“What happens when a destination nears the end of its lifecycle? More important, what can we learn from the decisions that led to its decline?” So asks Oregon State University professor Todd Montgomery, himself a tourism industry veteran. Here’s his considered response.
Tourism at the Inflection Point: The Old Model Needs an Update
It began with a promise.
On the Pacific island of Saipan, leaders searched for a new path forward for their tourism economy. In the late 1980s and 1990s, Saipan successfully built a mass tourism model largely driven by Japanese tourists. With warm beaches, great scuba diving, well-known golf courses, strong Japanese cultural ties, and a short three-hour flight from Japan, the island became an attractive and convenient destination for Japanese travelers.
Over time, however, Saipan’s appeal began to fade. Key attractions declined due to overuse, competition from other destinations increased, and visitor numbers dropped. Facing growing economic uncertainty, leaders turned to what appeared to be a straightforward solution. Encouraged by outside investors, they proposed a large-scale casino development designed to attract high-spending visitors and create a new, stable revenue stream.
This decision moved forward despite a clear warning sign. A similar casino model had already failed on the nearby island of Tinian. Local voters initially rejected the Saipan proposal, but after an intensive lobbying campaign by the investors, political leaders ultimately approved the project.
The Limits of the Traditional Lifecycle
For decades, this type of strategy aligned with the widely accepted Butler’s Tourism Area Life Cycle model. Under this framework, destinations progress through stages of exploration, development, growth, and eventual stagnation or decline. When growth slows, reinvestment, often in the form of infrastructure or attractions, is seen as the pathway back to expansion.
The Butler model has long served as a foundational concept in tourism planning. However, today, that model is increasingly out of date. Due to a lack of its real-world applicability, it functions more as a lagging indicator than a decision-making tool, often identifying problems only after they are deeply entrenched. By the time a destination recognizes it has reached “maturity” or “stagnation,” the economic, social, and environmental costs may have already significantly degraded the destination attractions.
More critically, the model assumes that tourist arrivals are the primary measure of success. This creates a dangerous bias toward growth without a clear understanding of capacity or community impact. The result is a system that encourages expansion without fully accounting for consequences, precisely the conditions under which projects like Saipan’s casino emerge.
Introducing the Applied Destination Lifecycle (ADL)
To address these shortcomings, a more modern framework has emerged: the Applied Destination Lifecycle (ADL). Unlike its predecessor, ADL is designed for real-time policy applications. It simplifies lifecycle stages into four measurable phases: Discovery, Development, Expansion, and Inflection/Post-Inflection. Each stage is tied to observable indicators such as the introduction of lodging, the formation of tourism taxes, or the arrival of foreign investment.
But the most important shift is conceptual.
Instead of measuring success through visitor volume, ADL replaces the traditional y-axis with resident sentiment towards tourism, which is the percentage of residents who believe tourism’s costs outweigh its benefits. This reframing aligns tourism analysis with principles of Welfare Economics, focusing on overall community well-being rather than purely economic output. This change is not just academic. It fundamentally alters how destinations interpret growth.
Data and the Rise of Resident Sentiment
Across hundreds of destinations globally, a consistent pattern is emerging as tourism grows and the resulting externalities. Overcrowding, housing pressure, congestion, environmental degradation, and cultural strain begin to erode the very assets that attracted visitors in the first place.
ADL captures this through two key additions:
- The cost curve: a rising line representing increasing negative externalities as tourism expands.
- The depletion line: a downward trajectory reflecting the erosion of environmental and social assets over time.
Together, these dimensions reveal a critical insight: growth is not neutral. It carries compounding costs that, if unmanaged, push destinations toward an inflection point. This often occurs when roughly half of residents believe tourism’s costs outweigh its benefits. At this stage, communities begin to respond through policy, taxation, or political pressure shaping the future of tourism more directly.
Aligning Policy with the Destination Lifecycle
Saipan’s casino project reflects a common but flawed assumption: that destinations can build their way out of stagnation. The Applied Destination Lifecycle (ADL) framework suggests a different approach, one grounded in how destinations actually evolve and how communities experience tourism over time.
Effective tourism policy begins with recognizing that strategies must align with a destination’s stage of development. In early phases, growth-oriented investments and incentives may be appropriate. However, as destinations mature, the focus must shift toward managing capacity, addressing imbalances, and ensuring that the benefits of tourism are more evenly distributed across the community.
At the same time, policy must directly address tourism’s externalities. Taxes and fees should not exist solely to generate revenue; they should be designed to reflect the true costs of tourism. Visitors who contribute to congestion, housing pressure, or environmental strain should play a role in funding the systems that mitigate those impacts. This creates a more balanced and sustainable economic model.
Equally important is the role of residents. Community sentiment is not a secondary consideration, it is central to how destinations function. A destination is ultimately shaped by the people who live there, and their perceptions of tourism serve as an early warning system. By consistently measuring and responding to resident sentiment, policymakers can identify emerging issues before they escalate into larger social or political challenges.
Finally, tourism policy must be designed with a long-term perspective. Rather than pursuing continuous growth, destinations should aim for a steady-state equilibrium, one where tourism supports community well-being, preserves key assets, and remains viable for future generations.
A Cautionary Ending
The casino in Saipan was never completed.
Today, it stands as a massive, typhoon-proof concrete structure on a prime beachfront. It is unfinished, unused, and unaffordable to demolish. What was once envisioned as a catalyst for economic renewal has instead become a symbol of what happens when policy leaders ignore residents wishes. It is a white elephant on the beach.
This outcome is not unique. Around the world, destinations that pursue growth without a clear understanding of lifecycle dynamics, community sentiment, and external costs risk similar fates.
Tourism economic development is not simply about attracting more visitors or building new infrastructure. It is about managing a complex system where economic benefits, community well-being, and environmental sustainability must remain in balance.
Without thoughtful, lifecycle-based policy, even the most promising investments can become permanent reminders of what happens when destinations try to grow first and think later.
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Watch Todd Montgomery’s video about what went wrong in Saipan, and what could fix it and destinations like it.
Todd Montgomery is a professor at Oregon State University.