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Economic Impact of Tourism
The tourism industry generates substantial economic benefits to both host countries and tourists’ home countries. Especially in developing countries, one of the primary motivations for a region to promote itself as a tourism destination is the expected economic improvement.
Positive Economic Impacts
Businesses and public organizations are increasingly interested in the economic impacts of tourism at national, state, and local levels. One regularly hears claims that tourism supports a certain number of jobs in an area, or that a festival or special event generated a specific amount of sales or income in a community. Multiplier effects are often cited to capture the secondary effects of tourism spending, and to show the wide range of sectors in a community which may benefit from tourism.
Tourism’s economic benefits are touted by the industry for a variety of reasons. For one, claims of tourism’s economic significance lend the industry an air of increased respectability in the eyes of the business community, public officials, and the general public: this often translates into decisions or public policies favorable to tourism. Also, community support is important for tourism; the industry affects and is affected by the entire community.
- The major economic benefits are: Helps diversify and stabilize the local economy.
- Provides governments with extra tax revenues each year through accommodation and restaurant taxes, airport taxes, sales taxes, park entrance fees, employee income tax etc..
- Creates local jobs and business opportunities. These include those jobs directly related to tourism (hotel and tour services) and those that indirectly support tourism (such as food production and housing construction).
- The multiplier effect:
- Brings new money into the economy. Tourist money is returned to the local economy as it is spent over and over again.
- Helps attract additional businesses and services to support the tourist industry.
- Is labour-intensive.
- Earns valuable foreign exchange.
Negative Economic Impacts
- Economic Leakages
It refers to the process through which tourism receipts are withdrawn or leave the destination’s economy. This happens due to reasons such as:
- a) Considerable amount of foreign exchange revenues leaks back out of the destination countries for tourism-related imports.
- b) Employing foreigners in tourism job and their income in the form salary is leaked out of the country.
- c) Importing good from other countries to cater to the requirements of the tourists.
- d) If outside interests own the tourism development, most of the economic benefits will leave the community.
- Inflation
It is a phenomena happening out of tourism development at a particular region where the prices of land and other commodities is increased either by creating artificial demand or taking the advantage of the high spending capacity of the tourists. The major concern is that the local people will be affected by this and they find it difficult to manage their life with limited income. This would increase the cost of living of the local people.
iii. Seasonal Employment
Most of the jobs created by the tourism industry are seasonal in nature. Because of this particular character, employees will be very busy and they will have hand full of money during peak season but as the industry moves to the off season much loss their job and it would be difficult for them to manage in rest of the period.
Environmental Impact of Tourism
Economic Impact of Tourism Economic Impact of Tourism Economic Impact of Tourism Economic Impact of Tourism Economic Impact of Tourism Economic Impact of Tourism
