The Economic Impacts of Tourism Faculty of Management Sciences The Economic Impacts of Tourism Learning objectives Identify the economic benefits of tourism for a nation, both nationally and regionally Be aware of the negative economic effects of tourism for destinations Understand how tourism is measured statistically Recognise the limitations of statistical measurement

Introduction tourism can bring both economic benefits and costs previous research done on economic impacts of tourism by: Bull (1995) Tribe (2005) and Vanhove (2005)

The International Tourist Market tourism is the single most important industry in the world WTTC (2011): tourism accounts for 2,8% of GDP and broader impacts accounts for 9,1% of global GDP (global domestic product) the travel and tourism industry contributes to 258,5 million jobs worldwide (8,8% of total employment)

Domestic Tourism data previously mentioned do not include people travelling within their own countries much higher levels of domestic tourism take place America India China (2011) the number of domestic trips far exceeds the level of arrivals from international tourists but what about their spending?

Trends in International Travel as controls over the freedom of movement of populations in many countries are lifted, many are seeking the opportunity to travel outside of their own borders UNWTO estimates international tourism to grow in Asia, Middle East and Africa, and less growth in mature regions of Europe and the Americas International tourism resulted from low prices, frequent flights and large, relatively wealthy populations Acts of terrorism, medical emergencies (swine flu pandemic in 2009), Asian tsunami (2004), floodings in New Orleans following Hurricane Katrina (2005) and earthquake in Christchurch, New Zealand (2011) – TOURISTS EVENTUALLY RETURN IN EVER GREATER NUMBERS

Propensity (likelihood) to Travel we need to take into account factors that lead to growth or decline of tourism from each country countries where residents’ GDP is higher is more likely to travel more (even internationally) e.g. Eastern Europe BRIC (Brazil, Russia, India, China) countries experience a rise in middle-income classes domestic and international travel patterns Propensity is high among Scandinavians (Norway, Sweden and Denmark) due to long winters and lack of sunshine Travel Propensity (the percentage of the population taking trips) = Net travel propensity (the percentage of the population that has travelled) Gross travel propensity (the total number of trips taken in relation to the total population)

Propensity to Travel (continued) Travel Propensity (the percentage of the population taking trips) = Net travel propensity (the percentage of the population that has travelled) Gross travel propensity (the total number of trips taken in relation to the total population)

Other factors affecting the economic value of tourism relative cost compared to income (see figure) this causes vicious price wars in the travel industry attitudes to the use of leisure time Cheap price Low cost per tourist High demand High load factor

The value of economic data the government of a country need to gather data on tourists for: its own national tourist office (development) and providers of tourism services (forecasting future trends) the government need to know tourism’s contribution to: income employment investments and balance of payments

The value of economic data (continued) the government can use this data for making recommendations and decisions regarding infrastructure and superstructure. Infrastructure: building new or expanding existing airports or seaports, provision of new or improved roads to growing destinations, improving other services such as public utilities, water and electricity (plans may take years to implement) Superstructure: comprises of the tourist amenities needed – hotels, restaurants, shops and tourist services (not necessarily developers in the public sector, but subsidiaries might be applicable in developing countries)

The economic impacts of tourism receiving areas: (tourist destination) the region, country or continent where the tourist activity takes place generating areas: areas from which the tourist come to visit, where they take their money to spend, representing a net loss of revenue for the generating area and a gain for the receiving area We can say that incoming tourist spend is an export, while outgoing tourist spend is an import (as the tourist is buying services from overseas)

The economic impacts of tourism The flow of tourists b/n generating and receiving areas can be measured in 4 distinct ways: income employment the area’s balance of payments and investment and development

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