Economics of Tourism

The Economic Value of Tourism Direct Impacts: Tourist $ spent on easily identifiable transactions, with positive economic benefits. Ex. Accommodations, food, and souvenirs Indirect Impacts: Secondary transactions that are made as a result of tourism; less easy to identify. Ex. Transportation, farms, construction

Foreign Investment & Leakages Many smaller, poorer countries simply do not have enough $ (capital) to build tourist facilities on their own; therefore, to spur tourism and create jobs, they encourage multinational corporations, eg. Club Med, to build resorts. Problem? Superstructure: including hotels, places for entertainment, shopping centres, and restaurants. With luck, the destination remains popular with tourists long enough for these costs to be recovered and for the destination to show a profit. During the period of decline, there is little investment and the existing facilities decay – making them even less attractive to tourists.

Success Factors Unfortunately, despite local enthusiasm, some places are still not able to establish vital tourism industries.