Tourism and the Economy

Tourism and the Global Economy Tourism has become one of the fastest growing economic industries in the world and has become one of the major players in international commerce. Tourism has become one of the fastest growing economic industries in the world and has become one of the major players in international commerce. Money made in the global tourism industry was $800 billion in This is predicted to double in Money made in the global tourism industry was $800 billion in This is predicted to double in Often it is the main source of income for many developing countries. Often it is the main source of income for many developing countries.

Examples of Countries that Depend on Tourism Amount of total economy – measured as gross domestic product (GDP) – generated by tourism: (pg.264 of textbook) Amount of total economy – measured as gross domestic product (GDP) – generated by tourism: (pg.264 of textbook) Maldives 37.3% of GDPMaldives 37.3% of GDP Aruba 21.1%Aruba 21.1% Bahamas 20.8%Bahamas 20.8% Barbados 14.6 %Barbados 14.6 %

Tourism and the Canadian Economy From the Government Revenue Attributable to Tourism, 2000 to 2006, Statistics Canada

How does tourism create income? Tourist Arrivals Tourists spending money Tourism creates income by attracting visitors to experience the beauty and culture of a place, and having them spend money while they are there.

How does tourism create income? Tourists spending money Export of a product made in the country Money earned from the exported product Exporting a product from a country will also create income. Therefore tourism spending is like an ‘export product’ for many countries.

Tourism industry impact on the economy Money earned and people employed by the tourism industry often seems small But in reality, there are many other industries and working people that are affected by tourism indirectly

Tourism industry impact on the economy Direct Impacts – Money made by businesses that produce or provide products and services directly to travellers (ex. airline tickets, hotel rooms, tour guides etc. Indirect Impacts – Money made by support businesses that provide goods or services to tourism (ex. fuel for airplanes, food purchased for restaurant kitchens, suntan lotion etc.)

Economic impact of tourism in Ontario

Multiplying Economic Benefits Direct and indirect tourist spending lead to greater economic activity > multiplier effect $500 Tourist Hotel $200 Hotel Staff Wages $100 Rent

Multiplying Economic Benefits In many cases, money gained from tourism does not go directly into the local economy. It often will go into the pockets of businesses outside the local economy, such as to a foreign-owned hotel company (ex. Club Med), or to foreign-owned businesses that made imported products (such as food or beverages). We call this loss of tourism income: Leakage

Example: Tourism in the Bahamas Tourism does provide local jobs (ex. tour guides, boat operators) Tourism does provide local jobs (ex. tour guides, boat operators) Bahamas has several foreign- owned resorts so majority of profit goes elsewhere (leakage) Bahamas has several foreign- owned resorts so majority of profit goes elsewhere (leakage) Supplies such as food (ex meat) and drink (ex wine) are often purchased off shore and foreign owners profit. (leakage) Supplies such as food (ex meat) and drink (ex wine) are often purchased off shore and foreign owners profit. (leakage) Atlantis Resort

Multiplying Economic Benefits Tourist destinations that are most self-sufficient – that is, those able to supply most of their own goods and services – have the greatest multiplier effects. Tourist destinations that are most self-sufficient – that is, those able to supply most of their own goods and services – have the greatest multiplier effects. This is because they can keep leakages to a minimum so that more money can be re-spent locally. This is because they can keep leakages to a minimum so that more money can be re-spent locally.