2. Economics and the Impact of Tourism
Chapter 2
Economics and the Impact of Tourism
The Impact of Hospitality & Tourism
Why Do People Travel?

3. Chapter Objectives Explain the economic multiplier.
Define sustainable tourism.
Identify the different areas impacted by tourism.
Explain the cyclical nature of travel.
Describe business and pleasure travel.
Explain the different motives for travel.

4. Effects of Hospitality & Tourism
Travel, tourism, and hospitality have numerous effects on the world.
Economic
Social and Cultural
Environmental
Section 2.1

5. Economic Impact
The development of infrastructure that supports the needs of travelers helps to create jobs.
infrastructure the physical components of a destination, such as hotels, restaurants, roadways, and transportation, that support tourism
Section 2.1

6. Economic Impact $ $ $ $ $ $ Tourist Dollars Infrastructure
Business Growth $ $
Tax Revenue
Jobs $
Section 2.1 6

7. Economic Impact
The economic multiplier depends on how much money tourists spend per year and how much leakage there is offshore.
economic multiplier the process of how money filters through a local economy and is spent and re-spent, creating income for other businesses
leakage tourists dollars spent on imported goods so that revenue ends up in foreign economies
Section 2.1

8. Economic Impact of Travel in the United States
Travel expenditures
$545.5 billion
Travel-generated payroll
$157.0 billion
Travel-generated tax revenue
$93.2 billion
Travel surplus
$5.5 billion
Travel-generated employment
7.2 million jobs
Section 2.1 8

9. Globalization and Tourism
In the past 50 years, the world has experienced globalization.
globalization the increasing integration of the world economy
Continued growth in hospitality and tourism depends on responsibly protecting and maintaining human and natural resources.
Section 2.1

10. Globalization and Tourism
Businesses and governments must create sustainable tourism.
sustainable tourism tourism that allows a destination to support both local residents and tourists without compromising future generations
Section 2.1

11. Social and Cultural Impact
Failure to protect unique cultures and established social customs can destroy the appeal of a destination.
Section 2.1

12. Social and Cultural Impact
Tourists help cultures by trading cultural influences and creating interest in exploring cultures.
Tourists can harm a culture by inadvertently creating unrealistic expectations of wealth.
Section 2.1

13. Environmental Impact
Negative impacts from tourism occur when visitors’ use of a resource is greater than the destination’s ability to handle that usage.
Section 2.1

14. Environmental Impact Water Resources Land Resources Visual Pollution
Waste Disposal
Noise Pollution
Section 2.1 14

15. Environmental Impact
Tourism development can cause aesthetic pollution.
aesthetic pollution the spoiling or contamination of the natural beauty and features of an environment due to poor planning and design of tourism projects
Section 2.1

16. Environmental Impact
Tourism can also affect an environment positively.
Revenues generated from park entrance fees and similar sources can help pay for the protection and management of sensitive environments.
Section 2.1

17. Cyclical Nature of Travel
Introduction
Growth
Maturation
Sometimes
Renewal
Decline
Section 2.1 17

18. Cyclical Nature of Travel
During the introduction stage of the destination life cycle, tourists begin to discover a new destination and word quickly spreads among the venturers of the world.
venturers travelers who tend to be the first to discover a new, unspoiled destination
Section 2.1

19. Cyclical Nature of Travel
A destination in the mature stage of the life cycle is visited by dependables.
dependables travelers who prefer familiarity and creature comforts and seldom try anything new or different
Section 2.1

20. Continuing Hospitality & Tourism Influences
Renewal and reinvestment can help prolong and continue the positive or negative effects of travel, tourism, and hospitality on destinations.
Section 2.1

21. What is the economic multiplier? Why is sustainable tourism important?
2.1 1.
What is the economic multiplier?
Why is sustainable tourism important?
What is one positive and one negative impact of tourism? 2.
Quick Check Answers
It is the process of how money spending filters through the local economy and is spend and re-spent.
Sustainable tourism is important because it supports local residents and tourists without compromising future generations.
Possible answers: Positive impact of tourism includes renewed sense of pride among some cultures, revival of native arts and crafts. Negative impacts of tourism include sudden economic growth among local residents, which can lead to unrealistic expectations, and water, air, and garbage pollution. 3.
Section 2.1

22. The Reasons for Travel The most common reasons for travel are:
Business commitments
Family occasions
Leisure
Hospitality and tourism professionals study these reasons in order to adapt products and services to their customers’ needs.
Section 2.2

23. Business Travel
Business travel usually occurs during the week, not on the weekend, and can involve multiple destinations and methods of travel.
business travel travel for the sole purpose of conducting an individual’s or company's business
Section 2.2

24. Business Travel Challenges of business travel include: Stress
Time changes
Long absences from home
Language or cultural barriers
Section 2.2

25. Business Travel Incentives for business travel include:
Frequent-flyer miles
Travel in business or first class on airlines
Favored treatment at car rental companies and hotels
Section 2.2

26. Business Travel
A branch of business travel is meeting and incentive travel.
meeting and incentive travel business travel by employees to attend a business meeting or as a reward for having met or exceeded company goals
Section 2.2

27. Business Travel A meeting planner has a variety of responsibilities:
meeting planner a person who organizes and plans a meeting
Find a site for a meeting
Make travel arrangements
Coordinate meeting space, hotel rooms, and meals
Schedule speakers and multimedia services
Handle registration
Section 2.2

28. Pleasure Travel
When traveling for pleasure, some people engage in VFR travel.
VFR travel travel for the purpose of visiting friends or relatives
The needs of people who engage in leisure travel can be more complex.
leisure travel travel for the sole purpose of enjoyment
Section 2.2

29. Travel Motive Theories
Maslow’s hierarchy of needs and Plog’s psychographic analysis are two theories that can help explain traveler behavior.
Maslow’s hierarchy of needs a theory that explains what motivates people to act in certain ways or make certain decisions
Section 2.2

30. Maslow’s Hierarchy of Needs
Travel Motive Theories
Maslow’s Hierarchy of Needs
Self- actualization
Most self-fulfilling needs
Self-esteem
Recognition
Safety and security
Most basic needs
Physiological needs
Section 2.2 30

31. Travel Motive Theories
Stanley Plog developed Plog’s psychographic analysis to describe two types of travelers:
Venturers
Seek out unspoiled destinations and explore without using tourist services
Dependables
Prefer creature comforts and seldom try anything new or foreign
Section 2.2

32. Travel Motive Theories
When asked by a team of Plog researchers why they traveled, most Americans gave the following answers:
To get rid of stress
To enrich perspective on life
To bring family closer together
To do what they wanted, when they wanted
To feel alive and energetic
Section 2.2

33. Travel Online
The Internet has changed the way people fly, rent, make reservations, and relax.
Operating an e-tail business on an electronic channel—the Web—can be costly, due to design, delivery, returns, and operating expenses.
Though Many larger dot-com companies crashed in the 1990’s, small stores like Harris Cyclery of West Newton, Massachusetts, actually increase sales using a basic Web site. Today, a third of Harris’s bicycle business rides in on the Web to get hard-to-find parts and personal service.
Describe an e-business’s home page to your class after viewing one through marketingseries.glencoe.com.
In 2002, researchers found that 59 million people in the United States made online travel purchases. With so many online travel options, user friendliness and low rates keep travel Web sites competitive.
For more information, go to marketingseries.glencoe.com.
Section 2.2 33

34. What are three needs of the business traveler?
2.2 1.
What are three needs of the business traveler?
What are a venturer and a dependable?
What are some of the motivations for travel? 2.
Quick Check Answers
Business travel usually occurs during the week and can involve multiple destinations and methods of transportation. Business travelers want to travel efficiently and economically.
Venturers are outgoing, confident and curious. They enjoy new destination. Dependables focus on everyday problems and value familiarity and comfort. They prefer conventional travel.
Maslow believed travel behavior is driven by a desire to satisfy a variety of needs. Plog believed the psychological characteristics could predict a person’s travel preferences. 3.
Section 2.2

35. Checking Concepts
Explain two factors that determine the amount of the economic multiplier.
Sustainable tourism is tourism that allows a destination to support both local residents and tourists without compromising future generations. It is important because it protects the future of the industry in that area. 3.
Tourism impacts many aspects of a destination, including economic, social and cultural, and environmental conditions. 4.
Globalization is the increasing integration of the world economy. 2.
The economic multiplier is the process by which tourist money filters through a local economy and is spent and re-spent, creating income for other businesses. 1.
Define globalization.
Explain the importance of sustainable tourism.
Checking Concepts Answers
The economic multiplier is the process by which tourist money filters through a local economy and is spent and re-spent, creating income for other businesses.
Globalization is the increasing integration of the world economy.
Sustainable tourism is tourism that allows a destination to support both local residents and tourists without compromising future generations. It is important because it protects the future of the industry in that area.
Tourism impacts many aspects of a destination, including economic, social and cultural, and environmental conditions.
Identify aspects impacted by tourism.
continued

36. Checking Concepts
Describe the first two phases of a destination’s life cycle.
Plog’s psychographic analysis helps to determine people’s travel preferences. It places individuals on a continuum ranging from venturer to dependable, based on their answers to a series of questions about values, beliefs, and lifestyles. 7.
Business travel is done for the sole purpose of conducting a person’s or company’s business. Travel for pleasure is done to visit friends and relatives or for enjoyment. 6.
The first two phases of a tourist destination’s life cycle are (1) introduction, during which tourists begin to discover the location, and (2) growth, during which development, such as the building of new facilities, occurs to attract more tourists. 5.
Explain the difference between travel for business and for pleasure.
Checking Concepts Answers
The first two phases of a tourist destination’s life cycle are (1) introduction, during which tourists begin to discover the location, and (2) growth, during which development, such as the building of new facilities, occurs to attract more tourists.
Business travel is done for the sole purpose of conducting a person’s or company’s business. Travel for pleasure is done to visit friends and relatives or for enjoyment.
Plog’s psychographic analysis helps to determine people’s travel preferences. It places individuals on a continuum ranging from venturer to dependable, based on their answers to a series of questions about values, beliefs, and lifestyles.
Define Plog’s psychographic analysis.
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37. Checking Concepts Critical Thinking
The reasons for travel identified by Plog researchers include reducing stress; enriching perspectives on life; bringing family closer together; doing what you want when you want; and feeling alive and energetic. 8.
Explain at least three reasons for travel provided by Plog researchers.
Checking Concepts Answers
The reasons for travel identified by Plog researchers include reducing stress; enriching perspectives on life; bringing family closer together; doing what you want when you want; and feeling alive and energetic.

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