1. 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

2. 1. Income Income is earned from selling goods and services to tourists
Income pays: interest, rent, wages and salaries (labor-intensive industry)
Income is greater where more tourists visit, where tourists spend longer time at the destination or where there is higher expenditure or more opportunities to spend
Tourism is of great importance, especially in areas with few opportunities in employment
Tourism in areas with little manufacturing industry, have seasonal and low-pay jobs (low-pay or no-pay?)

3. 1. Income (continued)
Income is also from interest, rent and profits of tourism businesses
Interest: e.g. interest paid on loans to an airline i. o. t. buy aircraft
Rent: rent paid to landowner for a campsite by the sea
Taxation on tourism activities, sales tax (VAT, room taxes on hotel bills, duty and tax on petrol)
Austria, Belgium, Hungary, Spain and the Netherlands = tourist tax
Most countries levy a departure tax on all passangers travelling by air
National income: sum of all incomes in a country
The importance of tourism to a country’s economy can be measured by looking at the proportion of national income that is created by tourism

5. 1. Income (continued): The Tourism Multiplier
TIM (tourism income multiplier: tourism’s contribution to the income of an area
Money spent by tourists (direct income) in the area will be re-spent by recipients, augmenting the total
Direct income is spent to receive goods and services required for holiday (e.g. accommodation, meals, activities)
Tourism businesses spend some of the direct income obtaining goods and services to fulfil obligations to the tourist
Secondary spend of income:
Indirect income: e.g. entry fees to attraction paid by guide of the tourism business or attraction paying its guide
Induced Income: e.g. resident spending their pay on food or a visit to the cinema

6. 1. Income (continued): The Tourism Multiplier
FORMULA:
Multiplier =
proportion of leakages

7. 1. Income (continued): Leakages
Each time the money is circulated in this way, some money will be lost to the area / money that is lost from the system are known as leakages
Examples:
taxes paid are transmitted outside the area
savings removed from the area and spend elsewhere
some spend has gone to goods imported into the area from elsewhere
Therefore, if there are high tax rates or many goods demanded to be imported, the TIM may be low and the economy will not benefit greatly from tourism
Discussion: what about foreign-owned local hotels or coach operators?

8. 1. Income (continued): Leakages
Principle reasons for leakages:
cost of imported good, especially food and drink
foreign exchange costs of imports for the development of tourist facilities
remittance of profits abroad
remittance of pay to expatriates
management fees or royalties for franchises
payments to overseas carriers and travel companies
costs of overseas promotions
additional expenditure on imports resulting from the earning of those benefiting from tourism

9. 2. Employment
Jobs are created in travel agencies, tour operators and other intermediaries who supply tourist services in generating and destinations areas
Jobs range from hotel managers, deckchair attendants, excursion-booking clerks, home cleaners open to the public and maintenance staff at theme parks
Many of these jobs are seasonal or part-time, tourism’s contribution to full-time employment is much less than total figures – much effort is spent to lengthen the tourist season – but still important to consider that these jobs are created in areas where little alternative employment exists
This attracts students to work during holidays or households to open their house as B&B establishments

10. 2. Employment (continued)
Tourism as a form of employment is economically beneficial, but efforts must be made to create more full-time jobs in the industry
Tourism is important for regions within an economy as it affects employment = resident families who stay in the area need to buy goods, services, education for families and medical care
This in turn, give rise to jobs in shops, schools and hospitals
Recent developments in technology are threatening labor opportunities in tourism e.g. CRS is replacing manual reservations systems – booking clerk jobs are disapprearing
This is similar to online bookings done via the Internet (threatens travel agents)
FORTUNATELY: tourists seek a high level of personal service

11. 3. Balance of payments Nationally, tourism has a major influence on a
country’s balance of payments
International tourists are buying tourist services
in another country and those payments are noted in a country’s accounts as ‘invisibles’
The total value of receipts minus the total payments made during the year represent a country’s balance of payments on the tourism account – this is part of the country’s entire invisible balance, and includes other services (e.g. banking, insurance, transport)
READ EXAMPLES ON PAGE 112

12. 4. Investment and Development
Investments can be private or public
Unfortunately, tourism is considered by private investors as high-risk investments
This often means that tourism cannot take off until the public sector is prepared to ‘kick-start’ the economy (invest risk capital)
This takes on the form of grants or low-interest loans to private developers or government itself builds and runs facilities

13. 4. Investment and Development (continued)
There will be unwillingness to invest until a flow of tourists can be demonstrated
Accelerator Concept: once tourism is shown to be successful, private developers and government agencies are willing to invest even further (success breeds success)
Unfortunately, the relationship b/n tourism growth and economic development is uneven, owing to the rate of inflation, the ability of an area to diversify and attitudes to work among the local labor force
Often, key workers are resourced from outside the area if locals are either unwilling or unable to adapt to the needs of the tourism industry

14. Balancing economic diversification with overdependence on tourism
Tourism may offer an opportunity to diversify the economy, increasing the variety of empowerment opportunities available for the local population (especially in rural areas or declining industrial areas)
In some rural areas, tourism is being amalgamated with farming businesses to provide additional income and new products for an area (FarmTourism / AgriTourism)
In some developing countries, overreliance on tourism is of concern- attracting tourists from many different regions and market segments may help to spread the risk

15. Inflationary pressures
The demand for resources (land and labor) in a destination can push the cost of those resources higher as that very demand creates an imbalance in supply
This creates an inflationary effect – as prices rise, employees seek higher pay to afford the higher costs of land/property, food and entertainment
Some locals might not be able to afford the increased costs and become excluded from accessing their own community’s resources

16. The opportunity cost of tourism
1. Opportunity cost = by developing tourism, many resources (land, labor, capital investment) are used to support the industry, thus making them unavailable for other industries
“opportunity costs are the benefits that would be forthcoming if the public resources committed to a tourism project were 1) redirected to other public services or 2) retained by the taxpayer” (Crompton, 2006)
2. Taxation = when governments tax residents, i. o. t. invest in tourism projects, they reduce the spending capability of the local population, which impacts on the multiplier effect of indirect or induced expenditure

17. Statistical measurement of tourism
Gathering data on tourism is a vital task for the government of a country
Governments need to know the contributions that tourism makes i. t. o. income, employment, balance of payments and investment
Governments need to examine trends over time in the country and in comparison with the performance of competing countries
National tourist offices use this information to forecast growth, plan for tourism in their areas and as a guide for promotional campaigns.
Information must be quantitative (numbers and composition of tourists) and qualitative (nature and purpose) in nature

19. Statistical measurement of tourism: National Statistics on tourism
the number of international visitors (arrivals) and domestic tourists
how these are distributed over the months of a year
the countries generating the international tourists and regions generating domestic tourists
The growth, year on year, of those tourists
Their spend – in absolute terms and how they distribute it b/n accommodation, transport, shopping, catering, etc.
Their mode of travel – what transport they use, whether they are travelling independently or on an inclusive tour
The duration of their visit
The types of accommodation they use
The purpose of their visit – whether leisure, business or VFR
Demographic profiles – age, group composition, social class
Psychographic profiles – personality, lifestyle, interests and activities
What these tourists seek and the extent to which they are satisfied with what they find

20. Statistical measurement of tourism: National Statistics on tourism
This information related to inbound, outbound and domestic travel
This data allows the nation to know what trends are developing over time, what patterns of growth are taking place and how tastes and preferences are changing over time
Governments: to determine where to site roads and airports where to make provision for expansion in local gov plans and in what countries to increase or decrease the spend on advertising
Private Sector: when deciding whether or not and where to invest and the forms of those facilities should take

21. The most commonly used measurements in tourism
International Surveys:
The systematic collection of tourism data on a global scale
Global tourism statistics (covering traffic flows, expenditure and trends over time) are collected annually by the UNWTO and the Organisation for Economic Cooperation and Development (OECD)
Other surveys are undertaken by private organisations: providing additional data on the volume of tourists and their expenditure

23. The most commonly used measurements in tourism
2. National Surveys:
National and regional governments must have data on domestic tourism – tourism flows within a country
Many govs invest in surveys that provide details of the travel habits of residents
The EU has encouraged its member states to extend statistical data collection related to the tourism market and industry
National Survey Information includes: volume and value of all trips with one overnight stay, the purpose of the trip, accommodation and transport used, activities engaged in, booking method used and their demographic details

24. Techniques and problems regarding measurement of tourism
Criticism: most research employs quantitative methods (when and where tourists travel, where they come from, how long they stay and how much they spend)
The demand for qualitative research
Research dealing with why people travel is far more limited (understanding the behavior of tourists; how they choose their destinations, what do they do when they arrive and why, what satisfies them, their purchasing patterns (booking directly or through an agent / book early or close to departure time)

25. Techniques and problems regarding measurement of tourism
1. The demand for qualitative research (continued)
this involves lengthy interviews where consumers talk about their behaviours or through observation
This type of research is expensive and time-consuming
The accuracy of the information cannot be determined (unlike quantitative research) and the honesty of the respondent is unknown
This research produces richer and more complete data

26. Techniques and problems regarding measurement of tourism
2. Some criticisms of quantitative methods
Asking participants when arriving at the destination is not accurate, as it is intentions and not accurate picture of what really happened
Departing visitors need good levels of recall (especially expenditure)
The categories or definitions used may vary by survey (residents vs. nationality)
If common definitions are used, direct comparisons may be misleading (EU countries, visiting neighboring country for a meal, The Schengen Agreement)

27. Techniques and problems regarding measurement of tourism
3. Tourism Satellite Accounts (TSAs)
To provide more accurate assessment, the UNWTO introduced TSA
This technique includes all indirect expenditures and their resultant contribution to GDP and employment
A set of standardized procedures that aim to ensure that all countries are operating similar systems and the resulting data is comparable across nations
This provides info regarding the economic importance of tourism for the national economy and employment created by tourism and the tax revenues earned as a direct result from tourism activity

28. Techniques and problems regarding measurement of tourism
3. Tourism Satellite Accounts (TSAs) - continued
This info can assist with planning tourism resources and encourages greater awareness of tourism and further investment in the industry
Problems: expensive and time-consuming to employ, disregards sustainability, requires full-scale research in an area of research

29. Future Issues
Although international travel declined in 2009, there was an immediate rebound in 2010
During this downturn, domestic tourism continued to provide significant contribution to many economies
Arguments about the need for sustainability are helping to address the ‘grow at all cost’ attitude towards tourism development
Emerging markets of China and India – large markets, provision to meet the demands of these markets
The UNWTO and WTTC allows free online access to many reports and statistics to improve planning and development to make informed decisions

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