The Impacts of Tourism

Key Perspectives to Tourism

• Tourism impacts are likely to change over time as a destination area develops (Butler, 1980).

• The impacts are also affected by time (when), location (where) and seasonality.

• Tourism impacts also occur beyond the destination.

Key Perspectives to Tourism

• Tourism also has an impact on tourists themselves.

Advantages to Tourism

• Tourism brings much needed investment into an area.

• Tourism provides employment for local people.

• The money that tourism brings in can be used to improve the infrastructure of the area.

Advantages to Tourism• Income from tourism may be used to help

conserve the natural environment that is the reason why visitors come in the first place.

• The country can benefit from overseas investment, primarily in the tourist industry, but also in other related industries.

• Tourism may help to preserve local cultures and communities, as they become a tourist attraction.

Disadvantages to Tourism• The jobs for the locals are often badly paid, with

very poor working conditions.• The huge number of tourists coming to the

attractions could easily damage the environment.

• Increasing numbers of tourists brings problems such as littering, pollution and footpath erosion.

• Local cultures could be devalued by tourism.

Some Fundamental Truths about Tourism

• A Case Study by McKercher in 1993

Some Fundamental Truths about Tourism

1. Tourism consumes resources and creates waste.

2. Tourism has the ability to over-consume resources.

3. Tourism competes with other resource users and needs to do this to survive.

4. Tourism is private sector dominated.

Some Fundamental Truths about Tourism

5. Tourism is multi-faceted and is therefore almost impossible to control.

6. Tourists are consumers, not anthropologists.

7. Tourism is entertainment.8. Unlike other industrial activities, tourism

imports the clients rather than export a product.

Activity

• How do McKercher’s ‘fundamental truths’ affect your views on tourism impacts?

• To what extent do you agree with McKercher’s ‘fundamental truths’.

Impacts of Tourism

ECONOMIC IMPACTS

SOCIO-CULTURAL IMPACTS

ENVIRONMENTAL IMPACTS

Tourism and its Economic

Benefits

What is Economics?

• The study of methods of allocating scarce resources and distributing the products of those resources, and the study of the consequences of these methods of allocation and distribution. (Craven, 1990)

ECONOMICSSCARCITY

RESOURCES1. Natural2. Labor3. Capital

COMMODITIES1. Goods – tangible products2. Services – intangible

products

Microeconomics v. Macroeconomics

MICROENOMICS MACROECONOMICSThe firmThe consumerProduction and sellingThe demand for goodsThe supply of goods

How the national economy operates

Employment and unemploymentInflationNational production and

consumptionThe money supply in the country

Economic Cycles

• Short-term economic cycles- periods of dramatic change (seasonality)

• Medium-term economic cycles- changes over a period of several years (may be due to natural disasters)

Long Term Economic Cycles

• Long-term economic cycles- the growth of a destination and its ultimate decline- (boom, recession, depression, recovery)

The Economic Characteristics of the tourism Industry

Travel and Tourism Industry

Travel and Tourism

Economy

Economic Benefits of Tourism

• Foreign Exchange Earnings– Travel and Tourism expenditures– Generate income to the host economy and

can stimulate the investment necessary to finance growth in other economic sectors.

– accelerate this growth by requiring visitors to bring in a certain amount of foreign currency for each day of their stay.

Economic Benefits of Tourism

• Foreign Exchange Earnings– Tourism is one of the top five export

categories for as many as 83% of countries and is a main source of foreign exchange earnings for at least 38% of countries.

Economic Benefits of Tourism

• Contribution to Government Revenues– Direct contributions– Indirect contributions

Economic Benefits of Tourism

• Generation of Employment Opportunities – Direct Employment– Indirect Employment– Induced Employment

Economic Benefits of Tourism

• Infrastructure Investment– Tourism can induce the local government to

make infrastructure improvements such as better water and sewage systems, roads, electricity, telephone and public transport network

– This can improve the quality of life for residents as well as facilitate tourism.

Economic Costs of Tourism

• Inflation– Increase in prices of land, houses and food

that can occur as a result of tourism.

Economic Costs of Tourism

• Inflation– Increase in prices of land, houses and food

that can occur as a result of tourism.– Lies heavily on the demand.

Economic Costs of Tourism

• Opportunity Costs– the cost of engaging in tourism rather than

another form of economic activity.

Economic Costs of Tourism

• Dependency– a place becomes over-dependent on tourism

that other industries are abandoned.– Over-reliance on tourism carries risks to

tourism-dependent economies.

Economic Costs of Tourism

• Seasonality– One of the major disadvantages in tourism– Its effect to jobs, investments and tourism-

related enterprises

Economic Costs of Tourism

• Leakage– Goes out of the local economy to pay for

imported items, expatriate salaries or franchise fees.

Economic Costs of Tourism

• Leakage– occurs through;1. Repatriation of profits generated from foreign

capital investment;2. Vertical integration;3. Not sourcing goods and services locally.

Economic Costs of Tourism

• Enclave Tourism– Remain for their entire stay at the same cruise

ship or resort, which provides everything they need and where they will make all their expenditures, not much opportunity is left for local people to profit from tourism.

Economic Costs of Tourism

• Seasonal Character of Jobs– Job (and therefore income) insecurity– No guarantee of employment from one

season to the next– Difficulties in getting training, employment-

related medical benefits, and recognition of their experience

– Unsatisfactory housing and working conditions.

Economic Costs of Tourism

• Prostitution and the Underground Economy– Sex Sector, prostitution, which many regard as

a by product of tourism, has been estimated to contribute between 2%-14% of the GDP of Indonesia, Malaysia, Thailand and the Philippines.

– 2% - earnings of the prostitute themselves– 14% - incomes of people indirectly benefiting

from prostitution

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