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Impacts of TourismImpacts of Tourism

11 - -Economic Impact of TourismEconomic Impact of Tourism

1.A -1.A -NEGATIVE ECONOMIC IMPACTS OF TOURISMNEGATIVE ECONOMIC IMPACTS OF TOURISM

LeakageLeakage Enclave tourismEnclave tourism

NEGATIVE ECONOMIC IMPACTS OF NEGATIVE ECONOMIC IMPACTS OF TOURISMTOURISM

There are many There are many hidden costshidden costs to tourism, to tourism,

which can have unfavourable economic effects which can have unfavourable economic effects

on the on the host communityhost community. .

Often rich countries are better able to profit Often rich countries are better able to profit

from tourism than poor ones.from tourism than poor ones.

NEGATIVE ECONOMIC IMPACTS OF NEGATIVE ECONOMIC IMPACTS OF TOURISMTOURISM

Whereas the least developed countriesWhereas the least developed countries

have the most urgent need for income, have the most urgent need for income,

employment and general rise of the standard employment and general rise of the standard

of living by means of tourism, they are least of living by means of tourism, they are least

able to realize these benefits. able to realize these benefits.

NEGATIVE ECONOMIC IMPACTS OF NEGATIVE ECONOMIC IMPACTS OF TOURISMTOURISM

Among the reasons for this are Among the reasons for this are large-scale large-scale

transfer of tourism revenuestransfer of tourism revenues out of the host out of the host

country and country and exclusion of local businessesexclusion of local businesses

and products. and products.

NEGATIVE ECONOMIC IMPACTS OF NEGATIVE ECONOMIC IMPACTS OF TOURISM “TOURISM “LeakageLeakage””

The The direct incomedirect income for an area is the for an area is the

amount of tourist expenditure that remains amount of tourist expenditure that remains

locally after taxes, profits, and wages are locally after taxes, profits, and wages are

paid paid outside the areaoutside the area and after imports are and after imports are

purchased; these subtracted amounts purchased; these subtracted amounts

are called are called leakageleakage..

NEGATIVE ECONOMIC IMPACTS OF NEGATIVE ECONOMIC IMPACTS OF TOURISM “TOURISM “LeakageLeakage””

In most In most all-inclusive package toursall-inclusive package tours, about , about 80%80%

of travellers' expenditures go to the airlines, of travellers' expenditures go to the airlines,

hotels and other international companies, hotels and other international companies,

and not to local businesses or workers.and not to local businesses or workers.

NEGATIVE ECONOMIC IMPACTS OF NEGATIVE ECONOMIC IMPACTS OF TOURISM “TOURISM “LeakageLeakage””

In addition, significant amounts of income In addition, significant amounts of income

actually retained at destination level can leaveactually retained at destination level can leave

again through leakage. again through leakage.

NEGATIVE ECONOMIC IMPACTS OF NEGATIVE ECONOMIC IMPACTS OF TOURISM “TOURISM “LeakageLeakage””

A study of tourism 'leakage' in A study of tourism 'leakage' in ThailandThailand

estimated that 70% of all money spent by estimated that 70% of all money spent by

tourists ended up leaving Thailand.tourists ended up leaving Thailand.

Estimates for other Third World countries Estimates for other Third World countries

range from 80% in range from 80% in the Caribbeanthe Caribbean to 40% to 40%

in India.in India.

NEGATIVE ECONOMIC IMPACTS OF NEGATIVE ECONOMIC IMPACTS OF TOURISM “TOURISM “LeakageLeakage””

NEGATIVE ECONOMIC IMPACTS OF NEGATIVE ECONOMIC IMPACTS OF TOURISM “TOURISM “LeakageLeakage””

There are two main ways that leakage occurs:There are two main ways that leakage occurs:

Import leakageImport leakage This commonly occurs when tourists demand This commonly occurs when tourists demand

standards of equipment, food, and other standards of equipment, food, and other

products that the host country cannot supply.products that the host country cannot supply.

NEGATIVE ECONOMIC IMPACTS OF NEGATIVE ECONOMIC IMPACTS OF TOURISM “TOURISM “LeakageLeakage””

Especially in LEDC’s, food and drinks Especially in LEDC’s, food and drinks

must often be imported, since local productsmust often be imported, since local products

are not up to the hotel's (i.e. tourist's) are not up to the hotel's (i.e. tourist's)

standards or the country simply doesn't standards or the country simply doesn't

have a supplying industry.have a supplying industry.

NEGATIVE ECONOMIC IMPACTS OF NEGATIVE ECONOMIC IMPACTS OF TOURISM TOURISM ““LeakageLeakage””

Much of the income from tourism expenditures Much of the income from tourism expenditures

leaves the country again to pay for these leaves the country again to pay for these

imports. imports.

The average The average import-related leakageimport-related leakage for most for most

developing countries today is developing countries today is between between 40% and40% and

50%50% of gross tourism earnings of gross tourism earnings for for small small

economieseconomies and and between 10% and 20%between 10% and 20% for for

most most advanced advanced and diversified economies.and diversified economies.

NEGATIVE ECONOMIC IMPACTS OF NEGATIVE ECONOMIC IMPACTS OF TOURISM TOURISM ““LeakageLeakage””

Export leakageExport leakage TNC's have a substantial share in TNC's have a substantial share in

the export leakage. Often, especially the export leakage. Often, especially

in poor developing destinations, they in poor developing destinations, they

are the only ones that possess are the only ones that possess the the

necessary capital to investnecessary capital to invest in the in the

construction of tourism construction of tourism infrastructureinfrastructure

andand facilities facilities. .

NEGATIVE ECONOMIC IMPACTS OF NEGATIVE ECONOMIC IMPACTS OF TOURISM TOURISM ““LeakageLeakage””

As a consequence of this, an As a consequence of this, an export leakageexport leakage

arises when arises when overseas investors overseas investors who financewho finance

the resorts and hotels take their the resorts and hotels take their profits backprofits back

to their country of origin. to their country of origin.

NEGATIVE ECONOMIC IMPACTS OF NEGATIVE ECONOMIC IMPACTS OF TOURISM “TOURISM “Enclave tourismEnclave tourism””

Local businesses often see their chancesLocal businesses often see their chances

to earn income from tourists severely reduced to earn income from tourists severely reduced

by the creation ofby the creation of "all-inclusive" vacation packages"all-inclusive" vacation packages..

NEGATIVE ECONOMIC IMPACTS OF NEGATIVE ECONOMIC IMPACTS OF TOURISM “TOURISM “Enclave tourismEnclave tourism””

When tourists remain for their entire stay When tourists remain for their entire stay at the same at the same cruise ship or resortcruise ship or resort, which provides everything they , which provides everything they need and where they will make all their expenditures, not need and where they will make all their expenditures, not much opportunity is left for local people to profit from much opportunity is left for local people to profit from tourism.tourism.

NEGATIVE ECONOMIC IMPACTS OF NEGATIVE ECONOMIC IMPACTS OF TOURISM “TOURISM “Enclave tourismEnclave tourism””

All-inclusive hotelsAll-inclusive hotels generate the largest generate the largest

amount of revenue but their impact on the amount of revenue but their impact on the

economy is smaller per dollar of revenue economy is smaller per dollar of revenue

than other accommodation types.than other accommodation types.

NEGATIVE ECONOMIC IMPACTS OF NEGATIVE ECONOMIC IMPACTS OF TOURISM “TOURISM “Enclave tourismEnclave tourism””

All-inclusives also All-inclusives also import more import more

and employed fewer peopleand employed fewer people per dollar per dollar

of revenue than other hotels.Smaller of revenue than other hotels.Smaller

trickle-down effecttrickle-down effect on local economies. on local economies.

NEGATIVE ECONOMIC IMPACTS OF NEGATIVE ECONOMIC IMPACTS OF TOURISM “TOURISM “Enclave tourismEnclave tourism””

TheThe cruise ship industrycruise ship industry provides provides

another example of economic another example of economic

enclave tourism.enclave tourism.

Non-river cruises Non-river cruises carried carried

some 8.7 million international some 8.7 million international

passengers in 1999passengers in 1999..

NEGATIVE ECONOMIC IMPACTS OF NEGATIVE ECONOMIC IMPACTS OF TOURISM “TOURISM “Enclave tourismEnclave tourism””

On many ships, especially in the CaribbeanOn many ships, especially in the Caribbean, ,

guests are encouraged to guests are encouraged to spend most of their time and spend most of their time and money on boardmoney on board, and opportunities to spend in some , and opportunities to spend in some ports are closely managed and restricted. ports are closely managed and restricted.

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