Travel Reference
In-Depth Information
In ationary Pressure
Tourists inject money (earned elsewhere) into the destination economy. Although this increases the
income of the region (as discussed earlier), it also might cause in ationary pressures . Tourists
typically have a higher expenditure capability than the residents do—either because tourists have
higher incomes or because they have saved for the trip and are inclined to '' splurge '' while on vacation.
Hence, they are able to somewhat bid up the prices of such commodities as food, transportation, and
arts and crafts. This causes in ationary pressures, which can be detrimental to the economic welfare of
residents of the host community. This is particularly true when in ation affects the prices of essentials
such as food, clothing, transportation, and housing. Land prices have been known to escalate rapidly in
tourist destination areas. The prices that foreigners are willing to pay for vacation homes in the area
can decrease the demand for first homes by residents
for as presently in the United States, help
correct past excesses.
E GLOBAL INSIGHT E
The Power of Travel. Source:TIA
DISCUSSION QUESTIONS
1.
How does the tourism multiplier work?
2.
Discuss how tourism dollars flow in your home community.
Lundberg notes that as the tourist industry developed in an area, land prices rose sharply. 8 In a
particular underdeveloped area, the amount of investment in land constituted just 1 percent of the
total investment for a hotel project. By contrast, this ratio increased to 20 percent in an area where
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