Travel Reference
In-Depth Information
measure of bene
ts or possible detriments to a community. The main economic phenomena described
are various multipliers, balance of payments, investments, tax consideration, employment, economic
impact generators, travel expenditures, dependence on tourism, price and income elasticity as related
to buying travel experiences, and optimization. The chapter also discussed a new method of measuring
tourism economic impact, satellite accounting.
Many people do not understand or appreciate the economics of tourism. The following list
summarizes the principal economic effects:
1.
Expenditures by foreign visitors in one
'
s country become exports (mainly of services). The
economic effects are the same as those derived from exporting tangible goods. If there is a
favorable exchange rate (foreign currency buying appreciably more of one
'
s own country
'
s
currency), the country that has the devalued currency will experience a higher demand for visitor
services than before devaluation.
2.
If citizens of one country spend money in foreign countries, these expenditures become imports
for the tourists
'
originating country.
3.
Sums of the values of national exports and imports are used when calculating a nation
'
s balance
of payments. A positive balance results when exports exceed imports, thus increasing a nation
'
s
gross national product (GNP).
4.
Tourism developments typically require large investments of capital. Thus, local economies
where the developments take place are stimulated by such investments.
5.
Tourists pay various kinds of taxes directly and indirectly while visiting an area. Thus, tax revenues
are increased for all levels of government.
6.
Because tourists usually spend more per day at a destination than they do while at home, these
extra expenditures may cause in
ationary pressures and rising prices for consumer goods in the
destination area.
7.
Tourism expenditures injected into the economy produce an income multiplier for local people.
This is because of the diversity of expenditures made by those receiving tourist payments. Tourist
receipts are used to buy a wide variety of goods and services over a year
'
s time. The money
turnover creates additional local income.
8.
The amount of income multiplication, however, will depend on how much leakage takes place.
Leakages are a combination of (1) imported goods and services purchased by tourism suppliers,
and (2) savings made of tourist receipts not loaned to another spender within one year of receipt.
Thus, the more tourist goods that are supplied locally, the higher will be the multiplier.
9.
Income multiplication caused by tourist expenditures necessitates hiring more people. Thus, they
also affect an employment multiplier.
10.
As increased spending produces more
financial transactions, they create a transactions multiplier.
These are of particular interest to governments that have a sales or value-added tax on such
transactions.
11.
As a tourist area grows, more capital is invested in new facilities. This results in a capital multiplier.
12.
It is an unwise policy for a society to place too much dependency on tourism as a subsistence
industry.
13.
Although tourism often has an excellent potential in economic development, it is not a panacea
for economic ills. Its economic bene
ts should be optimized rather than maximized.
14.
We believe that tourism products are mainly price elastic, meaning that as prices rise, the
quantity demanded tends to drop.
15.
In general, we believe that tourism is income elastic. This means that as family income rises, or a
particular market
'
s income rises, and tourism prices do not rise proportionally, the demand for
travel to that particular area will increase.
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