Contributions of Tourism to Economic Development
Economic Development and Tourism
Tourism has been seen as an important form of economic development.
It also promoted as an agent of an economic and social change
A service based industry capable of creating employment and income.
An important form of economic activity
The impact and role of tourism will vary from region to region.
Destinations can rise and fall in popularity.
Understanding Economic Impacts
Tourism in the Global Economy
1997 2007 Growth Jobs 262 Million 383 Million 68.4% GDP 3,3 Tr. USD 6,3 Tr. USD 52.4% Investments 801 Billion USD 1,5 Billion USD 53.4 % Taxes 716 Billion USD 1,3 Billion USD 55.1 %
1995 2000 2006 2020 Arrivals 567 million 698 million 842 million 1.560 billion Receipts 372 billion 500 billion 715 billion 1.600 billion Jobs 212 million 262 million ? 340 million (2005) Taxes 166 billion ? ?
Tourism in the National Economy
Tourism is a significant economic contributor to a nation's GNP.
Tourism impacts on KENYA's economy
Foreign exchange earnings from tourism are a significant percentage of gross receipts
Kenya 90%, Tunisia 6 %, Maldives 18 %, Barbados 32%.
Impacts of Tourism on Employment
1 in 9 workers worldwide (212 million people)
Tourism payroll $ 1.7 trillion (10.3 % of total payroll)
Provides direct and indirect employment
Year Direct Employment
% of Total Indirect Employment % of Total
Total 1991 4.9 5.3 10.2 1994 5.1 5.5 10.6 2005 5.4 5.9 11.3
Measuring Tourism Economic Impacts
Identifying Tourism Activity
Encompasses private and public sectors-transportation, accommodations, retail, food and beverage, reception, and convention centers.
Difficult to distinguish tourism activity from other economic activity.
Common standards are vital to make comparisons
Difficulty measuring industry: conflict on visitors-non-visitors
Tourism activity is best defined by a demand characteristics.
Structure of the Tourism Industry
Type of companies
Direct, Indirect and Induced Benefits
Direct tourist expenditures for goods and services
Re-spending of tourism expenditures expenditure, such as payments to employees, payments to suppliers.
Additional income spending within a tourism destination, such as consumption of employees.
Multiplier Model of Tourism Revenue Turnover
Leakage: Tourism receipts leave the destination's economy.
(Direct expenditures + Indirect Expenditures + Induced Expenditures) / Direct expenditures
Direct expenditures..... : $ 500
Indirect expenditures...: $ 300
Induced Expenditures. : $ 150
If direct expenditures $ 700, total effect will be $700 x 1.9 = $ 1330.
Analyzing industry relationships by tracking the flow of goods and services in an areas economy.
Sales of the total output of each sector
Total inputs from other sectors
Tourism Satellite Accounts
A satellite account re-organizes the national system of accounts to identify the contribution of tourism to a state or national economy.
Identify the benefit enjoyed by various tourism sectors of the economy and employment, income, taxes, and other benefits that flow from these sectors.
Provide a comprehensive picture of the size and scale of tourism in the country, thereby helping governments and businesses asses the value of tourism to the economy.
Cost Benefit Analysis
Potential Economic Benefits of Tourism
Increased income and standard of living
New employment opportunities
Increased tax base
Improved infrastructure and facilities
Increased resources for the protection of natural and cultural resources.
Increased cost of living for residents
Increased traffic and congestion
Negative impact on cultural and natural heritage resources
Leakage of revenue and dependency on imported goods and services
Monitoring Economic Impacts
Overall economic development of the destination
Analysis of the social, cultural, and environmental costs and benefits of tourism