Transcript Tourism and Economics

Tourism and the
Economy
Tourism and the Global Economy
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Tourism has become one of the fastest growing
economic industries in the world and has
become one of the major players in
international commerce.
Money made in the global tourism industry was
$800 billion in 2005. This is predicted to double
in 2020.
Often it is the main source of income for many
developing countries.
Examples of Countries that Depend
on Tourism
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Amount of total economy – measured as gross
domestic product (GDP) – generated by
tourism: (pg.264 of textbook)
•Maldives
•Aruba
•Bahamas
•Barbados
37.3% of GDP
21.1%
20.8%
14.6 %
Tourism and the Canadian Economy
From the Government Revenue Attributable to Tourism, 2000 to 2006, Statistics Canada
How does tourism create income?
Tourists spending money
Tourist Arrivals
Tourism
creates
income by
attracting
visitors to
experience
the beauty
and culture of
a place, and
having them
spend money
while they are
there.
How does tourism create income?
Tourists spending money
Export of a product
made in the country
Money earned from
the exported product
Exporting a product from a country will also create income.
Therefore tourism spending is like an ‘export product’ for
many countries.
Tourism industry impact on the
economy
Money earned and
people employed by
the tourism industry
often seems small
But in reality, there are
many other industries
and working people
that are affected by
tourism indirectly
Tourism industry impact on the
economy
Direct Impacts – Money
made by businesses that
produce or provide products
and services directly to
travellers (ex. airline tickets,
hotel rooms, tour guides etc.
Indirect Impacts – Money
made by support businesses
that provide goods or
services to tourism (ex. fuel
for airplanes, food purchased
for restaurant kitchens,
suntan lotion etc.)
Economic impact of tourism in
Ontario
Multiplying Economic Benefits
Direct and indirect tourist spending lead to
greater economic activity > multiplier effect
$500
Tourist
$200
Hotel
$100
Hotel Staff Wages
Rent
Multiplying Economic Benefits
In many cases, money gained from tourism
does not go directly into the local economy.
It often will go into the pockets of
businesses outside the local economy, such
as to a foreign-owned hotel company (ex.
Club Med), or to foreign-owned businesses
that made imported products (such as food
or beverages).
We call this loss of tourism income: Leakage
Example:
Tourism in the Bahamas
Atlantis Resort
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Tourism does provide local jobs
(ex. tour guides, boat operators)
Bahamas has several foreignowned resorts so majority of
profit goes elsewhere (leakage)
Supplies such as food (ex meat)
and drink (ex wine) are often
purchased off shore and foreign
owners profit. (leakage)
Multiplying Economic Benefits
Tourist destinations that are most selfsufficient – that is, those able to
supply most of their own goods and
services – have the greatest multiplier
effects.
 This is because they can keep leakages
to a minimum so that more money
can be re-spent locally.
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