Video #14 Economic Impacts of Tourism (12 narrated slides, 10:53)
Channel: Stan McGahey
Date: 2015-03-29

Link: https://youtu.be/6WQJnuuFThE
Slide #1: Welcome to video #14 in my series of presentations that will attempt to “demystify tourism”. I’m Dr. Stan McGahey, the creator and narrator of the videos. Slide #2: Most experts agree tourism is a mega-industry, made up of the airline industry, attractions industry, hotel industry, restaurant industry, cruise industry, etc.  International tourism arrivals have topped one billion per year, and tourism receipts are major parts of the economy for virtually every country in the world. It is a leader in world GDP, employment, and foreign exchange earnings. Slide #3: Tourism is labor-intensive, responsible for 9% of all jobs in the world. This includes, direct employment in its four operational sectors, and indirect employment, or jobs that exist, because tourism exists. Slide #4: Tourism means, outsiders visit a place, purchase its tourism products, and then go home, leaving the destination with more money than it had before they visited.  It’s a bit like 20 people in a room all day buying and selling from each other.  At the end of the day, when they count all the money, it totals the same, or less, if somebody left the room to buy something not available in the room.  But, if they were visited by 3 or 4 people, who spent money on their goods and services, they would have more money at the end of the day. Slide #5: Governments need tax revenue to pay for basic services. Tourism creates special taxes, such as those on hotel rooms, airline tickets, and car rentals.  It’s important that tourism’s special taxes go into a dedicated fund that can only be used for tourism projects that enhance the health of the tourism industry. Slide #6: If tourism is often “rich people, visiting poor people”, then that destination infrastructure needs upgraded.  When tourism spreads into pristine areas, it needs to be developed from scratch. And, in developed areas, the increase in tourism requires infrastructure enhancements. Infrastructure important to tourism includes roads, airports, seaports, and utilities, such as water, sewage, electricity, telecommunications, and Internet. It is a government responsibility, but residents should also benefit from its use. Slide #7: Destinations have exports when they host foreign tourists. A business in one country is still selling its product, (a tourism experience) to someone, from another country. The difference is instead of shipping the product to the consumer, in tourism, the consumer travels to the product. This is called an invisible export. Slide #8: Tourism has an income multiplier effect. When money is earned by a destination, it circulates, as many people use it to buy additional products. So, its actual value is more than its face value. This occurs through direct, indirect, and induced spending. Larger destinations that buy products they produce have higher multipliers, because the money keeps circulating much longer, while smaller countries that import many products have much lower multipliers. Slide #9: Leakage causes money to stop circulating and leak from the economy. It comes in many forms. Some are necessary to attract and satisfy tourists.  Common forms are imported construction materials, imported products for tourists, salaries of foreign workers and profits of foreign investors, promotions in source markets, tax exemptions, profits of foreign hotels and airlines, and fees paid to travel agencies and tour operators. In some Caribbean countries as much as 80% of tourism spending leaks from the economy. Slide #10: Tourism is not considered an industry by the National Accounts System. To measure its economic impact within individual countries, the Tourism Satellite Account was created.  It enables a country to analyze tourism alongside other sectors of its economy and decide the level of government support it should receive. Slide #11: Tourism has several other potential negative impacts. Destinations can become overly-dependent on tourism.  They incur so much debt, they must continuously feed the machine to pay for items such as new airports, loans for resorts, and land redevelopment.  Slide #12: Tourism is an enormous economic activities coveted by destinations around the world for its jobs and income. In Los Angeles, tourism officials report that every 250 tourists creates one new job. Tourism has the potential to provide ongoing benefits to communities of all sizes, as it’s often developed by local entrepreneurs, who operate small businesses, including ones that are family-run.  Now, I invite you to watch Video #15: Socio-cultural Impacts of Tourism.  Thank you!