Carry out the following steps. Step 1b - Calculate local earned income generated by the project Total visitor expenditures do not translate exactly into the amount of new local income that is generated by a development project. It is that gain in local income that is the most important indicator of economic impact to your community from the tourism development effort. Tourism affects local income by more than just the initial amount of money visitors spend. This is because each dollar tourists spend goes to local businesses and employees who in turn spend those additional dollars to purchase things for personal or business use.
Money is spent in more than one round.
Each time some of the money stays in the local economy buying locally-produced goods and services and a lot goes out to purchase goods and services not available locally. Think about whether most items purchased in your community are produced in the community with local inputs. The more your community buys locally, the greater will be your local income gain. Local income is calculated by using an income multiplier coefficient as described below and in more detail in the Concepts Glossary at the end of this handbook. The local income multiplier coefficient is applied to total visitor expenditures to show what portion stays in the local economy as additional income versus leaking outside.