tourism destinations—Lalibela in Ethiopia and Luang Prabang town in Lao PDR— dramatically differ in the levels of spending on the local economy. Although 90 percent of the tourists visit Ethiopia’s main cultural site Lalibela, craft sellers earn only 1 percent of tourist revenues, while handicrafts are the second-most important sub-chain after the food and beverages sub-chain. The strong handicrafts sector, abundance of small locally owned enterprises, high quality of local goods and services and safety enabling tourists to walk around at any time of day and night are the secrets of success in Luang Prabang. Of around US$ 23 million spent by tourists in Luang Prabang every year, around 27 percent accrues to skilled and semi-skilled people.

Package tourism on Tunisia’s beaches creates many jobs and a market for local food— over 90,000 jobs are created in hotels, and an estimated 90 percent of hotels’ foods and beverages are made in Tunisia—but with weak linkages with artisans and vendors. In Tunisia, receipts per visitor are less than half that in Morocco and Egypt, with out-ofpocket spending by tourists in Tunisia of as little as US$ 8 per day. Some of the reasons for such low spending levels are the physical separation of resorts from towns, a limited range of high quality products offered by street vendors, and little incentive for beach tourists to leave hotels other than for organized excursions. In contrast, beach package tourism in The Gambia has very strong linkages with food markets and local shopping, and tourists’ out-of-pocket expenditures there average US$ 53 per person per day and US$ 574 over a typical 11 day-long stay—a high level both internationally and compared to the cost of the package. Local initiatives have helped boost these linkages to the local economy, such as an agricultural supply chain project that has boosted the local fruit and vegetable supply, a project to train informal sector operators (juicers, crafters, guides) and hotels to upgrade the quality of services and sales levels.

Tourism development can become a particularly important source of off-farm income in rural and peripheral areas in Panama, and for some population groups it may exceeds the importance of agricultural activities. In Panama, income from agricultural production contributes only between around 10 and 20 percent to total household income in rural areas, with the exception of indigenous areas where it is close to a third of total income; and nearly 40 to 50 percent of total income is from skilled and unskilled labor (Appendix Table 3).<sup>10</sup> By creating new employment opportunities and through the effect on wage levels, the tourism sector is likely to have a significant impact on the local economy, particularly high for the poor and in the indigenous communities. In terms of employment in rural areas, dependence on agriculture is highest among the poor and for indigenous households; employment in the services sector (large and small-scale commerce and repairs) tends to be higher among the non-poor (Appendix Table 4). Since these types of services will be affected by tourism growth, tourism can have significant indirect benefits for the poor.

# **5. Methodology and Data Sources**

The true size of the tourism sector, more accurate than a partial picture provided by national accounts, can be measured using Input-Output (I-O) and Tourism Satellite

> 10 Some of this is agricultural labor.

7