Tourism’s positive impacts in society and at the destination

Tourism’s negative impacts at the destination

The economic impact

of tourism

The economic impact

of tourism

The dimension of tourism worldwide has an economical, social, cultural and environmental influence on

tourism destinations (Mathieson and Wall, 1982), and the influence can be

positive and/or negative

■ Income generation

■ Employment generation

■ Tax revenue generation

■ Balance of payment effects■ Economic disadvantages

■ Improvement of the economic structure of a region

■ Encouragement of entrepreneurial activity

Six major factors govern

the magnitude of the

economic impact:

■ The volume and intensity of expenditure

■ The level of economic development in the destination

■ The size of the economic base of the destination

■ The degree to which tourist expenditures recirculate within the destination

■ The degree to which the destination has adjusted to the seasonality of tourist demand (Mathieson and Wall, 1982).

■ The nature of the main facility and its attrac-tiveness

Comparative advantages

of tourism

1. Natural resources, culture and cultural heritage2. Human resources3. Capital and infrastructure resources.

■ The types of suppliers and producers with which the industry’s demands are linked■ The ability of local suppliers to meet these demands■ The historical development of tourism in the destination area■ The type of tourist development.

economic

Disadvantages

Cost inflation is a consequence of a number of factors:■ Peak management■ High taxes on some tourist ■ products and services.

Tourism and inflation■ Seasonal demand■ Inelastic supply■ An insufficient market reaction (certain resorts or firms profit from an eco-nomic rent)■ Imported inflation due to international arrivals (impact of hard currencies and increase of the money mass).

Balance of payments

and tourism

The real tourism

external account

The magic tourism

multiplier

There are 3

different effects

1. The direct effect of a change in final demand refers to first-round effects

2. The indirect effect recognizes the need for an industry – subject to a change in final demand for its product – to make purchases from other

industries within an economy in order to produce its output

3. The induced effect occurs as income levels rise throughout the economy as a result of the initial change in final demand,

and a portion of the increased income is re-spent on final goods produced within the local economy. This additional local

expenditure, arising from increased income, will generate further reper-cussive effects. The addition to total output,

income, employment and govern-ment revenue caused by this re-spending of local income is known as the induced effect.

Determining factors

1. The saving quota of the population of the destination2. The import quota, or the share of tourism expenditure that is spent to imported products

3. The tax quota, or the share going to the public sector.4. A fourth possible factor is the supply constraints in the economy

Types of

multipliers

1.Orthodox income multipliers■type I – (direct+indirect income)/direct income■type II – (direct+indirect+induced income)/direct income

2. Unorthodox income multipliers■type I – (direct+indirect income)/change in final demand (additional expenditures)■type II – (direct+indirect+induced income)/change in final demand (additional unit of spending).

Tourism Income

Multiplier

Input-output

analysis

The Tourism

Satellite Account

approach

measurement of

employment

generation

1. The supply approach■tourism-related sectors■minimum requirement method

2. The demand approach■the national accounts method■the tourism satellite account approach■the Henderson–Cousins method■the input–output approach■the multiplier method.

The input–output

approach

The multiplier

method

Special

characteristics

of employment

1. Tourism is a growth sector2. Tourism is a sector with a high degree of semi-

skilled and so-called unskilled workers3. Tourism is also a sector with a high percentage of

part-time jobs4. The high share of female workers

5. The sector also has many small firms and self-employed

6. The seasonality of employment7. Employment in tourism is growing

Cost–benefit analysisCost–benefit analysis takes these crowding-out effects into account through the application of the ‘with and without’ and not the ‘before and after’ principle (Vanhove, 1976).

Crowding-out’ effectsMajor events always involve ‘crowding-out’ effects, expenditure switching and retained expenditure. Big events are very often confronted with crowding-out effects, when traditional visitors prefer not to visit the region where the event takes place for reasons of over occupation, higher prices, etc. (Scherly and Breiter, 2002)

The impact of

events