Economic Impacts of Tourism
                     Economic Impacts Of Tourism
Introduction to Tourism
• Tourism is one of the most important components of the 
global economy. It generates billions of dollars in revenues 
and millions of jobs worldwide.
• It is considered by many communities, especially in 
emerging countries the only tool for development, and the 
only chance for increasing the quality of life. 
• Thus the tourism industry has stretched from seaside to 
mountain resorts and from small villages to big 
metropolises.
Source: tourismteacher.com
Traditional Tourism
• In the ‘60s and ‘70s the first studies regarding the 
impact tourism could have on regions or 
destinations have been focused on economics. This 
singular point of focus was based on two 501 facts:
• 1. The economic impact was easier to quantify and 
2. there was a general optimism regarding the 
benefits that tourism generates.
Source: tourismteacher.com
Economic Benefits 
• The benefits and costs generated by the tourism activity should 
be viewed from three sides: tourists, local community and 
authorities. On one side we have the tourists, who pay to enjoy 
a certain form of tourism. 
• On another side, we have the local community who enjoy the 
benefits from the tourism activity. 
• At the same time, they are the ones who have to face the 
hidden costs tourists leave behind. Last but not least, we have 
the government and the local authorities. 
Source: tourismteacher.com
The Argument
• Many argue that the tourism industry is the largest 
industry in the world. 
• While its actual value is difficult to accurately 
determine, the economic potential of the tourism 
industry is indisputable. 
• In fact, it is because of the positive economic impacts 
that most destinations embark on their tourism journey.
Source: tourismteacher.com
Negative and Positive Impacts
• There is, however, more than meets the eye in 
most cases. The positive economic impacts of 
tourism are often not as significant as anticipated.
• Furthermore, tourism activity tends to bring with it 
unwanted and often unexpected negative 
economic impacts of tourism.
Source: tourismteacher.com
Why Govt. Invest?
• Tourism brings with it huge economic potential for a 
destination that wishes to develop their tourism industry. 
• Employment, currency exchange, imports and taxes are just a 
few of the ways that tourism can bring money into a 
destination.
• There are a number of reasons for this growth including 
improvements in technology, increases in disposable income, 
the growth of budget airlines and consumer desires to travel 
further, to new destinations and more often.
Source: tourismteacher.com
Foreign Exchange Earnings
• Tourism expenditures generate income to the host 
economy. The money that the country makes from tourism 
can then be reinvested in the economy.
•  How a destination manages their finances differs around 
the world; some destinations may spend this money on 
growing their tourism industry further, some may spend this 
money on public services such as education or healthcare 
and some destinations suffer extreme corruption so nobody 
really knows where the money ends up!
Source: tourismteacher.com
Contribution to Govt. Revenues
• Direct contributions are generated by taxes on 
incomes from tourism employment and tourism 
businesses and things such as departure taxes.
• Indirect contributions come from goods and 
services supplied to tourists which are not directly 
related to the tourism industry.
Source: tourismteacher.com
Employment Generation
• Direct employment includes jobs that are 
immediately associated with the tourism industry. 
This might include hotel staff, restaurant staff or taxi 
drivers, to name a few.
• Indirect employment includes jobs which are not 
technically based in the tourism industry, but are 
related to the tourism industry.
Source: tourismteacher.com
Contributions to the Locals
• The government may reinvest money towards 
public services and money earned by tourism 
employees will be spent in the local community. 
This is known as the multiplier effect.
Source: tourismteacher.com
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