Tourism and the Tourism and the EconomyEconomy

Tourism and the Global Tourism and the Global EconomyEconomy

Tourism has become one of the Tourism has become one of the fastest growing economic industries fastest growing economic industries in the world and has become one of in the world and has become one of the major players in international the major players in international commerce. commerce.

Money made in the global tourism Money made in the global tourism industry was $800 billion in 2005. industry was $800 billion in 2005. This is predicted to double in 2020.This is predicted to double in 2020.

Often it is the main source of income Often it is the main source of income for many developing countries. for many developing countries.

Examples of Countries that Examples of Countries that Depend on TourismDepend on Tourism

Amount of total economy – measured Amount of total economy – measured as gross domestic product (GDP) – as gross domestic product (GDP) – generated by tourism:generated by tourism: (pg.264 of textbook)(pg.264 of textbook)

•Maldives Maldives 37.3% of GDP37.3% of GDP•ArubaAruba 21.1%21.1%•Bahamas Bahamas 20.8% 20.8%•Barbados Barbados 14.6 % 14.6 %

Tourism and the Canadian Tourism and the Canadian EconomyEconomy

From the Government Revenue Attributable to Tourism, 2000 to 2006, Statistics Canada

How does tourism create How does tourism create income?income?

Tourist Arrivals

Tourists spending money

Tourism creates income by attracting visitors to experience the beauty and culture of a place, and having them spend money while they are there.

How does tourism create How does tourism create income?income?

Tourists spending money Export of a product made in the country

Money earned from the exported product

Exporting a product from a country will also create income. Therefore tourism spending is like an ‘export product’ for many countries.

Tourism industry impact on Tourism industry impact on the economythe economy

Money earned and people employed by the tourism industry often seems small

But in reality, there are many other

industries and working people that are

affected by tourism indirectly

Tourism industry impact on Tourism industry impact on the economythe economy

Direct Impacts – Money made by businesses that produce or provide products and services directly to travellers (ex. airline tickets, hotel rooms, tour guides etc.

Indirect Impacts – Money made by support businesses that provide goods or services to tourism (ex. fuel for airplanes, food purchased for restaurant kitchens, suntan lotion etc.)

Economic impact of tourism Economic impact of tourism in Ontarioin Ontario

Multiplying Economic BenefitsMultiplying Economic Benefits

Direct and indirect tourist spending lead to Direct and indirect tourist spending lead to greater economic activity > greater economic activity > multiplier effectmultiplier effect

$500

Tourist Hotel

$200

Hotel Staff Wages

$100 Rent

Multiplying Economic BenefitsMultiplying Economic Benefits

In many cases, money gained from In many cases, money gained from tourism does tourism does notnot go directly into the go directly into the local economy. It often will go into local economy. It often will go into the pockets of businesses the pockets of businesses outside the outside the local economylocal economy, such as to a foreign-, such as to a foreign-owned hotel company (ex. Club Med), owned hotel company (ex. Club Med), or to foreign-owned businesses that or to foreign-owned businesses that made imported products (such as made imported products (such as food or beverages).food or beverages).

We call this loss of tourism income: We call this loss of tourism income: LeakageLeakage

Example: Example: Tourism in the BahamasTourism in the Bahamas

Tourism does provide local Tourism does provide local jobs (ex. tour guides, boat jobs (ex. tour guides, boat operators)operators)

Bahamas has several foreign-Bahamas has several foreign-owned resorts so majority of owned resorts so majority of profit goes elsewhere profit goes elsewhere (leakage)(leakage)

Supplies such as food (ex Supplies such as food (ex meat) and drink (ex wine) are meat) and drink (ex wine) are often purchased off shore and often purchased off shore and foreign owners profit. foreign owners profit. (leakage)(leakage)

Atlantis Resort

Multiplying Economic Multiplying Economic BenefitsBenefits

Tourist destinations that are Tourist destinations that are most most self-sufficientself-sufficient – that is, – that is, those able to supply most of their those able to supply most of their own goods and services – have own goods and services – have the greatest multiplier effects.the greatest multiplier effects.

This is because they can keep This is because they can keep leakages to a minimum so that leakages to a minimum so that more money can be re-spent more money can be re-spent locally.locally.