E CONOMIC I MPACT OF TOURISM

E CONOMIC B ENEFITS

Helps diversify and stabilize the local economy.

Provides governments with extra tax revenues each year through accommodation and restaurant taxes, airport taxes, sales taxes, park entrance fees, employee income tax etc..

Creates local jobs and business opportunities. These include those jobs directly related to tourism (hotel and tour services) and those that indirectly support tourism (such as food production and housing construction).

The multiplier effect:

Brings new money into the economy. Tourist money is returned to the local economy as it is spent over and over again. Helps attract additional businesses and services to support the tourist industry. Tourist multiplier effect

Is labour-intensive. Earns valuable foreign exchange.

E CONOMIC C OSTS

Tourism development of infrastructure (airports, roads, etc.) can cost the local government a great deal of money. May inflate property values and prices of goods and services. Leakages:

If outside interests own the tourism development, most of the economic benefits will leave the community. Considerable amount of foreign exchange revenues leaks back out of the destination countries for tourism-related imports.

Employment tends to be seasonal. Workers may be laid off in the winter season.

Many jobs in the tourism industry are poorly paid. This is a particular problem in LEDCs where the local workforce lack the skills to fill the better paid management positions.

Tourist numbers can be adversely affected by events beyond the control of the destination e.g. terrorism, economic recession. This is a big problem in LEDC countries dependent on tourism.

Tourism follows a "product life cycle", with a final stage of decline, where the destination no longer offers new attractions for the tourist, and the quality has diminished with the rise of competition and tourist saturation.

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