MODULE 5

Week 1-2

Module 5: Positive and Negative Impact of Hospitality & Tourism

Learning Objectives

1. Understand how the tourism industry affects the environment;

2. learn and understand the many benefits tourism brings to the economy; and
3. learn and understand the positive and negative impact of hospitality industry.

Content

Introduction

Every business face industry-specific challenge that make it tough to operate in a particular
sector. Conversely, every business has the opportunity to win foot traffic and repeat business,
differentiate themselves from the competition and make a decent profit, when they face these
challenges head on.

Despite the broad reach of the hospitality industry, we can identify five core areas that have
the potential to chew up or elevate any small business operating in this sector. These are:

1. Competition.
2. Reputation management.
3. Staff retention and recruitment.
4. Sustainability.
5. Technology.

Relentless Competition From New and Existing Players

The number of restaurant units in the U.S. reached 647,288 in 2017, which illustrates the
sheer number of competitors that you're up against in this one small niche of the F&B sector.
Significantly, while the number of restaurant chain units is growing year-on-year, independents
are going under at an alarming rate. Customers, it seems, prefer the lure of the known in their
dining experiences.

That's the bad news.

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On the plus side, consumer tastes are changing. Increasingly, customers are looking for an
"experience" rather than just a meal or a stay, and this provides an opportunity for independent
small business to emphasize their point of difference compared to the uniformity of the chain
operators. For example, you could:

• Be on site regularly. Being physically present show customers the people behind the
brand and allows you to engage with guests in a way that's authentic and unscripted.
• Promote an ever-changing menu of local food from local farmers. Local sourcing is
generally not feasible for multi-unit restaurant chains. This type of offer appeals to
adventuresome guests who enjoy staying in tune with dining trends.
• For the lodging sector, offer services such as free Wifi, in-room toiletries, dry cleaning
or 24/7 check in to head off budget competitors like Airbnb and offer guests the most
bang for their buck.
• Focus on service quality. The beauty of being an independent is you can offer old-
fashioned personal service, with no long waits and beepers telling customers when their
table is ready.
• Look for partnership opportunities with other hospitality businesses offering tours,
walks or other fun activities in the area. Offering discounts to nearby attractions might
encourage people to stay at your hotel.

Whatever the business, there are tons of ideas for creating a great experience like this. Too
many small businesses don't take the time, and wonder why they're losing out to the
competition.

Customer Expectations and Reputation Management

Having so much choice available to them makes customers demanding and critical – and in
the reputation economy, the discontented have the loudest voices. Compared to positive
customer experiences, poor experiences result in two to four times as many nasty reviews
on TripAdvisor. For potential guests, reading a negative online review can outweigh other
decision-making factors, including price, when they are deciding where to eat or stay.

This means that, to survive in hospitality, you must focus on the total satisfaction of your
guests. That includes listening to customer complaints and taking them seriously. For example,
if a guest complains because the noise from a wedding party is keeping him awake, then you
need to personally apologize. Gestures such as offering the guest a 50 percent refund, a free
stay in the future, or having a nice bottle of wine sent up to his room can go a long way toward
bringing a disgruntled customer back on side.

Hospitality operates in a world where one customer's experience can be magnified across
thousands of potential customers via online review sites – there's no getting away from this
fact. But for small businesses who manage their reputation well, it provides a real opportunity
to shine. This is why many business owners go into hospitality in the first place: a passion for
delivering great customer experiences.

Staff Retention and Recruitment

Unsociable hours, regular "on-calls" – limited career advancement and low pay are just some
of the disadvantages of working in the hospitality industry – and the reason why it's so hard to
recruit and retain good staff. There's an average turnover rate of 73.8 percent in the hotel and
motel industry, according to the Bureau of Labor Statistics, which stands in stark contrast to
the 10 to 15 percent rate considered "healthy" by most HR experts.

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For small businesses in particular, turnover is damaging. There's an expense attached to job
recruiting, orientation and training, and it's possible that an unhappy employee will provide a
substandard service to customers, which has a ripple effect on your reputation and customer
loyalty.

People are the beating heart of the hospitality industry. No matter what service you provide, or
what niche you operate in, you need to have a dream team of polite and friendly employees
who are dedicated to seeing customers come back for more. There are various ways you can
achieve this, including:

• Getting creative with your work schedules so that shift patterns strike a good work/life
balance and help staff meet their family commitments.
• Rewarding staff for delivering exceptional service to customers
• Offering incentives for employee referrals –

your staff may know people who would be great at the job, probably more than you do *
Offering good pay and benefit packages.

Sustainability and the Social Impact of the Hospitality Industry

The United Nations declared 2017 as the "International Year of Sustainable Tourism for
Development" putting ethical travel at the front of customers' minds. For many countries,
tourism is a major source of income. At the same time, irresponsible tourism can have a
damaging effect on local communities and the environment when resources are depleted.

But what does this mean for the hospitality industry?

For independent businesses who do not have to worry about maintaining consistency across a
chain of establishments, it means there's a tremendous opportunity to think morally and
responsibly when it comes to traveling. You have more latitude than chain operators to
become "green," reduce waste and have a positive impact on your surroundings. Here are
some ideas of how the tourism industry can achieve this:

• Use locally sourced and organic food in restaurants.

• Reduce the use of plastics.
• Install water-conserving shower heads and toilets.
• Encourage guests to reuse towels, sheets and bedding.
• Install energy saving lighting and heating.

While some of these measures may be costly, they could help to set up a great selling point for
your organization as a sustainable, ethical business.

Positive and Negative Impact of Technology on the Hospitality Industry

Technology continues to disrupt most industries, and hospitality is no exception. Whereas

once a customer would have to physically visit a hotel or restaurant to form an opinion of it,
today's customers can check reviews and ratings, compare room rates and make a purchasing
decision – all with the swipe of a smartphone. Customer want to (virtually) try before they buy.
If you're not empowering them to do this, then you may be missing out.

The good news is, hospitality businesses that stay up to speed with technology can open up a
range of marketing opportunities that cost an awful lot less than traditional advertising.
Engaging with you target market on social media is completely free and it's a great way to
showcase your business, share discounts and offers, and differentiate yourself from the

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competition. Instagram and Pinterest are essential for sharing images if your room decor and
menu items look glorious!

Digital messaging solutions like text or SMS also offers a fresh channel for customer
engagement, sending out loyalty offers and collecting feedback.

Offering a live chat option on your website is a good way to answer customer queries and
guide website visitors toward a purchasing decision. You could even create an app to enable
online restaurant bookings, hotel check-in and virtual keycards. Some apps allow guests to
schedule spa appointments and book local tours during their stay. Especially for Millennials
and Generation Z who are used to booking taxis and making meal reservations on an app,
having this kind of experience is almost expected. Look for drag-and-drop app makers which
allow you to create an app without having any background in code.

The Bottom Line

Hospitality is a competitive industry, and that makes it a tough industry to crack. With so many
options, consumers can get very confused with what is on offer and whether your
establishment is going to meet their wants and needs – that's why online review sites are so
pervasive, and why they have the potential to make or break a small operator in this industry.

But for every challenge there's an opportunity. With a customer-centric business model, a
stable and friendly team, the support of technology and an eye on the ethical impact of your
business, you can create a sustainable and profitable hospitality business that has its place in
the economy.

Benefits and Impact of Tourism

The World Tourism Council estimates that travel and tourism provide employment for more
than 100 million people word wide (that's one in sixteen workers) and is responsible for over
7% of worldwide capital investment.

Multiplier Effect

A tourism dollar is a new dollar injected into the local economy. A percentage of this new dollar
is spent in the community by the recipient and this dollar is spent and re-spent creating a
multiplier effect. The newer tourism dollars entering a local economy and the longer the
percentage is retained locally, the greater the economic benefit.

The formula for tourism multiplier is:

K=Y/E

Where:

K=the multiplier

Y=the change in income generated by E

E=the change in expenditures (the initial sum of money spent by the tourist)

The size of the multiplier depends on the extent to which the various sectors of the economy
are linked to one another. When the tourism sectors are linked heavily with other local

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economic sectors for goods and services, there will be a smaller tendency to import and the
multiplier will be greater than if the reverse were true.

Employment Opportunities

Tourism is a labor-intensive industry and creates many job opportunities, especially for young
people and part-time and full-time workers. In the tourism hospitality and recreation industries,
alone there are 50 categories of employment and approximately 200 classifications of
occupations.

Diversification

Tourism can provide diversification, making the local economy less reliant on a traditional base
e.g. agriculture and mining. This particularly significant for regional rural communities.
Opportunities for Business Tourism creates opportunities for the establishment of new products,
facilities and Services and expansion of existing businesses which would not otherwise be
justified solely on the resident population.

Preservation of the Environment

Tourism highlights the need for proper management and, through effective policies and planning,
can ensure that the environment, heritage area is preserved.

The Catalyst for Residential Development

In many places visitors who initially travelled to particular areas as tourism, have relocated to
those areas to become residents and acquire a better quality of life.

Improved Transport Service

Tourism can stimulate the establishment of new and improved transport services to and within
a regional area.

A Broader Social Outlook

Tourism provides the opportunity for residents to interact with other people and cultures and
brings new ideas into the community.

How Tourism Benefits Communities

Tourism is one of the most effective ways of money redistributing wealth, by moving into local
economies from other parts of the country and overseas. It brings income into a community that
would otherwise not be earned.

Tourism undoubtedly is the best means to spread and promote peace not only among nations
but more precisely within the country to create better understanding and unity among its citizens.
One can never understand the culture of people from other regions of the country without
spending time in such destination. whatever is taught not in the school would definitely suffice
to the understanding of the students without actual immersion to the culture of the particular
region particularly those who belong to the so-called minority.

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Economic benefits resulting from tourism can take a number of forms including:

1. Jobs

Employment may be associated directly, such as tour guide or managerial positions; or

in supporting industries like food production or retail suppliers.

Economic Impact

The economic impact of tourism on a destination area is enormous since it provides a

source of income, employment and foreign exchange. Tourist expenditures have direct
and secondary effects on the economy of a country. The tourism multiplier is affected by
leakages or the value of the services that must be imported to lower multiplier effects; the
less leakages, the greater the multiplier effect.

Leakage is the value of goods and services that must be imported to service the needs
of tourism. To estimate the total economic impact on an area, imports must be subtracted
from the income generated by visitors.

2. Increase Spending

Increased spending in the community generated from visitors or tourism businesses can
directly and indirectly promote the viability of local businesses.

3. Economic Diversification

Tourism operators can play a role in highlighting the broad prosperity that tourism can
bring to a community and will contribute to a greater understanding and respect for the
value of tourism.

Economic diversification is, for many communities, an insurance policy against hard
times. By offering an additional means of income, tourism can support a community when
a traditional industry is under financial pressure, particularly where that community relies
heavily on a single industry.

BENEFITS OF TOURISM CAN BRING TO OUR ECONOMY

The main positive economic impacts of tourism relate to foreign exchanges earnings,
contribution to government revenues, generation of employment and business opportunities.
Some of the most economy that tourism can bring along are mentioned here.

1. Foreign Exchange Earnings - tourism expenditures, the export and import of all related
goods and services generate income to the host. Tourism is the main source of foreign
exchange earnings.
2. Employment Generation – creates local jobs and business opportunities. The expansion
of international tourism has led to significant employment creation. Tourism can generate
jobs directly through hotels, restaurants, taxis, souvenir sales and indirectly through the
supply of goods and services needed by tourism-related businesses. According to the
world tourism organization tourism represents around 7% of the world employees.
3. Contribution to the Government Revenue

The rapid expansion of international tourism has led to significant employment creation.
For example, the hotel accommodation sectors alone provided around 11.3 million jobs
worldwide (1995). Provides extra tax revenues each year through accommodation,

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 restaurant taxes, airport taxes, sales taxes, and park entrance fee and employee income
tax. Government revenues from the tourism sector can be categorized as;

a. Direct Contribution - is generated by taxes on incomes from employment and

tourism businesses.

b) Indirect Contribution - is derived from the taxes and duties on goods and services
supplied to tourist, for example, taxes, souvenirs, alcohol and other tourist product.

4. Tourism can induce the local government to improve the infrastructure by creating better
water, sewage system, roads, electricity, telephone and public transport network. All this
can improve the quality of life for residents as well as facilitate tourism.

Part of the tourism income comes from the informal employment, such street vendors,
and informal guides. The positive side of the informal or unreported employment is that
the money is returned to the local and has economy a great multiplier effect as it is over
and over again.

Tourism can contribute directly to the conservation of sensitive areas and habitats.
Revenue from park-entrance fees and similar sources can be allocated specially to pay
for the protection and management of environmentally sensitive areas. Some government
collects money in more far-reaching and indirect ways that are not linked to specific parks
or conservation areas. User fees, income taxes, taxes on sales or rental of recreation
equipment and license fees for activities such as hunting and fishing can provide
governments needed to manage natural resources.

ECONOMIC BENEFITS

• Helps diversify and stabilize the local economy.

• Provides governments with extra revenues.

Each year through accommodation and restaurant taxes, airport taxes, sales
taxes, park entrance fees, employee income tax and etc.

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

Farmers Markets

The popularity of farmers markets is increasing becoming a key driver of economic development
in regional areas. Activities such as visits to farms and markets, fruit farmers picking and
agricultural farm accommodation may provide important supplemental activities to struggling
rural areas. Some of the benefits of Markets include:

• Showcase local produce and local products;

• Encourage visitors from other areas;
• Showcase the local and regional areas;
• Allow for community events to be incorporated;
• Provide distribution opportunities for small businesses;
• Contribute to the valuable economic development of the area as money is spent
locally.

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Infrastructure

Infrastructure including roads, parks, and other public places can be developed and improved
both for visitors and local residents through increased tourism activity in a region.

Social Benefits

Community identity and pride can be generated through tourism. A positive sense of community
identity can be reinforced and tourism can encourage local communities to maintain their
traditions and identity.

ENVIRONMENTAL BENEFITS

Providing in financial or in-kind for the conservation of the local environment and natural
resources will enhance the reputation of any tourism business. Tourism, particularly ecotourism,
can place a greater focus of the conservation of natural resources through the recognition of
their importance to visitor experiences and their economic value to the local community.

Tourism provides a substantial proportion of the money that supports our heritage and culture,
and is one of the main focuses for economic regeneration in many areas. it makes an important
contribution to the quality of life, supporting facilities and Services of the whole community.

1. Conservation of Important Natural Areas -areas such as mountains, caves and coral
reefs are visited and appreciated both by domestic and foreign visitors.
2. Biological Conservation- Tourism has also been instrument in protecting significant
plants and animal species.
3. Improvement of Environmental Quality and Enhancement of the Environment-the
self-interest of tourist establishment to make themselves attractive.
4. Improvement of Infrastructure-successful tourist industry is one that bring appropriate
infrastructure.
5. Increase of Environmental Awareness-can bring in fresh environmental information

Benefits in Making Community Engagement Work

Working with local communities does not necessitate complex and costly activities Practical
examples of everyday activities that build win-win partnerships with local communities include:

Supporting the Local Community

• Purchase locally whenever possible - food, fuel, equipment, souvenirs and services;
• Employ local residents;
• Host community functions;
• Sponsor local events, sporting teams, etc.;
• Sponsor local charities or community-based organizations;
• Support community group through the provision of clerical and business service support.

Educational Partnership

• Provide work experience opportunities for local residents, particularly students.

• Make specialist equipment or staff expertise available to local groups.
• Speak at local functions and educational institutions.
• Hold 'open days' for the community.

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Responsible Product Development and Marketing

• Incorporate opportunities for tourists to support local businesses, events organizations

into local products.
• Provide positive profile of the local community in your interpretive program and
promotional materials.
• Provide locals with regular information updates on your business, photo opportunities and
media opportunities.

Infrastructure

Provision of maintenance of:

• Public toilets
• Visitor information centre
• Tourist information
• Maps
• Signage Roads
• Public parks and other public spaces

IMPACTS OF TOURISM THAT CAN BRING TO THE ECONOMY

Tourism has a variety in economic impacts. Tourism contributes to sales, profit, jobs, tax
revenues, and primary tourism income in an area. The most direct effect occurs within the
sectors lodging, restaurant, transportation, amusement and trade. Through secondary effects,
tourism affects most sector of the economy an economic impact of tourism activities normally
focuses on changes and in sales, income employment in a region resulting from tourism activity.

The economic impact of tourism to a destination is commonly underappreciated and extends

well beyond core hospitality and Economic offers transportation sectors. Tourism a solution to
destination marketing organizations (DMO's) and to industry associations profile of the tourism
as an economic engine.

Economic Leakages

Several studies have pointed out that the tourism industry generally exhibits a high degree of
leakage, where money spent in a particular community or flows outside and doesn't benefit
country the local population. Leakages are by generally created foreign ownership, the need to
import goods (typical luxury food items, alcoholic beverages), international marketing cost,
interest payment on foreign loans and the payment of the franchise and management fees to
foreign companies.

However, leakages don't necessarily need to be foreign. Rural communities often complain of
leakage of tourism receipts back to metropolitan areas. Admittedly in the Burmese context, hotel
economic leakages back to the developed world are low with international class hotels struggling
to keep their books in the black, and it is still better to support one of these enterprises than one
owned and operated by the government.

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Economic Cost

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

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

Tourism Multiplier Effect

Tourism not only creates jobs in the tertiary sector, it also encourages growth in the primary and
secondary sectors of industry. This is known as the multiplier effect which is in its simplest form
is how many times money spent by a tourist circulates through a country' s economy.

Money spent in a hotel helps to create jobs directly in the hotel, but it also creates jobs indirectly
elsewhere in the economy. The hotel, for example, has to buy food from local farmers, who may
spend some of this money on fertilizer or clothes. The demand for local products increases as
tourists often buy souvenirs, which increases secondary employment.

The multiplier effect continues until the money eventually leaks from the economy through
imports-the purchase of goods from other countries.

THE TOURIST MULTIPLIER EFFECT

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The above conceptual presentation of tourism multiplier effects is a clear display of how tourism
can affect various sectors of industry, jobs, and people who are directly and indirectly part of the
tourism multipliers loop.

ENVIRONMENT PROBLEMS

Negative Impacts

Area of effects

1. Biodiversity Effect

o killing of animals for leisure (hunting) or to supply souvenir trade.

o loss of habitats and change in species composition.
o destruction to vegetation

2. Resource Base

o depletion of ground and surface water

o diversion of water supply to meet tourist needs (golf course or pools)
o depletion of local fuel sources
o depletion of local building material sources

3. Pollution

o water pollution through sewage or fuel spillage and rubbish from pleasure boats
o air pollution (vehicle emissions, factory that produces various products to meet
tourism demand)
o Noise pollution (from vehicles or tourist attractions, bars, discos, etc.)
o Littering visual pollution such as various colors of buildings, billboards, shanties,
etc.

4. Erosion and Physical Damage

o soil erosion
o damage to sites through trampling
o overloading of key infrastructure (water supply networks)

5. Visual Structural Change

o Land transfer to tourism (e.g., farming)

o Detrimental visual impact to natural and non-natural landscapes through tourism
development
o Introduction of new architectural styles
o Changes in urban functions
o Physical expansion of built up areas

Positive Impacts

1. Biodiversity

o Encouragement to conserve animal as attractions

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 o Establishment of protected or conserved areas to meet tourists demands

2. Erosion and Physical Damage

o tourism revenue to finance ground repair and site restoration

o improvement to infrastructure prompted by tourist demand

3. Resource Base

o Development of new/improved sources of supply

4. Visual Structural Change

o new users for marginal or unproductive lands

o landscapes improvements (e.g., to clear urban dereliction)
o regeneration and or modernization of built environment
o reused of disused buildings

5. Pollution

o Cleaning programs to protect the attractiveness of tourism sites

Waste Disposal

Tourism is a major waste generator. Solid waste is often a big problem or arises from tourism
development. Disposal of waste plan is sometimes or most of the times are being neglected by
the tourism players at the destination that leads to hygiene problem.

Damage to Natural Sites

In pursuit to generate more income out of tourism activities, natural sites are often times put at
stakes thereby causing irreparable damage. These natural sites are;

▪ Mountains
▪ Forests
▪ Beaches
▪ Rivers
▪ Lakes Falls
▪ Corals
▪ Caves, etc

SUMMARY

Tourism brings lots of benefits to the country, community and to the people particular through
the job generated by the various tourism enterprise. However, negative and positive impacts are
always part of its existence and growth.

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