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.

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.

In tourism, this means that the money and resources that are used for one purpose may not then be
available to be used for other purposes. Some destinations have been known to spend more money on
tourism than on providing education or healthcare for the people who live there, for example.

There are a number of independent, franchised or multinational investors who play an important role in
the industry. They may own hotels, roads or land amongst other aspects that are important players in
the overall success of the tourism industry. Many businesses and individuals will take out loans to help
fund their initial ventures.

Most destinations choose to invest their time and money into tourism because of the positive economic
impacts that they hope to achieve. There are a range of possible positive economic impacts. I will
explain the most common economic benefits of tourism below.

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!

Tourism is one of the top five export categories for as many as 83% of countries and is a main source of
foreign exchange earnings for at least 38% of countries.

Economic dependence of the local community on tourism

Many countries run the risk of becoming too dependent on tourism. The country sees $ signs and places
all of its efforts in tourism. Whilst this can work out well, it is also risky business!

If for some reason tourism begins to lack in a destination, then it is important that the destination has
alternative methods of making money. If they don’t, then they run the risk of being in severe financial
difficulty if there is a decline in their tourism industry.