Micro Perspective of Tourism and Hospitality (Thc1)

PhilCST
PHILIPPINE COLLEGE OF SCIENCE & TECHNOLOGY

OLD NALSIAN ROAD, BRGY. NALSIAN, CALASIAO, PANGASINAN
MICRO PERSPECTIVE OF TOURISM AND

HOSPITALITY (THC1)
MODULE 7. IMPACTS OF TOURISM

Lesson 4. Impacts of Tourism on the Economy
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POSITIVE
IMPACTS
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According to Swarbrooke, the main beneficial

impacts of tourism on the economy are job creation,
livelihood generation, tax revenues, and economic
regeneration.
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Jobs
Tourism generates jobs, with the most optimistic estimate being one
job created for every tourist received by the country. There are several jobs
available in the tourism industry. For example, in hotels, entry level jobs
include front desk clerks, porters, concierges, room attendants, waiters or
waitresses, and kitchen staff. More advanced positions include guest service
supervisor, housekeeping supervisor, front desk supervisor, kitchen
manager, restaurant manager, and executive chef. Further up the ladder
are administrative positions like marketing and advertising coordinator,
accounting manager, event planner, assistant hotel manager, and hotel
manager. Several more work behind the scenes, such as accounting
supervisor, accounts clerks, accounts supervisor, corporate controller,
directors of various departments, night auditor, payroll accountant, and
several others.
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In the airline sector, there are flight attendants,

administrative support staff, such as secretaries, data entry
workers, receptionists, communications and public relations
specialists, human resources department staff, operations
agent, avionics technicians, flight dispatcher, ground
attendant, reservation sales agent, airline ticket agent, and
many more.
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Employment is generated throughout the tourism value chain.

The value chain refers to the suppliers of needed inputs for tourism
operations, as well as the other entities that benefit indirectly from
tourism development. With respect to suppliers, we can imagine the
thousands of materials and services that a hotel needs to function. At
the planning stage, they would require architects, landscape
architects, and interior decorators, and many other experts. During
construction, building materials, such as cement, steel, paint, tiles,
fixtures, glass, elevators, escalators, tools, heavy equipment, and so on
will be needed. Construction contractors and workers like engineers,
masons, plumbers, painters, and carpenters, will also be required.
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Airlines would need aircraft and airports. Aircraft is supplied by

aircraft manufacturers which depend on a host of suppliers for the
thousands of parts that are needed to assemble an airplane. To appreciate
the scope of operations of an aircraft manufacturer, you may find that the
list of suppliers of Airbus is 56-page long, with each page containing
approximately 60 suppliers from all over the world. These suppliers, in turn,
employ hundreds of people. Airports are also complicated operations that
involve thousands of people. There are personnel for security, customs,
quarantine, and immigration. Manila Ninoy International Airport
concessions include banks (with foreign exchange), post office, and
telephones. There are also several restaurants, coffee shops, and bars. There
are two duty-free shops which are located at the departure and arrival
areas. There are also taxi and car for hire services that operate at the
airport.
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Tourism establishments also need office supplies,

equipment, and furniture. In all phases, people need to eat,
so caterers, canteen operators, restaurants, and coffee shops
will also make money. Thus, manufacturers and distributors
of these products benefit from tourism business operations
and expansion. Furthermore, these entities also rely on their
own supply chains for their business operations. Schools also
benefit because when tourism is booming, enrollment in
tourism and hospitality programs increases. These courses
sometimes become the bread and telecommunication
services also benefit from increased demand caused by
increased tourist arrivals.
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Livelihood Generation
Tourism provides economic opportunities for other industries.
Farming communities can venture into agritourism, offering farm-related
experiences to tourists. Income from tourism can help the farmers' families
tide it over the lull period between planting and harvesting seasons,
Farming communities can develop educational tours, letting students
experience planting rice in the field or how to milk cows, they can also sell
their produce and operate eateries and homestay facilities. Some private
farms and livestock raisers make money by teaching retirees and hobbyists
on organic farming, composting, raising native pigs, and cultivating high-
value fruits. Fishermen, weavers, cashew nut growers, local bakeries, and
makers of local pastries not only from the destination, but also in outlying
communities, benefit from an expanded market for their products.
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Tourism and travel-related businesses support an ecology of several

other smaller operations. When you take the bus to some destination,
notice the number of vendors who boards the vehicle at certain points
throughout your journey, peddling various items. They sell chicharon (pork
skin crackling), empanada, fruits in season, water, soft drinks, sandwiches,
peanuts, native delicacies like tupig in Ilocos, pili nuts in Bicol, pastillas in
Bulacan, and buko pie in Laguna. The bus also makes pit stops at partner
restaurants along the way, where meals and pasalubong items are sold.
Traveling to Bayombong, Nueva Vizcaya, the author counted at least three
stops. In each stop, most passengers will buy snacks or have a full meal. The
list of all the ingredients the restaurants need to prepare food will be long
enough to fill at least a couple of pages of this book. Lest forget, people also
have to shell out a few pesos for using the toilets in these stopover joints.
Taxi drivers, tricycle drivers, habal-habal drivers also get some trickle-down
benefit from travel and tourism.
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Hometown's Share of Tourism

Income
Tourism's economic impact is not restricted to the destination

alone. The tourists' places of origin and transit routes, which include
areas used as pit stops by travelers, take sizeable chunk of travel and
tourism-related expenditure. Whenever people travel, their
hometowns share the benefit.
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Taxes and Fees

How does the government earn from tourism? There
are several sources of tourism-related revenues for the
government. These include passport processing fee, fees for
National Statistics Office (NSO), certificates required for
securing a passport, travel tax, documentation fee for
travel tax exemption, airport terminal fee, airport space
rental fees, and parking fee. The government also collects
value added tax from tourism-related business
establishments, business permit fees, barangay clearance,
and taxes paid by employees in tourism establishments.
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NEGATIVE
IMPACTS
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Tourism's drawbacks lie in leakages, opportunity

costs, poor quality of jobs, overdependence on tourism,
and inflation of prices of food land, houses, and services.
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Leakage
Tourists look for products that they have been accustomed to
consuming or using. Many such products and services cannot be sourced locally.
As such, some money is used to pay for such goods and services. Examples are
wine, certain cheeses, some fruits like kiwi, certain vegetables like Brussels
sprout, wagyu beef, and many more. Chefs for Japanese or French cuisines also
need to be imported, as well as high-level hotel managers. This money
constitutes leakage. Leakage also happens when there is very loose or non-
existent linkage in the tourist value chain. To repeat Sen. Bam Aquino's
example, although Boracay contributes 50% of the total revenue of the Aklan,
only 5% of the raw materials needed by the establishments on the island are
sourced from within the province itself. In other words, 95% of the spending is
leaked outside of the province.
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Poor Quality of Jobs

Tourism creates jobs. The job to tourist ratio has been put as
high as 1:1. By that measure, there should be about 4.8 million workers
in the tourism industry. Assuming that this is true, critics of tourism
argue that workers in tourism suffer from low wages, unpaid overtime
pay, lack of security of tenure, and seasonality. These problems may
be attributed to outsourcing and contractualization by some tourism
establishments. These labor practices are tolerated by government
because of the high unemployment rate. To be fair, these issues are
not unique to tourism as far as the Philippines is concerned. Malls also
practice the said strategies in order to minimize costs.
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Price Increase
Tourists represent additional demand for goods and
services available in a destination. When tourists come too
suddenly, the local economy is not able to respond by
augmenting the supply of goods and services. This creates a
situation of shortage which results in price increase. Beside the
price of goods and services, land and housing units also
become more expensive. This is partly because some
international visitors tend to buy real property, through their
spouses or friends.
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Overdependence
Tourism, because of its attractiveness as a business venture, tends to
encourage investment in tourism-related business, sometimes causing a shift
from livelihood activities to tourism. Over time, because tourism is highly
profitable, the local economy becomes monolithic or reliant on a single
economy, one which is dependent on tourism. Overdependence on tourism
increases the vulnerability of the local population to natural as well as man-
made shocks. The devastating impact of the US pullout from Subic in 1991,
after the Mt. Pinatubo eruption on the owners and employees of souvenir
shops is one example. The buyers of Capiz macrame woodcarvings, and other
native decorative items were basically the US servicemen, so when the Bases
closed, the market for such souvenirs disappeared. Boracay residents were also
affected by the slowdown in arrivals when its beaches were contaminated by
E. coli bacteria in the late 1990s.
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Opportunity Cost
Another dark side to tourism is that investing in tourism
development requires billions of pesos for infrastructure alone, such as
airports, roads, and terminals. For example, the Bacolod-Silay
International Airport which was inaugurated in 2007 had a price tag
of P4.3 billion (News Today 2007). When local government units
allocate funds for tourism development, a huge amount is diverted
from the provision of social services, such as health, education, and
security. The P4.3 billion is enough to pay for the tuition fees for four
years (at 60,000 per year) of almost 18,000 college students, or the
annual salaries of more than 25,000 entry grade police officers. In this
manner, tourism-related financial outlay constitutes opportunity costs.
PhilCST
- END OF LECTURE -
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PhilCST

PHILIPPINE COLLEGE OF SCIENCE & TECHNOLOGY

MICRO PERSPECTIVE OF TOURISM AND

MODULE 7. IMPACTS OF TOURISM

According to Swarbrooke, the main beneficial

In the airline sector, there are flight attendants,

Employment is generated throughout the tourism value chain.

Airlines would need aircraft and airports. Aircraft is supplied by

Tourism establishments also need office supplies,

Tourism and travel-related businesses support an ecology of several

Hometown's Share of Tourism

Tourism's economic impact is not restricted to the destination

Taxes and Fees

Tourism's drawbacks lie in leakages, opportunity

Poor Quality of Jobs

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