ECONOMIC IMPACTS

THE POSITIVE ECONOMIC EFFECTS OF TOURISM AND HOSPITALITY

• INCOME
• EMPLOYMENT
• AREA'S BALANCE OF PAYMENTS
• INVESTMENT and DEVELOPMENT

INCOME
o TOURISM INCOME, in general comes from wages and salaries, interest, rent, and profits.
o It is also generated from interest, rent, and profits on tourism and hospitality businesses
o Income is also obtained from direct taxation or indirect taxation.
o Tourism and hospitality is both an income generator and income redistributor.
o The sum of all income in a country is called NATIONAL INCOME.
o MULTIPLIERS are means of estimating how much extra income is produced in an economy as a result of the initial
spending or injection of cash.

EMPLOYMENT
o There are three types of employment generated by tourism and hospitality:
Direct
Indirect
Induced Employment

BALANCE OF PAYMENTS
o is an accounting of flow of goods, services and funds in and out of the country during a given period
o If a country pays or agrees to pay more money than it receives – deficit
o If it receives more money than it sends or exports – surplus

INVESTMENT AND DEVELOPMENT

Accelerator concept
o The accelerator theory is an economic postulation that states that when either demand or income rises, investment
expenditure rises as well. According to the theory, when there is excess demand, businesses can either reduce demand
by raising prices or increase investment to meet the level of demand.

THE NEGATIVE ECONOMIC EFFECTS OF TOURISM AND HOSPITALITY

• High inflation and land speculation destination
• High leakages from the economies of developing countries
• Low returns on investments because of seasonal fluctuations in demand;
• Overdependence on tourism and hospitality

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