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Chapter Ten: Economic and Political Impacts of Tourism

Chapter Ten: Economic and Political Impacts of Tourism. Learning Objectives. Identify and explain the economic benefits of tourism Identify and explain the potential economic problems that can be created by tourism Explain why tourism revenues are considered to be an export

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Chapter Ten: Economic and Political Impacts of Tourism

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  1. Chapter Ten: Economic and Political Impacts of Tourism Cook: Tourism: The Business of Travel, 3rd edition (c) 2006 Pearson Education, Upper Saddle River, NJ, 07458. All Rights Reserved

  2. Learning Objectives • Identify and explain the economic benefits of tourism • Identify and explain the potential economic problems that can be created by tourism • Explain why tourism revenues are considered to be an export • Explain what is meant by the tourism multiplier concept • List the various organizations that help promote tourism • Explain how convention centers are used to generate tourism in a city and how these centers can be funded and managed • Explain the steps involved in tourism planning • Explain why tourism development can lead to political tugs of war Cook: Tourism: The Business of Travel, 3rd edition (c) 2006 Pearson Education, Upper Saddle River, NJ, 07458. All Rights Reserved

  3. Introduction • Tourism is one of the top five export categories • 30% of all tourism expenditures are made during trips in the U.S. and Canada • Estimates are from the estimate of number of arrivals times the estimate of average expenditure per visitor • Estimates can vary widely depending on the method used to approximate number of arrivals and average expenditure • Definitions of who is identified as a tourist also differ • Need overnight stay (or not) • Number of miles away from home (as little as 50 to 200 is used) Cook: Tourism: The Business of Travel, 3rd edition (c) 2006 Pearson Education, Upper Saddle River, NJ, 07458. All Rights Reserved

  4. Looking to Tourism for Economic Growth and Vitality • Development of tourism offers a country a means of increasing economic well-being • Economics: The social science that seeks to understand the choices people make in using their scarce resources to meet their wants Cook: Tourism: The Business of Travel, 3rd edition (c) 2006 Pearson Education, Upper Saddle River, NJ, 07458. All Rights Reserved

  5. Looking to Tourism for Economic Growth and Vitality, continued • Concept of comparative advantage • Tourism has comparative advantage over other industries if it yields a better return on the region’s human and natural resource inputs • Tourism is likely to have a comparative advantage for a region if: • It has features that are highly attractive to visitors • It is easily accessible to potential tourists • It has necessary infrastructure and abundant labor force • Tourism may have comparative advantage if the region has no other industry alternatives Cook: Tourism: The Business of Travel, 3rd edition (c) 2006 Pearson Education, Upper Saddle River, NJ, 07458. All Rights Reserved

  6. Looking to Tourism for Economic Growth and Vitality,continued • Tourism and foreign exchange rates • Relative exchange rate of currency is one of the most important factors in determining the level of international tourism to (and from) a country • Beginning of 21st century United States became destination for international travelers • Power of single currency (Euro) can have impact on tourism expenditures Cook: Tourism: The Business of Travel, 3rd edition (c) 2006 Pearson Education, Upper Saddle River, NJ, 07458. All Rights Reserved

  7. Multiplier Concept • Output multiplier: One of the most common measures of the economic impact of tourism • Export perspective: International tourism is considered an export for the destination country • What goes around comes around • Three levels of impact created by tourism purchasing • Direct • Indirect • Induced effects • Tracking the impact of tourism expenditures • Multipliers are indicator of economic independence of a country Cook: Tourism: The Business of Travel, 3rd edition (c) 2006 Pearson Education, Upper Saddle River, NJ, 07458. All Rights Reserved

  8. Other Economic Impacts • Positive economic impacts • Tourism provides a stable source of income to a region due to its historic ability to weather recessions well • Provides diversity to an economy and offers a variety of employment • Provide economic incentive to improve infrastructure that can be used by locals • Many opportunities for small business ownership/entrepreneurship Cook: Tourism: The Business of Travel, 3rd edition (c) 2006 Pearson Education, Upper Saddle River, NJ, 07458. All Rights Reserved

  9. Other Economic Impacts, continued • Potential problems in tourism-based economies • Area can become overdependent on tourism so that major decline in tourism has devastating effect on entire economy; e.g., islands and hurricanes • Problem of too much of a good thing, attracting too many visitors • Tourism in the economic balance • Use of cost/benefit analysis to determine the total economic impact of tourism • Attempts are now made to quantify difficult to value pluses and minuses Cook: Tourism: The Business of Travel, 3rd edition (c) 2006 Pearson Education, Upper Saddle River, NJ, 07458. All Rights Reserved

  10. Tourism and Politics • Politics: How decisions are made; “Politics is about power, who gets what, where, how, and why.” • The role of government in tourism • Tourism promotion agencies Cook: Tourism: The Business of Travel, 3rd edition (c) 2006 Pearson Education, Upper Saddle River, NJ, 07458. All Rights Reserved

  11. Public/Private Organizations • Organizations whose membership includes both public and private entities whose funding is generated from both public and private sources • Chambers of Commerce and Convention and Visitors Bureaus (C&VB) • Convention centers Cook: Tourism: The Business of Travel, 3rd edition (c) 2006 Pearson Education, Upper Saddle River, NJ, 07458. All Rights Reserved

  12. Tourism Planning • Planning for such a diverse industry is difficult • Decisions that need to be made in tourism planning • Timing of development • Size of infrastructure and superstructure • Targeting of promotional efforts • Enhancement and preservation of resources, natural and man-made Cook: Tourism: The Business of Travel, 3rd edition (c) 2006 Pearson Education, Upper Saddle River, NJ, 07458. All Rights Reserved

  13. Tourism Planning, continued • Government usually must take the responsibility for tourism planning • Goal of planning sometimes is to spread tourism development throughout a region • Planning is constant process that needs continuing research and then modification of plans and objectives to maintain and enhance tourism resources Cook: Tourism: The Business of Travel, 3rd edition (c) 2006 Pearson Education, Upper Saddle River, NJ, 07458. All Rights Reserved

  14. Political “Tugs of War” • Tourism generates large number of constituent groups • Each group has its own set of priorities, especially about spending of tax dollars and what factors enhance quality of life for area citizens • Difficult to maximize all constituents’ desires • International political tugs of war also affect tourism Cook: Tourism: The Business of Travel, 3rd edition (c) 2006 Pearson Education, Upper Saddle River, NJ, 07458. All Rights Reserved

  15. International Travelers • Large and growing segment of tourism consumers • Europe is major international destination • Changing value of the dollar has made US and Canada attractive to most foreign visitors Cook: Tourism: The Business of Travel, 3rd edition (c) 2006 Pearson Education, Upper Saddle River, NJ, 07458. All Rights Reserved

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