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11 - -Economic Impact of TourismEconomic Impact of Tourism
1.A -1.A -NEGATIVE ECONOMIC IMPACTS OF TOURISMNEGATIVE ECONOMIC IMPACTS OF TOURISM
LeakageLeakage Enclave tourismEnclave tourism
NEGATIVE ECONOMIC IMPACTS OF NEGATIVE ECONOMIC IMPACTS OF TOURISMTOURISM
There are many There are many hidden costshidden costs to tourism, to tourism,
which can have unfavourable economic effects which can have unfavourable economic effects
on the on the host communityhost community. .
Often rich countries are better able to profit Often rich countries are better able to profit
from tourism than poor ones.from tourism than poor ones.
NEGATIVE ECONOMIC IMPACTS OF NEGATIVE ECONOMIC IMPACTS OF TOURISMTOURISM
Whereas the least developed countriesWhereas the least developed countries
have the most urgent need for income, have the most urgent need for income,
employment and general rise of the standard employment and general rise of the standard
of living by means of tourism, they are least of living by means of tourism, they are least
able to realize these benefits. able to realize these benefits.
NEGATIVE ECONOMIC IMPACTS OF NEGATIVE ECONOMIC IMPACTS OF TOURISMTOURISM
Among the reasons for this are Among the reasons for this are large-scale large-scale
transfer of tourism revenuestransfer of tourism revenues out of the host out of the host
country and country and exclusion of local businessesexclusion of local businesses
and products. and products.
NEGATIVE ECONOMIC IMPACTS OF NEGATIVE ECONOMIC IMPACTS OF TOURISM “TOURISM “LeakageLeakage””
The The direct incomedirect income for an area is the for an area is the
amount of tourist expenditure that remains amount of tourist expenditure that remains
locally after taxes, profits, and wages are locally after taxes, profits, and wages are
paid paid outside the areaoutside the area and after imports are and after imports are
purchased; these subtracted amounts purchased; these subtracted amounts
are called are called leakageleakage..
NEGATIVE ECONOMIC IMPACTS OF NEGATIVE ECONOMIC IMPACTS OF TOURISM “TOURISM “LeakageLeakage””
In most In most all-inclusive package toursall-inclusive package tours, about , about 80%80%
of travellers' expenditures go to the airlines, of travellers' expenditures go to the airlines,
hotels and other international companies, hotels and other international companies,
and not to local businesses or workers.and not to local businesses or workers.
NEGATIVE ECONOMIC IMPACTS OF NEGATIVE ECONOMIC IMPACTS OF TOURISM “TOURISM “LeakageLeakage””
In addition, significant amounts of income In addition, significant amounts of income
actually retained at destination level can leaveactually retained at destination level can leave
again through leakage. again through leakage.
NEGATIVE ECONOMIC IMPACTS OF NEGATIVE ECONOMIC IMPACTS OF TOURISM “TOURISM “LeakageLeakage””
A study of tourism 'leakage' in A study of tourism 'leakage' in ThailandThailand
estimated that 70% of all money spent by estimated that 70% of all money spent by
tourists ended up leaving Thailand.tourists ended up leaving Thailand.
Estimates for other Third World countries Estimates for other Third World countries
range from 80% in range from 80% in the Caribbeanthe Caribbean to 40% to 40%
in India.in India.
NEGATIVE ECONOMIC IMPACTS OF NEGATIVE ECONOMIC IMPACTS OF TOURISM “TOURISM “LeakageLeakage””
There are two main ways that leakage occurs:There are two main ways that leakage occurs:
Import leakageImport leakage This commonly occurs when tourists demand This commonly occurs when tourists demand
standards of equipment, food, and other standards of equipment, food, and other
products that the host country cannot supply.products that the host country cannot supply.
NEGATIVE ECONOMIC IMPACTS OF NEGATIVE ECONOMIC IMPACTS OF TOURISM “TOURISM “LeakageLeakage””
Especially in LEDC’s, food and drinks Especially in LEDC’s, food and drinks
must often be imported, since local productsmust often be imported, since local products
are not up to the hotel's (i.e. tourist's) are not up to the hotel's (i.e. tourist's)
standards or the country simply doesn't standards or the country simply doesn't
have a supplying industry.have a supplying industry.
NEGATIVE ECONOMIC IMPACTS OF NEGATIVE ECONOMIC IMPACTS OF TOURISM TOURISM ““LeakageLeakage””
Much of the income from tourism expenditures Much of the income from tourism expenditures
leaves the country again to pay for these leaves the country again to pay for these
imports. imports.
The average The average import-related leakageimport-related leakage for most for most
developing countries today is developing countries today is between between 40% and40% and
50%50% of gross tourism earnings of gross tourism earnings for for small small
economieseconomies and and between 10% and 20%between 10% and 20% for for
most most advanced advanced and diversified economies.and diversified economies.
NEGATIVE ECONOMIC IMPACTS OF NEGATIVE ECONOMIC IMPACTS OF TOURISM TOURISM ““LeakageLeakage””
Export leakageExport leakage TNC's have a substantial share in TNC's have a substantial share in
the export leakage. Often, especially the export leakage. Often, especially
in poor developing destinations, they in poor developing destinations, they
are the only ones that possess are the only ones that possess the the
necessary capital to investnecessary capital to invest in the in the
construction of tourism construction of tourism infrastructureinfrastructure
andand facilities facilities. .
NEGATIVE ECONOMIC IMPACTS OF NEGATIVE ECONOMIC IMPACTS OF TOURISM TOURISM ““LeakageLeakage””
As a consequence of this, an As a consequence of this, an export leakageexport leakage
arises when arises when overseas investors overseas investors who financewho finance
the resorts and hotels take their the resorts and hotels take their profits backprofits back
to their country of origin. to their country of origin.
NEGATIVE ECONOMIC IMPACTS OF NEGATIVE ECONOMIC IMPACTS OF TOURISM “TOURISM “Enclave tourismEnclave tourism””
Local businesses often see their chancesLocal businesses often see their chances
to earn income from tourists severely reduced to earn income from tourists severely reduced
by the creation ofby the creation of "all-inclusive" vacation packages"all-inclusive" vacation packages..
NEGATIVE ECONOMIC IMPACTS OF NEGATIVE ECONOMIC IMPACTS OF TOURISM “TOURISM “Enclave tourismEnclave tourism””
When tourists remain for their entire stay When tourists remain for their entire stay at the same at the same cruise ship or resortcruise ship or resort, which provides everything they , which provides everything they need and where they will make all their expenditures, not need and where they will make all their expenditures, not much opportunity is left for local people to profit from much opportunity is left for local people to profit from tourism.tourism.
NEGATIVE ECONOMIC IMPACTS OF NEGATIVE ECONOMIC IMPACTS OF TOURISM “TOURISM “Enclave tourismEnclave tourism””
All-inclusive hotelsAll-inclusive hotels generate the largest generate the largest
amount of revenue but their impact on the amount of revenue but their impact on the
economy is smaller per dollar of revenue economy is smaller per dollar of revenue
than other accommodation types.than other accommodation types.
NEGATIVE ECONOMIC IMPACTS OF NEGATIVE ECONOMIC IMPACTS OF TOURISM “TOURISM “Enclave tourismEnclave tourism””
All-inclusives also All-inclusives also import more import more
and employed fewer peopleand employed fewer people per dollar per dollar
of revenue than other hotels.Smaller of revenue than other hotels.Smaller
trickle-down effecttrickle-down effect on local economies. on local economies.
NEGATIVE ECONOMIC IMPACTS OF NEGATIVE ECONOMIC IMPACTS OF TOURISM “TOURISM “Enclave tourismEnclave tourism””
TheThe cruise ship industrycruise ship industry provides provides
another example of economic another example of economic
enclave tourism.enclave tourism.
Non-river cruises Non-river cruises carried carried
some 8.7 million international some 8.7 million international
passengers in 1999passengers in 1999..
NEGATIVE ECONOMIC IMPACTS OF NEGATIVE ECONOMIC IMPACTS OF TOURISM “TOURISM “Enclave tourismEnclave tourism””
On many ships, especially in the CaribbeanOn many ships, especially in the Caribbean, ,
guests are encouraged to guests are encouraged to spend most of their time and spend most of their time and money on boardmoney on board, and opportunities to spend in some , and opportunities to spend in some ports are closely managed and restricted. ports are closely managed and restricted.