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
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
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
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
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
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
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
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
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
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
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
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
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
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
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