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
 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
 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
 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 regions
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
 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
 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
 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
 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
 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
 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
 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
 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
 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
 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