Lesson Proper for Week 7

Tourists bring new money into the economy of the place they are visiting, and this has
effects beyond the original expenditures. When tourist spends money to travel, to stay in a
hotel, or to eat in a restaurant that money is recycled by those businesses to purchase more
goods thereby, generating further use of the money. In addition, employees of businesses
who serve tourists spend a higher proportion of their money locally on various goods and
services. This chain reaction, called the multiplier effect, continues until there is a leakage,
meaning that money is used to purchase something outside the area.
The term multiplier effect refers to the resulting effect of a service or amenity creating
further wealth or positive effects in an area. For example, tourism in an area will create
jobs in an area, therefore the employees of the tourism industry will have some extra money
to spend on other services, and therefore improving these other services in that area,
allowing further employment in the area. The below figure illustrates the multiplier effect.

Multipliers or Ripple Effect

• Multiplier theory emerges from the work of Kahn and Keynes.
• Multipliers are a means of estimating how much extra income is produced in an
economy as a result of initial spending or injection of cash.
• Every time money changes hands, it provides new income and continuous series of
conversions of money spent by tourists from what economists termed “Multiplier Effect”.
• The more often a conversion occurs, the greater its beneficial effects on the economy
of the recipient country.

Types of Expenditures
• Direct: In the case of tourism, this expenditure is made by the tourist, government or
similar agencies involved in tourism, providing goods and services, tourism generated
exports or for tourism related investment in an area.
• Indirect: Covers successive rounds of inter-business transactions resulting from direct
expenditure.
• Induced: This is the increased consumer spending resulting from the additional
personal income generated by direct expenditure.
 (Indirect + Induced = Secondary Expenditure)
The money generated by tourists spending multiplies as it passes through various sections
of the economy. It can be explained as follows:
• From an initial impulse such as investment and expenditure, one or more primary
effects such as income and expenditure will occur.
• These primary effects in the course of the second period and produce secondary
effects of the same type as the first.
• The process is repeated several times in the course of time.
Types of Multipliers in Tourism

Sales and Output

• Sales (Transaction) Multiplier - this measures the extra business turnover created
(direct and secondary) by an extra unit of tourist expenditure.
• Output Multiplier – this is similar to the Sales Multiplier but it also takes into account
inventory changes, such as the increase in stock levels by hotels, restaurants and shops
because of increased trading activity

Income
 Income Multiplier – this measures the income generated by an extra unit of tourist
expenditure. Income multipliers can be expressed in one of two ways: the ration method,
which expresses the direct and indirect incomes (or the direct and secondary incomes)
generated per unit of direct income; or the normal method, which expresses total income
(direct and secondary) generated in the study area per unit increase.

Employment
 Employment Multiplier – this can be expressed in one or two ways: as a ration of the
combination of direct and secondary employment generated per additional unit of tourist
expenditure to direct employment generated, or as the employment created by tourism per
unit of tourist expenditure. Employment multiplier is associated with the name of Prof. R.F.
Kahn. The idea of multiplier had its origin in 1931 when Prof. Kahn was discussing the
favorable effects of public investment on aggregate employment.

Multiplier Models
• Base Model – It assumes that one can divide the economy under research into export
activities and local (non-export) activities, and that a stable relationship exists between the
export and local sectors, with these sectors linked by linear relationships.
• Keynesian Model – this is based on identifying streams of income and employment
which are generated in “rounds” which diminish in geometric progression because of
leakages at each round.
• Input-Output Model – the input-output concept analyzes the economy into its sectors
and expresses a relationship of these factors in matrix form, based on the results of
research into the effects of tourist expenditure

HOSPITALITY AND TOURISM MANAGEMENT EMPLOYMENT OPPORTUNITIES

The tourism and hospitality industry is an umbrella covering a sea of fun and engaging
careers. In an industry that is constantly growing and evolving to new trends, why not jump
on board and explore the options? Hospitality and tourism career opportunities await!
HOTEL OPERATIONS:

1. BANQUET AND CONFERENCES - It is a demanding, yet high energy career working in

hotels, resorts and conference centers setting up rooms and servicing events.
2. FOOD & BEVERAGE MANAGEMENT - Responsible for all things related to food and
beverage from ordering products to hiring staff and balancing profit and loss sheets.
3. FRONT OFFICE RECEPTION - From the very first moment of a guest’s arrival, the front
office serves as the face of the company and its standards of service.
4. RESORT MANAGEMENT - Responsible for the overall success of the facility, this is a
very diverse position that manages a wide variety of people.
5. RESTAURANT MANAGEMENT - Responsible for the overall function of the operation,
inventory, ordering and budgeting often top the list of a manager’s to-do list.
6. SPA AND WELLNESS MANAGEMENT - A position responsible for the day-to-day
operations of a health or beauty spa.
7. CONCERTS, FESTIVALS & EXHIBITIONS - This role involves studying the brand,
identifying the target audience, devising the event concept and coordinating all the
technical aspects before launching or hosting an event.
8. WEDDING COORDINATION - It all comes down to the details and building
relationships. Brides want to have confidence in their wedding coordinator and in doing so,
this individual needs to be extremely organized and love executing special events with many
moving components, balancing a need for both structure and creativity in the workplace.
9. AIRLINES - Manage the in-flight services taking care of food and beverage, duty free
and other customer service requests.
10. AMUSEMENT PARKS - Manage the overall operations as a member of the
leadership team or be ready to welcome amusement park goers behind the desk selling
tickets, supervising a food and beverage outlet or controlling the rides themselves.
11. CASINOS - The gaming service industry is huge and jobs are typically found in casinos
or at the racetrack.
12. CATERING - It is a great position incorporating sales with event planning.
13. CRUISES - Very similar to a hotel, but you are floating from port to port.
14. CONSULTING - Work for a firm or start your own business, this career requires a base
of experience in order to advise your clients.
15. START YOUR OWN BUSINESS - With a little ingenuity, good business sense and
creative genius you can start a company of your own and scale to great magnitudes.
ECONOMIC IMPACTS OF TOURISM
Here are few facts about the economic importance of the tourism industry globally:
• The tourism economy represents 5 percent of world GDP
• Tourism contributes to 6-7 percent of total employment
• International tourism ranks fourth (after fuels, chemicals and automotive products) in
global exports
• The tourism industry is valued at USD 1trillion a year
• Tourism accounts for 30 percent the world’s exports of commercial services
• Tourism accounts for 6 percent of total exports
• 1.4 billion international tourists were recorded in 2018 (UNWTO)
• In over 150 countries, tourism is one of five top earners
• Tourism is the main source of foreign exchange countries and one-half of less
economically developed countries.

Positive economic impacts of tourism:

• Foreign exchange earnings – One of the biggest benefits of tourism is the ability to
make money through foreign exchange earnings. The money that the country makes from
tourism can then be re-invested in the economy.
• Contribution to government revenues – Tourism can help to raise money that it then
invested elsewhere by the government. There are two main ways that this money is
accumulated. Direct contributions are generated by taxes on incomes from tourism
businesses and things such as departure taxes. Indirect contributions come from goods and
services supplied to tourists which are not directly related to the tourism industry. Take
food, for example. A tourist may buy food at a local supermarket. The supermarket is not
directly associated with tourism, but if it wasn’t for tourism its revenue wouldn’t be as high
because the tourists would not stop there. There is also the income that is generated
through induced contributions. These are accounted for money spent by the people who
are employed in tourism industry. This might include costs for housing, food, clothing, and
leisure activities amongst others. This will all contribute to an increase in economic activity
in the area where tourism is being developed.
• Employment generation – The rapid expansion of international tourism has led to
significant employment creation. There are two types of employment in the tourism
industry: direct and indirect. Direct employment includes jobs that are immediately
associated with the tourism industry. This might include hotel staff, restaurant staff or tour
guide, to name a few. Indirect employment includes jobs which are not technically based
in the tourism industry. Take a fisherman, for example. He does not have any contact of
dealings with tourist. But he does sell his fish to the hotel which serves tourists.
• Contributions to local economies – All of the money raised, whether through formal
or informal means, has the potential to contribute to the local economy.
• Development of the Private Sector – The private sector has continuously developed
within the tourism industry and owning a business within the private sector can be
extremely profitable.
Negative economic impacts of tourism:
• Leakage - Economic leakage in tourism is when money spent does not remain in the
country but ends up elsewhere, therefore limiting the economic benefits of tourism to the
host destination.
• Infrastructure cost - Tourism development can cost the local government and local
taxpayers a great deal of money. Tourism may require the government to improve the
airport, roads and other infrastructure, which are costly.
• Increase in prices - Increasing demand for basic services and goods from tourist will
often cause price hikes that negatively impact local residents whose income does not
increase proportionately.
• Gentrification - Tourism development and the related rise in real estate demand may
dramatically increase building costs and land values. This often means that local people
will be forced to move away from the area that tourism is located.

WHY THE ENVIRONMENT IS SO IMPORTANT TO TOURISM?

Positive environmental impacts of tourism:

The most commonly noted positive environmental impact of tourism is raised awareness.
Many destinations promote ecotourism and sustainable tourism and this can help to
educate people about the environmental impacts of tourism. There are also many national
parks, game reserves and conservation areas around the world that help to promote
positive environmental impacts of tourism.

Negative environmental impacts of tourism:

Uncontrolled conventional tourism poses potential threats to many natural areas around
the world.
• Depletion of natural resources – Some of the most common noted examples include
using up water resources, land degradation and the depletion of other local resources.
• Overuse of water resources – The tourism industry generally overuses water
resources for hotels, swimming pools, golf courses and personal use of water by tourists.
• Land degradation – Increased construction of tourism facilities has increased the
pressure on these resources and on scenic landscapes.
• Great pressure on local resources - Tourism can create great pressure on local
resources like energy, food, and other raw materials that may already be in short supply.
Greater extraction and transport of these resources exacerbates the physical impacts
associated with their exploitation.
• Pollution – Tourism can cause the same forms of pollution as any other industry: Air
emissions, noise pollution, solid waste and littering, sewage, oil and chemicals.
Air pollution and noise – Transport by air, road, and rail is continuously increasing in
response to the rising number of tourists and their greater mobility.
Noise pollution - Noise pollution from aircrafts, cars, buses, (+snowmobiles, jet skis, etc.)
can cause annoyance, stress, and even hearing loss for humans. It also causes distress to
wildlife and can cause animals to alter their natural activity patterns.
Solid waste and littering – Improper waste disposal can be a major despoiler of the natural
environment. Rivers, scenic areas, and roadsides are areas that are commonly found
littered with waste, ranging from plastic bottles to sewage.
Sewage – The construction of hotels, recreation and other facilities often leads to increased
sewage pollution.
Aesthetic Pollution – Often tourism fails to integrate its structures with the natural features
and indigenous architecture of the destination. Large, dominating resorts of disparate
design can look out of place in any natural environment and may clash with the indigenous
structural design.

Physical Impacts of Tourism Development - This includes the construction of buildings,

marinas, roads, etc.
Construction activities and infrastructure development - The development of tourism
facilities can involve sand mining, beach and sand dune erosion and loss of wildlife
habitats.

Deforestation and intensified or unsustainable use of land - Construction of ski resort

accommodation and facilities frequently requires clearing forested land. Areas that would
be home to a wide array of flora and fauna are turned into hotels, car parks and swimming
pools.
Marina development - Development of marinas and breakwaters can cause changes in
currents and coastlines. These changes can have vast impacts ranging from changes in
temperature to erosion spots to the wider ecosystem.
Coral reefs - Coral reefs are especially fragile marine ecosystem. They suffer worldwide
from reef-based tourism developments and from tourist activity.

Physical impacts from tourist activities:

The last point worth mentioning when discussing the environmental impacts of tourism is
the way in
which physical impacts can occur as a result of tourist activities. This includes tramping,
anchoring, cruising and diving.
• Trampling – Tourists using the same trail over and over again trample the vegetation
and soil, eventually causing damage that can lead to loss of biodiversity and other impacts.
Such damage can be even more extensive when visitors frequently stray off established
trails.
• Anchoring and other marine activities – In marine areas many tourist activities occur
in or around fragile ecosystem. Anchoring, scuba diving, yachting and cruising are some of
the activities that can cause direct degradation of marine ecosystem such as coral reefs.
• Alteration of ecosystem by tourist activities – Habitats can be degraded by tourism
leisure activities. For example, wildlife viewing can bring about stress for the animals and
alter their natural behavior when tourists come too close.