Economics of Tourism and Hospitality PDF

Economics of Tourism and Hospitality Economics of Tourism and Hospitality Page 1 of 7  Role of Tourism and Hospitality in Economic...

Economics of Tourism and Hospitality Economics of Tourism and Hospitality Page 1 of 7  Role of Tourism and Hospitality in Economic Development Organization for Economic Cooperation and Development : T&H provides major opportunity for growth to countries that are at the intermediate stage of economic development and require more foreign exchange earnings. 1. Continuous demand for international travel in developed countries 2. As income in developed countries increases, demand for tourism and hospitality also increases at a faster rate 3. Developing countries need foreign exchange to aid their economic development Economics of Tourism and Hospitality Page 2 of 7  INVISIBLE OPPORTUNITY EXPORT CREATION Tourism and ECONOMIC IMPACT Hospitality Benefits 1. Consumer collects the product themselves (Invisible Export) 2. Demand for pleasure travel is directly affected by changes in price and income, ForEx 3. Affects several other sectors such as: shops, local transport firms, entertainment establishments, handicraft producers, and others such as equipment manufacturers and utilities. Can also be beneficial socially, culturally, and environmentally Economics of Tourism and Hospitality Page 3 of 7  ECONOMIC IMPACT OF TOURISM MULTIPLIER EFFECT TOURISM AND HOSPITALITY T&H acts as an export industry by bringing in revenues from outside sources Tourist expenditure also increase the level of economic activity in the host area Increase ForEX Provides a source of income, employment, and ForEX Multiplier effect - how many times money spent by a tourist circulates through a country's economy Economics of Tourism and Hospitality Page 4 of 7  Undesirable Economic Aspects of Tourism Higher Prices Economic Instability Economics of Tourism and Hospitality Page 5 of 7  How to Maximize the Economic Effect of Tourism and Hospitality GROWTH IMPORT INCENTIVES THEORIES SUBSTITUTION Growth Theories: Balanced - T&H needs support from other industries; integrate T&H with other economic activities; produce T&H goods and services locally Unbalanced - emphasizes the need to increase demand Economic Strategies: Import substitution - impose quotas or tariffs on importation of goods that can be produced locally; grand subsidies, grants, or loans to local industries to encourage use of local materials; minimize leakage of money Incentives - examples: tax exemptions/reductions on imported machinery/materials etc; reduction in company tax, tax holidays (limited period); grants, subsidies, loans w/ low interest rate, etc Economics of Tourism and Hospitality Page 6 of 7  Homework: Read about the T&H Network and Supply Components Economics of Tourism and Hospitality Page 7 of 7