Tourism Impacts on the Economy

Tourism Impacts on the Economy

Tourism Impact on Economy |
Table of Contents
1. Abstract------------------------------------------------------------------------------pg. 3
2. Introduction------------------------------------------------------------------------pg. 3- 4
3. Methods------------------------------------------------------------------------------pg. 4- 6
4. Results--------------------------------------------------------------------------------pg. 6- 13
5. Discussions--------------------------------------------------------------------------pg. 13- 14
6. Limitations--------------------------------------------------------------------------pg.14
7. Conclusion--------------------------------------------------------------------------pg. 14- 15
8. References--------------------------------------------------------------------------pg. 16-17
9. Appendix----------------------------------------------------------------------------pg. 18
* 1) Abstract
The purpose of this report is to examine the effect that tourism has on the economy, including its’ pros and cons. Furthermore, we also addressed one of the major concerns of the tourism industry, the sustainability of tourism, which affects an economy’s growth and planning. We utilized multiple methods in order to research this topic. We first found and read an array of key journal articles that addressed the economic effects of tourism that is found from different websites and the UNSW library. Then, we conducted different types of interviews to find the general opinion that the public has on this matter. From our results and the statistics that we have gathered, it is evident that tourism and economy are deeply related and the tourism industry can benefit or even carry an economy, it can also have a downside and lead to social, environmental and economic problems. We will also explore the potential problems faced by the economy in the future and find possible solutions to address the problems.
2) Introduction
Our primary objective in writing this report is to gain an in depth understanding of how tourism impacts on the economy both positively and negatively and how the tourism industry can influence some major economic decisions to one nation. Tourism involved with people, activities and facilities. Tourism is considered to be the “temporary movement of people to destinations outside their normal work and residence, the activities undertaken during their stay in those destinations and the facilities created to cater to their needs (Lecture slides).” The economy is simply referring to the economic system of an area, which could include labor, capital, and the distribution and consumption of goods and services in this area. Therefore, we can see how elements involved within tourism are heavily interrelated with the elements within an economy. Clearly the tourism of a region has the possibility of contributing greatly to that area’s economy. Industries such as transportation (i.e. Rail and flying), accommodation, food, and entertainment are all vital components of tourism and the economy as well. It is actually fairly simple to see how a thriving tourism industry could positively contribute to the economy. In a well-travelled area, tourism can add to the local economy by helping to “generate sales and output, labor earnings, and employment (Frechtling and Horvath). The tourism industry not only helps to brings along employment opportunities and output to the economy, but also attracts more foreign investments, encourages free- trade, enhances quality of life, increases tax revenue and maintains the strength of the local economy. And this is why we see the significance of the benefits that the tourism industry has on the economy. But on the other hand, we also want to make sure that these sort of economic benefits from tourism is sustainable and examine any possible ways that tourism may impact an economy negatively as well.
There are several problems that tourism can cause the economy that are certainly worth noting. One of the negative effect of tourism has on an economy can be the result of overcrowding and overdependence. These problem will then further creates social and environmental problems such as pollution, social unrest, inflation, damages to the natural environment… etc that contributed to the need of certain economic policies to solve the problem.
In this report we will expand more on the impacts of tourism on economy through the results we obtained from our research. We will also examine what further problems it has created for the economy in the long term. From our multiple researches, we will be widely looking at the impacts of tourism on different economies and how should the problems be solved.
3) Methods
In order to gain a thorough understanding of the impacts the tourism industry has on the economy, we have researched a wide range of information using methods. We collected both primary and secondary resources and then further analyzed each piece of information in order to make inferences and draw conclusions. The following are the methods that we have conducted and how we used information gathered
* Brainstorming
Brainstorming was one of the most useful tools in helping our group to discuss and expand on our research materials. Brainstorming is a process for generating creative ideas and solutions through intensive and freewheeling group discussion. Since we had not conducted any other academic research yet, our initial ideas were quite narrow. We gathered a list of ideas spontaneously contributed by our members and could only discuss amongst ourselves from the limited knowledge we had. At this stage, most of our discussion and ideas came from our past experience or knowledge that we gained from travelling, the media…. etc. And that is why there is a need to further expand our research using other methods.
* Library research
This method is where we gathered our main sources and conducted a large portion of our research. We have spent most of our time researching on journal articles from the UNSW library website. We have found more than 10 different academic sources to help expand our ideas and gain more understanding on impacts of the tourism industry has on different economies. The sources that we have found in developed countries, and several also focus on the Australian economy.
We have used the statistics from the sources and analyze them and compared them with the survey results that we collected. These statistical refernces have been really useful for us in proving the significant impacts of tourism industry on the economy, including both the positive and negative side.
* Website search
On the other hand, we have successfully found a number of websites that have been useful in conducting our research and are all closely related to our studies. This includes the official Australian government tourism website and some other government websites who mention about the tourism’s impact on the economy. These websites not only give us government fact sheets of tourism industry and tourism forecasts on the economy. We are able to notice the problem of sustainability in the tourism industry towards the economy through the National Long- Term Tourism Strategy which includes some major economic problem encountered from tourism, e.g. employment rate, GDP, resource allocation. Moreover, from the tourism work strategies and programs, we gained a better understanding on the problems that the Australian Government is now facing and the solution towards the problem.
* Telephone interviews
From our lecture notes, we learned about how one’s demographic environment will shapes one’s views and values. We have noted that all three of our group members have families based overseas. Therefore we have decided to conduct a telephone interview with our parents who are from: America, China and Hong Kong. We did spot some differences in their views of the impacts of tourism to the economy, and through the different opinions from an international viewpoint, we are able to we gain a more sophisticated result in analyzing our data.
* Personal interview
Travel agents are individuals who possess professional skills and knowledge about the tourism industry. Therefore, after our discussion, we decided to interview one of the travel agents who work closely with companies in Hong Kong. As Grace’s father’s business works closely with this travel agent, we conducted a personal interview and ask a couple of questions about his views on the impacts of tourism has on the economy and whether he thinks that the general public that he has come across during work are aware of these economic impacts that are brought about by the tourism industry.
* Survey questionnaires
In order to collect some primary resources of our own and to gain an understanding of the views of the general public, we as a group conducted closed survey questions and interviewed 30 people. This includes people with different occupations, age groups and cultural backgrounds. These demographic factors doubtlessly contributed in shaping their values and ideas about the impacts of the tourism industry to the economy. We first developed a set of answers on the advantages and disadvantages of the tourism industry to the economy and gave them some statistical reference of those impacts to allow them to gain a basic understanding before they started our survey. Then they got to choose which of the following dot points of the advantages and disadvantages he or she thinks would affect the economy. We’ve also asked questions on their awareness of the impacts and also their general knowledge and acceptance towards tourism through participation of their past tourism activity
4) Results
Brainstorming:
After our group’s brainstorming discussion, these are the following results that we have obtained through our own understanding and our past experiences on the impact of tourism industry to the economy. As we can see from the above mind map, our analysis and the ideas we have at this stage is quite narrow. Therefore we further expand our research on other methods in order to get a thorough understanding on this topic.
Research from the library and website research:
There has been a wide range of benefits and harms that we have found in our library research. Impact studies have often argued that tourism can generate jobs, income, tax revenue, stronger infrastructure, improved standard of living, business opportunities and hard currency (Choi and Murray, 2009). Being one of the fastest and largest growing sectors in an economy, one of the significant impacts from the industry is in generating a large number of tax revenue to the government. This is further illustrated in the example of Texas, where in 2005, tourists spend about $49.2 billion, generating $3.4 billion in tax revenue to the Texas state and local government (Choi and Murray, 2009). It is further explained that tourism should be developed in a way so that it benefits the local communities, strengthens the local economy, employs local workforce and wherever ecologically sustainable, uses local materials, local agricultural products and traditional skills (Choi and Murray, 2009). And the following graph further conveyed this idea on the impacts has on the economy of Victoria in Australia in 1993-1994. It shows the total impact from different types of tourists has on gross output, income (wages and salaries), employment, and value added (gross state product) for each category of tourist.
* The graphs above clearly shown the magnitude of the total impact on gross output, value added, income and employment for Victoria’s economy. It shows that day- tripper gives a greater contribution to GSP, with a percentage increase of 0.84 compared with 0.73 for intrastate tourism for each percentage point increase in tourism spending. International and interstate tourism show elasticity of 2.10 and 2.02, respectively. Over all tourism activities, a 1% increase in tourism spending will results in a 1.31% increase in gross state product. (West and Gamage, 2001). It has shown through these values added the total GST contribution for day- trippers were estimated to have contributed $2.8 with intrastate visitors contributing $1.4 billion. Interstate tourists contributed $1.9 billion, while international visitors contributed only $0.9 billion. (West and Gamage, 2001)
From these economic benefits, it is said that it also identified the benefits arising from social, cultural and environmental aspects of tourism. These benefits include renovated recreational facilities, and wider offerings of leisure activities, a cleaner community appearance, more events…and which created a better quality of life in general (Choi and Murray, 2009).
But on the other hand, some studies found that tourism not only brings economic growth but also imposes an economic burden upon destinations. One of the major problems is the issue of overdependence. A region’s economy can be based heavily on tourism and thrive nonetheless, however there is always an inherent risk involved in this sort of business. If the economy is overly dependent on tourism and then something happens to make tourism less attractive, then the entire economy will suffer. This could range from anything from economic distress abroad, to natural disasters, to terrorism or other dangers to tourists. For instance, Hawaii, whose economy is largely dependent on tourism, has suffered greatly recently due to the recent recessions in both Japan and the US, two large sources of visitors (Woo, 2009). Moreover, in less industrialized countries tourism industry creates economic problem such as, the lack of compensation for skilled workers, the inflated prices of imported goods, higher cost of living and inflated prices for land and housing (Choi and Murray, 2009). The problem of overcrowding could also creates other social and environmental problems, e.g. noise pollution, forms of litter, vandalism, traffic, crime, crowding, alcoholism, public intoxication, disruption of resident’s daily life which lead to diminish of quality of life.
In order to maintain the sustainability of tourism activities to ensure it helps to strengthen our economy and also protect and preserve our community resources, the government therefore implemented certain economic policies in maximizing the net economic benefit of the tourism industry to the Australian economy.
These economic and tourism policies includes emphasis on:
* Improve labor and skills outcomes in the tourism work force and remove impediments to labor mobility
* Reform regulation that impedes tourism investment and facilitate tourism investment and development
* Broaden the research base for the industry and improve industry’s access to the information needed by operators
* Accelerate the uptake of on-line opportunities and smarter use of digital distribution
* Improve integration of tourism into transport access and infrastructure planning
* Identify strategies to help industry adapt to a carbon constrained future
* Undertake Destination Management Planning to improve access to Australia’s natural and cultural attractions while at the same time improving environmental outcomes, and
* Improve Indigenous tourism development.
Reshaping the tourism policy landscape will assist the tourism industry to realize its full potential on a dynamic path for growth, delivering a revitalized and resilient industry that can achieve its full economic potential.
Telephone Interview results:
As mentioned before, three of group members’ families based in a foreign country, we have gathered other results from the interviews and compare their views on the impact of tourism industry to the economy with their demographic background.
Here is some information we gathered from the three member’s families:
Grace’s father:
Works as a businessman
Lives mainly in China and Hong Kong
An essential need to go on business trips every year
Travelled mainly to the Asia- Pacific region, Italy and Paris
Thoughts about the impacts of tourism industry to the economy:
Led to exchange rate volatility
Encourage more exports and imports goods
Overcrowding problem created in some popular places, e.g. Shanghai, Hong Kong…etc.
Gus’s family:
Lives in the U.S.A
Works as physical therapists in local schools
Travel occasionally, but rarely long distance trips
Thoughts about the impacts of tourism industry to the economy:
Opportunities for small businesses
Employment opportunities, particularly seasonally ones
Inflation problem
Some people may waste too much income on travelling
Rising oil prices
Icy’s mother:
Lives in Melbourne and sometimes travel back to China
Used to travel a lot
Thoughts about the impacts of tourism industry to the economy:
Inflation problem
Pollution
To conclude our results gathered here, it seemed that people with a demographic background in the Asia- Pacific region tends to be more aware on the overcrowding problem which impacts on the environment and create further environmental problems such as pollution and waste problems. And Gus’s parents, who live in the states, tend to be aware of the rising oil prices and inflation contributed to by the forces of tourism activities. And it seemed that the three families primarily note of the negative aspects that tourism has brought to the economy and are less concerned with the benefits associated.
Personal Interview:
The personal interview with James is conducted by asking a number of questions on the topic, these questions are:
What do you think about the sustainability of the tourism industry? And how does it affect the economy in the Long Run?
In your own experience with tourists and locals, do you think the general public is aware about the impacts of tourism industry to the economy?
What are the major economic impacts brought by tourism that u have noticed in the recent years?
To summarize James’ answers, he certainly thinks that it’s getting harder to maintain the sustainability of the tourism industry and the industry is now expanding to a larger world- the Internet. He claimed because of this expansion, people pay more attention towards the impacts associated with the tourism industry. He further explained that the Internet can now provide many useful resources about the impacts of tourism industry to the economy and the government has also increased their media attention towards the impacts that tourism industry could bring to the economy. He agrees that people are more aware about the issue but he thinks that there should be more emphasis placed. Therefore he claimed it is hard to maintain the strength of the economy in the long run because the the industry is changing greatly day by day through technology advancements. He also thinks that economic dislocation has been a major impact towards many economies in the recent years (e.g. Spain, Italy and many other European countries) and on the other hand, the industry has also helped a lot in boosting an economy’s quality of life (e.g. China).
Survey
The results from our closed survey questions are quite similar to the results we gathered from the other methods. We separated those 30 people into two focus groups: Generation X and Y. The range of generation Y is around 19-25. The range of generation X is around 40 -51.
And the following are the results we obtained from the surveyors’ view of the advantages and disadvantages of the impacts of tourism industry to the economy. (Note that they are allowed to choose more than one option)
* From the graphs above, we can see that most people thinks the tourism industry impacts heavily on employment opportunities, strengthening the economy, increasing total tourism GDP and enhancing quality of life. And for disadvantages, they think it creates problems like overcrowding, pollution and increased the cost of living. From the results obtained, we can see that most people are only aware of the things that will directly affect their personal life and pay less attention to the community and the environment. This is also because of the lack of information provided by the government to inform the public and also because of the demographic factors that contribute to and shape one’s values and opinions.
As the data presented, Generation X are more willing to spent more money on travelling, as their purchasing power is stronger than Generation Y. On the other hand, we can see that as the amount of money increased, there are less people in generation X willing to spend on that price range. It is assumed that Generation X people will be more aware about the impact of tourism industry to the economy because they are the people who are willing to spend more tourism activities. Moreover, from the survey results, more than half of the sample is interested in participating tourist attractions and purchasing souvenirs.
5) Discussion
After our research findings, we discussed the information obtained and how could we use the information to help develop our report. We have found some predictable results but also a couple that we had not thought of. From the different types of interviews conducted, we are aware that the general public focuses primarily on the negative impacts that the industry brings to the economy and pays less attention to the importance of tourism in benefiting and strengthening the economy and people are generally more aware of the surrounding impacts in their daily lives. This includes: rising goods and services prices, overcrowding, pollution problems, more recreational facilities, more employment opportunities, enhanced quality of life. In order to expand on our research materials, we have gathered some statistics from the journal articles that are useful in proving the significance of the impacts has on the economy. Without these actual numbers, it is hard to understand how much it has actually impacted the economy and it also helps to draw public’s attention towards the importance of these impacts towards their economy. We also explored a major economic problem faced by most economies in recent decades- the sustainability of the tourism industry. This is a serious problem encountered by each nation because it contributes in maintaining their economy’s strength, minimize potential costs and to maintain, improve, conserve and protect the quality of community assets (Choi and Murray, 2009). The main objective of solving the problem, however, is not only to protect and preserve community resources but also to optimize their long- term economic viability. Australia, as one of the major developed countries, has already actively responded to this issue by implementing certain economic policies, which are focusing on the impacts brought by the industry. An example of these policies would be the National Long- Term Tourism Strategy which focused on certain economic policies, such as improvements on labor and skills outcomes, broadening the research base of the industry, reserve of the natural resources… etc. We are also aware that nowadays, residents appreciate the importance of their community’s environment and tourism as a crucial economic activity. However in many communities, residents are often neither included in the decision- making process nor even informed about it (Choi and Murray, 2009). In order to build a better community and a stronger economy, local governments need to involve residents and stakeholder groups in the planning process. As the major participants acting within the economy are the general public, it is important that governments increase residents participation and educate the public about the possible impacts that tourism could brought to the economy both now and in the future. It is proven that if a respondent has a strong attitude toward participating in tourism development, he/she is less to be supportive of future development, less likely to perceive positive impacts, and is likely opposed to tourism because of its negative impact. This may explain how residents’ attitudes toward community participation reflect their past experiences (Choi and Murray, 2009). Therefore, we encourage the government not only to implement certain policies towards the economy regarding the tourism industry but to also make social changes to the current society and increases participation of the general public in order to be effective and efficient in helping to plan and optimize long- term economic viability.
6) Limitations
In our research of the impacts of the tourism industry to the economy, there are a couple limitations that we encounter. Firstly, in our survey questionnaires, we only interviewed 30 people mainly from two generation. This limits our results as the sample size is too small, plus we only have two focus groups which means the results will not be broad enough to do an analysis representing the general public within an economy.
Secondly, our research articles mainly focused on developed countries where we could only gathered statistical references from these economies and left out the possible impacts that happened around developing countries. As mentioned before, there’s a possibility that social unrest and other associated social and cultural problems actually appeared more often in developing countries.
Lastly, the different types of interviews that we have conducted might be inaccurate and biased. As we mentioned before, an individual’s values are shaped by its past experience and demographic factors. Therefore the interviewer’s answers might be biased and failed to provide accurate and meaningful results.
7) Conclusion
To conclude, each of the different types of methods we used in our research component are certainly important in contributing our understanding about the impacts of tourism on the economy. Through the different research methods, we are able to identify certain benefits and harms that the industry could bring to the economy and how it influences future economic decisions. Throughout the development of our report, we gain an in depth understanding that tourism industry has played an important role in maintaining an economy’s strength and the importance to preserve community resources and minimize potential cost to pursue the sustainability of tourism industry and also to promote an optimized economic future.

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