Economic Factors Affecting Tourism
Tourism plays a major role in most economies in the world. Even though this role varies from country to country, there are various factors, which affect the performance of the tourism industry. In this essay, we shall discuss in details different factors, which affect the performance of tourism.
Firstly, there are many hidden costs attached to tourism, which may in turn have unfavorable effects on the host country. Research however reveals that richer countries have a higher likelihood of benefiting from tourism as compared to those that are poorly developed. While this is the case, most poor nations are usually in need of income and creation of new jobs for their local people and hardly realize these benefits from the tourism industry. This is because most of the tourism revenues are always transferred to foreign countries, leaving host nations in poor economic states. Additionally, tourism leads to exclusion of domestic products and businesses. Thus, some people, or leaders may not embrace tourism activities that negatively affect the performance of their local commodities.
It is important to note that countries support tourism initiatives to get revenues for their economies, which is the expenditure that remains after eliminating taxes, wages and profits. In most countries around the world, about 80% of travelers’ expenditures are directed to airlines, international companies and hotels. When this happens, the local workers and companies hardly feel the fruits of tourism. This is called leakages.
Additionally, local businesses hardly support tourism since the industry affects their businesses. In most cases, tourists go for all-inclusive packages, denying local business people chance to make money from visiting guests. For example, when tourists choose to operate from a resort or cruise ship, they deprive the locals the market for their products. Research shows that all-inclusive accommodation hotels make a lot of money even though they usually have a limited economic impact to the host country.
Additionally, the infrastructure of a country can affect the performance of the industry in different ways. For tourism to thrive in any economy, a country requires good transport and communication networks. For instance, there should be easy international connectivity through airports to facilitate entry and exist of tourists from different parts of the world. No tourist would enjoy visiting a country that lacks connection to leading international cities. This applies to the local transport system, which has to be in good state to attract guests from all over the world. In the event a country ventures into the tourism industry with poor infrastructure, it is likely to incur huge expenses in order to attain standards.
Unlike other industries, tourism offers seasonal opportunities. For example, people prefer travelling during the winter season to other destinations like Africa, which do not experience these seasons. This situation leads to economic challenges for countries, which largely depend on the sector. For workers in this sector, they lack job security, as they can be rendered jobless once the peak season is over. Because of this, some entrepreneurs and governments do not invest heavily in the industry because of its unreliability.
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