General Overview

Tourism generally includes three impacts: economic, environmental, and social/cultural. Economic impacts are very important to a destination because tourism essentially provides the destination with an influx of spending that is earned by tourists in their origin geographical area. This provides what is sometimes referred to as “new money”. Environmental impacts are typically considered by many to be negative, such as pollution, degradation of natural resources. However, there are potential positive environmental impacts as well. Social/cultural impacts might include such issues as crowding, potential conflict between different groups of people. But positive social/cultural impacts can include opportunities for education and learning about and generating an appreciation for other cultures, religions, ways of life. The reality is all three impacts can be positive and/or negative and there are varying views of whether an impact is positive or negative. As a result, understanding tourism impacts is critical to developing a strong foundation of understanding what is tourism. Some general important reasons all three are important to tourism destinations include all three contributing to the decision of repeat visitation or not (Jarvis et al., 2016), tourists and residents are bound to interact (i.e., social impacts) and that affects residents’ attitudes toward tourism (Joo et al., 2018), residents also potentially benefit from tourism development through economic impacts such as the tax revenue and jobs generated (Perdue et al., 1990). In essence, tourism has impacts on residents of a destination. Those impacts can be positive and/or negative, depending on one’s perspective, benefits, etc. All of these impacts affect local residents’ quality of life, and it is important for local community leaders to take into consideration all impacts.

Economic Impacts

The basic economic impacts of tourism are revenue, jobs, and income. The revenue can go to various businesses, organizations, and government. First, there is the revenue to businesses when tourists pay for goods and services. Some attractions and events are non-profit organizations and the revenue is used for their operating expenses. On top of the cost tourists pay there are taxes, which creates revenue for governments at different levels (e.g., local and state). In order for businesses to sell goods and services they need employees, so the revenue helps create jobs and then income for employees. The money spent by tourists can be re-spent, generating even more economic activity for the respective destination.

Income

First, the spending by tourists in the destination community has multiple levels. The three levels of spending are:

1. Direct – First level of spending (tourists spending money in a destination or for things prior to the trip where the money ends up within the destination – e.g., booking a hotel room directly with the hotel)
2. Indirect – Second level of spending (businesses res-pend the money tourists spend with them)
3. Induced – Third and subsequent levels of spending (the money just continues to be re-spent in the community)

Here is a full scenario of the three levels of spending. A tourist visits a destination and pays their entrance fee to an attraction (direct). The attraction pays their employees (indirect). The employees who live locally purchase groceries and pay their rent (induced). The combination of these levels of spending within the destination community contribute to the multiplier effect. What is not spent within the destination community is called leakage. Leakage can occur at all three levels of spending.

Within the levels of spending there are two other implications that are important for destination. First, the tourism multiplier. As stated by Walker and Walker (2018), the multiplier essentially measures how money spent by travelers affects a destination’s economy or “tries to measure the total impact of ‘fresh’ or new dollars that enter an economy” (p. 100) and create a ripple effect through the indirect and induced levels of spending within the destination community.

Multipliers are essentially how much of the money spent by tourists is re-spent within the respective destination. Leakage is how much of the money spent by tourists is re-spent outside the destination. Multipliers are typically stated in terms of $1.00 dollar spent by tourists (direct). The sum of the indirect and induced levels makes up how much of that $1.00 is re-spent, which then represents what comes after the decimal. For example, a multiplier of $1.55 means for every $1.00 spent by a tourist, $0.55 gets re-spent at the indirect and induced levels in the destination community. Leakage is how much of the $1.00 spent by a tourist is not re-spent at the indirect and induced levels. So, in this example there is $0.45 leakage.

Multipliers can be complex and measured in various ways, which make them difficult to compare (Crompton et al., 2016). However, people and destinations try to compare them. Examples of multipliers are input-output (I-O) model, which is very difficult and expensive to measure and initially done by expert economists. However, now there are programs such as RIMSII, REMI, and IMPLAN that make estimating multipliers easier and more available. However, comparing the three for a respective destination or region would result in different multipliers because of differences in the programs, such as how simple to complex they are and what economic measures are included (Crompton et al., 2016). Because the economic impact of tourism is so critical to evaluate how a destination is doing, there are critics that identify various “mischievous procedures” to increase the estimates, such as including local residents (Crompton, 2006).

Employment

There also direct and indirect employment in tourism. Direct employment includes sectors such as accommodations, food and beverage, attractions, transportation. Indirect employment includes construction (e.g., building a hotel, restaurant), manufacturing (e.g., any goods needed in the hotel, restaurant, etc.), laundry/dry cleaning (e.g., if a hotel sends linens to be cleaned by a local laundry company).

There are some challenges with employment in tourism, but each could also be seen as an opportunity. First, tourism is seasonal for many destinations. For example, a beach destination has its peak season around the summer months. So, employment as a lifeguard is seasonal. But, the opportunity is for students to be employed during the summer when they are less likely to be in school. A related issue is workforce migration. For example, for someone not in school who is a lifeguard they need to find other work during the winter. Such a person might go to a destination where winter is the peak season, such as working ski patrol or other position at a skiing destination. Essentially, with seasonality the jobs fluctuate.

For class discussion, see if you can think of other indirect employment sectors.

Environmental Impacts

There are certainly negative environmental impacts from travel and tourism, but there are also positive. The three biggest negative environmental impacts include use of energy and water and waste creation (Morrison et al., 2018). Programs to help mitigate these impacts include sensor lighting, hotels rewarding guests for not replacing towels and linens everyday, and restaurants only providing water when requested.

Although there appears to be greater awareness of negative environmental impacts, there are positive. For example, Leave No Trace promotes being environmentally friendly when exploring the outdoors by bringing out whatever one takes into the outdoors. Other positive environmental impacts include greater awareness and protection of ecosystems, land, bodies of water, and other outdoor resources.

Greentumble (2015-2023) provides a list of both negative and positive environmental impacts of tourism. In terms of negative, Greentumble (2015-2023) suggests “The depletion of natural resources” (e.g., water) is of greatest concern, followed by “overconsumption & Waste production, incl. food waste”, “Pollution”, “Greenhouse gas emissions and contribution to global warming”, “Soil erosion and unsustainable land use”, and “Physical degradation of ecosystems and loss of biodiversity”.

Greentumble (2015-2023) suggests two general positive environmental impacts of tourism include “Sustainable tourism helps protect the environment”, “Sustainable Development Goals (SDGs) in relation to tourism”. More specifically, Greentumble (2015-2023) suggest the number one positive environmental impact of tourism is “Awareness raising and first-hand experience”, “Tourism for skills learning and education”, Support of conservation and biodiversity protection activities”, Protection of endangered species”, “Prevention of illegal trade and exploitation”, “Finance and job opportunities”,  and “Adoption of sustainable practices and new legislation”.

To help minimize or prevent negative environmental impacts it is important to establish carrying capacity for natural resources. Carrying capacity is essentially how much use or activity the environment and/or natural resource can sustain (Morrison et al., 2018).

Social/Cultural Impacts

Some of the negative social and cultural impacts include a loss of local customs, traditions, and values. Tourism results in people of different cultures, ethnicity, languages, religions, values, lifestyles, prosperity, education, etc. This can cause conflict or culture clash. In other words, some people are not as accepting of other ways of life as others. However, this could also create more awareness, understanding, and appreciation for other cultures, ethnicity, religions, values, lifestyles, prosperity, education, etc. As Conrad Hilton’s motto says: “World Peace Through International Trade & Travel”.

In terms of residents of a tourism destination, tourism is presented as a way to improve not only the economy (e.g., employment opportunities, tax revenue paid by non-residents), but also improving quality of life through developing festivals, attractions (e.g., natural, cultural) restaurants (Andereck et al., 2005).

Every destination/community has intangible assets (e.g., dances, cultural performances, way of life, history, stories, local cuisine). These are some of the reasons people travel. It provides an opportunity learn about other cultures and ways of life. When people visit a destination and experience and appreciate these aspects of the destination it can provide a sense of pride for the residents of the destination. In addition, it can help the destination create ways to share the intangible assets (e.g., parades, museums, festivals).

However, sometimes the traditions, culture, etc. can be lost if it becomes too inauthentic. The idea of what Pine II and Gilmore (1999) called “the experience economy” is very much applicable in tourism, especially attractions like festivals. The basic idea is that if a business, event, etc. is providing an experience to consumers (or tourists) purely to make money the product becomes a commodity. In a sense, it is staged in order to make money and it becomes inauthentic. However, it is not dichotomous (i.e., authentic or inauthentic). Authenticity is a continuum and each consumer or tourist has their own preferences and perceptions of authenticity.

There are numerous incentive or rewards programs with airlines, hotels, car rentals, to name a few. These are typically based on how much money the consumer spends. In a unique program called “Ol’au Palau”, Palau is the first destination to reward visitors for how they treat the environment and culture of the destination, rather than their economic impact (Galloway, 2022, May 17). The program rewards visitors for things like using sunscreen that is safe for the reefs, visiting important cultural sites, and eating locally sourced food that is sustainable. The rewards include turning in points accumulated for experiences normally reserved for residents of Palau. More specifically, Galloway (2022) lists rewards including hiking an unmarked trail, swimming and fishing in secluded or secret spots, and sharing meals with locals.

There is also social carrying capacity, which is how much activity a society can sustain.

Response to Tourism Impacts

Destination

It is important for destinations to recognize and react to tourism impacts. This includes multiple stakeholders or community members (e.g., business leaders, government leaders, residents). The idea is to maximize the positive and minimize the negative impacts. Remember, the tourism product is the experience. Another phrase to describe tourism is “invisible export” because tourists spend the money they earned elsewhere to pay for their experience(s) and take the memories back home. Similar to another country paying the U.S. and the U.S. ships a tangible product (e.g., furniture, computers, etc.) to that country.

Intermediaries and DMOs

Travel intermediaries are business or organizations that come between the consumer (i.e., tourists, visitors) and suppliers (e.g., hotels, restaurants, etc.). Examples include Travelocity and Expedia who purchase products from suppliers (e.g., seats on airplanes, hotel rooms) and resell them to consumers.

CVBs and DMOs are critical in tourism to manage the entire system (e.g., development, marketing and promotion, managing and initiating collaborations, and many other areas). We will cover much more about tourism organizations in another section of the course.

Travel Providers

Often the focus of providers is to operate a business and make money. Many often focus on corporate social responsibility or environmental and social issues. For example, setting goals to reduce carbon or environmental footprints. In terms of people, being sure hiring, training, and opportunities to advance are inclusive of all groups.

Travelers

Hopefully travelers or tourists make a difference and do not provide any negative impacts. In terms of economic, many destinations will emphasize the locally owned and operated businesses. Environmentally tourists can participate in conserving energy, water, etc. while traveling. Many hotels now have incentives for guests, such as vouchers to hotel restaurant for such things as not requesting new  towels and linens everyday. In terms of social/cultural impacts, tourists can respect the residents of the destination and not diminish their quality of life. Hopefully residents also respect tourists, who spend their money at the destination, which helps keep residents taxes lower than if there was not tourism.

References

Andereck, K. L., Valentine, K. M., Knopf, R. C., & Vogt, C. A. (2005). Residents’ perceptions of community tourism impacts. Annals of Tourism Research, 32(4), 1056-1076.

Crompton, J. L. (2006). Economic impact studies: Instruments for political shenanigans? Journal of Travel Research, 45, 67-82.

Crompton, J. L., Jeong, J. Y., & Dudensing, R. M. (2016). Sources of variation in economic impact multipliers. Journal of Travel Research, 55(8), 1051-1064. http://jtr.sagepub.com/content/55/8/1051.abstract

Galloway, L. (2022, May 17). Palau’s world-first ‘good traveller’ incentive. BBC. https://www.bbc.com/travel/article/20220517-palaus-world-first-good-traveller-incentive

Greentumble. (2015-2023). https://greentumble.com/

Hilton Foundation. (2022). History. https://www.hiltonfoundation.org/about/history

Jarvis, D., Stoeckl, N., & Liu, H.-B. (2016). The impact of economic, social and environmental factors on trip satisfaction and the likelihood of visitors returning. Tourism Management, 52, 1-18. https://doi.org/http://dx.doi.org/10.1016/j.tourman.2015.06.003

Joo, D., Tasci, A. D. A., Woosnam, K. M., Maruyama, N. U., Hollas, C. R., & Aleshinloye, K. D. (2018). Residents’ attitude towards domestic tourists explained by contact, emotional solidarity and social distance. Tourism Management, 64, 245-257. http://www.sciencedirect.com/science/article/pii/S0261517717301887

Leave No Trace. (2021). https://lnt.org/

Morrison, A. M., Lehto, X. Y., & Day, J. G. (2018). The tourism system (8th ed.). Kendall Hunt.

Perdue, R. R., Long, P. T., & Allen, L. (1990). Resident support for tourism development. Annals of Tourism Research, 17, 586-599.

Pine II, J. P., & Gilmore, J. H. (1999). The experience economy: Work is theatre & every business a stage. Harvard Business School Press.

Smith, B. (2010). The economic impact of Houston Livestock Show and RodeoTM.

Walker, J. R., & Walker, C. J. (2018). Tourism: Concepts and practices (2nd ed.). Kendall Hunt Publishing Company.