Tourism Economics Chapter 1 TRM 490 Tourism Two

Tourism Economics Chapter 1 TRM 490

Tourism Two important organizations for Information on world tourism ◦ World Tourism Organization (WTO)—An UN Agency that oversees Tourism worldwide. ◦ The World Travel and Tourism Council (WTTC)---A Brussels. Based Private Organization of chief executive officers of major companies representing all sectors of the global tourism businesses. Tourism WTO is the world’s largest industry according to the ◦ 9% of the GDP (direct, indirect, and induced impact), accounts for 1 in 11 jobs, accounts for 1. 4 Trillion USD in exports, 1087 million international tourists, 5 -6 Billion domestic tourists. ◦ The past 6 decades have shown continued expansion and growth, becoming one of the largest and fastest growing economic sectors in the world according to the 2014 UNWTO Tourism Highlights.

Tourism Estimates of tourism’s economic impact vary widely according to the definition of tourism used ◦ Tourism, an umbrella concept (The world except US) dates back to 1811, or before , and continues to change in definition A traveler is variously defined as someone making a trip for a specified distance (25 m, 50 m or 100 mi) and for some specified purpose (leisure, business, for example) away from home ◦ The book states that the term encompasses travelers away from home and the businesses and people who serve them by expediting or otherwise making the travel easier and more entertaining Another definition is the commercial organization and operation of vacations and visits to places of interest. ◦ Knowing the definition of a region is important when accurately assessing effects of tourism on an economy An interrelated group of businesses who serves the needs and wants of the travelers.

Tourism Economics Tourism economic impact measures the amount of travel and its economic consequences, direct, indirect, and induced. ◦ The measurement of economic impact varies according to various methods of collecting and defining travel information. ◦ Technology has made the study of analytics more accessible to the industry as well as students studying the topic. Tourism has dimensions other than economic, among them the complex of interactions and their consequences that occur before, during, and after a tourist trip. They include: ◦ ◦ Psychological Sociological Ecological Political impacts

Tourism as an industry Tourism includes many parts to it: Restaurants, accommodations, transportation, destination development, travel research, government offices, travel expenditures, tourist attractions, recreational facilities, and the miscellaneous that includes service stations, grocery stores, etc. Perspectives on tourism: ◦ As an activity in which people are engaged in travel away from home for business or pleasure. ◦ As a business it provides goods and services to the travelers, involving any expenditure incurred by of for a visitor to his/her trip. ◦ As an industry it is comprised of hundreds of component businesses, some huge, most of them are small. ◦ As an economic development tool in which money collected through taxation is then compounded and redistributed back into the community and infrastructure. ◦ As an institution with a history, body of knowledge, and social aspect ◦ As an economic activity with billions of dollars exchanged each month, a social science to be analyzed, trends to be identified, and costs/benefits to be computed.

Tourist Definitions Various definitions of traveler/tourist: ◦ US Government: both mean the same---anyone who stays more than 24 hours, or make an overnight stay, away from home. (Exceptions: military travel, resident students, resident student immigrants, diplomats, and people working away from home). ◦ The US Census Bureau: travel at least 100 miles away from home and returns (overnight stay is not a requirement in the definition). ◦ Statistics Canada: a tourist is one who travel away from home for a distance of at least 50 miles beyond the boundary of the home community. ◦ Persons who make border crossings are counted as tourists by some national governments.

Tourism Definitions (cont. ) WTO’s view on inbound tourism/tourist/traveler/visitor: ◦ In most circumstances, the precision of the definitions is not a special concern, and all sorts of travelers might be included in the statistics of visitors. This also concerns their expenditure. Nationals residing outside the country are unevenly treated (some exclude them from their statistics of inbound visitors) and many countries are mostly worried by foreigners residing outside the country (confusion between the concept of nationality and of residence). ◦ Same-day visitors are usually excluded from theoretical definition (although their expenditure might be included), and it is also the case of transit visitors (specifically excluded in previous international definitions). ◦ Business travels were always considered of special interest, and in many cases were identified separately. Some countries also identified separately other purposes of the visit.

The Changing Definition of Tourism Issues in studying tourism economics ◦ Definition of tourism will continue to be imprecise because so many businesses, governments and the researchers are involved, and because rapid changes are taking place in the travel world. ◦ The reliability and validity of the numbers developed by primary research (collected privately or by government) ◦ Sources or estimates of errors are rarely given in reporting tourism statistics. ◦ Tourism statistics are fraught with problems of definition partly because tourism is a composite industry, made up of several other industries. ◦ Food store spending is hard to identify and tabulate.

Magnitude of Tourism Economics Tourism in the US: ◦ The third largest retail industry, following food and automobile industries ◦ The largest private employer ◦ The largest export industry ◦ The largest recipient of tourist travel income ◦ The US spends the most tourist dollars abroad (see Figure 1 -6, p 13) According to the US Office of Tourism and Travel Industries (OTTI) for 2015 Q 4: ◦ Tourism supplied the US with 8. 1 million American jobs ◦ Total Tourism-Related Output was $1. 6 trillion in the fourth quarter of 2015. ◦ It consisted of $919. 4 billion (58 percent) of direct tourism spending and $668. 9 billion (42 percent) of indirect tourism related spending.

Tourism Income and Impact Studies Typically, the higher the Gross National Product (GNP) of a country, the more money tourists from that country are spending per capita Top 5 International Markets to the US in 2014: Origin of visitor Millions of visitors % of Change Canada 23. 0 (-2)% Mexico 17. 07 17% United Kingdom 4. 15 8% Japan 3. 62 (-3)% Brazil 2. 26 10% According to: Travel. trade. gov/pdf/2014 -Top-10 -Markets. pdf

Domestic Tourism Income The US does not have a Department of Tourism, tourism is strictly the responsibility of each state. Every states annual economic impact study is on spending type (either business or traveler) is categorized differently. Sources drawn from local hotel occupancy tax, estimates reported in a number of visitor studies, local visitor surveys, US Dept. of Census, consumer price index, etc. Every state has its own tourism impact study, we’ll use California as an example. Examples of Spending Categories in California ◦ ◦ Retail shopping Lodging Ground transport Air transport Restaurants Recreation Food stores Travel arrangement Travelers are categorized into five groups: hotel/motel guests, day visitors, private home guests, vacation home guests, and campers.

Tourism in Developing Countries Tourism has recently became a major factor in places like China, India, South America, and Southeast Asia. The less developed countries in these areas rely heavily on loans or grants from world funds to develop tourism facilities and foreign expertise to develop and manage tourist enterprises such as hotels and tour operations. International visitor spending to the US (2014) ◦ ◦ Brazil – Spending equaled 13. 4 B South Korea – Spending equaled 7. 8 B India – Spending equaled 9. 8 B China – Spending equaled a massive 24. 0 B! According to travel. trade. gov/pdf/2014 -Top-10 -Markets. pdf