Tourism and hospitality are two industries that contribute significantly to the economy of many countries. Both directly and indirectly, these industries have a considerable impact on the economic growth and development of a country. In this article, we will discuss the direct and indirect effects of tourism and hospitality on the economy.
Direct Effects of Tourism and Hospitality on Economy
Employment
One of the most significant direct effects of tourism and hospitality on the economy is employment. These industries create jobs for millions of people worldwide, from hotel staff to tour guides to airline crew members. According to the World Travel & Tourism Council (WTTC), in 2019, travel and tourism supported 330 million jobs globally.
GDP Contribution
Tourism and hospitality also make a direct contribution to a country’s Gross Domestic Product (GDP). The WTTC reported that in 2019, travel and tourism accounted for 10.4% of global GDP, amounting to US$8.9 trillion.
Tax Revenue
Tourism and hospitality also generate tax revenue for governments through various channels such as sales taxes, income taxes, and tourism-specific levies like bed taxes. These taxes can be used for infrastructure development, public services, education, healthcare, etc.
Indirect Effects of Tourism and Hospitality on Economy
Multiplier Effect
The multiplier effect is one of the most significant indirect effects of tourism and hospitality on the economy. When tourists spend money in a particular destination, it creates a ripple effect throughout the local economy. For example, if a tourist spends money at a hotel or restaurant in a specific city or town, it creates demand for goods and services from local suppliers such as farmers or manufacturers.
Infrastructure Development
Tourism can also drive infrastructure development in destinations that may not have had access to it before. For instance, airports, roads, and public transportation systems are essential for tourism, but they also benefit locals. Infrastructure development can lead to more significant economic growth beyond tourism.
Improved Quality of Life
Tourism can also have indirect effects on the quality of life of locals. With increased tourism comes increased demand for goods and services, which can lead to better jobs and higher wages for locals. Additionally, tourism can also help promote cultural and environmental preservation in a destination.
Conclusion
In conclusion, tourism and hospitality have significant direct and indirect effects on the economy. These industries create jobs, contribute to GDP, generate tax revenue, drive infrastructure development, and improve the quality of life for locals. It is essential to recognize the impact of these industries on the economy and work towards sustainable growth that benefits both tourists and locals alike.