Tourism: Principles, Practices, Philosophies Part One: Tourism Overview

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Part Four Tourism Supply, Demand Policy,
Planning, and Development
Learning Objectives

• Know the economic generators and impact of
  tourism
• Perceive the economic importance of tourism in
  various regions of the world
• Understand multipliers
• Know about balance of payments
• Comprehend elasticity and inelasticity
• Know about tourism satellite accounts

Chapter 14 Tourisms Economic Impact
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Part Four Tourism Supply, Demand Policy,
Planning, and Development
Three Major Goals of Tourism
1) Maximize the amount of psychological
experience for tourists. 2) Maximize the profits
for firms providing goods and services to
tourists. 3) Maximize the direct (primary) and
indirect (secondary) impacts of tourist
expenditures on a community or region.
These goals are often compatible but in certain
situations they can be incompatible.
Chapter 14 Tourisms Economic Impact
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Part Four Tourism Supply, Demand Policy,
Planning, and Development
Constraints Faced in Tourism Goal Attainment

• Demand
• Supply of attractive resources
• Technical and environmental constraints
• Time constraints
• Indivisibilities
• Legal constraints
• Self-imposed constraints
• Lack of knowledge
• Limits on supportive resources

Chapter 14 Tourisms Economic Impact
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Economic Multipliers
Part Four Tourism Supply, Demand Policy,
Planning, and Development

• Direct Effect
• Result from visitors spending money in tourist
  enterprises and providing a living for the owners
  and managers and creating jobs for employees.
• Indirect Effect
• This is the multiplier impact. This is where
  visitor spending circulates and recirculates.
• Employment Multiplier
• Income Multiplier

Chapter 14 Tourisms Economic Impact
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Part Four Tourism Supply, Demand Policy,
Planning, and Development
Income Multiplier Formula
Multiplier where M marginal
(extra) P propensity (inclination) C consume
(spending) MPC S savings (money out of
circulation) MPS
A more simpler formula is Multiplier 1/MPS
Chapter 14 Tourisms Economic Impact