Economic Impacts of Tourism

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The travel and tourism sector creates more jobs per million of investment than any other sector of the economy and is capable of providing employment to a wide spectrum of job seekers from the unskilled to the specialized, even in the remote parts of a country. The author in the following report has a brief introduction of tourism and a little bit of the industry. The report also contains what the industry’s growth is and how the visualizes itself in 2020. The Butler’s Life Cycle model and what are the economic impacts on tourism have also been explained. This report contains Singapore as its main example to prove that tourism does have an impact on the economy. The author has given facts and figures to prove that Singapore economy has very high relevance to tourism, Singapore has also been put on the life cycle and explained. Thus concluding that Singapore’s tourism does impact the economy.


Tourism may be defined as the processes, activities, and outcomes arising from the relationships and the interactions among tourists, tourism suppliers, host governments, host communities, and surrounding environments that are involved in the attracting and hosting of visitors.

World tourism organization defines tourism as, tourism comprises the activities of persons traveling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes.

Wealthy people have always traveled to distant parts of the world, to see great buildings, works of art, learn new languages, experience new cultures and to taste different cuisines. Long ago, at the time of the Roman Republic, places such as Baiae were popular coastal resorts for the rich. The word tourism was used by 1811 and tourist by 1840. In 1936, the League of Nations defined foreign tourist as "someone traveling abroad for at least twenty-four hours". Its successor, the United Nations, amended this definition in 1945, by including a maximum stay of six months. Tourism has become a popular global leisure activity. In 2008, there were over 922 million international tourist arrivals, with a growth of 1.9% as compared to 2007. International tourism receipts grew to US$944 billion (euro 642 billion) in 2008, corresponding to an increase in real terms of 1.8%. As a result of the late-2000s recession, international travel demand suffered a strong slowdown beginning in June 2008, with growth in international tourism arrivals worldwide falling to 2% during the boreal summer months. This negative trend intensified during 2009, exacerbated in some countries due to the outbreak of the H1N1 influenza virus, resulting in a worldwide decline of 4% in 2009 to 880 million international tourists’ arrivals, and an estimated 6% decline in international tourism receipts. Based on United Nation World Tourist Organization, in 2010 the numbers of international tourist had increased 7 percent to 935 million travelers due to recovering from economic/financial crisis. The growth rate is different in different regions of the worlds with Asia takes the lead of recovery. Many countries depend heavily upon travel expenditures by foreigners as a source of taxation and as a source of income for the enterprises that sell (export) services to these travellers. Consequently the development of tourism is often a strategy employed either by a Non-governmental organization (NGO) or a governmental agency to promote a particular region for the purpose of increasing commerce through exporting goods and services to non-locals. Types of tourism:

according to time period
short-term (up to 3 days)
long-term (>7 days)

according to way of organization
organized (by travel agency)
individual (families on their own)

according to place of destination
international tourism (prevails on Europe)
domestic tourism (prevails in large countries – USA, Canada)

according to direction of tourist flows...
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