Tourism Multiplier

Horwath Tourism & Leisure Consulting Member of Horwath International

Tourism Multipliers Explained

Published in Conjunction with the World Tourism Organisation

November 1981

Table Of Contents

Introduction

1

1.

The Multiplier Concept

3

2.

Models

5

3.

Weaknesses and Limitations of Tourism Multipliers
3.1 3.2 3.3 3.4 3.5 3.6 3.7 Data Deficiency Restrictive Assumptions and Limitations Existence of Supply Constraints Use of Homogeneous Consumption Functions Repercussive Feedback Mechanism Speed of Transactions Within the Economy Sensitivity of Coefficients

7 7 7 8 8 9 9 9

4.

The Suitability of Multipliers

10

5.

Multiplier Values
5.1 5.2 5.3 5.4 Introduction Tourism Output/Sales Multiplier Tourism Income Multipliers Generalisation Relating to Size of Multiplier

11 11 11 12 13

November 1981

Page i

Introduction
The following document was issued by the Secretary General of the World Tourism Organisation to its members on 5 November 1981. made up of: It was prepared by the Investment in Tourism working party of the Affiliate Members of WTO which is

• • • • • • • • •

Horwath & Horwath (UK) Ltd – Chairman, representing Horwath & Horwath International Centre d’ Etudes du Tourisme (Canada) Iberia (Spain) Institut fur Fremdenverkehrs-Entwicklung (Austria) International Hotel Association Kenya Tourist Development Corporation Promotour (France) Spantax (Spain) Travel Industry Association of America

The paper sets out to explain tourism multipliers, and the state of knowledge of them, in simple layman’s terms. It is intended to aid practitioners in tourism who do not have direct technical knowledge. It was prepared for the working party by Martin W. Gerty of Horwath & Horwath (UK) Ltd under the guidance of professor Brian Archer (Department of Hotel and Tourism Management, University of Surrey), and J.A. Bodlender (Horwath & Horwath International), Chairman of the working party. Professor Archer... [continues]

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