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The Importance of Tourism on Economies and Businesses

Published: 3/26/2019 12:21:08 PM

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Tourism is vital for the success of many economies around the world. There are several benefits of tourism on host destinations.  Tourism boosts the revenue of the economy, creates thousands of jobs, develops the infrastructures of a country, and plants a sense of cultural exchange between foreigners and citizens.

The number of jobs created by tourism in many different areas is significant. These jobs are not only a part of the tourism sector but may also include the agricultural sector, communication sector, health sector, and the educational sector. Many tourists travel to experience the hosting destination’s culture, different traditions, and gastronomy. This is very profitable to local restaurants, shopping centers, and stores. Melbourne, Australia ’s population is greatly affected by tourism. It has a population of around 4 million people and around 22,000 citizens are employed by the tourism sector only.

Governments that rely on tourism for a big percentage of their revenue invest a lot in the infrastructure of the country . They want more and more tourists to visit their country which means that safe and advanced facilities are necessary. This leads to new roads and highways, developed parks, improved public spaces, new airports, and possibly better schools and hospitals. Safe and innovative infrastructures allow for a smooth flow of goods and services. Moreover, local people experience an opportunity for economic and educational growth.

Tourism creates a cultural exchange between tourists and local citizens. Exhibitions, conferences, and events usually attract foreigners. Organizing authorities usually gain profits from registration fees, gift sales, exhibition spaces, and sales of media copyright. Furthermore, foreign tourists bring diversity and cultural enrichment to the hosting country.

Tourism is a great opportunity for foreigners to learn about a new culture, but it also creates many opportunities for local citizens . It allows young entrepreneurs to establish new products and services that would not be sustainable on the local population of residents alone. Moreover, residents experience the benefits that come with tourism occurring in their own country.

To learn about the countries earning the most from international tourist arrivals, click on the link below!

Countries Earning the Most from International Tourism

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Chitra Samaroo

Business of Tourism: What You Need to Know

Table of Contents

The business of tourism is a powerful engine for economic growth , connecting industries and creating jobs worldwide. Whether you’re involved in hospitality, travel, or event management, this sector offers many opportunities. 

Tourism’s impact is undeniable, from boosting local economies to shaping global trends . This article will explore the benefits, management strategies, and real-world examples of how tourism works. Grasping these elements is essential for anyone succeeding in this ever-evolving industry.

What is the Business of Tourism?

The business of tourism is a broad industry that involves travel, hospitality, and experiences designed to attract visitors to various destinations. It plays an important role in local and global economies by creating jobs, supporting businesses , and promoting cultural exchange. At its core, the business of tourism is about providing services that make travel enjoyable and convenient for people.

Connecting Different Sectors

One of the defining features of the business of tourism is how it connects various sectors. Tourism combines hospitality services like hotels, resorts, and restaurants with transportation, entertainment, and retail businesses. These industries work together to create seamless travel experiences for tourists.

Whether someone is visiting for leisure or business, they rely on different services , and each contributes to tourism’s success. For example, a tourist visiting a city might stay in a hotel, dine at local restaurants, and participate in guided tours or cultural activities. Behind the scenes, travel agencies, airlines, and other transport providers are involved. The business of tourism creates a network of industries working together to deliver value.

The Role of Hospitality

Hospitality is at the heart of the business of tourism. Hotels, resorts, and other accommodations are the backbone of the tourism experience, providing comfort and convenience . Many businesses in the hospitality sector focus on delivering exceptional customer service to attract repeat visitors. Restaurants, cafes, and bars also play an enormous role, offering local flavors and unique dining experiences that enhance a tourist’s stay.

The Impact of Travel

The business of tourism relies heavily on transportation. From airlines to taxis, transportation allows people to explore new destinations. As tourists travel, they spend money on accommodations, dining, entertainment, and more, benefiting local businesses. This flow of visitors supports economies and creates jobs in areas that may rely heavily on tourism income.

How Does the Business of Tourism Benefit the Economy?

The benefits of tourism to the economy are significant and wide-reaching. Tourism contributes to economic growth, from creating jobs to generating revenue for local businesses . Whether it’s a popular tourist destination or a small town, the benefits of tourism to the economy can help communities thrive and develop.

Job Creation

One of tourism’s main benefits to the economy is job creation . Tourism supports various hospitality, transportation, and entertainment employment opportunities. Hotels, restaurants, and tour companies often rely on a steady stream of tourists to maintain their workforce. Additionally, jobs are created in industries that support tourism, such as construction, retail, and event planning. These jobs provide income for residents and help reduce unemployment, especially in regions heavily reliant on tourism.

Revenue Generation

Another benefit of tourism to the economy is revenue generation. Tourists spend money on accommodations, food, transportation, and entertainment. This spending boosts local economies by increasing business sales and generating tax revenue for governments. Many countries and cities rely on tourism as a significant source of income, using the money to improve infrastructure, fund public services, and promote future growth.

For instance, popular tourist destinations often invest in improving roads, airports, and public transportation to accommodate increasing visitors . This creates a cycle in which tourism supports economic development, and enhanced infrastructure attracts more tourists.

Supporting Local Businesses

Tourism also helps local businesses grow by bringing in a steady stream of customers. Small shops, restaurants, and local tour operators often benefit the most from tourism. As visitors explore new places, they spend money on local products and services, boosting profits for small businesses. The benefits of tourism to the economy can be especially noticeable in rural or less-developed areas, where tourism may be one of the few significant industries supporting local livelihoods.

What is the Business of Tourism Management?

The business of tourism management involves overseeing the operations, customer experience, and planning within the tourism industry. Successful management ensures that all parts of a tourism business work together smoothly to create memorable travel experiences while maintaining profitability.

Managing Operations

One key aspect of the business of tourism management is handling day-to-day operations. This includes managing accommodations, tours, transportation, and other services tourists rely on. Efficient operations management ensures that everything runs on time, resources are used effectively, and customers receive the services they expect. From coordinating hotel staff to organizing group tours, operations management plays a central role in keeping tourism businesses running smoothly.

Customer Experience

Enhancing the customer experience is a critical part of the business of tourism management. Tourists expect quality service, comfort, and convenience throughout their trip. Managers in the tourism industry must ensure that their services meet or exceed customer expectations. This involves everything from training staff in customer service to ensuring facilities’ cleanliness and transportation reliability. A great customer experience encourages repeat business, positive reviews, and lasting loyalty. These factors are crucial for success in the tourism industry.

Strategic Planning

Strategic planning is another essential element of the business of tourism management. This involves setting long-term goals, analyzing market trends, and creating strategies to attract more tourists. Managers need to be aware of changing customer preferences, shifts in global travel patterns, and new competition in the market. Tourism managers can ensure their businesses remain competitive by making informed decisions about marketing, pricing, and product offerings. Planning for growth, improving services, and staying updated on industry trends are vital responsibilities for those in the business of tourism management.

What is the Business Model of Tourism?

The business model of tourism refers to the structure and strategies tourism businesses use to generate revenue, deliver services, and engage with customers. Different tourism businesses follow various models depending on their size, target market, and the types of services they offer. Understanding the business model of tourism helps businesses remain competitive and profitable.

Revenue Streams

Revenue generation is a core element of any business model of tourism. Tourism businesses earn money through a variety of channels. Hotels and resorts, for instance, rely on room bookings, while travel agencies may earn commissions from booking flights, accommodations, and tours. 

Additional revenue can come from offering premium services like guided tours, spa treatments, or exclusive dining experiences. Some businesses also charge for experiences like adventure activities, cultural events, or transportation services. Diversifying revenue streams helps ensure a stable income, even during off-peak travel seasons.

Services Offered

Another essential part of the tourism business model is the range of services offered. Tourism businesses provide everything from basic accommodation and transport to more personalized services such as travel planning and tailored experiences. Successful tourism businesses tailor their services to match the needs and preferences of their target audience. 

For example, luxury resorts offer premium amenities like private pools and exclusive dining, while budget hotels focus on providing affordable and comfortable stays. A well-designed service offering is critical to attracting different types of tourists and meeting their expectations.

Customer Engagement

Engaging customers is a vital aspect of the tourism business model. This involves building strong relationships with travelers through marketing, customer service, and personalized experiences. 

Many tourism businesses use online platforms, social media, and travel apps to stay connected with their customers before, during, and after their trips. Positive customer engagement leads to repeat business and helps generate word-of-mouth recommendations and online reviews, which is essential in today’s travel industry.

How Do Hospitality and Tourism Connect in the Business of Tourism?

The hospitality and tourism business is closely intertwined, with every sector playing an important role in providing travelers with enjoyable and comfortable experiences. While tourism focuses on the movement of people from one destination to another, hospitality ensures that visitors have access to accommodations, food, and other essential services during their stay.

The Role of Hospitality in Tourism

Hospitality is a vital component of the hospitality and tourism business. Hotels, resorts, restaurants, and other hospitality services provide the foundation for any travel experience. When tourists visit a destination, they rely on these services for comfort, convenience, and relaxation. 

Whether it’s a luxury hotel or a budget-friendly hostel, the quality of hospitality can significantly affect a tourist’s overall experience. By offering excellent service, comfortable accommodations, and great dining options, the hospitality industry helps enhance a destination’s appeal.

Enhancing the Travel Experience

The business of hospitality and tourism works together to enhance the travel experience. Tourists often visit new places to see the sights and enjoy the local culture, food, and activities. Hospitality businesses play an essential role in delivering these experiences. 

Restaurants offer local cuisine, hotels provide comfortable stays, and tour operators often partner with local hospitality providers to ensure visitors have a well-rounded experience. This synergy between tourism and hospitality creates memorable experiences for travelers, which leads to positive reviews, repeat visits, and word-of-mouth recommendations.

Supporting Local Economies

Hospitality and tourism businesses also support local economies. When tourists spend money on hotels, restaurants, and entertainment, they generate revenue for local businesses. This income helps boost the local economy and create jobs in various sectors. 

Many tourism destinations rely heavily on the hospitality industry to cater to visitors’ needs, making the connection between these industries essential for economic growth. Tourism draws people in, while hospitality ensures they stay and enjoy the destination, creating a mutually beneficial relationship that fuels the local economy.

What is an Example of Business of Tourism in Action?

What is an example of a business of tourism? The business of tourism refers to the management of services that cater to travelers, including accommodations, transportation, dining, and attractions. In business tourism, professionals travel for work-related events like conferences, meetings, or exhibitions. Let’s look at real-world examples of how the business of tourism plays out, focusing on events and corporate travel.

Conferences and Their Economic Impact

A classic example of the business of tourism is the influence of large conferences on local economies. For instance, the Mobile World Congress in Barcelona attracts thousands of tech professionals worldwide. 

This event drives business tourism by boosting hotel bookings, restaurant reservations, and local transport use. It is a strong example of the business of tourism, where a major event brings financial benefits to the host city and facilitates global business networking.

Corporate Travel: A Constant Revenue Stream

Corporate travel is another important example of the business of tourism. For example, executives from an international company might travel for strategy meetings or to finalize business deals in a foreign country. 

They utilize services like hotels, taxis, and restaurants during these trips. This type of travel supports the local tourism industry while fostering cross-border collaboration. Corporate travel provides consistent demand for hospitality services, benefiting tourism year-round.

The Cricket World Cup: A Global Tourism Magnet

Another example of the business of tourism in action is the Cricket World Cup. This event draws fans and teams from around the globe, filling hotels, restaurants, and local attractions in host cities. 

The Cricket World Cup attracts spectators, media crews, sponsors, and corporate partners, all contributing to the local economy. This global event showcases how sports can drive business tourism, creating significant city revenue through increased demand for hospitality services and related industries.

The Impact and Importance of the Business of Tourism

The business of tourism plays a significant role in shaping local economies and creating opportunities across industries. From conferences and corporate travel to large-scale events like the Cricket World Cup, tourism connects various sectors such as hospitality, transportation, and entertainment.

The business of tourism helps boost job creation, generates revenue, and supports local businesses, while strategic management ensures smooth operations and memorable customer experiences. Whether through corporate travel or major global events, the business of tourism creates value for destinations and industries worldwide, highlighting its far-reaching impact on economies and business growth.

What is the business of tourism?

The business of tourism refers to the collection of industries and services that cater to travelers. This includes accommodations, transportation, entertainment, and hospitality, all working together to provide enjoyable travel experiences.

How does the business of tourism benefit the economy?

Tourism benefits the economy by creating jobs, generating revenue, and supporting local businesses. It drives economic growth by attracting visitors who spend money on accommodations, food, and entertainment.

 What is the business of tourism management?

The business of tourism management involves overseeing operations, improving customer experiences, and planning for future growth in tourism businesses. Managers ensure that hotels, travel agencies, and related services run smoothly and deliver high-quality experiences to travelers.

What is the business model of tourism?

The tourism business model focuses on how tourism businesses generate revenue and provide services. Revenue streams can come from accommodation bookings, tour packages, transportation, and premium services like guided tours or exclusive dining experiences. 

How do hospitality and tourism connect in the business of tourism?

The business of hospitality and tourism is closely linked. Hospitality services such as hotels and restaurants form the foundation of the tourism experience. Hospitality ensures that tourists have comfortable places to stay, eat, and relax.

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10 Economic impacts of tourism + explanations + examples

There are many economic impacts of tourism, and it is important that we understand what they are and how we can maximise the positive economic impacts of tourism and minimise the negative economic impacts of tourism.

Many argue that the tourism industry is the largest industry in the world. While its actual value is difficult to accurately determine, the economic potential of the tourism industry is indisputable. In fact, it is because of the positive economic impacts that most destinations embark on their tourism journey.

There is, however, more than meets the eye in most cases. The positive economic impacts of tourism are often not as significant as anticipated. Furthermore, tourism activity tends to bring with it unwanted and often unexpected negative economic impacts of tourism.

In this article I will discuss the importance of understanding the economic impacts of tourism and what the economic impacts of tourism might be. A range of positive and negative impacts are discussed and case studies are provided.

At the end of the post I have provided some additional reading on the economic impacts of tourism for tourism stakeholders , students and those who are interested in learning more.

 Foreign exchange earnings

Contribution to government revenues, employment generation, contribution to local economies, development of the private sector, infrastructure cost, increase in prices, economic dependence of the local community on tourism, foreign ownership and management, economic impacts of tourism: conclusion, further reading on the economic impacts of tourism, the economic impacts of tourism: why governments invest.

Tourism brings with it huge economic potential for a destination that wishes to develop their tourism industry. Employment, currency exchange, imports and taxes are just a few of the ways that tourism can bring money into a destination.

In recent years, tourism numbers have increased globally at exponential rates, as shown in the World Tourism Organisation data below.

There are a number of reasons for this growth including improvements in technology, increases in disposable income, the growth of budget airlines and consumer desires to travel further, to new destinations and more often.

Here are a few facts about the economic importance of the tourism industry globally:

• The tourism economy represents 5 percent of world GDP
• Tourism contributes to 6-7 percent of total employment
• International tourism ranks fourth (after fuels, chemicals and automotive products) in global exports
• The tourism industry is valued at US$1trillion a year
• Tourism accounts for 30 percent of the world’s exports of commercial services
• Tourism accounts for 6 percent of total exports
• 1.4billion international tourists were recorded in 2018 (UNWTO)
• In over 150 countries, tourism is one of five top export earners
• Tourism is the main source of foreign exchange for one-third of developing countries and one-half of less economically developed countries (LEDCs)

There is a wealth of data about the economic value of tourism worldwide, with lots of handy graphs and charts in the United Nations Economic Impact Report .

In short, tourism is an example of an economic policy pursued by governments because:

•      it brings in foreign exchange
•      it generates employment
•      it creates economic activity

Building and developing a tourism industry, however, involves a lot of initial and ongoing expenditure. The airport may need expanding. The beaches need to be regularly cleaned. New roads may need to be built. All of this takes money, which is usually a financial outlay required by the Government.

For governments, decisions have to be made regarding their expenditure. They must ask questions such as:

How much money should be spent on the provision of social services such as health, education, housing?

How much should be spent on building new tourism facilities or maintaining existing ones?

If financial investment and resources are provided for tourism, the issue of opportunity costs arises.

By opportunity costs, I mean that by spending money on tourism, money will not be spent somewhere else. Think of it like this- we all have a specified amount of money and when it runs out, it runs out. If we decide to buy the new shoes instead of going out for dinner than we might look great, but have nowhere to go…!

In tourism, this means that the money and resources that are used for one purpose may not then be available to be used for other purposes. Some destinations have been known to spend more money on tourism than on providing education or healthcare for the people who live there, for example.

This can be said for other stakeholders of the tourism industry too.

There are a number of independent, franchised or multinational investors who play an important role in the industry. They may own hotels, roads or land amongst other aspects that are important players in the overall success of the tourism industry. Many businesses and individuals will take out loans to help fund their initial ventures.

So investing in tourism is big business, that much is clear. What what are the positive and negative impacts of this?

Positive economic impacts of tourism

So what are the positive economic impacts of tourism? As I explained, most destinations choose to invest their time and money into tourism because of the positive economic impacts that they hope to achieve. There are a range of possible positive economic impacts. I will explain the most common economic benefits of tourism below.

One of the biggest benefits of tourism is the ability to make money through foreign exchange earnings.

Tourism expenditures generate income to the host economy. The money that the country makes from tourism can then be reinvested in the economy. How a destination manages their finances differs around the world; some destinations may spend this money on growing their tourism industry further, some may spend this money on public services such as education or healthcare and some destinations suffer extreme corruption so nobody really knows where the money ends up!

Some currencies are worth more than others and so some countries will target tourists from particular areas. I remember when I visited Goa and somebody helped to carry my luggage at the airport. I wanted to give them a small tip and handed them some Rupees only to be told that the young man would prefer a British Pound!

Currencies that are strong are generally the most desirable currencies. This typically includes the British Pound, American, Australian and Singapore Dollar and the Euro .

Tourism is one of the top five export categories for as many as 83% of countries and is a main source of foreign exchange earnings for at least 38% of countries.

Tourism can help to raise money that it then invested elsewhere by the Government. There are two main ways that this money is accumulated.

Direct contributions are generated by taxes on incomes from tourism employment and tourism businesses and things such as departure taxes.

Taxes differ considerably between destinations. I will never forget the first time that I was asked to pay a departure tax (I had never heard of it before then), because I was on my way home from a six month backpacking trip and I was almost out of money!

Japan is known for its high departure taxes. Here is a video by a travel blogger explaining how it works.

According to the World Tourism Organisation, the direct contribution of Travel & Tourism to GDP in 2018 was $2,750.7billion (3.2% of GDP). This is forecast to rise by 3.6% to $2,849.2billion in 2019.

Indirect contributions come from goods and services supplied to tourists which are not directly related to the tourism industry.

Take food, for example. A tourist may buy food at a local supermarket. The supermarket is not directly associated with tourism, but if it wasn’t for tourism its revenues wouldn’t be as high because the tourists would not shop there.

There is also the income that is generated through induced contributions . This accounts for money spent by the people who are employed in the tourism industry. This might include costs for housing, food, clothing and leisure Activities amongst others. This will all contribute to an increase in economic activity in the area where tourism is being developed.

The rapid expansion of international tourism has led to significant employment creation. From hotel managers to theme park operatives to cleaners, tourism creates many employment opportunities. Tourism supports some 7% of the world’s workers.

There are two types of employment in the tourism industry: direct and indirect.

Direct employment includes jobs that are immediately associated with the tourism industry. This might include hotel staff, restaurant staff or taxi drivers, to name a few.

Indirect employment includes jobs which are not technically based in the tourism industry, but are related to the tourism industry. Take a fisherman, for example. He does not have any contact of dealings with tourists. BUT he does sell his fish to the hotel which serves tourists. So he is indirectly employed by the tourism industry, because without the tourists he would not be supplying the fish to the hotel.

It is because of these indirect relationships, that it is very difficult to accurately measure the economic value of tourism.

It is also difficult to say how many people are employed, directly and indirectly, within the tourism industry.

Furthermore, many informal employments may not be officially accounted for. Think tut tut driver in Cambodia or street seller in The Gambia – these people are not likely to be registered by the state and therefore their earnings are not declared.

It is for this reason that some suggest that the actual economic benefits of tourism may be as high as double that of the recorded figures!

All of the money raised, whether through formal or informal means, has the potential to contribute to the local economy.

If sustainable tourism is demonstrated, money will be directed to areas that will benefit the local community most.

There may be pro-poor tourism initiatives (tourism which is intended to help the poor) or volunteer tourism projects.

The government may reinvest money towards public services and money earned by tourism employees will be spent in the local community. This is known as the multiplier effect.

The multiplier effect relates to spending in one place creating economic benefits elsewhere. Tourism can do wonders for a destination in areas that may seem to be completely unrelated to tourism, but which are actually connected somewhere in the economic system.

Let me give you an example.

A tourist buys an omelet and a glass of orange juice for their breakfast in the restaurant of their hotel. This simple transaction actually has a significant multiplier effect. Below I have listed just a few of the effects of the tourist buying this breakfast.

The waiter is paid a salary- he spends his salary on schooling for his kids- the school has more money to spend on equipment- the standard of education at the school increases- the kids graduate with better qualifications- as adults, they secure better paying jobs- they can then spend more money in the local community…

The restaurant purchases eggs from a local farmer- the farmer uses that money to buy some more chickens- the chicken breeder uses that money to improve the standards of their cages, meaning that the chickens are healthier, live longer and lay more eggs- they can now sell the chickens for a higher price- the increased money made means that they can hire an extra employee- the employee spends his income in the local community…

The restaurant purchase the oranges from a local supplier- the supplier uses this money to pay the lorry driver who transports the oranges- the lorry driver pays road tax- the Government uses said road tax income to fix pot holes in the road- the improved roads make journeys quicker for the local community…

So as you can see, that breakfast that the tourist probably gave not another thought to after taking his last mouthful of egg, actually had the potential to have a significant economic impact on the local community!

The private sector has continuously developed within the tourism industry and owning a business within the private sector can be extremely profitable; making this a positive economic impact of tourism.

Whilst many businesses that you will come across are multinational, internationally-owned organisations (which contribute towards economic leakage ).

Many are also owned by the local community. This is the case even more so in recent years due to the rise in the popularity of the sharing economy and the likes of Airbnb and Uber, which encourage the growth of businesses within the local community.

Every destination is different with regards to how they manage the development of the private sector in tourism.

Some destinations do not allow multinational organisations for fear that they will steal business and thus profits away from local people. I have seen this myself in Italy when I was in search of a Starbucks mug for my collection , only to find that Italy has not allowed the company to open up any shops in their country because they are very proud of their individually-owned coffee shops.

Negative economic impacts of tourism

Unfortunately, the tourism industry doesn’t always smell of roses and there are also several negative economic impacts of tourism.

There are many hidden costs to tourism, which can have unfavourable economic effects on the host community.

Whilst such negative impacts are well documented in the tourism literature, many tourists are unaware of the negative effects that their actions may cause. Likewise, many destinations who are inexperienced or uneducated in tourism and economics may not be aware of the problems that can occur if tourism is not management properly.

Below, I will outline the most prominent negative economic impacts of tourism.

Economic leakage in tourism is one of the major negative economic impacts of tourism. This is when money spent does not remain in the country but ends up elsewhere; therefore limiting the economic benefits of tourism to the host destination.

The biggest culprits of economic leakage are multinational and internationally-owned corporations, all-inclusive holidays and enclave tourism.

I have written a detailed post on the concept of economic leakage in tourism, you can take a look here- Economic leakage in tourism explained .

Another one of the negative economic impacts of tourism is the cost of infrastructure. Tourism development can cost the local government and local taxpayers a great deal of money.

Tourism may require the government to improve the airport, roads and other infrastructure, which are costly. The development of the third runway at London Heathrow, for example, is estimated to cost £18.6billion!

Money spent in these areas may reduce government money needed in other critical areas such as education and health, as I outlined previously in my discussion on opportunity costs.

One of the most obvious economic impacts of tourism is that the very presence of tourism increases prices in the local area.

Have you ever tried to buy a can of Coke in the supermarket in your hotel? Or the bar on the beachfront? Walk five minutes down the road and try buying that same can in a local shop- I promise you, in the majority of cases you will see a BIG difference In cost! (For more travel hacks like this subscribe to my newsletter – I send out lots of tips, tricks and coupons!)

Increasing demand for basic services and goods from tourists will often cause price hikes that negatively impact local residents whose income does not increase proportionately.

Tourism development and the related rise in real estate demand may dramatically increase building costs and land values. This often means that local people will be forced to move away from the area that tourism is located, known as gentrification.

Taking measures to ensure that tourism is managed sustainably can help to mitigate this negative economic impact of tourism. Techniques such as employing only local people, limiting the number of all-inclusive hotels and encouraging the purchasing of local products and services can all help.

Another one of the major economic impacts of tourism is dependency. Many countries run the risk of becoming too dependant on tourism. The country sees $ signs and places all of its efforts in tourism. Whilst this can work out well, it is also risky business!

If for some reason tourism begins to lack in a destination, then it is important that the destination has alternative methods of making money. If they don’t, then they run the risk of being in severe financial difficulty if there is a decline in their tourism industry.

In The Gambia, for instance, 30% of the workforce depends directly or indirectly on tourism. In small island developing states, percentages can range from 83% in the Maldives to 21% in the Seychelles and 34% in Jamaica.

There are a number of reasons that tourism could decline in a destination.

The Gambia has experienced this just recently when they had a double hit on their tourism industry. The first hit was due to political instability in the country, which has put many tourists off visiting, and the second was when airline Monarch went bust, as they had a large market share in flights to The Gambia.

Other issues that could result in a decline in tourism includes economic recession, natural disasters and changing tourism patterns. Over-reliance on tourism carries risks to tourism-dependent economies, which can have devastating consequences.

The last of the negative economic impacts of tourism that I will discuss is that of foreign ownership and management.

As enterprise in the developed world becomes increasingly expensive, many businesses choose to go abroad. Whilst this may save the business money, it is usually not so beneficial for the economy of the host destination.

Foreign companies often bring with them their own staff, thus limiting the economic impact of increased employment. They will usually also export a large proportion of their income to the country where they are based. You can read more on this in my post on economic leakage in tourism .

As I have demonstrated in this post, tourism is a significant economic driver the world over. However, not all economic impacts of tourism are positive. In order to ensure that the economic impacts of tourism are maximised, careful management of the tourism industry is required.

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Understanding the Travel and Tourism Sector: A Business Perspective

The world of business is inextricably linked with the realm of travel and tourism. From corporate travel arrangements to the operation of hospitality giants, this sector plays a pivotal role in the global economy.

The travel and tourism industry is not merely about vacations and leisure; it encompasses a diverse array of activities, services, and businesses that fuel economies, create jobs, and shape the way we explore the world.

In this article, we will embark on a journey to understand the intricacies of the travel and tourism sector from a business standpoint. We will explore its significance in the global economy, delve into the core components of the industry, examine the economic impact, and discuss emerging trends and challenges.

Moreover, we will shed light on the business aspects of travel, highlighting the key players, revenue streams, and marketing strategies that drive success.

But why should business professionals, beyond those directly involved in tourism, care about this sector? The answer lies in the fact that travel and tourism intersect with nearly every industry. Whether you’re in finance, technology, healthcare, or any other field, understanding how this sector operates can unlock opportunities for growth, collaboration, and innovation.

So, fasten your seatbelts and prepare for a journey through the multifaceted world of travel and tourism, where business meets exploration and economic growth meets wanderlust.

Travel and Tourism

Travel and tourism refer to the activities, services, and industries associated with people traveling to and staying in places outside their usual place of residence for leisure, business, or other purposes.

The Core Components of Travel and Tourism

At its heart, the travel and tourism sector comprises several key components, each playing a unique role in the industry’s ecosystem. Understanding these components is crucial for any business professional aiming to navigate this dynamic sector effectively.

Here are the primary elements:

1. Accommodation: Accommodation providers are the backbone of the tourism industry. They include hotels, resorts, vacation rentals, and even unconventional options like Airbnb. These establishments cater to travelers by offering a place to stay, ranging from budget to luxury.

2. Transportation: Travel relies heavily on transportation. This segment encompasses airlines, cruise lines, railways, car rental services, and public transportation systems. Efficient transportation networks are vital for connecting travelers to their destinations.

3. Food and Beverage: Dining experiences are an integral part of any trip. This category includes restaurants, cafes, food trucks, and bars. Culinary tourism, where travelers explore local cuisine, has become a significant trend within this segment.

4. Travel Agencies: Travel agencies and tour operators serve as intermediaries between travelers and service providers. They help plan itineraries, book accommodations, and arrange transportation, making the travel process more convenient.

5. Attractions and Entertainment: Tourist destinations offer various attractions, from historical sites and museums to theme parks and natural wonders. Entertainment options such as theaters and music venues also contribute to the overall travel experience.

6. Travel Technology: In the digital age, technology has transformed the way people plan and experience travel. Online booking platforms, travel apps, and services like TripAdvisor have reshaped the industry’s landscape.

7. Tourism Services: This category includes a range of services such as travel insurance, currency exchange, and visa assistance. These services ensure that travelers are prepared for their journeys and can navigate any unforeseen challenges.

8. Destination Management: Local governments and organizations play a pivotal role in managing and promoting tourist destinations. They invest in infrastructure, marketing, and sustainability efforts to attract visitors.

The Economic Impact of Travel and Tourism

From a business perspective, it’s essential to grasp the significant economic impact of the travel and tourism sector. This industry is a global economic powerhouse that generates jobs, fosters investment and drives economic growth.

Here are some key statistics to illustrate the significance of travel and tourism :

• Job Creation: Travel and tourism directly support over 330 million jobs worldwide, accounting for 1 in 10 jobs globally.
• Contribution to GDP: In 2022, the travel and tourism sector contributed 7.6% to global GDP, highlighting its substantial economic footprint.
• Investment Magnet: This sector attracts investments in infrastructure, hotels, transportation, and more, further stimulating economic activity.
• Foreign Exchange Earnings: Tourism often serves as a vital source of foreign exchange earnings for many countries, boosting their balance of payments.
• SME Growth: Small and medium-sized enterprises (SMEs) play a significant role in the sector, benefiting from the opportunities created by tourism-related businesses.

The economic interplay between tourism and other industries is intricate.

For instance, the hospitality sector relies on agriculture for food supplies, airlines depend on the aerospace industry for aircraft and tourist destinations often collaborate with local artisans and businesses to promote cultural experiences.

In the business world, recognizing the economic clout of travel and tourism can open doors for collaboration, investment, and innovation. Many companies, even those seemingly unrelated to tourism, can find ways to tap into this lucrative market.

Emerging Trends and Challenges

The travel and tourism sector is continuously evolving, driven by changing consumer preferences, technological advancements, and global events. Business professionals must stay attuned to these trends and challenges to adapt and thrive in this dynamic industry.

Here are some notable developments:

1. Sustainable Tourism: Travelers increasingly prioritize eco-friendly and sustainable practices. Businesses that adopt green initiatives not only reduce their environmental footprint but also attract environmentally conscious travelers.

2. Digital Transformation: The digitalization of travel services has reshaped how consumers plan and book trips. Online platforms, artificial intelligence, and data analytics are instrumental in personalizing travel experiences.

3. Health and Safety: Recent global health crises have heightened travelers’ concerns about safety and hygiene. Businesses must implement robust health and safety measures to regain consumer trust.

4. Shifts in Travel Behavior: The pandemic has brought about changes in travel behavior, with a focus on remote and nature-based destinations. Companies need to adapt their offerings to cater to these evolving preferences.

5. Regulatory Challenges: Navigating complex regulations, including visa requirements and health protocols, can be a challenge for travel businesses. Staying informed and compliant is crucial.

6. Geopolitical Factors: Political instability and international relations can significantly impact the tourism industry. Businesses must be prepared to adapt to changing geopolitical landscapes.

The Business of Travel and Tourism

Understanding how businesses operate within this sector is essential for both industry insiders and entrepreneurs looking to tap into this thriving market.

Role of Businesses in the Travel Sector

Businesses play a pivotal role in shaping the travel and tourism landscape. Whether you’re a hotel chain, an airline, a tour operator, or a travel agency, your role is multifaceted, encompassing everything from customer service to marketing and sustainability initiatives.

• Customer-Centric Approach : At the heart of every successful travel and tourism business is a deep commitment to customer satisfaction. Travelers today expect exceptional service and unique experiences. From the moment a traveler starts planning their trip to the time they return home, businesses must focus on providing top-notch services, personalized recommendations, and seamless experiences.
• Innovation and Adaptation : The travel industry is highly competitive and constantly evolving. Successful businesses in this sector are those that innovate and adapt to changing trends. This could mean embracing digital technology, offering eco-friendly options, or creating new and exciting travel packages.

Business Models and Revenue Streams

To thrive in the travel and tourism sector, businesses employ various revenue models tailored to their specific niches. Here are a few common business models:

• Hospitality and Accommodation : Hotels, resorts, and vacation rentals rely on room bookings and additional services such as dining, spa treatments, and event hosting to generate revenue.
• Airlines and Transportation : Airlines make money through ticket sales, baggage fees, in-flight services, and partnerships with other travel-related businesses. Transportation services like taxis, trains, and cruise lines have similar revenue structures.
• Tour Operators and Travel Agencies : These businesses profit from organizing and selling travel packages, tours, and experiences. Commissions, booking fees, and tour sales are primary income sources.
• Online Travel Agencies (OTAs) : OTAs like Expedia and Booking.com aggregate information from various travel service providers and earn commissions on bookings made through their platforms.

Customer Experience and Service Excellence

In the digital age, the travel and tourism sector is driven by customer reviews and recommendations. Travelers share their experiences online, influencing the choices of others. Therefore, providing exceptional customer service is paramount. Here are some strategies to achieve service excellence:

• Personalization : Tailor recommendations and services to individual preferences.
• Seamless Booking and Travel : Make the booking process simple and provide support throughout the journey.
• Feedback and Improvement : Collect customer feedback and use it to enhance services continually.
• Crisis Management : Be prepared to handle unexpected situations, such as flight cancellations or health emergencies, with professionalism and empathy.

Marketing and Promotion Strategies

Effective marketing is essential for attracting travelers to your business. Here are some strategies commonly used in the travel and tourism industry:

• Digital Marketing : Utilize online channels such as social media, search engine optimization (SEO), email marketing, and paid advertising to reach a global audience.
• Content Marketing : Create engaging content, including blog posts, videos, and travel guides, to inspire and inform potential travelers.
• Partnerships : Collaborate with influencers, other businesses, and tourism boards to expand your reach and access new markets.
• Sustainability Promotion : Highlight your commitment to sustainable and responsible travel practices, as eco-conscious travelers seek eco-friendly options.

The business of travel and tourism is a multifaceted realm that demands a relentless focus on customer satisfaction, innovation, and responsible practices.

Success in this sector requires a deep understanding of your niche, a commitment to service excellence, and strategic marketing efforts. As the travel industry continues to evolve, businesses that can adapt and offer unique, memorable experiences will undoubtedly thrive in this exciting and ever-changing market.

Key Players in the Travel and Tourism Industry

As we dive deeper into the business of travel and tourism, it’s crucial to recognize the key players that shape this industry. These players, ranging from airlines to accommodation providers and travel agencies, contribute to the diverse ecosystem of travel and tourism.

Understanding their roles and significance is essential for anyone interested in this dynamic sector.

Airlines and Aviation

Airlines are the lifelines of global travel. They provide the means for travelers to reach their destinations quickly and efficiently. Here’s an overview of their role in the industry:

• Passenger Transportation : Airlines transport millions of passengers daily, connecting cities and countries across the globe. They generate revenue through ticket sales, baggage fees, and in-flight services.
• Cargo Services : Airlines also play a pivotal role in transporting goods and cargo, contributing significantly to international trade and logistics.
• Global Networks : Major airlines operate extensive global networks, allowing travelers to reach virtually any corner of the world.

Hotel Chains and Accommodation Providers

The hospitality sector, including hotels, resorts, and vacation rentals, is another cornerstone of the travel and tourism industry. Here’s how they contribute:

• Lodging : These businesses offer lodging options, from budget-friendly to luxury, catering to diverse traveler preferences.
• Dining and Services : Many hotels provide dining options, spa services, event hosting, and recreational facilities, enhancing the guest experience and generating additional revenue.
• Destination Attraction : Iconic hotels and resorts often become attractions in themselves, drawing travelers to specific destinations.

Tour Operators and Travel Agencies

Tour operators and travel agencies specialize in creating and selling travel packages and experiences. Their roles include:

• Curating Experiences : They design itineraries and packages that offer unique and immersive travel experiences, from adventure tours to cultural excursions.
• Booking and Logistics : These businesses handle the logistics of travel, including accommodations, transportation, and activities, streamlining the process for travelers.
• Expertise : Tour operators and travel agencies provide expert guidance, helping travelers navigate complex travel decisions.

Destination Management Companies

Destination management companies (DMCs) focus on specific regions or destinations. Their roles encompass:

• Local Expertise : DMCs have in-depth knowledge of their respective destinations, enabling them to offer specialized services and experiences.
• Customized Services : They work closely with travel planners and agencies to tailor experiences for groups and individuals.
• Sustainability : DMCs often play a vital role in promoting responsible tourism practices within their destinations.

Online Travel Agencies (OTAs)

Online travel agencies have become a dominant force in the industry, leveraging digital platforms to connect travelers with various travel services. Here’s what they do:

• Aggregation : OTAs aggregate information from airlines, hotels, and other travel service providers, offering a wide array of choices to travelers.
• Booking Platforms : They provide convenient booking platforms, allowing travelers to book flights, accommodations, and more in one place.
• Reviews and Recommendations : OTAs often feature user reviews and recommendations, influencing traveler decisions.

Understanding the roles of these key players in the travel and tourism industry is essential for anyone considering entering this sector.

Each player contributes uniquely to the travel experience, from transportation to accommodation and beyond. Successful businesses often collaborate with multiple stakeholders to offer comprehensive and memorable travel experiences to their customers.

Travel and Tourism Post-COVID-19

The travel and tourism industry, like many others, faced unprecedented challenges during the COVID-19 pandemic. Lockdowns, travel restrictions, and health concerns brought international travel to a standstill. However, the industry has displayed remarkable resilience and adaptability.

Let’s explore how the sector is recovering and adapting in a post-pandemic world.

Impact of the Pandemic on the Industry

• Travel Restrictions : Stringent travel restrictions, including border closures and quarantine requirements, severely impacted international travel. Airlines faced a sharp decline in passenger numbers.
• Hospitality Struggles : Hotels and accommodation providers experienced a dramatic drop in occupancy rates. Many temporarily closed or adapted to offer quarantine and isolation services.
• Cruise Industry Challenges : Cruise lines faced significant setbacks due to onboard outbreaks. The industry had to reimagine health and safety protocols.
• Shift to Domestic Travel : With international travel restrictions, many travelers turned to domestic and regional destinations, boosting local tourism.
• Digital Transformation : The pandemic accelerated the adoption of digital technologies for contactless bookings, health monitoring, and communication.

Recovery and Adaptation Strategies

The travel and tourism industry is rebounding, thanks to a combination of factors:

• Vaccination Campaigns : Widespread vaccination campaigns have increased traveler confidence, making international travel safer.
• Health and Safety Protocols : Airlines, hotels, and other businesses have implemented robust health and safety measures to reassure travelers.
• Flexible Booking Policies : Many travel companies introduced flexible booking and cancellation policies to accommodate changing travel plans.
• Sustainability Focus : There’s a growing emphasis on sustainable and responsible tourism, with businesses integrating eco-friendly practices.
• Digitalization : The industry continues to embrace digital technologies, offering contactless experiences and personalized services.
• Collaboration : Stakeholders across the industry are collaborating to rebuild and promote destinations.

Future Outlook and Resilience

The travel and tourism industry is poised for recovery and growth in the coming years. Here’s what the future may hold:

• Pent-Up Demand : Many travelers postponed their plans during the pandemic, leading to pent-up demand for leisure and business travel.
• Sustainable Travel : Sustainable and eco-conscious travel is gaining momentum. Travelers are increasingly choosing destinations and businesses committed to environmental responsibility.
• Tech Integration : Technology will continue to play a significant role, with advancements in AI, mobile apps, and data analytics enhancing the travel experience.
• Health and Safety : Health and safety measures will remain a priority, with businesses maintaining rigorous protocols.
• Remote Work and Travel : Remote work trends may encourage a blend of work and leisure travel, with more extended stays in diverse locations.
• Resilience Planning : The industry is developing resilience plans to better handle future crises and disruptions.

The travel and tourism industry’s ability to adapt and innovate in the face of adversity demonstrates its resilience. As it recovers and evolves, it offers promising opportunities for businesses and travelers alike.

The key to success lies in embracing change, prioritizing safety, and delivering exceptional experiences that meet the evolving needs of travelers in a changing world.

Sustainable Tourism and Responsible Business Practices

In a world increasingly concerned about the environment and social responsibility, the travel and tourism industry is under scrutiny to adopt more sustainable and responsible practices.

Let’s delve into the importance of sustainable tourism and how businesses can contribute to a greener and more ethical travel sector.

Environmental and Social Responsibility

• Reducing Carbon Footprint : The travel industry is a significant contributor to greenhouse gas emissions. Airlines, for example, are exploring biofuels and more fuel-efficient aircraft to reduce their carbon footprint.
• Preserving Natural Resources : Eco-conscious travelers seek destinations that protect and preserve natural resources. Businesses can contribute by implementing eco-friendly initiatives like energy-efficient facilities and waste reduction programs.
• Conservation Efforts : Supporting local conservation projects and wildlife protection initiatives can be a part of responsible tourism. This can involve financial contributions or active participation.
• Respecting Local Cultures : Responsible tourism respects and celebrates local cultures and traditions. It involves engaging with local communities in a respectful and sustainable manner.
• Community Involvement : Businesses can support the communities they operate in through job creation, fair wages, and community development projects.

Sustainable Tourism Certifications and Initiatives

• Eco-Certifications : Numerous certifications, such as EarthCheck and Green Key , help businesses showcase their commitment to sustainability. These certifications often involve rigorous audits of a company’s environmental practices.
• Zero-Waste Initiatives : Some hotels and resorts aim to become zero-waste establishments, recycling and repurposing nearly all their waste.
• Wildlife Conservation : Tour operators and businesses can partner with wildlife conservation organizations to promote ethical wildlife experiences.
• Local Sourcing : Restaurants and hotels can prioritize local sourcing of food and materials, reducing transportation-related carbon emissions.
• Plastic Reduction : Many businesses are eliminating single-use plastics and opting for sustainable alternatives.

Benefits of Responsible Tourism for Businesses

• Competitive Advantage : Travelers increasingly seek sustainable and responsible options. Businesses that embrace these practices gain a competitive edge.
• Cost Savings : Sustainable practices often lead to cost savings through reduced energy and resource consumption.
• Enhanced Reputation : Businesses committed to responsible tourism build a positive reputation and attract like-minded customers.
• Legal Compliance : Adhering to eco-friendly and ethical standards ensures compliance with evolving environmental and social regulations.
• Long-Term Viability : By protecting the environment and supporting local communities, businesses contribute to the long-term viability of their destinations.
• Guest Satisfaction : Eco-conscious travelers appreciate businesses that share their values, leading to higher guest satisfaction and loyalty.

The travel and tourism sector’s future hinges on sustainable and responsible practices. Businesses that prioritize environmental and social responsibility not only contribute to a healthier planet but also position themselves for long-term success in an industry undergoing profound changes.

As a business professional, understanding and adopting these practices can be a strategic advantage in a world where ethical considerations increasingly influence consumer choices.

Hostile Takeovers

In a hostile takeover, the acquiring company pursues the target company despite the target’s resistance. Hostile takeovers often involve aggressive tactics, such as tender offers directly to shareholders or attempts to replace the target’s board of directors.

Case Studies: Successful Businesses in Travel and Tourism

To gain deeper insights into the strategies and approaches that have propelled certain businesses to success in the travel and tourism sector, let’s examine a few notable case studies.

These examples showcase how innovation, adaptability, and a customer-centric approach can make a significant impact in this dynamic industry.

Airbnb: Revolutionizing Accommodation

Airbnb, founded in 2008, has transformed the hospitality sector. This online marketplace connects travelers with unique accommodations offered by hosts worldwide. What sets Airbnb apart?

Key Success Factors:

• Platform Model : Airbnb operates as a platform, allowing hosts to list their properties and travelers to book them. This asset-light model means Airbnb doesn’t own properties, reducing capital requirements.
• User Reviews : User-generated reviews and ratings build trust among users. Travelers can make informed choices based on the experiences of previous guests.
• Personalization : Airbnb’s recommendation engine suggests accommodations based on user preferences, enhancing the customer experience.
• Diverse Offerings : From treehouses to castles, Airbnb offers a wide range of unique accommodations, appealing to travelers seeking authentic experiences.
• Host Community : Airbnb invests in building a strong host community, providing support and resources to hosts.

Cross-Border Mergers and Acquisitions: Global Expansion

Cross-border M&A transactions involve companies from different countries coming together. These deals offer opportunities for global expansion but also present unique challenges.

Booking.com: Data-Driven Booking

Booking.com, founded in 1996, is a global online travel agency. It leverages technology and data to simplify travel booking.

• Vast Inventory : Booking.com offers a wide range of accommodation options, from hotels to vacation rentals. This extensive inventory caters to diverse traveler preferences.
• User Experience : The platform’s user-friendly interface and transparent booking process contribute to its popularity.
• Data Analytics : Booking.com uses data analytics to understand traveler behavior, enabling personalized recommendations and pricing strategies.
• Global Reach : With a presence in over 220 countries and territories, Booking.com serves a global audience.
• Instant Confirmation : Providing real-time booking confirmation enhances the customer experience.

Delta Air Lines: Customer-Centric Air Travel

Delta Air Lines, a major U.S. carrier founded in 1924, is known for its customer-centric approach.

• Reliability : Delta prioritizes operational reliability, minimizing flight cancellations and delays.
• Fleet Upgrades : Investing in a modern and efficient fleet enhances the passenger experience and reduces operating costs.
• Customer Service : Delta emphasizes excellent customer service, and its efforts are reflected in high customer satisfaction ratings.
• Global Alliances : Participation in global airline alliances expands route networks and offers travelers more choices.
• Innovation : Delta embraces innovation, introducing features like biometric boarding and in-flight entertainment options.

These case studies highlight the diverse strategies and approaches that have driven success in the travel and tourism sector. From disruptive online marketplaces to data-driven booking platforms and customer-centric airlines, businesses that prioritize innovation, customer experience, and adaptability are well-positioned for growth.

By studying these examples, business professionals can gain valuable insights into the industry’s evolving landscape and identify opportunities to innovate and excel in their own travel and tourism endeavors.

Lessons Learned from Industry Leaders

The travel and tourism sector offers a treasure trove of lessons for business professionals across various industries. Let’s distill some key takeaways from the successes and innovations of industry leaders:

1. Customer-Centricity Is Paramount

Whether you’re running an airline, hotel, or travel agency, prioritizing the customer experience is non-negotiable. Happy and satisfied customers become loyal patrons and brand advocates. Invest in personalized services, efficient booking processes, and responsive customer support.

2. Embrace Technology and Data

Technology is a game-changer in the travel industry. From data analytics that inform pricing strategies to mobile apps that enhance on-the-go experiences, leveraging technology can set your business apart. Be open to adopting new tools and systems that improve efficiency and customer satisfaction.

3. Diversity and Choice Matter

Offering a diverse range of products or services can attract a broader audience. In the travel sector, this means providing various accommodation types, transportation options, and tour packages. Embrace diversity to meet the unique preferences of your customers.

4. Transparency Builds Trust

Transparency in pricing, policies, and terms and conditions builds trust with customers. Hidden fees and ambiguous policies can lead to dissatisfaction. Clear communication and honesty go a long way in establishing credibility.

5. Sustainability Is the Future

Sustainability and responsible tourism are becoming central to the industry’s ethos. Travelers are increasingly conscious of their environmental impact. Consider eco-friendly practices and promote responsible tourism. It’s not only good for the planet but also a selling point for your business.

6. Innovate or Stagnate

Innovation is the lifeblood of the travel and tourism sector. Whether it’s introducing new services, improving efficiency, or enhancing the customer journey, staying ahead requires a commitment to innovation. Monitor industry trends and be open to creative solutions.

7. Globalization Expands Reach

Participating in global networks and alliances can expand your business’s reach. Collaborate with international partners to offer customers a wider range of options. Globalization also provides resilience in the face of economic fluctuations.

8. Resilience Is Crucial

The industry has weathered numerous storms, from economic crises to health emergencies. Building resilience into your business plans, such as having contingency measures for crises, is essential. Flexibility and adaptability are key.

9. Community and Culture Matter

Embrace the culture and communities where your business operates. Engage with local communities, respect their traditions, and contribute positively. This fosters goodwill and can lead to meaningful partnerships.

10. Continuous Learning Is a Competitive Advantage

The travel and tourism sector is ever-evolving. Continuous learning and staying informed about industry trends and regulations are essential. Attend conferences, workshops, and industry events to network and gain insights.

Incorporating these lessons into your business strategy can set you on a path to success in the dynamic and rewarding world of travel and tourism. By combining innovation, customer focus, and a commitment to sustainability, you can thrive in an industry that promises new horizons and unforgettable experiences for travelers worldwide.

The travel and tourism sector represents a dynamic and resilient industry with a significant impact on the global economy. As a business professional, understanding the nuances and opportunities within this sector is paramount. In this comprehensive guide, we’ve explored the multifaceted world of travel and tourism, delving into its significance, components, trends, and challenges.

We’ve seen how the industry intersects with business, offering a wide array of opportunities for entrepreneurs and established enterprises alike. Whether you’re considering venturing into travel-related ventures or seeking to enhance an existing business through tourism, the sector holds immense potential.

Key takeaways from this exploration include:

• The Economic Powerhouse : Travel and tourism contribute significantly to GDP, job creation, and foreign exchange earnings in many countries. This sector’s resilience is evident through its ability to rebound from crises.
• Diverse Components : The industry encompasses hospitality, transportation, attractions, travel services, and more, creating a rich tapestry of business opportunities.
• Trends and Challenges : Emerging trends like sustainable tourism and digital transformation offer avenues for innovation. Yet, challenges such as health concerns and environmental responsibility must be addressed.
• The Business of Tourism : Customer-centricity, technology adoption, transparency, and sustainability are vital principles for success in this sector.
• Key Players : Airlines, hotel chains, tour operators, and online travel agencies are among the key players shaping the industry’s landscape.
• Post-COVID-19 Era : The pandemic prompted significant shifts in travel behavior. Recovery strategies and adaptability are critical for businesses in the post-COVID-19 world.
• Sustainable Tourism : Responsible practices not only benefit the environment but also appeal to conscious travelers and can drive business success.
• Lessons from Industry Leaders : Customer-centricity, innovation, transparency, and resilience are valuable takeaways from successful travel and tourism businesses.

As the world evolves, so do the travel and tourism opportunities. By staying informed, embracing innovation, and aligning with sustainability, you can position your business for success in an industry that promises both profitability and the chance to create unforgettable experiences for travelers around the globe.

Now, armed with insights from this guide, you’re better equipped to navigate the exciting and ever-changing world of travel and tourism, contributing to its growth and shaping its future. Bon voyage!

• United Nations World Tourism Organization (UNWTO). (2022). Tourism Highlights 2022 Edition. Link
• World Travel & Tourism Council (WTTC). (2022). Economic Impact Reports. Link
• International Air Transport Association (IATA). (2022). IATA Economics. Link
• Deloitte. (2022). Travel, Hospitality, and Leisure Reports. Link
• Statista. (2022). Statistics and Market Data on Travel and Tourism. Link
• McKinsey & Company. (2022). Travel, Logistics & Transport Infrastructure. Link
• Booking.com. (2023). Link
• TripAdvisor. (2023). GreenLeaders. Link
• The New York Times. (2023). Travel and Tourism. Link
• National Geographic. (2023). Sustainable Travel. Link
• The World Bank. (2023). Tourism. Link
• World Tourism Organization (2022). Global Code of Ethics for Tourism. Link

Tumisang Bogwasi

2X Award-Winning Entrepreneur | Empowering Brands to Generate Leads, Grow Revenue with Business Strategy and Digital Marketing | Founder, CEO of Fine Group

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• Understanding Poverty
• Competitiveness

Tourism and Competitiveness

• Publications

The tourism sector provides opportunities for developing countries to create productive and inclusive jobs, grow innovative firms, finance the conservation of natural and cultural assets, and increase economic empowerment, especially for women, who comprise the majority of the tourism sector’s workforce. Before the COVID-19 pandemic, tourism was the world’s largest service sector—providing one in ten jobs worldwide,  almost seven percent of all international trade and  25 percent of the world’s service exports —a critical foreign exchange generator.  In 2019 the sector was valued at more than US$9 trillion and accounted for 10.4 percent of global GDP.

Tourism offers opportunities for economic diversification and market-creation. When effectively managed, its deep local value chains can expand demand for existing and new products and services that directly and positively impact the poor and rural/isolated communities. The sector can also be a force for biodiversity conservation, heritage protection, and climate-friendly livelihoods, making up a key pillar of the blue/green economy. This potential is also associated with social and environmental risks, which need to be managed and mitigated to maximize the sector’s net-positive benefits.

The impact of the COVID-19 pandemic has been devastating for tourism service providers, with a loss of 20 percent of all tourism jobs (62 million), and US$1.3 trillion in export revenue, leading to a reduction of 50 percent of its  contribution to GDP  in 2020 alone. The collapse of demand has severely impacted the livelihoods of tourism-dependent communities, small businesses and women-run enterprises. It has also reduced government tax revenues and constrained the availability of resources for destination management and site conservation.

Naturalist local guide with group of tourist in Cuyabeno Wildlife Reserve Ecuador. Photo: Ammit Jack/Shutterstock

Tourism and Competitiveness Strategic Pillars

Our solutions are integrated across the following areas:

• Competitive and Productive Tourism Markets. We work with government and private sector stakeholders to foster competitive tourism markets that create productive jobs, improve visitor expenditure and impact, and are supportive of high-growth, innovative firms. To do so we offer guidance on firm and destination level recovery, policy and regulatory reforms, demand diversification, investment promotion and market access. 
• Blue, Green and Resilient Tourism Economies. We support economic diversification to sustain natural capital and tourism assets, prepare for external and climate-related shocks, and be sustainably managed through strong policy, coordination, and governance improvements. To do so we offer support to align the tourism enabling and policy environment towards sustainability, while improving tourism destination and site planning, development, and management. We work with governments to enhance the sector’s resilience and to foster the development of innovative sustainable financing instruments.
• Inclusive Value Chains. We work with client governments and intermediaries to support Small and Medium sized Enterprises (SMEs), and strengthen value chains that provide equitable livelihoods for communities, women, youth, minorities, and local businesses. 

The successful design and implementation of reforms in the tourism space requires the combined effort of diverse line ministries and agencies, and an understanding of the impact of digital technologies in the industry. Accordingly, our teams support cross-cutting issues of tourism governance and coordination, digital innovation and the use and application of data throughout the three focus areas of work.

Tourism and Competitiveness Theory of Change 

Examples of our projects:

• In Indonesia , a US$955m loan is supporting the Government’s Integrated Infrastructure Development for National Tourism Strategic Areas Project. This project is designed to improve the quality of, and access to, tourism-relevant basic infrastructure and services, strengthen local economy linkages to tourism, and attract private investment in selected tourism destinations. In its initial phases, the project has supported detailed market and demand analyses needed to justify significant public investment, mobilized integrated tourism destination masterplans for each new destination and established essential coordination mechanisms at the national level and at all seventeen of the Project’s participating districts and cities.
• In Madagascar , a series of projects totaling US$450m in lending and IFC Technical Assistance have contributed to the sustainable growth of the tourism sector by enhancing access to enabling infrastructure and services in target regions. Activities under the project focused on providing support to SMEs, capacity building to institutions, and promoting investment and enabling environment reforms. They resulted in the creation of more than 10,000 jobs and the registration of more than 30,000 businesses. As a result of COVID-19, the project provided emergency support both to government institutions (i.e., Ministry of Tourism) and other organizations such as the National Tourism Promotion Board to plan, strategize and implement initiatives to address effects of the pandemic and support the sector’s gradual relaunch, as well as to directly support tourism companies and workers groups most affected by the crisis. 
• In Sierra Leone , an Economic Diversification Project has a strong focus on sustainable tourism development.  The project is contributing significantly to the COVID-19 recovery, with its focus on the creation of six new tourism destinations, attracting new private investment, and building the capacity of government ministries to successfully manage and market their tourism assets.  This project aims to contribute to the development of more circular economy tourism business models, and support the growth of women- run tourism businesses.  
• Through the Rebuilding Tourism Competitiveness: Tourism Response, Recovery and Resilience to the COVID-19 Crisis initiative and the Tourism for Development Learning Series , we held webinars, published insights and guidance notes as well as formed new partnerships with Organization of Eastern Caribbean States, United Nations Environment Program, United Nations World Tourism Organization, and World Travel and Tourism Council to exchange knowledge on managing tourism throughout the pandemic, planning for recovery and building back better. The initiative’s key Policy Note has been downloaded more than 20,000 times and has been used to inform recovery initiatives in over 30 countries across 6 regions.
• The Global Aviation Dashboard  is a platform that visualizes real-time changes in global flight movements, allowing users to generate 2D & 3D visualizations, charts, graphs, and tables; and ranking animations for: flight volume, seat volume, and available seat kilometers.  Data is available for domestic, intra-regional, and inter-regional routes across all regions, countries, airports, and airlines on a daily, weekly, or monthly basis from January 2020 until today. The dashboard has been used to track the status and recovery of global travel and inform policy and operational actions.

Traditional Samburu women in Kenya. Photo: hecke61/Shutterstock.

Featured Data

We-Fi WeTour Women in Tourism Enterprise Surveys (2019)

• Sierra Leone  |  Ghana

Featured Reports 

• Destination Management Handbook: A Guide to the Planning and Implementation of Destination Management  (2023)
• Blue Tourism in Islands and Small Tourism-Dependent Coastal States : Tools and Recovery Strategies (2022)
• Resilient Tourism: Competitiveness in the Face of Disasters  (2020)
• Tourism and the Sharing Economy: Policy and Potential of Sustainable Peer-to-Peer Accommodation  (2018)
• Supporting Sustainable Livelihoods through Wildlife Tourism  (2018)
• The Voice of Travelers: Leveraging User-Generated Content for Tourism Development  (2018)
• Women and Tourism: Designing for Inclusion  (2017)
• Twenty Reasons Sustainable Tourism Counts for Development  (2017)
• An introduction to tourism concessioning:14 characteristics of successful programs.  The World Bank, 2016)
• Getting financed: 9 tips for community joint ventures in tourism . World Wildlife Fund (WWF) and World Bank, (2015)
• Global investment promotion best practices: Winning tourism investment” Investment Climate  (2013)

Country-Specific

• COVID-19 and Tourism in South Asia: Opportunities for Sustainable Regional Outcomes  (2020)
• Demand Analysis for Tourism in African Local Communities  (2018)
• Tourism in Africa: Harnessing Tourism for Growth and Improved Livelihoods . Africa Development Forum (2014)

COVID-19 Response

• Expecting the Unexpected : Tools and Policy Considerations to Support the Recovery and Resilience of the Tourism Sector (2022)
• Rebuilding Tourism Competitiveness. Tourism response, recovery and resilience to the COVID-19 crisis  (2020)
• COVID-19 and Tourism in South Asia Opportunities for Sustainable Regional Outcomes  (2020)  
• WBG support for tourism clients and destinations during the COVID-19 crisis  (2020)
• Tourism for Development: Tourism Diagnostic Toolkit  (2019)
• Tourism Theory of Change  (2018)

Country   -Specific

• COVID Impact Mitigation Survey Results  (South Africa) (2020)
• COVID Preparedness for Reopening Survey Results  (South Africa) (2020)
• COVID Study  (Fiji) (2020) with   IFC

Featured Blogs

• Louise Twining-Ward and Alba Suris , Bridging the Tourism Data Divide: New Tools for Policymaking
• Fiona Stewart, Samantha Power & Shaun Mann ,  Harnessing the power of capital markets to conserve and restore global biodiversity through “Natural Asset Companies”   | October 12 th  2021
• Mari Elka Pangestu ,  Tourism in the post-COVID world: Three steps to build better forward  | April 30 th  2021
• Hartwig Schafer ,  Regional collaboration can help South Asian nations rebuild and strengthen tourism industry  | July 23 rd  2020
• Caroline Freund ,  We can’t travel, but we can take measures to preserve jobs in the tourism industry  | March 20 th  2020

Featured Webinars

• Destination Management for Resilient Growth . This webinar looks at emerging destinations at the local level to examine the opportunities, examples, and best tools available. Destination Management Handbook
• Launch of the Future of Pacific Tourism. This webinar goes through the results of the new Future of Pacific Tourism report. It was launched by FCI Regional and Global Managers with Discussants from the Asian Development Bank and Intrepid Group.
• Circular Economy and Tourism . This webinar discusses how new and circular business models are needed to change the way tourism operates and enable businesses and destinations to be sustainable.
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20 Reasons You Should Integrate Tourism into Your Development Agenda

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The Economic Impact of Tourism: What You Need to Know

How Much Does Tourism Contribute to the Global Economy?

The relationship between tourism and economic growth, how does tourism affect developing countries, what are the four economic impacts of tourism, leveraging the power of tourism for online travel agencies.

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Tourism encompasses much more than just leisurely vacations and exploring far-off destinations. In fact, this vast industry plays a significant role in keeping the world economy thriving. 

When the world shut down due to the COVID-19 pandemic, we saw its devastating effects on the tourism industry. Airports were shut down, hotels were left empty, and online travel agencies experienced a complete halt in revenue. 

Like the rest of the world, the travel and tourism industry was in a state of limbo.

As we look to the future, it’s important to remember the power of tourism and its impacts on the global economy. In 2023, the tourism sector’s global market size is anticipated to exceed 2019 , with a market size estimated at $2.29tn.

The impact of tourism on the economy extends beyond generating income and employment. It acts as a growth engine, stimulating investment in infrastructure, promoting sustainable development, and fostering the conservation of cultural and natural heritage . This multifaceted influence demonstrates how tourism is fundamental to global economic development.

In this blog post, we’ll explore how tourism contributes to the economy and why it should be a priority for everyone.

Travel isn’t just good for the soul; it’s good for the economy. Let’s break down the numbers.

Contribution to Global GDP

Exploring the impact of tourism on the economy requires a detailed look at its contribution to the global GDP. This contribution is not only a direct reflection of tourist spending but also an indicator of how tourism stimulates the economy through job creation , infrastructure investment, and a boost to related industries.

In 2019, the travel and tourism industry accounted for 10.4% of global GDP – that’s $10 trillion! In 2022, the industry reached 7.6% of GDP .

Not only does this include the direct spending by tourists in hotels, restaurants, and attractions, but it also includes indirect spending in industries such as transportation, shopping, and entertainment.

This data indicates the industry’s resilience and potential to bounce back. The travel and tourism industry will continue to contribute to the global economy.

Job Creation

In 2022, the tourism industry supported over 22 million jobs. When people think of tourism-related jobs, they usually think of travel agents, hotel staff, and workers at tourist attractions. However, there are also millions of people around the world who work in tourism and related industries.

The Interconnectedness of the Tourism Industry with Other Industries

The tourism industry is intricately connected to a wide array of other industries. 

It’s challenging to measure tourism’s exact contributions due to the level of fragmentation within the industry. However, its actual values are expected to be far greater than reported. This is because travelers also contribute to non-travel sectors such as retail, recreation, and entertainment.

Tourism is a significant driver of economic prosperity as it contributes to job creation and spurs innovation and investments.

Given the significant impact of tourism on the global economy, it’s important to examine the relationship between tourism and economic growth.

Tourism as a Driver for Economic Growth 

Increased demand stimulates the economy by creating jobs in different sectors, from hospitality to transport which brings in more revenue and opportunities for growth within the community.

Zurab Pololikashvili, the secretary general of UNWTO , said, “ Global tourism is on track to return to pre-pandemic levels by the end of year. By investing in people and projects that make a difference, we can deliver on the sector’s potential to drive growth and opportunity for all.”

In tourism, there are jobs that are directly related to tourism and tourism spending; for example, when a tourist travels to Barcelona, they will spend money on hotels, tour guides, and activities.

But there are also those indirectly related to tourism ; for instance, when they go to a restaurant in the city or shop at a local store, they contribute to the local economy.

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The Multiplier Effect of Tourism

The interconnectedness of tourism also leads to the multiplier effect, which amplifies the economic impact of tourism on a region or country. 

The Journal of Risk and Financial Management conducted a study that found “The impact of tourism activity on economic development is determined by the current multiplier mechanism created by the existing revenue-expenditure flow in the sector due to international tourism movements.” 

Tourism also has a multiplier effect on other industries . For example, suppose a tourist spends money on a hotel room. In that case, the hotel purchases goods and services from other businesses, such as food, linen, and toiletries. These businesses, in turn, purchase goods and services from other companies, and the cycle continues.

This means that the economic impact of tourism is not limited to the tourism industry but spreads across various sectors of the economy. The expenditure of international tourists on tourism can generate income that may result in new revenue streams, investments, savings, and consumption.

The Role of Online Travel Agencies in Promoting Economic Growth 

Online travel agencies play an important role in promoting economic growth and development. They help connect travelers with different hotels, flights, and activities. 

However, they don’t just help them find the right place to stay or flight to book. OTAs also provide travelers with inspiration, knowledge, and insights to help them make the best trip decisions.

Their promotional activities can fastly increase the economic growth of the regions they promote. For instance, OTAs can promote different destinations and activities they may not know. Whether it’s a destination in the countryside or a less-traveled area such as many developing countries.

In addition to traditional methods of economic growth in tourism, the importance of exploring sustainable approaches, cannot be overstated. Gain a deeper understanding of this forward-thinking practice, which includes diverse examples and effective implementation strategies, in our in-depth exploration about what is regenerative tourism .

Benefits of Tourism

Tourism provides numerous benefits to economies around the world, playing a crucial role in both local and global contexts. Here are some of the key benefits of tourism:

     Economic Growth : Tourism significantly contributes to economic growth by generating income and employment. It accounts for about 10% of global GDP and employs one in ten people worldwide​​. Tourism stimulates local economies through direct spending on goods and services, creating jobs in hotels, restaurants, and other tourism-related businesses.

     Job Creation : Tourism creates a wide range of jobs, not only in the tourism sectors such as hospitality and travel services but also in related industries like retail and transportation. In regions with high unemployment rates, tourism can be a vital source of employment​.

     Cultural Preservation : Tourism helps preserve cultural heritage by providing financial resources needed for the maintenance of cultural sites and traditions. For instance, entrance fees from tourists visiting heritage sites often fund the preservation and operation of these sites​.

     Environmental Conservation : Tourism can support environmental conservation by funding the creation and maintenance of national parks and protected areas. Tourists’ demand for natural and historical sites can lead to increased efforts to conserve these areas​​.

     Positive Social Effects : The economic benefits of tourism can lead to improved infrastructure and services, such as better roads, healthcare facilities, and education. These improvements benefit not only tourists but also local communities, enhancing the overall quality of life.

     Global Awareness and Learning : Tourism encourages global awareness and cross-cultural understanding. By interacting with different cultures, tourists and locals alike can develop a deeper appreciation for cultural diversity, fostering a sense of global community​.

When tourists spend more money when they travel, and the money they spend is reinvested into the local economy, tourism directly impacts the economy.

Tourism increases economic activity. The influx of tourists drives up local businesses’ demand for services and products, creating jobs, increasing revenue, and reducing poverty.

Direct benefits include those created by tourism-related activities such as accommodation, transport, and attractions. Indirect benefits come from supporting activities to tourism, such as construction and retailing. 

Tourism also benefits developing countries in other ways, such as improving the perception of their country on the global stage and increasing foreign investment.

Challenges and Opportunities for Online Travel Agencies in Emerging Markets

In John Lea’s book, Tourism and Developments in the Third World , he discusses how small island communities depend more on foreign tourism than bigger countries. Island tourism can be a lifeline for many people in these places, particularly regarding job creation and economic opportunities. 

However, challenges like limited infrastructure, political instability, and lack of local tourism products still exist. 

The 5 A’s of tourism – attractions, activities, accessibility, accommodation, and amenities, play a significant role in determining the success of tourism in any destination. By improving these areas, emerging markets can better leverage and capitalize on their tourism potential.

Online travel agencies can play a crucial role in driving economic growth in these markets:

• They have the potential to access untapped opportunities that are often overlooked.
• They can promote lesser-known tourist hotspots with potential. 
• They can partner with governments and local tourism stakeholders in emerging markets.
• They are more agile and better equipped to respond quickly to changing market needs.
• They can enable local players to expand their reach, open up new markets, and create economic value. 
• They can provide a platform for local businesses to showcase their products.

Case Studies of Successful Tourism Development in Developing Countries

South Africa

South Africa is an excellent example of a developing country that has successfully utilized tourism as an integral part of its economic growth plan. 

The tourism industry accounts for 3.7% of South Africa’s GDP. This is higher than the contribution of agriculture, utilities, and construction.

The country’s abundance of natural and cultural resources makes it a popular tourist destination for people worldwide. With its stunning beaches, mountains, and diverse wildlife reserves, it has become one of Africa’s most popular tourism destinations.

South African Tourism (SAT) and the Department of Tourism have aligned their strategic plan for 2020-2025 to encourage the growth and development of tourism in South Africa. This includes providing efficient marketing for tourist destinations and improving cooperation between different levels of government in managing tourism.

The accommodation industry’s total income in September 2022 increased by 79.3% compared to September 2021. Among all accommodation options, hotels experienced the most significant increase in total income , with a 118.6% rise.

Egypt is another great example of a developing country that has seen success in the tourism industry. Egypt’s tourism earnings are expected to reach $13.6 billion in 2023.

The Minister of Tourism, Ahmed Issa, aims to achieve an annual growth rate of 25% to 30% . This is part of Egypt’s plan to attract 30 million tourists by 2028. They aim to invest $30bn (30,000 rooms) to meet anticipated demand. Additionally, they plan to invest investment in customer experiences.

The focus of the Egyptian government is to offer improved tourism experiences . This includes promoting cultural heritage sites, nature-based tourism activities, and other diverse tourist attractions unique to Egypt.

India is another developing country rapidly gaining traction in the tourism industry. India’s total contribution to GDP in Travel & Tourism r anked sixth in 2022. Tourism jobs are expected to increase by 8.3% , reaching nearly 35 million employment opportunities.

The Ministry of Tourism launched the Swadesh Darshan scheme to promote theme-based tourism in India and harness its potential for development.

Their goals are to improve the local economies, generate job opportunities, promote industry skill development, increase private sector investment, and conserve local cultural and natural resources.

1. Infrastructure Development

Tourism provides the government and private sector with the revenue to invest in the infrastructure required for tourism activities . This includes the construction and renovation of roads, highways, and airports. For example, increased tourism can lead to improved access and transportation networks, which benefit the local economy and travelers alike.

2. Cultural Preservation 

Tourism also plays a role in preserving historical sites and cultural traditions. As many visitors worldwide flock to a destination to learn about its history and culture, tourism can help generate sufficient funds for cultural conservation efforts.

3. Natural Resources

Tourism can provide incentives for protecting and preserving natural resources and ecosystems. By introducing sustainable tourism practices, areas with important biodiversity can be better safeguarded against destruction while delivering economic benefits to the local community.

4. Local Entrepreneurship and Small Business Growth

The influx of visitors to a destination can also stimulate the growth of small, locally-owned businesses. Restaurants and retail stores often experience increased profits. At the same time, entrepreneurs can take advantage of new opportunities in the tourism industry.

Online travel agencies play a vital role in the tourism industry, providing the convenience of booking services with just a few clicks. With the right strategies, OTAs can leverage the power of tourism to maximize its economic impact. 

Strategies for Maximizing the Positive Economic Impact of Tourism:

There are three strategies for maximizing the positive impact of tourism: understanding the local economy, promoting responsible and sustainable tourism practices, and adapting to evolving trends in the tourism industry.

1. Understand the Local Economy. 

To better serve your clients, it’s crucial to comprehend how tourism can economically benefit various regions based on the type of travel agency you operate . This knowledge can then aid you in aligning your clients’ interests with your business goals.

For example, tourists visiting a region may stimulate local businesses and introduce new products that would otherwise not be available. This can have a ripple effect on the local economy.

2. Promoting Responsible and Sustainable Tourism Practices

The way online travel agencies advertise and promote their services based on responsible and sustainable tourism practices has changed over the years. 

OTAs can support this by promoting sustainable and ethical travel opportunities that empower local communities.

For example, an OTA may promote eco-friendly accommodations, sustainable tour operators, and local community initiatives.

3. Adapting to Evolving Trends in the Tourism Industry

Tourists often seek out new experiences, and OTAs can provide information about activities that match their interests.

For example, experiential travel, which focuses on activities such as cultural experiences and outdoor adventures, has been gaining traction in recent years.

The economic impact of tourism is enormous, and the industry has the potential to be a significant driver of global economic growth. 

OTA’s have an important role to play in the continued success of this sector, and understanding the economic impact that tourism has on their business can help them make smart decisions and continue to grow their business. Tourism affects not only these agencies but also hotels, airlines, and other related businesses. Additionally, the industry provides many opportunities for growth and development in the tourism sector. As governments worldwide strive to create more sustainable and environmentally conscious development models, the tourism industry can provide a key source of income and job opportunities.

For insights into successful tourism marketing strategies, offering valuable perspectives and case studies and, as we explore the significant economic impact of tourism, it’s also important to understand how effective campaigns in tourism can amplify this impact.

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Marc Truyols has a degree in Tourism from the University of the Balearic Islands. Marc has extensive experience in the leisure, travel and tourism industry. His skills in negotiation, hotel management, customer service, sales and hotel management make him a strong business development professional in the travel industry.

Mize is the leading hotel booking optimization solution in the world. With over 170 partners using our fintech products, Mize creates new extra profit for the hotel booking industry using its fully automated proprietary technology and has generated hundreds of millions of dollars in revenue across its suite of products for its partners. Mize was founded in 2016 with its headquarters in Tel Aviv and offices worldwide.

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How Does Tourism Benefit Local Communities?

Tourism is a thriving industry that not only brings in visitors from around the world but also has significant positive impacts on local communities. While the economic benefits of tourism are well-known, its contributions to social, cultural, and environmental aspects are often overlooked. This article will explore how tourism can catalyze sustainable development and create a range of advantages for local communities.

Economic Growth and Job Creation: One of the most apparent benefits of tourism is its role in generating economic growth and employment opportunities. Tourists visit a destination and spend money on accommodation, transportation, food, shopping, and various services. This expenditure stimulates the local economy, increasing business activities and new jobs. Hotels, restaurants, tour operators, and local artisans are among the many businesses that directly benefit from the influx of tourists.

Preservation of Cultural Heritage: Tourism plays a significant role in preserving and promoting the cultural heritage of local communities. Visitors are often eager to explore a destination's unique traditions, customs, and historical sites. This creates a demand for cultural experiences, encouraging locals to preserve their traditions and showcase their heritage. By valuing their cultural assets, communities are motivated to protect historical landmarks, monuments, festivals, and traditional craftsmanship, which might have been neglected or forgotten.

Community Development and Infrastructure Improvement: Tourism can lead to the development of community infrastructure and public services. The revenue generated from tourism can be reinvested in improving transportation networks, healthcare facilities, educational institutions, and public spaces. This benefits tourists and enhances the quality of life for local residents. Additionally, the need to provide a positive visitor experience can encourage communities to invest in better facilities, amenities, and attractions, which ultimately benefit both tourists and locals alike.

Encouragement of Small Businesses and Entrepreneurship: The tourism industry allows small businesses and local entrepreneurs to thrive. Locals can establish their guesthouses, homestays, restaurants, tour companies, souvenir shops, and other tourism-related enterprises. This fosters entrepreneurship and empowers individuals within the community, promoting self-sufficiency and economic diversification. The growth of small businesses contributes to a more balanced and sustainable local economy, reducing dependency on a single industry.

Cultural Exchanges and Social Understanding: Tourism acts as a bridge for cultural exchange, fostering greater understanding and appreciation between visitors and locals. When tourists engage with the community, they gain insights into the local way of life, traditions, and customs. Similarly, locals can learn about different cultures, perspectives, and values. These interactions promote mutual respect and tolerance, breaking down stereotypes and fostering a sense of global citizenship.

Environmental Conservation and Sustainable Practices: Tourism can also drive environmental conservation and sustainable practices. Destinations with natural attractions often rely on preserving their environment to attract tourists. This incentivizes local communities to protect and conserve their natural resources, such as forests, wildlife, and marine ecosystems. Sustainable tourism practices, including responsible waste management, energy conservation, and eco-friendly initiatives, can benefit the environment and the community's long-term well-being.

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Conclusion: Tourism brings many benefits to local communities beyond economic gains. It contributes to cultural preservation, infrastructure development, entrepreneurship, social understanding, and environmental conservation. By embracing sustainable tourism practices and involving local communities in decision-making processes, we can ensure that the positive impacts of tourism are maximized while minimizing its potential negative consequences. As travelers, we have the power to support and promote tourism that benefits local communities, ultimately creating a more inclusive and sustainable world.

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UN Tourism | Bringing the world closer

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UN report Underscores Importance of Tourism for Economic Recovery in 2022

• All Regions
• 13 Jan 2022

The important role that tourism will play in the recovery of national economies and global trade has been highlighted in the 2022 edition of the World Economic Situation and Prospects (WESP) report by the United Nations. Drawing on data from the World Tourism Organization (UNWTO), WESP underlines the sector’s importance for the world economy and particularly for developing economies, including Small Island Developing States (SIDS).

After a global contraction of 3.4% in 2020 and a rebound of 5.5% in 2021, the world economy is projected to grow by 4% in 2022 and then 3.5% in 2023. Given its importance as a major export category (prior to the pandemic tourism was the third largest in the world, after fuels and chemicals), and recognizing its role as a source of employment and economic development , the sector’s recovery is expected to drive growth in every world region.

UNWTO Secretary-General Zurab Pololikashvili said: “The sudden halt in international tourism caused by the pandemic has emphasized the sector’s importance to both national economies and individual livelihoods. The flagship UN report makes use of UNWTO data and analysis to assess the cost of declining tourism and illustrates just how important restarting tourism will be in 2022 and beyond.”

Jobs, economic growth and equality all hit

The sudden halt in international tourism caused by the pandemic has emphasized the sector’s importance to both national economies and individual livelihoods

The latest edition of the UN World Economic Situation and Prospects report uses key UNWTO data on international tourist arrivals and tourism receipts to illustrate how the pandemic’s impact has been felt beyond the sector itself . International tourist arrivals plunged by 73% in 2020, dropping to levels not seen for 30 years. And while tourism did record a modest improvement in the third quarter of 2021, international arrivals between January-September 2021 were still 20% below 2020 levels and 76% below 2019 levels (full year 2021 results to be released by UNWTO on 18 January).

The crisis has had a devastating impact on employment, including in hospitality, travel services and retail trade. It has disproportionately affected vulnerable groups, including youth and migrant workers, as well as workers with lower educational attainment and skills. Exacerbation of the gender divide is evident, especially in developing countries, with women seeing greater declines in employment and labour force participation than men.

Diversification for recovery

Further analysing the sector’s role in economic recovery, the UN report notes that many destinations, in particular tourism-dependent countries, will need to diversify their tourism throughout 2022 and beyond. Again drawing on UNWTO analysis , the publication shows how many destinations are developing domestic and rural tourism to help local economies in rural and depressed areas to boost job creation and protect natural resources and cultural heritage , while at the same time empowering women, youth and indigenous peoples. Additionally, the report notes how Small Island Developing States can take steps to ensure local businesses and workers retain more of the economic benefits that international tourism brings, noting for example that that “tourism leakage” amounts to an estimated 80% of all money spent by tourists in the Caribbean region.

Related links

• Download the news release in PDF
• UNWTO Market Intelligence
• UNWTO Tourism Data Dashboard
• Rural Tourism
• World Economic Situation and Prospects 2022

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The future of tourism: Bridging the labor gap, enhancing customer experience

As travel resumes and builds momentum, it’s becoming clear that tourism is resilient—there is an enduring desire to travel. Against all odds, international tourism rebounded in 2022: visitor numbers to Europe and the Middle East climbed to around 80 percent of 2019 levels, and the Americas recovered about 65 percent of prepandemic visitors 1 “Tourism set to return to pre-pandemic levels in some regions in 2023,” United Nations World Tourism Organization (UNWTO), January 17, 2023. —a number made more significant because it was reached without travelers from China, which had the world’s largest outbound travel market before the pandemic. 2 “ Outlook for China tourism 2023: Light at the end of the tunnel ,” McKinsey, May 9, 2023.

Recovery and growth are likely to continue. According to estimates from the World Tourism Organization (UNWTO) for 2023, international tourist arrivals could reach 80 to 95 percent of prepandemic levels depending on the extent of the economic slowdown, travel recovery in Asia–Pacific, and geopolitical tensions, among other factors. 3 “Tourism set to return to pre-pandemic levels in some regions in 2023,” United Nations World Tourism Organization (UNWTO), January 17, 2023. Similarly, the World Travel & Tourism Council (WTTC) forecasts that by the end of 2023, nearly half of the 185 countries in which the organization conducts research will have either recovered to prepandemic levels or be within 95 percent of full recovery. 4 “Global travel and tourism catapults into 2023 says WTTC,” World Travel & Tourism Council (WTTC), April 26, 2023.

Longer-term forecasts also point to optimism for the decade ahead. Travel and tourism GDP is predicted to grow, on average, at 5.8 percent a year between 2022 and 2032, outpacing the growth of the overall economy at an expected 2.7 percent a year. 5 Travel & Tourism economic impact 2022 , WTTC, August 2022.

So, is it all systems go for travel and tourism? Not really. The industry continues to face a prolonged and widespread labor shortage. After losing 62 million travel and tourism jobs in 2020, labor supply and demand remain out of balance. 6 “WTTC research reveals Travel & Tourism’s slow recovery is hitting jobs and growth worldwide,” World Travel & Tourism Council, October 6, 2021. Today, in the European Union, 11 percent of tourism jobs are likely to go unfilled; in the United States, that figure is 7 percent. 7 Travel & Tourism economic impact 2022 : Staff shortages, WTTC, August 2022.

There has been an exodus of tourism staff, particularly from customer-facing roles, to other sectors, and there is no sign that the industry will be able to bring all these people back. 8 Travel & Tourism economic impact 2022 : Staff shortages, WTTC, August 2022. Hotels, restaurants, cruises, airports, and airlines face staff shortages that can translate into operational, reputational, and financial difficulties. If unaddressed, these shortages may constrain the industry’s growth trajectory.

The current labor shortage may have its roots in factors related to the nature of work in the industry. Chronic workplace challenges, coupled with the effects of COVID-19, have culminated in an industry struggling to rebuild its workforce. Generally, tourism-related jobs are largely informal, partly due to high seasonality and weak regulation. And conditions such as excessively long working hours, low wages, a high turnover rate, and a lack of social protection tend to be most pronounced in an informal economy. Additionally, shift work, night work, and temporary or part-time employment are common in tourism.

The industry may need to revisit some fundamentals to build a far more sustainable future: either make the industry more attractive to talent (and put conditions in place to retain staff for longer periods) or improve products, services, and processes so that they complement existing staffing needs or solve existing pain points.

One solution could be to build a workforce with the mix of digital and interpersonal skills needed to keep up with travelers’ fast-changing requirements. The industry could make the most of available technology to provide customers with a digitally enhanced experience, resolve staff shortages, and improve working conditions.

Would you like to learn more about our Travel, Logistics & Infrastructure Practice ?

Complementing concierges with chatbots.

The pace of technological change has redefined customer expectations. Technology-driven services are often at customers’ fingertips, with no queues or waiting times. By contrast, the airport and airline disruption widely reported in the press over the summer of 2022 points to customers not receiving this same level of digital innovation when traveling.

Imagine the following travel experience: it’s 2035 and you start your long-awaited honeymoon to a tropical island. A virtual tour operator and a destination travel specialist booked your trip for you; you connected via videoconference to make your plans. Your itinerary was chosen with the support of generative AI , which analyzed your preferences, recommended personalized travel packages, and made real-time adjustments based on your feedback.

Before leaving home, you check in online and QR code your luggage. You travel to the airport by self-driving cab. After dropping off your luggage at the self-service counter, you pass through security and the biometric check. You access the premier lounge with the QR code on the airline’s loyalty card and help yourself to a glass of wine and a sandwich. After your flight, a prebooked, self-driving cab takes you to the resort. No need to check in—that was completed online ahead of time (including picking your room and making sure that the hotel’s virtual concierge arranged for red roses and a bottle of champagne to be delivered).

While your luggage is brought to the room by a baggage robot, your personal digital concierge presents the honeymoon itinerary with all the requested bookings. For the romantic dinner on the first night, you order your food via the restaurant app on the table and settle the bill likewise. So far, you’ve had very little human interaction. But at dinner, the sommelier chats with you in person about the wine. The next day, your sightseeing is made easier by the hotel app and digital guide—and you don’t get lost! With the aid of holographic technology, the virtual tour guide brings historical figures to life and takes your sightseeing experience to a whole new level. Then, as arranged, a local citizen meets you and takes you to their home to enjoy a local family dinner. The trip is seamless, there are no holdups or snags.

This scenario features less human interaction than a traditional trip—but it flows smoothly due to the underlying technology. The human interactions that do take place are authentic, meaningful, and add a special touch to the experience. This may be a far-fetched example, but the essence of the scenario is clear: use technology to ease typical travel pain points such as queues, misunderstandings, or misinformation, and elevate the quality of human interaction.

Travel with less human interaction may be considered a disruptive idea, as many travelers rely on and enjoy the human connection, the “service with a smile.” This will always be the case, but perhaps the time is right to think about bringing a digital experience into the mix. The industry may not need to depend exclusively on human beings to serve its customers. Perhaps the future of travel is  physical, but digitally enhanced (and with a smile!).

Digital solutions are on the rise and can help bridge the labor gap

Digital innovation is improving customer experience across multiple industries. Car-sharing apps have overcome service-counter waiting times and endless paperwork that travelers traditionally had to cope with when renting a car. The same applies to time-consuming hotel check-in, check-out, and payment processes that can annoy weary customers. These pain points can be removed. For instance, in China, the Huazhu Hotels Group installed self-check-in kiosks that enable guests to check in or out in under 30 seconds. 9 “Huazhu Group targets lifestyle market opportunities,” ChinaTravelNews, May 27, 2021.

Technology meets hospitality

In 2019, Alibaba opened its FlyZoo Hotel in Huangzhou, described as a “290-room ultra-modern boutique, where technology meets hospitality.” 1 “Chinese e-commerce giant Alibaba has a hotel run almost entirely by robots that can serve food and fetch toiletries—take a look inside,” Business Insider, October 21, 2019; “FlyZoo Hotel: The hotel of the future or just more technology hype?,” Hotel Technology News, March 2019. The hotel was the first of its kind that instead of relying on traditional check-in and key card processes, allowed guests to manage reservations and make payments entirely from a mobile app, to check-in using self-service kiosks, and enter their rooms using facial-recognition technology.

The hotel is run almost entirely by robots that serve food and fetch toiletries and other sundries as needed. Each guest room has a voice-activated smart assistant to help guests with a variety of tasks, from adjusting the temperature, lights, curtains, and the TV to playing music and answering simple questions about the hotel and surroundings.

The hotel was developed by the company’s online travel platform, Fliggy, in tandem with Alibaba’s AI Labs and Alibaba Cloud technology with the goal of “leveraging cutting-edge tech to help transform the hospitality industry, one that keeps the sector current with the digital era we’re living in,” according to the company.

Adoption of some digitally enhanced services was accelerated during the pandemic in the quest for safer, contactless solutions. During the Winter Olympics in Beijing, a restaurant designed to keep physical contact to a minimum used a track system on the ceiling to deliver meals directly from the kitchen to the table. 10 “This Beijing Winter Games restaurant uses ceiling-based tracks,” Trendhunter, January 26, 2022. Customers around the world have become familiar with restaurants using apps to display menus, take orders, and accept payment, as well as hotels using robots to deliver luggage and room service (see sidebar “Technology meets hospitality”). Similarly, theme parks, cinemas, stadiums, and concert halls are deploying digital solutions such as facial recognition to optimize entrance control. Shanghai Disneyland, for example, offers annual pass holders the option to choose facial recognition to facilitate park entry. 11 “Facial recognition park entry,” Shanghai Disney Resort website.

Automation and digitization can also free up staff from attending to repetitive functions that could be handled more efficiently via an app and instead reserve the human touch for roles where staff can add the most value. For instance, technology can help customer-facing staff to provide a more personalized service. By accessing data analytics, frontline staff can have guests’ details and preferences at their fingertips. A trainee can become an experienced concierge in a short time, with the help of technology.

Apps and in-room tech: Unused market potential

According to Skift Research calculations, total revenue generated by guest apps and in-room technology in 2019 was approximately $293 million, including proprietary apps by hotel brands as well as third-party vendors. 1 “Hotel tech benchmark: Guest-facing technology 2022,” Skift Research, November 2022. The relatively low market penetration rate of this kind of tech points to around $2.4 billion in untapped revenue potential (exhibit).

Even though guest-facing technology is available—the kind that can facilitate contactless interactions and offer travelers convenience and personalized service—the industry is only beginning to explore its potential. A report by Skift Research shows that the hotel industry, in particular, has not tapped into tech’s potential. Only 11 percent of hotels and 25 percent of hotel rooms worldwide are supported by a hotel app or use in-room technology, and only 3 percent of hotels offer keyless entry. 12 “Hotel tech benchmark: Guest-facing technology 2022,” Skift Research, November 2022. Of the five types of technology examined (guest apps and in-room tech; virtual concierge; guest messaging and chatbots; digital check-in and kiosks; and keyless entry), all have relatively low market-penetration rates (see sidebar “Apps and in-room tech: Unused market potential”).

While apps, digitization, and new technology may be the answer to offering better customer experience, there is also the possibility that tourism may face competition from technological advances, particularly virtual experiences. Museums, attractions, and historical sites can be made interactive and, in some cases, more lifelike, through AR/VR technology that can enhance the physical travel experience by reconstructing historical places or events.

Up until now, tourism, arguably, was one of a few sectors that could not easily be replaced by tech. It was not possible to replicate the physical experience of traveling to another place. With the emerging metaverse , this might change. Travelers could potentially enjoy an event or experience from their sofa without any logistical snags, and without the commitment to traveling to another country for any length of time. For example, Google offers virtual tours of the Pyramids of Meroë in Sudan via an immersive online experience available in a range of languages. 13 Mariam Khaled Dabboussi, “Step into the Meroë pyramids with Google,” Google, May 17, 2022. And a crypto banking group, The BCB Group, has created a metaverse city that includes representations of some of the most visited destinations in the world, such as the Great Wall of China and the Statue of Liberty. According to BCB, the total cost of flights, transfers, and entry for all these landmarks would come to $7,600—while a virtual trip would cost just over $2. 14 “What impact can the Metaverse have on the travel industry?,” Middle East Economy, July 29, 2022.

The metaverse holds potential for business travel, too—the meeting, incentives, conferences, and exhibitions (MICE) sector in particular. Participants could take part in activities in the same immersive space while connecting from anywhere, dramatically reducing travel, venue, catering, and other costs. 15 “ Tourism in the metaverse: Can travel go virtual? ,” McKinsey, May 4, 2023.

The allure and convenience of such digital experiences make offering seamless, customer-centric travel and tourism in the real world all the more pressing.

Three innovations to solve hotel staffing shortages

Is the future contactless.

Given the advances in technology, and the many digital innovations and applications that already exist, there is potential for businesses across the travel and tourism spectrum to cope with labor shortages while improving customer experience. Process automation and digitization can also add to process efficiency. Taken together, a combination of outsourcing, remote work, and digital solutions can help to retain existing staff and reduce dependency on roles that employers are struggling to fill (exhibit).

Depending on the customer service approach and direct contact need, we estimate that the travel and tourism industry would be able to cope with a structural labor shortage of around 10 to 15 percent in the long run by operating more flexibly and increasing digital and automated efficiency—while offering the remaining staff an improved total work package.

Outsourcing and remote work could also help resolve the labor shortage

While COVID-19 pushed organizations in a wide variety of sectors to embrace remote work, there are many hospitality roles that rely on direct physical services that cannot be performed remotely, such as laundry, cleaning, maintenance, and facility management. If faced with staff shortages, these roles could be outsourced to third-party professional service providers, and existing staff could be reskilled to take up new positions.

In McKinsey’s experience, the total service cost of this type of work in a typical hotel can make up 10 percent of total operating costs. Most often, these roles are not guest facing. A professional and digital-based solution might become an integrated part of a third-party service for hotels looking to outsource this type of work.

One of the lessons learned in the aftermath of COVID-19 is that many tourism employees moved to similar positions in other sectors because they were disillusioned by working conditions in the industry . Specialist multisector companies have been able to shuffle their staff away from tourism to other sectors that offer steady employment or more regular working hours compared with the long hours and seasonal nature of work in tourism.

The remaining travel and tourism staff may be looking for more flexibility or the option to work from home. This can be an effective solution for retaining employees. For example, a travel agent with specific destination expertise could work from home or be consulted on an needs basis.

In instances where remote work or outsourcing is not viable, there are other solutions that the hospitality industry can explore to improve operational effectiveness as well as employee satisfaction. A more agile staffing model  can better match available labor with peaks and troughs in daily, or even hourly, demand. This could involve combining similar roles or cross-training staff so that they can switch roles. Redesigned roles could potentially improve employee satisfaction by empowering staff to explore new career paths within the hotel’s operations. Combined roles build skills across disciplines—for example, supporting a housekeeper to train and become proficient in other maintenance areas, or a front-desk associate to build managerial skills.

Where management or ownership is shared across properties, roles could be staffed to cover a network of sites, rather than individual hotels. By applying a combination of these approaches, hotels could reduce the number of staff hours needed to keep operations running at the same standard. 16 “ Three innovations to solve hotel staffing shortages ,” McKinsey, April 3, 2023.

Taken together, operational adjustments combined with greater use of technology could provide the tourism industry with a way of overcoming staffing challenges and giving customers the seamless digitally enhanced experiences they expect in other aspects of daily life.

In an industry facing a labor shortage, there are opportunities for tech innovations that can help travel and tourism businesses do more with less, while ensuring that remaining staff are engaged and motivated to stay in the industry. For travelers, this could mean fewer friendly faces, but more meaningful experiences and interactions.

Urs Binggeli is a senior expert in McKinsey’s Zurich office, Zi Chen is a capabilities and insights specialist in the Shanghai office, Steffen Köpke is a capabilities and insights expert in the Düsseldorf office, and Jackey Yu is a partner in the Hong Kong office.

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7 ways to directly support the local economy.

• August 31, 2023

Supporting the local economy

Tourism can bring both positive and negative impacts to a destination. Whether tourism is considered good or sustainable, depends on how well these impacts are management. An important aspect of good tourism is the realisation of creating better places for people to live in and better places for people to visit.

One of the main benefits of tourism for a destination are the economic benefits. Tourism can bring a lot of income to a destination. Travellers spend money on accommodations , food, transportation, souvenirs and activities, creating jobs and supporting local businesses. This economic boost can contribute to infrastructure development, public services, and overall economic growth.

Beware of leakage

Don’t forget that local economic growth is only possible if money spent in the destination, actually stays in the destination. The concept ‘leakage’ refers to money leaving the tourism destination and ‘flowing back’ to other countries, rather than staying within the destination to benefit the local economy.

This can happen when travellers spend money and products and services provided by businesses that are not local to the destination. Leakage can occur in various ways, including:

• Imported goods such as French champagne or Dutch Gouda cheese
• Franchise operations such as McDonalds and Hilton Hotels
• Foreign-owned businesses where the investors and owners live abroad
• International travel companies that take a significant percentage of the travel fee

Leakage reduces the overall economic impact of tourism in a destination and limits the benefits that local businesses, communities and residents gain from the industry.

Measuring leakage

Leakage in tourism can be measured, although is extremely complex due to various factors and the need for accurate data collection. The goal is to quantify the amount of money leaving a destination’s economy through various channels and doesn’t contribute to the local economy directly.

The government plays an important role in tourism revenue distribution as they are in the position to collect relevant data, distinguish between local vs. non-local spending, calculate total tourism revenue and identify leakage factors.

7 tips to directly support the local economy

Luckily, there are also ways for you to truly support the local economy and provide travellers with an amazing travel experience! It comes down to the choices you make in promoting the destination, creating your itineraries and recommendations to your travellers. How are your customers going to spend their money?

In this article

• Hire local guides and drivers
• Book in locally owned accommodations
• Work with local communities
• Collaborate with local partners
• Buy local souvenirs
• Eat in local restaurants
• Donate to local projects

1. Hire local guides and drivers

The tourism industry is responsible for 1 in 11 jobs worldwide. One of the easiest ways to directly stimulate local employment in tourism is to hire local guides and drivers. Besides supporting the local economy, you’ll also add value to your travel experiences .

Locals are very familiar with their country, it’s history, people and culture. They are the connection between the destination and the traveller and in the position to turn the activity into an experience. Don’t forget to hire qualified and trained guides and drivers for quality, safety and reliability.

Want to learn more?

Read more about involving local guides in sustainable practices .

2. Book in locally owned accommodations

As mentioned before, booking with larger chain hotels will make your money leak back to international headquarters instead of staying in the destination. Directly support the local economy by booking locally owned accommodations.

Know that this does not only benefit the accommodation holder. It indirectly also benefits their local employees , their food providers and all other suppliers. Additionally, the traveller will have a better experience staying in an accommodation where they can learn more about the local culture.

3. Work with local communities

Community-based tourism is the perfect way to contribute to the local economy. The aim of community-based tourism is to directly benefit local communities financially, while travellers experience local way of life. The tourism experiences are hosted and managed by the communities themselves, which results in direct employment and ownership!

When done right, community-based tourism is the ultimate way of good tourism. It’s in the perfect position to create better lives for local communities, to preserve their culture and to offer travellers unique experiences.

Read more about our 7 tips to develop community-based tourism .

4. Collaborate with local partners

As a travel business, you are most likely working with a supply-chain in the destination. Partners that help you manage your travel experience, for example transport or activities. When selecting those partners, make sure to work with locals!

Thereby, make sure that you and your partner share the same values. This way you are able to guarantee your customers with a sustainable and unique experience. To offer customers the best possible service, you need to rely on partners that share your values, mindset and mission for sustainable tourism .

5. Buy local souvenirs

For most travellers, travelling is about making memories. Souvenirs are often bought to remind them of a specific travel experience. When buying souvenirs locally, you support the local handcrafters and their material providers.

Inform your travellers to buy souvenirs from local communities and instruct your guides to not take travellers to larger commercial shops. Thereby, make sure to explain about illegal souvenirs made from protected flora and fauna. For example, souvenirs made from poached ivory.

Read more about illegal souvenirs .

6. Eat in local restaurants

Eating and drinking in local restaurants and café’s directly benefits the local economy for the obvious reasons. It ensures the money stays in the destination and that the local owner and employees financially benefit. It also directly supports the local farmers and food producers in the area.

Besides supporting the local economy, eating locally is good for the environment. Local food doesn’t have to travel as far, so it reduces the CO2 emissions . Eating in a local restaurant is also a great experience for the traveller, who will be able to taste and explore the local cuisine.

7. Donate to local projects

Besides buying from and employing locals, you can also support the local economy by donating to local projects. You can choose to support a local project in every destination you offer and donate a fixed amount per traveller. Most travellers will want to contribute to a project in the destination they are visiting.

Donating doesn’t necessarily mean financially. You can also donate time or materials and the projects can be both social and environmental. Think about a local hospital, school or women empowerment center where you can contribute to. Or environmentally, you can support a wildlife sanctuary, a vegetable garden or tree planting project.

The local multiplier effect of tourism

If spent money stays in the destination, the economic benefits of tourism are boosted by the local multiplier effect. When money is spent locally you don’t only benefit the person you do business with. It recirculates in the economy:

Directly: By hiring local employees or purchasing local products Indirectly: By spending money at any local business Third party: When locals spend their tourism-owned money locally

How will you support the local economy?

As a travel business, you have the opportunity to decide where your money and that of your travellers ends up. By spending your money locally and with the right people, you make sure the destination directly benefits from tourism. You give locals the opportunity to do business, to be more independent and to stimulate economic growth. Support the movement of good tourism: better places to live in, and better places to visit.

You must be logged in to post a comment.

Hi, it is interesting to read posts like this. But, I wonder, are they ideas of yours, or there are some investigations or theory behind them?

I mean, I like the insights you are posting, but how do you come to those ideas?

I would love to get in contact and have a chance to cooperate.

Hi Anvar, thank you for your comment! The ideas are our own opinions and thoughts based on our work experience in the tourism industry. For inspiration, we read a lot of articles and academic papers. Please send us an email to get in contact with us!

Hello Anne, Thank you very much for your time contribution posting this. It helpful and locals love oriented.

So good to hear Kagabo!

Indeed , as a good tourism institute trainne ,the purpose to go through the course should be one that results into ‘better places to live in and better places to visit ‘ for both the locals and the visitors to our destinations

Absolutely Priscilla, that’s the goal. Good to see you’re so active on the platform!

Tthe way to go for all stakeholders ; ; as each one of us has a hand in tourism whether as a tour operatot ; tourism buyers and communities where we operate from

Anne de Jong

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How to communicate sustainability effectively

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What Is Sustainable Tourism and Why Is It Important?

Sustainable management and socioeconomic, cultural, and environmental impacts are the four pillars of sustainable tourism

• Chapman University

• Harvard University Extension School
• Sustainable Fashion
• Art & Media

What Makes Tourism Sustainable?

The role of tourists, types of sustainable tourism.

Sustainable tourism considers its current and future economic, social, and environmental impacts by addressing the needs of its ecological surroundings and the local communities. This is achieved by protecting natural environments and wildlife when developing and managing tourism activities, providing only authentic experiences for tourists that don’t appropriate or misrepresent local heritage and culture, or creating direct socioeconomic benefits for local communities through training and employment.

As people begin to pay more attention to sustainability and the direct and indirect effects of their actions, travel destinations and organizations are following suit. For example, the New Zealand Tourism Sustainability Commitment is aiming to see every New Zealand tourism business committed to sustainability by 2025, while the island country of Palau has required visitors to sign an eco pledge upon entry since 2017.

Tourism industries are considered successfully sustainable when they can meet the needs of travelers while having a low impact on natural resources and generating long-term employment for locals. By creating positive experiences for local people, travelers, and the industry itself, properly managed sustainable tourism can meet the needs of the present without compromising the future.

What Is Sustainability?

At its core, sustainability focuses on balance — maintaining our environmental, social, and economic benefits without using up the resources that future generations will need to thrive. In the past, sustainability ideals tended to lean towards business, though more modern definitions of sustainability highlight finding ways to avoid depleting natural resources in order to keep an ecological balance and maintain the quality of environmental and human societies.

Since tourism impacts and is impacted by a wide range of different activities and industries, all sectors and stakeholders (tourists, governments, host communities, tourism businesses) need to collaborate on sustainable tourism in order for it to be successful.

The World Tourism Organization (UNWTO) , which is the United Nations agency responsible for the promotion of sustainable tourism, and the Global Sustainable Tourism Council (GSTC) , the global standard for sustainable travel and tourism, have similar opinions on what makes tourism sustainable. By their account, sustainable tourism should make the best use of environmental resources while helping to conserve natural heritage and biodiversity, respect the socio-culture of local host communities, and contribute to intercultural understanding. Economically, it should also ensure viable long-term operations that will provide benefits to all stakeholders, whether that includes stable employment to locals, social services, or contributions to poverty alleviation.

The GSTC has developed a series of criteria to create a common language about sustainable travel and tourism. These criteria are used to distinguish sustainable destinations and organizations, but can also help create sustainable policies for businesses and government agencies. Arranged in four pillars, the global baseline standards include sustainable management, socioeconomic impact, cultural impacts, and environmental impacts.

Travel Tip:

The GSTC is an excellent resource for travelers who want to find sustainably managed destinations and accommodations and learn how to become a more sustainable traveler in general.

Environment 

Protecting natural environments is the bedrock of sustainable tourism. Data released by the World Tourism Organization estimates that tourism-based CO2 emissions are forecast to increase 25% by 2030. In 2016, tourism transport-related emissions contributed to 5% of all man-made emissions, while transport-related emissions from long-haul international travel were expected to grow 45% by 2030.

The environmental ramifications of tourism don’t end with carbon emissions, either. Unsustainably managed tourism can create waste problems, lead to land loss or soil erosion, increase natural habitat loss, and put pressure on endangered species . More often than not, the resources in these places are already scarce, and sadly, the negative effects can contribute to the destruction of the very environment on which the industry depends.

Industries and destinations that want to be sustainable must do their part to conserve resources, reduce pollution, and conserve biodiversity and important ecosystems. In order to achieve this, proper resource management and management of waste and emissions is important. In Bali, for example, tourism consumes 65% of local water resources, while in Zanzibar, tourists use 15 times as much water per night as local residents.

Another factor to environmentally focused sustainable tourism comes in the form of purchasing: Does the tour operator, hotel, or restaurant favor locally sourced suppliers and products? How do they manage their food waste and dispose of goods? Something as simple as offering paper straws instead of plastic ones can make a huge dent in an organization’s harmful pollutant footprint.

Recently, there has been an uptick in companies that promote carbon offsetting . The idea behind carbon offsetting is to compensate for generated greenhouse gas emissions by canceling out emissions somewhere else. Much like the idea that reducing or reusing should be considered first before recycling , carbon offsetting shouldn’t be the primary goal. Sustainable tourism industries always work towards reducing emissions first and offset what they can’t.

Properly managed sustainable tourism also has the power to provide alternatives to need-based professions and behaviors like poaching . Often, and especially in underdeveloped countries, residents turn to environmentally harmful practices due to poverty and other social issues. At Periyar Tiger Reserve in India, for example, an unregulated increase in tourists made it more difficult to control poaching in the area. In response, an eco development program aimed at providing employment for locals turned 85 former poachers into reserve gamekeepers. Under supervision of the reserve’s management staff, the group of gamekeepers have developed a series of tourism packages and are now protecting land instead of exploiting it. They’ve found that jobs in responsible wildlife tourism are more rewarding and lucrative than illegal work.

Flying nonstop and spending more time in a single destination can help save CO2, since planes use more fuel the more times they take off.

Local Culture and Residents

One of the most important and overlooked aspects of sustainable tourism is contributing to protecting, preserving, and enhancing local sites and traditions. These include areas of historical, archaeological, or cultural significance, but also "intangible heritage," such as ceremonial dance or traditional art techniques.

In cases where a site is being used as a tourist attraction, it is important that the tourism doesn’t impede access to local residents. For example, some tourist organizations create local programs that offer residents the chance to visit tourism sites with cultural value in their own countries. A program called “Children in the Wilderness” run by Wilderness Safaris educates children in rural Africa about the importance of wildlife conservation and valuable leadership development tools. Vacations booked through travel site Responsible Travel contribute to the company’s “Trip for a Trip” program, which organizes day trips for disadvantaged youth who live near popular tourist destinations but have never had the opportunity to visit.

Sustainable tourism bodies work alongside communities to incorporate various local cultural expressions as part of a traveler’s experiences and ensure that they are appropriately represented. They collaborate with locals and seek their input on culturally appropriate interpretation of sites, and train guides to give visitors a valuable (and correct) impression of the site. The key is to inspire travelers to want to protect the area because they understand its significance.

Bhutan, a small landlocked country in South Asia, has enforced a system of all-inclusive tax for international visitors since 1997 ($200 per day in the off season and $250 per day in the high season). This way, the government is able to restrict the tourism market to local entrepreneurs exclusively and restrict tourism to specific regions, ensuring that the country’s most precious natural resources won’t be exploited.

Incorporating volunteer work into your vacation is an amazing way to learn more about the local culture and help contribute to your host community at the same time. You can also book a trip that is focused primarily on volunteer work through a locally run charity or non profit (just be sure that the job isn’t taking employment opportunities away from residents).

It's not difficult to make a business case for sustainable tourism, especially if one looks at a destination as a product. Think of protecting a destination, cultural landmark, or ecosystem as an investment. By keeping the environment healthy and the locals happy, sustainable tourism will maximize the efficiency of business resources. This is especially true in places where locals are more likely to voice their concerns if they feel like the industry is treating visitors better than residents.

Not only does reducing reliance on natural resources help save money in the long run, studies have shown that modern travelers are likely to participate in environmentally friendly tourism. In 2019, Booking.com found that 73% of travelers preferred an eco-sustainable hotel over a traditional one and 72% of travelers believed that people need to make sustainable travel choices for the sake of future generations.

Always be mindful of where your souvenirs are coming from and whether or not the money is going directly towards the local economy. For example, opt for handcrafted souvenirs made by local artisans.

Growth in the travel and tourism sectors alone has outpaced the overall global economy growth for nine years in a row. Prior to the pandemic, travel and tourism accounted for an $9.6 trillion contribution to the global GDP and 333 million jobs (or one in four new jobs around the world).

Sustainable travel dollars help support employees, who in turn pay taxes that contribute to their local economy. If those employees are not paid a fair wage or aren’t treated fairly, the traveler is unknowingly supporting damaging or unsustainable practices that do nothing to contribute to the future of the community. Similarly, if a hotel doesn’t take into account its ecological footprint, it may be building infrastructure on animal nesting grounds or contributing to excessive pollution. The same goes for attractions, since sustainably managed spots (like nature preserves) often put profits towards conservation and research.

Costa Rica was able to turn a severe deforestation crisis in the 1980s into a diversified tourism-based economy by designating 25.56% of land protected as either a national park, wildlife refuge, or reserve.

While traveling, think of how you would want your home country or home town to be treated by visitors.

Are You a Sustainable Traveler?

Sustainable travelers understand that their actions create an ecological and social footprint on the places they visit. Be mindful of the destinations , accommodations, and activities you choose, and choose destinations that are closer to home or extend your length of stay to save resources. Consider switching to more environmentally friendly modes of transportation such as bicycles, trains, or walking while on vacation. Look into supporting locally run tour operations or local family-owned businesses rather than large international chains. Don’t engage in activities that harm wildlife, such as elephant riding or tiger petting , and opt instead for a wildlife sanctuary (or better yet, attend a beach clean up or plan an hour or two of some volunteer work that interests you). Leave natural areas as you found them by taking out what you carry in, not littering, and respecting the local residents and their traditions.

Most of us travel to experience the world. New cultures, new traditions, new sights and smells and tastes are what makes traveling so rewarding. It is our responsibility as travelers to ensure that these destinations are protected not only for the sake of the communities who rely upon them, but for a future generation of travelers.

Sustainable tourism has many different layers, most of which oppose the more traditional forms of mass tourism that are more likely to lead to environmental damage, loss of culture, pollution, negative economic impacts, and overtourism.

Ecotourism highlights responsible travel to natural areas that focus on environmental conservation. A sustainable tourism body supports and contributes to biodiversity conservation by managing its own property responsibly and respecting or enhancing nearby natural protected areas (or areas of high biological value). Most of the time, this looks like a financial compensation to conservation management, but it can also include making sure that tours, attractions, and infrastructure don’t disturb natural ecosystems.

On the same page, wildlife interactions with free roaming wildlife should be non-invasive and managed responsibly to avoid negative impacts to the animals. As a traveler, prioritize visits to accredited rescue and rehabilitation centers that focus on treating, rehoming, or releasing animals back into the wild, such as the Jaguar Rescue Center in Costa Rica.

Soft Tourism

Soft tourism may highlight local experiences, local languages, or encourage longer time spent in individual areas. This is opposed to hard tourism featuring short duration of visits, travel without respecting culture, taking lots of selfies , and generally feeling a sense of superiority as a tourist.

Many World Heritage Sites, for example, pay special attention to protection, preservation, and sustainability by promoting soft tourism. Peru’s famed Machu Picchu was previously known as one of the world’s worst victims of overtourism , or a place of interest that has experienced negative effects (such as traffic or litter) from excessive numbers of tourists. The attraction has taken steps to control damages in recent years, requiring hikers to hire local guides on the Inca Trail, specifying dates and time on visitor tickets to negate overcrowding, and banning all single use plastics from the site.

Traveling during a destination’s shoulder season , the period between the peak and low seasons, typically combines good weather and low prices without the large crowds. This allows better opportunities to immerse yourself in a new place without contributing to overtourism, but also provides the local economy with income during a normally slow season.

Rural Tourism

Rural tourism applies to tourism that takes place in non-urbanized areas such as national parks, forests, nature reserves, and mountain areas. This can mean anything from camping and glamping to hiking and WOOFing. Rural tourism is a great way to practice sustainable tourism, since it usually requires less use of natural resources.

Community Tourism

Community-based tourism involves tourism where local residents invite travelers to visit their own communities. It sometimes includes overnight stays and often takes place in rural or underdeveloped countries. This type of tourism fosters connection and enables tourists to gain an in-depth knowledge of local habitats, wildlife, and traditional cultures — all while providing direct economic benefits to the host communities. Ecuador is a world leader in community tourism, offering unique accommodation options like the Sani Lodge run by the local Kichwa indigenous community, which offers responsible cultural experiences in the Ecuadorian Amazon rainforest.

" Transport-related CO 2  Emissions of the Tourism Sector – Modelling Results ." World Tourism Organization and International Transport Forum , 2019, doi:10.18111/9789284416660

" 45 Arrivals Every Second ." The World Counts.

Becken, Susanne. " Water Equity- Contrasting Tourism Water Use With That of the Local Community ." Water Resources and Industry , vol. 7-8, 2014, pp. 9-22, doi:10.1016/j.wri.2014.09.002

Kutty, Govindan M., and T.K. Raghavan Nair. " Periyar Tiger Reserve: Poachers Turned Gamekeepers ." Food and Agriculture Organization.

" GSTC Destination Criteria ." Global Sustainable Tourism Council.

Rinzin, Chhewang, et al. " Ecotourism as a Mechanism for Sustainable Development: the Case of Bhutan ." Environmental Sciences , vol. 4, no. 2, 2007, pp. 109-125, doi:10.1080/15693430701365420

" Booking.com Reveals Key Findings From Its 2019 Sustainable Travel Report ." Booking.com.

" Economic Impact Reports ." World Travel and Tourism Council .

• Costa Rica’s Keys to Success as a Sustainable Tourism Pioneer
• How to Be a Sustainable Traveler: 18 Tips
• Regenerative Travel: What It Is and How It's Outperforming Sustainable Tourism
• What Is Ecotourism? Definition, Examples, and Pros and Cons
• What Is Experiential Tourism?
• What Is Community-Based Tourism? Definition and Popular Destinations
• 3 More Rules for Sustainable Tourism
• What Is Overtourism and Why Is It Such a Big Problem?
• How to Become a Geo-Traveler
• What Is Voluntourism? Does It Help or Harm Communities?
• The World Doesn't Want Your Inukshuk
• 8 Incredible Rainforest Destinations Around the World
• 'Scattered Hotels' Are Saving Historic Villages in Italy and Beyond
• 15 Travel Destinations Being Ruined by Tourism
• How to Make Travel More Sustainable
• What's Special About the Faroe Islands

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