Jobassign

International Examinations

Career Award

Travel and Tourism
Standard Level

Ann Rowe, John D. Smith
and Fiona Borein

PUBLISHED BY THE PRESS SYNDICATE OF THE UNIVERSITY OF CAMBRIDGE
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CAMBRIDGE UNIVERSITY PRESS
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© Cambridge University Press 2002

This book is in copyright. Subject to statutory exception
and to the provisions of relevant collective licensing agreements,
no reproduction of any part may take place without
the written permission of Cambridge University Press.

First published 2002

Printed in the United Kingdom at the University Press, Cambridge

Typeface: Meridien 10/13.5pt. System: QuarkXPress®

A catalogue record for this book is available from the British Library

ISBN 0 521 89235 X paperback

Contents
Introduction 1

Part 1 The Core Module
1 The travel and tourism industry 3
q The structure of the international travel and tourism
industry 3
q Social, cultural, economic and environmental impacts
of travel and tourism 15
q Role of national governments in forming tourism policy
and promotion 23
q Patterns of demand for international travel and tourism 25

2 Features of worldwide destinations 31
q The main global features 31
q Time zones and climates 35
q Travel and tourism destinations 40
q What attracts tourists to a particular destination 50

3 Customer care and working procedures 64
q Dealing with customers and colleagues 64
q Essential personal skills required when working in travel
and tourism 69
q Handling enquiries, making reservations and receiving
money 74
q Using reference sources to obtain information 82
q Presentation and promotion of tourist facilities 86

4 Travel and tourism products and services 88
q Tourism products and ancillary services 88
q The roles of tour operators and travel agents 94
q Support facilities for travel and tourism 98
q Worldwide transport in relation to major international
routes 106

Contents

Part 2 The Optional Modules
5 Marketing and promotion 118
q Role and function of marketing and promotion 119
q Market segmentation and targeting 123
q ‘Product’ as part of the marketing mix 124
q ‘Price’ as part of the marketing mix 127
q ‘Place’ as part of the marketing mix 129
q ‘Promotion’ as part of the marketing mix 131

6 Travel organisation 135
q Travel providers 135
q Methods of travel 138
q Sources of information 148
q Ancillary travel services 152
q Planning a travel itinerary 156

7 Visitor services 164
q The role and function of tourist boards and tourist
information centres 165
q Provision of products and services 171
q Marketing and promotion 173
q Quality control 175
q Business travel services 178
q Leisure travel services 181

Examination techniques 184
List of useful websites 186
Glossary of terms 187
Acknowledgements 192
Index 193

Part 1 The Core Module

The travel and 1
tourism industry
Learning outcomes
In this chapter you will look at the structure of the international travel
and tourism industry. By the end of the chapter you should be able to:

q explain the nature and structure of the travel and tourism industry
q describe the social, cultural, economic and environmental impacts
of tourism
q identify the role of governments in forming tourism policies
and promoting tourism
q describe the patterns of demand for international tourism

This chapter covers Section A of the Core Module.

The structure of the international travel and tourism industry
We begin by looking at all the main organisations involved in the travel
and tourism industry. This forms the foundation for all the other topics
covered in this book and explains some of the key terms that you will
need to understand.

What is travel and tourism? To use the example of the World Tourism
Organisation (WTO) – affiliated to the United Nations and recognised as
the leading international body on global tourism – tourism is:

the activities of persons travelling to and staying in places outside
their usual environment for not more than one consecutive year for
leisure, business and other purposes.
World Tourism Organisation, 1993

Therefore the people who are considered to be ‘tourists’, are those
who are:
q away from their normal place of residence for a period of up to one
year (but will return home);
q taking part in activities that would normally be associated with leisure
and tourism;
q on a visit that is temporary and short term;

3

Part 1: The Core Module

q not necessarily away from home overnight as they could be on a day
trip or excursion;
q away from home but not necessarily on holiday, as they could be
away on business.

‘Travel and tourism’ does not necessarily involve travelling abroad. Much
tourism takes place within people’s home country, on visits to attractions,
city breaks, trips to business meetings, sports events or concerts, and visits
to friends and relatives (abbreviated as VFR).

There are three main types of tourism: domestic tourism, incoming or
inbound tourism and outbound tourism. We will look at each in turn.

Domestic tourism
This is when people take holidays, short breaks and day trips in their
own country. Examples would be:
q a couple taking a weekend break in their own country;
q the supporters of a football team going to an away game featuring
their local team;
q a family visiting relations in another part of the country, even if they
live only a few miles away.

If we take figures from the British Tourist Authority for 2000, we find
that British people made a total of 174.5 million trips within the UK,
broken down as follows:
q 106 million were on holidays;
q 23.7 million were on business;
q 40.6 million were visiting friends or relatives;
q 5.1 million were for other miscellaneous reasons.

Incoming/inbound tourism
This describes people entering the country in question from their home
country, so it is a type of international tourism. Examples could be:
q a party of Japanese visitors coming to Europe on a trip;
q teams from different countries entering a country for an international
event, such as the Olympic Games;
q families from Pakistan entering England to visit relations.

For the UK, the British Tourist Authority statistics show that 25.2 million
overseas visitors came in 2000, spending £12.6 billion in the UK.

4

The travel and tourism industry

Outbound tourism
This term applies when people travel away from their home country to
visit other international countries for leisure or business. Examples of this
could be:
q a family from Belgium going on holiday to Austria;
q business people from the UK travelling to America to visit a major
exhibition;
q a day tripper from southern Malaysia visiting Singapore.

Using BTA figures for 1999, UK residents took 50.9 million visits abroad,
of which 42.8 million were for leisure and 8 million were for business.

The following table summarises the range of reasons for travelling: Reasons for travel

LEISURE TOURISM VISITING FRIENDS AND RELATIVES (VFR) BUSINESS TOURISM

Holidays Visiting elderly relatives Business meetings
Health and fitness Social visits to friends and relatives Exhibitions and
Sport Wedding celebrations trade fairs
Education Conferences and
Culture and conventions
religion Incentive travel (given
Social and spiritual by businesses as
rewards for sales
or achievement in
that business)

Activity
Contact your national tourist board to obtain the figures for
domestic tourism, inbound/incoming tourism and outbound tourism
over the past few years. Using these figures, discuss the reasons for
any possible changes and consider the effects on the economy of
your country if tourism is increasing.

In order to assist people with their travel arrangements, there are
specialist travel service providers. These include travel agencies who
retail travel products direct to the individual or groups and business
travel agencies who specialise in providing travel for the business
customer or promoting conference trade. Tour operators provide a
package for the individual and principals provide the basic services
required by the travel and tourism industry. It is possible to divide the
components of the travel and tourism industry into six key areas, as
represented in Figure 1.

5


Figure 1
Components of travel
and tourism

We will look at each of these in more detail. Travel agents provide
a customer with advice and professional guidance on the choice of
a holiday or to purchase travel products. The main aims of travel
agents are:
q to sell holidays and associated products like insurance, car hire
and currency exchange;
q to provide information;
q to advise clients.

To do this they also provide the additional services that are outlined in
Chapter 2: ‘Features of worldwide destinations’. They sell their products
in the same way as other high street shops, so they advertise their
products and special offers to supply customers with what they want.
They act as agents for the suppliers of industry products or ‘principals’
such as airlines, rail companies, hotels, ferry and cruise companies, car
hire companies, tour operators, and foreign currency suppliers. They earn
their income from the commission paid by these principals. They supply
brochures to potential customers for them to browse through and then
take bookings along with any deposits or payments. They will use
computer reservations systems or viewdata systems to investigate
availability and the costs of any planned journey or holiday and advise
on the suitability of the accommodation or transport to meet the
customers’ needs.

Another type of travel agent is the business travel agent who
specialises in arranging accommodation and transport specifically for the
business traveller, whether this is to attend conferences, develop new
business or visit existing or new suppliers. Agents arrange flights, transfers
and accommodation suitable for the business traveller. Some large companies
have their own travel agencies at their headquarters to organise the
travel needs for the company. This is only beneficial when a company
undertakes a large volume of business travel and tends to happen in large

6


multi-national companies. You may also wish to refer to pages 94–8 in
Chapter 4 for more detail on travel agencies.

A tour operator puts together holiday packages which consist of:
q travel (road, rail, sea, air)
q accommodation (hotels, guesthouses, self catering villas or
apartments)
q travel services (transfers to and from the destination airport, car hire,
excursions).

The package holidays offered may cover a wide range of destinations,
both national and international, and can cover a variety of holidays, such
as cruises, adventure, touring, winter and summer destinations. The tour
operators act as the ‘wholesalers’ in the travel industry, as they produce a
package holiday and then negotiate with travel agencies the commission
they will receive to sell these to the end user, the customer.

There are two types of tour operator: the wholesale operators, who put
together and operate tours only through retail travel agencies; and the
direct sell operators, who market their products direct to the public (in
other words they do not use travel agencies to promote their products).

Tour operators may specialise in a particular type of product – some only
offer holidays within the home country, others operate only in a
particular field, such as cruises, whereas others cover a wide range of
holiday opportunities. Incoming tour operators or inbound handling
agents specialise in tours for overseas visitors in the home country thus
earning money for the national economy. Examples of worldwide tour
operators are American Express and Thomas Cook, though there are
others such as Kuoni and Preussag.

The tour operator will cost the package to include travel and
accommodation and also produce brochures, employ and train staff
(such as holiday representatives or tour directors). They undertake
market research on not only the type of holiday in demand but which
principals to use, and maintain their central reservations systems and
customer support.

The principals within the industry, as previously mentioned, include the
transport, accommodation and attraction providers. These provide the
finance required to operate the product and act independently of tour
operators or travel agencies, earning their income from sales, whether to

7


individuals or tour operators. They supply the initial product, whether it
is hotel accommodation, an airline, catering or an attraction.

Of the principals in the industry, transport providers are those
operating any major form of transport. These would include the airlines
(such as Cathay Pacific, Emirates or American Airways) providing the
seats which an individual traveller, business person or tour operator may
purchase. The airlines may be scheduled airlines operating to a timetable
from large regional and national airports, or they may be chartered
airlines. These are defined and discussed in more detail on pp. 138–9 of
Chapter 6: ‘Travel organisation’.

Ferry operators are another type of transport principal. Ferries provide
vital links between groups of islands, or islands and a larger land mass
(such as those which operate across the English Channel between the UK
and Europe, or those which operate from the Greek mainland to its
many islands). These services are provided for all travellers, not just
tourists, but tickets are also sold to tour operators, through travel
agencies or direct to the customer.

Rail companies, whether national organisations or privately owned rail
companies, are also transport principals, and provide a scheduled service
within the home country. Seats may be reserved by individual or
business travellers either direct with the provider or through travel
agencies. Tour operators may reserve seats for specific groups of travellers
on a particular route. An example of this would be a tour operator
booking seats on the Rocky Mountaineer, a scenic train which runs
through the Canadian Rocky Mountains. Any seats not used by the tour
operator would be available to the general public to purchase on an
individual basis.

A tourist’s choice of transport would depend on:
q price
q destination
q time – how much is available
q reason – visiting family or friends, business or leisure
q departure points – how easy it is to get there
q convenience.

In order to encourage more people to buy their holidays, many tour
operators will provide flights from more accessible regional airports either
direct to the final destination or to one of the major international airports
which operate long-haul flights.

8


Many travellers wish to be independent at their destination and so
require the services of car hire principals who provide cars of varying
specifications to suit different group sizes and budgets. These may be
hired independently through international chains, such as Hertz or Avis,
to be available at the point of arrival for the period of the booking, or
may be hired through travel agencies and tour operators. Many tour
operators now promote self-drive holidays, where the flight and car hire
are included but the more independent travellers buy their own
accommodation in the destination country. Business travellers may also
require car hire in order to visit customers in the destination country, so
the business travel agency could make a booking.

Accommodation principals are those who build and staff hotels, villas,
apartment resorts or holiday cottages which are available to any traveller.
Some of these are major international chains such as Marriott Hotels,
Holiday Inn, Comfort Inns and Hotels; others are smaller providers who
may only own one or a small chain of hotels. The accommodation may
be marketed individually by the provider or rooms purchased by a tour
operator in order to make up a package holiday often at a special rate.
The benefit to the accommodation provider of selling through a tour
operator is that they have a more guaranteed occupancy rate throughout
a holiday season. Otherwise they may have to spend large amounts of
money on advertising in order to attract sufficient individual customers to
make a profit.

Accommodation is divided into two basic categories: serviced
accommodation (where meals are provided such as in hotels and
guesthouses) and self-catering accommodation (such as cottages, chalets
and apartments where the occupants provide their own food). Tourists
can also reserve accommodation on different terms such as:
q bed and breakfast (where the price only includes the provision of bed
and breakfast which may be cooked, buffet style or continental);
q half board (with bed, breakfast and either lunch or evening meal
included in the price);
q full board (where accommodation and all meals are provided);
q all-inclusive (which includes accommodation, all meals, snacks and
beverages for the period of the stay).

Within the tour operator’s brochure, there will usually be some statement
as to the accommodation and catering included in the cost. This will help
the tourist to budget for the package holiday, knowing what is included
and what must be paid for separately.

9


Figure 2 shows some examples of marketing by different principals in the
Figure 2 travel and tourism industry. These are all taken from a national
Examples of marketing newspaper in the UK and are aimed at the individual traveller, rather
by principals than one who makes a booking through a travel agency.

10


Though accommodation is a major feature of travel and tourism, visitors
require catering facilities, and principals within the industry include
those providing a variety of outlets for food and refreshment. Whether a
visitor is only away for a few hours, or for a longer holiday, food and/or
drink will be required and these can be found at a variety of outlets.
Airlines, ferries and rail principals will usually provide some form of
catering and outlets will also be provided at airports or terminals. Visitor
attractions often provide a variety of catering outlets which may include
a cafeteria, self-service food selection area or a restaurant with waitress
service. Even cinemas and theatres may sell snacks, ice creams or
confectionery and drinks.

Major resort areas and hotels provide a wider choice of catering facilities,
ranging from fast food outlets (such as Macdonalds, Wimpy, Pizza Hut
and other international chains) to restaurants providing various meals
from different ethnic regions (such as Indian, Chinese, French and Italian
food). There could also be cafeterias where snacks and meals can be
purchased plus bars and coffee shops. Even large shopping malls and
sporting venues provide catering outlets for the convenience of
participants and spectators.

The principals who provide attractions for the visitor will need to have
undertaken market research to establish the need for the attraction in
that particular location and its potential audience. Attractions may be
purpose built, such as Disney theme parks in California, Florida or Paris,
or they may be part of a nation’s cultural heritage, such as the Louvre
Gallery in Paris, or Sydney Opera House in Australia. They may also be
created for a purpose, for example zoos, rare animal parks and sea-life
centres set up to conserve and display animals and birds. Other
attractions may relate to the industrial heritage or scientific development
of a country. Some large companies allow visitors to tour their factories
or manufacturing plants. An example of this is Cadbury World in the UK,
the manufacturing base of Cadbury’s chocolates, where visitors can see
chocolate being made as well as be entertained with rides and purchase
goods in the factory shop. Another example is the Corning Museum of
Glass, outside New York in the USA, where visitors can watch glass-
blowing demonstrations, see and touch examples explaining the history
of glass and visit a café and factory shop.

Many newly developing countries and resorts see the need to have one
or more visitor attraction in the area in order to widen their appeal and
attract a larger number of tourists. Even those resorts which have
previously relied on tourists who want a beach holiday, are now

11


developing alternative attractions to offer more variety to the holiday
experience.

Whatever the attraction, its aim is to appeal to as many customers as
possible in order to make a profit and invest further in its development or
improvement. Marketing is largely undertaken by the management of the
attraction itself. It may be done in various ways – through the media
(television, radio or newspapers), or by offering tour operators specific
discounts to include the attraction as part of a package holiday or tour.

Activities
q Using one or two copies of your national newspaper, locate
advertisements placed by as many principals in the travel and
tourism industry as you can. Consider whether these
advertisements are targeted at the individual or group traveller.
q Identify the main attractions in your country or area and
investigate the number of visitors each has received over the past
10 years. If any of you have visited any of these attractions,
present a report to your group on the type of experience you had
and the most and least enjoyable aspects of your visit. Suggest
any attractions or catering outlets which you consider would
benefit your local area.

Tourists are generally classified in statistics according to the duration and
purpose of their journey. If tourists are away from home for a day or less
and do not need accommodation they are classified as day trippers. If
the stay includes accommodation then they may be classified by their
length of stay, such as one night or more. Length of stay statistics are
often grouped into stays of one night, of between two and four nights, a
week, two weeks, one month, and so on. Also visitors may be classified
as to whether they are touring for business or leisure purposes.

These data can then be analysed to identify trends within the industry
that will affect not only the marketing by the principals and tour
operators, but also the economy of the country. This will be looked at in
more detail later in this chapter.

Many countries with an established or significant travel and tourism
industry, or those who wish to increase the national income by
promoting tourism further, are likely to have a separate department of
government or a public body responsible to government for this purpose.
These bodies are known as National Tourism Organisations or NTOs.

12


In the UK, the NTO is the British Tourist Authority, and its mission is to
build the value of inbound tourism to Britain, generating additional
revenue throughout Britain, throughout the year. It operates in 27
overseas markets, working in partnership with the national tourism
boards of England, Scotland, Wales and Northern Ireland, and gathers
essential market intelligence for the tourism industry. It is funded by
grant aid from the government’s Department for Culture, Media and
Sport, and has partnership support from airlines, hotels, local authorities
and others to increase the marketing resources. It helps the tourism
businesses reach overseas customers cost-effectively.

A typical NTO will have four main areas of responsibility:
q marketing;
q research and corporate planning (i.e. undertaking market research and
deciding the policies and strategies for the organisation);
q development (looking at ways to develop tourism further, through
customer care and quality assurance, liaison over training, trade
relations and product development); Figure 3
q finance and administration (managing its budgets, corporate press and Examples of marketing
publicity, staffing and general administration functions including by National Tourism
information technology). Organisations

13


As already mentioned, in the UK, the national tourism bodies (such as
Wales Tourist Board, Scottish Tourist Board etc.) work in close
partnership with the BTA (British Tourist Authority), and they in turn
work closely with regional tourist boards. There are ten regional tourist
boards in England who work closely with the local authorities or councils
and tourism principals in order to improve the provision and promotion
of tourist facilities and attractions in that region. Each local authority or
town council may also have an officer responsible for the promotion of
Figure 4
tourism within that smaller area, who will have the benefit of more
National Tourism specific knowledge of the needs of that smaller area. To try and make this
Organisation for clearer, study the following diagram and compare this with the operation
the UK of the NTO in your area.

British Tourist Authority

Scottish Tourist English Tourism Northern Ireland Wales Tourist
Board Council Tourist Board Board

North West
Tourist Board
(One of 10 regional tourist boards)
Members include:
Lancashire County Council (regional authority)
Blackpool Borough Council (local authority)
Blackpool Pleasure Beach (attraction provider)
Blackpool Hotels Association (accommodation providers)

Part of the role of the regional tourist boards is to provide information to
visitors when they are actually in that area. This is done through Tourist
Information Centres (TICs). These may be located at points of entry to
the areas (such as railway or bus stations) or at central points in the
towns or cities, often with signs directing visitors to them. Inside the TIC
there will be displays of leaflets and brochures on local attractions,
entertainment venues and events, and possibly details about public
transport such as timetables for buses and rail travel within the local area.
There may also be a touch-screen facility enabling visitors to locate
particular places of interest. One of the services provided by the TIC is
information on accommodation in the area and many are able to take
bookings on behalf of local hotels and guesthouses for a small deposit.

14


You will find more information on TICs in Chapter 6 (see pp. 149–50).
You could also visit your local TIC to find out what services and
information it provides to visitors.

Another ancillary service within the industry is the provision of tourist
guiding services. These may come in the form of guides or tour
directors who accompany groups of tourists round an attraction or on a
specific tour provided by an operator (such as a coach tour). They are
selected because of their knowledge of the specific area and also their
ability to organise and manage people, so their skills must include good
communication and administration. They may be required to deal with
customer complaints and negotiate with other providers, such as the
coach company, hotel accommodation if this is provided and excursion
providers whilst on a tour.

Other types of guiding services include those specifically located at an
attraction, such as museum guides. They usually have a specific, detailed
knowledge of the attraction in question, and may be able to conduct
tours in a particular foreign language to help visitors from overseas who
do not speak the local language.

Some attraction providers now supply audio packages in various
languages which can be hired by visitors for the duration of their visit.
These audio tapes guide the visitor round the attraction and describe
exhibits or features along the selected route. These can actually be more
cost-effective for providers than employing guides, though they do lack
the personal touch. Some cities also provide ‘walking guides’ who
accompany small groups of visitors round an area, pointing out places of
interest. These tend to be people local to the specific area who know it
well, have been suitably trained and hold a tour guide qualification.

Social, cultural, economic and environmental impacts of
travel and tourism
Social and cultural impacts of tourism
Tourism may have many different effects on the social and cultural
aspects of life in a particular region or area, depending on the cultural
and religious strengths of that region. The interaction between tourists
and the host community can be one of the factors that may affect a
community as tourists may not be sensitive to local customs, traditions
and standards. The effect can be positive or negative on the host
community.

15


Positive impacts on an area include such benefits as:
q local community can mix with people from diverse backgrounds with
different lifestyles which through ‘demonstration effect’ may lead to
the development of improved lifestyles and practices from the tourists’
examples;
q there can be an improvement in local life through better local facilities
and infrastructure (developed to sustain tourism) which could lead to
better education, health care, employment opportunities and income;
q more cultural and social events available for local people such as
entertainment, exhibitions etc.
q improved sports and leisure facilities created for the tourists which
local people may use, particularly out of the tourist season;
q conservation of the local cultural heritage of an area and rebirth of its
crafts, architectural traditions and ancestral heritage;
q urban areas which may be in decline can be revived and the
movement of people from rural areas to urban areas for employment
may be reversed as jobs will be available in the tourism industry;
q increase in youth exchange programmes, village tourism, home swap
programmes and voluntary work overseas.

Dubai is a good example of a tourist destination where the development of
tourism has had positive effects on the social and cultural life of the area.
As you will see in the case study in Chapter 2 (pp. 40–9), considerable
financial investment by both public and private sectors has led to
improvements in the infrastructure and to job creation. Archaeological and
heritage sites are preserved, and local traditions maintained. The hospitable
culture of the Arab world and acceptance of others’ lifestyles means that
tourists are welcomed but do not threaten existing ways of life.

However, tourism may have negative effects on an area, such as:
q the infrastructure (roads, railways, health care provision) may not be
able to cope with the greater numbers created by tourism;
q poor sanitation may lead to diseases for both tourists and local
population;
q local population’s activities and lifestyles may suffer intrusion from
tourists leading to resentment towards tourists;
q the local population may copy lifestyles of tourists through the
‘demonstration effect’ and the result could be a loss to local customs
and traditions as well as standards of behaviour;
q there could be a loss of native languages and traditions leading to the
area losing some of its original appeal;
q increased crime could develop through a decline in moral and
religious values, leading to greed and jealousy of wealthier visitors;

16


q traditional industries may be lost and local goods substituted by
imported and mass-produced goods which lack authenticity but appeal
to a mass market;
q tourists may act in an anti-social manner which could cause offence to
the local population. Unless sufficient information is provided by the
host nation and tourist providers on the standards of behaviour
expected in that area, local populations may come to resent tourists
and act aggressively towards them, or the host community adopts the
same anti-social behaviour;
q tourists may be unprepared for social contact and interaction with the
host community (particularly in large self-contained resort areas)
which leads to resentment and constraint in the host community;
q there may be language barriers between the tourist and the host
community which may create communication problems.

Providing careful planning is undertaken in an area where tourist
development is being considered and the host community fully involved
in that planning, many of these negative factors can be overcome.
However, some of the negative factors may take some time to become
apparent in the host community so planners need to research tourist
development and its effects to try and prevent problems arising.

Economic impacts of tourism
The major benefit of tourism for a region or country is economic as it
provides an opportunity for job creation and generation of revenue at
international, national, regional and local levels. Tourism can also benefit
economies at regional and local levels, as money comes into urban and
rural areas which in turn stimulates new business enterprises and
promotes a more positive image in an area. As an example, we could
look at figures for the UK to show the level of spending on tourism
in 2000:

Spending on
Spending by visitors from overseas £ billion tourism in 2000
Visits to the UK 12.8
Fares to UK carriers 3.5

Spending by domestic tourists
Trips of 1+ nights 26.1
Day trips 32.7

17


In the UK tourism accounts for around 4 per cent of GDP (Gross
Domestic Product) and employs 1.8 million people. (Gross Domestic
Product is the total value of goods and services produced in the country
plus its net revenues from abroad. Studying the contribution of tourism
to a country’s GDP can give an indication of the importance of tourism in
relation to other industries in that country.) Globally, the World Travel
and Tourism Council indicated that in 1996 tourism generated a total
output of US$3.6 trillion and contributed 10.7 per cent of global Gross
Domestic Product. Many governments now actively promote tourism in
order to bring foreign currency into a country and generate more wealth
for that country. The income generated helps the national balance of
payments, earning revenue through direct taxation, as well as from
indirect taxes on goods and services purchased by tourists.

When an area develops as a tourist destination, the local economy
benefits because new jobs are created and visitors bring more business to
local shops and restaurants. The income generated can then be used to
improve local services, whether by developing better transport and
infrastructure, or by providing more facilities for residents and visitors,
such as leisure centres, shopping areas and entertainment or attractions.
This is known as the ‘multiplier effect’.

Activity
Look at the pie chart below, showing the domestic and overseas
tourist spending breakdown for the UK in 1999. Obtain similar
statistics for your own area and compare the percentages in each of
the principal areas.

Total £28,748 million
Eating out £6,755mn
Entertainment £1,277mn 23.5%
4.4%

18.9% Services etc
Shopping £5,434mn £977mn
3.4%

1% 14.7%
Others £297mn Travel within UK
£4,225mn

Figure 5 34%
UK tourist spending Accommodation £9,782mn
breakdown, 1999
Source: www.staruk.org.uk, sponsored by the National Tourist Boards and the Department
for Culture, Media and Sport

18


The balance of payments is a statement which shows the flows of
international currency and capital items to and from a particular country.
Items are classed as either ‘visible’ or ‘invisible’. Visibles are items which
can be seen – such as cars, electrical products or raw materials – and
invisible items are those which cannot be physically seen – such as
shipping, banking, tourism and insurance. The tourism balance of
payments for a particular country is the figure which shows all the
earnings from overseas visitors, less any payments made by its own
residents who travel abroad.

If we use the figures for the UK we can see how the tourism balance of
payments has changed over a period of time:

Spending on
1975 1987 1996 1997 1998 tourism 1975–98, in
Money spent in UK 1,218 6,260 12,290 12,244 12,671 £ millions
by overseas residents

Money spent abroad 917 7,280 16,223 16,931 19,489
by UK residents

Balance on travel 301 −1,202 −3,933 −4,687 −6,819
account
Source: National Statistics for the UK

Using these figures, it is evident that the tourism balance of payments for
the UK is in deficit (i.e. more money is going out of the country than
coming in) and obviously the BTA has the target to improve this balance
and reduce the deficit. One of the problems for the UK is that most
regional tourism tends to be seasonal. In other words it is affected by
weather patterns, with the bulk of tourism occurring in the summer
months, though London and other larger cities may attract visitors
throughout the year. Other countries may also be affected by weather
patterns, such as monsoon or hurricane seasons, or some may attract
particular types of visitors in specific seasons, such as ski and winter
sports resorts.

The multiplier concept is the term used to calculate the benefit of
tourism income to a particular region. Money spent by tourists in a
destination area has both direct and indirect economic benefits.
Enterprises which offer tourist facilities, such as hotels, attractions and
transport operators, benefit directly from tourist spending. Other
businesses may also benefit from the presence of the tourist, such as
shops, banks, and businesses which provide goods and services for the
tourist (like laundries and food suppliers). If visitors to London, for

19


example, stay overnight, they will have to pay the hotel for the
accommodation. The hotel uses this income to pay its staff and suppliers.
Those staff will spend some of their wages in local shops and the
suppliers will pay their own staff. So the money is circulating in the
area and thus creating more wealth in that area for other businesses.
However, a portion of the visitor’s payment to the hotel is lost to the
area, through taxation paid by the hotel to the government, or to
suppliers outside the local area. This is known as ‘leakage’ from the
local economy.

A small local restaurant is more likely to have a higher income multiplier
effect, as it would use local staff and probably local suppliers. But a large
city-centre hotel may be part of a national or international chain, and
goods and services may be purchased centrally by the organisation, so
less of the income earned by the hotel is spent in the local area.

Tourism is a very people-oriented business, therefore the opportunity to
create employment in an area is one of the attractions to governments.
If an area has suffered from declining industries and levels of
unemployment are high, tourism could be a way of revitalising that area
and creating employment. But the skills needed within the industry may
not be the same as the traditional industry, so efforts are made to retrain
and recruit those with the necessary expertise (such as communication,
personal presentation or specific catering qualifications, for example).
Some of the employees may need to be relocated to the developing area,
particularly where there are skills shortages, but others will be employed
locally. Other local residents may see an opportunity to become self-
employed and develop their own business in the tourism sector. An
example of this may be the owner of a farm in a declining area
converting buildings into holiday cottages, or a fisherman unable to earn
sufficient income through fishing alone offering boating or fishing trips to
visitors round the local coastline.

Direct employment in tourism occurs in accommodation and catering,
transport operations, travel agencies, tour operators, tourist attractions
and government departments (such as tourist boards and tourism
information centres, national parks and monuments, air traffic control
and lifeguards). Tourism employment opportunities may also arise more
indirectly, through areas such as customs and immigration officials at
land borders, ports and airports; and capital investment jobs (design and
construction of highways, airports, aircraft, hotels/resorts and cruise
ships, for example). Employment opportunities may also grow in areas
concerned with the supply and production of travel products (film

20


developers, sign makers, laundries, food producers and chemists,
for example).

The negative impact of employment within the tourism industry can be
that, as the work may be seasonal, the employees may not have the same
loyalty and commitment to the job, and take little interest in gaining skills
and qualifications in the industry. The hours can be long and the pay may
not always compete favourably with other industries, so potential
employees may not see their work as a career opportunity. This can have
an effect on the way tourists experience an area. Poor service or an
otherwise unfavourable experience may affect a tourist’s enjoyment of
an area. The tourist is unlikely to return to that area and may tell others,
thus creating a decline in demand affecting other tourism providers in
that area.

Tourism is considered to be a growth industry, but if potential visitors do
not have the income to spend on tourism, a negative aspect could be a
recession in tourism. If a developing country is over-dependent on
tourism, then the economic and social problems caused by a recession in
the industry could be great. Governments need to develop strategies to
reduce over-reliance on tourism employment to minimise these effects. A
further aspect of over-dependence is that employees may be attracted to
employment in tourism-related work and leave their traditional primary
industries, particularly in developing countries. This has the effect of loss
of labour in those traditional industries, causing labour supply problems.

Another negative impact of tourism can be inflation in prices of goods
and services in an area, which causes difficulties for the local residents.
The businesses catering for the tourist may increase their prices to attract
more revenue but the local population may not be able to pay these
higher prices. Prices of houses in a popular tourist area may rise, so local
people may no longer be able to afford to buy there. This can happen
where houses are purchased as second homes or holiday villas meaning
they are no longer available to local residents. A social difficulty could
arise as younger people may be forced to move from the area in order to
be able to purchase a property. Local shops and businesses may decide
to cater more for the tourist market, thus reducing the facilities and choice
for local inhabitants who may need to travel further for basic supplies of
goods. If an area is spending money on the development of facilities for
tourists, such as hotels or roads, then there is less money available
for other capital projects such as schools and hospitals which an area
may need.

21


Environmental impacts of tourism
An attractive environment appeals to tourists, whether natural or built,
and the development of tourism in a locality will relate to the
surrounding area. The term ‘environment’ refers to the physical setting in
which tourism takes place – this could be coastal resorts, historic cities,
mountain ranges, picturesque villages, sites of cultural interest including
museums and national monuments – and which provides the stimulus
for travel.

Tourism itself will affect the environment in both positive and negative
ways. The following lists summarise these effects:

The positive effects may include:
q increased investment in the area (may improve facilities, access and
enable development);
q conservation of features encouraged (buildings, wildlife, countryside);
q increased income for upkeep and preservation of facilities.

On the other hand, negative aspects could include:
q appealing environment spoilt by over-development;
q local people displaced due to development of coastal resorts;
q damage to natural flora and fauna;
q scarcity or reduction in water supply/quality to meet tourism demands;
q increased litter and waste disposal problems;
q greater air pollution and noise from overcrowded facilities/increased
air traffic.

There are pressure groups who campaign to preserve the environment
and try to prevent over-development, such as Friends of the Earth and
Tourism Concern. Government departments in many countries aim to
achieve sensitive tourism development that is respectful of local
environments and customs. The more involved a local community is with
the development of tourism in an area, the less damaging the impact of
tourism may be on that area. However, the local community may see the
benefits of tourism development without being fully aware of the
negative effects or costs to the community. Or they may focus on the
threats to the environment without seeing the positive aspects. This is
where local tourism forums (such as regional tourist boards) can help
focus the issues and provide an opportunity for discussion and analysis as
well as raising public awareness.

22

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