A common belief about tourism to certain locations is that economies automatically thrive. Such a belief makes sense. After all, the arrival of visitors from various locations means the importation of funds. In other words, all those tourists are going to spend money. Not all is perfect with tourism, though. Economies can suffer some drawbacks due to tourism. Generally, the positives seem to outweigh many negatives. Few tourist destinations try to discourage the arrival of new guests.

Businesses Gain Benefits

Again, tourists spend money. Big and small businesses both receive a lot of the money tourists spend. Hotels, restaurants, car rental services, clothing shops, and luxury retail stores experience a large amount of annual revenue from visitors. As the numbers of these visitors increase, so do the revenues for business owners. Profitability becomes difficult when there aren’t many customers. More tourists mean more customers. And it is not the business owners or shareholders who are the only ones who benefit.

Employee and Local Government Benefits

Businesses cannot operate without the right employees in place. Even the greatest luxury shopping trends cannot generate revenues for a business when the right employees are not in place. With increased tourism, the number of jobs available in a region increase. Salaries could also increase if jobs become competitive. As such, income can increase in a particular area.

The local government also has much to thank for the arrival of tourists. Tax revenue increases, too. With many spending decisions, tourists send sales tax revenue in the direction of the local and national government. Income tax revenue increases thanks to the salaries paid to employees and to the profits on increased business revenues. The tax income would be hard to generate without relying on the spending habits of tourists. Government services would suffer without this increased tax revenue.

While tourism reflects a net positive, certain negatives are unavoidable.

Stress on Local Services Occurs

The arrival of thousands upon thousands of tourists in specific geographic regions brings with it costs the locality cannot avoid. Roads, bridges and other infrastructure suffer from additional wear and tear. Law enforcement and emergency services end up being strained due to limited resources and constant demand. The generated tax revenue may not always be enough to handle the fiscal costs.

Money Doesn’t Always Stay

Since so many businesses are multinational and international, funds may be directed out of the local region. A major corporation could collect money through, say, a fast food chain it owns. The money doesn’t get deposited in local banks, though. The companies have the right to move money to banks anywhere else in the world and do so. The local economy loses all the positives associated with that money.

Things Outside of Anyone’s Control

A booming economy in one country could lead to a swarm of tourism into another country. On the other hand, a devastating event such as a natural disaster could ruin tourism for a long time.

Business and economic issues may not be the only things affected positively or negatively by the arrival or departure of tourists.

Social and Environmental Implications

There are social and environmental benefits and drawbacks that come with tourists. Local regions simply must accept cultural, social, and environmental enhancements and concerns when tourism remains a large part of the landscape. Some tourists may conserve the environment and contribute to the local cultures, others may be disrespectful. Again, this is the nature of tourist regions.

The Outlook for Businesses

As long as tourists help economies thrive, businesses can do well. Of course, offering the right products and services combined with effective marketing and customer service help. Business owners and other impacted by tourism simply have to take the proverbial good with the bad.


by: Mark Palmer