The Multiplier Effect In Tourism | What Is It? How Does It Work? Why Does It Matter?
Summary
TLDRIn this informative video, Dr. Haley Stainton explains the concept of the multiplier effect in tourism, highlighting its significance in boosting local economies. She breaks down five types of tourism multipliers, including sales, output, income, employment, and government revenue, illustrating how tourism can create jobs, increase income, and stimulate economic growth. However, she also addresses the issue of economic leakage, emphasizing the importance of sustainable tourism practices to ensure that benefits are retained within the destination.
Takeaways
- 🌐 The multiplier effect in tourism is a significant economic concept, amplifying the benefits of tourism spending in an area.
- 👩🏫 Dr. Haley Stainton is the host of the channel, focusing on teaching travel and tourism concepts.
- 💡 Tourism has the potential to create jobs, generate income, and support essential needs for communities around the world.
- 🌍 The multiplier effect is not limited to developed countries; it's a global phenomenon that can uplift economies everywhere.
- 📈 The concept of the multiplier effect is broken down into five categories by Dickerish and Jenkins in 1997.
- 🏨 The sales or transaction multiplier refers to increased sales directly and indirectly related to the tourism industry.
- 📊 The output or production multiplier is about the increase in goods and services produced and offered for sale due to tourism.
- 💰 The income multiplier highlights how tourism can increase personal income, leading to more spending in the local economy.
- 🔑 The employment multiplier indicates that increased tourism leads to more jobs and, consequently, more economic activity.
- 🏛 The government revenue multiplier involves official figures showing revenue from tourism, which can be reinvested in public services.
- 💸 However, not all tourism revenue is officially recorded, suggesting the actual economic benefits might be higher than reported.
- 🔄 The tourism multiplier effect works through direct, indirect, and induced expenditures, impacting various sectors of the economy.
- 🌳 The importance of the tourism multiplier effect lies in its potential to bring opportunities and revenue, but it must be managed sustainably to prevent economic leakage.
Q & A
What is the multiplier effect in tourism?
-The multiplier effect in tourism refers to the way in which the economic benefits generated by tourism are multiplied, leading to increased sales, production, income, employment, and government revenue.
Who is Dr. Haley Stainton and what does she teach?
-Dr. Haley Stainton is the host of the channel that provides education on travel and tourism. She teaches various aspects of the tourism industry.
Why is the multiplier effect significant in the context of developing countries?
-The multiplier effect is significant in developing countries because it can provide jobs, income, and essential funds for local communities, which may not be as privileged as those in the Western world.
What are the different types of multipliers identified by Dickerish and Jenkins in 1997?
-Dickerish and Jenkins identified five types of multipliers in tourism: sales or transaction multiplier, output or production multiplier, income multiplier, employment multiplier, and government revenue multiplier.
How does the sales or transaction multiplier work in tourism?
-The sales or transaction multiplier works by increasing the number of sales directly and indirectly related to the tourism industry, such as hotel rooms, tours, and even goods produced by local farmers supplying the tourism sector.
Can you explain the output or production multiplier in tourism?
-The output or production multiplier in tourism refers to the increase in the production of goods and services that are offered for sale, such as additional hotel rooms or tickets for shows, which may not always be sold but contribute to the economy.
What is the income multiplier in tourism and how does it impact individuals?
-The income multiplier in tourism occurs when the income of individuals involved in the tourism industry increases due to growth in tourism, allowing them to spend more in the local economy, thereby multiplying the economic benefits.
How does the employment multiplier in tourism contribute to the local economy?
-The employment multiplier in tourism contributes to the local economy by creating more jobs both directly and indirectly related to the industry, which in turn increases the income of workers who then spend more in the local economy.
What is the government revenue multiplier and how can it benefit a country?
-The government revenue multiplier is the official figures that demonstrate the revenue generated from the tourism industry. Governments can use this revenue to reinvest in public services like hospitals and schools, although not all revenue may be officially recorded.
Why is sustainable tourism management important in relation to the multiplier effect?
-Sustainable tourism management is important to ensure that the economic benefits from tourism are retained within the local economy, preventing economic leakage and maximizing the positive impacts of tourism on the community.
What is economic leakage in the context of tourism, and how can it be mitigated?
-Economic leakage in tourism occurs when money spent by tourists leaves the local economy, often due to foreign ownership of businesses or the purchase of imported goods. It can be mitigated by promoting local businesses and products to keep the money circulating within the local economy.
Outlines
🚀 Introduction to the Multiplier Effect in Tourism
This paragraph introduces the concept of the multiplier effect in tourism, emphasizing its significance in the industry. Dr. Haley Stainton, the host, explains that tourism has the potential to create jobs and improve the economy. The paragraph sets the stage for a deeper dive into the multiplier effect, which is presented as a key economic impact of tourism. It also mentions that there are various types of multipliers within the industry, first identified by Dickerish and Jenkins in 1997, and invites viewers to learn more about them in the video.
🌐 Types of Multipliers in Tourism
This paragraph delves into the different types of multipliers in tourism, starting with the sales or transaction multiplier, which involves an increase in sales directly and indirectly related to tourism. The output or production multiplier is next, highlighting the increase in production of tourism-related goods and services. The income multiplier is explained as the increase in income for individuals due to tourism growth, leading to more spending and a ripple effect in the economy. The employment multiplier is discussed as the creation of more jobs, both directly and indirectly related to tourism. Lastly, the government revenue multiplier is introduced, which is the official figures showing revenue from tourism that can be reinvested in the community, though it notes the issue of unreported revenue and the potential underestimation of tourism's economic benefits.
💰 Understanding the Tourism Multiplier Effect
The paragraph explains how the tourism multiplier effect works through three main types of expenditures: direct tourism expenditure where tourists spend money on tourism activities, indirect tourism expenditure which includes government spending on infrastructure used by tourists, and induced tourism expenditure resulting from increased spending by individuals who have more disposable income due to tourism. The paragraph also discusses the importance of the multiplier effect in bringing opportunities and economic growth to an area, but warns of the challenges of economic leakage, where money spent on foreign-owned businesses or imported goods does not remain in the local economy. The video concludes by encouraging viewers to support sustainable tourism practices to maximize the local benefits of tourism.
Mindmap
Keywords
💡Multiplier Effect
💡Tourism Industry
💡Economic Impact
💡Sales Multiplier
💡Output Multiplier
💡Income Multiplier
💡Employment Multiplier
💡Government Revenue Multiplier
💡Economic Leakage
💡Sustainable Tourism
💡Induced Tourism Expenditure
Highlights
The multiplier effect in tourism is a significant concept that can greatly benefit economies.
Dr. Haley Stainton introduces the concept of the multiplier effect in the context of tourism.
Tourism has the potential to create jobs, provide income, and support essential needs in communities.
The economic impacts of tourism can be both positive and negative, with the multiplier effect being a key positive example.
The multiplier effect is conceptually simple, involving the multiplication of economic benefits from tourism.
Different types of multipliers in tourism were identified by Dickerish and Jenkins in 1997, categorizing them into five distinct groups.
The sales or transaction multiplier involves an increase in the number of sales directly and indirectly related to tourism.
Indirect sales from tourism can affect industries like agriculture and fishing, which may not be directly part of the tourism industry.
The output or production multiplier is exemplified by the increase in offerings such as hotel rooms or tickets for shows.
The income multiplier in tourism refers to the increase in income for individuals due to growth in the tourism sector.
Employment multipliers in tourism indicate the creation of more jobs as a result of increased tourism activity.
The government revenue multiplier reflects the official figures on revenue generated by tourism, which can be reinvested in public services.
Not all revenue from tourism is officially recorded, potentially underestimating the true economic benefits.
The tourism multiplier effect works through direct, indirect, and induced tourism expenditures.
Sustainable tourism management is crucial to prevent economic leakage and maximize the multiplier effect.
Economic leakage occurs when money spent on tourism leaves the local economy, such as through foreign-owned hotels or imported goods.
Supporting local products and services can help keep tourism revenue within the local economy, enhancing the multiplier effect.
Transcripts
[Music]
the multiplier effect in tourism is a
big deal and if you don't know what that
means you've come to the right place in
this video i am going to teach you what
the multiplier effect in tourism means
and why
it is so
so
important
[Music]
if you are new to this channel my name
is dr haley stainton i teach all things
travel and tourism tourism can do a lot
of great things and the multiplier
effect in tourism is one example the
travel and tourism industry has so much
potential to do so much good it can give
people jobs
it can give people money it can provide
people with money to spend on essential
things like feeding their children like
sending their kids to school like
putting a roof over their heads in the
western world we're largely privileged
that we take these things for granted
but that isn't the case everywhere in
the world and tourism is the answer for
a lot of people there are many different
economic impacts of tourism that can be
both good
and bad and the multiplier effect is
just one example of them by the way you
can learn more about all the other
economic impacts of tourism in this
video here so what exactly is the
multiplier effect and how does it
actually work well if you google the
term multiplier effect without the words
in tourism after you will be presented
with
complicated economic theory and
equations and if you are hoping to learn
more about the tourism industry that
might be beneficial but it's probably
not necessary what you're here for is to
understand the concept and that's where
i'm going to teach you now so the
multiplier effect is actually pretty
simple conceptually at least i have no
idea how to work out the equations don't
ask me that but the multiplier effect is
essentially when the economic benefits
i.e the good things that come from
tourism are
multiplied now there are different types
of multipliers that we will find within
the tourism industry and these different
types of multipliers were first
identified by dickerish and jenkins back
in 1997 and they suggested that tourism
multipliers can be broken down into five
different categories the first
multiplier in tourism is the sales or
transaction multiplier and this is
essentially when the number of sales
that occur this could be hotel rooms it
could be tours it could be seats on a
flight increase now those examples i
just gave you were
direct examples so things that have sold
that are directly related to the tourism
industry but there is also something
known as indirect sales too so for
example when we go on holiday we want to
eat yes the waiter who serves us our
food and the chef who cooks our food
they are directly employed within the
tourism industry but what about the
farmers who
grow the tomatoes what about the
fishermen who go out and catch the fish
those people are also getting more sales
as a result of tourism but they're not
directly employed within the tourism
industry so sales increasing isn't just
the direct sales it's the indirect sales
too the second type of multiply in
tourism is the output or production
multiplier now what this means is that
there are more things that are
produced there are more hotel rooms
there are more tickets sold for shows
there are more boat trips for sale
whatever it might be there are more
things on offer now these don't always
necessarily have to be sold they could
just be for sale they're produced and
for sale not every hotel room is going
to be booked every night of the week for
example but if there are more hotel
rooms available that is an example of an
output or production multiplier in
tourism and the third type of multiplier
in tourism is the income multiplier now
this one's pretty easy to understand
it's when our income
is multiplied because of tourism so for
example somebody who was working
part-time as say a hotel waiter can now
go full time because there are more
tourists and the tourism industry has
grown this means that their income has
multiplied but not only that because the
tourists have come they are spending
more money in the shops the waiter who's
now got more money is also spending more
money in the shops so the shopkeepers
also have an increase in their income
this is an example of a tourism
multiplier and the fourth example of a
multiplier in terrorism is an employment
multiplier this one's also pretty simple
it means when we've got more tourism
we've got more jobs more people are
employed if more people are employed
they've got more money they spend that
money in the economy that has a ripple
on effect a multiplication effect and
just like i explained before these jobs
can be directly involved with the
tourism industry for example that hotel
waiter or they can be indirectly
involved in the tourism industry for
example
a construction worker who builds hotels
or somebody who works maintaining the
roads that the tourists will use they
are examples of people who have jobs
because tourism is there but they don't
directly work within the tourism
industry and the fifth type of tourism
multiplier is the official or the
government revenue multiplier now what
this means is it is the official
statistics the official figures that are
put together by the government or other
official body that demonstrates how much
money how much revenue has been made
from the tourism industry they then can
take that money and they can reinvest it
elsewhere perhaps to build new hospitals
or new schools for example however one
thing to note with this is that not all
revenue from tourism is officially
recorded do you think when you go to
thailand that driver is going straight
to pay his taxes on the income that he
makes from your tuk-tuk ride perhaps not
and what about the children who sold you
bracelets in cambodia on the beach well
they're not paying taxes are they
they're not even legally working so
there are lots of examples within the
tourism industry of people who make
money from tourism but they don't
officially declare it so it's therefore
not represented in official statistics
and some people suggest that the actual
economic benefits from tourism might be
as much as double what is officially
recorded that's pretty significant
so how does the tourism multiplier
effect actually work well there's three
main ways this occurs the first is
through direct tourism expenditure so in
other words the more money that tourists
spend on tourism things the more money
that goes into an area the second
example is indirect tourism expenditure
so whereas direct expenditure might be
booking that hotel room booking that
flight indirect tourism expenditure
could be the money that the government
spends on maintaining the roads that the
tourists need to use and we then have
induced tourism expenditure and this is
when money is spent on areas that
wouldn't have been spent if it wasn't
for tourism so for example that waiter
that i mentioned before he now works
full-time he now has more money he
spends that money on buying
the new crayons for his daughter in a
shop he would not have spent that money
if he didn't have it and if it wasn't
for more tourism he wouldn't have had
that money because he wouldn't have been
able to increase his hours at work so
this is an example of induced tourism
expenditure so why is the tourism
multiplier effect important well the
multiplier effect in tourism can be
amazing it can bring so many
opportunities to an area it can bring
money
money brings opportunities but one of
the major problems is that destinations
are not managed in a sustainable way now
sustainable tourism is something that i
mention in most of my videos because it
is super important a destination wants
to develop tourism to make money so why
why why why do they let so much of the
money leak out of the country this is
known as economic leakage so if we have
for example a big chain hotel let's say
a hilton or a travel lodge and they are
placed in let's say bangkok when you
stay in those hotels very little of your
money is staying in thailand most of it
will be going back to the western
countries that own these foreign hotel
brands this is the same when you buy
imported foods drinks like coca-cola for
example or named branded alcohol like
smirnoff ice or bacardi breezer if you
buy those drinks your money's not
staying in the country whereas if you
buy locally produced beer and most
countries have their own beers you know
that money is staying within the country
so tourism destinations can from a top
down level manage this to some extent
and try to prevent economic leakage and
try to prevent some of the other
negative impacts of tourism that can
occur economically
[Music]
if you have found this video helpful
please do me a favor give me a big
thumbs up and don't forget to subscribe
to this channel to learn lots more about
the travel and tourism industry
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