Introduction
Tourism is a form of leisure travel. Tourists, on the other hand, are those who travel for leisure. According to the “World Tourism Organization” (WTO), tourism is the activities of individuals visiting and living in places beyond their familiar surroundings for several years for leisure, commerce, or other objectives. Tourism thus excludes commuting from home to the office. Still, it includes vacations, private and state government business, industry, religious devotion, education, medical care, and other activities. People travel from one place to another for various reasons, including work and pleasure. Approximately 62 international individuals travel for Pleasure, 18 percent for employment, and 20% for other purposes, such as visiting relatives, religious travel, and health tourism, among other reasons (Mark 3). In 1999, recreational travel accounted for 69 percent of domestic and international trips taken in the United States. There are compelling arguments for solely reserving “tourism” for tourism. This paper focuses on the economic impacts of both domestic and international travel and tourism.
Commuters trip for the advantage of their companies, while leisure travelers visit for their enjoyment. Tourists are responsible for their travel costs, whereas business travelers are responsible for transportation, housing, and food (Mark 4). The elements influencing leisure and business travelers’ travel planning are significantly different. Tourism operators, such as airplanes, treat Pleasure and corporate travel as distinct markets and use different pricing tactics. Governments, too, differentiate between Pleasure and international flights; business travel costs are “tax-deductible,” whereas leisure travel costs are typically not. Some governments limit people’s ability to leave for other states for vacation, but not for work or formal official business. Therefore, Pleasure traveling should be examined independently of other modes of travel.
Tourism and Economics
Economics is concerned with how people make daily decisions, including what to cook, what to wear, where to go, and what to do. For instance, officials from airlines must select how many flights and seats to assign between specific destinations and how much to charge for these seats (Mark 5). For example, cruise line businesses must choose to provide more Alaska trips and fewer European excursions during the summer. Rental car firms must determine where their vehicles will be parked. Souvenir stores must pick how many goods they wish to order from their suppliers. Government tourist offices must select how much money to invest in which markets to encourage travel to their locations. Because existing resources do not allow people to fulfill all of their desires, they must make choices. All of this evidence of people making decisions depict economics in action in everyday life. Consequently, economics is the study of how rational people choose among available options to achieve their objectives.
The numerous decision-makers in the tourism industry, including tourists, providers, and governments, do not have the same purpose. Consumers want to get “the most bang for their money” (Mark 5). The happiness or benefit (“the bang”) that consumers obtain from using an item or service is considered a utility by economists (Mark 5). The tourist’s purpose is to get the most enjoyment from the limited resources, specifically time and money. The purpose of a commercial provider, on the other hand, is to maximize earnings. There are various not-for-profit tourism suppliers, such as historical attraction operators, national park operators, and museum operators, whose purpose may be to optimize the number of tourist visits. Governments have bigger goals: Governments in developing nations may seek to use tourism to generate cash and tax revenues, create jobs, and reduce poverty while protecting the environment and respecting their customs (Mark 6). Another purpose of tourist development in industrialized countries could be to improve people-to-people communication and international affairs. Nations can use tourism to attain political objectives. For instance, in the 1970s, Eastern European nations started welcoming Western tourists because experience with communists would persuade Westerners of their communist system’s merits.
EU Policies and Initiatives That Nurture the Travel and Tourism Industry
Several funds have been set aside by the EU for businesses. The EU’s Enterprise and Commerce Division recently emphasized strengthening SMEs’ access to capital. According to a joint study released by the European Commission and the European Investment Bank (EIB) on May 2, 2013, their support has benefited over 220,000 small enterprises across Europe (Camilleri 124). This fascinating trend has resulted in several funding mechanisms and a younger generation of investment products to assist SMEs with financing requirements. In addition to the financial resources made accessible to SMEs, the EIB received a capital injection of E10 billion (Camilleri 124). In addition, the EU Commission has opened a new unified online platform for all fiscal instruments (for SMEs) and an educational guide to encourage stock listings of SMEs. For 2014 and 2020, the EU set aside an E2.3 billion initiative to boost the ‘Competitiveness of Companies and Small and Medium-Sized Enterprises’ (COSME) (Camilleri 124). Therefore, most SMEs benefited from the EU’s CIP, which provided them with security for their financing.
Every euro spent on government loans would increase bank lending. In reality, CIP has shown to be an effective program over the last few years. CIP has assisted SMEs across Europe in obtaining around E13 billion in loans and E2.3 billion in venture capital (Camilleri 124). Fundraising is another initiative that would nurture tourism firms. This innovative fundraising method collects cash from numerous people to raise funds for a specific project or enterprise. This type of funding can fill the equity gap that many businesses are experiencing. It is envisaged that this new program will encourage entrepreneurship across the EU’s various regulatory, administrative, fiscal, and societal structures. The EU appears to be sifting through existing national legislative frameworks to fully understand how enterprises can acquire funds through such an answer sheet of funding. While some fundraising initiatives focus on the local community, others may benefit from improved access to capital.
Domestic Tourism and Economic Impact
Domestic tourism involves residents of a nation traveling only within their country’s borders. While nations tend to concentrate on international tourism because of income earned through exporting, domestic tourism is the leading tourism in several countries worldwide. Domestic tourism represents an essential tool for a region’s economic development and growth. With half of the world population described as “rich” or “middle class,” several individuals afford to travel. The demand for domestic tourism generates revenue of US$35,000 (Tourism Knowledge Center 1). Domestic tourism in 2017 represented 73% of the total worldwide tourism spend (Tourism Knowledge Center 2). While there are vital variations between nations, domestic tourism contributions to Tourism and Travel reached 87% in Argentina, Germany, and China (Tourism Knowledge Center 2). Tourism was 94% in Brazil, with China accounting for 62% of the absolute global growth in domestic expenditure in the last ten years (Tourism Knowledge Center 2). This growth enhanced China to climb to the top position from fourth in 2017, overtaking the US to be the most significant domestic and travel market globally.
Domestic tourism in developed and developing economies are driven by a developing middle class, increased domestic consumer spending power, the size of the nations, and governments’ plans to identify new locations. Improving transport advancements and economic links between various regions play vital roles in local tourism. For example, China has built about eight airports yearly since 2013 and speedily developed a high-speed railway system in the last 15 years, opening up formerly remote regions to domestic tourism (Tourism Knowledge Center 2). China’s domestic expenditure reached $ 841 billion, followed by the US with $803 billion in 2017 (Tourism Knowledge Center 2). The US and China account for about 40% of the worldwide domestic Travel and Tourism (Tourism Knowledge Center 2). Domestic tourism has economic impacts on various nations, including generating employment for individuals. Governments use domestic tourism as income security whereby they rely on the income earned from it, hence avoiding reliance on international tourists. Through domestic tourism, regions’ infrastructure develops, thus opening up different places of a country to economic development.
Policies to Raise the Contribution of Domestic Tourism
Domestic travel encourages and shapes national and local pride, justifies infrastructure developments, disperses visitors geographically among areas, improves seasonality, and creates career opportunities. Domestic tourism can improve the attractiveness of locations, promoting local well-being and assisting in the employment of educated young individuals on whom high-value-added enterprises increasingly rely. A robust domestic tourism sector can assist a nation in resisting demand and shocks variations that occur when external source markets are affected by crises. National and local governments can intervene by providing local tourism facilities to inspire domestic travel. Governments can promote domestic tourism by regulating pricing policies, encouraging promotional activities, developing interconnections between tourism and tourism, and putting direct measures to boost the industry. For instance, in Hungary, the government introduced a benefit initiative to direct spending toward tourism services and incentivize domestic travel. Such measures encourage employers to offer employees various non-wage advantages, including an incentive for holiday and recreation facilities.
International Tourism and Economic Impact
International tourism involves people traveling outside their countries’ borders to other nations for leisure. As a result of globalization, tourism has become a popular global leisure activity (Tabb 39). Individuals who travel to and stay in countries other than their usual permanent abode for less than a year for leisure, trade, or other reasons are involved in international tourism. International tourism is defined by its geographical scope and diversity of tourist sites and items (International Tourism Trends 2). Developing nations are seeing a considerable expansion in new tourist-receiving markets. However, the developed economies of Europe and the Americas still make up the majority of international global tourism activity. International tourism has become one of the most important economic activities in many developing countries and a critical source of foreign jobs and exchange revenues. In recent years, tourism development has gotten a lot of attention in many developing countries development strategies and is on the agenda of numerous sustainable development conferences.
As a large export sector, international tourism helps countries improve their trade balance by offsetting trade deficits or complementing an underlying excess from trade in other goods and services. International tourism causes a tourist trade surplus or a deficit in a nation’s travel balance when receipts exceed expenditures. In 2019, the US had the most significant travel surplus globally due to tourism expenditures (International Tourism Trends 3). Spain had the second-largest travel surplus worldwide, with USD 52 billion (International Tourism Trends 3). Macao (China) and Thailand had the most excellent travel revenues among the developing economies, with surpluses varying from $6 to $ 15 billion (International Tourism Trends 3). International tourism plays a vital role in an economy’s income because it creates job opportunities, improves a nation’s infrastructure, and results in cross-cultural exchange. Global tourism sustains various industries like education, healthcare, communication, and agriculture. International tourists visit cultural places to study a nation’s traditions and culture on several occasions. Hence, international tourism generates revenue for local businesses like restaurants, improving the economy.
Global tourism contributes to the development of the infrastructure of a nation, including airports, roads, hospitals, and restaurants. Improved infrastructure schemes allow a free flow of services and products in a nation, thus developing its economy. People in nations with improved infrastructure access opportunities for education, trade, health, and economic progress. International tourism leads to an exchange of cultures between local people and tourists. Due to this interaction, local people earn foreign revenue through money tourists give during registration, broadcast rights, gift sales, and space sales. International tourists contribute to the host country’s richness and diversity through cultural exchange.
Conclusion
In conclusion, Pleasure and a job are the two most popular reasons for travel. Tourism significantly contributes to a nation’s economic improvement, creates employment opportunities, transforms a region’s infrastructure, and leads to cultural interchange between visitors and natives. Local and international tourism creates a significant number of jobs in various sectors. While countries tend to focus on foreign tourism since it generates revenue, domestic tourism is the most popular worldwide. Domestic tourism is critical to a region’s economic development and expansion. National and local governments can encourage domestic travel by offering local tourism facilities. Governments can encourage domestic tourism by regulating pricing rules, encouraging promotional activities, building tourism-to-tourist interconnections, and directly boosting the industry.
Works Cited
“International Tourism Trends, 2019”. E-Unwto.Org, 2020, Web.
“Tourism Knowledge Center.” Tourism Knowledge Center, 2018, Web.
Camilleri, Mark Anthony. “Nurturing Travel and Tourism Enterprises for Economic Growth and Competitiveness.” Tourism and Hospitality Research, vol. 18, no. 1, 2018, pp. 123–27, Web.
Mak, James. “Tourism and Economics.” Tourism and the Economy: Understanding the Economics of Tourism, University of Hawai’i Press, 2004, pp. 3–7, Web.
Tabb, William K. Economic Governance in the Age of Globalization. Columbia University Press, 2004, Web.