Blog

Indirect Impacts of Tourism

21.05.13

This week I’m in Jordan. Tourism is an important sector here, and there is a feeling that things are quite fragile. With the situation across the border in Syria getting worse…and likely to continue to get worse before it gets better…there is genuine concern that the tourism sector in Jordan will be seriously affected.

Over the last 12 months we’ve spent a lot of time looking at the tourism statistics coming out of the Inbound and Domestic Tourism Surveys, and towards the end of last year developed a Tourism Satellite Account for Jordan, which for the first time measured the direct impact of tourism on the economy (over £1 billion).

However, the direct impact only tells part of the story, and all too often the indirect impact of tourism is ignored.

The direct impacts of tourism refer to the expenditure of tourists on goods and services in a country. However, the impact of tourists does not end there. There is also an indirect impact on the economy. This happens when businesses that provide goods and services to tourists then make purchases from other businesses.

Take, as an example, a tourist who spends JD 100 on a hotel room for the night. This can be considered the direct impact of tourism. However, the hotel needs to service that tourist. The sheets on the bed need to be cleaned, and this might be done by a laundry company. The tourist has a meal in the hotel. To prepare this meal the hotel needs to buy meat and vegetables from a local supplier. These purchases from the laundry and the food supplier would not have taken place without the initial direct expenditure by the tourist, and are the indirect impacts.

We’ve developed an Input-Output model to measure these impacts, and found them to be 57% of the direct impacts, thereby increasing the value added of tourism by 57% to around £1.6 billion.

In many countries with strong economies, the indirect impacts of tourism exceed the direct impacts (in Australia the indirect impacts are twice the size of the direct impacts).

Just a reminder that tourism is often so much more important to the national (and regional) economies that it appears from the basic expenditure statistics.