The Economic Impact of Tourism: A Multiplying Effect

What is the economic impact of tourism? Do you spend money when you’re on vacation? More money than you do in your work-a-day life? You know, that really nice hotel with the great spa, restaurants that serve hardy breakfasts, spa-like fresh lunches and that amazingly creative restaurant you normally wouldn’t indulge in for dinner but “heck, I’m on vacation.” That must-have, hand-made and can’t-find-that-any-other-place-but-here souvenir that will keep the memory alive long after the vacation is over.

Chances are you’ve answered yes to those few scenarios and would to even more ways to spend while enjoying your much-deserved time off and that, in a nut shell, is tourism economic impact. But, it’s much more than that too.

Direct Impact

The scenario above is considered ‘direct impact.’ You’ve stayed overnight at a hotel and simply by doing so, the statistics show that you’ll spend more money in that area. You’ll pay a local restaurant proprietor for your meal and you’ll pay the retail shop owner for your souvenir. You’ll likely stop to fuel your car with gas, might have forgotten your favorite shampoo so you stop into the local market and you’ll visit a local museum or attraction and pay an entry fee. All that, and more, is directly supporting the tourism industry; however, it’s just the tip of the iceberg when it comes to the multiplying affect of how your dollars are compounding and benefitting a local economy.

Indirect Benefit

This is where re-spending plays a very important role. For instance, there are countless businesses and industries that support a hotel. There is a local vendor that comes into the hotel to clean rugs. Linen companies supply towels and bed linens. There are landscape companies that add charming curb appeal and there are even farmers who deliver fresh, local produce for your culinary pleasure. That one hotel has now multiplied the impact of your visit by supporting the local economy, has kept its own staff employed and has contributed to the employment of several other local residents. This is the same for restaurants, retail shops, gas stations, grocery stores and the list goes on. And, it continues.

Induced Effect

So now those people employed at various tourism related businesses are spending their income earned directly or indirectly as a result of tourism spending. Home ownership becomes a reality as does purchasing cars, furniture, clothing and by doing so, paying local taxes. And the best part, these employed folks are taking vacations – staying in hotels, eating in restaurants, buying souvenirs and the ‘circle of tourism life’ continues.

The tourism industry is a vital contributor to local, state and national economic growth and in addition, has a great impact on the Quality of Life for us all.

Visit www.ustravel.org/research for valuable studies and statistics related to the power of tourism and its economic benefit.