[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
