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Chapter 2. Economics and the Impact of Tourism. The Impact of Hospitality & Tourism. Why Do People Travel?. Chapter Objectives. Explain the economic multiplier. Define sustainable tourism. Identify the different areas impacted by tourism. Explain the cyclical nature of travel.

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Chapter 2

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Chapter 2

Economics and theImpact of Tourism

The Impact of Hospitality& Tourism

Why Do People Travel?

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Chapter Objectives

  • Explain the economic multiplier.

  • Define sustainable tourism.

  • Identify the different areas impacted by tourism.

  • Explain the cyclical nature of travel.

  • Describe business and pleasure travel.

  • Explain the different motives for travel.

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Social andCultural


Effects of Hospitality & Tourism

Travel, tourism, and hospitality have numerous effects on the world.

Section 2.1

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Economic Impact

The development of infrastructure that supports the needs of travelers helps to create jobs.

infrastructure the physical components of a destination, such as hotels, restaurants, roadways, and transportation, that support tourism

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Economic Impact




Tourist Dollars








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Economic Impact

The economic multiplier depends on how much money tourists spend per year and how much leakage there is offshore.

economic multiplier the process of how money filters through a local economy and is spent and re-spent, creating income for other businesses

leakage tourists dollars spent on imported goods so that revenue ends up in foreign economies

Section 2.1

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Economic Impact

Economic Impact of Travel in the United States

Travel expenditures

$545.5 billion

Travel-generated payroll

$157.0 billion

$93.2 billion

Travel-generated tax revenue

Travel surplus

$5.5 billion

Travel-generated employment

7.2 million jobs

Section 2.1


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Globalization and Tourism

In the past 50 years, the world has experienced globalization.

globalization the increasing integration of the world economy

Continued growth in hospitality and tourism depends on responsibly protecting and maintaining human and natural resources.

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Globalization and Tourism

Businesses and governments must create sustainable tourism.

sustainable tourism tourism that allows a destination to support both local residents and tourists without compromising future generations

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Social and Cultural Impact

Failure to protect unique cultures and established social customs can destroy the appeal of a destination.

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Social and Cultural Impact

Tourists help cultures by trading cultural influences and creating interest in exploring cultures.

Tourists can harm a culture by inadvertently creating unrealistic expectations of wealth.

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Environmental Impact

Negative impacts from tourism occur when visitors’ use of a resource is greater than the destination’s ability to handle that usage.

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Environmental Impact






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Environmental Impact

Tourism development can cause aesthetic pollution.

aesthetic pollution the spoiling or contamination of the natural beauty and features of an environment due to poor planning and design of tourism projects

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Environmental Impact

Tourism can also affect an environment positively.

Revenues generated from park entrance fees and similar sources can help pay for the protection and management of sensitive environments.

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Cyclical Nature of Travel


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Cyclical Nature of Travel

During the introduction stage of the destination life cycle, tourists begin to discover a new destination and word quickly spreads among the venturers of the world.

venturers travelers who tend to be the first to discover a new, unspoiled destination

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Cyclical Nature of Travel

A destination in the mature stage of the life cycle is visited by dependables.

dependables travelers who prefer familiarity and creature comforts and seldom try anything new or different

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Continuing Hospitality & Tourism Influences

Renewal and reinvestment can help prolong and continue the positive or negative effects of travel, tourism, and hospitality on destinations.

Section 2.1

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What is the economic multiplier?

Why is sustainable tourism important?

What is one positive and one negative impact of tourism?




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The Reasons for Travel

The most common reasons for travel are:

  • Business commitments

  • Family occasions

  • Leisure

Hospitality and tourism professionals study these reasons in order to adapt products and services to their customers’ needs.

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Business Travel

Business travel usually occurs during the week, not on the weekend, and can involve multiple destinations and methods of travel.

business travel travel for the sole purpose of conducting an individual’s or company's business

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Business Travel

Challenges of business travel include:

  • Stress

  • Time changes

  • Long absences from home

  • Language or cultural barriers

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Business Travel

Incentives for business travel include:

  • Frequent-flyer miles

  • Travel in business or first class on airlines

  • Favored treatment at car rental companies and hotels

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Business Travel

A branch of business travel is meeting and incentive travel.

meeting and incentive travel business travel by employees to attend a business meeting or as a reward for having met or exceeded company goals

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Business Travel

A meeting planner has a variety of responsibilities:

meeting planner a person who organizes and plans a meeting

  • Find a site for a meeting

  • Make travel arrangements

  • Coordinate meeting space, hotel rooms, and meals

  • Schedule speakers and multimedia services

  • Handle registration

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Pleasure Travel

When traveling for pleasure, some people engage in VFR travel.

VFR travel travel for the purpose of visiting friends or relatives

The needs of people who engage in leisure travel can be more complex.

leisure travel travel for the sole purpose of enjoyment

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Travel Motive Theories

Maslow’s hierarchy of needs and Plog’s psychographic analysis are two theories that can help explain traveler behavior.

Maslow’s hierarchy of needs a theory that explains what motivates people to act in certain ways or make certain decisions

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Travel Motive Theories

Maslow’s Hierarchy of Needs


Most self-fulfilling needs



Safety and security

Most basic needs

Physiological needs

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Travel Motive Theories

Stanley Plog developed Plog’s psychographic analysis to describe two types of travelers:

  • Venturers

    • Seek out unspoiled destinations and explore without using tourist services

  • Dependables

    • Prefer creature comforts and seldom try anything new or foreign

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Travel Motive Theories

When asked by a team of Plog researchers why they traveled, most Americans gave the following answers:

  • To get rid of stress

  • To enrich perspective on life

  • To bring family closer together

  • To do what they wanted, when they wanted

  • To feel alive and energetic

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Travel Online

The Internet has changed the way people fly, rent, make reservations, and relax.

Operating an e-tail business on an electronic channel—the Web—can be costly, due to design, delivery, returns, and operating expenses.

Though Many larger dot-com companies crashed in the 1990’s, small stores like Harris Cyclery of West Newton, Massachusetts, actually increase sales using a basic Web site. Today, a third of Harris’s bicycle business rides in on the Web to get hard-to-find parts and personal service.

Describe an e-business’s home page to your class after viewing one through

In 2002, researchers found that 59 million people in the United States made online travel purchases. With so many online travel options, user friendliness and low rates keep travel Web sites competitive.

For more information, go to

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What are three needs of the business traveler?

What are a venturer and a dependable?

What are some of the motivations for travel?




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The economic multiplier is the process by which tourist money filters through a local economy and is spent and re-spent, creating income for other businesses.

Globalization is the increasing integration of the world economy.

Sustainable tourism is tourism that allows a destination to support both local residents and tourists without compromising future generations. It is important because it protects the future of the industry in that area.

Tourism impacts many aspects of a destination, including economic, social and cultural, and environmental conditions.

Checking Concepts

  • Explain two factors that determine the amount of the economic multiplier.

  • Define globalization.

  • Explain the importance of sustainable tourism.

  • Identify aspects impacted by tourism.


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The first two phases of a tourist destination’s life cycle are (1) introduction, during which tourists begin to discover the location, and (2) growth, during which development, such as the building of new facilities, occurs to attract more tourists.

Business travel is done for the sole purpose of conducting a person’s or company’s business. Travel for pleasure is done to visit friends and relatives or for enjoyment.

Plog’s psychographic analysis helps to determine people’s travel preferences. It places individuals on a continuum ranging from venturer to dependable, based on their answers to a series of questions about values, beliefs, and lifestyles.

Checking Concepts

  • Describe the first two phases of a destination’s life cycle.

  • Explain the difference between travel for business and for pleasure.

  • Define Plog’s psychographic analysis.


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The reasons for travel identified by Plog researchers include reducing stress; enriching perspectives on life; bringing family closer together; doing what you want when you want; and feeling alive and energetic.

Checking Concepts

Critical Thinking

  • Explain at least three reasons for travel provided by Plog researchers.

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