The Tourism And Its Economic Impact On Industrialized Tourism Essay

This research paper which explains the tourism and its economic impact on industrialized and developing countries has focused mainly on the two major problems that have been experienced by the tourism industry that hampers its progress and development: seasonality and terrorism or crime. The problems are ubiquitous irrespective of the scale of the industry whether it is a small scale or a mammoth firm. Many efforts have been taken in action to cope with these problems but still require more strenuous and painstaking work to be done to overcome these problems. Seasonality is classified into three categories which put some light on the bearings of tourism businesses. Similarly, a research on terrorism and its impact on tourism show how these increasing activities of terrorism have affected tourism.

The author of this research paper says that Small Tourism Firms (STFs) has an immense impact on the economic development of the communities and hence being considered as a factor to spur the enhancement the local economies. To support his research the author makes an assertion by giving the example of New Zealand Tourism which states that in New Zealand the tourism is responsible for overall regional development. There industrial revolution is more palpable when dependent agricultural economy is transfigured into free market economy. These changes entail cutback tax, take away of all major subsidies and no check on cost, wages and prices. In spite of Top Down approach, a different, bottom up approach is used which resolves all major concern of classical theory. A “bottom-up” approach is experienced in very few countries but its capable to tackle the problem of sustainability.

Research on Wairarapa

Another research Wairarapa (Wellington), depicts that after that demise in agricultural sector, tourism came as a revitalization which further concluded in establishment of wine industries and numerous tourists. This research focuses on the previous work and to develop additional explanation by performing various tests. To satisfy the STFs; research involves the survey and interviews of all people from both public and private sectors. These interviews were framed with the core questions and then analysis of interview-based data was done to answer how the people remarked “The Revolutionised Wairarapa”.

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Government Support & Various Agencies

A “Push-and-Pull” factor was such a motivating factor to make the people to participate in these small businesses, which contribute to regional development. The diversity was palpable in this path of involvement in the small tourism business; farmers builders, teachers, and doctors were the participants in the tourism industry. The most interesting thing was the women’s involvement reflecting the region’s strong farming tradition in which activity women were less involved. Now, for the maturation of the STFs, the government identifies the factors that inhibit the growth and development to take the appropriate actions to cope with them. One of the major initiatives is the lifting education and economic development and launch of High Speed of Internet, consequences of which resulted in the establishment of e-centers, free internet at schools and computer skills learning. Government also offers wide variety of services like training to improve their businesses, event scheduling, advertising tourism, visitor’s record centres; these facilities are provided by various tourism agencies. On darker side, growing competition and envy are seen clearly as barrier to interaction with local institutions and organization.

There are some organizations under which these STF’s are operated. Some major ones are Tourism New Zealand (TNZ), Central Stage Micro Region (CSMR) and Regional Tourism Organization (RTO)/ Go Wairarapa. Main role of TNZ is to allow little people to fascinate international market where as for RTO, equity and distributions of resources are major concerns.

Planning, marketing, HR, ICT (Information and Communication Technologies), networking are some managerial areas and one major where tourism depicts entrepreneurial attitude. Small business owners set up their own “in house centres” comprising publicising going-ons, customer data and records and used Internet for other efforts. The diverse training ranging from personal training management, ICT, small business management and marketing was given. The business owners from all sectors took pain to learn new skills which can be helpful to run their commerce.

They also try to overcome the problems faced during weekdays and peek off periods by capturing international market. These small tourism firms are directly related to local and regional economy, either by means of business services and employment or by purchasing or physical goods. And they also share a deep relation with Banks and accountants. As shown by surveys and interviews, many of the firms are dependent on bank borrowings to pioneer business. In conclusion, tourism business with active participation of both private and public sector and support from government allows an insular region to develop its economy.

Literature Analysis

Seasonality

One of the major problems of tourist industry is Seasonality, a periodical change which occurs every year because of public holidays, occasions or festivals and season.(Chung, 2009)

These refashioned patterns can be seen not only in a year but within a month, a calendar week or even in a time of day.(Chung, 2009)

It is indicated that pantry, Inns, cafes, general departmental stores are utmost affected businesses. (Jang, 2004) Off periods are always considered as a constraint in tourism industry and these are divided into three categories (Chung, 2009)

Employment

People working with hospitality and tourism industries expect to have a fixed yearly package but it’s difficult to employ them for full year. These casual jobs led people to migrate from region in search of better opportunities whose outcome is to increase in salary for same job.

Seasonality

(Off Periods)

Employment

Environment

Investment

FIG:- Classification of Off Periods (Jang, 2004)

Investment

When it comes to investment, accommodation and warehouses are adversely influenced during this period. As they have to pay fixed amount for physical facilities even in slow seasons.

Environment

Large number of tourists in peak season causes various environmental problems like air, noise and water pollution. It also stimulate use of plastic bags and bottles which causes environmental problems .(Jang, 2004)

Research shows that these off seasons have more adverse effects in rural and isolated areas rather than urban. (Butler, 1993)

Beside all these negative effects of seasonality there are some benefits which are necessary to both tourism industry and to nature and its inhabitants. Environment can rejuvenate itself and even entrepreneurs can undergo edifice or some kind of renovation if needed. (Butler, 1993)

Many of the suggestions are given to tackle the slow season problem but very few of them have been implemented.(Jang, 2004)

It is assumed that we can trim down the seasonality problem to some extent but we can’t eliminate it completely. (Butler, 1993)

One measure is the financial portfolio theory developed by Markowitz 1952, which can help in reducing the instability in demand to some extent.(Jang, 2004)

Business meetings and conferences could be promoted to address the off peak season. Special price offers and discounted prices can help them to tackle the off periods.(Chung, 2009)

Terrorism

Another problem which causes detrimental effects on tourism industry is the increasing terrorism, a strategy to create the ambience of havoc and instability and terrorisation to threaten the social, constitutional and spiritual motive by numerous exploits of violence like use of explosives, arson, hijacking and many more. (Pizam & Smith, 2000)

Terrorism had many adverse effects on both, tourists and tourism industry.

The graph illustrates the fluctuating immoral events in various years. In 1993-94, according to the graph maximum number of terrorist incidents took place

Graph- Number of terrorist incidents per year, 1985-98.

(Pizam & Smith, 2000)

.

Who can forget the bombing at London 2005, the train explosion in Spain 2004, attack in Israel 2002 and the most infamous attack in US 9/11 on world trade centre? The global economy and tourism industries are still trying to recover from the deadly effects of tourism. (Moss, Ryan, & Moss, 2008). Terrorist activities are ubiquitous to all countries whether it is a developed country or a developing.(Sandler & Enders, 2008).

Table 1 shows, Iraq is at top of list which endures the maximum number of violence attacks. Top 10 countries terribly affected by terrorism are given below.

Table 1- Top 10 countries with terrorist incidents (Terrorism Act 1968-2006)

Rank

Country

Amount (per 1 million)

1

Iraq

439.078

2

Lebanon

329.371

3

Barbados

260.796

4

Israel

228.9

5

West Bank

228.003

6

Gibraltar

107.419

7

Colombia

32.092

8

Cyprus

31.876

9

Algeria

29.852

10

Angola

29.521

Source: – World Statistics Website (http://www.nationmaster.com/index.php)

Impacts of terrorism

Terrorism distress the whole country, its economy and its native peoples.(Sandler & Enders, 2008)

These terrorist attacks not only detriment the tourism industry but also cause the loss of life, damages to public and private properties and disruption of services like water, electricity, communication etc. Also it affects the global economy and aids obtained from tax and foreign exchange earnings. (Feridun, 2010)

Country’s Economy

There are many countries whose large part of economy is based on tourism, and Tourism industries contribute to increase in GDP (Gross domestic product), employment, economic growth and education. (Lee & Chang, 2008)

For example: In New Zealand, $6.5 billion of GDP was generated in year 2010 (New Zealand Statistics www.stats.govt.nz)

So targeting some of the most famous tourist destinations can be the ultimate approach to bang the economy of a country and its international image as well. (Feridun, 2010)

Top ten tourism destinations are given below according to world statistics.

Table 2:- Top 10 tourism destinations in Year 1980 & 1997

Rank

Country

Tourist Arrivals (Thousands)

Share of Arrivals World-wide (%age)

Average annual growth (%age)

1997

1980

1997

1980

1980-1997

1

France

66864

30100

10.95

10.5

4.8

2

USA

47754

22500

7.82

7.9

4.5

3

Spain

43403

22388

7.11

7.9

4.0

4

Italy

34087

22087

5.58

7.7

2.6

5

UK

25515

12420

4.18

4.3

4.3

6

China

23770

3500

3.89

2.0

7.6

7

Poland

19520

5664

3.20

2.0

7.6

8

Mexico

19351

11945

3.17

4.2

2.9

9

Canada

17285

12876

2.83

4.5

1.8

10

Hungary

17248

9413

2.82

3.3

3.6

Source:-world trade organisation website (www.wto.org)

Air Travel

Many business sectors face the harsh impacts of Terrorism and the Air travel is one of them. It was found that after the 9/11 attack on US, these travel and resorts industries were hit hardly. About 240 contracts were cancelled in only Las Vegas, US. People were reluctant to fly even after 2 years of assault. Similarly in Spain (Mallorca) 96% of tourist come via air and 50% of its revenue is derived from tourist. But after the bombing in Mallorca, Spain, It was proposed that the international travel revenue fell up to $29.1 billion that year. (Moss et al., 2008)

Also air travellers have to pay new levied taxes on air tickets, fuel and long queues in security checks. Media also plays a significant role in disheartening people by covering the incident place and discourages

people from international travel. (Pizam & Smith, 2000). It can set off the successful and extravagant journey of tourism industry to an end.

Lesson for SME’s

The objective of this research was to explain the two ever green problems of tourism industries. Many destinations are enduring the terrorism and yearly seasonality problem. These problems are responsible for the falloff businesses, low GDP, sometimes loss of public property and low employment to population ratio which directly contributes to loss in country’s economy.

This paper focuses on the negative effects of seasonality with some remedies like financial portfolio and special offers during off season to minimize it. It depicts that though seasonality leads to drowning away of income but beside all these it also has some positive effects, especially from the environmental latent. A break after the gigantic peak season is needed by the atmosphere to refresh itself. It’s like servicing your car engine to reduce wear n tear and to achieve enhanced performance.

Terrorism or felony has been introduced as new emerging problem in tourist industries which was neglected earlier. The research shows that terrorist attacks disturb all nations but majorly the ones which have tourism as a backbone for their survival. Data depicts that there was increasing number of missive attacks from mid of 80’s to 90’s. this creates the” Terrophobia” all around the world. People are afraid to travel to the targeted destinations because of the massive destruction done by the terrorists. And the unintentional participation of media in spreading the gossip to raise their TRPs, make the things bad to worse. It’s true to say that the terrorism is inherently unpredictable as the earthquakes and tsunami. So both Government and local people have to take active steps to control such violence, by creating awareness about terrorism among peoples and by providing tight and unbreakable security. Even after so much study, still it’s not clear that if tourism is a honey pot for the terrorism or they are just the victims of one of their cruel activities.

No effort can lead us to abolish these problems so some precautions should be taken against them. We should learn from the previously affected destinations and should prepare ourselves for the crisis either by allocating a squad for the crises management or by assigning permissible authorities. Further research is needed to find the other factors which are responsible for weakening of trade “Tourism”. Also its affects in a developed or developing country is still an open minded question.