Impact of Tourism Industry on Economic Process

Question: Discuss about the Impact of Tourism Industry on Economic Process. Answer: Introduction Tourism industry is a major source of revenue of a country. The revenue realize helps in the social economic development of a country. Tourism industry triggers global economy as well as the economy of a country. Tourism industry is a major industry in Australia and tourists are attracted towards the variety of natural beauty in Australia (Lee and Brahmasrene, 2013). Tourists across the world travel to Australia to enjoy its diversity. It is seen that tourism industry represents 3.0% of the GDP of Australia and it is seen to contribute $47.5 billion Australian dollar in the financial year 2014 and 2015 (Chatziantoniouetetal,2013). During the period 2014-15, the Australian tourism industry employed 580,800 persons. In this assignment, various aspects of tourism industry would be analysed. The effect of the tourism industry on the economy of the country would also be analysed in this assignment. A picture about the impact of tourism industry on the economy of Australia will be drawn. T he uses of various statistical methods would be shown in this assignment. The previous studies regarding the impact of tourism industry on the economy of Australia would also be studied in this assignment (Anderson, 2012). Background information Tourism in Australia started in the pre-colonial period where people from other regions set out in quest for wealth and adventure. Some of the tourists settled in places far away from their places of origin while others opted to go back to their homes. The dispersed settlement of the Australian population exposed majority of the people to occasional long distance travelling to visit their kins and for memory refreshment as well as entrepreneur visits. Most of these visits were conducted through horsebacks or ships, which was tedious and took longer time. After the end of war I the 1920s and the ease of the great depression in 1930, there was a sudden increase of travelling that prompted the economy to provide more comfortable means of transport like the railway transport introduced by the Australian government and the establishment of the Australian National Travel Association. The tourism traffic continued to increase through rail and sea transport. With the biggest number of tourist using sea, transport through the Queensland, port. The end of second war in 1945 saw the increased lifestyle standards as well as other means of transport. The beginning of jet age and large airplanes that had the ability of carrying 100 passengers changed the Australian economy as tourism boomed due to international tourism that increased the normal expenditure in the tourism industry. The growth of this industry gave rise to the hospitality industry that aimed to make tourists feel at home and welcomed. In 1960s, there was an increased awareness on payed holidays by corporations operating in Australia thus boosting domestic tourism. By examining how tourism varies across different patterns of tourist visitation both international and domestic, this proposal will be built on current information that will help construct a more comprehensive framework for the study of the tourism industry and its impact on the Australian Economy. The development of the sector has been has been in previous years frustrated by conflicting definitions, l ack of a methodological framework, and scepticism to the advancement of tourism. Studying the impact of tourism to the economy will provide a transition of understanding the key roles of the sector in the economy as well as develop measure to counter the negative results arising from the advancement of this industry. In addition to examining the relationship between tourism and economy, the proposal broadens the study of hospitality and transport sector in the country as well as international. Much of the previous research on tourism has been done have focussed on the revenue side of tourism in Australia. Likewise, this proposal will include the revenue side as well as well as the shortcomings brought about in creating these revenues. While tourism impact on the economy in terms of monetary benefits has largely been written on in many previous studies, limited number, written materials are available on the negative side that is brought out by tourism. Social economical negative impa cts have in time not been focused on and the accumulated effects have only been realized in the recent studies. This proposal will be developed in a way to ensure that the overlooked impacts have been addressed to uncover the relevant details and provide an all-round proposal. The proposal will address the social effects of tourism and the erosion of culture of Australian natives, who are the reason of attracting the tourists in the first place. The evolution of the tourism industry in Australia has seen improvement in services as well as facilities such as resorts that target the tourist population. Moreover, the tourism industry has relentlessly continued to grow the Australian economy to the extent that new enterprises are cropping up. These enterprise aims at enhancing service delivery by helping tourists choose their destinations as well as make reservations of their stay such as Jovago.com. Problem statement The problem statement developed for the present assignment is to assess the impact that the tourism industry has on the economy of Australia. The aim of the research is to understand and interpret the impact of tourism industry in Australia on the economy of the country. The objectives of the present research are as follows: To find the structure of tourism industry for the last 20 years To understand the change in the tourism industry for the last 20 years To find the structure of the economy of the country for the last 20 years To understand the change in the economy of the country for the last 20 years To understand the impact of change in tourism industry on the economy of the country in the last 20 years Research questions The questions of the research are as follows: How is the structure of tourism industry for the last 20 years? How is the change in the tourism industry for the last 20 years? How is the structure of the economy of the country for the last 20 years? How is the change in the economy of the country for the last 20 years? How is the impact of change in tourism industry on the economy of the country in the last 20 years? Literature review This part will analyse previous literature works done on Australian tourism industry. The tourism industry in Australia contributes about $34billion every year. The industry also provides employment to about half a million of the Australian population. New South Wales, Queens land and Victoria account for 80% of the tourism industry output. According to the viewpoint of Tribe (2015), it is seen that tourism industry can be a solution to the direct marketing organization. It is seen that tourism industry had been growing rapidly with time. People want to spend more time exploring different places and learning new things. It is observed that the domestic tourism in Australia accounts for about three quarter of the total tourism visits due to its rich economy. Among this domestic visits, household account for eighty-five percent of spending while the remaining fifteen percent is the expenditure from business travels. It was seen that there were 7.4 million tourists that had arrived in A ustralia in the year 2015. Brisbane, Sydney and Melbourne are some of the coastal cities that are preferred by the tourists. The tourists (Lee and Brahmasrene, 2013) also prefer high profile tourist destinations like the Gold Coast, Queensland and The Great Barrier Reef. Tourism industry is important in Australia as it employs 5% of the workforce in Australia. From domestic tourism to international tourism, Australia gathers her revenue from every methods of tourism. It was seen that total economic value of domestic tourism industry was found to measure $63.3 billion in the year 2009. As per the viewpoint of (Goodall and Ashworth, 2013), it was seen that Australia has various icons for tourists to visit. It is seen that Australia has varied climatic conditions that ranges from deserts to wilderness, mountains to coastal areas and cities to rural areas. Coastal regions have high profile destinations while there are Tasmanian wildernesses that lie at the southernmost tip of Australia. Australia has various major attractions across the country. From Great Barrier Reef to Sydney Opera House, there are various major tourists attractions across Australia. It was seen that there were 7.4 million tourists that had arrived in Australia in the year 2015 (Chatziantoniouet al. 2013). It is seen that Australian tourism industry provides various advertising campaign that features various Australian famous faces. These campaigns attract visitors from across the world and also encourages domestic tourists to visit different various places of Australia. According to the viewpoint of (Webster and Ivanovo, 2014), it was seen that the tourism industry provides a significant contribution in the overall level and economic condition of Australia. Tourism industry and economic condition, both are seen to increase with time. However, it is seen that there is a decrease in the holiday expenditure as a share of household consumption. It can be interpreted that there had been increase in the expenditures of the daily household consumptions, which had resulted in the decrease in the expenditure in tourism industry (Mowforth and Munt, 2015). The holiday patterns of Australia were found to be changing over the years. It was seen that there had been decrease in the holiday travel pattern for the natives of the Australians while there had been an increase in the overseas night pattern. As per the viewpoint of (Holden, 2016), it is seen that the distribution pattern of visitors across the states is uneven. New South Wales was seen to have most visitors in Australia than other states. Tasmania was found to have the least number of visitors in Australia across both domestic and international tourists. Australia has aboriginal, which is the native tribe in Australia. It is also seen that they have various cultures and rituals, which are not practiced in any other parts of Australia (Murphy, 2013). These rituals and cultures are attractive to various tourists as they can explore and understand the native cultures and rituals of Australia. Kangaroo and Koala bears are the native animals of Australia, which are not found in other parts of the world. Tourists across the globe want to see these native animals of Australia and they want to experience them at every cost (Anderson, 2012). It is seen that there had been a decrease in the growth of increase in the revenue from tourism industry. This had been due to the decrease in the number of tourists in Australia over the past. This had been a severe issue regarding the economy of the country as a major portion of the revenue of the company comes from the tourism industry. Part of the decreased growth on economy that is propelled by the tourism industry has been attributed to natural calamities that destroy tourist attraction sites within Australia. Thus, the impact of tourism in the revenue of the country is a bigger issue that should be analysed. In this assignment, an idea about this impact of tourism industry of Australia in the revenue of the country would be given (Tourism, 2017). However the tourisms industry has had its own share of problems and challenges in the Australian social and economy welfare, due to the heavy traffic that find tourism in Australia attractive. The traffic has contributed exhaustion of the existing infrastructure leading to poor sanitation that may contribute to the genesis of diseases to both the locals as well as the international tourists. Erosion of culture is another negative effect that might occur due to the adoption of foreign culture that comes along with the tourists (seagrant.umn/tourism, 2017). The belief that tourists are wealthy and have a lot of money might lead to engagement in criminal activities by the local people who will be robbing money from the tourists thus leading to loss of morals and religious values. Furthermore, the advancement of tourisms in Australia must always come at a cost to the environment thus leading to the damage of the flora and fauna, displacement of local people especially those at the beache s to give room for hotel developments. The bigger the population the more the natural resources that are needed to sustain the population (Research gate, 2017). The result is more footfalls, increased transportation, improper waste disposal, more noise, increase in pollution and disturbance of the ecological balance in the area. Moreover, the advancement of tourisms industry can lead to loss of traditional jobs such as farming to the local people where the farmers engage in tourism activities in place of farming. This can be detrimental to the national food basket of Australia. The continuous flow of cash around the tourist attraction regions may lead to increased cost of living due to upward push of goods prices leading to inflation that arises due to flow of large amount of cash in the surrounding economy hence the local people get disadvantaged(Tourism, 2017). The TSA frame in Australia came up with the direct and indirect definitions that overlapped the terminologies of input output modelling. The I-O modelling concept strives rp explain the flow-on effect generated by the tourism industry demand that includes, visitors spending plus the other industry that rely on tourism or suppliers in the sector according to how it is presented in the national TSA. However, the TSA direct concept will remain the same in other industries in the supply chain. The TSA report shows that the previous concept applied will remain the same to simplify the comparison on the flow-on effects. With the help of direct tourism, contribution only there will be an under-estimation of the total contribution on tourism to the economy. The correct tourism contribution will be achieved by applying the three Tourism Satellite Account (TSA) estimates values of tourism within the national accounting framework. A satellite account will allow the expansion of national account in various frequently toured areas while maintaining the structures of the core National Accounts methodology. The combination direct tourism and indirect tourism output will enable the calculation of flow-on effects using the I-O multipliers. The flow indirect effects are as a result of changes in supply brought about by the change in spending of the tourism industrys on goods and services from other industries. E.g., when a visitor purchases a meal from a hotel, the hotel goes ahead to purchases vegetables and meat from a food supplier, the food supplier will then purchases these from a farming company, which pays for labour and transport to deliver the produce to market. The estimation of the economic impact of such indirect effects, aimed at complementing the direct effects, will be reported in the findings of this paper, which will help provide a more comprehensive view of the economic contribution of tourism. Refer to Appendices A and B for detail on the criteria as well as p eriod used to facilitate the derivation of the indirect contribution of tourism on output and employment. The Australias economic share total contribution from tourism is simply the combination of direct contributions and indirect contributions with reference to TRA estimates. In this report, total contribution will be presented for the last 15 years period from 2001 to 2016. According to TRAs estimates the indirect Gross Value Added (GVA), Gross Domestic Product (GDP) as well as employment have significant added value to the economy, by providing a more comprehensive view of the role that tourism plays in the economy. Policy makers have made great steps in the effectiveness of gauging the value of tourism, and applied this to inform their decision-making. However, Australia and New Zealand are the only countries that have put in place a mechanism to produce a full set of indirect estimates for tourism GVA, GDP and employment. New Zealands (NZ) TSA (2012) report indicated that in the year ended March 2012: The tourism sector total contribution was 8.6 per cent to NZ GDP; NZ$6.2 billion ( or 3.3 per cent) directly and NZ$9.7 billion (or 5.2 per cent) indirectly. Tourism has managed to employ a full-time New Zealand population of 186,900 employees (or 9.6 per cent). However, international governing bodies are now recognising the importance of a TSA. The United Nations World Tourism Organization (UNWTO) (2010) reported that, about 60 countries are identified by early 2010 as having already produced or currently developing a TSA exercise?. Research Methodology The research process will involve both qualitative and quantitative research methodology to obtain at conclusive and reliable data. The reason for coming up with the two methodologies is to be able to collect reliable data through qualitative methodology and understand the social trends through quantitative analysis. Data collection Both primary and secondary data would be collected for the research. Secondary data would be collected from the documents of the government of Australia and primary data would be collected from surveying the tourists of Australia. Both international and domestic tourists would be considered for this purpose. Thirty tourists, which consist of both international and domestic tourists, would be surveyed using questionnaire method. Close-ended questions would be asked to the samples to collect the primary data. The questions would be in Likerts scale and the responses of the respondents would be considered for the research. These data would undergo various statistical calculations in order to fulfil the objectives of the research. The primary data and secondary data would undergo statistical methods like descriptive statistics, methods of central tendency, correlation, regression and methods of frequency distribution. These methods would analyse the data and help to fulfil the objectives. Various graphs, charts and tables would be provided in the research in order to support the analysis. Significance By examining how tourism varies across different patterns of tourist visitation both international and domestic, this proposal will be built on current information that will help construct a more comprehensive framework for the study of the tourism industry and its impact on the Australian Economy. The development of the sector has been has been in previous years frustrated by conflicting definitions, lack of a methodological framework, and scepticism to the advancement of tourism. Studying the impact of tourism to the economy will provide a transition of understanding the key roles of the sector in the economy as well as develop measure to counter the negative results arising from the advancement of this industry. In addition to examining the relationship between tourism and economy, the proposal broadens the study of hospitality and transport sector in the country as well as international. Much of the previous research on tourism has been done have focussed on the revenue side of t ourism in Australia. Likewise, this proposal wlll include the revenue side as well as well as the shortcomings brought about in creating these revenues. While tourism impact on the economy in terms of monetary benefits has largely been written on in many previous studies, limited number, written materials are available on the negative side that is brought out by tourism. Social economical negative impacts have in time not been focused on and the accumulated effects have only been realized in the recent studies. This proposal will be developed in a way to ensure that the overlooked impacts have been addressed to uncover the relevant details and provide an all-round proposal. Ethical consideration Various ethical issues would be considered in this research. The researcher would not force the respondents to answer the questionnaire and participate in the survey. There will be no names asked belonging to respondents. The researcher will aim at assessing the impact of tourism industry on the Australian economy by engaging respondents in the research. The researcher should not use any arms and threaten the respondents to provide the responses. The researcher should not tamper with the responses of the respondents and should collect the data as it comes. The researcher must seek the permission of the respondents prior to using the data. Expected outcomes It is expected that there has been a continuous increase in the daily expenses of tourists both domestic and international, which had resulted from various improvement in the tourism industry, services as well as the economic welfare of the Australian economy. The Australian tourism will generate large amounts of revenue that will in turn contribute to the overall growth of the economy. Employment rates will go high during certain seasons; as a result, the lifestyle of the surrounding community will be elevated to the level above poverty threshold. Other local industries are expected to record a growth brought about by the thriving tourism industry, such industries include fashion, food, hospitality as well as the construction industry (Anderson, 2012). The decrease in the expenditure in tourism is explained by the unexpected natural disasters that destroyed the attractiveness of touring places in Australia hence contributing to the decrease of the place popularity, tourists had lost interests in touring such places in Australia. Apart from the low expenses the tourism industry will lead to several negative impacts such as loss of traditional jobs by the local people who will shift the occupations to venture in to the tourism industry will seem lucrative. Hiked product prices will also be observed, as the surrounding economy will be flooded with cash from both domestic and international tourists. Criminal activities will also top the list of negative impacts promoted by tourism, as the local people will try to enrich themselves by robbing the tourists of their belongings and cash. Culture and traditional practices will be eroded because of adoption of foreign culture practised by the tourist. Moreover, environmental destruction will be prevalent, as developers will require space to setup hotels, hence destroying the flora and fauna. Finally, pollution will be inevitable due to the traffic brought about by the tourists at the tourist sites that do not have adequ ate infrastructure to handle large population of tourists (Research gate, 2017). References Anderson, B. (2012). Crisis management in the Australian tourism industry: Preparedness, personnel and postscript. Tourism Management, 27(6), pp.1290-1297. Chatziantoniou, I., Filis, G., Eeckels, B. and Apostolakis, A., 2013. Oil prices, tourism income and economic growth: A structural VAR approach for European Mediterranean countries.Tourism Management,36, pp.331-341. Goodall, B. and Ashworth, G. eds., 2013.Marketing in the Tourism Industry (RLE Tourism): The Promotion of Destination Regions. Routledge. Holden, A., 2016.Environment and tourism.Routledge. Lee, J.W. and Brahmasrene, T., 2013. Investigating the influence of tourism on economic growth and carbon emissions: Evidence from panel analysis of the European Union.Tourism Management,38, pp.69-76. Mowforth, M. and Munt, I., 2015.Tourism and sustainability: Development, globalisation and new tourism in the third world. Routledge. Murphy, P.E., 2013.Tourism: A Community Approach (RLE Tourism). Routledge. Researchgate.(2017). Tourism Rmpact. [online] Available at: https://www.researchgate.net/publication/277411573_Positive_vs_negative_economic_impacts_of_tourism_development_a_review_of_economic_impact_studies [accessed 4 feb. 2017]. seagrant.umn/tourism. (2017). tourism and the economy. [online] Available at: https://www.seagrant.umn.edu/tourism/pdfs/ImpactsTourism.pdf [Accessed 4 Feb. 2017]. Tourism, P. (2017). Positive Negative Effects of Tourism. [online] Traveltips.australia.com. Available at: https://traveltips.australia.com/positive-negative-effects-tourism-63336.html [Accessed 4 Feb. 2017]. Tribe, J., 2015.The economics of recreation, leisure and tourism.Routledge. Webster, C. and Ivanov, S., 2014. Transforming competitiveness into economic benefits: Does tourism stimulate economic growth in more competitive destinations?.Tourism Management,40, pp.137-140.