In the summer of 2016 - while reading Bruce Poon Tip’s book Looptail - I stumbled upon a horrible finding the UN had discovered almost 16 years earlier. For every 100 USD, a tourist spent in a developing country only about 5 USD remained in the host community. This phenomenon is better known as tourism leakage.
Tourism leakage can get quite complicated, thus making it hard to really evaluate its overall negative economic impact on a country. Yet, a micro example of this is when someone travels to a country and stays in an international hotel. A hotel not locally owned. Yes, in most cases international hotels create new job opportunities for locals. Yet, if we take a closer look at their total earnings, most of it ends up leaving the country. So the macroeconomic impact on that country is a lot less than it can actually be.
Many people see tourism or traveling as a luxury. I would argue against this. In any case, the fact of the matter is that tourism accounts for about 10% of the global GDP. It is a massive industry with an even bigger economic collateral impact.
There is, however, a negative side to this.
In most developing countries or emerging markets, there is a big percentage (sometimes up to 95%) of the total money spent by a tourist leaving the country and not benefiting the host community to the fullest.
This is mostly seen when purchasing your all inclusive holiday at your home country from a local travel agency or tour operator.
Normally, airfare and lodging form the biggest expense on your travel. Up to 80% at times. So when you travel with the airline of your home country and stay in an international hotel, also from your home country, there’s already a big economic value that will never even go to the country you’re visiting.
I’m not against traveling with the airline of your home country, sometimes is the only option you have, not to mention award miles.
I’m not against chain hotels, I think Starwood or Marriott have done an impeccable job at service.
What I do stand strong against, is when people visit other countries and refuse to embrace and engage in local activities that all together would highly benefit the host community. Economically and intellectually.
There’s a common misconception in hospitality: make you’re guest feel at home. There are two reasons why that’s a bad thing:
1. It defeats the whole purpose of traveling and authentically experiencing a country.
2. Guests end up purchasing imported goods, such as F&B products popular in the guest's country. Further extending the leakage.
This problem is not endemic to the tourism industry. Most other industries with a lucrative goal can also have a tremendous negative impact on the local community that's producing the income or commodity.
Yet, I believe if we fix this issue, at least for developing countries, then these things will change for the better:
- Price inflation: mass tourism can do more harm than good. As the number of visitors increases in a country, so will the prices of goods and services. While residents income will not increase proportionately.
- Water shortage: big hotels and resorts consume a great amount of water. This in itself is not very good for the environment. But just imagine the damage it can do to a community where there is a shortage of fresh water.
- Space issues: it's common for big multinational companies in the tourism sector to buy a beach, island or a piece of land that bans locals from accessing it. Take a look at Labadee in Haiti. Owned by Royal Caribbean International.
- Cultural issues: since the beginning of humanity, clashes between cultures and different ethnic groups have prevailed. Today, one could argue that we are living in highly civilized times. It is therefore expected, that we respect and accept different cultures. It's very easy for a tourist to offend a native person by snapping a photo of her.
- Noise issues: asides from the noise travelers or tourist make which may disturb the neighboring who has to wake up early to go to work. Noise pollution from leisure vehicles, generators, private transport, etc. Will not only be a nuisance for the residents but a problem for the environment.
- Infrastructure costs: taxes may increase in the local country to build new touristic infrastructure. Such as airport, roads and public areas. Which is good, but this may not be a priority for a country with a high child rate mortality. Additionally, real estate and land values may increase. Making it more difficult for residents to build and invest. Moreover, as we see in Costa Rica, you might end up with a high property ownership from foreigners. - About 65% of hotels in Costa Rica are owned by foreigners.
Certainly, this does not apply to every country or company. There are many companies and countries that lead an example in sustainable development and travel to fix this issues. What's important here is to be mindful of this big problem and adjust your behavior as an individual traveler to do it in a more sustainable way.
Always think of the consequence that your actions may play in the host community.