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Economic Impact of Tourism

Essay by   •  March 30, 2012  •  Research Paper  •  4,297 Words (18 Pages)  •  2,765 Views

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Mauritius has witnessed a massive development in the last decades. From a monocrop economy, depending mainly on sugar, it has diversified its economic activities in different sectors. Much of this economic growth has been the result of the expansion of the luxury tourism sector. Mauritius is one of Africa's wealthier countries, and its economy is mainly dependent on the sugar, textiles, and tourism industries. As world sugar prices have declined and the production of textiles has become economically unfeasible, the tourist industry is being concentrated on. Tourism is still very much a growth industry in Mauritius. This report focuses on both the positive and negative economical impact of tourism.

Before highlighting the economical impact of tourism in Mauritius it becomes imperative to know what factors make our small island an attractive destination of tourist. Mauritius is well known for being a high quality tourist destination. This has not been a natural, chance occurrence but the result of deliberate efforts. The Government has been very supportive to investors - local and foreign - by setting clear policies, eliminating bureaucratic procedures, offering incentives and creating an environment conducive to investment. Laws (1995) identifies primary elements contributing to the attractiveness of a tourist destination as being climate, ecology, culture and traditional architecture and secondary elements specifically for tourist groups, e.g. hotels, catering, transport and entertainment. Hence, taking Laws theory of destination into account we can say that our island encompasses all these elements as we offer tourism product - primarily beach tourism and the sun, our strategic location, the image that Mauritius has, hospitality of Mauritians, our infrastructure, availability of skilled workers, the political stability that Mauritius has, business incentives government offers, and the beautiful environment that we have, portrays our island as an attractive destination for tourism.

From an economical perspective it is obvious to say that tourism is one of the most efficient ways of redistributing wealth, by moving money into local economies from other parts of the country and overseas. It brings income into a community that would otherwise not be earned. Tourist arrivals in Mauritius reached 906 971 in 2007, which translates into a growth rate of 15.1 per cent compared with 3.5 per cent in 2006 and in 2008 the number of tourist arrival recorded was 930,456(Central Statistics Office Data, 2008). Arrivals of tourists for the first semester of 2010 were 591,153(Economic & Social Indicators 2010). Compared to the same period of 2009, these figures represent increases of 7.0% in arrivals. There is no doubt that tourism has contributed much to the economic progress of the island and to the general welfare of its inhabitants. Indeed, tourism is the third pillar of the Mauritian economy and foreign earnings from tourism (Rs 9.0 billion) surpasses earnings from sugar (Rs 8.0 billion), 1996 figures. The Gross receipts from tourism for the year 2009 amounted to 35,693 million rupees. Data from the Bank of Mauritius indicate that gross tourism receipts for the first semester of 2010 were Rs 19,809 million, that is. an increase of 8.5% compared to Rs 18,249 million for the same period of 2009. According to the Bank of Mauritius, tourism receipts for the year 2010 will be around Rs 37,935 million (+6.3 %) compared to Rs 35,693 million in 2009. This fact alone is indicative of the importance of that sector for the local economy. It can be noticed that the figures for tourism receipts are increasing year by year. According to Frangialli (2001), tourism is profoundly important for economic development through its impacts on employment, exports, stimulation of infrastructure provision, generation of revenue, and promotion of international cultural appreciation, peace and harmony.

Moreover, this report attempts to provide some fundamental concepts for estimating the impacts of tourism on the Mauritian economy. Tourism is an expenditure-driven economic activity (Mihalic, 2005) and tourists' expenditure multiplies in the local economic system. Economic impacts of the expenditure are generally divided into direct, indirect and induced impacts (Mathieson & Wall, 1982). They can be further divided into income, employment, wage and tax income impacts. Archer (1989) states that impact analysis is an economic approach used to measure inter alia the amount of income, government revenue, employment and import generated in an economy by the direct and secondary (indirect and induced) effects of visitor expenditure. Tourism has a variety of economic impacts. Tourists contribute to sales, profits, jobs, tax revenues, and income in an area. Direct effects are the changes in the industries associated directly with visitor spending. This is the direct sales effect of the visitor spending. The hotel will hire employees and pay salaries, creating direct employment and income effects. The importance of the tourism sector in Mauritius has become more apparent when one evaluates its economical and social impact, especially in generating jobs. The tourism industry has created direct and indirect employments in many different areas. Direct employment in tourism occurs in accommodation and catering, transport operations, travel agencies, tour operators, tourist attractions and government departments, national parks and monuments, air traffic control and lifeguards and much more. All of this creates many different levels of employment not only for people in touristic villages but also to all people working in the tourism sectors. Sustainable Coastal Tourism can add to the vitality of communities in many ways. Examples are events and festivals of the local residents where they have been the primary participants and spectators. Often these are refreshed and developed in response to tourists' interests. The jobs created by tourism can act as a very important motivation to reduce emigration of Mauritian people to foreign countries. Local people can also increase their influence on tourism development, as well as improve their jobs and earnings prospects through tourism-related professional training and development of business and organizational skills.

Tourist arrivals have been rising by more than 8% per year and the tourism industry has become one of the most dynamic sectors of the economy, accounting for 19 per cent of gross export earnings and providing employment directly and indirectly for about 50,000 people. According to the Survey of Employment and Earnings, direct employment in hotels, restaurants and travel and tourism establishments employing 10 persons or more stood at 27,161 at the end of March 2010 showing an increase of 0.6% over the figure of 27,002 for March 2009.

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