CHAPTER 4

ECONOMICS
OF
TOURISM
REASONS WHY TOURISM IS MADE AN
ALTERNATIVE TO ECONOMIC
DEVELOPMENT
1. There’s a continuous demand for
international travel in developed countries.
2. As income increases, the demand for tourism
also increases.
3. Developing countries need foreign exchange
to aid their economic development.
 TOURISM MULTIPLIER
• It describes the total effect of tourism to the
economy.
TOUR
OPERATOR
Increased SPEND
Personal SEED
Income
SAVE
HANDICRAFTS FERTILIZER
Raw
Purchase of Material
TOURIST IMPORTS
Supplies
WAGES
HOTELIER
RENT
Wages FOOD
SAVINGS
SERVICES
 DIRECT AND INDIRECT EFFECTS
• Direct
– Income is received directly by tourism
establishment.

• Indirect/Secondary
– Money paid by tourist to businesses are in
turn used to pay for supplies, wages and
other items to supply direct services.
SOCIOLOGY
OF
TOURISM
 SOCIOECONOMIC VARIABLES AND
THEIR EFFECT ON TRAVEL
• Age
• Income and Social Status
• Education
• Life Stages of the Family
 AGE
• Younger people tend to select more active
recreational activities than older people.
• Elderly (those in the late 60’s and upward)
prefer more passive forms of recreation:
– VFR
– Fishing
– Sight-seing
– Playing golf
INCOME AND SOCIAL STATUS
RICH PERSONS LOWER INCOME
(HIGHER SOCIAL (LOWER SOCIAL
STATUS) STATUS)
Travel more Travel less
Stay longer Spend minimal days
Spend more Spend less
 EDUCATION
• The better educated members of the population
have a greater desire to travel.
• Researcher have found that the more educated
the travelers are, they tend to be more
sophisticated in their tastes.
• They prefer activities, which require the
development of interpretative and expressive
skills:
– Attending plays, concerts, art museums
– Reading books, playing golf tennis, skiing
 LIFE STAGES OF THE FAMILY
• The presence of children in the family limits
travel and more leisure time is spent at home.
• As children grow and leave home, married
couples renew interest in travel.
THE RISE OF NEW TRAVEL PATTERN
• Travel Clubs
• Airline Group and Arrangements
• Special Interests Tours
 Travel Clubs
• A club member enjoys travel opportunities
and vacation destination facilities at a much
cheaper price than paid by a non-member.
Ex. Club Mediterranee
AIRLINE GROUP AND ARRANGEMENTS
• Different types of tour fares promoted by airlines:
a. groups of 15 or more are given reduced fares;
b. charter service is given by some airlines to
affinity group tours which are intended for those
affiliated to a legitimate group for a period of 6
months or longer;
c. public charter in which an entire airplane is
made available to a group; and
d. incentive tours that are given by firms to
employees as a reward.
 SPECIAL INTEREST TOURS
• It is becoming more popular at the present.
• These are tours arranged for those who are
interested in a particular activity.
PREFERENCES OF THE INTERNATIONAL
TOURISTS
• Relaxation vs. Activity
• Familiarity vs. Novelty
• Dependence vs. Autonomy
• Order vs. Disorder
 RELAXATION VS. ACTIVITY
• Before:
– The workweek for most people was long and
exhausting that’s why they demanded holidays
that offered relaxation and rest.

• Present:
– Workweek has been shortened, has become less
tiresome, and people have become used to
greater leisure. The demand for activity-oriented
travel has greatly increased.
 FAMILIARITY VS. NOVELTY
• Before:
– On their first trip abroad, they tend to seek for
something that will remind them of home.
– As soon as they find a place where they feel at
home, these tourists will go back to the same place
for a number of times.

• Present:
– There is an increasing positive attitude for change.
– People accept innovations in industry and tourists
move away from traditional resorts to new tourist
destinations
 DEPENDENCE VS. AUTONOMY
• Before:
– Tourists joined package tours in which everything
were fixed in advanced by the tour agency.

• Present:
– There is the emergence of a group tourists who would
like to acquire a sense of personal autonomy
regarding their leisure time.
– They would like to travel on their own and not with a
group.
– They would like to feel independent.
 ORDER VS. DISORDER
• Before:
– Tourists sought holidays which enforced the
traditional concept of conformity:
• Set meals at fixed times
• Using guide books
• Going to resorts where their fellow tourists
were tidy, well-behaved, and properly dressed.

• Present:
– Tourists are not very much concerned about what to
wear and how to behave when on holiday.
– Greater tolerance toward the differences of others,
informality in behavior, and freedom from
institutionalized regulations
 TYPES OF TOURIST ROLES
INSTITUTIONALIZED NON-
TOURIST ROLES INSTITUTIONALIZED
TOURIST ROLES
Organized Mass Tourist The Explorer
Individual Mass Tourist The Drifter
 INSTITUTIONALIZED MASS TOURISTS
• They are dealt within a routine way by the
tourist establishment, such as travel agencies,
hotel chains, which cater to the tourist trade.
 NON-INSTITUTIONALIZED TOURIST
ROLES
• They are loosely attached to the tourist
establishments.
 TYPES OF TOURIST ROLES
A. Organized Mass Tourist
- Least adventurous
- Buys package tours in which itinerary of his trip is
fixed in advance and his stops are well-prepared
and guided.
- Seldom makes decisions
- Prefers familiar environment rather than new
environment
 TYPES OF TOURIST ROLES
B. Individual Mass Tourists
- Has a certain degree of control over his time
and itinerary and is not bound to a group.
- All major arrangements of his tour are still
made through a travel agency.
- the desire for novelty is greater for the
individual mass tourists.
 TYPES OF TOURIST ROLES
C. The Explorer
- arranges his trip by himself and looks for
comfortable accommodations and reliable
means of transportation
- tries to associate with the people he visits
and to speak their language.
- dares to leave his country but goes back to it
when the experience becomes too rough.
- does not adopt completely the lifestyle of
the host country.
 TYPES OF TOURIST ROLES
D. The Drifter
- Goes farthest away from the accustomed
ways of life of his own country.
- Totally immersed in his host culture.
- Tries to live the way the people he visits live.
- Does not have a fixed itinerary.
- Novelty is at its highest; familiarity
disappears almost completely.
 SOCIAL TOURISM
• It is a subsidized system of travel through the
intervention of the government, employer, or
labor union to achieve social goals and
purposes.