Rural Innovation Institute

Every community that has some form of retail business very likely already has tourism.  Throughout Texas many communities have developed economies around the activities and needs of the traveling public.  Others have chosen to develop tourism alongside other economic endeavors to create a more diversified economic base.  Still other communities throughout Texas have the potential to develop tourism as a primary or secondary economic activity.

Tourism has been shown to deliver a chain of economic, social, and often environmental benefits to communities that thoughtfully and successfully develop it.  It is not developed, however, without some costs.  The decision to launch a tourism program should be made only after the community’s unique economic and social needs are defined.  Tourism then, should be considered as one strategy among others to achieve the community’s desired goals.  To make this decision, a community should evaluate:

•   Community needs that tourism could meet,

•   The trade-off between the benefits that tourism delivers and the costs and liabilities it imposes, and

•   Community interest in tourism.

All communities have economic, social and environmental needs.  Many of these can be addressed by developing the local economy.  The following are some of the positive contributions that tourism development often makes to communities.

•   brings in new money

•   supports small businesses and creates new jobs

•   diversifies the economic base

•   generates tax revenues

•   enhances the community’s image

•   helps provide attractions and services that may not otherwise be viable without tourists

Benefits Of Tourism

Tourism Brings In New Money

Tourism is an export business that exports customer or visitor satisfactions in exchange for new, outside dollars.  The final effect of these new dollars that enter the community from the outside is not limited to the initial economic activity and exchange.  The degree of additional impact is a function of how long the new dollars remain in the community, in terms of the number of exchanges and transactions they enter into.  When those imported dollars leave the community to purchase or import commodities or services from outside the community, their local impact ceases.  Other things equal, the larger and more complex the community economy, the longer the imported dollar will remain before leaking out, and the greater the impact.  This additional activity is referred to as the multiplier. 

When a traveler buys gasoline in a small service station in a rural community, most of that gross income to the operator may leave the community directly to purchase more gasoline from a wholesaler outside the community.  What is left in the hands of the service station operator may even then move quickly out of the community.  The multiplier, in this case, will be low. 

While very small communities or communities with simple, narrow-based economies may have multipliers approaching 1.0, very large communities with broad economic bases may have multipliers approaching 3.0 or 4.0.  The following example17 in Figure 5 below will explain the income multiplier in more detail.  In this example the multiplier is 2.0.  Caution should be used since multipliers are abstract thereby making it difficult to justify their actual impact.  Multipliers do give an idea of the impact that tourists’ dollars have on a local economy.

Figure 5.  Calculation of Income Multiplier

Calculation using the formula: Income Multiplier = 1/1-X = 1/1-.  5 = 1/.  5 = 2

Tourism Creates Jobs

Tourism is a service industry requiring large numbers of employees in relation to the amount of investment.  While more and more professional positions in tourism are emerging, many jobs created by tourism require only moderate education and skills.  Because of the seasonal nature of tourism, part-time jobs are made available for the underemployed, including retirees.  In many communities, the tourism season coincides with school vacations, providing employment opportunities for area youth and the necessary labor for successful tourism operations.  Careful analysis of a community’s labor situation must precede tourism development efforts.

Tourism Supports Small Business

Small businesses dominate the tourist/travel industry.  In small and medium-sized communities, these businesses employ local people, encourage economic diversity and stability, and help to increase the economic spin-off of tourism by keeping tourism dollars within the community.  Frequently, “cottage industries” are nurtured by tourism such as artisans making pottery, tapestries, paintings and carvings, or bed and breakfast businesses, and other local entrepreneurial efforts.  Tourism’s support of small business means that it can truly be a community affair, with local residents able to engage in small business development.

Tourism Attracts Other Industry

Irrespective of a community’s size, economic diversity is a key ingredient of stability because it serves to level out peaks and valleys of the earnings of local industry.  Beyond the diversity of businesses and industries inherent to tourism, the amenities often associated with tourism activity in a community can be an important attraction to businesses seeking places to relocate.

Why is this?  Most modern businesses are involved with travel outside their home community and with housing visitors in their own environment.  Travel access and services are important considerations in business relocation decisions.  Recent studies have also shown that businesses prefer to locate and operate in high-amenity areas.  A community that maintains a high quality resource base and offers outstanding services in order to generate tourism may also find that it is attractive as a location for manufacturing trade, and other industries.

Tourism Enhances Community Image and Pride

Many communities experience an image problem even among resident populations.  Tourism development requires that a community examines its resources from a visitor’s perspective and discovers its special qualities and problems.  By playing host to tourists, residents often gain a heightened sense of pride and interest in their community.  This in turn makes the community even more attractive as a place to live, work, and visit.

Tourism Helps Support Community Amenities

Tourist expenditures are valuable revenue sources for community facilities such as theaters, sports facilities, shopping centers, food services, and entertainment.  In small communities revenue generated by local use alone is often not sufficient to keep these kinds of facilities operational.  Tourists’ support of them often provides the critical difference needed to maintain amenities to the benefit of both tourists and residents alike.

Tourism Can Promote Conservation And Preservation

Those things that are unique to an area and community, such as cultural heritage, architecture, scenery, and natural resources attract visitors.  An awareness of the value of these resources to tourism can motivate communities to develop management programs for conserving and protecting them.  Some communities with special heritage have been motivated by tourism to preserve unique artisan techniques that might have otherwise been forgotten. 

Others have been motivated to restore historic districts that are important tourism “attractors” and community amenities.

Worksheet 1a will help you assess your community’s needs and tourism’s possibility for addressing them.  The left column lists needs in the three categories: economic, social/cultural, and physical environment.  The center column provides space for your own assessment of your community’s situation concerning these needs.  The right column suggests the role that tourism might play.

Once you have completed this worksheet you will have a clearer understanding of your community’s needs and the ability of tourism development to address them.  Tourism is one of many forms of economic development.  It may or may not be the best alternative for your community or it may be successful only if it is developed alongside other economic development efforts.  Each community’s unique situation must be considered before launching into tourism development action.

[PLEASE COMPLETE WORKSHEET 1A]

Considering the Trade-Off of Benefits and Costs

While tourism delivers many benefits, it also imposes costs and liabilities.  Those that are most commonly encountered are described in Table 2.  Recognizing only the benefits of tourism leads to shallow development and false hopes.  Table 2 summarizes the trade-off between tourism’s benefits and the costs that must be considered when community tourism development is in question.  All may not be relevant to every community and most can be addressed through proper tourism planning and management.  Worksheet 1b will help you assess your community’s capacity to absorb the costs of tourism.

Table 2. Tourism Trade-off: Benefits and Costs of Development

Costs Of Tourism

Tourism May Conflict With Resident Use Demands on Public Services and Facilities

Tourism development places increased demand on the need for public facilities and services including: roads, parking, informational signs, promotion, park and recreation areas, water supply, sewage and trash disposal, restrooms, public health and welfare, and public safety such as police and fire protection.  Because these facilities and services are primarily supported by local taxes, increased demand will likely affect residents’ property tax rates.  For example, some coastal communities in Texas have found that the tourism demands on beach cleanup, maintenance, and security represent a substantial tax burden.  However, many communities have found that tax revenues generated by tourism offset these increased public costs.  Others have instituted use fees at public sites, such as beaches, to further balance the trade-off of tax costs and benefits.

Tourism Requires Operational And Capital Costs

Operational costs are increasingly encountered as a tourism program grows in size and stature.  These costs, which are essential and inevitable for successful tourism development, include promotion, market research, fund-raising, association memberships, and the support of paid tourism staff.

Tourism Brings Strangers Into Communities Whose Activities May Conflict With Those Of Residents

When evaluating tourism development it is important to consider community values.  Activities of tourists may conflict with the lifestyles and mores of local residents.  For example, some residents may view gambling or paramutual betting as important tourism “attractors,” yet others may be offended by such leisure pursuits.  Residents may also find that as tourism develops they must compete with visitors for use of local facilities and services such as roads, parking, food services, and local attractions.  Conflict between tourist’s needs and residents’ life styles can erode a critical foundation of successful tourism, which is widespread community support and hospitality.

In Some Communities A Tourism Industry Versus Rest Of The Community Feeling Develops Into Antagonism

Because businesses that serve tourists are often the most visible element of tourism within a community, many residents may perceive only one sector of the community, the private sector, benefiting from tourism.  This usually results from a lack of understanding of tourism goals and objectives.  Tourism can support and be consistent with many local economic and social goals.  As a composite industry requiring support from public, private and non-profit sectors, tourism cannot be singled out as benefiting and being the responsibility of profit-oriented businesses only.  Awareness programs and regulated tourism growth can minimize these problems.  Tourism awareness programs and regulating tourism growth can help address some these problems.  Disseminating information to residents about tourism, it’s characteristics, it’s positive and negative impacts, etc., is important in order to ensure that they are informed and prepared for dealing with tourism in your community.  Such tourism education can be conducted through local media such as community newsletter / newspapers, local television and radio, direct mail-outs of information, as well as workshops and public information sessions.

Tourism Is Often Seasonal

The seasonal nature of some segments of the tourism industry can cause problems in supporting capital investments in tourism development, whether public or private.  The challenge of seasonality can be addressed in part by using special marketing strategies to encourage travel during the off-season.  For example, many communities to extend their tourism season have used conducting special events during slower periods.  Unfortunately, the development of new tourism products to attract new markets during slower seasons of the year has been used more by individual tourism resorts and businesses than on a coordinated community-wide basis.

In Texas, seasonality problems may be reduced if the competitive advantages of climate, cultural resources, and natural resources are packaged and marketed to a greater extent.  Year-round outdoor recreation potential and idyllic vacation weather during spring and fall periods suggest great opportunities for extending the tourist season.  Furthermore, growing travel segments, such as the senior market, are not restricted to structured vacation times, as are family travel markets that need to accommodate school children.

People-Pressure On Local Resources And Services May Cause Environmental Deterioration And Pollution

Overcrowding and inadequate support facilities pose a problem for natural resources and some public services.  Resource protection and environmental quality are community-wide and sometimes controversial issues.  Active involvement of local government in tourism planning can help anticipate and alleviate overcrowding and environmental deterioration, but this requires a long range outlook and broad perspective of tourism.  Because tourism is often developed around natural attractions, this long-range outlook is essential for ongoing tourism success.  When planning for tourism, it is important to identify and develop ways of maintaining and preserving natural resources and other unique community assets that are important to residents and visitors.

 [PLEASE COMPLETE WORKSHEET 1B]

Tourism, perhaps more than any other form of economic development, depends upon community-wide interest and support.  Because tourism requires that residents play host to visiting guests, their willingness to serve in this capacity and join in tourism efforts must be carefully assessed.

Community interest can be assessed by:

•      holding public meetings

•      conferring with key community representatives

•      conducting surveys

•      soliciting written responses from citizens

•      visiting with community interest groups

•      determining community values

•      office / home meetings

•      informal communications on the street or in other public spaces

As you evaluate community interest, consider also what residents know about tourism.  A community education program explaining the balance of tourism costs and benefits may be instrumental to pique residents’ interest, address their concerns, and secure their ongoing support.  Research studies demonstrate that residents who perceive positive economic impacts from tourism tend to be more favorable towards tourism development than those who do not see personal gains to be made from tourism.  Other studies demonstrate that the more informed the residents are about tourism and tourism development in their community, the better they are able to make informed decisions about tourism related proposals and plans.  A resident population that is educated and knowledgeable about various facets of tourism is an asset, for it enhances community capacity, and stands a better chance of dealing constructively with tourism impacts.

Once community needs, tourism’s benefits and costs, and community interest have been evaluated you will be ready to decide to what extent tourism is a sound development option.  While some communities have superior endowments that allow tourism to be the focal point of economic activity, most communities will find that their goals are best achieved when tourism is one part of an overall development plan.  This plan may include choosing several forms of complementary economic development activities to meet the community needs that any one industry may not alone address. 

The next section describes a tourism planning process that helps to convert ideas into a tourism action plan.  Worksheets are provided to assist you in applying the steps of the process to your own community.

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