chapter  2
23 Pages

MICROECONOMIC FOUNDATIONS OF TOURISM DEMAND

The relative and absolute importance of tourism in people’s expenditure budgets has risen dramatically, with consequences not only for the welfare of tourists themselves but also for the residents of the areas they visit. The large numbers of tourists and the scale of their expenditure have considerable effects on the income, employment, government revenue, balance of payments, environments and culture of destination areas. A fall in demand can bring about decreases in living standards and rises in unemployment, while increased demand can result in higher employment, income, output and/or infl ation and may threaten environmental quality and sustainability. Furthermore, tourism fi rms are confronted by changing revenue and profi ts and governments experience changing tax revenue and expenditure. Thus, tourism demand affects all sectors of an economy – individuals and households, private businesses and the public sector.