Tourism Economics Grade 12 Study Guide

Tourism Economics Grade 12 Study Guide. Tourism is travel for the purpose of leisure, recreation or business. Local tourists travel to different places in their own country. Inbound tourists come to South Africa from other countries. South African tourists who travel overseas are known as outbound tourists. South Africa is a popular tourist destination because of its beauty, wildlife, good weather and its interesting political history.

TOURISM GRADE 12 NOTES – ECONOMICS STUDY GUIDES

Overview

13.1 Key concepts

These definitions will help you understand the meaning of key Economics concepts that are used in this study guide. Understand these concepts well. Use mobile notes to help you remember them.

Use mobile notes to help you learn these key concepts. Learn more about mobile notes on page xiv in the introduction.

13.2 Definition of tourism

Tourists travel to foreign countries for holidays, business, conferences and to discover more about other countries. Tourism allows people to experience the world. Tourism can be defined as activities of people travelling to places outside their usual environment for less than one year for business, leisure or other purposes without any remuneration.
An activity is seen as tourism if it fits in with the following criteria:

• There is a purpose for the visit or activity.
• There is no remuneration (money) earned in the place visited.
• A minimum length of stay is one night.
• A maximum length of stay is one year.
• There is a travelling distance of more than 160 km from the tourist’s home environment.

13.3 The purposes (types) of tourism

• Leisure and recreation: Tourists come to South Africa on holiday, to play sport, to visit friends, and to see the tourist attractions
• Cultural tourism: Tourists come to visit museums and art galleries, e.g. Robben Island and the Apartheid Museum.
• Ecotourism: Tourists visit undisturbed natural areas, e.g. the Richtersveld Cultural and Botanical Landscape, the Cape Floral Region Protected Areas and the Kruger National Park.
• Business and professional: Tourists visit for business meetings and conferences.
• Other: For studies, or medical reasons.

13.4 Measuring tourism

Tourism consists of different activities that should comply with the following:

• There should be a purpose for the visit e.g. camping, business or studies.
• No remuneration should be earned at the tourist destination.
• A minimum length of stay should be one night.
• The maximum length of stay should not exceed one year.
• The travelling distance should exceed 160 km from a person’s residence.

13.5 Reasons for growth

The rapid growth in the tourism industry has resulted in a steady change in the standard of living as well as people’s lifestyles. Tourism is much more evident in the developed than developing countries, although tourism is increasing faster in the developing countries. Local tourism is booming since South Africa is becoming more attractive as tourist destination.
Reasons for the growth of the tourism industry are:

• Increased disposable income.
• Less working hours so more time to travel.
• An awareness of leisure and recreation.
• Improved transport, communication and accommodation facilities.
• Increased advertising and promotion.
• Enjoying the benefits of holidays and travel.
• Easily obtainable foreign exchange.
• International: tourism is much more evident in the developed than developing world, but tourism is growing faster in developing countries, e.g. 4.6% growth from 2010 to 2011.
• Locally:
  • Foreign arrivals: foreign tourists who visit the country as their destination.
  • Those who are stopping over, are called transit tourists or sameday travellers.
  • Foreign tourists: come for the experience – visit friends, game farms, enjoy the different cultures, heritage spots or sports activities and events.
  • Domestic tourism: South Africans are free to travel locally (domestic tourists) or abroad (outbound tourists). Outbound tourists have the same effect on the Balance of Payments as imports.

13.6 The effects of tourism

Tourism has a significant effect on the economy and the country as a whole. The following 6 areas are greatly affected by tourism:
13.6.1 Employment

• Tourism employs 7% of South Africa’s workforce (approximately 1,12 million people).
• Tourism is the largest provider of jobs because it:
• Is labour intensive.
• Employs many different kinds of skills, e.g. tourist guides, hotel staff.
• Provides immediate employment.
• Provides entrepreneurial opportunities.
• Tourism is the largest earner of foreign exchange because:
• Foreign tourists pay for services in foreign exchange.
• Foreign tourists usually spend more than local tourists.

Use the acronym PIGEEE to help you remember the 6 effects of tourism:
P – Poverty
I – Infrastructure
G – GDP
E – Employment
E – Environment
E – Externalities

13.6.2 Gross domestic product (GDP)

• Tourism has the biggest impact on the services industry.
• Indirect contribution: Tourism is a service-based industry. It is responsible for 65% of the GDP in developed economies and 40% of the GDP in developing countries.
• Direct contribution: Tourism contributes 7,9 % of GDP in South Africa (compared to 12% worldwide).

13.6.3 Poverty
Poverty is most evident in rural areas due to a lack of job opportunities.
Tourism can alleviate (ease) poverty in the following ways:

• Tourism is a fast and effective mechanism for distributing resources to rural areas to develop them as tourist sites.
• Many prime tourist attractions are located in rural areas.
• Tourist developments in rural areas increase the number of available jobs in areas where there aren’t many jobs.
• Tourism promotes a balanced and sustainable form of development.
  People are able to earn a living in their home areas, resulting in a reduction in urbanisation and a more balanced population distribution.

13.6.4 Externalities
Externalities are costs and benefits that result from a specific activity.
Tourism results in both:
Positive externalities:

• Tourism attracts large amounts of revenue.
• Tourism leads to an improvement in infrastructure development.
• Tourism can stimulate employment indirectly.
• Tourism can help conserve cultural and natural assets and alleviate poverty, but needs to be carefully planned.

Negative externalities:

• Tourism can cause environmental damage if not managed correctly.
• Tourism can result in a lot of waste and damage to sensitive tourist sites.
• The infrastructure at tourist sites can come under pressure to cater for increased tourist numbers.
• Tourism can lead to increased prices for locals.

13.6.5 The environment
Tourism can create environmental stress. It can result in:

• Permanent restructuring of the landscape, e.g. construction work on highways.
• Additional waste products, e.g. biological (sewage) and non-biological (litter) waste.
• Direct environmental stress, e.g. the loss of wildlife species due to safari hunting.
• Effects on population dynamics, e.g. migration and changes in population density in response to the needs of tourist sites.

13.6.6 Investment
Tourist destinations require adequate physical (hotel rooms), economic (ATMs) and basic (water and electricity) services infrastructure. This includes:

• Transport infrastructure, e.g. improved roads are needed to access tourist sites.
• Communication infrastructure, e.g. hotels need telephone lines to take bookings at tourist sites.
• Energy infrastructure, e.g. tourists need electricity at tourist sites.
• Basic services, e.g. clean water and refuse removal.

13.7 The benefits of tourism

South Africa benefits from tourism through the growth in the gross domestic product (GDP), employment and infrastructure development. An additional benefit is that spending by foreign tourists results in an increase in foreign exchange earnings, which has a similar impact on the GDP to an increase in exports.
13.7.1 Households
Tourism benefits a household’s prosperity (wealth) in three ways:

• More people earn salaries and wages because of additional job opportunities.
• Infrastructure built for tourists is available both for tourists and local people’s use.
• Skills: A variety of skills is required in the tourism industry.

13.7.2 Businesses
Tourism has many benefits for the business sector:

• The economic and basic services infrastructure required for tourism is provided by the public sector.
• Tourism needs superstructure, which consists of businesses that provide accommodation, transport, built attractions, retailing and recreation services.
• Superstructure is normally supplied by the private sector, and the building and running of the superstructure make profits.
• Public and private sector partnerships (PPPs) are used to develop tourist destinations.
• Other work opportunities become available for the previously disadvantaged. These include:
  • Employment opportunities in entertainment, laundry and transportation.
  • Business opportunities in car rental, arts, craft and curio sales.

13.7.3 Government
The main benefit to government is in the levying (charging) of taxes. This has two purposes:

• To recover external costs: To compensate the host community for providing infrastructure.
• To raise revenue: Tourists are seen as part of the overall tax base (e.g. airport departure taxes and hotel tourism levies increase the amount of taxes collected).

Use this mnemonic to help you remember the 4 benefits of tourism:
H – Households – HOT
B – Businesses – BEACHES
I – Infrastructure – IN
G – Government – GEORGE

13.7.4 Infrastructure development
South Africa benefits from tourism because all infrastructure built to support tourism becomes an asset to the country.
As a result:

• Residents and visitors enjoy adequate and well-maintained physical and basic services infrastructure.
• The Department of Transport prioritises economic infrastructure. Spatial Development Initiatives and economic corridors focus on tourism, and public and private sector partnerships (PPPs) are used for the development of infrastructure.
• Tourists require social infrastructure – ambulances, medical clinics, police protection services and information services – that becomes a national asset.

13.8 A South African tourism profile

1. Aim with visits: most foreign tourists visit South Africa for vacation (94.3%) and business (2%). The major attractions are the coast, wildlife and scenery.
2. Local destinations: Destinations link all aspects of tourism – demand, supply, transport, accommodation and marketing. The success of tourism is determined by the variety of destinations as well as the geographical distribution of tourist destinations.
3. Local tourists: There has been a steady growth in the number of South Africans travelling domestically.
4. Indigenous knowledge
   • Tourists want to understand the indigenous (local) culture, history and environment.
   • Tourists seek authentic (genuine) and unique destinations. They want to see how local people live and work.
   • The Khoi San are among the world’s oldest people, and their way of life is of interest to many foreign tourists.

World heritage sites:

• Mapungubwe (Limpopo)
• Vredefort Dome (Free State and North West)
• Sterkfontein caves
• Robben Island
• Richtersveld Cultural and Botanical Landscape

Environmental World Heritage Sites:

• iSimangiliso Wetland Park (ecosystems)
• Cape Fynbos Region
• uKhahlamba Drakensberg Park

13.9 Tourism policy suggestions

The Department of Tourism leads and directs tourism policy. The starting point for policy on tourism is the White Paper on Tourism. Tourism policy is also supported and directed by the Tourism Forum, which is an advisory body to the Minister of Tourism. Some tourism policy initiatives include the following:

This is an easy topic. Memorise at least 4 facts under each heading.

13.9.1 Marketing
SA Tourism was created to promote tourism internationally and nationally:

• Nationally: SA Tourism persuades South African citizens to travel in their own country.
• Internationally: Marketing initiatives try to ensure South Africa is selected as a tourist destination. Foreigners visit our country for the following reasons:
  • Value for money
  • The world in one country
  • South Africa’s political miracle
  • The climate
  • Safety
  • The friendliness of South Africa’s people
  • The cleanliness and tranquility (peace) of our tourist destinations

13.9.2 Directing tourists’ spatial distribution
Three approaches are followed to distribute tourists effectively to the many tourist sites:

• Create representative bodies: Tourist-based industries are linked to form representative bodies. Tourists can then easily access knowledge about all tourist destinations.
• Improve marketing: Tourists receive accurate product descriptions and information about competitive prices. Less well-known destinations are aggressively marketed.
• Improve supporting services: The standards of transport, accommodation and other amenities (facilities and services) are world class.

13.9.3 Taxation
Growth in tourism results in increased tourist taxes. Guidelines for levying taxes are:

• Equity: Taxes must be fair, e.g. taxes on air tickets.
• Efficiency: Nature and game reserves charge entry taxes to regulate tourist flows.
• Simplicity: A flat tax rate is used to ensure taxes are easy to pay and administer.

13.9.4 Infrastructure
Tourism requires economic infrastructure (roads), social infrastructure(ambulances) and basic services (clean water):

• Infrastructure is maintained for the benefit of domestic and foreign tourists, as well as local citizens.
• The basic considerations are:
  • More infrastructure is required, e.g. water supplies.
  • Existing infrastructure must be upgraded, e.g. upgrade dirt roads to tarred roads.
  • Use new technology to extend the infrastructure, e.g. build the Gautrain.

Activity 1
Study the diagram below and answer the questions that follow:

1. Define the concept tourism. (4)
2. Explain the difference between an inbound and an outbound tourist. (4)
3. List any THREE World Heritage Sites in South Africa. (3)
4. Discuss the effect of tourism on infrastructure. (4 × 2) (8)
   [19]

Activity 2
Choose the correct answer from the following alternatives:
Tourism is _________ intensive.

1. Labour
2. Capital
3. Risk
   [2]

Answer to activity 2
A. Labour
[2]

Activity 3
Choose the correct answer from the following alternatives:
Tourism benefits the household through_________ .

1. Lower incomes
2. Lower productivity
3. More infrastructure
   [2]

Answer to activity 3
C. More infrastructure
[2]