What are some of the aspects of tourism that make it difficult to analyze from an economic perspective?

What are some of the aspects of tourism that make it difficult to analyze from an economic perspective?


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Tourism and Economic Perspectives

Tourism can have an immense impact on regions, countries and destinations. The carrying out of tourism activities worldwide has social, economic and cultural effects on the tourism destination. The tourism sector, however, has aspects that make it difficult to analyze from a financial perspective: a distinction between external diseconomies and private costs, normally hotels. Tourism dependence can be dangerous for a country (Ritchie & Jiang, 2019). The risks encompass the sensitivity of tourism to external factors, which puts a country’s economic growth at stake.

Tourism and Inflation

Tourism is difficult to analyze from an economic perspective because it causes inflation. The relationship that exists between tourism and inflation is local and more complex. It is complicated to analyze the economic benefits of tourism when it causes inflation. A high inflow of tourists and tourism activities can ignite a sharp rise in the prices of a number of goods and services in the region where tourism activity occurs (Shaari et al., 2018). It is asserted that prices for basic commodities are generally higher in regions and cities where there are tourism activities compared to places where there are no tourism activities and that prices for hotels and other tourism services and goods are higher during peak seasons than in the low seasons. The upswing of prices of basic commodities is assumed to be higher in areas predominantly occupied by the poor population than the rich. Tourists can afford expensive goods, so traders increase prices and provide more costly goods. The net effect is the locals change their buying behaviours and tend to move to other points of sale. Another consequence is that tourists are only interested in specific types of goods. The residents are forced to pay more for their homes, and the net benefits become in question, especially on the side of local economies. Another fundamental aspect is the demand and cost inflations caused by tourism activities ( Shaari et al., 2018). Demand inflation results in inelastic supplies, seasonal demand, insufficient market reaction and imported inflation due to foreign arrivals, which impact the local currency and influx of mass money. Peak management, the rise of energy prices and high taxation on some tourist products also make it difficult to analyze tourism’s economic benefit analysis.

Seasonality of Demand and Negative Effects of Tourism on Regions

The demand for tourism products is engulfed by unequal and worldly distribution making it difficult to analyze the economic benefits. The seasonality of high and low tourism peaks makes it difficult to collect the net economic benefits of tourism activities. Some of the effects of seasonality in the tourism sector include; the seasonal demand affecting accommodation providers’ occupancy rate, and it isn’t easy to run the hotels profitably (Vergori,2017). Besides, it’s difficult to analyze tourism from an economic perspective because of the negative degradation of natural resources due to the development of tourist sites. Through the development of areas affected by tourism activities, the negative effects of tourists on the natural environment are higher than the economic benefits in the long run (Ritchie & Jiang, 2019). Damage to the trees and scenarios depletes a country’s esthetic beauty and natural resources due to soil erosions and other destructive activities caused by tourism. In addition, tourism is a challenge to developing countries’ development as it poses the challenges of redistribution, cultural challenges of tourism, and the sustainability and consumption gap, which makes it very difficult to regress the economic benefits and losses.


Ritchie, B. W., & Jiang, Y. (2019). Tourism, globalization, and natural disasters. In Handbook of Globalisation and Tourism. Edward Elgar Publishing.

Shaari, M. S., Ahmad, T. S. T., & Razali, R. (2018). Tourism led-inflation: A case of Malaysia. In MATEC Web of Conferences (Vol. 150, p. 06026). EDP Sciences.

Vergori, A. S. (2017). Patterns of seasonality and tourism demand forecasting. Tourism Economics23(5), 1011-1027.

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