Discuss the positive and negative economic impacts of tourism in Mallorca.

Introduction

The tourism industry generates substantial economic benefits to both host countries and tourist’s home countries. Especially in developing countries, one of the primary motivations for a region to promote itself as a tourism destination is the expected economic improvements.

As with other impacts, this massive economic development brings along both positive and negative consequences. ‘According to the World Tourism Organisation, 698 million people travelled to a foreign country in 2000, spending more US$ 478 billion. International tourism receipts combined with passenger transport currently total more than US$ 575 billion making tourism the worlds number one export earner, ahead of automotive products, chemicals, petroleum and food. [www.uneptie.org]

Tourists spend their money on a wide variety of goods and services. Tourists purchase food and beverage, transport, communications, entertainment and services, goods from retail outlets, tour/travel services and accommodation. This money may be seen as an injection of demand into the host economy.

Tourism in Mallorca

To make Mallorca economically successful it needs to attract tourists who are going to spend money. Mallorca does this by having very attractive and historical architecture, mainly cultural sites, pleasant landscapes, crafts and traditions plus many more. Mallorca is the largest of the four Balearic islands, the other islands include Menorca, Ibiza and Formentera, and there are also a few smaller islands.

One of Mallorca's tourist guides says that ‘Mallorca has everything to offer those who seek a creative retreat as well as those who wish to tour the sensibility and culture of the places they visit’. Mallorca not only has traces of Judaic and Islamic cultures been found on Mallorca, but richly endowed settlements bear eloquent testimony to Roman times. The official languages of Mallorca are Castilian Spanish and Catalan. Mallorca has a population of 615,000 half whom live in the capital Palma.

Positive Impacts

Mallorca has developed its own way of helping the economy in by introducing an Eco tax. The tourist pays one Euro per day and in turn this generates 15 million euros per year, which is mainly being spent on improving transport, Mallorca is building a new rail system with the money from the Eco tax and other plans include buying up large tracts of land as nature reserves.

According to figures from the amount spent by tourists altogether was €7.4114,4 million with €4.814,1 million coming from the high season. Mallorca brought in the most money out of ...

This is a preview of the whole essay

Positive Impacts

According to figures from the amount spent by tourists altogether was €7.4114,4 million with €4.814,1 million coming from the high season. Mallorca brought in the most money out of the Balearic islands by bringing in €4.150,1 million of the €7.411,4 million spent. There are three different ways the tourist has spent their money in the Balearic islands. €395.6 million was spent on travel to the Balearic islands, €1.675,6 million spent on accommodation in the Balearics and €2.907,7 million was other spending including leisure, entertainment, public transport and personal services.

The main positive economic impacts of tourism relate to foreign exchange earnings, contributions to government revenues and generation of employment. In Mallorca the generation of employment is relatively high due to resorts like Magaluf and Palma Nova. Many people are employed by bars and restaurants also due to the high number of tourist’s jobs all over the island are increased.

There are three types of employment which may be generated by tourism.

Direct employment involves jobs created as a result of visitor expenditure and directly supporting tourism activity such as hotels. Indirect employment is jobs created within the tourism supply sector but not as a direct result of tourism activity. Induced employment involves jobs created as a result of tourism expenditure as local residents spend money earned from tourism.

Tourist expenditures and the export and import of related goods and services generate income to Mallorcas economy and can stimulate the investment necessary to finance growth in other economic sectors.

Tourism can be a significant, even essential, part of the local economy. As the environment is a basic component of the tourism industry’s assets, tourism revenues are often used to measure the economic value of protected areas.

Economic benefits may be induced from tourism spending which directly benefits the tourism environment. While it is accepted that spending to a greater or lesser extent assists in local economic development, more refined ways of ensuring a flow of money to specific development projects is a more innovative approach. Much discussion about introduction of tourist taxes exists but there is a little consensus as to the desirability of such a policy. Mallorca has taken up the idea of taxes in the form of the Eco tax.

Tourist expenditure has a cascading effect throughout the host economy in this case Mallorca. It starts with tourist’s spending money in ‘front-line’ tourist establishments, such as hotels, restaurants and taxis, and then permates throughout the rest of the economy. It can examined by assessing the impact at three different levels – the direct, indirect and induced levels. The establishments that directly receive the tourist expenditure also need to purchase goods and services from other sectors within the local economy, for example hotels will purchase the services of builders, accounts, banks, food and beverage suppliers to these ‘front-line’ establishments will also need to purchase goods and services from other sectors within the local economy and so the process continues. The generation of economic activity brought about by these subsequent rounds of expenditure is known as the indirect effect.

Finally, during the direct and indirect rounds of expenditure, income will accrue to local residents in the form of wages, salaries, distributed profit, rent and intrest. This addition to the local income will, in part, be re-spent in the local economy on goods and this will generate yet further rounds of economic activity.

Negative Impacts

There are many hidden costs to tourism, which can have unfavourable economic effects on the host community which in this case is Mallorca. Often countries are more able to profit from tourism than poor ones. Whereas the least developed countries have the most need for income, employment and general rise of the standard of living by means of tourism, they are least able to realise these benefits. Among the reasons for this are large-scale transfer of tourism revenues out of the host country and exclusion of local businesses and products.

Tourism development can cost the local government and local tax payers a great deal of money. Developers may want the government to improve the airport, roads and other infrastructure, and possibly provide tax breaks and other financial advantages, which are costly activities for the government.

The seasonal character of the tourism industry in Mallorca creates economic problems as they are heavily dependant on the tourism industry. Problems that the seasonal workers face include job security, usually with no guarantee of employment from one season to the next, difficulties in getting training, employment – related medical benefits, and recognition of their experience and unsatisfactory housing and working conditions. This could defiantly be said for the seasonal workers who work in Magaluf and Palma Nova as there jobs depend on great tourism revenue. If people stop going to Magaluf and Palma Nova then the whole island in turn would suffer.

Calvia’s problems as a tourist destination with over 1,200,000 visitors a year are not exclusive. They reflect the crisis of the tourist model in our country since the sixties. In the short-term this has been an economic success. However, from the start it was based on uncontrolled tourist development of the coastline and unsustainable exploitation of its extraordinarily valuable natural and scenic resources. This model will soon be unable to fulfil the emerging demands of a tourist sector that is maturing and becoming more demanding. Faced with need to overcome the dangers of continuous degradation and the foreseeable collapse, Calvia, with its Tourist Excellence Plan, began to reshape itself at the beginning of the nineties.

Conclusion

The economic impact of tourism on a host economy is generally positive but also carries with it some negative aspects. Most of the literature on this topic is biased towards the positive aspects of economic impacts. Tourism is a major global industry that provides huge opportunity for economic growth, foreign exchange earnings as well as employment and income generation. It has been seen that tourism results in a range of economic impacts, both positive and negative, depending on the location and socio-economic foundation of a destination. All too often , a critical awareness of the true economic costs of tourism to host communities and regions are obscured or glossed over in attempts to develop employment in declining regions or cities as well as in the less developed world. Yet for tourism to reach its full potential, developing a tourism product and visitor industry based on the ability of the local economy and environment to support tourism-related growth needs careful planning and management and in this respect, the economic aspects of tourism cannot be seen in isolation from the wider economic growth and development of countries, regions and places since they need to be carefully integrated into the economic structures and existing social and cultural structures.