What can your destination do about tourism leakage?

Man selling watermelons at a local market

Reduce tourism leakage with long-term strategic goals and new success metrics

When tourism revenue is funnelled to outside economies, the knock-on effects in your destination are widespread. Tourism leakage leads to problems like fewer job opportunities for residents and smaller budgets to build and maintain tourism infrastructure. These struggles also challenge how DMOs measure success. New metrics must acknowledge economic value as part of a system that goes beyond revenue to include social, cultural and environmental well-being.

Beyond adopting new metrics, here are some ways your destination can help retain tourism revenue to benefit both your local industry and the wider community.

Restrict the number of all-inclusive resorts

In most all-inclusive package tours, about 80% of travellers’ expenditures go to airlines, hotels and other international companies instead of local businesses or workers. Aruba Tourism Authority, a participant at Destination Think’s international Forum 2016 event, sought to address this imbalance with a cap on all-inclusive resorts. Tourism and travel contribute 91% of Aruba’s gross domestic product (GDP) – the second-highest percentage worldwide. Considering Aruba’s high level of dependence on the tourism industry, it was imperative to formulate a policy that met island residents’ needs.

Empower locally-owned accommodation providers 

A hotel owned by an international chain will send profits back to company headquarters. It may also employ internationally trained and non-local staff. By contrast, supporting the development and promotion of locally-owned accommodation providers is one way to stop profits from flowing out of your destination. Boutique hotels that reflect the unique aspects of a place have the added advantage of improving demand for local cultural and culinary experiences. An example of this in practice is Bambu Indah in Ubud, Indonesia. In addition to local service staff, cooks and chefs, the hotel works closely with nearby industries. Local producers supply food, tradesmen build infrastructure using local materials like bamboo, and artisans create meaningful souvenirs. Hiring locally helps Bambu Indah keep revenue in-house and tell a story that celebrates the unique culture of the place.

This is an excerpt from an article by Katie Shriner, originally published by Destination Think.

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