Over the last years, the tourism industry has played a significant role in the economic growth and development of numerous countries. This field represents the third largest economic sector in Europe, as this area is one of the most important tourism regions in the world and it generates more than 4% of the European Union GDP. However, the tourism industry has faced numerous challenges, from environmental disasters to globalisation, and specifically the financial crisis that started from 2008 has provoked severe damages to this economic field, causing Europe’s market shares to decline during this period due to the vulnerability of this industry to economic volatility. This leads to immediate effects, such as rising unemployment rates and a
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The first refers to the decision of cutting back the amount of resources or time invested in tourism by the consumers. For example, customers might spend their holidays at a destination but instead of travelling away for two weeks they cut back the time spent at the destination to 8 days, another major effect is the substitution due to the income elasticity mechanism. Although tourism is generally considered an income elastic service, the concept of inferiority may be considered as valid in some situations; this concept is based on the increase in the consumption of some of these goods when the income decreases (Stabler et al 2010). For example, this might particularly affect negatively luxurious tourism destinations, due to the high-income elasticity, and it might affect positively low price destinations. Nonetheless, the income elasticity might also influence the relation between inbound and outbound tourism, due to the high elasticity of outbound tourism consumers are more likely to switch to domestic tourism destinations, and in this case, this would benefit the domestic tourism industry in terms of income and employment (Sheldon and Dwyer, …show more content…
The investments brought by the travel and tourism industry play a very important part in the trade balances, facilitating the attraction of foreign direct investment and providing opportunities for local markets, but these can be impacted by the crisis and the reduction of tourism in the region, leading also, to a reduction of potential investors in the local economy businesses. The decrease in potential investment would also lead to a reduction in the development of infrastructure and services in Europe, and that would collectively affect the local community and public or private establishments as well as the tourists. In addition, as it has been described previously the travel and tourism industry represents a major part in the economy of the European Union region. This industry in particular is in charge of creating jobs, bringing new money to the region and diversifying the local economic base, making the economic diversity one of the critical aspects that lead to the success in rural tourism areas (Goodwin, Harold,
The first refers to the decision of cutting back the amount of resources or time invested in tourism by the consumers. For example, customers might spend their holidays at a destination but instead of travelling away for two weeks they cut back the time spent at the destination to 8 days, another major effect is the substitution due to the income elasticity mechanism. Although tourism is generally considered an income elastic service, the concept of inferiority may be considered as valid in some situations; this concept is based on the increase in the consumption of some of these goods when the income decreases (Stabler et al 2010). For example, this might particularly affect negatively luxurious tourism destinations, due to the high-income elasticity, and it might affect positively low price destinations. Nonetheless, the income elasticity might also influence the relation between inbound and outbound tourism, due to the high elasticity of outbound tourism consumers are more likely to switch to domestic tourism destinations, and in this case, this would benefit the domestic tourism industry in terms of income and employment (Sheldon and Dwyer, …show more content…
The investments brought by the travel and tourism industry play a very important part in the trade balances, facilitating the attraction of foreign direct investment and providing opportunities for local markets, but these can be impacted by the crisis and the reduction of tourism in the region, leading also, to a reduction of potential investors in the local economy businesses. The decrease in potential investment would also lead to a reduction in the development of infrastructure and services in Europe, and that would collectively affect the local community and public or private establishments as well as the tourists. In addition, as it has been described previously the travel and tourism industry represents a major part in the economy of the European Union region. This industry in particular is in charge of creating jobs, bringing new money to the region and diversifying the local economic base, making the economic diversity one of the critical aspects that lead to the success in rural tourism areas (Goodwin, Harold,