Socio Cultural Impacts Of Tourism Essay Competition

Executive Summary

Tourism industry] has evolved to a leading economic factor for many countries.

According to the World Tourism Organization, tourists are people who "travel to and stay in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes not related to the exercise of an activity remunerated from within the place visited" (UNWTO, 2007). The agency examined that there were over 846 million international tourist arrivals in 2006. The industry has become essential for many countries.

Tourism generates different kinds of revenue that can contribute to the host country’s welfare. Further, with the development of resorts, jobs are created in sectors directly or indirectly related to tourism such as transportation, accommodation and entertainment services.

The following report investigates economic, environmental and socio-cultural impacts in Mexico caused by the tourism industry. Positive as well as negative influences will be investigated.

Furthermore, the paper will have a special focus on Cancún, a mega resort built by a governmental agency within only a few years. Mexico accounts to the leading tourism destinations among developing countries. Despite its wonderful beaches and the different kinds of activities such as water sports, deep-sea fishing, diving Mexico offers a wide range of culture and history. Ancient Maya sites, for example Tulum or Chichen Itza being the most popular attraction with tourists.


The Federal Republic of Mexico is located in Middle America, bordering the Gulf of Mexico and the Caribbean Sea in the east of the country and the Pacific Ocean in the west. As one can see in Appendix A, the three adjoining states are the United States in the north and Belize and Guatemala in the south. The capital is Mexico City. The population of Mexico is approximately 105 million of which the greatest part are Mestizos (Amerindian-Spanish). 89 percent of the people are Roman Catholics. Due to Spanish influences Spanish is still the official language. However, over 100 Native American languages still exist.

Cancún is the most visited tourist destination in Mexico. It is located in the east of the country in the State of Quintana Roo at the most southern tip of the Yucatan Peninsula. The resort is divided into a hotel section along the seaside and Cancún City on the mainland. Sports facilities such as golf courses, tennis courts and abandoned lagoons for scuba-divers as well as a great biodiversity make Cancún a destination popular with tourists. The resort earns 25 percent of Mexico’s tourism revenue.

In terms of tourism, Mexico ranks on number eight of the world’s tourism destinations with 21.4 million tourist arriving in 2006 (WTO, 2006). Mexico is Latin America’s leading destination. Despite its dry and mild weather all over the year, the wonderful beaches and beautiful landscape, Mexico has a big advantage over other destinations: its proximity to the US. Approximately 90 % of the tourists visiting Mexico are from the USA, 4 percent are from Europe, 3 percent are from Canada and 2 percent are from other Latin American countries (Kersten, 1997). In the past couple of years, tourism became Mexico’s second biggest earner, behind manufacturing, outrunning the oil industry. With occupancy rates of 86% tourism industry is booming (Friedland, 1999). According to Clancy Mexico became the country with the highest number of foreign affiliated hotel rooms among the developing nations in 1998 (1998).

Economic Impacts

The most significant positive economic impact in the tourism industry is achieved by direct revenue resulting from traveling activity by tourists. As displayed in figure 1, the International Tourism Receipts of Mexico have been growing steadily until 2004.

Figure 1

International Tourism Receipts Units: Million current US $

illustration not visible in this excerpt

Source: The World Bank. (2007)

Included in tourism receipts are taxation revenues. Two categories of taxation can be differentiated. Taxes charged directly to tourists are entry and exit taxes, air passenger duty, bed- night taxes for hotels and accommodation and also VAT charged by restaurants and groceries. The second group is taxation charged to the tourism business such as fuel taxes, duties on the tourist equipment that is imported to the destination as well as property and corporation taxes. An additional important impact which is directly related to the tourism receipts is the contribution to GDP. According to the World Travel & Tourism Council (2008) the contribution of Travel & Tourism to Gross Domestic Product is expected to rise from 14% in 2008 to 15.2% by 2018.

Tourism has also a direct impact on the employment in the host country. In 2005, 1.9 million jobs were directly associated with the Mexican tourism industry. As the WTTC found out, the contribution of the Travel & Tourism Economy to employment is expected to rise from 6,633,000 jobs in 2008, which is 14.3% of total employment to 8,100,000 jobs, 15.7% of total employment in 2018. This means that 1 in every 7 jobs will be directly or indirect related to the tourism industry. And since low-paid workers tend to spend all additional income on necessities like food and clothing, this creates a multiplier effect that creates jobs. Further, the industry can help local businesses to generate more revenue. According to a research done by Rebecca Torres in 2003, most of the bigger hotels in Cancún have already had direct contracts with local farmers, fisherman or ranchers as suppliers. However, direct contracts with private suppliers still represent only 6% of total food supply. This has to do with the overall mistrust on both – supply and demand sides as well as cultural differences concerning reliability (Torres, 2003).

For Mexico the access to foreign direct investment has improved a lot since the North American Free Trade Agreement (NAFTA) has been approved in 1994. The interest in hosting conventions in Mexico has grown and a lot of foreign investors have been attracted, especially from the United States and Canada (Korn, 1993). Before, in February 1993, a law was passed which deregulates the tourism industry and with it the regulations of rating hotels by SECTUR, Mexico’s Secretariat of Tourism, which also has set up the prices until this stage (Korn, 1993).

In order to increase international tourism receipts, according to Ricardo Ampudia, Mexico’s former Director of Tourism, the country needs more entertainment facilities, such as megaresorts, shopping centers and golf courses, emphasizing that casinos would probably attract such venues and make Mexico more competitive to other destinations (Kersten, 1997).

With the opening of Cancún Convention Center in 1995 the resort is now known for its possibility to hold large scale meetings and conventions. A fixed percentage of the profits which are generated go to an organization that offers various programs, such as educational, sports or housing programs for young people with disadvantages (Korn, 1993).

The negative result incorporated with providing a lot of jobs is cheap labor. The operational costs per worker per day are approximately 18 $ per day, whereas the average room price is 125$ per person per day (Friedland, 1999).

After NAFTA, when a lot of foreign industries decided to invest in projects in Mexico, leakage to international corporations can occur, meaning that the revenue that is generated in the host country will be taken out of the country, usually to the country of the investors. Several studies have done research about the leakage rates regarding tourist expenditure. An IFC study found out that for underdeveloped countries the leakage rate is 55%, meaning that only 45% of foreign exchange earnings from tourism remain in the country. Though, according to a research undertaken by the World Bank (2003), in Mexico the leakage rate is less that 15% (World Bank), indicating that 85% stay in the country.

Corruption and well-connected political bonds that influence decisions are still common in Mexico. A significant lack of clear laws made bypassing rules easy in the past. For that reason Playa del Carmen, a once-lonely coastline has turned into the country’s fastest growing resort area (Friedland, 1999). As Roman Rivera Torres, real estate mogul and developer of the resort said, “I’ve never asked for permission”. Here, the community doesn’t profit. New neoliberal economic regulations have inhibited the agrarian sector by eliminating subsidies and restricting credit. A direct connection to the tourism industry can be seen, as inflated land and labor prices driven by tourism have constrained production. The average salary per month in the tourism industry in Cancún is more than twice as high for an unskilled worker than in the agricultural sector. (Torres, 2003) Also the local community does not necessarily benefit from the tourism industry due to “all-inclusive” vacation packages. The aim is to make people stay in the hotel area during the whole vacation period. With the creation of “all-inclusive”, there is no need for tourists to leave the hotel and the result is enclave tourism.

Infrastructural development needed for the tourism industry is another factor that can result in high costs for the government and the local tax payers. These expenditures could cause the regime to cut investments in other areas such as the health and educational sector. For Mexico, this applies with the development of the “super-highway” from Acapulco to Mexico City.

Further, as illustrated in Appendix C, global political issues can have negative effects on tourism demand. The terror attacks of 9/11 in the United States had a significant impact on the tourism industry in Mexico, due to the proximity to the US. As shown in the table in 2001 the growth of the tourism sector declined until 2003, and started to recover again in the following year.

Environmental Impacts

Although Cancún has been developed by the governmental agency FONATUR the National Fund of Tourism Development that has planned the growth of the resort and was implemented to ensure that there won’t be an overdevelopment, significant environmental impacts can be noticed.

Tourism industry cannot survive without environmental planning. Polluted water and destroyed beaches do not attract tourists. Cancún, originally designed for 300,000 people has reached the 500,000 mark in 1999. The lack of proper housing and potable water treatment will bring the city up to the breaking point in the next years (Friedland, 1999).


Tourism has always been one of the most attractive and interesting kinds of time spending for millions of people. Tourism, as an industry, is very profitable and is considered an economical savior for the countries, especially for those, which are not so strong from the point of view of industry and economic development, but are very attractive by their historical places and rich architecture. The tourism, especially the nature tourism, brings not only economic value; it is also rather dangerous ecologically, because tourism influence ecology of the countries in the negative way. The present paper is devoted to the discussion of the environmental impacts of tourism and contains discussion of economic benefits of tourism compared to its ecological impacts.

From an environmental point of view, tourism is one of the forms of nature usage. Tourism development requires an involvement of human activity in the natural resources. This produces a special kind of landscape - recreational. In many developed countries, areas used for recreation and tourism, are on the third place after the area of agricultural and forest lands. Rapid growth of the global tourism industry and its large economic benefits makes recreational use of land and promising ability to successfully compete and displace other uses.

Nature and territories of attention of tourists are vulnerable and fragile, and recreational resources are finite, they are irreplaceable and have limited opportunities. Their spontaneous and irrational usage creates a number of environmental problems in areas of intensive tourism development, both in industrialized countries and in developing countries.

For example, Mykonos Island in Greece is a famous tourist resort, during the last 30 years, that has rapidly developed. Together with the development of the tourism industry (accommodation, bars, etc.), the island's population has also increased, in contrast to other Greek islands, where the population has recently decreased. The main reason for the increase of the island population was the development of infrastructure (construction of ports, expansion of the network of roads, dykes, etc.). It also allowed more tourists and visitors to visit the island, leading to the gaps in such problems as traffic jams, lack of parking, increased crime, and pollution of water and land resources, especially in high season. At the same time, intensive construction, tourism and infrastructure development " absorbed " most of the island, and led to the loss of farmland. Uncontrolled and rapid development of tourism has led to a complete change of two traditional villages of the island, which were merged with the newly constructed villages, and turned into a large-scale residential areas, leading to degradation of the environment, local culture and changes in the socioeconomic structure (Mathieson and Wall, 2002)

The size of the negative impacts of tourism, which the economy of many countries is currently experiencing today, is huge and many countries do not have sufficient technical and financial capacity to replenish the resources used by tourists and for the disposal of their waste. Negative impacts of tourism on the environment, which has recently been underestimated, are now becoming an object of close attention of the international community. Such effects are varied and numerous : pollution of natural objects; consumption of natural resources; development of land; degradation of natural landscapes , threats to wildlife and habitats , with consequent loss of biodiversity , finally, the breakdown of local customs and social structures.

For example, Adriatic coast of Italy was devastated due to the rapid growth of brown algae. Because of the rising level of pollution due to excessive amount of tourists, the attractiveness of such a huge national park, as the Grand Canyon in the United States has significantly decreased. Some of the famous East African game parks have turned into a pile of dust by the tourists. Greece's national treasury, which used to be white marble Parthenon in Athens , is now a symbol of  the neglect of the environment, suffered from the severe pollution. The government has taken the action to restrict the number of visitors to avoid the environmental catastrophe in the future.

Along with the burning problem of pollution and changing environmental components that are the most urgent in such recreational areas as national parks, nature reserves and suburban green areas, where attendance of tourists destroy leaves, twigs, pine needles, in other words , components containing essential nutrients. Disturbing the natural cycle and natural regeneration processes, and destroying underbrush undergrowth reduces biological activity of the soil and stands density. It leads to unbearable environmental problems and negative ecological impacts. Expansion of hospitality and the construction of a tourist destination (huge hotels; ports, making changes in the beach resort, but in the sea itself; specially setting the equipped stations for mountain tourism, etc.) have also a detrimental effect on the environment (Mathieson and Wall, 2002).

Experience Yellowstone National Park in the United States, one of the first "cradles" of tourism, illustrates the contradictory tendencies that the development of such tourism may lead to. On the one hand, the mass of visitors coming with the main purpose to visit Yellowstone provides a very substantial income for the entire state of Montana, where the park is situated: during their visit, they use other services, such as restaurants, gas stations and hotels (Gartner, 2006). However, the rapid growth of tourism seriously changed the way of life of the local citizens; they are ready to come up with it, because it will bring additional economic values to their region. Although the level of life of local residents, as well as those of the whole state, has slightly increased, they have to put up with the construction of new roads, road congestion and flow of tourists, noise pollution, gassy and rapid growth of prices for lands and properties. The concentration of visitors in the park reached a critical level, so communion with nature (the main purpose of their visit) has become almost impossible.

Negative aspects of tourism development in protected areas are more widely noticed than its positive aspects, as they are more obvious. Increase in the number of tourists, unsustainable use of natural resources, construction of hotels and other activities related to tourism, impact the environment in considerably.

It is necessary to admit that unsustainable intensive tourism development often leads to some local environmental catastrophes. Simultaneously, the development of tourism depends mainly on the quality of the environment and natural diversity. Water and air quality, aesthetics of landscape and biological diversity are the natural components of the tourism, reproducible result in the functioning of the natural ecosystems. There is hardly any kind of business, which is more interested in the preservation of all components of the environment than tourism is. While destroying the environment, tourism reduces the possibility of its development. There is a contradiction: how to resolve the problem? Are modern hospitality industry professionals look for the ways of solution?

Reasons for environmental concern

Transportation of international tourists is now carried out by planes, which annually consume a huge amount of kerosene. Thus, in 1990, 176 million tons of kerosene was used, while 550 million tons of CO2 and more than 3 million tons of NO2 has been extracted (this is a huge contribution to the "greenhouse effect" and acid rain, in its turn) (Andereck, 2003). Secondly, the usage of vehicles, which use gasoline and produce the same effect.

Construction and creation of infrastructure for the hospitality industry has led to an almost complete loss of tourist and recreational attraction in a number of places, such as Malaysia, the Caribbean, etc. Tourists and their behavior are also a powerful factor, having the negative impact on the environment. It can also lead to local environmental disasters: the catastrophic degradation of vegetation, erosion, landslides, loss of beaches, etc.

Positive economic impacts of tourism

Examples of negative impact of tourism on the environment are numerous, but at the same time, tourism can have a positive impact and contribute to the sustainable development, providing welfare and social progress. If the tourism is properly organized, it can make a significant contribution to the preservation of environment and culture. For example, together with the development of tourism over the past 50 years, a huge amount of parks and natural protected areas appeared (today there are nearly 10 000 national parks) (Johnson and Barry, 2002). Tourism is a powerful incentive for the creation of water treatment facilities, garbage disposal mechanisms, and favorable environmental conditions are the basic requirement for tourism.

Economic advantages of tourism

The most obvious advantage of tourism is creation of jobs in hotels, restaurants, retail shops and transport service organizations. Types of employment in the tourism sector are varied, ranging from work in hotels, ending the tour guides and taxi drivers. In developing countries, tourism is the driving force in almost all sectors of the economy: agriculture, construction, industry, infrastructure development, as well as in education, culture, sports and entertainment industries. Tourism growth leads to increased local demand for commodity products and the development of local markets in each sector (Frechtling, 2004). Secondly, although being less beneficial, but still having the right for existence, the support of the industry and its professions (such as consultants of effective management, tourism and university teachers, etc.), many of which bring much more revenue.

A third advantage of tourism is a multiplier effect, as the cost of tourism is processed by local economy. Governments use the model of economic impact to evaluate how tourism has increased the number of jobs in the areas of goods and services consumption. The fourth advantage of tourism is federal and local income, received from the tax revenues from tourism (Frechtling, 2004). With the help of tourism, the tax burden is transferred to non-residents. For example, more than half of income from currency exchange and tax revenues in Bermuda is at the expense of tourism. Fee for ship loading in Bermuda is $ 20 per person, this is one of the highest in the world, the same concerns the taxes on imports of durable goods, starting from cars to refrigerators. This is one of the few developed countries where there is no income tax (Johnson and Barry, 2002). Critics of this tax argue that scheme of tax system organization is not representative and leads to reckless money spending and has little to do with tourism development and improvement of the hospitality industry. Hospitality management companies and managers on tourism should make sure that the taxes related to tourism, and their return will be invested in tourism promotion and development of infrastructure with the aim to support tourism.

Despite all mentioned above, the tourism has its fifth advantage: it stimulates the export of local products. Based on estimated costs for tourist gifts, products and souvenirs made of tissue and other raw materials are ranged from 15 to 20 % of their costs (Walsh, 2006). The extent, to which these products are manufactures or assembled in this particular area, provides an economic impact on the local economy.

Worldwide, tourism has become one of the most important sectors of the national economy. Revenues from tourism are growing, adding to the national budget. Being one of the highest and the most dynamic sectors of the economy, tourism takes only the second place after oil production and refining. For example, in South Africa, tourism takes the second place for adding to the budget revenues after diamond extraction. In Alaska, tourism ranks the second place among the sectors of the economy after oil extraction and refinery. On the tourism industry accounts for about 6 % of global gross national product is taken from tourism sector, it comprises7 % of global investment as well, 5% of all tax revenues.

Some places of tourism destination, however, do not equally welcome tourists. Some places are not rich in the opportunities for economic activity, because of the inconvenient location, bad climate, limited or poor resources and the size of their cultural heritage. For certain places of tourism interest, their involvement in the tourism business evokes mixed, and sometimes ambivalent feelings (Walsh, 2006). For example, Bali is concerned that tourism destroys its culture, as the countryside becomes a resort, and new professions destroy family values ​​. "Bali and tourism is a marriage without love ," - said one of the officials from the sphere of tourism, clearly pointing and underlying the dilemma of Bali: the destruction of culture and rapid economic growth on income from more than 500,000 tourists per year (Walsh, 2006). Londoners, in their turn, are in need of the Arabic tourists’ interest to their city, although they do not feel much enthusiasm about it. Many European capitals witness mass departure of local citizens, who are trying to escape from summer flow of tourists. Some participants of the hospitality industry benefit from tourism, while others do not. Although economy can considerably benefit from, people believe that lowering of the standards of living, inconvenience and loss of cultural and social values do not worth these benefits.


Conclusion from all the mentioned above is clear: there is a direct and very precise link between tourism and environment. Organizations, working in the hospitality industry should meet all the requirements to preserve proper environment. At the same time, no branch of the global economy, except, depends so greatly on the purity of the water, beaches, air and the ideal state of nature, such as tourism. For some people wilderness provides an appropriate quality of life, while for others, this is an incentive to travel around the world to see natural attractions (Johnson and Barry, 2002). Therefore, the tourism industry should be associated only with a rational and sustainable use of natural resources. Environmental degradation poses a threat on the viability of tourism and this threat stems from the activities of other sectors of the economy, as well as from the activities related to tourism itself. It is necessary to use natural resources considerably, paying special attention to the most vulnerable parts and territories. Moreover, tourism must be reasonable and do not cause harm to nature and its resources and preserve them. The role of the government in this process is to provide the laws and regulations for sustainable tourism development in order to prevent the major environmental threats, such as global warming, loss of biodiversity and destruction of landscapes, pollution of coastal waters and freshwater shortages and air pollution.

Reference List

Andereck, K. L. (2003). The Impacts of Tourism on Natural Resources. Parks and Recreation, 28 (6), 26- 32.

Frechtling, D. C. (2004). Assessing the economic impacts of travel and tourism Measuring economic costs. In Travel, Tourism and Hospitality Research, second edition. J.R. Brent Ritchie and Charles R. Goeldner (eds). New York: John Wiley and Sons Inc.

Gartner, W. C. (2006). Tourism Development: Principles, Processes, and Policies. New York: Van Nostrand Reinhold.

Johnson, P. and Barry, T. (2002). Choice and demand in tourism. London: Mansell

Mathieson, A. and Wall, G. (2002). Tourism: Economic, Physical and Social Impacts. New York: Longman House.

Walsh, R. G. (2006). Recreation economic decisions--Comparing benefits and costs. State College, PA: Venture Publishing Co

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