The Travel and Tourism (T&T) sector is an industry that not only provides unforgettable experiences for travelers but also plays an important role in shaping the economic landscape all around the world. Its impact extends far beyond offering exciting vacations; it significantly contributes to the growth, development, and sustainability of economies.
The 10-year forecast by The World Travel and Tourism Council expects travel industry set gain US$15.5 trillion, which brings more than 11.6% of the global economy to increase by 2033. Due to the pandemic, Malaysia’s ranking based on TTDI 2021 results showed a large decline in the Travel and Tourism Sector (T&T). However, despite the large decline over the last two years, the country’s economy is predicted to grow by 2.9% in the second quarter of 2023. Globally, the high-income countries secured the top 10 spot for the Travel and Tourism Development Index (TTDI) 2021.
Here are the factors that contribute to the economic impact of the travel and tourism sector:
Creating Job Opportunities
Job creation is one of the most evident ways to boost the economy through the travel industry. Employment opportunities within the T&T sector play a great role in driving economic growth and prosperity. For example, job opportunities in hotels and accommodations can include housekeeping, chefs, marketing specialists, concierges, or even relatable experts in the field. The economy can be boosted in several ways when there are job opportunities. Through this, profits bring to the economy are such as from employed individuals who will spend their earnings and businesses tax.
Infrastructure Development
Interesting destinations require an investment in infrastructure development in order to attract tourists. This can be done by upgrading airports, roads, public transportation, and cultural attractions. However, digital infrastructures, which is an Information Communication Technology (ICT) tools, are also important in this technology-driven era. For example, training planning mobile apps can help tourists obtain real-time updates on flights, book hotels and track their travel expenses.
Better infrastructure such as having a better transportation that is energy-saving will reduce electric bills. Reduced costs helps both individuals and businesses to increase remaining income and increase economy. This infrastructure investments not only enhance the travel experience but also improve the overall quality of life for the local residents.
Tourism
Travelling involves a wide area of industries such as hospitality, transportation, entertainment, food and beverages, retail and more. When tourists are travelling to a country, they will spend their money on basic necessities such as foods, accommodation, transportations and activities that will bring an improvement to not only towards the businesses and individuals, but also to the country’s economy.
Foreign Exchange Earnings
This earnings are gained from the sellings of goods and services or by exchanging currencies in global markets, which can strengthen a country’s currency and stable its balance of payments. It is as simple as spending the currency into another country. A country with strong foreign exchange earnings can attract foreign direct investments. As an example, a country with growth in software and IT services exports has attracted investors since countries with stable and growing foreign exchange earnings are seen as more attractive to them.
Cultural Exchange
When tourists come to visit to a country and meet people with different backgrounds, this will promote cultural exchange. These tourists often travel out of their country to come and discover, explore and learn about local cultures, trying out new foods and participating in local cultural events. Getting engage with the locals can promote the exchange of stories, ideas and feelings that will create bonds and understanding of the diversity in the communities. Through these new connections, this will develop stronger diplomatic ties, inread trade and investments, which will benefit the economy.
Diversify Economic Base
For a country to be stable and prevent from getting economy vulnerable to fluctuations, the country should not focus on one industry only. By adding travel industry and prioritizing it, it will help the country as a buffer to maintain stability and growth during economic downturns. For example, when a country offers tourism with outstanding landscape, it will not only just offer that. They will also provide outdoor adventures and cultural immersion such as going for a hike and listening to local music. This diversification will improve the residents living standards.
Putting the travel industry first can be a powerful move to boost the economic growth. It increases job creation, infrastructure development, and foreign exchange earnings, while also fostering cultural exchange and diversifying the economy. However, it is essential for country to approach tourism with sustainability in mind to ensure a long-term prosperity of both their economies and the tourist attractions themselves.
