Effects of Tourism on the United Kingdom's Economy - Essay Example

TOURISM AND THE UK ECONOMY (Student Name) (Course Number) (University) (Date) Introduction In many areas of the world, people travel from one place to another or even one country to another to experience nature and view the existing sceneries. The tourism industry is one of the important contributors to the economies of some of the richest nations in the world. Generally, tourism can be defined as the movement of people from one place to another, outside their normal environment within a duration of less than one year. The main aim of tourism is commonly for leisure and business purposes. The tourism industry is characterized by constant changes. Hence there is the need adapt to the changing consumer needs to realize customer satisfaction (Aramberri and Butler, 2004, p. 9-12). Tourism takes many different forms (Sharma, 2008, p.10-25). One is the inbound or international tourism where people from different countries visit a particular country to experience nature and enjoy themselves. Domestic tourism, on the other hand, takes place when the locals within a country or province visit place within the country for pleasure or business reasons. The tourism industry, therefore, is characterized by many sectors with the main aim of provision of variety of products and services to visitors as well as the local residents of the given area in which tourism is practised. Situated in Europe, the United Kingdom is among the greatest tourist destinations in the world today. According to the UK Tourism Statistics, 2015, the country is rated as the eighth largest international tourism destination accounting for approximately 3.5% of the international tourism receipts after other countries such as Germany, France, China and Italy. This shows the massive contribution that the tourism sector has on the gross domestic product of the United Kingdom. Important to note is that people will not travel far and wide to visit a place if has nothing attractive to offer. The United Kingdom has an array of attractive sceneries such as the Buckingham Palace in Westminster, which is the centre of the monarchy of the United Kingdom. Other areas of attraction include; the Tower of London, St. Paul’s Cathedral, the Edinburgh Castle, the Legoland Windsor Resort, London Eye and the Hampton Court Palace among others. The museums and art galleries in the United Kingdom are also some major tourist attraction sites. International students, as well as other tourists, visit the museums to learn about different things such as the cultures of the indigenous people and for research purposes. Among the museums commonly visited in the United Kingdom are the Science Museum, the British Museum, the Natural History Museum and the Victoria and Albert Museum. The Tate Britain, Tate Modern and the National Portrait galleries are also the most commonly visited. One of the important activities that tourists in the United Kingdom engage in is walking or even strolling. The tourism sector, therefore, provides parks and open spaces where the visitors can walk, have picnics and relax. Among the most commonly visited parks in the United Kingdom are the St. James Park, Greenwich Park, Regent’s and Hampstead parks. All these beautiful sceneries attract visitors to the United Kingdom, making it one of the largest countries, whose economy is impacted greatly by the tourism industry. The tourism industry contributes significantly to the economy of the United Kingdom, currently accounting for 9% of its total gross domestic product. This contribution is accounted for in three ways. One is the direct industry which include the businesses associated with the tourism activities and contributes to 4.1% of the total GDP of the United Kingdom. The other measure is the tourism economy which accounts for 9% of the GDP. These include the impacts of the tourism industry resulting from its interaction with the other businesses in the supply chain. This is as a result of the ability of the tourism industry to relate with other sectors of the economy, as other sectors sell to or buy from the tourism industry. The last measure of the tourism industry in the United Kingdom is the total contribution of the tourism industry which includes the expenditure of the employees as well as the indirect contributions of the tourism industry to the gross domestic product of the United Kingdom and accounts for 11.4%. Discussion Effects of tourism on the economy The tourism sector has a number of positive impacts to the economy of the United Kingdom (Ryan, 2003, p. 54). One of the important contributions of tourism to the economy of the United Kingdom is foreign exchange earnings. Owing to the multiple beautiful sceneries, parks and open spaces, museums and the world class hotels that are found in the United Kingdom, it is able to attract tourists from different parts of the world to enjoy these attractions offered. To pay for the experience in the UK, the tourists exchange their currencies into sterling pounds. As a result, the country has more foreign currencies that can be used in national development such as the provision of better health care as well as further stimulation of economic development. In 2013 alone, for instance, the United Kingdom received 32 million visitors who spent 17.2 billion dollars. Another significant contribution of tourism to the United Kingdom’s economy is the creation of jobs (Mitchel and Ashley, 2010, p. 33). The tourism industry contributes to the creation of job opportunities form the citizens of the nations within the United Kingdom, increasing their living standards, thus increasing economic development. Borrowing from regression analysis, the amount of money required to create a job in the UK is 54000 sterling pounds. This means that a 1% increase in the tourism industry expenditure results in a 0.89% increase in employment (Sharpley and Telfer. 2015, p. 77). Since 2010, as part of recovery from the financial crisis, 900, 000 jobs have been created in the United Kingdom, 300,000 of which are in the tourism sector (Great Britain, 2013, p. 3-12).This makes the tourism industry in the United Kingdom the third largest employer with an average of 3.1 million employees and catering for 9.6% of the total employment in the UK. This way, the tourism industry empowers the locals through creation of employment opportunities leading to improvement in the living standards of the people hence increased economic development. The tourism industry employs hoteliers, tour guides and other professionals, improving their living standards (Seth and Bhat, 2008, p. 127) Another important contribution of the tourism sector in the economy of the United Kingdom is through the multiplier effect. The multiplier effect is the relationship that exists between the direct, indirect and induced effects of the tourism industry (Matias et al., p. 4-10). The amount of money spent by a tourist in the UK for instance, spreads throughout different sectors of the economy. The multiplier effects can be income, employment and output and government revenue multiplier. For instance, the amount of money spent by tourists in a hotel in the United Kingdom is used in paying off the employees, repairing damages within the hotel and buying new items for use within the hotel. The employees can spend the amount of money earned on meals in cafes, which is used by the café owners in buying more food products. The money can also be spent on a taxi for transportation home, part of which the taxi operator can use in the purchase of fuel. The employees must also pay rent in the places where the landlord can use in in repairing the house or save it for future use. Through the multiplier effect, therefore, the tourism industry generally contributes to almost all sectors of the economy of the United Kingdom, thus contributing to its overall GDP (Dale, 2005, p. 31). Another impact of the tourism industry in the United Kingdom is the promotion of trade (Cole and Morgan, 2010, p.87). The tourism industry has led to the growth of the businesses especially in the service sector thus allowing the exchange of goods and services. The growth of other sectors of the economy such as the transports sector which supports many local employees. The other sectors of business that are impacted by tourism include the hotel industry. In the last three years, the visitors export has increase in the United Kingdom resulting in increased trade and entrepreneurship within the region. The tourism industry also increases foreign direct investment hence increasing trade between the United Kingdom and other countries hence resulting in the GDP growth. The other positive impact of tourism in the economy of the UK is increased government revenue.one of the strategies in which the government of the United Kingdom earns revenue is through taxation on tourists and tourism activities (Dwyer and Forsyth, 2006, p. 251). Among the taxes charged on the visitors departing from the United Kingdom is the air passenger duty in which the government gets up to 3.1 billion sterling annually, an amount which is expected to increase in the future. The government also taxes travel documents such as visas for the passengers travelling to the United Kingdom as well as value addition on accommodation and cultural attractions. Although the tourism industry has an array of positive contributions to the economy of the United Kingdom, the industry may also portray some negative effects on the economy of the country. One of the disadvantages of tourism to the United Kingdom economy is the seasonality aspect (Page and Connell, 2007, p. 50). The tourism industry is not an everyday business but has its peak seasons. The off tourist season in the United Kingdom commonly causes reduced foreign exchange and reduced business in other sectors of the economy such as transportation, hence resulting in reduced economic growth caused by reduced returns to investments. Secondly, the tourism industry also impacts negatively on the economy of the United Kingdom through the creation of new costs. Tourism commonly comes with a lot of expenses for the host country. For instance, increased tourism and related activities results in increased utility services such as gas supplies, sewage and garbage collection which require money to do. Also, the tourist attraction sites need regular maintenance, which is also necessary for other sectors such as transportation (Great Britain, 2011, p. 150). All these require that the tourism industry, as well as the government, put money aside for such activities, hence economic losses. With regards to the above discussion, it is evident that the tourism industry is one of the major contributors to the United Kingdom gross domestic product. However, the sector faces economic challenges that should be addressed in order to make to make the industry more economically sustainable. There is the need to address these challenges to increase the competitiveness of the UK tourism industry hence increasing its rank to the best tourist destination in the world. References Aramberri, J., & Butler, R. (2004). Tourism development: issues for a vulnerable industry. Clevedon, Channel View, p. 9-12 Cole, S., & Morgan, N. (2010). Tourism and inequality: problems and prospects. Wallingford, Oxfordshire, CABI, p. 87. Dale, G. (2005). BTEC national travel & tourism. Oxford, Heinemann, p.31. Dwyer, L., & Forsyth, P. (2006). International handbook on the economics of tourism. Cheltenham, UK, E. Elgar, p.251. Great Britain. (2013). A Severn Barrage: second report of session 2013-14. 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