Prospects and Problems of Tourism Services Industry, Invisible Exports, Development of Underdeveloped Areas Part 2

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Tourism Services Industry: Meaning and Impact

Tourism is highly labour-intensive industry of a unique type. It provides different services needed as well as expected by the incoming tourists. At the world’s level, it is one of the largest in terms of money spent by tourists in the countries they visit. This amount is said to exceed the GNP of many countries with the sole exception of the USA.

According to the latest estimates of the world travel and tourism council, this industry is expected to generate about 6 % of India’s total employment.

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Prospects and Problems of Tourism Services Industry

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In the year 2004, about 11.5 million people forming 2.4% of our workforce are directly employed in the hospitality services related to tourism industry. These workers are employed in hotels, restaurants, bars, transport services running for tourists along popular trunk routes, and in gift or souvenir shops at tourist spots. A major chunk of directly employed workers look after catering all matters of accommodation and different modes of transport for tourists in the host country.

Indirectly, over 13 million people are also employed, part or full time, in numerous related services of secondary nature in this every year. In other words, 47 out of every 100 workers in this industry serve the tourists directly in hotels and 53 are absorbed indirectly either through an organisation or are self-employed in related jobs within tourist areas. Looking ahead, the economic impact of all this is expected to generate a total of about 28 million jobs by the year 2014. It would give a jump of more than 2½ times to income over its total in 2004, based on growing demand for travel and tourism. Outside the direct tourism sector, indirectly available jobs are no less lucrative. They pertain to the plying of taxies or luxury coaches in local areas, provision of guide or interpreter, folk artists, craft dealers, other transacting financial services, the supplying of sports and photographic equipment of current tourist interest. Additional jobs come up in laundries, medical stores, and shops dealing exclusively with tourists, in toiletries or cosmetic goods.

It is proper to say that tourism is neither a single nor a specific kind of industry strictly located at a particular site. It is the sum total of a host of services rendered to the tourists as soon as they start gathering information from the host country through any medium. Publicity services are run by tour operators of the host country to help tourists in preparing the plan schedule to visit the places of their choice. Trained chefs and other professionals look to their comforts during stay in hotels. Guidance services take up the duty of showing around the tourist sites. Salesmanship is no less important as a customer service supplied though a chain of stores selling articles ranging from jewellery, garments, furnishings, or decorative art pieces which tourists like to carry as gifts or for their own use.

Such a development of multifarious service industries is least expansive and for less difficult to manage as a part of economic activity. The biggest resource required to operate such an industry is human ingenuity and a creative skill. Compare it to the development of an area through agriculture or manufacturing demanding huge investments to exploit the required resources.

In course of time, tourism by itself starts contributing to further growth of infrastructural resources that it needs. There are the means of transport, communication network, transmission lines for electricity, generator sets or transformers, and water storage tanks within the run of the local tourist area.

As an industry, tourism creates its demand by attracting tourists on the one hand. On the other hand, it starts providing market for a number of other industries. Agriculture, manufacturing, building, and road construction works get boost from increasing demand of tourism. More of hotels and motels opened in an area mean multiplication of a number of interconnected service industries, one following another. Even a visit to old monuments, building a machine (engines) of historic importance is included in what is now called the “heritage industry”. The name is appropriate because we earn out of them just as we sell any other industrial product.

It enlarges the scope for the work of advertising bureaus and visual media as well as for the government’s tourist departments to lure tourists in even increasing numbers. The side benefits create new sources of income and jobs for the people in an area. Both these outcomes become factors in the development of the area.

According to one estimate, an investment of one million rupees generated generally through the promotion of domestic tourism, creates 89 jobs in the hotel sector alone. In comparison, the same amount creates only 45 jobs in agriculture and 13 jobs in the manufacturing sector.

As the network of tourist services grows, the distribution of casual or seasonal employment for a large number of self-employed people becomes widespread all over the area around the places of tourist interest. Travel and tourism are growing, twice faster, as the world’s largest economic force in the Asia-Pacific region. As it has now caught our attention, its boom would no longer by-pass India. It stands as a hard fact that one million regular jobs in tourism sector can alone generate revenue to pay 40% of the entire bill of costly petroleum products of India a year. Foreign exchange earnings through tourism will additionally meet this bill.

Invisible Exports

The services rendered to foreign tourists visiting India are the invisible products of tourist industry. These products, i.e. hospitality services of all sorts for tourists turn into invisible exports because these are included in this category without turning Indian soil. More the foreign exchange earnings, greater is the gain. In the same manner more than number of visitors from foreign countries, more is our foreign exchange earnings. The host country has only to provide all possible facilities to the quest visitors to keep them entertained and in a holidaying mood for the longest possible period in hotels. Longer is their stay, more money they will spend and their earning is passed on to us.

Though our services to the tourists are nowhere appearing as tangible articles in international trade, we succeed in getting cash from them just as we get from the export of other goods. As the same time, the creative items like art pieces fabrics in indigenous designs including heavy goods like carpets and a lot more, do not fail to carry an appeal for the sightseers. Their sale in India itself is an additional advantage. By exporting the same product through an agent, our profit gets reduced.

More the foreign trade of a country more is the number of tourists, including a large number of business entrepreneurs and professionals by way of their frequent visits. This has given a boost to our tourist industry. Travel tourism creates its own market because many tourists are themselves traders. The money spent by a foreign tourist in India offsets the losses incurred because of an adverse balance of payment position. Export in the form of our tourist services has risen to 1.3% in year 2004 from a mere 0.6% in 1990. Among most of the developing countries of Asia and Africa we have become the second fastest growing tourism economy in the world. Next to readymade garments, gems and jewellery, tourism is our largest export item in terms of its earnings. While in the case of jewellery etc., 75% is the import component, less than 7% is spent on promoting tourism by our overseas publicity bureaus. It clearly retains 93% of each dollar earned from tourism.

Development of Underdeveloped Areas

The travel of foreign visitors in our country forms the basis for development of tourism as a kind of India’s export industry. It is a key to raise the level of economic activity through the sale of products and services to travellers. Away from the centres of mass production, each local area is known for some specimen of its craftsmanship which catches the fancy of the tourists. More the number of visitors, greater is the demand for sale of a variety of such articles. Correspondingly it increases the opportunities of employment in local areas. These advantages are of special interest to the relatively underdeveloped areas within the country.

The non-industrialised or partly industrialised areas are largely populated by peasants practising subsistence type of agriculture. There is a general scarcity of alternate resources which can be utilised for productive economic activity in such types of areas. Such areas form pockets of various sizes widespread throughout the length and breadth of India.

A part of the amount of expenditure spent by foreign tourists during their stay is left as a direct source of income for the local residents. The money paid by the visitors to business people turns into wages of workers used for their services.

The development of tourism provides at least seasonal employment to the young unemployed people and a side job to the women or the elderly persons. The craftsmanship gets revived. At the country level, the list of such products is very long. Even the articles looking just very ordinary arouse the interest of tourists. These are sold like hot cakes in the tourist markets at a handsome premium.

The youngsters from these areas usually migrate to urban centres to seek jobs. In course of time, the sale of locally produced things and the jobs created for serving the incoming tourists halts the drift of the youth from underdeveloped localities. Tourism creates new sources of income for investors, landowners, and banks. It increases the scope of more taxes for the government. This happens rapidly when projects of building or renovating the tourist resorts are undertaken. Money starts flowing in both from the public and private sources. Bank may go in for raising loans in order to take up such ventures. This money or the capital resources were earlier concentrated in a few highly industrialised regions. They start getting transferred to the underdeveloped areas.

Recreative tourism thus helps to filter down the growth of economy from national to lower order regions and to local levels. The trend corrects the regional imbalances of development considerably in the long run.