A heatwave and holiday bookings
On 25 July 2014, The Guardian printed the headline 'July heatwave boosts UK holiday bookings'. A spell of hot weather changed how many people decided to book a holiday. Tourism reacts fast to events like this. When bookings rise or fall, the change spreads to hotels, airlines, restaurants, shops and the governments that collect taxes from them.
Tourism is one of the clearest places to see globalisation at work. Companies from one country build hotels and airports in another. Money moves across borders. Tourists carry their own tastes and habits with them wherever they travel.
All of this raises one big question. Who really gains from globalised tourism? It could be the large companies, the host country's government, local people or the tourists themselves.
Transnational corporations (TNCs) and franchises were introduced in the lesson on how globalisation shaped the world. Those same companies now play a central part in building tourism in poorer countries.
TNCs and foreign direct investment
Many of the world's tourist destinations are in low-income countries (LICs), introduced in the lesson on how globalisation shaped the world. In these countries, TNCs have become very important in developing tourism.
Governments in many LICs see tourism as a route to economic development. As a result, many have changed the kind of economy they have. They have moved away from relying on farming, mining or factory work and towards providing services.
An economy where most jobs and income come from providing services, such as tourism, retail, transport and banking, rather than from growing crops, extracting raw materials or making goods.
To build a tourism industry, a country needs money. One way to get it is to let foreign companies invest.
Money that a company from one country puts into businesses or projects in another country, for example building a hotel or an airport.
A new resort is of little use if visitors cannot reach it or if the taps do not run. So when TNCs invest in tourism, they often build or improve the infrastructure around it:
- transport links, including airports and good roads
- better water and electricity supplies
- improved sanitation
- sometimes schools and hospitals
These improvements do not only serve tourists. Local people can also use the roads, the clean water and the electricity. This is one reason governments welcome TNCs.
FDI is not the only option. A government can also borrow money (take out loans) to pay for infrastructure itself. Both choices bring benefits and costs.
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