Many municipal leaders are curious how to build a vibrant tourist economy. However, not all municipal leaders are convinced—nor should they be. A municipality that has not thought through the economic impacts of their tourist economy can create more problems than solutions. However, with thoughtful intention, stewardship and consistent quality of life metrics and measurement, many areas can reap the benefits of tourism without

For those that are curious, the section below highlights the chain of economic variables that tourism can impact an economy. To summarize, a vibrant tourist economy will impact all of the top line metrics of a community, including income growth, employment growth, population growth, real estate property value, local economic output growth, and a higher quality of life.

However, a tourist economy that is not nurtured and grown is, unfortunately, to see any economic windfall from their tourist activities. For every economy that has grown a tourist economy, there are others that have not been able to harness the virtue of their tourist activity.

While a tourist area may be considered a missed opportunity if it is not nurtured, there are even greater challenges that must be considered before a community fully-embraces tourism as part of their identity. The areas that do not closely measure and evaluate their tourist industry could see their own property values skyrocket wherein the local residents can no longer afford to live where they want to live. Employers may not be able to find capable employees. Unfortunately, there are also countless examples of communities divided over housing, leading to an undesirable quality of life for all residents.

Positive Impacts of Tourism

How does tourism affect the economy?

Unfortunately, everybody’s favorite answer is… “it depends”. That was very likely not the answer you were looking for, but it is an honest assessment of tourism’s impact on an economy. Tourism can be a positive impact to an economy, but it can also be a negative impact to an economy.

How the community deploys and supports the economy is actually the critical factor. For every economic success story rooted in tourism, there are countless other horror stories to match. Using tourism to create a vibrant economy requires thoughtful consideration, consistent management, and a commitment to a higher quality of life for all residents.

There are some recurring economic development patterns based on tourism that should be considered. From the research, an area that creates a tourism activity has created an opportunity for future sustained economic growth. However, if the economy, the community, and the sector are not closely measured, it can create undesirable effects on the current citizens’ quality of life.

An effective way to think of a tourism economy like a chain of fireworks with a very long connected fuse. Unfortunately, not every area has a compelling tourist activity that persuades visitation from outsiders. But, if the economy does, the first economic/social indicator to reflect this reality will be a little bit of income growth by existing business owners. If this tourist activity is likely to sustain, the second firework to ignite will likely some level of employment gain, albeit initially in part-time service work. Again, if the area is fortunate enough to sustain the tourist activities this will fire the third firework that is new business starts. It is about this time that the tourist area should start seeing some growth in cyclical economic services concurrently. Eventually, an area will see recurring tourists (perhaps even with real estate investments in the community). The last economic and social needle to move is the increase of population. However, at each step in this cog, the community has another opportunity to further entrench their economy as a tourist economy. In all cases, municipal leaders should consider themselves stewards of their community helping to maximize growth, prosperity, and quality of life for their residents.

Unfortunately, many municipal leaders in tourist areas do not fully understand the mechanisms, the metrics, and the outputs of a tourist area. Without understanding the overall economy, how to foster growth, and without good data in hand it becomes increasingly difficult to make informed decisions.

Tourism Stewardship

What are the negative impacts of tourism?

It is our pragmatic side that forces us to write this section about the downside risks of creating a tourism-based economy. However, we will say that there is copious research out there to help areas make sure that their downside risks are remediated. That said, there are a few examples historically of tourism activities “being discovered” and areas “being overrun”. The chances that this can happen are very small. Most municipalities and communities have a shot to create vibrancy in their economy while concurrently improving overall quality of life.

The biggest challenge communities face in creating their own tourist economy is themselves. Not every community wants to be a tourist economy. Even within a tourist economy, there are very likely to be people who do not have a positive viewpoint on outsiders in their hometown. Managing these expectations openly and effectively throughout the community is essential to long-term success. If the community can embrace their role as a tourism service provider, they next have to set expectations about the pace, the investment, and the perceived outcomes (preferably with the help of an outside expert).

Many tourist activities are focused on natural resources (mountains, coasts, forests, rivers, lakes, etc…). If these areas are not closely protected, there could be environmental damage and the very center of the tourist economy may be depleted or deteriorated.

The section above outlines how tourism is likely to impact an economy. At each step in this chain, there is potential for the tourist economy to lose its footing. In that case, those that had made strides to support the economy would likely be disappointed with those that quelled the enthusiasm. To think about this construct, imagine an area is starting to lure in outside tourists every Autumn. An enterprising person might become a realtor to help these outside tourists find investment properties. However, certain areas have passed legislation outlawing investment or short-term housing products. This new realtor is likely to be quite disappointed. This area, unfortunately, is likely to have a disappointed community and this disappointment is likely to create a lower quality of life. Thoughtful, collaborative, and open planning with consistent measurement and evaluation is essential to ensure the highest quality of life.

Quality of Life, by Design

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