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Invigorating Local Economies with Tourism

By Chelsea Souter

Imagine your last memorable vacation. Now imagine your trip if you had known it provided jobs that protect nature, grow local economies, and nourish communities. Makes it feel that much better, right?

Currently, 40% to 80% of each dollar spent by a tourist leaves the area it is spent in. It doesn’t have to be this way. There are ample opportunities to break down local market barriers, allowing more tourist dollars to stay within local economies. Clusters of economic development can be created to support tourism while enhancing local economies. Take a hotel for example: the food in the restaurant can be purchased from local farmers, the artwork in the hotel can be crafted by local artisans, and the tours provided can be led by local guides. These are just a few methods a hotel can use to create competitive advantage, maximize the value chain, and create a unique guest experience.
Not only would individual hotels benefit from going local, but the communities in which they are located would improve as well. Money spent locally can grow local businesses and create demand for new enterprises. Keeping money in the local economy creates a multiplier effect; it provides stable incomes, grows individual wealth, and supports other local businesses. As an additional incentive, it enhances the customer experience by providing an authentic representation of the chosen destination.

Tourism done right has the power to radically change the world. Why? Because it is big business. Tourism accounts for 11.7% of global GDP and is growing on average 1.3 times faster than the global GDP. Tourism is unique in that it is big business done by small players. Over 80% of global tourism activities are performed by small to medium-sized enterprises (SMEs), unlike other large industries, in which huge, global companies dominate.

With this growth in tourism, travelers increasingly have the opportunity to do both great good and great harm to the local communities, traditional economies and delicate ecosystems that draw tourists. Tourism is not being leveraged properly to drive sustainability, but this can change. By engaging more locally, tourism can invigorate local economies, and help in the transition towards a sustainable service based economy.


Chelsea Souter holds her MBA in sustainable management from Presidio Graduate School and has a strong interest in impact investing, international sustainable development, and storytelling for implementation.

Chelsea Souter is a social impact strategist devoted to implementing business strategies that increase competitive advantage while creating positive societal benefits. You can follow her musings on organizational design, behavior change, leadership development, shared values, responsible tourism, and storytelling @ChelseaLura.

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