5 Ways Tourism Can Support Local Economies

“I pledge to buy local — including food, experiences, and guides.”

Although now widely echoed among proponents of “pro-poor tourism,” Lelei LeLaulu, an advisor for the World Bank, Clinton Foundation, and others, first audaciously posited that tourism is “the largest voluntary transfer of cash from the rich to the poor, the ‘haves’ to ‘have nots,’ in history.”

There’s a strong case to be made in this regard. Even taking into account criticism about how tourism impacts water scarcity and waste management in developing areas, the industry is a major global employer. WTTC’s latest annual research, in conjunction with Oxford Economics, shows Travel & Tourism’s contribution to world GDP outpaced the global economy for the sixth consecutive year in 2016, rising to a total of 10.2% of world GDP (US$7.6 trillion). The sector now supports 292 million people in employment — that’s 1 in 10 jobs on the planet.

What’s more, governments around the world are using tourism to create an undeniably positive impact on local communities. Just last year China announced it will move 12 million people out of poverty through tourism development programs that will provide jobs to more people in rural areas. Travellers consciously exercising their purchasing power can effectively redistribute money from the developed world into developing countries. And while tourism in general spreads the money, it’s local-level tourism specifically that has such a profound effect on poverty alleviation — and it’s here that travellers and the industry must more fully commit to using tourism for good. There’s a lot of room for improvement in both the industry, and in traveller spending habits on the road.

Researchers found that “in Thailand [an] estimated 70% of all money spent by tourists ended up leaving Thailand (via foreign-owned tour operators, airlines, hotels, imported drinks and food, etc.). Estimates for other Third World countries range from 80% in the Caribbean to 40% in India.” This trend, dubbed ‘tourism leakage,’ stems from all-inclusive travel packages that prevent travellers from interacting with local communities — meaning “not much opportunity is left for local people to profit from tourism.” [UNEP]

But there’s hope that the trends are shifting towards local travel. The increasing demand for authenticity and experiential travel contributes to a corresponding push to provide travellers with locally-run tours, restaurants, and shopping locations. In a 2014 Skift Special Report, surveys showed that in both the UK and U.S. markets, “younger travellers are thinking about local tour firms to give them more authentic, deeper travel experiences.”

The rise in experiential travel trends nicely dovetails with the need for travellers to commit to spending money within local economies. Millennial travellers are pushing the trend towards local travel according to trend data from the UN World Tourism Organization and the ABTA. “Living like a local” is increasingly popular, and cultural travel is experiencing a renaissance among travellers seeking deep and personal connections with the people they meet on the road. Travellers increasingly see local offerings as a way to ensure meaningful and transformative travel experiences.

But What Constitutes Local Travel?

Since we noted that multinational companies account for much of the tourism leakage found around the world, it begs the question of what, exactly, constitutes a local travel experience. Does local mean products and services originate from the country, from the region, or from the town/village? In truth, local travel encompasses all three, and more.

There is no single definition or set of standards where local tourism is concerned, instead it’s an ideal with a lot of room for interpretation. Local travel means tourism that leaves money in the hands of those living in your touristed destination. This could be on a national level, say if you book a tour operator based out of the capital city who then runs tours into rural regions. Or local tourism means very clearly supporting those business run with a few miles of your hotel — family-owned businesses or social enterprises. The underlying theme of local travel is ensuring that your tourism dollar enters the money transfer cycle.

There is no standard tourism model, instead you can look to case studies to a better idea of locally-run businesses with models specifically built to maximise the positive impact of each tourism dollar spent. There’s an innovative microfinance tour operator in southern Mexico, or a fair-trade coffee tour in Thailand. Local travel is about touring a farm in Panama to ask the farmer about the origins of chocolate and finding creative ways to leave your tour route or packaged hotel and support those locals living in your destination.

Think about the supply chain that it takes to provide you with a local souvenir or handicraft. When making conscious spending choices, you can select a shop that guarantees that a large percentage of money from your souvenir purchase makes it directly into the hands of the person who carved, sewed, or crafted it. In many cases, artisans directly offer souvenirs to travellers through personal booths or shops, or they join fair trade cooperatives. With these cooperatives, even the fee going to the reseller is often a local. Every stage of the dollar is staying within the country. Even more, many fair trade collectives employ artisans from rural regions, sending the money into these remote communities where the money from your purchase pays a family’s school fees, buys local produce at the village’s market, and generally circulates more money through their rural economy. It’s a scenario where instead of shipping the money out of the country through a multinational company, the dollars pass through many hands and in turn provide many people with the direct and indirect effects of responsible, sustainable tourism.

And while these smaller shops are the obvious choice to support for responsible travellers, what about those big name companies and tour operators? Just this year Airbnb announced it would offers travellers the chance to book local tour experiences. The move makes good business sense. The Airbnb platform already gives ordinary citizens access to the sharing economy for accommodation, so the shift into experiential travel isn’t a far leap. Business-wise, there is demand. The United States Tour Operator Association found that an increasing number of “travelers today are looking for more immersive experiences, [and] the rise in demand is spread across both emerging and traditionally popular destinations.”

For travellers conscious of spending money within local communities, Airbnb falls within an ambiguous middle-ground. Based in San Francisco, Airbnb’ vice president of product Joseph Zadeh noted that Airbnb takes a 20% cut from all local experiences booked through the platform. While arguably a reasonable rate compared to many booking websites, local travel tends to emphasise keeping all of the money directly in those local communities offering the goods and services. That doesn’t happen with this new model, and yet there is a real case to be made that a platform like Airbnb gives travellers unprecedented access to vetted local experiences since it can be difficult for travellers unfamiliar with a new location to know exactly where and how to access these local services

There is no easy answer here for travellers or for T&T. Programmes like the Ritz Carlton Community Footprints initiative — which creates projects around the issues that are important to the communities where it operates — is undoubtedly good for the hotelier, the travellers, and the local community, too. The Ritz Carlton gives high-end travellers a way to know a portion of their hotel fee is staying within the local community, and that’s a step in the right direction.

As the global push for sustainable tourism takes center stage this year, every side of the tourism industry, from travellers to corporations to destinations must come together to offer cohesive travel experiences that emphasize responsible actions across the board.

3 Ways Travellers Can Support Local Businesses

No matter which style of vacation you choose, seek ways to support locally-owned restaurants. This money will travel not only to the restaurant, tour operator or shopkeeper, but it infuses money into the local communities, sending ripples of economic support throughout the business’ entire local supply chain. Here are three ways you can commit to leaving more money behind on your next vacation:

1. Eat in a locally owned restaurant at least once during your stay.

2. Take a walking tour using a local guide in each destination you visit.

3. Buy souvenirs made locally in your destination by locals.

There are no shortage of opportunities to infuse your cash into the local economy. From the moment you leave your doorstep, you have the chance to make spending choices that directly impact how much of your money heads towards multinational corporations, and how much stays within the city, region, and country, thus empowering local entrepreneurs and boosting the local economy. It takes a strong commitment and follow through to ensure that you are making conscious and deliberate spending decisions when you travel.

This post is part of a series about the various pledges that are part of the Is It Too Much To Ask campaign. You can view the campaign microsite here.

For an overview: Do you want to be on the endangered species list?