Effects of travel and tourism on GDP

Published: 2019-05-27 19:52:06
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The direct contribution that travel and tourism have on GDP reflects on the internal expenditure that the government has on the sector. As outlined by Avraham (2015), it is based on the total expenditure by non-residents and residents within the country on tourism and travel purposes as well as leisure and business purposes. Notably, the spending extends to the individual spending by the government on services that links directly to travel and tourism, for instance, recreational and cultural services. The calculation of tourism and travel contribution to the countrys GDP directly relates to the output. This is expressed in the tourism-characteristic areas such as airports, hotels, recreational services, leisure, and airlines.

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As analyzed by Avraham (2015), GDP calculation is done from the total internal expenditure through purchases made from different sectors of tourism. Particularly, the measure is strictly consistent with tourism GDP definition specified by the Satellite Tourism Account. On the same note, total travel and tourism contribution on the GDP has both induced direct impacts on the overall economy are felt through various approaches. The first one is the tourism and travel investment spending that is a critical aspect both currently and in the future. These include investment activities, for instance, constructing new hotels and purchasing new aircrafts. Second is the collective government expenditure that focuses on the entire population that helps the tourism sector in varied ways such as aviation administration, sanitation services, security services, and marketing promotional services. Lastly, domestic goods and services purchases by sectors that deal directly with tourism. For example hotels cleaning services, food purchases, catering and fuel services by various airlines, and travel agents IT services.

In a similar scenario, Avraham (2015) explores the induced travel and tourism contribution to the countrys GDP as being associated with those indirectly or directly employed by the industry. Travel and tourism industry in Bahrain generate over thirty thousand jobs directly every year, and this forms 4.1% of the countrys total employment. Future focus on the job creation predicts a continuous rise in the number of people who get directly employed in the sector. The works range from those in hotels, airlines, travel agents, and transportation services for the passengers.

Contribution in Hospitality industry

Bahrains hospitality sector has had increased growth due to travel and tourism activities in the region. With reference to Marinakou and Giousmpasoglou (2015), over 7.6 percent growth is projected yearly; hence, there is a need for increased training in the hospitality and human resource sector. An enormous number of hotel rooms have been added to accommodate the increased number of tourists that Bahrain experience. Very classy hotels have cropped in due to the travel and tourism activities in the area. Some of these hotels include InterContinental Regency, which is a leading trendy hotel located in Manam, Gulf Hotel a luxury hotel offering free Wi-Fi, Crowne Plaza, K Hotel, Elite Resort, and Domain Bahrain. Similarly, there are a lot of employment opportunities created within the hospitality industry due to travel and tourism. Some of these include waitress/waiter, bartender, hostess, chefs, restaurant managers, and their assistants.

Currency and Exchange

Visitor exports act as the key component in the currency exchange sector and forms a direct travel and tourism contribution (Marinakou & Giousmpasoglou, 2015). The tourists visiting the various attraction centers deal in foreign currencies which allow an easy and convenient way for the government to pay their foreign debts. Additionally, the growth of the tourism and travel sector strengthens the Bahrain economy thus boosting its currency strength. This places the country in a favorable trading ground with the rest of the competitive world. At the same time, the tourism sector has attracted the world class capital business investments that are expected to rise by huge margins within ten years.

Taxation

As confirmed by Marinakou and Giousmpasoglou (2015), the taxes charged by the Bahrain government on its workers are low given the fact that the tourism sector has placed the economy in a favorable thriving condition. In particular, the experts moving to Bahrain are not charged any tax on their monthly salary. Nevertheless, they are charged a 1% contribution from their monthly salary for the social insurance fund. Bahrain also has several banks besides its central bank. Some of these banks include Bahrain bank, Saudi Bank, Future Bank, and Islamic Bank. The foreign banks are Standard Chattered, United Bank, Habib Bank, and Barclays Bank.

Ways used by Bahrain to attract more tourists worldwide

Bahrain needs various essential activities and the right balance in order to maintain its tourism competitiveness with its neighbors. The competition that Bahrain faces from its neighbors forces it to specialize in unique activities to ensure it remains relevant as far as the tourism industry is concerned. The country has broader tourism activities and always kept up with tourist demands. However, these initiatives have been employed by its neighbors too thus the need for alternative approaches. The unique methods that Bahrain apply to ensure it attracts more tourists worldwide are sports events, historical heritage preservation, and cultural uniqueness.

Attractions through Sport events

As researched by Almossawi (2008), Bahrain maintains being the Formula 1 pioneer in the Middle East and Arabian Gulf. Since 2004, the country has hosted many motorsports including the renowned Grand Prefix Formula 1 races. This event has placed Bahrain in a positive international spotlight and turn generating colossal revenue. The race has also been designed to promote Bahrains national airlines and as such attract millions of tourists across the world. The races popularity positively affects hotel occupancy at the time of the event, with the occupancy rate of slightly over a hundred percent. From the research, the F1 fans typically spend double the amount spent by the regular tourists, thus increasing the tourism returns. At the same time, over three hundred million people follow the F1 race through their televisions thus providing Bahrain a greater chance of marketing its touristic appeal beyond the Arabian Gulf market.

The other event used as a way of promoting tourism is family-friendly World Ferrari Park located in Abu Dhabi. Lastly, the other sports event that Bahrain has used is the Bahrain International Boat Show and the Bahrain Air Show which are hosted yearly since 2009. The events attract various people who get access to the promising tourist destination spots. This in turn makes many of the fans be interested in visiting the country as tourists in later days.

Cultural activities

In addition to hosting numerous sporting events, Bahrain has actively marketed itself by promoting its cultural importance in the Middle East, and Arabian Gulf explains Almossawi (2008). Since 2006, the country has hosted the spring festival while summer festivals have been held since 2008. The events target both international and Arab artists. Their focus is mainly on theater, art exhibitions, dance, poetry, and music. Performances addressed to both the youths and adults plus some free events attract millions of viewers. The events have attracted prominent musicians such as Julio Iglesias and Diana Krall. Also, hosting of international music festival traditionally since 2011 has promoted access to the countrys prominent tourist destination points. The growing art and cultural industry necessity in the country has led to the construction of the national theater. The theater has accommodated several concerts that have brought together several tourists across the world and regionally into the country. Different types of art activities are assigned each month thus ensuring visits by the fans all year round. This is favorable for the tourism industry which is normally operational throughout the year.

Parsa (2015) confirms that promotion of cultural industry has been the primary development goal in Bahrain and the entire Middle East region. This has led to increased investments in the cultural sector. Due to the competitiveness in cultural industry development, Bahrain has started massive projects aimed at outshining all its neighbors. The primary areas of focus have been on the museum, beaches, and world-class art collections. Also, traditional building art has seen developments of various classy and tall buildings that are accommodative and attractive at the same time.

Exhibitions of the Historical Heritage

The final way that Bahrain uses to attract more tourists worldwide is through preservation of its historical legacy. As explored by Pars (2015), Bahrain possesses a very rich history that has placed it in a unique position as far as the tourism industry is concerned. To start with, it is a crossroad route of trading between Africa, Asia and, Europe since trading began. Throughout centuries, many foreign powers such as the Persians, Babylonians, Arabs, British, and Assyrians have engaged in fights in order to have control over this region. The early historic civilization in the region led to the developments of historical sites. Bahrain is the home of world heritage site that was first built by UNESCO. Also, the oldest mosque is situated in Bahrain and acts as the ancient Islamic architecture thus attracting numerous tourists. The other sites are the Arab and the Riffa forts which were built in 15th and 17th century respectively. Bahrains national museum majors in the display of historical artifacts from various locations thus easing the viewing process of these artifacts by the tourists. The long pearling tradition presented by pearl traders in Bahrain forms a unique world heritage center and has been recognized by UNESCO as the second heritage site.

Opportunities for travel and tourism in Bahrain

Karolak (2014) illustrates that Bahrain enjoys a number of travel and tourism opportunities that have kept it outstanding in the sector. The first opportunity is the development of the cultural heritage for maximum use, now and in the future. Second is the development of national tourism framework to ensure a smooth running of the sector. The other opportunity is its projected increase of tourists arrival in the future thus placing the country at a desirable state. The other opportunity is developing of different products to offer alternatives to the already existing tourism sites and areas. Involvement of all stakeholders within the industry to foresee its development is another opportunity. This will enhance the rate and scale of development thus resulting into the growth in the sector. Lastly, the industry can target customers who come from outside the Gulf. This is essential since it will ease competition and broaden the market that the tourism industry operates under.

Threats and challenges

From various studies such as Karolak (2014), there are some threats that face the travel and tourism industry in Bahrain. The first one is the continuous unrest that in turn give a negative image at the world economic level. The second major threat is the intense tourism development among the neighboring countries. This increases the competition thus narrowing the market base for the travel and tourism industry. Thirdly, delay in construction projects partly affected by the widespread unrest within the country delays completion of development projects in the tourism sector. This reduces the expansion rate of the industry thus loss of many potential tourist...

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Effects of travel and tourism on GDP. (2019, May 27). Retrieved from https://speedypaper.com/essays/effects-of-travel-and-tourism-on-gdp

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