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Impact of Visitor Expenditures on Local Revenues
By: Mr Heng Sopheap, National Institute of Management ( May, 2003 Volume 3 No. )

The money tourisms spend in a community is the benefit which people probably recognize most readily. Other benefits might include improved recreation facilities, expanded cultural and social opportunities, and pride in one's community, but additional dollars provide the usual appeal for tourism development. These dollars benefit sectors throughout the community, including those not directly connected to tourism, such as the construction industry.
Communities contemplating development to encourage tourism can estimate the amount of money visitors will spend in their area. These estimates are useful in several ways. - To indicate the value of tourism to a larger region.
- To show the impact on specific local economic sectors, for instance main street business, households, local governments.
- To plan new tourism attractions or facilities.
- To determine the impacts of tourism on the economy in terms of receipts, employment, payroll, and tax revenues.

Community leaders, or others involved with tourism-related community development, can use this series of fact sheets to lead a focused discussion on the economic benefits of tourism.
- Who will benefit from tourism?
- How many tourists will a new project bring to the community?
- How much will new tourists spend into the community?

This series of fact sheets is designed to address these questions, which must be answered in order to realistically evaluate decisions related to local tourism development.

Measuring visitor expenditures

There are four methods that communities may use to collect estimates of total dollars spent by visitors to their area.

Diaries

A diary format that continuously records spending is the most accurate method for obtaining expenditure information. Diaries require minimum recall on the part of respondents, which is advantageous if highly detailed information is sought. There are two major shortcomings, however. First, recording expenses may change the tourist' s spending habits and therefore bias total tourism spending estimates. Second, participation tends to be blow because few vacationers welcome an additional chore. Innovative incentive might offset this problem. Tourists with certain type of personalities may be more likely than others to keep diaries. Personality differences might also be reflected I spending behavior.

Exit interviews

Another method of gathering expending information is to interview people as they leave an area. People can be asked to estimate their total expenditures for the entire visit to an area, or for only their last day there. Since fewer people will refuse to complete an exit interview, you can expect to find a more representative group of respondents with this method than with diaries. People will tend to forget many expenditures, however. They will remember better the expenses from the last day than from earlier days. A variation in the exit interview is to interview peoples randomly in an attempt to reach them on each day of their visit. This reduces the bias found when interviews are concentrated on the last of a visit, but it does not eliminate the problem of recall.

Mail surveys at home

Questionnaires may be sent to visitors at their home addresses, using a random sample derived from various registration data. This type of questionnaire typically gets a higher response rate than the diary method, but a lower response rate than exit interviews. The time lapse in mail surveys increases the tendency to underestimate actual expenses.

Surveying tourist-related business

Businesses directly affected by visitor expenditures include hotels, shops, and restaurants. Information gathered from proprietors or managers of these establishments is subject to their ability to differentiate between tourist-related sales and sales to residents. There are two methods to measure the impact of tourist expenditures on local revenue:
- Adapt coefficients from existing national or regional studies.
- Develop specific Impact relationships for the community being studied.