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– Have you heard of the term ‘Tourism Leakage’? –  

If not, don’t worry you’re not alone, many travellers haven’t. Tourism leakage is a concept that’s hard to spot and one that’s not often talked about. Responsible travel has been a popular trend over the past 10 years with tourists becoming more aware of the environmental effects of their travels. However, as society moves towards more conscious ways of travelling, considerations other than just environmental impacts are becoming increasingly in the spotlight. Social, cultural and economic effects on host communities are key to a sustainable tourism industry and minimising Tourism Leakage plays a big part in this.

Locals take tourists on a local hidden fishermans trail excursion in Khao Lak, Thailand as part of CBT.
So, what is Tourism Leakage?

Tourism leakage is the concept of profits generated by tourism leaving the host community and is sometimes referred to as ‘Economic Leakage’ or ‘Leakage Effect’.  Simply put, the money spent by tourists whilst on holiday leaks out of the host country.  Often ending up in the pockets of large, multinational global conglomerates.  Already wealthy brands like Coca Cola continue to benefit and local businesses loose out.  There are two types of tourism leakage:

EXPORT LEAKAGE occurs when there is international ownership, where profits from money you spend leave the host country. For example, staying in a Hilton Hotel in Thailand means that the profits end up back in the US as it’s an American owned chain.

IMPORT LEAKAGE happens when tourists spend money on products and services that are imported. For example, drinking Heineken in Thailand results in import leakage.  Money leaves the country to pay for the import of European beer. Alternatively, drinking Singha or Chang keeps the dollar local as it’s produced in Thailand.  Some countries even import labour.  Rather than offering locals jobs they buy in English speaking staff to make tourists feel more comfortable.  Or it may be that importing labour is a cheaper option.

The cumulative effects of actions like staying in a foreign owned hotel, booking with a foreign owned tour company or buying imported food and drink can be significant. RNZ Pacific reported that in Fiji, it is estimated that 60% of the money earned through tourism ends up leaving the nation.
Tourism Leakage can happen anywhere. But, in developing countries its heightened as local communities may not have the capital and skills needed to operate tourism ventures and international conglomerates drive up prices. Such holiday destinations with high tourism leakage therefore suffer from the negative effects of tourism without reaping economic benefits.

For the year 2019, tourism generated 18.21% of national GDP in Thailand yet a report published by the UN Atlas of the World estimates that 70% of all money spent by tourists ends up leaving Thailand via foreign owned service providers. The same report suggests that tourism leakage ranges from 80% in the Caribbean to 40% in India.

Shopping at a local food market in Khao Lak, Thailand to keep the tourism dollar local and minimise tourism leakage.

Community Based Tourism (CBT) as one solution

Tourism can have an immensely positive impact on a host community. It can help preserve local culture and traditions, protect the environment and provide jobs to residents. As regenerative tourism becomes more of a focus Community Based Tourism (CBT) has been presented as an alternative to sustaining tourism development in developing countries. This tourism model empowers local residents to manage and promote natural and cultural resources generating greater benefits for local communities. CBT provides employment opportunities, revenue generation and local procurement of goods and services whilst limiting the money that leaves the community through tourism leakage.

Local fishermen getting ready to take tourists out on an excursion as part of CBT in Khao Lak, Thailand.

Organisations such as the Fair Tourism Foundation and Paneterra are experts in the area of CBT.  By developing local experience for tourists and supporting local communities they help minimise tourism leakage and ensure that money spent is injected back into the local economy.  CBT not only offers an authentic insight into the life of locals it also ensures the travel experience makes a genuine difference to the host community.  Being community owned and managed these experiences therefore don’t just benefit one family but the community as a whole.

One such CBT project that Fair Tourism Foundation supports is Huay Pu Keng in Northern Thailand.  The community consists of Kayan, an ethnic group who escaped Myanmar in the late 1980’s and early 1990’s due to conflict with the military regime.  Known for their traditional brass rings around their necks the Thai government considered the Kayan people as a highly profitable tourist attraction.  Exploitation rose and tourists visited villages purely to take photos of the Kayan with very little interaction and limited positive impact to the community.

Ma Pang, a skilled weaver from Huay Pu Keng.

Partnering with Fair Tourism Foundation, the village of Huay Pu Keng now offers CBT.  This approach offers the community equal and fair treatment by giving them an equitable income and retaining their dignity of as human beings.  Fair Tourism Foundation’s goal is to get more people to experience all the great things that Huay Pu Keng and its surroundings have to offer whilst residents of the villages no longer have to be exploited through tourism but can make a decent income centred around their unique skillsets.  Read more about the project here.

By choosing CBT whilst travelling you’ll be rewarded with an unforgettable journey whilst respecting the host community and its ancestral stewards. Advantages of a hands-on experience with another culture include a deeper connection with the people and place plus gaining new perspectives on both your own and other cultures. Ultimately, choosing this style of tourism you have greater control over where your money is going ensuring that it stays local and supports communities in sustainable ways.

Other strategies to drive positive change and help minimise Tourism Leakage?

  1. Choose local, from transport to shopping, food and drink and accommodation, always try your best to spend with companies that are locally owned. Those very welcomed tourism dollars will go back into the community and have a positive impact on the lives of locals.
  2. Book direct or use a local booking site. By booking direct 100% of the money will go into the owner’s pocket. Riparide in Australia, Smarter Stays in the UK and Fairbnb in Europe are great examples of start-up booking platforms that aim to keep booking fees local.
  3. Do your research, sometimes what at first appears to be a local company is actually internationally owned. Pick up the phone or send an email to find out if a business is locally owned if you can’t figure it out online. When you do travel, make it your aim to learn more about the community, the people and their culture.
  4. Spread the love and visit less frequented areas outside popular destinations. Staying in a few different accommodation venues over a few weeks will not only give you a variety of experiences, it will also spread your tourism dollars further. This increases the chances of your money ending up in the community.
  5. Use sustainable measurement tools such as G Adventures Ripple Score to choose more sustainable and regenerative options. The Ripple Score simply provides an indication of Tourism Leakage effect.  The higher the Ripple Score, the more money is staying within the local communities.
Wandee, founder and owner of Pakinnaka Cooking School in Khao Lak, Thailand teaching us how to cook authentic Thai food.

A better understanding of Tourism Leakage will help minimise its effects and encourage us all to be more mindful on future travels.  As responsible travellers, together we can be the positive change that’s needed.  One conscious decision is all it takes to help move towards a kinder, more authentic world in which equity is more balanced.

This article was written for Fair Tourism Foundation by Bex Thomas, Founder and Editor at Community Back Pocket. Spending her time between France and Australia, Bex’s responsible travel blog showcases local options in response to tourism leakage.  She upholds values around equality and believes the best travel experiences come from staying with and supporting locals.  Bex hopes that her blog will inspire and empower you to choose local and help minimise tourism leakage.

Connect with Bex on Facebook, Instagram and LinkedIn.

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