Leakage in Travel and Tourism | Spending Gone Wrong

Author | Julio Costa Beyeler

Image Source: Pexels / Karolina Grabowska

If you ever wondered where does your money go after travelling, the response might not be what you expect. People are easily misled by their good intentions of supporting local communities, however, not knowing how to do it properly, therefore resulting in the majority of their expenses ending up in the pockets of big corporations. This is what's called "tourism leakage". Budgeting is an extremely crucial part of travelling and touring, however, knowing how to spend it and where to spend it is just as important, therefore, in this article, we'll tell you all about tourism leakage, and how you can support the places you visit to keep them thriving and ready for your next visit. 

What is Tourism Leakage - Why is it Bad?

Essentially, tourism leakage happens when the money you spent on a destination ends up leaving it. A tourism leakage example would be if the majority of the owners behind the companies that have aided you throughout your trip, from airlines to hotels and food, aren't local to the community you have visited, that would mean that most of your expenses would end up in the pockets of international, wealthy companies. This happens to heavily impact developing countries. 

According to the UN Atlas of the Oceans, a digital portal that provides information on the sustainable development of the oceans, "of each $100 spent on a vacation tour from a tourist from a developed country, only around $5 actually stays in a developing-country's destination economy", expenses that could aid the upkeeping and maintanence of infrastructure to properly accomodate tourists, and help communities to thrive and build their own future. 

Not only economically, leakage in travel and tourism also impacts the flourishing and prosperity of cultures that struggle to survive and thrive on support, that could potentially lead to cultural erosion and dilution of global costumes - without culture, there's no authenticity, therefore, no way to best experience the community you're visiting. It creates an experience that could be achieved just as easily anywhere else in the world.

Image Source: Pexels / Andrea Piacquadio

At Wonderfinders, we ensure authentic Irish experiences by taking leakage into consideration when planning from accomodation to restaurants and shops, therefore, providing support and giving back to Irish communities.

Types of Leakage in Tourism

Import Leakage

Import leakage is one of the types of leakage in tourism. It happens when companies spend their revenue on imported products and workforce (sometimes exploited cheap labor) to ensure the satisfaction of their customers, which can affect the prosperity of local products and impact the availability of stable jobs for citizens in the city the company operates in. 

Export Leakage

Export leakage is the second type of leakage in tourism. It happens when international companies are set within the country you're visiting, and may provide luxuries and services that local companies cannot compete with, which may lead to a preference towards the first option.

How to Minimize Leakage in Tourism

Image Source: Pexels / Kevin Malik

In case you're wondering how to support them, here's how to minimize leakage in tourism and ensure another visit to your favorite local community.

Shop and Stay Local

Take preference in locally produced and sourced ingredients and products, whether by looking out for market stalls and local-owned brands, or by keeping an eye on labels that can indicate where something was produced. Hotels and resorts play a big part in the cause of tourism leakage. Take preference in places run by locals instead. It is one of the best ways to immerse yourself in the place you're staying in. 

Travel Informed and Look Out for Alternative Spots

Make sure to build familiarity with the place you're visiting beforehand to make sure to spend wisely and get informed on lesser known communities that would benefit even more financially. Not only that, by seeking out alternative spots you are contributing to the prevention of "overtourism", a problem that's been affecting destination's natural landscapes. Responsible Travel has provided an overtourism map that can assist you in ensuring in staying off the beaten path, which you can check below. 

If you're interested in some of Ireland's alternative spots, check out our blog post on "OFF THE BEATEN PATH | 5 REASONS TO VISIT IRELAND".

Get in contact with us now to book your authentic Irish tour!

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References

• Kelly-Shankar, S. (2020). Negative Impacts of Tourism Leakage and How To Prevent Them. [online] Curiosity Saves Travel. Available at: https://curiositysavestravel.com/prevent-tourism-leakage-negative-impact/#prevent.

•  Not In The GuideBooks. (2021). What is Tourism Leakage? [online] Available at: https://www.notintheguidebooks.com/sustainability/what-is-tourism-leakage-and-how-can-you-play-your-part-to-prevent-it-while-travelling/.

•  Faith, Sarah. “Tourism’s Dirty Secret: What Is Tourism Leakage and How Can You Avoid Contributing to It?” Yahoo Sports, Feb. 26AD, uk.sports.yahoo.com/news/tourism-dirty-secret-tourism-leakage-070015575.html.

•  Frost, Rosie. ““Overtourism” Ruining Some of the World’s Most Beautiful Destinations.” Euronews, 6 Nov. 2019, www.euronews.com/travel/2019/11/06/overtourism-ruining-some-of-the-world-s-most-beautiful-destinations.

•  Murphy, Tim. “Sustainable Tourism in Ireland - Circular Economy Company Ireland.” Circular Economy Company, 19 Oct. 2021, www.circulareconomy.ie/sustainable-tourism-in-ireland/.

•  Kenny, Stuart. “What Is Tourism Leakage and How Does It Impact Travel?” Much Better Adventures Magazine, Much Better Adventures Magazine, 20 Jan. 2023, www.muchbetteradventures.com/magazine/tourism-leakage/#:~:text=The%20approximate%20levels%20of%20tourism.