Major challenges

International tourism to economically weaker countries often makes use of structural imbalances in economic and political power. “Sea-sun-sand” tourism is the main segment from economically affluent to economically deprived countries. Their comparative advantage relies on their rigorous pricing policy and depends on low costs for local supply and services. Due to the high price sensitivity of tourism, receiving countries fear to be excluded from the tourism map if prices rise.

Tourism – especially international tourism – is an import-intensive industry and many products are shipped across long distances. While smaller companies often have deep roots in the local economy, multinational and international corporations can achieve eco- nomic advantages such as economies of scale thanks to their international supply chains. Research shows that hotels in the Dominican Republic import most of their fish because international prices are lower than local prices (Lange, 2011, p. 54). The result is that part of the foreign exchange earnings generated by tourism does not remain in the destination. This so-called leakage effect can be extremely high and is estimated to be 40-50 percent on average in developing countries and much lower in developed countries (UNWTO, 1995, p. 10). The United Nations Conference on Trade and Development (UNCTAD, 2010) points out that “high levels of leakage can seriously undermine the positive development impacts of tourism.

Inequalities within countries

Income inequalities can certainly not be effectively tackled unless the underlying inequalities of opportunities are addressed. Eventually, inequalities in outcomes such as health and education will be effective indicators to check whether the measures taken have been successful.

To reduce inequalities within countries, SDG 10 focuses on social, economic and political inclusion of all and the reduction of inequalities by eliminating discriminatory laws, policies and practices. The reality in tourism is far away from this.

Lack of inclusion of local population in tourism planning and implementation

Tourism can threaten the already precarious situation of indigenous people, as the example of the Moken in Thailand shows. The Moken‘s traditional area is the Andaman Sea with its long beaches and uninhabited islands, where they used to pursue a nomadic sea culture. Their lives changed dramatically after they were relocated to on-land sites. Tour- ism development in the region additionally threatened their livelihoods, due to increasing land values and costs of living. Today, the indigenous communities can hardly pursue their traditional lifestyles. They are exploited for their diving skills and work under precarious conditions in and around the tourism hotspots (Wongruang, 2012).

Also, self-administered tourism development around the world is hampered by unfavourable conditions regarding land rights, as the case from Nicoya in Costa Rica shows. The legal insecurity about their land tenure limits the socio-economic opportunities of local communities. They are prevented from becoming formalized tourism players, as they cannot get formal registration.

Tourist arrivals and tax revenues

Tax exemptions by governments or strategies for tax ‚optimization‘ by companies are among the reasons why growth in tourist numbers does not necessarily lead to an increase in public welfare. Figures from Cancún in Mexico show that corporate profits are growing while tax revenues are decreasing. Based on in-depth research, Linda Ambrosie (2015) identifies the main reason in the shift from a “lodging+” model to an all-inclusive model that allows big international hospitality companies to creatively ‚optimize‘ their tax payments because all operational costs from accommodation to food and services are incurred within one and the same company. Tourism also generates direct tax revenues, e.g. international departing fees and hotel taxes. In the case of Cancún, these revenues are not distributed fairly to address income inequalities (which are above the Mexican average), but to finance and support tourism promotion (Ibd., p. 141).

Relying on all-inclusive tourism means that tourists spend less in the destinations and less money reaches small shops, local restaurants, or other small-scale service providers. Aruba therefore decided to limit the percentage of hotel rooms with all-inclusive service to 40 percent (Bloomberg, 2016).

Working in tourism – no place in the sun

Tourism is not only a labour intensive low-income sector that allows relatively easy access to work for a large number of people with low levels of formal education. It is also a sector that requires high-level qualifications, namely foreign language skills and specific (inter- national) management skills. With regard to financial benefits and social security, there is a huge gap between the large number of people working in kitchens, house keeping or laundries and the relatively small number of persons at front desks as well as at manage- ment level. And the gap is widening due to the fact that outsourcing is very common in the hospitality sector, especially in sections such as laundry, cleaning and housekeeping.