Towards a green economy

3 The case for investing in the greening of tourism

3.1 Spending in the tourism sector

Tourism drives significant investments. Adding even small percentages of investment for a greener sector results in very significant increases in investment flows. Furthermore, much new investment flow is directed toward developing countries, where increased investment could have greater impact on green outcomes. It is estimated that travel and tourism-sector investments reached US$ 1,398 billion in 2009, or 9.4 per cent of global investment. It increased on average by 3 per cent during the last decade, notwithstanding a significant contraction in 2009 (-12 per cent). Global investment in tourism has fluctuated between 8 per cent and 10 per cent of total world investment over the last 20 years. In developing countries, such as in the Caribbean region, this figure could be as high as 50 per cent (WTTC 2010).8

In OECD countries, investment in

hotels, travel agencies and restaurants range from 6 per cent of national gross value added in Germany to 32 per cent in Portugal (OECD 2010).

Foreign Direct Investment (FDI) is an important source of world tourism investment. The stock of outward and inward FDI in the hotels and restaurants sector reported by UNCTAD (2009) accounts for almost 1 per cent of total FDI stock. This figure, however, does not take into account other tourism-related elements in other sectors, such as construction, transport or business activities. There is a growing focus on tourism as a generator of FDI in developing countries, where it is a priority of many Invest ment Promotion Agencies (IPAs). In this regard, the case of Costa Rica is illustrative as foreign investment in the tourism sector represented 17 per cent of total FDI inflows in 2009 and 13 per cent on average for 2000-09.9

3.2 Benefits in employment

Tourism is human-resource intensive due to the service nature of the industry. It is among the world’s top job

creators and allows for quick entry into the workforce for youth, women and migrant workers. The wider tourism economy provides, both directly and indirectly, more than 230 million jobs, which represents about 8 per cent of the global workforce. Women make up between 60 and 70 per cent of the labour force in the industry and half the workers are aged 25 or younger (ILO 2008). In developing countries, sustainable tourism investment can help create job opportunities, especially for poorer segments of the population.

The move toward more sustainable tourism can increase job creation. Additional employment in energy, water, and waste services and expanded local hiring and sourcing are expected from the greening of mainstream tourism segments. Furthermore, an increasing body of evidence suggests significantly expanded indirect employment growth opportunities from segments oriented toward local culture and the natural environment (Cooper et al. 2008; Moreno et al. 2010; Mitchell et al. 2009).

Tourism creates jobs directly and leads to additional (indirect) employment. It is estimated that one job in the core tourism industry creates about one and a half additional jobs in the tourism-related economy (ILO 2008). There are workers indirectly dependent on each person working in hotels, such as travel-agency staff, guides, taxi and bus drivers, food and beverage suppliers, laundry workers, textile workers, gardeners, shop staff for souvenirs and others, as well as airport employees (ILO 2008). These relationships influence the many types of workplace relationships that include full-time, part-time, temporary, casual and seasonal employment and have significant implications for employment opportunities within the sector. A study of South Africa shows that direct employment in the core tourism sector only accounts for 21 per cent of total employment creation due to tourism spending in 2008 (Pan African Research & Investment Services 2010). Available data indicate that every new job in tourism can have multiplying effects in the whole economy, as illustrated in Table 1.

8. It is worth mentioning that WTTC estimates incorporate all fixed investment expenditure by tourism service providers and government agencies, in facilities, capital equipment and infrastructure for visitors. In this sense, it could be overestimating infrastructure investments that are not tourism sector specific but affect the whole economy (for instance, road improvements or airport construction). Still, it is the only cross-country source of tourism investment data available.

9. Author’s calculations with data from the Central Bank of Costa Rica. Available at www.bccr.fi.cr, accessed on September 12, 2010. 426