Economics For Managers

Running head: ECONOMICS FOR MANAGERS
Economics For Managers
Name of the Student
Name of the University
Course ID

1ECONOMICS FOR MANAGERS
Table of Contents
Question 1..................................................................................................................................2
Summary of the article...........................................................................................................2
Question 2..................................................................................................................................3
Evaluation of tax on buyers of hotel accommodation............................................................3
Question 3..................................................................................................................................5
Tourism in Australia..............................................................................................................5
Question 4..................................................................................................................................7
Overview of tourism industry for three global leaders..........................................................7
Recommendation for Australian tourism...............................................................................9
References................................................................................................................................10

2ECONOMICS FOR MANAGERS
Question 1
Summary of the article
The article “Tourism Investment Monitor 2017” is concerned with trends in tourism
industry and projects undertaken for further progress in tourism in Australia. The direct and
indirect investment in tourism industry of Australia amounts to be $37.8 billion during 2016-
17. Investments are made in different industries related with tourism such as accommodation,
airlines, art, recreation and business services and others. Tourism in recent years is
considered as a rapidly growing sector in Australia. The fast expansion of the industry
attracts more investors to invest in the industry. With increase in tourists visitors there are
increase in demand for night stay at the hotels, transportation service and other associated
business. Expansion of tourism industry thus ensures expansion of other associated business
as well.
The standard economic theory suggests for maintaining a balance state in the market,
demand needs to be matched with supply (Sloman and Jones 2017). Steady growth in tourism
industry is ensured by the growth in demand backed by the increase in supply of necessary
services. On the supply side, supply of accommodation for tourists has been increased
through construction of new house especially in capital cities of Australia already facing
pressure from high occupancy rates. In capital cities, (Sydney and Melbourne) occupancy
rates are even above Australia’s national average.
The theory of demand indicates that demand of a good change with a change in
demand for related goods and services. There are different product and services that are
complementary to tourism industry (Baumol and Blinder 2015). As more tourists come to
Australia, there is an obvious boost in demand in accommodation market. There is more

3ECONOMICS FOR MANAGERS
demand for rooms in hotels and other business service apartments. There is also an expansion
of places in educational institute to support inflow of international students in Australia.
Because of favorable economic structure and strong economic growth, not only
domestic but also foreign investors invest in the tourism industry. More than half of the
investments in tourism sectors are financed through foreign funds. Investment projects in
accommodation market include investment in both stand-alone and mixed residence. The
article gives particular attention to FDI flow in Australia. There was a decline in foreign
investment in 2014 and 2015 following a slow-down in the mining sector (Eklund 2015).
Investment in the industry however recovered in 2016. The foreign investment in Australia
aggregated USD 48 billion in 2016.
An important sub-sector of tourism is art, recreation and other business services. This
contributes to tourism investment through arranging attractive events. Investment projects in
this sector worth a value of $17.0 billion. Another associated sector of tourism is aviation
industry. Investment projects worth 10.1 billion are designed for aviation industry. Important
aviation projects are undertaken in capital cities like Brisbane, Melbourne, Perth and others.
Projects are designed to build runway, expansion of terminals, upgrading terminal and other
airport projects. Both regional and capital cities attract investments different aviation
projects. Expansion in the tourism industry thus subject to expansion of other related
industries like aviation, accommodation, art, recreation and business service.
Question 2
Evaluation of tax on buyers of hotel accommodation
a)
Tax is a fee or charge levied by a government on a product, income and activity. Whenever
government wants to restrict any activity, it takes the policy of taxing either the buyers or the