MPE781 - Economics for Managers: Tourism Investment Monitor 2017

This report provides an economic analysis of tourism investment in Australia, drawing insights from the Tourism Investment Monitor 2017. It examines the Australian tourism environment, highlighting the significant role of tourism in the economy and its contribution to job creation and economic growth. The report analyzes investment categories such as aviation infrastructure, business services, and accommodation projects, supported by foreign investors. It discusses the impact of government taxes on the hospitality industry, focusing on the effects on buyers, producer surplus, and potential deadweight loss. Furthermore, the report explores the advantages and disadvantages of tourism, including its potential for economic growth and environmental impacts. The report also identifies leading countries in the global tourism market.

Running head: ECONOMICS FOR MANAGERS
Economics for managers
Name of the student
Name of the University
Author note

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Table of Contents
Answer2.....................................................................................................................................4
Answer 3....................................................................................................................................6
Answer 4....................................................................................................................................8
Reference list............................................................................................................................12

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Increase in tourism
Increase in jobs
Answer1
Figure 1 Complementary goods
The article The Tourism Investment Monitor tries to evaluate the economic status of
Australia. This particular article also analyzes the significant contributors to the Australian
economy and also some of the major sectors that have contributed to the growth of the
economy like the tourism industry. Till the year of 2014, Australia have been known to
experience a huge economic growth for the past two decades. This particular article shows
the numbers and the values of the major projects in the investment od the Australian tourism
pipeline. 204 projects have been undertaken by the tourism investment in Australia where the
total investment pipeline amounted to $37.8b billion. It has been found out that the business,
recreation and the arts services accounted for a value of about $17 billion. The aviation
infrastructure projects accounted for 10 million and the accommodation projects also valued
at $10.8 billion. The article also stated that investment remained strong in each of the three

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min sectors comprising of aviation infrastructure projects, business services, accommodation
projects. The strength of the investment pipeline is known to be supported by the foreign
investors of Australia around the accommodation projects. The tourism in Australia is known
to be a standout performer in the economy of Australia which provides an attractive
environment for the investors. The prospects of the future investment states that the industry
has a strong demand from the international visitors. The Tourism Forecasts also suggests that
the tourism expenditure will be growing at a rate of 6.3% per annum for reaching $224.8
billion by the year 2027. The increase in the growth of the visitors is known to create a
demand for more than available seats of the airlines, Australian educational institutions and
hotels. Large amount of investment in Australian tourism industry is needed in the future in
order to keep the market in equilibrium. The methodology of the tourism investment pipeline
has been designed to track the investment projects which are known to be valued over $20
million. When the accommodation investment is known there will be a continued shift
towards the mixed-use projects which will combine accommodation of tourism with the other
non-tourism components. The article states that the places Queensland and Victoria were the
most popular for the mixed used developments with availability of more rooms in the
projects. According to the United National Conference on Trade and Development, World
Investment Report of 2017, Australia have known to receive US$48 billion as the inward
foreign direct investment in the previous year. In case of the aviation infrastructure, in the
year of 2016 -2017 it was worth $10 billion which had been spread across the 19 projects.
The aviation infrastructure projects comprise of the Perth International and domestic terminal
upgrades, Brisbane Airport domestic terminal expansion and the Melbourne Airport
construction of a third runway. In the year of 2017, only projects of valuation $3.2 billion
were found to be under construction. The total amount proposed for the aviation
infrastructure for the purpose of the tourism was $10.1 billion, out of which $6.9 billion had

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been used for he infrastructure. In case of the infrastructure of the arts, recreation and
business services, it will help in boosting the demand for tourism through the provision of
events and attractions. The investments in the infrastructure’s arts, recreations and the
different business services have been spread across a wide variety of project types. The
pipeline of the cultural and the arts facilities known to valued for $3.2 billion for over
seventeen projects. On the other hand, the tourist’s attractions include the nine projects
which had a total value of $2.1 billion. More than seven projects of worth $2 billion known
to have completed between the years 2016 and 2017.

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Answer2
Figure 2 Tax on buyers
The hospitality industry of Australia is known to be perfectly competitive in nature
according to the question. The perfect competition is the market structure where there is
presence of the large numbers of buyers as well as sellers. The product sold is homogeneous
in nature and all the buyers and sellers are engaged in buying and selling of the homogeneous
products at the market prevailing price. Perfect competition in the market provides both
allocative efficiency as well as the productive efficiency. In case of short run, the perfectly
competitive markets are not productively efficient as output will not occur when the marginal
cost is equal to the average cost. When the government levies taxes on the buyers, the
demand curve will be shifting sown to the left exactly at the rate of tax imposed. When the
government levied taxes on the buyers, the equilibrium point also changes from E1 to E2.
The service or the quantity demanded will decrease from Q1 to Q2. Taxes are the
contributions made by the businessman or any individual for supporting the government of
that region. In this case as the tax had been levied on the buyers therefore buyers will face

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most of effects. The producer’s surplus is the benefit the seller gains from selling the goods at
a specific price. Tax might also result to dead weight loss which is the cost to the society
when the buyers and the suppliers leave the market because of the tax cost. With the rise in
tax, there will be decrease in the producer surplus. With the increase in tax therefore the
producer surplus will also decrease. Tax levied on buyers as well as on he sellers both have
an equivalent effect. The result is due to the reduction in the quantity sold as the relative price
of goods rises with the increase in tax.
The deadweight loss which takes place to an imposition of tax is a form of economic
inefficiency which leads to a reduction of both the producer as well as the consumer surplus.
However, taxation generally leads to welfare loss which can be stated as the decrease in the
economic wellbeing. The tax burden in general will lead to decrease in the level of
employment, living conditions and labor wages. There is a result of decline in the economic
wellbeing die to the deadweight loss. The social welfare from the production and
consumption of a particular amount of a good is the sum of the producer surplus, consumer
surplus, and any tax revenue taken in by the government.
Tax revenue is the amount of income which is gained by the government through
taxation. Therefore, it can be said that an increase in tax will help in raising the tax revenue.
Taxation is the primary source of income for a state. It can be therefore extracted from
various sources of public enterprises, trade royalties. Rise in the rate of tax will lead to
increase in the revenue of the government. Growth will lead to high amount of tax which will
in term lead to higher revenue in the long term. Therefore, it can be said that a high rate of tax
will lead to rise in the revenue of the governments.

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Answer 3
Figure 3 Increase in the rate of tourist arrivals
Australia has a huge competitive advantage in tourism through proximity to Asia by
providing the low-cost airlines. Both travel and tourism are the significant economic activity
which is present in most of the countries around the world. The economic impact had both
indirect and direct relationship. Australia therefore needs huge investment in the
infrastructure of the tourism for blooming global along with the regional tourism market.
Australia therefore needs to invest a large sum of money for the tourism boom to continue.
The recent studies show that 8.2 million international tourists visited Australia in the year of
2017. The balancing act between creation of demand and ensuring supply of both
infrastructure and human resource is known as tourism. Australia also offers few
development and investment incentives for developing accommodation. Therefore, both the
federal and state governments need to invest more resources for promoting careers in tourism
and training at both the vocational and education levels. There is a presence of both
advantages and disadvantages of the tourism to the economy of Australia. Tourism brings
money and therefore is one of the main advantages to the country. For this reason, tourism is
been promoted every year in both the developing and the developed countries.

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 A growth industry: tourism and travel are the significant parts of the economy of
Australia. This sector contributes o about more than three percent to the gross
domestic product of Australia. It also employs more than six million people in the
country. According to the experts it is believed that tourism has a great potential to be
in the key area of growth despite the political and various kind of economic instability
in the world. With the decline in the mining sectors of Australia, tourism can prevent
the Australian economy from sliding in to the recessions.
 Approved destinations of the Chinese visitors: one of the biggest sources of the
inbound tourists of Australia are china. This relationship strengthened in the year of
2014, when both the countries signed the Free Trade Agreement. For this reason, for
than a million of Chinese tourists visited Australia in the year of 2016 and it is
expected to grow more. The Chinese tourism is therefore likely to be worth of more
than $ 9 billion by the year 2020.
 Provide incentives: tourism can provide huge amount of incentives for a place for
reservations, regeneration and provide upkeep in both the wildlife as well as in the
urban areas. The visitors can also help in promoting international links which will
provide more cultural as well as business connections in the medium as well as in the
long term. With the increase in tourism, there will be increase in the profile of the
place generally and will give the locality a chance to show itself to the outer world. It
will also help in proving jobs for the locals, hotels, bars, transport and to the
restaurants which needs enough staffing. Tourism can also provide much needed
enjoyment for the people.
On the other hand, the disadvantages of tourism are as follows:
 Environmental damage: an increases level of tourism in Australia will lead to
environmental damage like pollution and the forest fires. Most of the ancient places,

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monuments and the beaches struggle to cope with the huge number of tourist traffic
here they need to suffer the wear and tear of the damage. Tourists activities such as
hiking, trekking, bird watching, scuba diving and other different kinds of activities
negatively affects the local ecology of any place.
 the tourism jobs are mostly seasonal in nature and are quite insecure with no such
extra benefits such as health care facilities or sick payments. Some of the areas might
be inundates with the visitors during the busy times and then may remain deserted for
several months. There is a presence of many negative effects of tourism. With the rise
in population, the resources of the paces become unsustainable in nature as well as
exhausted. Most of the negative impacts of the increased tourism can be found in the
development stage of the tourism area life cycle. There is also a presence of
imbalance in this case. There can be presence of negative effects of tourism from the
cultural interactions.
Answer 4
The list of three countries which are among the leaders in the global tourism market
are France, United States and Spain.
France
The France tourism is known to contribute 77.7 billion euros to the gross domestic
product of the country where more than thirty percent comes from the international visitors.
In the year of 2013, France had been visited by more than eighty five percent of the visitors.
Most of the tourists were from European Union, Switzerland, china and the United States.
Paris, which is the capital city of France is one of the most visited places in the world. It has
some of the largest and renowned museums, landmarks in the world. France is one of those
countries which has very well-developed rural tourism brining a huge economic profit to the

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country as well as in the rural areas. It also has thirty-seven sites inscribed in the UNESCO’s
World Heritage List which also comprised of the featured cities as well as sites of high
cultural interests. Ski resorts, seaside resorts, beaches and the rural regions are the major
tourists’ attractions of France. The French Riviera receives for about more than ten million
tourists a year. Therefore, it is one of the major tourist destinations in the world. Some of the
major cities of the French Riviera are Antibes, Nice, Cannes and the Cap Ferrat which are
some of the popular destinations.
United States
Tourism in the United States is a huge industry which serves millions of international
along with domestic industries every year. There is a wide range of attractions in the United
States which comprises of the amusement parks, golf courses, festivals, famous landmarks
and historical buildings along with recreations, spas and outdoor recreations. After the
election of Donald Trump, there had been a drop in the rate of tourism at four percent. Most
of the tourists are form Mexico, Canada, United Kingdom and Japan. According to the
statistics of 2018, the city of New York had been one of the most visited destinations in the
United States. It has also been found out that the tourists love to spend a huge amount of
money in the United States than any other country which attracts a large number of tourists
every year. Most of the tourists visits the United States to see the natural wonders, landmarks,
entertainment venues and the different cities. Although after the attack in the year of 2001,
the economic sectors were highly affected. The revolution of the air travel contributed greatly
to the tourism in the United States.
Spain
Spain tourism is one of the significant contributors to the economic life after the
banking sectors contributing to the gross domestic product of the country. Spain is one of the

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popular destinations for the summer holidays where the huge number of tourists come from
the United States, France, Germany and Italy. It has been found out that the foreign tourism
industry of Spain has been the second biggest tourism in the world. In the year of 2017,
Spain was one of the most visited countries in the world recording 82 million tourists. In the
biannual Travel and Tourism Competitiveness Index which have been published by the
World Economic Forum in the year of 2017, Spain had been ranked first among the 136
countries. The summer resorts and beaches of the Spain generates a huge income for most of
the Spanish economy. Two of the popular destinations of Spain are Balearic Islands and the
Canary Islands. Madrid and Barcelona are two of the largest cities of Spain which most of the
tourists visit. Large number of festivals celebrated through out the year are also one f the
major attractions in Spain. The mainland coasts of the Costa Brava, The Costa Daurade have
known to received 12.8 million visitors in the year of 2017. The Costa Blanca is one of the
favorite destinations for the tourists of United Kingdom as well as Germany.
Tourism is one of the important industries in Australia where it generates about $94
billion to the gross domestic product of Australia. As there is rise in competition and the
increase in the Australian dollar, the tourism industry of Australia had been negatively
affected. The international market shares also known to have decreased on a large scale.
Therefore, some of the ways through which the tourism of Australia can be increased are:
 Growing demand from Asia: the Australian government should make investments in
driving tourists from the Asian countries since it will act as a huge opportunity in the
industry. Therefore, the tourism industry needs to strengthen distribution, develop

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marketing campaigns and strengthen distribution to attract tourists from the Asian
countries.
 Building of the industry resilience, quality and the productivity: the productivity of
the industry is quite low when compared to the rest of the economy of Australia. This
will limit the tourism of Australian operators to provide consumers the value of the
money experiences. Therefore, the government should build on competitive
advantage of Australia, which will be working with the industry for increasing the
productivity, quality and innovation.
 Building of the competitive digital capability: strong digital capability is very
important for both marketing and distribution of products in Australia. Therefore, the
both the tourism industry and the government will continue to work to make sure that
more tourism enterprises are able to take advantage of the online opportunities.

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