What is the multiplier effect in tourism?

The multiplier effect in tourism refers to the phenomenon where initial spending by tourists leads to increased economic activity within the local economy. When tourists spend money, whether on accommodations, food, or attractions, those businesses then have more revenue. This additional income can lead to higher wages for employees, who may then spend their earnings in other local businesses. Consequently, one dollar spent by a tourist can have a ripple effect through the economy as it generates further income and spending across various sectors.

This concept highlights the broader economic impact of tourism beyond just the direct expenditures made by visitors. It illustrates how tourism can stimulate job creation, enhance local services, and boost overall economic growth, significantly benefiting the community.

In contrast, the other options do not capture the multilayered economic impact of tourism. The average spending of tourists focuses only on singular transactions, how tourism affects global markets looks at macroeconomic aspects, and the pricing strategy of travel packages pertains to marketing and sales rather than the economic consequences of tourist spending in the local economy. Thus, the option that addresses the additional impact on local economies aligns perfectly with the definition of the multiplier effect in tourism.