Additional hotel sales and associated changes in hotel payments for wages and salaries, taxes, and supplies and services are examples of __ effects of the tourist spending.
A direct
B indirect
C induced
D secondary
The correct answer and explanation is:
The correct answer is A) direct.
Direct effects refer to the immediate impact of tourist spending on businesses and services directly involved in the tourism industry. When tourists spend money on accommodation, food, or services, this spending leads to immediate changes in the revenues of businesses such as hotels, restaurants, and other tourism-related services. In the case of a hotel, this could include payments for wages and salaries for staff, taxes, supplies, and services, all of which are directly linked to the hotel’s operations and depend on the level of tourist spending.
These direct effects are the initial and most straightforward economic impacts, as they are directly caused by tourist expenditures. For example, when a tourist books a hotel room, the hotel experiences direct changes in revenue. These changes will be used to cover wages for hotel staff, pay for supplies (such as cleaning products, linens, and food for the restaurant), and fulfill tax obligations. All of these expenses are a direct result of the tourist’s presence and spending at the hotel.
In contrast, indirect effects occur when businesses that supply goods and services to the hotel (such as food producers or cleaning supply companies) experience an increase in demand due to the increased hotel revenues. Induced effects are the broader impacts on the economy when employees of the hotel and its suppliers spend their wages in the local economy.
Thus, the changes in hotel payments for wages, taxes, and supplies are examples of direct effects, as they are directly linked to the immediate actions resulting from tourist spending.