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The visitor economy is all the economic activity that exists because people come to a place from somewhere else and spend money there, whether they come for a holiday, a congress, a football match, a hospital appointment, a wedding or a Sunday lunch. It is wider than tourism as most people picture it. The hotel and the airline are in it, of course, but so are the taxi driver, the pharmacy opposite the conference center, the farmer who sells eggs to a resort kitchen, the cleaning firm that turns over short-stay flats on Saturday mornings and the museum shop that would close without its weekend crowd.
I like the term because it moves the conversation away from one sector and towards a place. Say “the tourism industry” and people picture hotels, tour operators and attractions. Say “the visitor economy” and a less comfortable question follows quite naturally: whose income, and whose costs, depend on people who do not live here?
Even the word visitor carries more than it seems to. UN Tourism’s statistical glossary counts as visitors both tourists who stay overnight and same-day visitors, and it includes residents travelling inside their own country as well as people arriving from abroad. So the family that drives in from the next province for a long lunch and an afternoon at the seafront belongs to the visitor economy just as much as the long-haul guest. In many destinations that short, domestic traffic is the steadier half of the business, even though it rarely gets a press release.
Visitor money moves in rings, and the outer rings are the ones people forget
The first ring is the one everyone can see. The visitor pays the hotel, the restaurant, the ticket office, the transfer company. This is direct spending, and it is what most people mean when they talk about tourism revenue.
The second ring is made of the businesses that supply the first. A hotel buys laundry service, food, maintenance, printing and security. A congress hires an audiovisual company, a destination management company for transfers and excursions, a caterer, a sign maker and a few dozen temporary staff for the registration area. Very few of these suppliers would say they work in tourism, yet a weak season appears in their accounts within a month.
The third ring is what the people working in the first two rings do with their wages: rent, groceries, school costs, a car repair. WTTC’s economic impact research adds the direct, indirect and induced effects together and puts the total contribution of travel and tourism at 9.8% of the global economy in 2025. You can argue about any single headline figure, and economists do, but the method itself is a fair picture of how far visitor money travels once it lands.
Planning rarely looks beyond the first ring, at least in the destinations I know. A destination will know its hotel occupancy month by month, yet it will have very little idea how many local suppliers lost work when a large association meeting chose another city, or how many households in the district rely on seven months of seasonal wages to get through the other five. Event tourism shows the gap clearly, because a congress or a race fills the second and third rings in a concentrated burst and then empties them just as fast. The hotel reports a good week. The badge printer, the minibus owner and the student who worked the cloakroom are the ones who feel it when the date moves.
Who earns and who pays are rarely the same people
I am not complaining about tourism here. Visitor spending pays for a great deal that residents use, from restaurants that could not survive on local demand alone to flights that would not exist without inbound traffic. The difficulty is that the gains and the costs fall on different shoulders, and most reports only describe one side.
Put the main groups in one table and the imbalance is hard to miss:
| Group | What it usually gains | What it usually carries |
|---|---|---|
| Hotels, resorts and large operators | Room revenue, packages, group and congress business | Seasonal swings, high fixed costs, the struggle to keep good staff |
| Local suppliers (food, transport, print, technical) | Contracts that follow visitor demand | Last-minute orders, late payment, competition from suppliers brought in from outside |
| Seasonal and temporary workers | Wages, experience, a first job in the sector | Short contracts, irregular hours, months without income |
| Residents outside the sector | More restaurants, better connections, a livelier center | Higher rents, crowded streets and transport at peak times, pressure on shared spaces |
| Local public services | Local revenue, visibility | Extra demand on cleaning, water, waste and transport in exactly the busiest weeks |
The table is simplified, and many people sit in more than one row (the waiter who rents a flat in the old quarter, for instance). Still, it shows why the same season can feel like a success at a hotel association meeting and like a long, tiring summer at a neighborhood shop.
I have a frank criticism of our own industry here. The impact figures that hotel groups, tour operators and their associations put forward almost always describe the middle column and leave the right one empty. I understand why: these documents are written to argue for investment, flights, events and marketing budgets. But an argument that only counts gains is easy for residents to dismiss, and when they dismiss it, they often dismiss tourism along with it.
Residents are the biggest stakeholders and the least counted
Residents do not only live next to the visitor economy. They are part of its supply. They are the staff, the landlords, the parents whose children work summer jobs, the regulars who keep a café alive in February so that it is still there for visitors in June. They also share the same streets, beaches, parks and buses with every visitor who arrives.
A visitor economy is only as strong as the willingness of the people who live in it to keep sharing their place.
That willingness, which researchers study as residents’ attitudes toward tourism development, is not unlimited, and it is not fixed either. In the busiest weeks of a popular destination, sharing can turn into crowding, and crowding into the resentment people now call overtourism. Often what pushes residents over the edge is not the visitors themselves but what follows them: flats turned into short-stay rentals, a neighborhood grocery replaced by a souvenir shop, a promenade where locals can no longer find a bench in the evening.
I can imagine a hotelier answering that this is simply the price of success, and that residents also benefit from jobs and services. Partly true. But the benefit is uneven, and the people whose quality of life tourism wears down most are often the ones who earn least from visitors. A retired couple in the historic center does not work in a hotel. A young family priced out of their district takes little comfort from a better occupancy rate.
This is why I think destination development has to begin with the resident’s day and not only the visitor’s itinerary. When the public spaces that residents use every evening are kept lively and well looked after, visitors enjoy them too and pay for them indirectly through every coffee they buy nearby. When those spaces are turned over to visitors alone, the place slowly stops being worth visiting.
Leakage decides how much of the visitor’s money stays
The money a visitor spends and the money a place keeps are two different numbers. The gap between them is what economists call leakage, and in some destinations it is very large.
Leakage happens in ordinary ways. A booking made through an international platform sends a commission abroad before the guest has even arrived. A resort owned by a group based elsewhere sends its profit to headquarters. A hotel kitchen that buys most of its produce from distant wholesalers, because it is easier to deal with one large supplier than with twenty small ones, sends that spending out of the region. A congress that brings its whole production crew, staging and staff from another city leaves behind hotel nights and very little else.
Some of this is unavoidable. Not every destination can produce what a large hotel needs, at the quality and volume it needs, on a reliable schedule. But a lot of leakage is habit rather than necessity, and here the industry has real room to change. A destination that markets itself through food tourism while its hotels serve imported cheese and frozen bread is leaking twice: once in money and once in credibility.
The fix I keep hoping for is purchasing that is designed rather than defaulted. Hotels can split part of their buying among smaller local producers and accept a bit more administration in return. Event organizers can ask, at the planning stage rather than after the contracts are signed, which parts of the production a local supplier could take on. And local suppliers, for their part, can make it easier to be chosen by being visible, reliable and paid on fair terms, because nobody gives a contract to a firm they have never heard of.
The visitor economy needs a resident line in every report
So what would honest counting look like? It would not mean abandoning arrival counts, overnight stays or average spend. Those numbers matter and they are comparable over time. It would mean adding a few things beside them that describe the place rather than only the trade.
How much of visitor spending stays with locally owned businesses? How many local suppliers worked on the year’s large events? How many months of income do seasonal workers have, and what share return for a second season? How do residents feel about the number of visitors, and has that feeling changed? The questions are hardly exotic. Some are already part of serious destination surveys and of any decent destination management plan. They are just rarely the ones that make it into the slide shown to investors.
The industry has its own reason to want this. Hotels, agencies and event organizers depend on residents in ways they rarely acknowledge: as staff, as suppliers, as the people who make a place feel alive rather than staged. Knowing what residents get back from visitors gives a destination something to say when tourism is questioned, while an occupancy rate on its own leaves it silent once a neighborhood starts to push back.
For my part, I have stopped trusting any destination figure that a shopkeeper two streets from the seafront would not recognize.
How much of last year’s visitor spending can the people who live here actually see in their own street?