IGCSE Travel and Tourism Practice Exam

What does leakage refer to in tourism?

1. The profit made from local sales

2. Tourist spending that remains local after expenses

3. Tax deductions for tourism businesses

4. Money spent by tourists on imported goods

The correct answer is: Tourist spending that remains local after expenses

Leakage in tourism refers to the amount of money that tourists spend which does not remain within the local economy. It relates specifically to the concept of how much economic benefit local communities receive from tourism activities. When tourists visit a destination, they often spend money on goods and services, some of which may be provided by local businesses. However, leakage occurs when a significant portion of this spending goes to external entities, such as foreign-owned hotels, international food chains, or imported goods, rather than benefiting local vendors or suppliers. Given this context, the correct understanding of leakage is about how tourist spending interacts with the local economy. The concept emphasizes the importance of encouraging local businesses to capture more of the tourist spending, thus reducing the amount of money that leaves the community. This makes option B the appropriate answer, as it encapsulates the idea of local profit retention versus expenditure flowing away from the local economy. The other options do not accurately represent the concept of leakage: profits made from local sales, tax deductions for tourism businesses, or spending on imported goods do not pinpoint the dynamics of how tourist spending circulates within the destination's economy.