What economic impact does tourist leakage have on a destination?

Tourist leakage refers to the phenomenon where a portion of the revenue generated by tourism in a destination flows out to external entities rather than being retained in the local economy. When tourists spend money at foreign-owned businesses, hotels, or retailers instead of local enterprises, the destination experiences a reduction in the overall economic benefit derived from tourism.

This means that while tourists may contribute financially to the local economy, much of that money does not support local jobs or businesses, which can limit the economic growth that tourism might otherwise provide to the area. Consequently, the local economy suffers from decreased revenue, which can affect local services, infrastructure, and opportunities for residents. Understanding tourist leakage is vital for developing strategies that encourage more sustainable and locally-focused tourism practices.