Tourism Minister Patricia de Lille has proposed the creation of a specialised police unit to safeguard tourists in South Africa. This initiative has sparked a nationwide debate, dividing public opinion between proponents and critics. While some argue that the idea enhances safety, others raise concerns about its implications. De Lille’s proposition is not without precedent. Countries like Brazil, Russia, Thailand and India operate similar tourist police units to ensure the safety of tourists and bolster the tourism sector’s reputation.
Many countries, especially developing ones, tend to prioritise tourism because neoliberal economic thinking places the global tourism industry as a major driver of economic growth, particularly for developing countries that rely on it for foreign exchange and jobs. As a result, these countries divert meagre public resources towards supporting the industry and even compete against one another to attract visitors, generally from the Global North. However, the efficacy of neoliberal assertions regarding tourism’s benefits for the Third World remains deeply contested as they exist within a global economic framework that often siphons wealth from the South to the North.
Typically, tourism metrics focus on the volume of visitors arriving at airports and other entry points under the assumption that increased foot traffic correlates with economic benefit. However, the critical question remains: How much of the financial expenditure by tourists remains within South Africa? This issue complicates De Lille’s proposal, making it difficult to justify from economic and political grounds. The initiative appears to prioritise the safety of tourists over addressing the pressing needs of underprivileged areas that face rampant crime and other socio-economic marginalisation.
Even more disturbing is that the tourism sector, like many others in a globalised economy, exhibits a starkly unequal distribution of benefits. The dominance of powerful global economic actors in various domains, including hospitality, transportation and cross-border financial transactions, compounds this disparity. Such concentration affects the flow of value within the industry, where developing nations bear the costs of tourism. At the same time, profits remain or are funnelled back to the corporations’ home countries.
Adding to this challenge is the tendency for financial transactions to be managed outside local markets. This ensures that significant tourism revenue does not contribute to the local economy and may even be repatriated almost immediately. This opinion piece aims to unpack the structural dynamics of global tourism, elucidating how these frameworks empower economic actors in the Global North at the expense of developing economies. Hence, this viewpoint will help clarify why De Lille’s proposal is hard to back.
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- The Dominance of International Tourism Chains: Hotels and Financial Flows
Global brands like Marriott, Hilton, InterContinental Hotels Group (IHG), Wyndham Hotels & Resorts and Accor Hotels dominate the luxury lodging industry. These international corporations have built a strong market presence mainly through franchising and management agreements. The franchise model is hugely popular in hospitality. Owners license everything from branding to loyalty programmes in exchange for fees and royalties, gaining powerful global distribution and marketing capabilities. This method enables them to control operations and capture a large share of tourism earnings in developing markets.
As these global brands grow their market presence, they overshadow smaller, locally-owned establishments, reducing the opportunity for local businesses to thrive. It is no secret that international travellers prefer these famous brands in popular tourist destinations such as the Caribbean and Southeast Asia. These brands act as massive siphoning machines, extracting money from local economies by repatriating profits abroad rather than reinvesting in local infrastructure or social services.
A similar pattern emerges in the airline industry, where major carriers such as Emirates, British Airways and Delta dominate long-haul travel. These airlines not only dictate ticket prices but also influence the accessibility of destinations, often favouring well-established airports in developed countries. This limits tourist flow to regions in Africa or Latin America, where higher fares for comparable distances discourage travel. This excludes European ‘privatised’ destinations like Cancun, Cape Town, Bangkok or Rio de Janeiro. Such disparities diminish economic growth prospects for communities that depend on tourism revenue.
The tour operations and travel agency sectors further entrench inequality. Large tour operators like TUI Group wield significant control by offering package deals that include accommodation, transportation, and activities, often at prices local companies cannot match. TUI Group wholly or partially owns several travel agencies, hotel chains, cruise lines, retail shops and five European airlines. Due to its diversification, TUI’s main competitors span various travel industry sectors, including BCD Travel, Thomas Cook Group and online travel companies like Expedia and Booking Holdings.
The economies of scale these large operators enjoy allow them to set lower prices while imposing burdensome commission structures on local partners. As a result, much of the revenue from tourist packages goes to the multinational operators who design and market the tours, leaving local tour companies with only an insignificant share. Similarly, online travel platforms such as Booking Holdings and Expedia dominate the digital booking landscape and charge local businesses significant commission fees, sometimes as high as 30% of the total booking cost. This substantially reduces the profits of hotels and tour operators in countries where tourism is crucial.
Moreover, payments made via these platforms are processed by these companies through financial institutions based in regions like Europe or North America rather than directly in the destination country. When a traveller books a hotel or tour in Thailand or Kenya, the payment does not go directly to the local hotel or tour provider. Instead, it is first processed through a network of international financial institutions, including the company’s centralised payment system, before reaching the hotel or airline. The result is a drain on local economic resources, as significant portions of tourist spending end up in the bank accounts of multinational corporations rather than circulating within the host economy.
Concerns about the US dollar’s dominance in international transactions also extend to the tourism industry, where this privileged currency plays a significant role in shaping financial dynamics. In global travel and tourism, the US dollar serves as the primary currency for various cross-border transactions, from booking flights and accommodations to purchasing tours and other services. This predominance influences the flow of money within the industry and has several economic implications for destination countries, particularly developing economies.
Using the US dollar in tourism significantly affects local businesses’ access to international markets. Companies in countries with limited access to dollar-denominated financing may face challenges in expanding their services or upgrading their facilities to meet international standards. This can perpetuate a cycle where global players with easier access to dollar-denominated credit dominate the market, overshadowing local businesses.
- An Invisible Drain on Developing Economies
While the general focus on tourism is on its potential for fostering economic development, particularly in developing nations, revenue leakage is a critical challenge plaguing this sector. Revenue leakage significantly hampers the financial benefits that should ideally accrue to local economies. This means that a considerable portion of the expenditure by tourists fails to circulate within the host country, primarily due to various systemic and operational factors.
The revenue leakage phenomenon is fueled by the importation of goods and services tailored to meet the expectations of international visitors. High-end establishments such as luxury resorts and gourmet restaurants frequently source premium products from foreign suppliers, ranging from exotic foods to fine wines. While these offerings cater to tourists’ desires for familiarity and comfort, they effectively siphon off essential revenue that could otherwise bolster local businesses and contribute to economic growth. This explains the South’s lack of domestic production of fast-moving consumer goods.
The predominance of foreign-owned enterprises in the tourism sector exacerbates revenue leakage. Hotels, airlines and tour operators that are not locally owned repatriate their profits to parent companies headquartered abroad. This financial outflow is particularly pronounced in popular tourist destinations like Thailand and the Maldives, where the economic ramifications can be profound. Instead, funds that could be reinvested in critical areas such as infrastructure, education and healthcare are lost to foreign interests, thereby stunting local development.
The centralised nature of financial transactions adds to the complexity of revenue leakage. Even when services are rendered locally through a branch or a certified provider, payment processes involve international banking systems that facilitate the rapid transfer of funds overseas. This not only diverts money away from the local economy but also reinforces a cycle of dependency on external investment. De Lille’s motivation for tourist police may be due to this dependency and the absence of a concrete strategy to boost domestic demand.
South Africa’s liberalised economy has concentrated power in the tourism industry, creating significant barriers to entry for local entrepreneurs. Establishing businesses such as hotels, resorts, and tour companies requires substantial capital, which locals lack. Consequently, foreign companies find it easier to expand their reach while local businesses struggle to gain a foothold. International companies dominate high-value segments in major tourist destinations like Riviera Maya (Mexico) or Serengeti (Tanzania), while locally owned enterprises remain confined to low-margin services.
- Unequal Distribution of Economic Value and Mass Tourism’s Hidden Price
Online booking platforms play a crucial role in the tourism industry, but their high commission rates divert significant revenue that could help boost local economies. Moreover, the tendency for foreign-owned businesses to repatriate profits means that even in thriving tourist hotspots, the benefits do not trickle down to the surrounding communities. For instance, numerous luxurious resorts are owned by foreigners in Bali, Indonesia.
While they do provide employment opportunities, wages are typically low and the inflated cost of living in these tourist-centric areas further curtails the economic uplift that might be anticipated. De Lille rushes to protect tourists but says nothing about gentrification problems in the Western Cape, which has left the local population on the fringes. Major European cities like Barcelona have raised concerns about mass tourism and Air BnB on short-term rentals. Also, iconic destinations such as Venice and the pristine beaches of Thailand have witnessed the adverse effects of mass tourism, including overcrowding and ecological degradation.
The infrastructure required to accommodate large volumes of visitors places immense pressure on local resources, including water and energy, while generating waste that local governments must manage. Consequently, while multinational corporations generally take all the profits generated from tourism, local authorities and communities disproportionately bear the financial and environmental costs of maintaining and sustaining tourism infrastructure, further entrenching inequality.
- Moving Towards a More Equitable Global Tourism Industry
De Lille should spearhead a global movement to transform the international tourism industry by advocating for policies that empower local businesses and ensure a more equitable redistribution of economic benefits within host communities. UN Tourism claims that tourism is the world’s largest growth industry. However, tourism in Third World countries is an industry run by and for the rich, more powerful nations and their corresponding multinational corporations. De Lille’s tourism police will add to this unfairness and divert scarce resources to the privileged domestic and global elites.
For a country like South Africa, the focus should be on strengthening local supply chains and supporting local farmers, artisans and service providers to ensure that tourism benefits a broader population segment. Additionally, initiatives encouraging local development and promoting environmental sustainability can enhance tourism’s positive impact. As long as South Africa still commits to neoliberal economic theory and avoids topics like land reform, tourism will continue serving the few. Ultimately, tourism will be affected by social upheavals and crime, and policing might not be a solution.
This post was originally published on here
