The involvement of transnational corporations (TNCs) in tourism in low-income countries (LICs)

Transnational corporations (TNCs) play a significant role in the development of tourism, particularly in low-income countries (LICs). These countries often possess natural attractions and some basic facilities like hotels, but lack the necessary infrastructure to fully develop their tourism sector independently. As a result, they rely on TNCs, which are often headquartered in high-income countries (HICs), to manage, market, and expand their tourism offerings. Tourism is a major global industry, contributing significantly to economic activity and consumer spending worldwide.

Key areas of TNC operations within the tourism industry

TNCs are involved in multiple facets of the tourism sector, ensuring that they control various aspects of the tourist experience from travel to accommodation. Their operations are increasingly integrated, meaning they often manage several elements of the tourism chain under a single corporate structure.

Major sectors of TNC involvement

• Airlines - TNCs operate international and regional flights, connecting tourists from HICs to destinations in LICs.
• Hotels - Large hotel chains, often based in HICs, establish and manage accommodations in LICs, providing standardised services.
• Cruise lines - TNCs run cruise operations that include stops at various tourist destinations, often in LICs, as part of broader travel itineraries.
• Tour operators - These companies design and sell holiday packages, coordinating travel, accommodation, and activities for tourists.
• Travel agents - TNCs in this sector act as intermediaries, booking trips and providing information to tourists, often promoting destinations in LICs.

Stakeholders involved in tourism planning

Tourism development involves a range of stakeholders who influence or are affected by the planning and implementation of tourism projects. These groups have varying interests and roles in shaping how tourism evolves in a region.

Key stakeholders in tourism planning

• Tourism planners - Central to the process, they design strategies and policies for tourism development.
• Competitors - Other businesses or destinations that vie for the same tourist market.
• Employees - Workers in the tourism industry whose livelihoods depend on the sector’s success.
• Government - National or local authorities that regulate tourism and provide infrastructure or incentives.
• Residents - Local communities who live in tourist areas and are impacted by tourism activities.
• Activist groups - Organisations advocating for environmental, cultural, or social concerns related to tourism.
• Tourists - Visitors whose demands and behaviours shape tourism offerings.
• National business chains - Domestic companies that may partner with or compete against TNCs in the tourism market.

Advantages of TNC involvement in expanding tourism destinations

The presence of TNCs in the tourism industry brings several benefits to LICs, enhancing their ability to attract visitors and develop economically. These advantages often stem from the resources and expertise that TNCs can provide.

Benefits of TNC involvement in tourism

• Increased tourist demand - The visibility of well-known TNC brands, such as international hotel chains, often with prominent displays of national flags, can attract more visitors to a destination.
• High standards - Tourists, especially from HICs, expect quality services, which TNCs are better equipped to deliver compared to smaller, local operators.
• Introduction of new technologies and skills - TNCs bring advanced management practices, environmental technologies, and financial systems to LICs, boosting local capabilities.
• Enhanced productivity and sustainability - TNCs can improve the efficiency and long-term viability of the tourism sector and the broader economy.
• Diverse tourist activities - By offering a wider range of experiences, TNCs can inspire innovation among local businesses.
• Employment opportunities - TNCs create jobs, sometimes in greater numbers than local firms, contributing to economic growth.
• Better wages and benefits - Employees working for TNCs often receive higher pay and improved packages compared to those employed by local companies.
• Linkages with local suppliers - Some TNCs make efforts to collaborate with local businesses, supporting the regional economy.

Disadvantages of TNC involvement in expanding tourism destinations

While TNCs bring benefits, their involvement in tourism in LICs also has significant drawbacks. These disadvantages often relate to the unequal distribution of benefits and the prioritisation of corporate interests over local needs.

Drawbacks of TNC involvement in tourism

• Labour exploitation - Many jobs created by TNCs are part-time, seasonal, unskilled, and offer low wages, limiting the economic benefits for local workers.
• Resource depletion - TNCs often utilise local resources that could have been used to benefit the host country or its population.
• Wealth outflow (leakage) - A large portion of the revenue from tourism, including income from transport, accommodation, and dining, is transferred back to the TNC’s home country, reducing local economic gains.
• External decision-making - Investment decisions and the type of facilities developed are often made to maximise TNC profits and shareholder benefits, rather than addressing the needs of the local community.
• Widening global inequalities - The outflow of wealth from LICs to HICs through tourism contributes to a growing economic divide, as competitively priced holidays in LICs reinforce global disparities.