Page 160 - Tourism The International Business

8. Developing tourism

Financial incentives for tourism development include loans, loan guarantees, fiscal incentives and subsidies.
Private banking institutions could be involved in giving loans. Many governments have also underwritten matching
loans. The other incentives, if offered, would come from the public sector. A loan guarantee occurs when the host

government co-signs or guarantees the loan. Fiscal incentives can take the form of reduced taxes on investments or
income. This may also include such things as the relaxation or suspension of import or real estate taxes. In other
cases, cash contributions, namely a subsidy, have been made to private businesses to encourage their development.
Such incentives should be made carefully and selectively. Too often communities have given financial incentives
to businesses on the promise of future economic benefits to the community. But many times these benefits (jobs,
taxes and revenue) did not materialize. Communities have to weigh carefully the up-front costs of incentives against
the likely future benefits.

Legal environment
Government regulations in the US have increasingly affected all businesses, and tourism businesses are no
exception. The objective here is to determine the extent to which government affects tourism development and to

identify legislation that would hurt the development process. This analysis will serve to guide developers through
the legal maze to the right agency, office or person to approach regarding regulations that affect the development
under review. It will also point out to entrepreneurs the cost and risks involved in a developmental effort.
A framework for investigating the impact of the legal environment is suggested in Exhibit 55. This table
identifies the basic categories of the legal environment that impact tourism development.

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