As an award-winning leader in sustainable tourism, this project underscores our commitment to transparency and positive impact within the local economy.
Our initiative meticulously maps and labels the economic benefit distribution of over 80 of our day and half-day tours across Thailand, clearly indicating the geographical areas where economic benefits from each tour are felt. This effort marks a first of its kind in the industry, executed with an unparalleled level of rigour to offer clear insights to our travel trade partners and clients about who genuinely benefits from our tours financially.
Economic leakage — a term for when money from tourism flows out of the local economy — is a crucial issue we’re tackling. Often, funds escape local regions due to foreign ownership or reliance on imported goods and services. Transparent measurement of economic leakage is vital for creating a tourism industry that’s genuinely beneficial and sustainable.
Ewan Cluckie, one of our Co-Founders and our Director of Growth, explains, “Achieving zero economic leakage is unrealistic, sometimes locally provided alternatives are not viable, and it’s important that foreign investors receive a fair return on their investments since this incentivises participation. However, we must discern where beneficial investment ends and greed and exploitation begins. A standardised and transparent framework for calculating tourism’s economic benefits provides greater clarity for everyone involved.”
Economic leakage is particularly pronounced in destinations like Thailand, where international businesses often exploit the local resources and workforce. According to a UN report, 70% of Thailand’s tourism revenue leaks out of the country, and numerous recent reports within local and regional news media have revealed the significant challenges posed to local businesses by overseas entities concealing their foreign ownership through the use of local nominee shareholders – an illegal, yet extremely common misstep within the DMC sector here due to a historical lack of enforcement. By addressing these imbalances, the tourism sector can lead efforts to create fairer economic opportunities, ensuring that tourism benefits genuinely reach local populations.
While some argue that this high level of foreign investment contributes to GDP and job creation, it often leads to low-wage clerical work with limited opportunities for advancement. This results in locals being used as cheap labour, often facing discrimination and breaches of legal labour protections. Additionally, significant portions of revenue benefit foreign stakeholders, undermining genuine local economic advancement.
Reducing economic leakage benefits destinations by ensuring more revenue remains within destinations and local communities and goes hand-in-hand with ethical tax conduct towards fostering sustainable development and providing funds for improving public services and infrastructure. It empowers local stakeholders to address socio-economic inequalities and climate change initiatives effectively. Sustainable tourism thereby contributes positively to the local ecosystem, encouraging both economic stability and social and environmental progress.
The often overlooked factor impacting socio-economic sustainability is how travel companies manage their tax ethics and procedures. Taxation is crucial to evaluating the economic benefits that destinations receive. At Tripseed, we ensure that all our revenue and profits attributable to Thailand products and services are recorded in Thailand, where we also pay our taxes. Although this might appear as just common sense ethical governance, profit shifting to foreign countries is actually a significant issue in the DMC sector, diverting essential income away from local economies. This practice often prioritises maximising profitability over truly investing in the sustainable development of the destinations where travel is taking place. This leaves destinations bearing the full brunt of tourism’s negative impacts, and receiving very few of the positives in return.
Our project isn’t just numbers and charts; it’s a passion project aimed at making a real difference. We’re planning further phases to examine supply chains in related industries, revealing insights into revenue distribution and highlighting areas for development. This first phase introduces a labelling system that highlights the geographical beneficiaries of touring activities. Secondary and tertiary phases are already underway to disclose further details about the genuine economic beneficiaries of touring programs, and a complete company-wide disclosure will detail how much of Tripseed’s cost base goes toward benefiting local individuals and businesses versus how much leaks overseas to foreign-owned businesses and multinational corporations.
The latest revision of the methodology, still in development, dives into assessing the supply chains of industries such as petroleum companies to determine how the economic benefit is distributed from the purchasing of diesel and gasoline used for transportation. It will also examine the leakage from hotel properties, including their ownership and management structures, and import leakages such as amenities, produce, and imported beverages. The goal is to eventually publish our framework under flexible Creative Commons licensing to encourage industry-wide adoption, and reduce extractive and exploitative models.
With our combined decades of experience in Thailand’s DMC sector, we know first-hand how limited the genuine financial contributions really are to the local economy compared to the significant amounts sent offshore. Addressing this transparently felt like the right step forward.
Our initiative aims to set a new benchmark in understanding economic impacts within the tourism industry. By refining our methodology, we strive to uncover genuine socio-economic contributions to local communities and foster a tourism model prioritising ethical practices over profits.
This pioneering initiative aligns seamlessly with our mission of offering immersive and ethical travel experiences that foster cultural understanding and support social and environmental sustainability. By measuring and reporting economic leakage, we hope to empower our partners to ensure that destinations and local communities genuinely benefit from tourism, underscoring our commitment to creating innovative travel experiences that facilitate growth for all our stakeholders.
We invite individuals and travel businesses dedicated to sustainable transparency to join this initiative. A collaborative approach can redefine how the socio-economic impacts of travel are measured in destinations, setting a precedent for a more responsible industry. Interested parties are encouraged to contact our team at sustainability@tripseed.com for more information on how to get involved.
