The fight against poverty: Leveraging the opportunities associated with tourism

The UN’s Agenda 2030 sets ambitious development goals, such as a world without poverty achieved through sustainable economic growth. The tourism industry can make an even greater contribution to achieving those goals if the German policymakers remove the obstacles it faces.

Creating new “local” perspectives

Tourism is an expanding industry, even in the world’s structurally weak regions. Tourists spend more than half a trillion US dollars in low and medium-income countries every year. Investments in those countries’ tourism sectors have massive positive impacts. The Robinson Club being built on the Cape Verde Islands, which is due to open in autumn 2019, will provide up to 300 permanent jobs. It’s an additional medium-sized business that TUI is setting up on the island – with close ties to the local economy, because most of the suppliers are regional farmers and businesses. More than 80 euros for each overnight stay remain in the destination country according to a study of Cyprus by PwC and TUI. The stabilizing effect of tourism in northern Africa and other countries is also helping to reduce global migration flows to Germany and Europe because a lack of economic perspective is one reason, besides dissatisfaction with political regimes, that drives migration.

European Parliament is overshooting the mark

The European Parliament’s proposal doesn‘t take this progress adequately into account in its current debate on a directive for accessible products and services. A last-minute amendment changing the European Commission’s original proposal envisages the conversion of all accommodation establishments in the EU. All existing communal areas like conference rooms and – depending on the establishment’s size – a minimum number of rooms will have to be fully accessible. That simply isn’t commercially viable in many cases. In others, it isn’t architecturally possible and, overall, it lacks any sense of proportion. Another thing lacking is planning certainty, and without appropriate transition periods to comply with such regulations, many hoteliers would face bankruptcy. The fact that the European Parliament is making this demand without having given any consideration to the consequences highlights its shortcomings. In the upcoming trilogue negotiations, member states will have the opportunity, via the Council of Ministers, to support the original European Commission proposal and ensure practical improvements to the legislation.

Tourists spend around 400 billion US dollars every year in developing countries, providing them with prospects for stability and prosperity. So the tourism industry is a strong development aid partner.

German policymakers can do far more

Instead of supporting the travel industry as a key partner in the fight against poverty and causes of migration, the German government is making both tourism companies and holidaymakers pay. The money they pay for the following taxes and levies could be spent and invested in the destination countries:

  • Air transport tax: This tax was introduced in 2011. It affects all flight departures from Germany and provides the exchequer with a total of one billion euros every year. It costs the tourism industry around EUR 350 for each job it creates in Egypt:
  • Holiday tax: The German tax authorities pocket additional tax revenue for hotel rooms, even in developing countries. Tour operators are required to pay trade tax on purchased hotel room contingents. TUI partners in other countries cannot understand why the German exchequer is artificially raising the price of overnight stays abroad with its so-called “trade tax add backs”. They mean that income from tourism at the destinations is taxed by the German revenue authorities. It’s an unintended redistribution of income by the legislators that is having a negative impact on development cooperation.
  • Air security costs: All costs for airport security checks in Germany are paid by the passengers and the airlines. In other countries such as the USA, Spain and Italy the governments either share the burden of costs or pay them all.

Germany policymakers are called upon to eliminate these massive obstacles to growth through tourism in developing countries. They have to put an end to this special national strategy for air transportation and holiday tax, and for security costs.

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