Wed, 04 September 2019
A business, with its relative simplicity, can be easy to understand and explain. You have a product or service that is available for sale at a given value. At the other end, there are people who want that same product or service and are willing to pay the said price for the same. This is how the business starts to make money. But an economy is a far more complex system – however, the basics of what govern it are the same.
The economy itself is the core offering. All the variety of business activities that operate within that economic system i.e. banking and finance, goods and services produced or traded, hospitality services, healthcare and education, support this core offering. Each of these business activities has a multiplier impact on the economic system and allow it to earn enough money for business and welfare activities.
For the Bahraini economic system, hospitality offers tremendous potential. This stems from the ability of tourism to impact a very large number of factors of economic activity. This is true for every economy, but for Bahrain, its unique geographic position and global diaspora of population make it a very interesting destination.
For every tourist attraction and,every hospitality service established to support them, the impact is manifold. It creates employment at the construction stage as well as for implementation. It provides an avenue for locals to spend local currency thereby enabling currency churn. For locals, this means that the overall quality of life improves. In addition, the emotional and social benefits of having avenues for leisure activities have significant intangible benefits.
Beyond locals, the benefits simply multiply. As people from other countries visit, local currency gets exchanged for foreign currencies. This has a stabilising impact on the economy and reduces its dependence on just one currency to maintain economic activity. When foreign currency is exchanged, it also adds to the money supply in the local economy because cash that was not generated in Bahrain is being spent and, thereby, added to the Bahrain economic system.
With each addition of hospitality and tourist attractions, usually, global brands offering hospitality services begin to enter the country. This sets off an increase in tourist activity which, again, increases interest in the country.
Global brands often mean that not only is employment generated, but local talent that’s hired is usually offered international training thereby expanding the skill sets of the population. This can have a spin-off as local talent goes on to establish hospitality ventures of international standards in the Kingdom.
As foreign visitors and international businesses increase, the social interaction with foreign cultures increases. As money is exchanged between Bahrain and other countries, the foundation of international economic relations strengthens significantly.
As tourist activity rises, the fundamental infrastructure of the host country is better utilised. Transport services, healthcare, local shops – they all benefit. Airlines witness better traffic movement and connectivity improves, which helps all business activity.
Keynesian economic theory says that to stabilise an economy, the state sometimes needs to simply dig trenches and fill them up to generate employment and initiate economic activity. The idea is supported broadly by either of two economic principals i.e. either you wait for demand and supply infrastructure and services for the same; or, you build the infrastructure, offer the services and then invest in marketing to create the demand. For tourism, it must always be the latter. Perhaps, the way forward is to build the hotels and tourism structure, and then fill them up.
You can follow Pria on Instagram at money_cues or visit http://www.i2d-consulting.com to know more about her professional experience.