Capital investments, tourist tax and tourism development: The case study of Armenia

Abstract

Tourism receives money from people and places, but it gives back very little. In this case many countries apply tourist tax, which tourists pay while staying at hotels. The collected money is used for financing tourism development projects. The correlation is made between some factors of tourism, which shows that many factors contribute to tourism development. The regression model was created which shows that tourism contribution to GDP will be changed depending on capital investments in tourism, government spending on tourism, international arrivals and receipts from international arrivals. The article proposes applying tourist tax in Armenia, and money from it is offered to be spent on different programs for tourism development: Tourism marketing, branding, investments in tourism infrastructures, etc. The survey done in the article shows that tourists mainly agree with the application of this tax and they indicate the necessity of using the gathered money more effectively. The cross tabulation and Pearson Chi Square analysis show that tourists who think that applying tourist tax in Armenian hotels is a good step for raising money for this sector development, will continue to stay at hotels if the tourist tax at the rates of 1-3% is applied.