While tourism enterprises are mostly owned by private capital in capitalist countries, the state is usually involved in this sector. There are the following reasons for state intervention:
(1) National Economic Goals:
The main attraction of tourism for national policy makers is that it is an agent of economic development. The ratio of labour to capital and the rapidity of development compared to agricultural and manufacturing sectors make tourism particularly attractive to national policy.
The state may intervene directly as in Spain or indirectly via infrastructural investments in these industries.
International tourism offers an added attraction of earning foreign exchange. For these reasons most governments have become involved in the promotion of their tourism attractions.
(2) Political Legitimating:
Tourism can be used as an instrument of political legitimation. There are many examples of governments which have used tourism as a means of improving their international political standing. Spain, Israel and the Philippines have all consciously used tourism in this manner.
The reverse position can be observed and a prohibition on tourism can be used to record opposition to a particular Government. For example, for many years USA banned travel to China and Cuba and at present, the same policy has been applied to Libya’.
(3) Equity and Social Needs:
If access to tourism is left to itself, the distribution of income in society will be very uneven.
The state intervenes, reallocating access in order to bring about greater equity.
(4) Externalities and Social Investment:
Investment in airports or roads may not be profitable investments for individuals. Since there are positive externalities to be obtained from such investments, the state may undertake these investments.
(5) Regulation and Negative Controls:
Tourism services may be developed in such a way as to be harmful to the consumers or to the long run interests of the industry itself, i.e. a series of large hotels may be built with poor standards in a beauty spot. The state has to intervene to regulate the production and delivery of tourism services.
(6) Regional Development:
Tourism development tends to be unevenly distributed especially because of the uneven spread of attractions. Tourism has been used as an instrument of regional development policy.
In 1975, master tourism plan for Malaysia attempted to decentralise tourism from the urban areas of the west by developing tourist regions on the eastern coast.