Has Tourism in Mountain Destinations Become an Extractive Industry?

From Limited Investment to Corporate Dominance in Mountain Destinations: Has Tourism Become an Extractive Industry? Understanding the Extraction Gap©

In recent years, tourism has become a significant economic driver for many rural and outdoor destinations throughout the country. For many destinations, it brings revenue, creates jobs, and generates local sales and Transient Occupancy Taxes (T.O.T.). However, corporate ownership has become increasingly dominant in many rural and mountain destinations, especially those with limited economic development sectors, and concerns have arisen regarding the impact of these corporate players on the social impact of destination communities. Corporate ownership now extends to all aspects of mountain destinations. Look around at the brand names Hyatt, Four Seasons, Holiday Inn, Vail Resorts, Alterra, Starbucks—the list goes on.

This essay will explore the nature of large corporate interest and their extractive nature, the implications of corporate ownership in tourism, and how these factors contribute to mountain destinations' environmental and community impact.

Understanding Extractive Industries

Extractive industries are sectors of the economy that involve extracting natural resources from the Earth. These industries include mining, oil and gas extraction, logging, and fishing. They are characterized by their reliance on finite resources, often leading to environmental degradation, loss of biodiversity, and disruption of local communities. The extractive model typically prioritizes short-term profits over long-term community impacts and sustainability, often resulting in significant ecological and social costs.

Extractive industries are particularly relevant to tourism when considering their long-term impacts on destinations. Many tourism destinations depend on their natural environments, vibrant ecosystems, and the culture of local communities, all of which can be severely compromised by extractive activities. These industries are impacting the community and diminishing destinations' appeal. The disruption of local communities and cultural landscapes often erodes the authenticity and sense of place tourism seeks to promote.

Understanding the intersection of extractive industries and tourism is critical for fostering sustainable practices that protect a destination’s long-term viability while ensuring that communities benefit equitably from tourism development.

Historically, tourism development has evolved through a complex interplay of entrepreneurial ambition, community interests, and, increasingly, corporate investment. Mountain destinations, in particular, have been shaped by distinct phases of investment and ownership, transitioning from localized, community-oriented endeavors to a landscape dominated by large-scale corporate interests. This shift raises a critical question: Has the increasing corporate ownership of ski resorts, lodging, retail, and dining transformed tourism into an extractive industry that prioritizes profit over community and environmental sustainability? To explore this, it is essential to examine the historical progression of tourism development, analyze the lifecycle of destinations, and assess the implications of corporate dominance in mountain tourism.

Historical Context: The Evolution of Mountain Tourism

In its early stages, mountain tourism was primarily driven by local entrepreneurs and small businesses. In the late 19th and early 20th centuries, mountain destinations emerged as retreats for affluent travelers seeking health, leisure, and adventure. These early developments were often characterized by minimal infrastructure and localized ownership. Ski resorts, for example, began as modest operations run by individuals or families passionate about outdoor recreation.

The post-World War II period marked a significant shift. The rise of mass tourism, facilitated by advancements in transportation and growing disposable incomes, spurred investment in mountain destinations. Regional governments and small investors were pivotal in developing ski resorts, hotels, and amenities. During this phase, the focus was on community enrichment, fostering local economies, and creating employment opportunities.

By the late 20th century, however, the dynamics began to change. Recognizing the profit potential in mountain tourism, corporate entities started acquiring and consolidating ski resorts, lodging facilities, and retail businesses. This trend accelerated in the 21st century, with multinational corporations and private equity firms dominating the sector. The result has been a significant shift in the ownership structure, operational priorities, and overall character of mountain destinations.

Destination Lifecycle and the Role of Investment

The lifecycle of a tourism destination—exploration, involvement, development, consolidation, stagnation, and potential decline or rejuvenation—provides a valuable framework for understanding the impact of investment.

1. Exploration and Involvement: In the initial stages, destinations attract a limited number of adventurous travelers. Investment is typically minimal and localized, focusing on creating foundational infrastructure. Community engagement and environmental stewardship are often at the forefront.

2. Development: As the destination gains popularity, larger-scale investment becomes necessary to cater to increasing demand. During this stage, external investors are welcomed for their financial resources and expertise, helping build resorts, transportation networks, and modern amenities.

3. Consolidation and Stagnation: Corporate interests often dominate once a destination reaches maturity—investment shifts from expanding infrastructure to optimizing profitability. The focus tends to move away from community needs and environmental sustainability, emphasizing shareholder returns.

The extractive nature of corporate tourism becomes most evident during the consolidation and stagnation phases. The profit-driven model often results in practices prioritizing short-term gains over long-term sustainability, such as overdevelopment, resource exploitation, and homogenization of the visitor experience.

The Extractive Nature of Tourism

Extractive tourism, which prioritizes maximizing economic returns, often at the expense of local communities and the environment, can have significant social and cultural impacts on local communities. In our experience, we have encountered various examples that are part of our thinking. Below are some ways it affects these aspects:

1. Erosion of Local Identity: As tourism marketing focuses on the attributes of the destination, it can often dilute the character and culture of mountain destinations. This can often diminish their intrinsic value to the community.

2. Economic Inequality: While tourism can benefit local communities economically, much of the revenue generated by corporate-owned resorts and attractions often "leaks" out of the local economy; profits may be repatriated to corporate headquarters, leaving local communities with minimal economic gain. This economic leakage can perpetuate social issues and inequality, undermining the potential benefits of tourism.

3. Displacement of Residents: Land and property prices can rise significantly due to tourism development, pushing residents out of their homes and neighborhoods to make way for hotels, resorts, or tourist amenities.

4. Overcrowding and Strain on Infrastructure: Unchecked tourism can lead to overcrowded communities, overwhelming local infrastructure such as transportation, healthcare, and public services, and often reducing residents’ quality of life.

5. Cultural Appropriation: Extractive tourism often leads to misrepresentation or inappropriate use of cultural symbols, practices, and traditions for commercial purposes, creating a sense of exploitation and alienation within the community.

6. Environmental Impact: Many tourist destinations rely on natural beauty as their primary attraction. However, the influx of tourists can lead to environmental degradation. Overtourism has led to significant impacts, including increased litter, pollution, strain on local resources such as water and energy, and habitat impacts.

7. Cultural Commodification: The tourism industry often commodifies local cultures, turning local events and traditions into attractions for visitors. This can lead to a dilution of cultural heritage, as local communities may feel pressured to alter their practices to cater to tourist expectations.

Economic Leakage and Tourism Revenues vs. True Costs.

Economic leakage, where profits generated by tourism are siphoned away from local communities to external stakeholders, poses a significant challenge for host destinations.

For example, in the tourism industry, most stewardship programs employed by private-sector corporations and the private sector focus on individual businesses, not necessarily their impact on the destination. (Stewardship refers to the responsible management and preservation of a destination's natural, cultural, and social resources to ensure long-term sustainability. It involves balancing the needs of visitors, local communities, and the environment while fostering positive economic, social, and environmental outcomes.)

Hotel and restaurant stewardship programs focus on individual businesses, not the exogenous effects on the destination and community. A prime example is Vail Resorts' laudable “Zero Commitment” sustainability program, which includes Zero net emissions by 2030, zero waste to landfill by 2030, and zero impact on Forests and Habitat.

While these efforts are welcome, Vail does not commit to dealing with their resorts' social and operational impact, including traffic, congestion, workforce housing, etc. As with many corporate entities, those costs are often deflected to the local community. While corporate entities export profits to shareholders and investors, much of the collective impact of those entities falls to the local community, creating an Extraction Gap©. Suppose each corporation focused only on its revenues and, to some extent, its environmental impact but at the same time ignored the collective social impact of its operations, which impacts the local community (traffic, housing, etc.). In that case, they are not accounting for the actual costs of their profits and may be getting a public subsidy. Exporting revenues to make investments in other places and not investing those dollars locally impacts and, in many cases, diminishes the experiences of residents and visitors in the destination where those revenues were generated.

The Cost of Tourism: Taxes and Revenues vs. Impacts

One critical consideration in evaluating tourism’s sustainability is whether the taxes and revenues generated by tourism adequately cover its actual costs. As exemplified above, these costs include infrastructure development and maintenance, environmental degradation, social impacts, and long-term resource depletion. Studies have often revealed that the financial contributions from tourism—in the form of taxes, fees, and corporate revenues—fall short of addressing these comprehensive costs.

1. Infrastructure Strain: Tourism places significant pressure on local infrastructure, including roads, public transportation, water supply, and waste management systems. The taxes generated often cover only a fraction of the costs required to maintain and upgrade these systems to meet the demands of high visitor volumes.

2. Environmental Costs: Mountain destinations face ecological challenges, including water scarcity and biodiversity loss. The expenses associated with mitigating these impacts, such as habitat restoration or sustainable water management systems, are rarely covered by tourism-generated revenues.

3. Social Costs: The influx of tourists often leads to rising living costs, housing shortages, and the displacement of local residents. Addressing these social challenges through affordable housing initiatives or community support programs requires funding, which is often lacking in tourism revenue allocation.

4. Emergency Services and Public Safety: Increased tourism can strain local emergency services, including police, fire departments, and healthcare facilities. The funding needed to expand these services to meet demand frequently exceeds the contributions made by tourists and corporations.

What Can be Done to Understand the Situation- The Triple Bottom Line Framework

The question arises of what a destination can do to better assess the issues related to profit extraction in a destination. One tool to consider is the Triple Bottom Line, which is applied to the private sector.

The Triple Bottom Line (TBL) concept, coined by John Elkington in 1994, emerged as a response to the growing recognition that businesses and organizations must account for their broader impact on society and the environment, not just their financial performance.

Here's a brief history:

In 1994, John Elkington, a British management consultant and sustainability pioneer, introduced the TBL in his book Cannibals with Forks: The Triple Bottom Line of 21st Century Business. The concept framed sustainability as a balance of three critical dimensions: economic (profit), environmental (planet), and social (people). The idea challenged traditional accounting, urging businesses to measure success not only by profit but also by their impact on the planet and the well-being of people.

The concept gained traction among businesses, non-profits, and governments as sustainability concerns like climate change, deforestation, and inequality became more prominent. It became a foundational framework for corporate social responsibility (CSR) initiatives, encouraging businesses to integrate sustainable practices into their operations.

The Triple Bottom Line remains a critical framework for driving sustainable development. It fosters an understanding that long-term success requires balancing economic, environmental, and social priorities.

The Triple Bottom Line (TBL) Concept and Its Application to Mountain Destinations

The Triple Bottom Line (TBL) framework evaluates success across three interconnected dimensions: economic, environmental, and social performance. It moves beyond traditional financial metrics to include the well-being of people and the environment. It is particularly relevant for corporate ownership in mountain destinations, where tourism and development can significantly impact communities and ecosystems. This framework enables and empowers communities and local governments to better assess the impact of corporate entities' “Extraction Gap” and the resulting impacts on a community.

As is often the case, corporate ownership has been interested in financial performance and profit extraction. From a local economic perspective, corporate investment generates employment and local taxes. Additionally, many corporations in mountain destinations are mindful of environmental impacts, especially from a regulatory standpoint in which agencies impose requirements and individual organizations' stewardship efforts.

Many corporately owned businesses fall short in terms of their social impact on the local community and the collective impact of all entities on the destination. This is problematic from an individual corporation's perspective and the collective impact of the tourism industry on local communities. Significantly, few mountain destinations in the West do not experience traffic, crowding, congestion, housing issues, and low wage growth due to the dominant corporate presence in their destination.

The shift from localized investment to corporate ownership in mountain destinations has fundamentally altered the dynamics of tourism development. While corporate investment has brought economic growth and modernization, it has also introduced challenges that align with the characteristics of extractive industries. Addressing these challenges requires a concerted effort from corporations, governments, communities, and tourists to prioritize sustainability, equity, and long-term viability.

Tourism in mountain destinations need not remain extractive. By understanding the true cost of the social and environmental impacts on a community, it is possible to mitigate the impact of extractive tourism practices and create a tourism model that benefits all stakeholders, not just corporate shareholders. This transformation requires a paradigm shift, but the cost of not making changes can further negatively impact the destination, the community, the tourism industry, and the corporate entities and their shareholders that benefit from tourism.

A Path Forward

Minimizing the impact of corporate revenue extraction in mountain destinations requires a path that prioritizes equitable economic distribution, environmental stewardship, and community empowerment.

Mitigating the impacts of extractive tourism requires a holistic approach that starts with understanding the actual social costs and extends to implementing sustainable and equitable tourism practices. Below are actionable steps designed to stimulate discussion on mitigating the Extraction Gap in mountain destinations. While not exhaustive, and some may not be feasible in some destinations, they are designed to begin to reframe the discussion to better balance the corporate interests with the social and economic costs of extractive tourism that destinations are bearing.

1. Understand the True Social Costs

• Conduct Social Impact Assessments (SIA): Assess tourism’s effects on the local community, including housing, low wages, and benefits.

• Map Stakeholders: To understand their perspectives and identify and engage with affected groups, such as residents and local businesses.

• Value Ecosystem Services: In economic calculations, account for environmental degradation, road impacts, loss of biodiversity, and cultural erosion to highlight hidden costs.

• Quantify Inequities: Analyze disparities in who benefits from tourism revenues versus who bears the burden of its negative impacts.

2. Promote Responsible Tourism Development

• Enforce Land Use Policies: Protect community spaces from overdevelopment by prioritizing local needs in zoning regulations.

• Encourage Small-Scale, Locally Owned Tourism: Support family-run businesses, local artisans, and cultural practitioners rather than large, external corporations.

• Limit Visitor Numbers: Implement carrying capacity guidelines to prevent overcrowding and strain on local infrastructure.

3. Support for Local Businesses:

• Encourage visitors and residents to support local businesses first. Work to reduce economic leakage.

• Heavily promote locally owned accommodations, restaurants, and cultural attractions as part of the visitor experience. Promote the “local experience as a distinct experience for visitors to consider.

4. Tourism Taxes and Fees:

• Tourism Taxes and Fees: Implement taxes on accommodations, activities, or attractions, with revenue reinvested into local infrastructure, conservation, and community programs.

• Environmental Impact Fees: Charge visitors fees for accessing sensitive natural or cultural sites to fund preservation and offset degradation.

• Parking Permits: Introduce parking fees or permits in high-traffic areas to manage congestion and reduce vehicle pollution.

5. Permitting and Ordinances as a Management Tool:

• Tourism Business Licenses: Require businesses to obtain permits, ensuring they meet sustainability and community benefit standards.

• Event Permits: Regulate large-scale events like festivals or conferences to minimize noise, overcrowding, and environmental degradation.

• Visitor Entry Permits: Introduce permits for accessing protected areas, such as beaches, parks, or cultural sites, to control visitor numbers and fund maintenance efforts.

6. Protect Worker Rights

• Fair Wage Ordinances: These ordinances require tourism businesses to pay their employees a living wage, ensuring that economic benefits are distributed fairly.

• Workplace Standards: Enforce health and safety regulations in tourism-related jobs to protect workers from exploitation.

7. Limit Carrying Capacity

• Visitor Caps: Use ordinances to cap the number of visitors in areas prone to over-tourism, maintaining a balance between tourism and community well-being.

• Timed Access: Introduce time-based permits for high-demand attractions to spread visitor flow and reduce peak-time congestion.

A Vision for the Future

Mountain destinations must adopt a model where corporations act as partners rather than extractors. This path forward emphasizes shared value creation, where businesses, communities, and ecosystems thrive together. By integrating policies prioritizing local empowerment, sustainability, and equitable growth, destinations can ensure long-term prosperity without sacrificing their natural and cultural heritage.

About the Author

Carl Ribaudo is a tourism strategist, consultant, speaker, and writer based in South Lake Tahoe. He is passionate about the outdoors and can be reached at carl@smgonline.net.