For a domestic or international tourist intending to spend his Kerala travel offers more than one can imagine at affordable costs. What a tourist will have to shell out to stay and move around at a tourist destination in Europe or North America is more than enough to stay in Kerala for a week. The direct or primary expenditure includes the amounts paid by the tourist to hotels, restaurants and other enterprises for the goods and services used by them, as well as transactions involving bank cheques and the use of the credit cards.

Indirect expenditures relates to the incomes derived from the direct expenditures on the second and successive round of circulation of these funds for goods and supplies purchased. Induced expenditures are those that are generated by direct and indirect injection of tourist funds and that which provides additional consumer income to employees working in tourism related establishments and those operating in support of such industries.

It may be useful to illustrate the process of distribution of funds by specific examples, on the basis of a study made sometimes back by the Societe Fiduciare Science pour l’ Hotellerie in Switzerland, where the receipts and expenses (on a percentage basis) were estimated. It helped to understand better the distribution process through which the income generated from a tourist passes on. With the advent of package tourism in Kerala the same pattern is now being witnessed in the state.

An analysis of the inventory costs, the financial changes and how the expenditure under different heads flowed into various channels over a wide area of the national economy is a must for the policy decision makers. These funds not only benefited the industries that provided goods and services directly required by the hotels, but also other public services like utilities, banks, insurance firms and transport companies, which helped the government also to earn much in the form of taxes.