Home » Book Reviews

Reviewed by Dr Mark Hampton, University of Kent, Canterbury UK.

Apart from iconic palm trees
drawn by cartoonists symbolising tax haven islands, offshore finance and tourism are not normally
seen as being closely associated,
yet as Linda Ambrosie discusses in fascinating detail in her book, there is more than just proximity linking these two giant global industries. Using extensive material from
her research on Cancun, Mexico Ambrosie details how the global tourism industry operates almost in symbiosis with the offshore finance business.

The book has some very technical parts which, as she explains in the clearly signposted introduction, can be skipped if readers are already familiar with the world

of transfer pricing and other tax dodging techniques used regularly by multinational companies. This book is an excellent introduction

to how tourism multinationals such as TUI (Germany),Thomas Cook (UK) and Melia Hotels International (Spain) regularly exploit offshore loopholes to massively reduce their tax liabilities in the tourist destination itself.

The Cancun case study is particularly interesting with a level of detail that clearly sets out how this massive tourism development along the Caribbean coast emerged. In doing so she casts a forensic light on

the murkier side of this oft-cited tourism development case study. Ambrosie’s book helps explode the popular narrative about Cancun’s development since the 1970s.

This story, similar to the common narrative about Bali’s Nusa Dua enclave, presents successful
tourism as being the result of wise government planning and innovative

international private investors who then build a successful tourism destination. It then helps a poor region develop by creating large- scale employment, sizeable tourist expenditure and (eventually, given tax breaks and other incentives) government revenue through taxation of the successful tourism enterprises. That is the commonly- told version of how hosting tourism should lead to economic growth in developing countries. However, Ambrosie actually shows, using original documents that she helped unearth, that the Mexican central bank drove the Cancun development, bankrolling the initial $2 million study in 1967-8 and then, behind the scenes, how it drove Mexican official investment since international investors were very wary.

Once the first heavily subsidised hotels were operating amid publicly financed infrastructure, international investors then started to appear and, as Ambrosie shows, the scale of the development increased rapidly with booming hotel construction and room capacity rising to host more

than three million tourists a year. She notes that although Cancun

did indeed create significant employment in the region, as the business model of international tourism has changed, so the local economic benefits have decreased significantly. Her argument partly revolves around a key change in much international tourism, that is, the rise of all-inclusive resorts where the visitors stay inside the tourist bubble of the resort hotel with all meals, drinks and most activities prepaid.

Other studies have clearly shown that linkages to the local economy from all-inclusives are far weaker than from conventional tourism when tourists spend locally on meals, excursions and activities (cruise ships being the ultimate ‘all-inclusive’ having some of the weakest linkages of all). This

is increasingly understood in
the tourism and international development literature, as well as by local communities such as in St Lucia, among other destinations, where there have been significant local protests about all-inclusives.

However, Ambrosie’s work significantly adds to our understanding of how the offshore world further reduces the benefits

of this all-inclusive tourism to the host countries. Her systematic discussion of the techniques of transfer pricing, the use of offshore companies for booking and detailed company organigrams clearly illustrate how tourism multinationals are able to divert profits from

their lucrative all-inclusive enclave operations in developing countries such as Mexico. Ambrosie argues that Cancun, rather than being a net contributor to Mexico’s economic growth, is now a ‘fiscal drain’.

Her underlying argument about the tourism multinationals is that their strategic game plan has become more focussed on highly complex corporate structures for tax minimisation rather than creating profit from what was their original core business in resort hotels or tour operations for leisure tourism. In fact she argues boldly that the basic model of international tourism in developing countries is now fundamentally flawed:“public sector mega-resort development no longer leads to poverty alleviation and reduction in income disparities in emerging economies” (p121).

Ambrosie is right to highlight this concern, buttressed by her detailed case study, and this crucial argument deserves more and wider discussion.

Although the book is rather technical in places and data-dense, it is well written. Ambrosie comments on the unavoidable complexity of how tourism multinationals dodge their tax liabilities but she encourages the reader to look past the ‘smoke and mirrors’ to see the mechanisms that are revealed. She notes the “extreme complexity, yet agility of these groups to constantly re-invent themselves, with shifting brands, shifting products, shifting assets and shifting alliances” (p108).

In this she could easily also be describing other multinationals, not just those in the tourism business. The book is not a quick nor an easy read in places, but it makes a real contribution to our understanding of modern tourism multinationals and how tax and tourism are, in fact, increasingly intertwined in the global economy with growing negative impacts for host destinations and local communities.




Maximiliano E. Korstanje⇑ Department of Economics, University of Palermo, Buenos Aires BUE

Sun & sea tourism: Fantasy and finance of the all-inclusive industry

By Linda Ambrosie. Cambridge Scholars Publishing (http://www.cambridgescholars.com/, Newcastle upon Tyne, England) 2015, xiii+298 pp (figures, tables, bibliography, index), Hb £52.99. ISBN: 978-144387804-3.

Once, mythology tells, humans were exiled from Eden for their arrogance. Banished from paradise, they tried to replicate the archetype of a lost paradise on the earth (Cantallops & Cardona, 2015; Korstanje & George, 2015). This mythical allegory not only has been exploited by business models but by tourism-related experts for more than five decades. This book does not offer an anthropological viewpoint about how the allegory of paradise lost is formed; rather, as Ambrosie puts it, it reveals the evolutions of the markets and their effects on marketing paradise on the tourism economies of Latin America and Caribbean destinations.

The act of producing and selling fantasy is the touchstone of this valuable book. However, a nation’s economic security is undermined whenever its fiscal regulation cannot be ensured. The tour- ism sector especially is monitored by governments suspecting tax evasions. In particular, some offi- cials are complicit with private sector investors involved in international tourist ventures. The main thesis of Ambrosie is that even if tourism generates profits, creates new jobs, and pays taxes in order for state to enhance their fiscal balance, this does not necessarily crystallize into substantial improve- ment for community. Tax avoidance conjoined with inefficiency in fiscal management by government are two of the main reasons, the enclave tourism industry is far from being sensitive to economic cycles. Of course as Ambrosie adds, this is nothing new, unless by the fact that her focus is on the con- flicts between private and public sectors.

In Part I, readers will find an in-depth discussion of enclave tourism particularly private interests and its evolution. In this section, the author describes the tactics by which private sector corporations avoid paying taxes at the same time governments implement more aggressive programs of tax-plan- ning. To this reviewer’s knowledge, this represents the most interesting side of the book simply because leads to an understanding of how financial losses of states can be accelerated by tourism.

In Part II, the inception and proliferation of sun and sea destinations in Mexico and Caribbean islands are described. Ambrosie’s personal experience in this region illuminates her discussion. As an example, she describes how Mexico has had very little growth in tourism revenues despite a great flux of visitors. To put this in bluntly, the number of visitors at destination does not guarantee sustainable growth in the local economy. The reasons why this happens are manifold, but include legal jurisprudence issues and challenges in capturing taxes—all of which are brilliantly addressed by Ambrosie.

Part III gives some hints about how to improve the degree of governance in destinations that are financially dependent on tourism. Here some doubts arise, where is the genuine contribution of this book to specialized literature? For example, is enclave tourism responsible for the inefficiencies of state? Though scholars often cites the negative effects of enclave tourism in Third World, most never seriously question whether this results from the private sector’s eagerness for financial returns, or governmental efforts fiscally optimize the use of resources. Ambrosie argues convincingly that while capital investment generates significant public resources in tourist destinations, growth of indirect wealth still remains stagnate. It is interesting to reflect on whether this reflects the expansion of all-inclusive resorts or if there are other forces at play.

One might speculate that the Caribbean was re-colonized through this pattern of consumption. However, the author explains economic changes in this region are the result of multiple combined fac- tors. At a first glance, legal perquisites and the mobility of capital facilitated the conditions of labour exploitation. Almost half of global enclave tourism is located in Mexico and Caribbean nations. Though this industry concentrates a high degree of human capital, only marginal profits are obtained by locals. These ventures, far from being interested in producing local wealth that leads towards natives’ pros- perity, firms seem more concerned with lowering costs to maximize incomes.

On particular strategy for many of the regions’ nations are to set-up off-shore financial centres (tax havens) for international investors. Banking secrecy, null tax rates, shell companies, and weak regu- lations to all limit the potential economic prospects for the local workforce. The metaphor of a lost paradise reflects hides the financial flows attracted by these tax havens. Capital flux can often escape the scrutiny of central economies. Under-developed nations have little ability to capture part of this mobile capital flux through the introduction of taxes. In many cases, tourism investors manipulate their reported revenues to avoid taxes and inflate costs. Tactics are developed to cement the possibil- ities for local actors to redistribute produced wealth, but financial leakages, tax evasion, and clandes- tine activities constrain local development. This where the book offers a good starting point for understanding some of the economic challenges of sun-and-sand tourism. However, little attention is given to the role of bribes, tax evasion, and other illegal activities. To some extent, enclave tourism has not formed from the lack of planning or government intervention as the classic literature sug- gests; rather, Ambrosie masterfully shows how it takes shape in a finely-ingrained program to exploit the nature of Caribbean as well as financial loopholes. Aside from all this, the author adheres to her

belief that evasion is something other than a neo-colonial tactic; it is an ‘‘issue of income inequality” (p. 226) replicated in all nations. This work exhibits not only a good attempt to shed light on how glo- bal tourism generates material asymmetries in developed and underdeveloped countries, but gives detail on the local compliance of the State in promoting, knowingly or not, tax-avoidance.


Nonetheless, methodologically speaking, there are some serious limitations respecting to the cred- ibility of consulted sources that come from governmental sources. There is the potential that govern- ments and private sector inflate numbers to protect their interests or attract further investors. The counting of travelling tourists is sometimes also inflated and official statistics are presented (if not manipulated) with the real aim to capture further investment. In this context, how can we ensure the information in public sources has not been manipulated? The lack of a more sceptical view of gov- ernment sources as well as non-statistical research limits the full impact of Ambrosie’s assertions. This raises a hot point, how may we conceal private and public interests in the fields of development? Doubtlessly, this seems to be one of the most troubling aspects concern policy makers in tourism fields.



Cantallops, A., & Cardona, J. (2015). Holiday destinations: The myth of the lost paradise. Annals of Tourism Research, 55, 171–173.

Korstanje, M., & George, B. (2015). The medium or the message? An examination of myths as resources to understand the tourism phenomenon. International Journal of Tourism Anthropology, 4(2), 122–141.


Maximiliano E. Korstanje: Department of Economics, University of Palermo, Buenos Aires BUE 1414, Argentina  Tel./fax: +54 4964 4600. E-mail address: mkorst@palermo.edu

Assigned 15 November 2015. Submitted 11 January 2016. Accepted 26 January 2016

Available online 2 March 2016 http://www.sciencedirect.com/science/article/pii/S0160738316300342