Tourism is one of the three pillars of Mongolia’s foreign exchange inflows. According to the state administrative body, the country welcomed 847,000 tourists in 2025, generating $1.6 billion in revenue.
However, detailed research remains scarce on how much of this income actually reaches local residents versus being absorbed by air transport, tour operators, and service fees. While national-level statistics are available, studies focusing on the specific benefits at the provincial (aimag) and soum levels are rare.
Research by the National Statistics Office shows that a domestic traveler spends an average of $320 (1.1 million MNT) annually on local trips. This figure varies significantly depending on regional development, remoteness, service capacity, and seasonality.
A Case Study of Five Soums in Eastern Mongolia
A research team led by Professor B. Yerbakhit (PhD) of Otgontenger University conducted a study in the historic tourism zones of Binder, Bayan-Adarga, Dadal, and Norovlin soums in Khentii aimag, and Bayan-Uul soum in Dornod aimag. The study calculated the average daily expenditure per tourist by soum:
• Dadal: $136 (470,000 MNT)
• Bayan-Uul: $88 (302,000 MNT)
• Bayan-Adarga: $75 (260,000 MNT)
• Norovlin: $72 (250,000 MNT)
• Binder: $72 (248,000 MNT)
Average Expenditure Breakdown (MNT)
The data reveals that Dadal soum sees the longest stays and highest expenditures. While accommodation accounts for the largest share of spending, shopping for local brands and food follows closely. Tourists are not just paying for hotels and restaurants; they are buying bread, dairy, meat, handicrafts, and souvenirs directly from residents, proving that locals benefit directly from tourism.
Economic Turnover and Structural Dependencies
Across these five soums, domestic tourist purchases alone generate an annual economic turnover of $12.2 million (42.2 billion MNT).
General structure of tourism revenue composition
In essence, the local tourism economy relies on a core model of: "Accommodation + Local Brand Purchases + Groceries for the road."
"Economic Leakage": Why Money Leaves the Soum
Not all tourism revenue stays in the district. In economics, this is known as "leakage." Typically, 10% of revenue goes to taxes, 10–15% to corporate profit, and 20–85% to import costs—all of which flow out of the local area. Only 20–40% for labor and 5–30% for local supplies have the potential to stay within the community.
General Income Structure Breakdown:
• Import Costs: 20–85%
• Labor Costs: 20–40%
• Corporate Profit: 10–15%
• Taxes: 10%
• Local Supply: 5–30%
The study shows that 52.1% ($6.4 million) of the total $12.2 million flows out immediately to pay for fuel, imported goods, equipment, and urban-based tour operators. The remaining 47.9% reaches local citizens and camps, but much of this is lost in the "secondary round" as camps buy supplies from the capital and employees spend wages on imported goods. Ultimately, only about 21% (2.5 million) truly settles into the local economy.
Example: When a tourist spends $290 (1 million MNT) in a soum:
• $151 (521,000 MNT) leaves immediately via the tour company for transport, equipment, and fees.
• $78 (268,000 MNT) is spent on camp operations, food sourcing from the city, and utilities.
• $61 (211,000 MNT) stays locally as wages and payment for local meat and dairy. However, even this 211,000 MNT will partially leak out when residents buy imported flour or electronics.
Strategies for Increasing Local Benefits
Domestic tourism is the most effective form of tourism for local economies. While international tourists have high spending power, domestic travelers interact directly with locals, buying goods and services more frequently. To increase the local retention of these funds, "leakage" must be reduced by 2–5% through the following steps:
• Localizing the Supply Chain: Camps and restaurants must prioritize local sourcing. Buying meat and milk from local herders, growing vegetables locally, and producing baked goods in the soum creates a foundation for wealth retention. Local governments should implement "Local Procurement Regulations," offering tax incentives to camps that source a specific percentage of food locally.
• Flexible Pricing Policies: There is a need for more affordable accommodation. Currently, many camps set prices based on international luxury standards ($100–$150 per night), driving domestic travelers to camp in tents instead. Research suggests domestic travelers are willing to stay in camps if prices are around $36 (125,000 MNT). Lowering prices can actually increase total local revenue by encouraging more people to use local services rather than bringing everything from home.
• Local Branding: Standardizing and improving the packaging of local handicrafts and food can significantly increase "shopping" revenue.
• Digital Transformation: Much leakage occurs through Ulaanbaatar-based tour agencies or foreign booking platforms. By helping local camps and residents establish their own digital presence, they can communicate directly with tourists, reducing middleman fees.
Conclusion
While domestic tourism is a vital lifeline for rural districts, currently less than 30% of the economic turnover remains in the local community. To develop truly sustainable tourism, we must shift our focus from mere "tourist numbers" to the "actual benefit" remaining in the pockets of local citizens. Designing tourism services specifically for the domestic market is the most viable path to maximizing local economic growth.
Sources:
• WWF Mongolia (2026): Policy Recommendations and Strategic Roadmap for Developing Eco-friendly and Sustainable Tourism in the Onon-Balj Protected Area.
• National Statistics Office of Mongolia (NSO): General tourism statistics and average annual expenditure data for domestic travelers (1.1 million MNT).
• Ministry of Environment and Tourism (MET): Data on 2025 tourist arrivals (847,000) and total sector revenue ($1.6 billion).
• UN Tourism (World Tourism Organization): Tourism Value Chain research methodology and cost structure coefficients.
• Asian Development Bank (ADB): Research models on the economic impact of the tourism sector, "leakage," and value chain analysis.
• Economic Calculation Model: Methodologies for allocating direct tourist expenditure across labor costs, local supply, taxes, import costs, and "secondary round" economic effects.
Tourism is one of the three pillars of Mongolia’s foreign exchange inflows. According to the state administrative body, the country welcomed 847,000 tourists in 2025, generating $1.6 billion in revenue.
However, detailed research remains scarce on how much of this income actually reaches local residents versus being absorbed by air transport, tour operators, and service fees. While national-level statistics are available, studies focusing on the specific benefits at the provincial (aimag) and soum levels are rare.
Research by the National Statistics Office shows that a domestic traveler spends an average of $320 (1.1 million MNT) annually on local trips. This figure varies significantly depending on regional development, remoteness, service capacity, and seasonality.
A Case Study of Five Soums in Eastern Mongolia
A research team led by Professor B. Yerbakhit (PhD) of Otgontenger University conducted a study in the historic tourism zones of Binder, Bayan-Adarga, Dadal, and Norovlin soums in Khentii aimag, and Bayan-Uul soum in Dornod aimag. The study calculated the average daily expenditure per tourist by soum:
• Dadal: $136 (470,000 MNT)
• Bayan-Uul: $88 (302,000 MNT)
• Bayan-Adarga: $75 (260,000 MNT)
• Norovlin: $72 (250,000 MNT)
• Binder: $72 (248,000 MNT)
Average Expenditure Breakdown (MNT)
The data reveals that Dadal soum sees the longest stays and highest expenditures. While accommodation accounts for the largest share of spending, shopping for local brands and food follows closely. Tourists are not just paying for hotels and restaurants; they are buying bread, dairy, meat, handicrafts, and souvenirs directly from residents, proving that locals benefit directly from tourism.
Economic Turnover and Structural Dependencies
Across these five soums, domestic tourist purchases alone generate an annual economic turnover of $12.2 million (42.2 billion MNT).
General structure of tourism revenue composition
In essence, the local tourism economy relies on a core model of: "Accommodation + Local Brand Purchases + Groceries for the road."
"Economic Leakage": Why Money Leaves the Soum
Not all tourism revenue stays in the district. In economics, this is known as "leakage." Typically, 10% of revenue goes to taxes, 10–15% to corporate profit, and 20–85% to import costs—all of which flow out of the local area. Only 20–40% for labor and 5–30% for local supplies have the potential to stay within the community.
General Income Structure Breakdown:
• Import Costs: 20–85%
• Labor Costs: 20–40%
• Corporate Profit: 10–15%
• Taxes: 10%
• Local Supply: 5–30%
The study shows that 52.1% ($6.4 million) of the total $12.2 million flows out immediately to pay for fuel, imported goods, equipment, and urban-based tour operators. The remaining 47.9% reaches local citizens and camps, but much of this is lost in the "secondary round" as camps buy supplies from the capital and employees spend wages on imported goods. Ultimately, only about 21% (2.5 million) truly settles into the local economy.
Example: When a tourist spends $290 (1 million MNT) in a soum:
• $151 (521,000 MNT) leaves immediately via the tour company for transport, equipment, and fees.
• $78 (268,000 MNT) is spent on camp operations, food sourcing from the city, and utilities.
• $61 (211,000 MNT) stays locally as wages and payment for local meat and dairy. However, even this 211,000 MNT will partially leak out when residents buy imported flour or electronics.
Strategies for Increasing Local Benefits
Domestic tourism is the most effective form of tourism for local economies. While international tourists have high spending power, domestic travelers interact directly with locals, buying goods and services more frequently. To increase the local retention of these funds, "leakage" must be reduced by 2–5% through the following steps:
• Localizing the Supply Chain: Camps and restaurants must prioritize local sourcing. Buying meat and milk from local herders, growing vegetables locally, and producing baked goods in the soum creates a foundation for wealth retention. Local governments should implement "Local Procurement Regulations," offering tax incentives to camps that source a specific percentage of food locally.
• Flexible Pricing Policies: There is a need for more affordable accommodation. Currently, many camps set prices based on international luxury standards ($100–$150 per night), driving domestic travelers to camp in tents instead. Research suggests domestic travelers are willing to stay in camps if prices are around $36 (125,000 MNT). Lowering prices can actually increase total local revenue by encouraging more people to use local services rather than bringing everything from home.
• Local Branding: Standardizing and improving the packaging of local handicrafts and food can significantly increase "shopping" revenue.
• Digital Transformation: Much leakage occurs through Ulaanbaatar-based tour agencies or foreign booking platforms. By helping local camps and residents establish their own digital presence, they can communicate directly with tourists, reducing middleman fees.
Conclusion
While domestic tourism is a vital lifeline for rural districts, currently less than 30% of the economic turnover remains in the local community. To develop truly sustainable tourism, we must shift our focus from mere "tourist numbers" to the "actual benefit" remaining in the pockets of local citizens. Designing tourism services specifically for the domestic market is the most viable path to maximizing local economic growth.
Sources:
• WWF Mongolia (2026): Policy Recommendations and Strategic Roadmap for Developing Eco-friendly and Sustainable Tourism in the Onon-Balj Protected Area.
• National Statistics Office of Mongolia (NSO): General tourism statistics and average annual expenditure data for domestic travelers (1.1 million MNT).
• Ministry of Environment and Tourism (MET): Data on 2025 tourist arrivals (847,000) and total sector revenue ($1.6 billion).
• UN Tourism (World Tourism Organization): Tourism Value Chain research methodology and cost structure coefficients.
• Asian Development Bank (ADB): Research models on the economic impact of the tourism sector, "leakage," and value chain analysis.
• Economic Calculation Model: Methodologies for allocating direct tourist expenditure across labor costs, local supply, taxes, import costs, and "secondary round" economic effects.