3rd International Multidisciplinary scientific conference on Social science and Arts - SGEM 2016, Book 2: Political science, Finance, Economics and tourism, Volume IV. Bulgaria: SGEM 2016, 2016. s. 537-544, 952 s. ISBN 978-619-7105-75-9. doi:10.5593/sgemsocial2016B24. PUBLIC FUNDING AND ITS IMPACT ON TOURISM DEVELOPMENT Ing. Lucie Plzáková, Ph.D. The Institute of Hospitality Management in Prague, Czech Republic ABSTRACT Tourism can be seen in two ways. First, as a purely entrepreneurial activity which brings considerable profits to providers of services in the tourism and related sectors, but also as an activity that has a positive economic, social, cultural and environmental impact on the region. In the previous programming period, the European Union invested from public sources into both tourism activities, in purely business, but also in activities that have a positive impact on regional development. This article aims to show how the investments from public sources in tourism were used and how significant its impact was on the selected region of the Czech Republic. The research question is whether the support of tourism from public sources has a major impact on the overall development and whether this effect is greater than that of the market itself. The main methods used to answer the research question are statistical descriptive methods, time series analysis, index analysis, correlation analysis, the chosen methods of so-called Counterfactual Impact Evaluation analysis and questionnaires. The outputs of analyses indicate that the market development of tourism has a greater influence than very high intervention from public funds into the development of tourism in the period 2007 - 2013, respectively 2015. The use of the Counterfactual Impact Evaluation methods show that 1 CZK from public sources generated in the selected region 34 cents from private sources, and that 71% of the projects focused on services, marketing and creation of tourism products in the region would not be implemented without public funds. These and more outcomes are covered in this paper. Keywords: Counterfactual Impact Evaluation methods, impact, public founding, tourism. INTRODUCTION Tourism is economically a superfluous service, which carries a higher sensitivity to the economic situation of the country, the purchasing power of the population, the development of exchange rates, political stability and last but not least the amount of free time available. Globally, tourism contributes 10% to GDP and every eleventh job is created in the field of tourism [4]. Tourism in the Czech Republic over the last decade has been influenced by several factors and events. Twice the Czech Republic was hit by devastating floods, which caused a decline of inbound and domestic tourism (2002, 2009), in the years 2008 to 2009 the worldwide economic crisis negatively affected the development of tourism. Other factors affecting the level of tourism demand in Europe were the global SARS epidemic in 2001, and increased competition. Europe as a tourist destination for the first time recorded (2009 - 2010) a slight loss in inbound tourism. In