Many developed countries choose tourism development as opportunity to sustain employment and economic growth. Thus, policies aimed at attracting more and more tourists are put in place. However, increasing tourists’ flows affect local economies and lives of local residents in a number of ways not excluding negative effects. Careful consideration of benefits and pitfalls of tourism development is necessary in order to sustain balanced development. The impact of tourism on residents is a recurrent topic in tourism research. The studies concerning the impact of tourism on residents considered the impact of tourism on economic, social, environmental and cultural life of residents (Wal and Mathieson, 2006). The limitation of these studies is that they provide an instant picture of the situation through a cross section analysis. Meanwhile, tourism destination takes years to develop and residents’ wellbeing is affected differently depending on the development stage of the destination (Kim et al., 2012). The focus of analysis in the existing literature is limited to a single destination making it difficult to generalize obtained results. In the present study we conduct a first exploration of the impact of tourism flows directly on the overall utility of residents in tourism areas. For this we unite data from socio-economic panel of German citizens (GSOEP) and data on tourists’ flows collected by German statistical bureau. The analysis conducted in the present paper involves the whole country of Germany distinguishing regions as tourism destinations. It considers the overall wellbeing of community members through addressing satisfaction with life in general and how it is affected by the presence of tourists in the area. The present study is conducted over time period between 1995 and 2011. Over this period, the presence of foreign tourists in the country grew by 80% positioning Germany as the 8th tourism destination in the world. Longitudinal feature of GSOEP permits to investigate how this growth affected residents’ wellbeing over time accounting for life cycle of the destination. We discuss implications of results obtained in the present study for the tourism development policy.