USE OF TOURISM
STATISTICS IN MACROECONOMIC & BUSINESS
PLANNING
By McHale ANDREW
CRSTDP/CTO Research Adviser
CTO/CRSTDP Statistics
Workshop 2005
1. Introduction
• "There are three kinds of lies: lies,
damned lies and statistics."
Benjamin Disraeli
CTO/CRSTDP Statistics
Workshop 2005
Why Statistics ?
• "The objective of a national statistical system is
to provide relevant, comprehensive, accurate
and objective statistical information. Generally,
statistics are invaluable for monitoring the
country’s economic and social conditions, the
planning and evaluation of government and
private sector programmes and investment,
policy debates and advocacy, and the creation
and maintenance of an informed public."
CTO/CRSTDP Statistics
Workshop 2005
Why Statistics ? Cont’d
Essential in:
• Official decision-making, policy formulation
• Policy Analysis & Research
• Academic, business, industrial & other
research
• Business planning & CRM
• Citizens/residents being informed about
performance of governments
CTO/CRSTDP Statistics
Workshop 2005
Why Statistics ?
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Facilitate comparison across countries/regions
Benchmarking
‘Best Practices’
Evaluation of performance
However, good statistics must be collected in accordance with
agreed international standards using appropriate methods for
data collection, processing and dissemination.
CTO/CRSTDP Statistics
Workshop 2005
Key Tourism Statistics
• Visitor Arrival figures
• Tourism expenditure estimates
• Visitor Surveys
(expenditure,motivation,satisfaction etc.)
• Accommodation and Tourism
Establishment Surveys
• Tourism Satellite Account (TSA)
CTO/CRSTDP Statistics
Workshop 2005
2. Importance of Statistics in
Tourism Sector Development
YEAR
INT’L TOURIST
ARRIVALS
(millions)
EXPENDITURE
(US$ billions)
2000
698
475
2001
684
463
2002
703
480
2003
691
523
2004
763
622
CTO/CRSTDP Statistics
Workshop 2005
Economic Importance of Tourism in
the CTO Caribbean
Year
C’BEAN (CTO) TOURIST
EXPENDITURE (US$ billions)
ARRIVALS (millions)
2000
20.3
19.9
2001
19.5
19.5
2002
19.0
18.9
2003
20.4
19.1
2004
21.7
20.8
(provisional estimate)
CTO/CRSTDP Statistics
Workshop 2005
Economic Importance of Tourism in
the CTO Caribbean
• With < 1% of world Pop > 3% of arrivals
• Significant re: GDP, FX, Emp. ,business
creation
• Increases daily market size
• Backward/forward sectoral linkages
CTO/CRSTDP Statistics
Workshop 2005
Economic Importance of Tourism in
the CTO Caribbean
Therefore tourist population must be factored in
when planning for:
• total effective demand
• social, economic and business services
• infrastructural development
• domestic and international transportation
• investment
• national sales and marketing programmes
• spatial planning, carrying capacity etc.
CTO/CRSTDP Statistics
Workshop 2005
Typical tourism experience in
regional destination can involve:
• A vast number of direct and indirect
services transactions across many
economic sectors involving transactions
with:
- airlines, hotels, guesthouses or private
villas
- car rental companies
- public utility services
CTO/CRSTDP Statistics
Workshop 2005
Typical tourism experience in
regional destination can involve:
- water sports companies, golf clubs
- destination management companies
- yacht charter companies, marine transport
companies
- Entertainers
- restaurants, retail outlets, local taxis, tour
guides
- telecommunications companies and casinos,
etc.
CTO/CRSTDP Statistics
Workshop 2005
Tourism Measurement Limitations
• In Caribbean absence of a reliable,
thorough and internationally uniform
statistical database from which one could
measure the full economic impact of
tourism
• Simple analyses of arrivals, estimates of
expenditure (VEMS)
• No in-depth analysis of Tourism economic
impact
CTO/CRSTDP Statistics
Workshop 2005
Tourism Satellite Account
Overview:
• UN SNA ’93 recommended TSA
• WTO describes the TSA as the "only way to have an
overall view of tourism's impact on the economy on an
equal footing with all other sectors."
• Enhance ability to accurately capture economic impact
of previously undefined “sectors”
• Analytical work done within existing national accounting
systems
• More flexible
• Not overburdening CSNA
CTO/CRSTDP Statistics
Workshop 2005
Tourism Satellite Account
Uses:
• Provide credible data on the impact of tourism and related
employment
• Serve as a standard framework for organizing statistical data on
tourism
• Become a new internationally accepted national accounting standard
endorsed by the UN Statistical Commission
• Function as a powerful instrument for designing economic policies
related to tourism development
• Measure tourism’s contribution to GDP and its ranking in relation to
other economic sectors
• Provide data on tourism’s impact on a country’s Balance Of Payments
• Provide information on tourism human resource characteristics
• Measure the level of investment in tourism
• Evaluate tax revenues generated by tourism industries
• Measure the level of tourism’s consumption of other goods and
services
CTO/CRSTDP Statistics
Workshop 2005
Tourism Satellite Account
Benefits:
• Reconciliation of the demand-side data with the
supply-side data within the account brings greater
coherence to the definition of the industry; all
partners in the industry will speak a common
language.
• Use of a recognized accounting system brings
enhanced credibility to the economic analysis of the
industry.
• Use of an accounting framework can bring other
important information into the analysis of tourism,
such as data on value-added benefits of tourism,
tourism share of GDP, government revenues, human
resources development or financial flows.
CTO/CRSTDP Statistics
Workshop 2005
Using Surveys to Assess Visitor
Expenditure & Motivation, etc.
Uses of Tourism Surveys:
1. demand side (visitor satisfaction,
motivation, expenditure etc.)
2. supply side (quality and standards of
tourism establishments, employment,
attitudes of residents etc.)
3. Travel patterns and expenditure of
regional and international visitors
CTO/CRSTDP Statistics
Workshop 2005
Using Surveys to Assess Visitor
Expenditure & Motivation, etc.
Uses of Tourism Surveys cont’d:
4.CRM/Visitor comment & feedback
5. Evaluation of tourism promotion programmes
Information collected from surveys used to :
• customize policies and strategies
• redress any supply problems
•
enhance the tourism product
• provide more competitive and attractive
destination or experience for the visitor.
CTO/CRSTDP Statistics
Workshop 2005
Formula for determining Return on
Investment from specific spending
• E.g. Tourism Advertising campaign
ROI Formula:
• Inquiries * Conversion rate * length of stay *
party size * Avg. spending = Total expenditure
• Total Advertising costs = (Costs of advertisement
placement/prod. + website development)
ROI = Total Spending/Advertising costs
CTO/CRSTDP Statistics
Workshop 2005
E.g. Tourism Advertising
campaign
• Inquiries = brochures + website visits
• In this example inquiries = 40,000 brochures+ 15,000
website visits = 55,000 inquiries
• Conversion rate is 25% [gross conversion (# people who
came, e.g. 60%) and net conversion (# people who
came because of advertising, e.g. 25 %)
• Average length of stay is 6 days
• Average party size is 2.6 people
• Average daily expenditure is $100
• Total Advertising costs = $100,000 (advertisement
placement & production)+ $10000 (website development
costs) = 110,000
CTO/CRSTDP Statistics
Workshop 2005
E.g. Tourism Advertising
campaign
• Total Spending = 55,000*25%*6 days*2.6
people* $50 per day = $10,725,000
• Therefore Net ROI is: 9,750,000/110,000 =
97.5
• For every advertising dollar spent, the
return to the country was $97.50 in
traveler spending.
CTO/CRSTDP Statistics
Workshop 2005
3. Tourism Statistics in MacroEconomic Planning
• Accurate statistics fundamental to good
economic planning !
• Planners use statistical databases,
spreadsheets and modern analytical
techniques to prepare reports and
recommendations for governments etc.
• Analytical techniques utilized to project
program costs and forecast future trends in
aggregate demand (GDP), employment,
housing, investment, taxation, transportation
and population
CTO/CRSTDP Statistics
Workshop 2005
Tourism Statistics in MacroEconomic Planning cont’d
Reliable and timely tourism statistics:
• crucial to projections & forecasting
• vital to better planning of tourism sector
and to justify its expansion
• long-term and short-term plans for optimal
land use
• decisions on trade-offs between
competing uses re: growth maximization
CTO/CRSTDP Statistics
Workshop 2005
Tourism Statistics in MacroEconomic Planning cont’d
Reliable and timely tourism statistics
necessary for rationalizing:
• economic, political and social needs
• traffic congestion, air, water and soil
pollution
• effects of growth and change on
community vs potential benefits from
tourism development
CTO/CRSTDP Statistics
Workshop 2005
Tourism Statistics in MacroEconomic Planning cont’d
• necessary to have reliable data on trends and
projections in key sectors, including the tourism
sector
• not making best use of community’s land and
resources can be counterproductive to the
particular development
• crucial to policy framework formulation
• informed decision-making by both public and
private sectors at international, regional, national
and local levels
CTO/CRSTDP Statistics
Workshop 2005
Policy formulation involves:
• Defining the objectives of tourism
development.
• Setting growth targets for tourism.
• Determining the type of tourism to be
attracted.
• Defining public and private responsibilities.
• Minimizing deleterious effects of tourism
CTO/CRSTDP Statistics
Workshop 2005
Economic Impacts
1.
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5.
Direct (first round)
Indirect (upstream)
Induced (tourism $ in Dom Y)
Negative (leakages)
Positive (government revenues ,
externalities ,multiplier effect)
CTO/CRSTDP Statistics
Workshop 2005
4. Tourism Statistics in Business
Planning & Investment Decisions
• Rapid growth of tourism necessitate more
focused and informed planning and
investment decisions by tourism business
• Given massive investments and
lender/shareholder demands tourism
growth projections must be rigorous and
as accurate as possible
• [e.g. in Turtle territory]
CTO/CRSTDP Statistics
Workshop 2005
Business planning:
• involves anticipating and controlling
change to maximize benefits of tourism
• requires enterprises to rely on statistics for
research, planning & design of marketing
programs
• needs reliable data for financial projections
• demands industry and sector performance
statistics for comparative analyses
CTO/CRSTDP Statistics
Workshop 2005
Investors
Rely on tourism statistics for:
• decision-making and financing proposals
• evaluating performance/justifying investments
• monitoring implementation of government
policies
• building partnerships with airlines, governments
etc.
• benchmarking performance of host country vs
competing destinations
• policy advocacy in trade associations
CTO/CRSTDP Statistics
Workshop 2005
Accommodation Surveys
• Commercial Accommodation
Classification Survey in New Zealand
* Survey data recorded using particular
groupings (classifications) and terms.
• Classifications
Survey provides information on groupings
used Commercial Accommodation Survey
Includes geographical, establishment and
employee type classifications.
CTO/CRSTDP Statistics
Workshop 2005
Classifications cont’d
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Geographical classifications
Origin of guests
Origin of establishments
Establishment classifications
Type of establishment
Eligibility for survey
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Workshop 2005
Establishment Classifications
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Establishments included in Classifications
Hotels
11 Hotels
12 Resorts
Motels
21 Motor inns
22 Motels and self catering accommodation
Hosted
31 Private Hotels
32 Guest Houses
33 Bed and Breakfast
34 Holiday farm (Host farm, Farm Stay) accommodation
Backpackers / Hostels
41 Backpackers / Hostels
Caravan Parks / Campgrounds
51 Caravan Parks
52 Camping Grounds
CTO/CRSTDP Statistics
Workshop 2005
Establishment Classifications
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Establishments Not Included in Classifications
Hospital
Prison
Work Camp
Nursing Home
School Hostel
University Hostel
Time shares (when used by owners)
School Lodge
Church Lodge
Trains
Ferries
Planes Cribs Refuge/Emergency Shelter Night Shelter
Serviced Apartments Chartered Boats House Swap Outward
Bound
CTO/CRSTDP Statistics
Workshop 2005
Other Classifications
• Employee Type Classifications
- Numbers who usually work full-time (30
hours or more a week)
- Numbers who usually work part-time (less
than 30 hours a week)
CTO/CRSTDP Statistics
Workshop 2005
Key areas covered in Survey
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Average length of stay
Business frame
Employment
Enterprise
Establishments (type & number)
Geographic (activity) unit
Guest arrivals (first nights & guest nights)
Residence of guests
Occupancy rates
Capacity (stay unit night)
Turnover (gross income from sales)
CTO/CRSTDP Statistics
Workshop 2005
Conclusion
• Tourism statistics crucial to macro-economic and
business planning
• Tourist arrivals, length of stay and estimates of
expenditure insufficient
• Technological advances make possible rigorous
data analysis in quick time
• Both businesses & governments need to
upgrade tourism statistical systems to better
compete
• TSA welcome but needs to measure profitability
• Best practices must be emulated
CTO/CRSTDP Statistics
Workshop 2005
The END……
Merci! Gracias !
Danki ! Thank You!
CTO/CRSTDP Statistics
Workshop 2005