Use of Tourism Statistics in Macro-Economic & Business Planning

CTO/CRSTDP Statistics
Workshop 2005
USE OF TOURISM
STATISTICS IN MACRO-
ECONOMIC & BUSINESS
PLANNING

By McHale ANDREW
CRSTDP/CTO Research Adviser

Workshop 2005
1. Introduction
"There are three kinds of lies: lies,
damned lies and statistics."

Benjamin Disraeli
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
countrys 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."
Workshop 2005
Why Statistics ? Contd
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

Workshop 2005
Why Statistics ?
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.
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)
Workshop 2005
2. Importance of Statistics in
Tourism Sector Development
YEAR
INTL TOURIST
ARRIVALS
(millions)
EXPENDITURE
(US$ billions)
2000 698 475
2001 684 463
2002 703 480
2003 691 523
2004 763 622

Workshop 2005
Economic Importance of Tourism in
the CTO Caribbean
Year
CBEAN (CTO) TOURIST
ARRIVALS (millions)
EXPENDITURE (US$ billions)
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)
Workshop 2005
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
Workshop 2005
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.

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

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.

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
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

Workshop 2005
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 tourisms contribution to GDP and its ranking in relation to
other economic sectors
Provide data on tourisms impact on a countrys 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 tourisms consumption of other goods and
services

Workshop 2005
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.

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

Workshop 2005
Using Surveys to Assess Visitor
Expenditure & Motivation, etc.
Uses of Tourism Surveys contd:
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.

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

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
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.
Workshop 2005
3. Tourism Statistics in Macro-
Economic 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

Workshop 2005
Tourism Statistics in Macro-
Economic Planning contd
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

Workshop 2005
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
Workshop 2005
necessary to have reliable data on trends and
projections in key sectors, including the tourism
sector
not making best use of communitys 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

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
Workshop 2005
Economic Impacts
1. Direct (first round)
2. Indirect (upstream)
3. Induced (tourism $ in Dom Y)
4. Negative (leakages)
5. Positive (government revenues ,
externalities ,multiplier effect)

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]
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

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

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.
Workshop 2005
Classifications contd
1. Geographical classifications
- Origin of guests
- Origin of establishments
2. Establishment classifications
- Type of establishment
- Eligibility for survey

Workshop 2005
Establishment Classifications
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

Workshop 2005
Establishment Classifications
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
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)

Workshop 2005
Key areas covered in Survey
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)

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
Workshop 2005
The END
Merci! Gracias !
Danki ! Thank You!

Use of Tourism Statistics in Macro-Economic & Business Planning

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