USE OF TOURISM STATISTICS IN MACRO-ECONOMIC & BUSINESS PLANNING

1. USE OF TOURISM STATISTICS IN MACRO-ECONOMIC & BUSINESS PLANNING By McHale ANDREW CRSTDP/CTO Research Adviser

2. 1. Introduction • "There are three kinds of lies: lies, damned lies and statistics."  Benjamin Disraeli

3. 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."

4. 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

5. 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.

6. Key Tourism Statistics • Visitor Arrival figures • Tourism expenditure estimates • Visitor Surveys (expenditure,motivation,satisfaction etc.) • Accommodation and Tourism Establishment Surveys • Tourism Satellite Account (TSA)

7. 2. Importance of Statistics in Tourism Sector Development

8. Economic Importance of Tourism in the CTO Caribbean

9. 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

10. 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.

11. 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

12. 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.

13. 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

14. 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

15. 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

16. 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.

17. Using Surveys to Assess Visitor Expenditure & Motivation, etc. Uses of Tourism Surveys: • demand side (visitor satisfaction, motivation, expenditure etc.) • supply side (quality and standards of tourism establishments, employment, attitudes of residents etc.) • Travel patterns and expenditure of regional and international visitors

18. 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.

19. 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

20. 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

21. 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.

22. 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

23. Tourism Statistics in Macro-Economic 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

24. Tourism Statistics in Macro-Economic 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

25. Tourism Statistics in Macro-Economic 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

26. 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

27. Economic Impacts • Direct (first round) • Indirect (upstream) • Induced (tourism $ in Dom Y) • Negative (leakages) • Positive (government revenues , externalities ,multiplier effect)

28. 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]

29. 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

30. 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

31. 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.

32. Classifications cont’d • Geographical classifications • Origin of guests • Origin of establishments 2. Establishment classifications • Type of establishment • Eligibility for survey

33. Establishment Classifications • Establishments included in Classifications • Hotels11 Hotels12 Resorts • Motels21 Motor inns22 Motels and self catering accommodation • Hosted31 Private Hotels32 Guest Houses33 Bed and Breakfast34 Holiday farm (Host farm, Farm Stay) accommodation • Backpackers / Hostels41 Backpackers / Hostels • Caravan Parks / Campgrounds51 Caravan Parks52 Camping Grounds

34. 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

35. 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)

36. 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)

37. 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

38. The END…… Merci! Gracias ! Danki ! Thank You!