Tourism Satellite Account STATISTICS NEW ZEALAND DECEMBER 2002

Transcription

1 Tourism Satellite Account STATISTICS NEW ZEALAND DECEMBER 2002

2 Published in December 2002 by: Statistics New Zealand Te Tari Tatau Wellington, New Zealand Catalogue Number ISSN X

3 Preface The Tourism Satellite Account provides an updated analysis of the New Zealand tourism industry and is part of an ongoing programme designed to enhance the understanding of the role that tourism plays in New Zealand. The Tourism Satellite Account has been developed and published by Statistics New Zealand. The satellite account is funded by the Ministry of Tourism, with the endorsement of Tourism Research Council New Zealand (TRCNZ). It is one component of a 'core set' of tourism data designed to provide base information for understanding and monitoring the changing level and impact of tourism activity in New Zealand. Other elements of the core data include surveys of spending by international and domestic visitors, visitor arrival statistics and forecasts of tourist numbers. The tourism satellite account integrates in a single format data about the supply and use of tourism-related goods and services. It provides a summary measure of the contribution tourism makes to production and employment. Because it is defined by customer demand, tourism cuts across a broad range of 'conventional' industries. The tourism satellite account, consistent and integrated with New Zealand's official national accounts, ensures that the importance of the tourism sector is measured and understood in the context of the New Zealand economy as a whole. Satellite accounts involve the rearrangement of existing information in the national accounts so that an area of particular economic or social importance, such as tourism, can be analysed more closely. As extensions of the core system of national accounts, satellite accounts are an important recommendation of the international standard, the System of National Accounts The Tourism Satellite Account has been developed in line with guidelines published by the World Tourism Organisation and approved by the United Nations Statistical Commission in Brian Pink Government Statistician

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5 GENERAL INFORMATION Acknowledgement This report was prepared by the National Accounts Division and published by the Information and Publishing Services Division of Statistics New Zealand. Further information For further information on the statistics in this report, or on other reports or products, contact our Information Centre. Visit out website: Or us at: Or phone toll free: AUCKLAND WELLINGTON CHRISTCHURCH Private Bag Phone Fax Information Centre Private Bag 2922 Phone Fax Your gateway to Statistics New Zealand Private Bag 4741 Phone Fax Each year, we collect over 60 million pieces of information. New Zealanders tell us how and where they live; about their work, spending and recreation. We also collect a complete picture of business in New Zealand. This valuable resource is yours to use. But with all the sophisticated options available, finding exactly what you need can sometimes be a problem. Giving you the answers Our customer services staff provide the answer. They are the people who know what information is available, and how it can be used to your best advantage. Think of them as your guides to Statistics New Zealand. They operate a free enquiry service where answers can be quickly provided from published material. More extensive answers and customised solutions will incur costs, but we always give you a free no-obligation quote before going ahead. Liability statement Statistics New Zealand gives no warranty that the information or data supplied contains no errors. However, all care and diligence has been used in processing, analysing and extracting the information. Statistics New Zealand shall not be liable for any loss or damage suffered by the customer consequent upon the use directly, or indirectly, of the information supplied in this product. Reproduction of material Any table or other material; published in this report may be reproduced and published without further license, provided that it does not purport to be published under government authority and that acknowledgement is made of this source. TOURISM SATELLITE ACCOUNT:

6 GENERAL INFORMATION Standards Percentage changes Percentage movements are, in a number of cases, calculated using data of greater precision than published. This could result in slight variations. Rounding procedures On occasion, figures are rounded to the nearest thousand or some other convenient unit. This may result in a total disagreeing slightly with the total of the individual items shown in tables. Where figures are rounded, the unit is in general expressed in words below the table headings, but where space does not allow this, the unit may be shown as (000) for thousands, etc. Changes of base Where consecutive figures have been compiled on different bases and are not strictly comparable, a footnote is added indicating the nature of the difference. Values All values are shown in New Zealand currency, except where otherwise stated. Source All data is compiled by Statistics New Zealand, except where otherwise stated. Symbols Interpretation of symbols used throughout this report is as follows: - nil or zero -- amount too small to be expressed.. figures not available... not applicable R P E C revised provisional early estimate confidential 2 TOURISM SATELLITE ACCOUNT:

7 CONTENTS Contents 1. Overview...5 Introduction... 5 Key results... 7 Measuring tourism Results for Direct tourism value added Employment Capital formation and capital stock Indirect effects of tourism and 1998 Tables Appendix 1: Conceptual framework Input-output framework Definitions Valuation basis used in the TSA Tourism products Industries producing tourism products Value added Appendix 2: Methodology Direct tourism value added Calculating tourism expenditure Production of tourism goods and services Balancing tourism expenditure and tourism production Calculating direct tourism value added Employment Capital formation and net capital stock Indirect effects of tourism Deriving imports used in production of products sold to tourists Special treatments Appendix 3: Product classification Appendix 4: Tourism industry concordance Appendix 5: Glossary National accounts definitions TOURISM SATELLITE ACCOUNT:

8 OVERVIEW Abbreviations used in this report...76 References TOURISM SATELLITE ACCOUNT:

9 OVERVIEW 1. Overview Introduction Tourism plays a significant role in the New Zealand economy in terms of the production of goods and services and the creation of employment opportunities. Tourism expenditure in New Zealand was $12.1 billion for the year ended March This represented a 6.9 percent recovery, following a decline of $182 million in 1998, partly because of a drop in tourist numbers from Asia. Tourism expenditure includes spending by overseas visitors and domestic household, business and government travellers. The accommodation industry, which has a strong tourism focus, also showed growth. Statistics New Zealand's Accommodation Survey recorded 22.7 million guest nights spent in commercial accommodation in New Zealand in the year to March 1999, up from 21.9 million guest nights in the year to March Tourism generated a direct contribution to gross domestic product (GDP) of $4.351 billion, or 4.6 percent of New Zealand's total industry contribution to GDP in This represents the value added by those businesses directly engaged in providing goods and services purchased by tourists, and can be compared to the value added contribution of agriculture (5.5 percent), construction (4.5 percent) and communications (3.5 percent) for the same year. Tourism, unlike 'conventional' industries such as agriculture or manufacturing, which are classified in accordance with the goods and services they produce, is defined by the characteristics of the customer demanding tourism products. As such, tourism products can cut across standard industry definitions, and alternative measurement systems are needed. A tourism satellite account (TSA) is used to measure the economic contribution of tourism to GDP and to provide analysis of the New Zealand tourism industry. The emphasis in the TSA is on measurement of expenditure in New Zealand by resident and non-resident tourists, and on the size of the tourism industry, including its contribution to GDP and employment. Figure 1.01 traces the flows of tourism expenditure through the New Zealand economy. TOURISM SATELLITE ACCOUNT:

10 OVERVIEW Figure 1.01: Flows of Tourism Expenditure Through the New Zealand Economy Year ended March 1999 International tourism expenditure $4,664 million Business $1,419 million Domestic tourism expenditure Government $206 million Households $5,788 million Total tourism expenditure $12,078 million Imports sold directly to tourists by retailers $665 million Direct tourism demand Direct tourism output $10,555 million GST on purchases by tourists $857 million Direct tourism intermediate inputs $6,204 million Direct tourism value added $4,351 million Imports used in production of goods and services sold to tourists $2,120 million Flow-on effects to supplier industries Indirect tourism demand $6,204 million Indirect tourism value added $4,085 million Tourism gross operating surplus $1,646 million Tourism compensation of employees $2,307 million Tourism taxes on production and imports (net of subsidies) $398 million Direct employment serving tourism: 86,000 full-time equivalent persons engaged. Indirect employment serving tourism: 57,000 full-time equivalent person engaged Note: In the diagram above, tourism expenditure is measured in purchasers' values. are measured in producers' prices. Totals may not add due to rounding. Other monetary aggregates 6 TOURISM SATELLITE ACCOUNT:

11 OVERVIEW Key results Value added is the 'value' that businesses add to the raw material goods and services they purchase (intermediate inputs) and use up in the process of producing their own output. The measurement of tourism's direct value added, also known as tourism's direct contribution to GDP, is the major focus of a TSA. It measures the contribution to GDP made by the sellers of products to tourists, as well as by the suppliers of retail products which firms on-sell to tourists. This enables a comparison to be made between the tourism industry's contribution to GDP and similar contributions made by industries such as agriculture and construction. Direct value added does not measure the full impact of tourism on the New Zealand economy because it is limited to those businesses that have direct contact with tourists. Additional value added also results from tourism through production of the intermediate inputs used in the production of goods and services sold to tourists, although there is no direct relationship between the producer of the intermediate inputs and the tourist. This additional value added is known as indirect value added. Table 1.01 presents the key results for the years 1997 to TOURISM SATELLITE ACCOUNT:

12 OVERVIEW Table 1.01: Summary Results Item Year ended March $(million) Annual percentage change Direct tourism value added 4,198 4,115 4, Indirect tourism value added 2 3,786 3,777 4, Imports sold directly to tourists by retailers Imports used in production of goods and services sold to tourists 2,012 1,981 2, GST on purchases by tourists Total tourism expenditure 11,485 11,303 12, Which consists of: International tourism expenditure 4,344 4,014 4, Domestic tourism expenditure 7,141 7,289 7, Employment (FTE persons) Directly engaged in tourism 85,000 83,000 86, Indirectly engaged in tourism 2 57,000 55,000 57, Total tourism employment in New Zealand 142, , , Value added as a percentage of total industry contribution to GDP Direct tourism value added 4.7% 4.4% 4.6% Indirect tourism value added 4.2% 4.1% 4.3% Total tourism value added 8.9% 8.5% 8.9% Employment (FTE persons) engaged in tourism as a percentage of total employment in New Zealand Directly engaged in tourism 5.5% 5.4% 5.6% Indirectly engaged in tourism 3.7% 3.6% 3.7% Total tourism employment in New Zealand 9.2% 9.0% 9.3% 1. The 1997 figures update those published in May Results from input-output tables for 1996 have been used to update the methodology for calculating indirect tourism value added and indirect tourism employment. Earlier tourism satellite accounts used 1995 input-output tables. Direct tourism value added was $4.351 billion, or 4.6 percent of the total industry contribution to GDP in When indirect flow-on effects are also included, a further $4.085 billion value added was generated by industries supporting tourism. An estimated 86,000 full-time equivalent employees were directly engaged in producing goods and services purchased by tourists in the year ended March Another 57,000 full-time equivalent persons were indirectly engaged in supporting tourism. As figure 1.02 shows, direct and indirect tourism value added combined accounts for 70 cents in every dollar of tourism expenditure. GST accounts for 7 cents in every dollar spent by tourists. 8 TOURISM SATELLITE ACCOUNT:

13 OVERVIEW Figure 1.02: Breaking Down One Dollar of Tourism Expenditure in New Zealand Year ended March 1999 GST on purchases by tourists 7.1% Imports used in production of goods and services sold to tourists 17.6% Imports sold directly to tourists by retailers 5.5% Direct tourism value added 36.0% Indirect tourism value added 33.8% Figure 1.03 shows that In the year to March 1999, there were 1.5 million short-term international visitors to New Zealand, spending $4.7 billion on goods and services. This followed expenditure of $4.3 billion in 1997 and $4.0 billion Figure 1.03: Short Term International Visitor Numbers 1,600 (000) 1,550 1,500 1,450 1,400 1, Year ended March TOURISM SATELLITE ACCOUNT:

14 OVERVIEW International tourism is a major export earner for New Zealand, and compares favourably with other traditional export products, as figure 1.04 shows. Figure 1.04: Comparison with Selected Primary Exports Year ended March 5,000 $(million) 4,000 3, ,000 1,000 0 International tourism Dairy products, including casein Meat and meat products Wood and wood products Seafood In 1999, tourism's contribution to total exports, at $4.7 billion, was slightly less than export receipts from dairy products, at $4.9 billion (or 15.9 percent). In the context of a TSA, the term 'tourist' covers a wider range of traveller than might usually be associated with the term. Tourism expenditure includes spending by overseas tourists visiting New Zealand, along with the domestic travel spending of households and employees of private business and government organisations. Domestic costs incurred by New Zealanders travelling overseas are included in domestic travel expenditure, as well as off-trip purchases of tourism-specific consumer durable goods. Tourism expenditure totalled $12,078 million in the year ended March Table 1.02 shows total expenditure by type of tourist. The international visitor share of total tourism expenditure was 38.6 percent in Households accounted for 47.9 percent, business travellers 11.8 percent and government travellers 1.7 percent. Table 1.02: Tourism Expenditure by Type of Tourist Year ended March Business demand Domestic demand Government demand Household demand International visitors demand Total demand $(million) , ,581 4,344 11,485 1, ,703 4,014 11,303 1, ,788 4,664 12,078 Percentage contribution TOURISM SATELLITE ACCOUNT:

15 OVERVIEW In 1998, the household contribution to total expenditure was almost 51 percent, a result of the drop in expenditure by overseas tourists as Asian visitor numbers declined. Table 1.03 details the share of total expenditure for selected products, by type of tourist, for the year ended March Table 1.03: Share of Tourism Expenditure for Selected Products by Type of Tourist Year ended March 1999 Households Business/ Government International All tourists Percent Accommodation services Food and beverages serving services Air passenger transport Tourism consumer durable products Motor vehicle hire or rental Food products Fuel and other automotive products All other tourism products Total See Appendix 3: Product classification, for goods included in this category. 2. See Appendix 2: Methodology, for the special treatment of travel agents' commissions in business travel expenditure. For the year ended March 1999, air passenger transport represented the largest proportion (22.2 percent) of total tourism expenditure, followed by food and beverage serving services (11.3 percent) and fuel and other automotive products (9.2 percent). There are some marked differences in expenditure patterns by type of visitor. Air passenger transport is the dominant tourist product for domestic business/government and international tourists. Fuel and other automotive products, purchases of tourism consumer durable products and food and beverage serving services are the dominant tourist products bought by domestic households. Measuring tourism Background Unlike conventional industries such as agriculture and manufacturing, tourism had not been explicitly measured in official economic statistics before compilation of the TSA. This was due to the nature of tourism. The Australian and New Zealand Standard Industrial Classification (ANZSIC) provides the framework under which production by industry is classified in the New Zealand System of National Accounts (NZSNA). This groups producers together into aggregate industries based on the supply of a specific range of products that can be unambiguously identified with that well-defined industry. Tourism, however, is not defined as an industry by the characteristics of the products it makes as output, but rather by the characteristics of the purchaser demanding the products. As such, tourism TOURISM SATELLITE ACCOUNT:

16 OVERVIEW products can cut across standard industry definitions, and alternative measurement systems are required. A TSA provides a measure of tourism s contribution to GDP that is consistent with similar measures of the contribution of other industries to GDP found in the NZSNA. Statistics New Zealand produced an experimental, or pilot, TSA for the year ended March 1995 (TSA95). It was acknowledged at the time that there were significant data deficiencies in some areas of TSA95, with estimation and data modelling required to fill in gaps. The main purpose of TSA95 was to develop a framework and methodology that would be used to produce comprehensive TSAs in the future and to identify areas where improved data was required. A TSA for the year ended March 1997 (TSA97) was published in May TSA97 incorporated the New Zealand Domestic Travel Study 1999 (DTS), conducted for the 1999 calendar year. This improved the quality and quantity of data available on expenditure by domestic tourists, both households and business. The 1996 input-output tables (IO96) greatly improved the quality of data in TSA97. IO96 involved a more comprehensive analysis than other years of all the flows between production and consumption within the economy, with supply and use balanced for each product. This produced a very accurate snapshot of the New Zealand economy within which tourism operates as a subset of the national accounts. TSA97 was considered of sufficient quality to justify release as an official Statistics New Zealand output. In August 2001, in order to provide a more timely picture of the impact of tourism activity within the New Zealand economy, provisional TSAs were published for the years Due to limitations on the availability of input data, these accounts were regarded as provisional in nature and subject to revision as relevant data sources became available. As a result they were presented in less detail. This report contains more detailed accounts for the year ended March 1998 (TSA98) and the year ended March 1999 (TSA99). TSA97 has also been updated. Production accounts by industry have been sourced from the balanced input-output tables for 1997, 1998 and 1999 (IO97, IO98 and IO99). Data from the New Zealand Domestic Travel Study for 2000 and the 2001 Census of Population and Dwellings were also introduced. The TSA is now an ongoing project. Provisional estimates for 2000, 2001 and 2002 will be published in March The TSA is compiled according to methodology outlined by the World Tourism Organisation (WTO), with references to writings by the Organisation for Economic Cooperation and Development (OECD). The United Nations Statistical Commission approved the WTO's methodology in The TSA methodology draws on and is consistent with concepts in the System of National Accounts 1993 and Balance of Payments Manual 5 (BPM5). International comparisons New Zealand is one of a number of countries to have developed a TSA. Canada was the first country to complete a TSA and, along with the OECD and the WTO, was instrumental in developing the methodology used for TSA97. Many other countries followed suit and 23 of 50 countries surveyed by the WTO in March 2001 had completed TSAs. While methodologies and approaches used in countries that have released TSAs have much in common, there are a number of conceptual differences, particularly as to what is covered by the term tourism expenditure. These differences may affect the tourism industry ratio, the proportion of each industry's output that is purchased by tourists. This, in turn, impacts on the calculation of tourism value added, employment and capital formation. 12 TOURISM SATELLITE ACCOUNT:

17 OVERVIEW A further complication is the fact that TSAs have generally been compiled on a one-off basis, so that a common reference year is not always available. Consequently, it is not necessarily possible to perform a direct comparison with TSAs produced by other countries. The table below should be interpreted as a guide only to tourism's relative importance in the various countries. Table 1.04: International Comparisons Comparison New Zealand (1999) Australia (2001) USA (1997) Norway (2001) Percent Direct tourism value added as a percentage of total value added Direct employment as a percentage of total employment New Zealand estimates are in producers' prices. 2. Australian estimates are in basic prices. 3. USA estimates are at factor cost. 4. Norwegian estimates are in basic prices. Note that different valuation bases used and slight methodological differences mean the comparisons above are a rough guide only. Benefits of measuring tourism using a satellite account Satellite accounts are extensions of the core System of National Accounts (SNA). The aim of a satellite account is to present information that focuses on a particular aspect of the economy (such as tourism) in much more detail than the core SNA. Satellite accounts involve the rearrangement of existing information within the national accounts so that an area of particular economic or social importance can be analysed more closely. The term 'satellite' is used because the information given is outside what is currently provided by the national accounts. The satellite account concept is ideally suited for measuring tourism. This is because although tourism activity forms an implicit part of the core national accounts, it is not separately measured. A tourism satellite account provides a means of making an explicit measurement of tourism. The reason tourism cannot be explicitly measured in the core national accounts relates to the way that industries are defined within them. Typically, industries in the national accounts are defined as a group of producers that supply a particular good or service. For example, the manufacturing industry comprises those producers that characteristically supply manufactured goods. The tourism 'industry,' however, is defined not by the suppliers of its output but rather by the consumers of its output. The producers within the tourism 'industry' do have something in common, but instead of it being a common good or service they produce, it is the fact that their output is purchased by a particular group of consumers, namely tourists. As such, the tourism industry as measured in a tourism satellite account cuts across many in fact, potentially all - of the industries in the core national accounts. Consider, as an example, the taxi industry. In the core national accounts, this industry will be defined as all those suppliers of taxi TOURISM SATELLITE ACCOUNT:

18 OVERVIEW services. At the same time, however, a portion of this industry that is, that portion consumed by tourists will also contribute to the tourism industry. It can thus be seen that the tourism industry exists implicitly within the core national accounts as part of many different industries such as accommodation, transport, restaurants and amusement and recreation. The aim of a TSA, therefore, is to identify the value of tourism expenditure and the proportion of each industry s output (as measured within the New Zealand System of National Accounts) that is consumed by tourists. From this, tourism s contribution to GDP may be calculated. 14 TOURISM SATELLITE ACCOUNT:

19 RESULTS FOR Results for 1999 The Tourism Satellite Account (TSA) results for 1999 are presented in four sections: The first section, Direct tourism value added, details the calculation of tourism's direct contribution to gross domestic production (GDP), a result comparable with the contribution to GDP of other industries such as farming or manufacturing. The second section, Employment, and the third section, Capital formation, expand the TSA direct value added tables and analyse tourism s impact on the important economic variables of employment and capital formation. The fourth section, Indirect effects of tourism, covers tourism's indirect impact on GDP and employment. The results for 1997 and 1998 are presented in tables 1 to 8 in Section 3. Direct tourism value added Tables 1 to 6 show the systematic process for calculating direct tourism value added. The steps in the process are shown by table number below: Table 1 shows tourism expenditure (or direct tourism demand) by type of tourist, for each product. Table 2 presents the overall production accounts of the tourism characteristic and tourism related industries, as well as a summary production account for all non-tourism related industries. This table relates to industry production consumed by both tourists and nontourists. Table 3 shows total sales of tourism characteristic, tourism related and non-tourism related industries by tourism product. Table 4 compares total tourism demand by product (from table 1) with total supply by product (from table 3). The ratio of product demand to supply is then calculated to produce tourism product ratios. Table 5 applies tourism product ratios (from table 4) to each industry s production of tourism products (from table 3) to calculate tourism sales by industry. Tourism industry ratios are then calculated by dividing industry sales to tourists by total industry sales 1. Table 6 shows how industry tourism ratios are multiplied through the production accounts (from table 2) to give tourism production accounts by industry and direct tourism value added. Tourism expenditure, by type of product and type of tourist Table 1 shows the demand for tourism characteristic and tourism related products by type of tourist. As with tables 3, 4 and 5, products are presented down the rows. The first four columns show direct tourism demand broken down by type of tourist. Total direct tourism demand by product is then calculated in the next column. 1. Note that tourism supply is derived at a finer product level than that shown in the tables in this section. Because of this, the tourism production by industry for some products published in table 5 may differ from the result of multiplying total supply by the product ratio shown in table 4. TOURISM SATELLITE ACCOUNT:

20 RESULTS FOR 1999 Table 1: Tourism Expenditure by Type of Product and Type of Tourist 1,2 Year ended March 1999 Business demand Domestic demand Government demand Household demand International demand Total $ (million) Tourism characteristic products Accommodation services ,053 Food and beverage serving services ,364 Road, rail and water passenger transport Air passenger transport ,524 2,682 Travel agency services Motor vehicle hire or rental Imputed rental on holiday homes Libraries, archives, museums and other cultural services Other sport and recreation services Total tourism characteristic products 1, ,170 3,410 7,018 Tourism related products Retail sales - alcohol Retail sales - clothing and footwear Retail sales - food, beverages, tobacco and other groceries Retail sales - fuel and other automotive products ,109 Retail sales - retail medicines, toiletries Retail sales - tourism consumer durables Retail sales - other shopping Financial services General insurance (incl. travel Insurance) Social and health related services Gambling services Other tourism related services Other personal services Total tourism related products , ,203 Total tourism demand by type of tourist 1, ,216 4,388 11,221 excluding GST GST paid on purchases by tourists Total tourism expenditure by type of tourist 1, ,788 4,664 12,078 Note: 1. Totals may not add due to rounding. 2. All values are in producer prices. 3. Road, rail and water passenger transport are combined for confidentiality reasons. 16 TOURISM SATELLITE ACCOUNT:

21 RESULTS FOR 1999 New Zealand System of National Accounts production accounts by industry Table 2 gives the full production accounts of each tourism characteristic and tourism related industry, as well as the total combined account of all non-tourism related industries. The production accounts show all production, regardless of the identity of the purchaser (ie total tourism and non-tourism production). Table 2: NZSNA Production Accounts by Industry 1,2 Year ended March 1999 Accommodation, cafes and restaurants Road passenger, rail and water transport 3 Tourism characteristic industries Air transport Other transport, storage and transport services Machinery and equipment hiring and leasing Cultural and recreational services Tourism related industries Retail trade All nontourism related industries Total $ (million) Published GDP 101,959 Less: GST, import duties and other taxes on production 7,472 Contribution to GDP from production 1, , ,420 5,636 82,023 94,487 Equivalent to: Total output 4,091 1,309 3,153 2,816 1,347 2,604 10, , ,834 Less: intermediate consumption 2, ,451 1, ,185 5,329 99, ,346 Components of GDP Compensation of employees 1, ,150 37,717 44,472 Gross operating surplus ,403 38,955 44,285 Taxes on production and imports ,531 6,013 Less: subsidies Note: 1. Totals may not add due to rounding. 2. All values are producer values. 3. Road, rail and water passenger transport are combined for confidentiality reasons. Sales analysis by type of product and industry Table 3 shows total sales of tourism specific products broken down into the industries supplying each tourism product. TOURISM SATELLITE ACCOUNT:

22 RESULTS FOR 1999 Table 3: Sales Analysis by Type of Product and Industry 1,2 Year ended March 1999 Accommodation, cafes and restaurants Road passenger, rail and water transport 3 Tourism characteristic industries Air transport Other transport, storage and transport services Machinery and equipment hiring and leasing Cultural and recreational services Tourism related industries Retail trade All non-tourism related industries Imports Total $ (million) Sales of tourism characteristic products Accommodation services ,121 Food and beverage serving services 2, ,554 Road, rail and water passenger transport Air passenger transport - - 2, ,811 Travel agency services Motor vehicle hire or rental Imputed rental on holiday homes Libraries, archives, museums and other cultural services Other sport and recreation services Total tourism characteristic products 3, , ,499 Sales of tourism related products Retail sales - alcohol , ,876 Retail sales - clothing and footwear ,424 1,008 3,334 Retail sales - food, beverages, tobacco and other groceries ,032 19,992 1,318 23,395 Retail sales - fuel and other automotive products , ,563 Retail sales - retail medicines, toiletries ,352 1,056 3,058 Retail sales - tourism consumer durables ,354 2,208 2,920 6,494 Retail sales - other shopping ,601 9,002 4,550 15,188 Financial services ,372-1,372 General insurance (incl. travel insurance) ,291-1,291 Social and health related services ,154-3,154 Gambling services , ,099 Other tourism related services ,004 7,410-9,540 Other personal services Total tourism related products ,068 8,848 53,729 11,783 76,205 Sales of all domestically produced non tourism related products ,898 1, , , ,366 Total 4,069 1,303 3,146 2,799 1,345 2,586 10, ,111 11, ,070 Other output items ,438-1,546 Less imports of tourism related products 4-11,783-11,783 Total output 4,091 1,309 3,153 2,816 1,347 2,604 10, , ,834 Note: 1. Totals may not add due to rounding. 2. All values are in producer prices. 3. Road, rail and water passenger transport are combined for confidentiality reasons. 4. Imports of tourism related products are subtracted from total sales as this relates to goods not produced in New Zealand. 18 TOURISM SATELLITE ACCOUNT:

23 RESULTS FOR 1999 Table 3 is a stepping stone for deriving direct tourism value added (presented in table 6). Its purpose is to identify the supply of tourism characteristic and tourism related products to compare with direct tourism demand for these products. The row totals of table 3 give the total amount of each product sold by all industries in the economy. For example, the total amount of food and beverage serving services produced for the year ended March 1999 was $3,554 million. The column totals give the total supply of products produced by each industry (equivalent to total sales by each industry). For example, total sales of the accommodation, cafes and restaurants industry were $4,069 million. Other output items (for example, stock change) that are not part of sales are then added to total sales to obtain total output by industry. Table 3 is presented in a typical input-output format, with products across the rows and industries down the columns. The information in table 3 shows sales of tourism characteristic, tourism related and non-tourism related products by tourism characteristic, tourism related and non-tourism related industries. For example, the accommodation, cafes and restaurant industry sold $2,504 million worth of food and beverage serving services. The retail trade industry produced $826 million worth of food and beverage serving services, and $167 million of this product was produced by all non-tourism industries. The 'All non-tourism related industries' column highlights the fact that it is not only characteristic or related tourism industries that produce tourism specific products. Any industry may produce these products. Likewise, characteristic or related tourism industries may produce non-tourism related products, ie not all of the output of characteristic or related tourism industries is produced to meet the demands of tourists. Note the treatment of the supply of goods sold by retailers to end users. The purchase price paid by the user (excluding GST) may be split into several components: the amount the manufacturer receives for the good, and the margins applied by the wholesaler and the retailer. Each component may be supplied by a different industry (for example, a clothing company makes a T-shirt and sells it to a wholesaler, who on-sells it to a retailer, who then sells it to a consumer). The retail sales products presented in table 3 have aggregated these components again (ie the Retail sales clothing and footwear product includes the value of manufacture, wholesale margin and retail margin in total supply). Imports have a special treatment in table 3. As tourists in New Zealand cannot consume a service produced overseas, there is no supply of imported services in table 3. It is possible, however, for a tourist in New Zealand to purchase a good imported from overseas. Table 3, therefore, shows imports of goods available for purchase by tourists and non-tourists. Derivation of tourism product ratios Table 4 takes the total tourism demand for each characteristic and tourism related product (from table 1) and compares this with the total supply of these products (from table 3). The ratio of these two variables is then taken for each product to produce the tourism product ratio. The tourism product ratio is instrumental in deriving total tourism industry output and tourism value added in tables 5 and 6. TOURISM SATELLITE ACCOUNT:

24 RESULTS FOR 1999 Table 4: Derivation of Tourism Product Ratios 1,2 Year ended March 1999 Total demand (from table 1) Total supply (from table 3) Tourism product ratio 4 Tourism characteristic products $ (million) Accommodation services 1,053 1, Food and beverage serving services 1,364 3, Road, rail and water passenger transport Air passenger transport 2,682 2, Travel agency services Motor vehicle hire or rental Imputed rental on holiday homes Libraries, archives, museums and other cultural services Other sport and recreation services Total tourism characteristic products 7,018 10,499 Tourism related products Retail sales - alcohol 144 2, Retail sales - clothing and footwear 335 3, Retail sales - food, beverages, tobacco and other groceries , Retail sales - fuel and other automotive products 1,109 4, Retail sales - retail medicines, toiletries 88 3, Retail sales - tourism consumer durables 665 6, Retail sales - other shopping , Financial services 15 1, General insurance (incl. travel insurance) 16 1, Social and health related services 50 3, Gambling services 66 1, Other tourism related services 316 9, Other personal services Total tourism related products 4,203 76,205 Total excluding GST 11,221 86,704 GST paid on purchases by tourists 857 Total tourism expenditure by type of tourist 12,078 Note: 1. Totals may not add due to rounding. 2. All values are in producer prices. 3. Road, rail and water passenger transport are combined for confidentiality reasons. 4. Tourism product ratios shown in this table may differ at the industry level for some products from the ratios used to derive tourism supply in table 5. Supply is calculated at a less aggregated level than the level presented in other tables. 20 TOURISM SATELLITE ACCOUNT:

25 RESULTS FOR 1999 To illustrate the concept of the tourism product ratio, take the food and beverage serving services product as an example. Food and beverage serving services has a tourism product ratio of This means that in 1999 tourists consumed 38 percent ($1,364 million) of the total supply of food and beverage serving services within New Zealand ($3,554 million). The closer a tourism product ratio is to 1.00, the greater the likelihood of that product being exclusively consumed by tourists. For example: Because of the nature of accommodation, tourists consume the majority of this product. The accommodation product has a tourism product ratio of With a tourism product ratio of 0.99, travel agency services are almost exclusively consumed by tourists. Demand and supply are equal for the imputed rental on holiday homes product because, by definition, all of this product will be consumed by tourists 1. The tourism product ratio is, therefore, Derivation of tourism industry ratios Table 5 derives total direct tourism supply by applying the tourism product ratio (from table 4) to the total supply of that product, by industry (from table 3). Note that the difference between tables 5 and 3 is that the product detail in table 5 relates to tourism sales only. Tourism industry ratios are then derived by dividing direct tourism sales by total industry output for each industry. 1. See Appendix 2: Methodology for further details. TOURISM SATELLITE ACCOUNT:

26 RESULTS FOR 1999 Table 5: Derivation of Tourism Industry Ratios 1,2 Year ended March 1999 Accommodation, cafes and restaurants Road passenger, rail and water transport 3 Tourism characteristic industries Air transport Other transport, storage and transport services Machinery and equipment hiring and leasing Cultural and recreational services Tourism related industries Retail trade All nontourism related industries Imports Total $ (million) Tourism characteristic products Accommodation services ,053 Food and beverage serving services ,364 Road, rail and water passenger transport Air passenger transport - - 2, ,682 Travel agency services Motor vehicle hire or rental Imputed rental on holiday homes Libraries, archives, museums and other cultural services Other sport and recreation services Total tourism characteristic products 1, , ,018 purchased by tourists Tourism related products Retail sales - alcohol Retail sales - clothing and footwear Retail sales - food, beverages, tobacco and other groceries Retail sales - fuel and other automotive products ,109 Retail sales - retail medicines, toiletries Retail sales - tourism consumer durables Retail sales - other shopping Financial services General insurance (incl. travel insurance) Social and health related services Gambling services Other tourism related services Other personal services Total tourism related products purchased by tourists , ,203 Direct tourism sales 1, , ,132 3, ,221 Total industry output 4,091 1,309 3,153 2,816 1,347 2,604 10, , ,834 Tourism industry ratio Note: 1. Totals may not add due to rounding. 2. All values are in producer prices. 3. Road, rail and water passenger transport are combined for confidentiality reasons. The 'Direct tourism sales' row shows the sum of each industry s output of tourism specific products directly consumed by tourists. Direct tourism sales by industry are then divided by the total output of each industry (from table 3) to get the tourism industry ratios, ie the proportion of each industry s total output consumed by tourists. Points to note from table 5: The rows show the value of each product produced by the different industries that are directly demanded by tourists. The columns show the value of each industry s output directly consumed by tourists. To illustrate the derivation of table 5, take the accommodation services product. The tourism product ratio of 0.94 (from table 4) is applied to the total supply of the product for each industry (from table 3). For example, the accommodation, cafes and restaurants industry produced $ TOURISM SATELLITE ACCOUNT:

27 RESULTS FOR 1999 million of accommodation services (from table 3). Table 5 shows that $819 million of this was sold directly to tourists. Total direct tourism sales of the accommodation, cafes and restaurants industry are $1,855 million. By dividing this figure by the total output of the accommodation, cafes and restaurants industry ($4,091 million) we get a tourism industry ratio of Note that tourism supply is derived at a finer product level than the level presented in table 5. Because of this, the tourism production by industry for some products may differ from the result of multiplying total supply by the tourism product ratio as shown in tables 3 and 4. Tourism products worth $11,221 million were directly supplied to tourists in This is equivalent to the total tourism demand for tourism products from table 1. Therefore, total tourism supply equals total tourism demand; thus each industry's direct supply to tourists is identified and can be used in calculating direct tourism value added. Tourism's direct contribution to GDP Table 6 shows how industry tourism ratios (from table 5) are multiplied through industry production accounts (from table 2) to give tourism production accounts by industry and direct tourism value added. Table 6: Derivation of Tourism's Direct Value Added 1,2 Year ended March 1999 Accommodation, cafes and restaurants Road passenger, rail and water transport 3 Tourism characteristic industries Air transport Other transport, storage and transport services Machinery and equipment hiring and leasing Cultural and recreational services Tourism related industries Retail trade All non-tourism related industries Total $ (million) Tourism industry ratio Direct tourism value added ,451 4,351 Equivalent to: Tourism output 1, , ,132 3,182 10,555 Less: tourism intermediate consumption 1, , ,731 6,204 Contribution to GDP from production 94,487 Direct tourism value added as a percentage of total industry contribution to GDP 4.6% Components of direct tourism value added Tourism compensation of employees ,307 Tourism gross operating surplus ,646 Tourism taxes on production and imports Less: tourism subsidies Note: 1. Totals may not add due to rounding. 2. All values are in producer prices. 3. Road, rail and water passenger transport are combined for confidentiality reasons. TOURISM SATELLITE ACCOUNT:

28 RESULTS FOR 1999 The tourism industry ratios from table 5 play a pivotal role in determining direct tourism value added. To calculate tourism value added, the tourism industry ratio is applied to total intermediate consumption to get total tourism intermediate consumption by industry. Total tourism value added is calculated as the difference between tourism output (ie total industry sales of products to tourists) and tourism intermediate consumption. The sum of all industries tourism value added is equal to the total direct tourism value added of $4,351 million. To present full tourism production accounts, the proportion is then applied to compensation of employees, and taxes on production and imports, to obtain an estimate of the total tourism component of these aggregates. Tourism subsidies are calculated slightly differently and tourism gross operating surplus is calculated as the residual. See Appendix 2: Methodology for details on calculating direct tourism value added. Points to note from table 6: The 'All non-tourism related industries' column includes the sales of tourism characteristic and tourism related products by all other industries in the economy to tourists. The tourism industry ratio for each industry is calculated and then applied to intermediate consumption and value added for each of these industries individually. Direct tourism contributed 4.6 percent of the total industry contribution to GDP. The measurement of direct tourism value added (also known as tourism's direct contribution to GDP) is a key result of the Tourism Satellite Account. As figure 2.01 shows, tourism directly accounted for $4,351 million of value added in the year ending March 1999, which was 4.6 percent of New Zealand's total industry contribution to GDP. This compares with 4.7 percent in 1997 and 4.4 percent in TOURISM SATELLITE ACCOUNT: