Final report of the Tourism Satellite Account project

Final report 7.12.2004 1(50) Economic Statistics Tourism Satellite Account Final report of the Tourism Satellite Account project TSA final report1

7.12.2004 2 (50) CONTENTS 1 BACKGROUND OF THE PROJECT... 4 2 TOURISM SATELLITE ACCOUNT (TSA)... 4 2.1 TOURISM SATELLITE ACCOUNT IN THE EU... 5 3 ON THE IMPLEMENTATION OF FINLAND S TSA PROJECT... 5 3.1 STEERING AND MONITORING OF THE PROJECT... 5 3.2 COMPILATION PROCESS OF THE STATISTICS... 6 3.3 WORKSHOP FOR TOURISM ACCOUNT USERS AND INTEREST GROUPS... 7 4 CONCEPTS, DEFINITIONS AND DELIMITATIONS APPLIED TO THE TOURISM ACCOUNT... 8 4.1 NATIONAL ACCOUNTS... 8 4.2 TOURISM... 8 4.3 VISITOR... 9 4.4 CONSUMPTION RELATED TO TOURISM... 10 4.5 TOURISM INDUSTRIES AND TOURISM PRODUCTION... 11 4.6 TOURISM EMPLOYMENT... 12 4.7 TOURISM GROSS FIXED CAPITAL FORMATION... 12 4.8 TOURISM COLLECTIVE CONSUMPTION... 13 5 TOURISM SATELLITE ACCOUNT TABLES... 13 5.1 TSA FRAMEWORK AND RECOMMENDATIONS... 13 5.2 PRODUCTS IN THE TSA... 13 5.2.1 TSA tourism products... 14 5.3 STRUCTURE OF THE TABLES... 15 5.3.1 Consumption tables... 15 5.3.2 Production tables... 15 5.3.3 Net valuation... 15 5.3.4 Goods acquired by visitors... 16 6 NATIONAL ACCOUNTS AS A FRAMEWORK FOR FINLAND S TOURISM SATELLITE ACCOUNT... 16 6.1 SUPPLY AND USE TABLES... 16 6.2 DELIMITATIONS OF INDUSTRIES IN THE TOURISM ACCOUNT... 17 6.3 PRODUCTS IN THE TOURISM ACCOUNT... 18 7 KEY SOURCE DATA FOR TOURISM DEMAND... 22 7.1 BALANCE OF PAYMENTS... 22 7.1.1 Travel balance... 22 7.1.2 Passenger transport balance... 23 7.2 BORDER INTERVIEW SURVEY... 23 7.3 STATISTICS FINLAND S OTHER TOURISM STATISTICS... 24 7.3.1 Finnish Travel Survey... 24 7.3.2 Accommodation statistics... 26 7.4 OTHER DATA... 26 7.4.1 Passenger transport survey... 26 7.4.2 Regional tourism revenue and employment surveys... 27 8 ON THE COMPILATION OF TABLES FOR FINLAND S TOURISM SATELLITE ACCOUNT... 27 8.1 TABLE 1: INBOUND TOURISM CONSUMPTION... 27 8.2 TABLE 2: DOMESTIC TOURISM CONSUMPTION... 29 8.3 TABLE 3: OUTBOUND TOURISM CONSUMPTION... 31 8.4 TABLE 4: INTERNAL TOURISM CONSUMPTION BY PRODUCTS AND TYPES OF TOURISM... 31 8.5 TABLE 5: PRODUCTION ACCOUNTS OF TOURISM INDUSTRIES AND OTHER INDUSTRIES... 33 8.6 TABLE 6: DOMESTIC SUPPLY AND INTERNAL TOURISM CONSUMPTION BY PRODUCTS... 33 8.7 TABLE 7: EMPLOYMENT IN THE TOURISM INDUSTRIES... 38 8.7.1 Imputed employment effects of tourism... 41 8.8 TABLE 8. TOURISM GROSS FIXED CAPITAL FORMATION... 42 8.9 TABLE 9. TOURISM COLLECTIVE CONSUMPTION... 42 8.10 TABLE 10. NON-MONETARY INDICATORS... 43 9 EXAMINATION OF THE RESULTS... 43

7.12.2004 3 (50) 10 ON THE RELIABILITY OF THE STATISTICS... 47 10.1 INQUIRIES AS SOURCES FOR CONSUMPTION DATA... 47 10.2 EXAMINATION BY TABLE... 47 11 DEVELOPMENT NEEDS OF THE TOURISM SATELLITE ACCOUNT... 49 LIST OF FIGURES Figure 1. Forms of tourism 9 Figure 2. Inbound tourism consumption by product in Finland in 2001 28 Figure 3. Inbound tourism consumption in Finland, total in 1995-2002 29 Figure 4. Domestic tourism consumption by product in Finland in 2001 30 Figure 5. Domestic tourism consumption, total in Finland in 1995-2002 31 Figure 6. Total tourism consumption by product in Finland in 2001 32 Figure 7. Tourism consumption by visitor group in 2001 32 Figure 8. Total tourism consumption in Finland in 1995-2002 33 Figure 9. Output generated by tourism by industry in 2001 37 Figure 10. Value added generated by tourism by industry in 2001 38 Figure 11. Employed persons in tourism industries in 2001 40 Figure 12. Hours worked in tourism industries in 2001 41 Figure 13. Distribution of domestic supply of some tourism products to tourism and other use in 2001 44 Figure 14. Tourism value added in 1995-2002 44 Figure 15. Tourism value added as a share of GDP at basic prices in 1995-2002 45 Figure 16. Annual changes in tourism value added and GDP in 1996-2002 at nominal prices. 45 Figure 17. GDP shares of certain industries values added in 2001 46 TEXT TABLES Table 1. Relationships between the economic indicators of tourism...12 Table 2. Definitions of tourism-related products...14 Table 3. Tourism products...14 Table 4. Imputed employment generated by tourism...41 Table 5. Imputed hours worked generated by tourism...42 Table 6. Key figures for tourism demand...46 Table 7. Key figures for tourism supply...46

7.12.2004 4 (50) 1 Background of the project At the beginning of 2004, Statistics Finland initiated a project on the Finnish Tourism Satellite Account, which was financed by the Finnish Ministry of Trade and Industry (70%) and the European Union (30%). The project is also called the tourism account. For the project, a full-time researcher was appointed to Statistics Finland s Economic Statistics unit for eight months, and a steering group was set up to assist in this work. The project developed methods for the current calculation of the satellite account and produced final tables for the Tourism Satellite Account for the years 1995-2001 as well as preliminary tables for the year 2002. This report describes the compilation of the tables and the results. The Tourism Satellite Account is a statistical system where the economic significance and effects of tourism are described in a diversified and comprehensive manner. It was developed in broad international co-operation, as a result of which the UN, WTO (World Tourism Organization), OECD and EU approved a recommendation on the Tourism Satellite Account in 2000. Within the EU the Tourism Satellite Account is of key importance for attaining the Commission s objectives related to tourism because other statistical systems do not produce enough information on the economic and employment impacts of tourism. The Commission aims to incorporate the Tourism Satellite Account into regular compilation of statistics in the near future. Finland compiled a preliminary Tourism Satellite Account for the year 1999 (MEK A:115 2001, www.mek.fi). It was drawn up by Travel Development Finland Ltd. Statistics Finland had a key role in that work. In practice, Statistics Finland prepared the tables for the satellite account and also made major contributions to the text of the report. The report indicates that tourism accounted for 2.4 per cent of Finland s gross domestic product in 1999. The results of the 1999 report can be regarded as only indicative, because when the report was made, product-specific supply and use tables of the national accounts were not yet available. In the new Tourism Satellite Account the supply and use tables provide a framework for the supply and use of tourism characteristic, connected and non-specific products. The Border Interview Survey, the Finnish Travel Survey and other data sources have been used to establish the share of tourism in the use of these products. The employment effect of tourism industries and nonmonetary indicators have also been examined. Of the tables in compliance with the international recommendation on the tourism account, the project has produced Tables 1 (Inbound tourism consumption), 2 (Domestic tourism consumption), 4 (Internal tourism consumption by products and types of tourism), 5 (Production accounts of tourism industries and other industries), 6 (Domestic supply and internal tourism consumption by products), 7 (Employment in the tourism industries), and 10 (Non-monetary indicators). 2 Tourism Satellite Account (TSA) In March 2000, the United Nations Statistics Division approved the joint manual of the WTO, OECD and Eurostat on the Tourism Satellite Account (Tourism Satellite Account Recommended Methodological Framework). The manual laid the foundation for compilation of internationally comparable satellite accounts.

7.12.2004 5 (50) In September 2000 the OECD published the manual Measuring the Role of Tourism in OECD countries. The OECD Manual on Tourism Satellite Accounts and the Employment Module. In its main parts it is uniform with the joint model approved by the UN. 2.1 Tourism Satellite Account in the EU Within Eurostat, the Statistical Office of the European Communities, tourism statistics are handled in a workgroup formed by representatives of EU/EEA countries. The TSA is being prepared in a Task Force formed for dealing with methodological questions of tourism statistics. There is as yet no actual EU directive on the TSA, but the EU supports the Member States efforts in developing the TSA by providing expert assistance. Eurostat also compiled technical manuals for application of the TSA and measurement of employment in the EU countries. The starting point for Eurostat was to survey the data needed and to utilise the production of data based on EU legislation. The development of the satellite account set off from identifying the information needed and examining the existing sources. The compilation of the TSA can start by degrees so that in the first phase are selected the tables and aggregates on which information is available. The minimum requirement is to compile a table (Table 6) describing tourism demand and supply. In addition, it was considered of primary importance to have tables describing inbound and domestic tourism demand (Tables 1 and 2) and production accounts of tourism industries and other industries (Table 5). The next most important were a summary table on tourism consumption (Table 4) and a table describing employment (Table 7). Tables on demand for outbound tourism services (Table 3) and physical indicators of tourism (Table 10) were considered less important. Measurement of investments and tourism collective consumption (Tables 8 and 9) can be postponed to a later time because international recommendations on these still need development. National accounts and tourism accounts constitute the central information basis for the Tourism Satellite Account. Compilation of the TSA requires co-operation between the units responsible for those data. Because other public and private institutions can take part in production or financing of tourism statistics in addition to statistical offices, many countries preparing TSAs have set up workgroups both within organisations and between authorities to implement the project. 3 On the implementation of Finland s TSA project 3.1 Steering and monitoring of the project To the steering group set up for the project the Ministry of Trade and Industry appointed in January 2004 representatives from the Ministry of Trade and Industry (Lea Häyhä as Chair), the Finnish Tourism Board (Tom Ylkänen), the Finnish Hotel and Restaurant Association (Heikki Lankinen) and Statistics Finland (Ritva Marin, Olli Savela and Olli Pirinen as Secretary). After the TSA workshop held in June, Malla Paajanen from the Helsinki School of Economics also took part in the work of the steering group. The Project Manager was Olli Pirinen from Statistics Finland. The progress of the project was followed in the steering group meetings, seven of which were held. In each meeting the topics discussed concerned the situation of table compilation connected to the current stage of the project, questions related to the availability and usability of source data and the problems arisen.

7.12.2004 6 (50) The problems discovered were recorded in the minutes of the steering group meetings, on the basis of which solutions were searched for the problems or if the problem required further inquiry, it was recorded on the basis of these notes to the progress or final report of the project. 3.2 Compilation process of the statistics Statistics Finland was mainly responsible for the practical work connected to the project for the production of the satellite account system and the compilation of the tables and the related descriptions. The project manager worked within Statistics Finland s National Accounts section. It will be explained later what position the national accounts and the supply and use tables they are based on have in the implementation of the TSA. The source data for the tables describing tourism demand were surveyed and collected by Statistics Finland s Transport and Tourism section. The section was also responsible for basic editing of the data into demand tables. The final compilation of the demand data and their combination with the supply data were made by Statistics Finland s National Accounts section. Similarly, the required revisions to the figures were mainly performed by that section. The schedule of the work progressed so that the products to be included in the tourism account and the corresponding product headings used in the national accounts were defined in the early stage of the project from January to February. Similarly, the tourism characteristic industries and the corresponding industries in the national accounts were defined during January and February. After these definitions, selection and editing of the necessary information from the national accounts data could be started between February and March. National accounts researchers of the relevant industries took part in the production of the basic data. On the basis of the data describing the supply of tourism industries, recurrently supplemented outlines were made of the tourism account Tables 5 and 6. The versions concerning particularly the year 2001 were discussed regularly in the steering group meetings. The tables for 1995-2000 and 2002 were also preliminarily available in June 2004, and they became revised until the conclusion of the project. Simultaneously with the supplementation of Tables 5 and 6, surveys for the demand data were started. In the first stage the focus was on the compilation of demand tables 1,2 and 4 for the year 2001, because it is the latest year for which final data are available on the supply data derived from the national accounts. The other years under study were prepared with the same systematics as for the year 2001 in the final stage of the project (by August 2004). The tables describing employment in the tourism industry (Table 7) for the years 1995-2002 were made overlappingly with the tables concerning tourism production so that they were complete in April. Tourism demand (Tables 1, 2 and 4) and the relation of demand to product-specific tourism supply (Table 6) were handled in the steering group meetings from May onwards until the termination of the project. The analysis of the results obtained was extended on the basis of the feedback obtained from the workshop in early June and discussions with various representatives of tourism interest groups.

7.12.2004 7 (50) 3.3 Workshop for tourism account users and interest groups A workshop for the users of the tourism account and other interest groups was arranged at the Ministry of Trade and Industry on 4 June 2004. All the main users of the tourism accounts were invited to the workshop. In all, 35 people attended the event. The programme of the workshop consisted of the following topics on which prepared presentations were given: What is tourism satellite account? (Presentation of the recommendation on tourism account and the tasks of the project), by Olli Savela. Finnish Tourism Satellite Account project - Presentation of the preliminary tourism account for the year 2001, by Olli Pirinen. Users presentation The users presentation was given by Jaakko Lehtonen, Director General of the Finnish Tourist Board. He demonstrated versatile uses of the TSA but also made suggestions for its development. At the end of the workshop other participants expressed their views on the use requirements of the TSA and ideas for further development. In the presentations of the workshop the views and problem areas relating to the results were discussed. The opinions of experts and the needs for change raised in the workshop could be utilised in the further work of the project. The use needs of the travel account presented in the workshop were also taken into consideration. In the workshop a need appeared for emphasising as distinct concepts the whole production of tourism industries and the consumption ending up in tourism, which forms a specific part of the total use of the products produced. The following is a list of the ideas brought up in the workshop. Regular studies into regional economic effects of tourism would supplement the satellite account. In connection with the regional input-output survey for the year 2002 Statistics Finland will examine visitor flows by region and this information should be utilised in studying the regional importance of tourism. It should be defined accurately for regional statistics how to record the expenses before, during and after the trip Statistics Finland s Time Use Survey could be utilised for the time used on tourism. Use of the tourism account in various simulation models should be developed in evaluating the economic and other effects of tourism. The results of the tourism account should be presented in a version to the general public where the concepts and results would be given clearly without any difficult professional terminology. The content of the product headings in the tourism account should be given in a more descriptive way (where to put ski lift tickets, etc.).

7.12.2004 8 (50) The share of motor vehicle transport in tourism should be presented more concretely. It was requested that the share of inland water transport would be separated from the total sums of boat trips. Tourism programme services were wished to be included as one whole in the tourism account Explanation was needed on what basis tourism supply of industries was determined: why e.g. taxi transport was included in the supply at 100 per cent. After the workshop the project advanced according to the directions given by improving the tables and compiling the missing tables. The feedback received in the workshop was taken into consideration in the project reporting as well. 4 Concepts, definitions and delimitations applied to the tourism account 4.1 National accounts 4.2 Tourism Finland s national accounts are based on international recommendations. The main ones of these are the United Nations global System of National Accounts 1993 (SNA 1993) and the European Union s act-based European System of Accounts 1995 (ESA 1995) founded on it. The purpose of the national accounts is to calculate and publish the key ratios describing the state and development of Finland s national economy, i.e. gross domestic product (GDP) and gross national income (GNI depicting the income derived from the country s production) and their components. Gross domestic product describes production of the national economy (value added). It is derived when taxes on products are added to the sum of industryspecific values added and subsidies on products are deducted from it. Value added is obtained when intermediate consumption (raw materials and other purchases) is deducted from output. Output is the monetary sum of products (goods and services) produced by the economy in a certain period. It roughly corresponds to enterprises turnover (except in trade). In other words, purchases from others are deducted from enterprises turnover, which yields the value added the enterprises have generated for production According to the recommendation of the World Tourism Organization (World Tourism Organization, WTO: Recommendations on Tourism Statistics, 1993), tourism is the activities of persons travelling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes. Tourism can be divided into three main groups by the following classification: domestic tourism, which is defined as including travelling by persons permanently resident in Finland only within Finland but outside their usual environment,

7.12.2004 9 (50) inbound tourism, which is defined as including travelling by persons permanently resident abroad within Finland (and outside their usual environment), outbound tourism, which is defined as including travelling by persons permanently resident in Finland outside Finland (and outside their usual environment). By combining these groups the following groups can be obtained: Internal tourism including domestic tourism and inbound tourism to Finland National tourism comprising domestic tourism and outbound tourism from Finland International tourism including outbound tourism from Finland and inbound tourism to Finland The definitions of these same groups can be used as applicable when talking about tourism in a certain area. Figure 1. Forms of tourism Source: WTO, Recommendations on Tourism Statistics 4.3 Visitor The WTO defines as a visitor a person travelling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes not related to the exercise of an activity remunerated from within the place visited. The usual environment is usually defined as the person s home, place of work and study or other regularly (and frequently) visited place. Travel and staying at a second home or a free-time residence are included in tourism as far as they fulfil the criteria for travel outside one s usual environment. Other visitors who cannot be defined as visitors by the grounds given are excluded from tourism statistics (e.g. refuges and migrant workers). Visitors can be broken down into two main groups:

7.12.2004 10 (50) International visitors, who travel to another country that is not their usual environment. International visitors can be further divided into the groups of those staying overnight and same-day visitors. Domestic visitors, who travel within the borders of their country of residence. Domestic visitors can also be further divided into the groups of those staying overnight and same-day visitors. 4.4 Consumption related to tourism The economic impacts of tourism should be measured both according to the production of tourism industries and the demand of visitors because the tourism industry produces services and products for local needs as well. For example, the production of the restaurant sector is not caused by tourism but it also includes consumption of local residents. Tourism expenditure is the value of goods or services the visitor uses for the trip, during the trip or immediately after the trip or which is used to satisfy the visitor s needs. Tourism expenditure can be generated from the maintenance of free-time residences without the actual definition of tourism being fulfilled. Acquisition of free-time residences is specified as an investment, which is not included in tourism expenditure. Inclusion of consumer durable goods in tourism expenditure depends on the commodity. For example, a suitcase probably has no other than travel use but a passenger car is used for both travelling and other purposes. Acquisition of passenger cars and other vehicles is excluded from tourism expenditure. Tourism consumption comprises all expenditure on goods and services (also acquisition of food and fuel for motor vehicles) during travelling whether paid by the visitor him/herself or someone else. Included are also other expenditure related to the trip before and after it and tourism single-purpose consumer durables, such as suitcases regardless of the time of acquisition. In addition to the expenditure paid by the visitor or someone else, included are tourism expenditure and tourismrelated social income transfers of enterprises (incl. government and other public institutions). Tourism consumption does not contain such as the following expenses: Payments not related to purchases of consumer goods and services, such as: Taxes and payments not levied on products (value added tax is consumption) Interests even if related to expenditure caused by the trip Purchase of monetary or fixed assets, e.g. land, real estate and works of art Donations to charity or private persons not related to payments of goods and services Acquisitions for commercial purposes such as products purchased for re-sale or production process When evaluating the economic importance of tourism for the whole national economy, total tourism expenditure should include besides visitors and employers consumption also tourism collective consumption, such as possible subsidies used for providing certain services (tourist information) and expenses caused by tourism gross fixed capital formation. For the time being, tourism collective consumption

7.12.2004 11 (50) and tourism gross fixed capital formation are not evaluated in Finland s tourism account application. 4.5 Tourism industries and tourism production The definition and classification of the tourism industry and product is problematic because tourism comprises various different industries. In theory, nearly all products can be sold to visitors and therefore most industries are either directly or indirectly involved in tourism. The characteristic tourism industries are dependent on tourism and also necessary for tourism. The classification is based on the industrial classification used in the national accounts. The tourism industry essentially includes the following industries: passenger transport services, hotels and restaurants and certain recreational, cultural and sporting activities. Trade can be regarded as the most important of the tourism non-specific industries. To describe the extent of tourism production, three different indicators should be used that differ slightly from one another but are also mutually complementary. (Source: Eurostat, OECD, WTO, UN, 2001: Tourism Satellite Account Recommended Methodological Framework, pp. 68-72). They are: 1. Value Added of Tourism Industries The value added of tourism industries shows the total value added of tourism characteristic industries regardless of whether all or only part of the output is directed to visitors. The indicator is used to express the extent of the production activity but it does not specify the importance of tourism to the national economy. 2. Tourism Value Added, TVA Tourism value added describes the value added of all industries that tourism consumption achieves. Of the value added of restaurants the TVA includes the part generated by visitors. The TVA also contains for producers engaged in tourism as a secondary activity the secondary value added, which is generated by tourism consumption, such as farm tourism. When determining the tourism value added information is used on the share of tourism demand in the supply of products. 3. Tourism GDP Gross domestic product indicates the value added (at basic prices) generated by the national economy to which taxes on products are added and from which subsidies on products are deducted. Tourism GDP describes the value added (at basic prices) generated by activities related to the tourism industry or other tourism consumption to which taxes on products of these activities are added and from which subsidies on products are deducted. The following table presents the relationships between these three indicators.

7.12.2004 12 (50) Table 1. Relationships between the economic indicators of tourism Value added of Tourism Industries Tourism Value Added (at basic prices) Tourism GDP (at market prices) Value added generated by the production observed observed observed to visitors by the tourism industries Value added generated by the production observed not observed not observed to non-visitors by the tourism industries Value added generated by the production not observed observed observed to visitors by activities not in the tourism industries Value added generated by the production not observed not observed not observed to non-visitors by activities not in the tourism industries Taxes on products minus subsidies on products generated by tourism consumption not observed not observed observed Source: Tourism Satellite Account: Recommended Methodological Framework, EU, OECD, WTO, UN, 2001, p. 71 4.6 Tourism employment The significance of tourism to different industries can be expressed by means of tourism percentages indicating how large share of the output of a certain industry is generated by tourism and what is local demand. The tourism percentage is obtained from inquiries to enterprises or by proportioning the demand for tourism products to the supply of tourism products (the latter method is used in Finland s tourism account). The purpose of the TSA is to produce information about the employment effects of tourism as well. Employment is a production-bound factor but for employment generated by tourism demand it should also be taken into consideration that the number of jobs in tourism cannot be directly derived from tourism value added or tourism output. Measurement of the employment effect of tourism still requires methodological development, for which reason Table 7 describing tourism employment presents the total numbers of employees and hours worked in tourism characteristic industries (divided into employee and self-employed shares). Due to deficiencies in data sources, not very reliable information is available on tourism labour force but indicative calculations are given in Section 8.7. 4.7 Tourism gross fixed capital formation Measurement of gross fixed capital formation is made in two stages. First are defined the capital goods that are clearly tourism-related. In the second stage the share of tourism is defined from the amount of investments made in those goods. For the time being the TSA recommendation takes account of only two indicators: Gross fixed capital formation of all tourism characteristic productive activities. Tourism gross fixed capital formation, including besides the above the tourism industry s investments in activities other than tourism.

7.12.2004 13 (50) Tourism gross fixed capital formation is for the time being not included in Finland s TSA. 4.8 Tourism collective consumption The public sector s tourism expenditure has to be taken into account when measuring the economic significance of tourism as a whole. The public sector has a considerable role in developing and administering tourism. The value of public activities should be given as the value of the expenses from the activities in question. Finland s present TSA does not include the share of tourism collective consumption. 5 Tourism Satellite Account tables 5.1 TSA framework and recommendations 5.2 Products in the TSA The joint recommendation of international organisations on the Tourism Satellite Account (TSA) comprises ten tables, which will be presented in detail in the section concerning the compilation of the tables. The tables are prepared on the basis of the national accounts use and supply tables on goods and services and the related basic data and by using statistical data available on tourism demand. The tables describe the demand for and supply of tourism services and products, employment, gross fixed capital formation 1, tourism collective consumption 2 and tourism volumes. The possible disparities between the national accounts and the TSA are different presentation modes used due to diverging perspectives. According to the recommendations, compilation of the TSA can be started by degrees according to the information available for the tables. However, the TSA must include at least the production table of tourism industries and a table on tourism consumption. The TSA recommendations require revision of national accounts data with consideration to tourism-related viewpoints. The TSA calls for the following measures: Specification of information related to tourism characteristic products Conversion of package tours from gross value into net value Separation of the value of travel agency services from the expenses of the services the travel agency services include (in principle, transport, package tours and accommodation) Separation of the re-sale margin of the products including service used by visitors from the value of the physical product All forms of tourism consumption (monetary, non-monetary and employer-paid consumption) should be set apart from each other and other consumption. In the TSA products are divided into three categories: 1 The table describing gross fixed capital formation is not included in Finland s TSA implementation. 2 The table describing tourism collective consumption is not included in Finland s TSA implementation.

7.12.2004 14 (50) 1. Characteristic products are products that would not exist or whose consumption would reduce substantially without tourism. 2. Connected products are products that are used by visitors and that are significant for visitors or producers of tourism services but are not characteristic. 3. Non-specific products are products that are used by visitors but in whose consumption visitors have no significant role. Table 2. Definitions of tourism-related products Category Definition Example 1. Characteristic product a product whose consumption would reduce significantly without tourism passenger air transport, accommodation services, travel agencies, certain leisure services 2. Connective product a product that is significant to tourism but taxis, car rental, local transport, muse- 3. Non-specific product not dependent on it a product that visitors may use but which is of only little significance to tourism and tourism has only little significance to the product in question ums, theatres food, household products, newspapers Source: Tourism Satellite Account: The conceptual framework, WTO, 1999 5.2.1 TSA tourism products The TSA products are presented in English and Finnish in the table below. Table 3. Tourism products Products Tuotteet 1. Accommodation services 1. Majoituspalvelut 1.1. Hotels and other lodging services 1.1. Hotelli- ja muut majoituspalvelut 1.2. Second homes services on own account or for free 1.2. Vapaa-ajanasuntopalvelut omassa käytössä tai ilmaiseksi 2. Food and beverage-serving services 2. Ravitsemispalvelut 3. Passenger transport services 3. Henkilöliikennepalvelut 3.1. Interurban railway transport services 3.1. Rautateiden kaukoliikennepalvelut 3.2. Road transport services 3.2. Maantieliikennepalvelut 3.3. Water transport services 3.3. Vesiliikennepalvelut 3.4. Air transport services 3.4. Ilmaliikennepalvelut 3.5. Supporting passenger transport services 3.5. Henkilöliikenteen tukipalvelut 3.6. Passenger transport equipment rental 3.6. Henkilöliikennevälineiden vuokrauspalvelut 3.7. Maintenance and repair services of passenger transport equipment 3.7. Henkilöliikennevälineiden ylläpito- ja korjauspalvelut 4. Travel agency, tour operator and tourist guide services 4. Matkatoimisto-, matkanjärjestäjä- ja matkaopaspalvelut 4.1. Travel agency services 4.1. Matkatoimistopalvelut 4.2. Tour operator services 4.2. Matkanjärjestäjäpalvelut 4.3. Tourist information and tourist guide services 4.3. Matkailuneuvonta- ja matkaopaspalvelut 5. Cultural services 5. Kulttuuripalvelut 5.1. Performing arts 5.1. Esittävä taide

7.12.2004 15 (50) 5.2. Museum and other cultural services 5.2. Museot ja muut kulttuuripalvelut 6. Recreation and other entertainment services 6. Virkistys- ja viihdepalvelut 6.1. Sports and recreational services 6.1. Urheilu- ja virkistyspalvelut 6.2. Other amusement and recreational services 6.2. Muut viihde- ja virkistyspalvelut 7. Miscellaneous tourism services 7. Sekalaiset matkailupalvelut 7.1. Financial and insurance services 7.1. Rahoitus- ja vakuutuspalvelut 7.2. Other good rental services 7.2. Muu tavaroiden vuokraus 7.3. Other tourism services 7.3. Muut matkailupalvelut 8. Connected products 8. Liitännäiset tuotteet 9. Non-specific products 9. Ei-ominaiset tuotteet Source: Tourism Satellite Account: Recommended Methodological Framework, EU, OECD, WTO, UN, 2001, p. 58 5.3 Structure of the tables 5.3.1 Consumption tables 5.3.2 Production tables 5.3.3 Net valuation The first four TSA tables describe consumption of visitors. The structure of the tables is essentially similar. The table rows depict tourism products and the columns show total consumption of visitor groups for each product. Consumption is given at purchasers prices, that is, including both value added and other taxes on products. Satellite account Tables 5 and 6 describe tourism production. The rows describe the corresponding tourism products as the consumption tables. Columns 1-12 depict the tourism industries producing tourism products. The outputs are aggregated in a separate column. Products of tourism connected industries and non-specific industries are presented in their own columns. In Table 6 the columns of industries are divided into two parts, of which the first indicates the output and second the share of tourism in output. The table has a column for imports, i.e. services produced by foreign enterprises in Finland. All figures describing output are given at basic prices, which means that they are exclusive of value added tax and possible subsidies on production but they are given in their own column. Domestic supply and demand are compared with each other in the last columns. Output and intermediate consumption and value added are presented after the products at the bottom of the tables. The note Net valuation in both demand and production tables refers to the problems involved in tour operator and travel agency services. The value of the abovementioned services should be separated from the total value of the package tour. Similarly, the value of the package tour should be divided according to the products belonging to it. How different package tour products are taken into account in the satellite accounts depends on the home country of each service producer. For example, accommodation abroad included in a package tour is generally excluded from Finland s TSA and it should be presented in Table 3.

7.12.2004 16 (50) 5.3.4 Goods acquired by visitors The share of the distribution margin and the total share of the product s other price formation components should be separated from the value of the goods acquired by visitors (souvenirs, food, other shopping, fuel, etc.). 6 National accounts as a framework for Finland s Tourism Satellite Account 6.1 Supply and use tables The system of national accounts is an internationally uniform method for measuring national economies of countries. The Finnish national accounts compiled by Statistics Finland are in compliance with the UN s recommendation on national accounts (SNA 1993) and the EU s act-based European System of Accounts (ESA 1995) founded on it. National accounts provide information about output, value added, development of price level, investments, employment and wages and salaries according to industry. National accounts display any changes in a national economic activity and the structure of the national economy. These data together with product-specific data form the framework for the satellite account. For the purposes of the tourism account, various re-groupings, specifications and other editing are made to the national accounts data, so that the data of the actual core national accounts are made to correspond to the information needs of the Tourism Satellite Account. Final national accounts data are nowadays based on supply and use tables that describe accurately the product flows of the national economy and the structure of the economy. Final supply and use tables are at the moment available for the years 1995 to 2001. The supply and use tables are suitable for describing and analysing the structure of production activity and dependencies between industries. The supply tables of different years describe by product group the production of goods and services used in Finland s national economy in different industries as well as their imports to the country. The supply tables thus produce the product-specific data needed also for the TSA on the goods and services produced during the year by the industries according to the national accounts. The use tables of different years depict by product group the use of the products (goods and services) produced in Finland and imported to Finland for intermediate consumption by different industries and for domestic final consumption and exports. The use tables are also used as a framework for the specification of the use data of tourism products in the TSA. The data of the national accounts and the supply and use tables they are based on are not quite as such detailed enough for the information needs of the tourism account. The required measures for editing the data for the purposes of the tourism account will be explained later on in this report.

7.12.2004 17 (50) 6.2 Delimitations of industries in the tourism account The industrial classification of the supply and use tables is based on the Standard Industrial Classification 2002 (TOL 2002) 3 and in manufacturing it correspond to its 3-digit level. In other industries the classification mainly follows its 2-digit level, in part it is more detailed. The number of industries involved in the compilation of the supply and use tables is 182. The classification of service industries used in national accounts is partly too rough for the purposes of the tourism account. Therefore the industries are adjusted to correspond to the delimitation of the tourism industry: the accuracy of the specification of the tourism industry has, though, been dependent on the accuracy of the data sources available. For example, in transport industries the parts corresponding to passenger transport are separated into tourism industries and those concerning goods transport are excluded from the tourism account. Similar delimitations are also made in the industry of recreational, cultural and sporting activities. The made selections and delimitations of industries are shown more precisely in connection with the detailed presentation of the supply tables. Tourism characteristic industries are such industries where the primary output is formed by tourism characteristic products (see the section on Products in the tourism account ). In the actual satellite account the following are tourism characteristic industries: 1. Hotels and similar (correspondence in the industrial classification: TOL 551+552 Hotels, etc.) 2. Second home ownership (TOL 70201+70202 Letting and operation of dwellings, part) 3. Restaurants and similar (TOL 553+554+555 Restaurants, etc.) 4. Railway passenger transport (TOL 601 Transport via railways, part) 5. Road passenger transport (TOL 6021+6023 Other scheduled passenger land transport, part, and TOL 6022 Taxi operation) 6. Water passenger transport (TOL 61 Water transport, part) 7. Air passenger transport (TOL 62 Air transport, part) 8. Passenger transport supporting services (TOL 632 Other supporting transport activities, part) 9. Passenger transport equipment rental; other rental (TOL 711+712, 71402 Renting of automobiles, etc.) 10. Travel agency and similar (TOL 633 Activities of travel agencies and tour operators, etc.) 11. Cultural services (TOL 92 Recreational, cultural and sporting activities, part) 3 Standard Industrial Classification TOL 2002 is based on the European Union s common industrial classification, NACE 2002, which is confirmed by a European Commission regulation. The regulation is binding to all Member States. TOL 2002 follows the principles and structure of NACE 2002.

7.12.2004 18 (50) 12. Sporting and other recreational services (TOL 92 Recreational, cultural and sporting activities, part) A tourism connected industry in the satellite account implementation is: Tourism connected industries (TOL 505+5151 Sale of automotive fuel) Other than the above-listed tourism characteristic industries or tourism connected industries are considered to be tourism non-specific industries. For example, trade is thus a tourism non-specific industry although part of its services goes to visitor use. The products produced by trade and other tourism non-specific industries for tourism use are included in the calculation of the tourism account. The delimitations of the industries for the tourism account are made on the basis of the basic data and calculations of Statistics Finland s national accounts sector researchers and/or on the basis of the product-specific output distribution of the supply and use tables. 6.3 Products in the tourism account The products produced in the national economy are divided for the TSA into tourism-specific products and tourism non-specific products. Tourism-specific products are further divided into tourism characteristic products and tourism connected products. Characteristic products are products whose consumption would reduce significantly without tourism. Tourism connected products are products that are significant for tourism but not characteristic of it. Tourism non-specific products are products used by visitors but their share is not significant. The classification of the products into these groups and other processing of the national accounts product data for the purposes of the tourism account was also addressed in the section concerning the general presentation of the satellite account tables. The product classification used in the supply and use tables is the product classification of national accounts (KTTL), which is derived from the EU s industry-based product classification, CPA (Statistical classification of products by activity in the European Economic Community). The classification contains 947 products proper and five combination products to help in balancing, in all 952 products. The national accounts product classification does not, however, correspond at a sufficient accuracy to the level of product specification needed for the TSA. While in railway and bus and motor-coach transport tourism characteristic products in the Finnish TSA are considered to be the part corresponding to interurban transport services, these parts had to be separated from their product heading in the national accounts. In the example case interurban railway transport (KTTL product) is divided into two parts, interurban passenger transport (TSA product 3.1) and local passenger transport (TSA connected product A.2), and secondly, bus and motorcoach transport (KTTL product) is divided first into goods transport and passenger transport and in the next stage passenger transport is divided into interurban transport (TSA product 3.2) and local transport (TSA connected product A.2). The delimitations of the products for the TSA were made on the basis of the basic data and calculations of the national accounts. More typical cases than additional specifications of the KTTL products are those where two or more KTTL products are combined into one tourism product. For ex-

7.12.2004 19 (50) ample, the TSA heading 2 Restaurants and similar is formed of four different KTTL products. The made product selections and delimitations are shown more precisely in the detailed presentation of the supply tables. The products of the implemented TSA are as follows (corresponding KTTL headings of the national accounts supply and use tables are given for each product): A. Specifi c products A. 1 Ch ara ct eristic produ c ts 1 Ac commodation ser vices 1.1 Hotels and other lodging services 1.2 Second homes services 2 Food and beve rage-s e rving se rvices 3 Pas seng er tr anspo rt ser vice s (correspondence with the KTTL headings:) 551000 Hotel services. Includes accommodation services of hotels, motels, apartment hotels, summer hotels, spa hotels, conference hotels, etc. 552000 Services of youth hostels, camping sites, holiday villages, etc. Accommodation services of lodging houses are also included here. 702100 Operation and renting of dwellings, of which part: rented second homes 702100 Operation and renting of dwellings, of which part: second homes on own account 553000 Restaurant services. Includes catering services of restaurants, cafés, fast-food restaurants, hamburger restaurants and grill kiosks, for example. 554000 Beverage-serving services. For example, services of various beer and drink bars. 555110 Staff and institutional catering services. For example, staff canteen services. 555200 Catering services. For example, catering services provided in parties and other occasions. 3.1 Interurban railway transport services 3.2 Road transport services 601010 Passenger transport via railways, of which the share of interurban railway transport 602120 Bus and motor-coach transport, of which the share of interurban passenger transport 602200 Taxi transport services 602300 Other land passenger transport (charter transport, etc.)

7.12.2004 20 (50) 3.3 Water transport services 611000 Water passenger transport. Both sea and inland water transport, but not the Finnish Road Administration s ferries and service vessels. Only the share of tickets, as ships restaurant services, tax-free sales and other services are included in their own service-specific product headings. 3.4 Air transport services 3.5 Supporting passenger transport services 3.6 Passenger transport equipment rental 621000 Air passenger transport 632100 Other services supporting land transport: Share of travel services provided by travel service centres. 711000 Renting services of automobiles 712100 Renting services of other land transport equipment: Share of renting of motor cycles and snow mobiles, caravans and campers 3.7 Maintenance and repair services of passenger transport equipment The product content was decided to be moved in this application to tourism nonspecific products because the inquiry data do not show any tourism consumption corresponding to these services. 4 Tra vel ag enc y, tour o pera tor and touri s t gui de servi ces 4.1 Travel agency services 4.2 Tour operator services 4.3 Tourist information and tourist guide services 5 Cultural servi ce s 633000 Services of travel agencies and tour operators, net share of the service Tourism products 4.1, 4.2 and 4.3 are for the time being given aggregated. Travel agency, tour operator and tourist guide services in principle cover various tourism programme services, such as nature and adventure tours, adventures and safaris, but due to the inaccuracy of the data sources, some of such programme services may be included in the national accounts product heading 927210 Other recreational services recorded under TSA product 6.2 Other amusement and recreational services. 5.1 Performing arts 5.2 Museums and other cultural services 6 Re cr eation and oth er ente rt ainment ser vice s 923200 Services of art institutions. Includes e.g. theatre and concert performances. 925210 Services of museums and protection services of historical sites and buildings 925310 Services of botanical gardens, zoos and nature reserves.