OECD guidelines for a Tourism Satellite Account -- Design and application for policy --

Szerző: Alain Dupeyras1

Summary: Public authorities lack reliable, detailed information necessary for devising tourism policies. Measuring the economic importance of tourism and the many roles which this activity plays in the economy is a challenge for those who produce statistics and a necessity for political analysis. The OECD guidelines for a tourism satellite account and the employment module provide a valuable tool for improving statistics on tourism and enhancing their credibility, increasing the statistical coverage of the activity and harmonising the data and their international comparability. The model specifies, in particular, how to calculate tourism value added. By using the information supplied by the account, public authorities will be able to target their decisions more accurately, to work towards a better political recognition of tourism and to improve the effectiveness and the evaluation of tourism policies. This document briefly sets out the background of the work of the OECD Tourism Committee, the main objectives and the general structure of the project and the approach adopted for the benefit of the Member countries. Finally, the document focuses on the use of this tool for policy.

1. Introduction

Governments and the tourist industry are showing increasing interest in obtaining analytical measures of the economic activities connected with tourism. The importance of tourism consumption, the close involvement of tourist industries in the economy, and tourism's key role in economic development and job creation are all factors which have helped to generate this demand for information. The OECD Tourism Committee has therefore produced guidelines for a Tourism Satellite Account (TSA) and an employment module2 in order to improve the measurement of economic activities connected with tourism and integrate them more in other economic statistics. The TSA is thus a continuation of the work done concerning the production of the OECD's tourism economic accounts.3

2. Background of the work of the OECD Tourism Committee and main objectives of the TSA

2.1 Brief history

The service economy has become the driving engine of growth in most OECD countries. It represents a large part of the economic activity and its importance continues to grow. Tourism, a large, complex and fragmented industry that is still very difficult to define and measure, is one of the key components of this service economy (30% of international trade in services in the OECD area). In terms of revenues, the OECD countries generate about 70% of world tourism activity. In general, tourism -- which has expanded dramatically over the past 30 years -- seems to continue growing as societies become more mobile and prosperous.

Obtaining better information on how economies function, particularly for services, the least developed side of statistics, is an important challenge for the statistical agencies but a real necessity for political analysis. In this context, measuring tourism forms part of a wider move to improve our knowledge of how economies work, what they produce and what changes occur over time. The "old" methods, which, for tourism, consisted mainly in measuring physical flows (arrivals and overnight stays) and some monetary data (revenue and expenditure relating to international tourism), where the statistical agencies have great experience, need to be supplemented to improve the representation and analysis of the economic role of tourism.

In an attempt to improve the understanding of what tourism represents, the OECD Tourism Committee started work in the early 1980s on setting up a model acceptable at international level. This work gave rise to the OECD Tourism Economic Accounts, intended to measure certain socio-economic aspects of tourism. While developing this tool, the OECD Tourism Committee produced concepts which permitted a more precise definition of tourism, visitors and tourist expenditure.4

Despite its economic importance, tourism is not adequately recognised by governments, especially in developed economies. There is therefore an urgent need for an integrated statistical tool measuring the economic aspects of tourism (value added, jobs, revenue, investment, profits) in order to provide a more convincing demonstration of this activity's economic significance. That is why, at the request of its members, the OECD's Tourism Committee has developed guidelines for a Tourism Satellite Account and an employment module.

2.2 Main objectives of the OECD guidelines for a Tourism Satellite Account

The OECD guidelines for a Tourism Satellite Account provide methodological guidance for national statistical offices, national tourism authorities and national tourist offices in the OECD countries. The TSA's main objectives are to:

  • present data on tourism based strictly on the principles of the System of National Accounts 1993 (SNA93)5 and compatible with the recommendations on tourism statistics adopted by the United Nations and the World Tourism Organisation in 1993;6
  • provide a set of accounts allowing a parallel to be drawn with other industries on a harmonised basis, comparable at international level;
  • offer policy-makers insights into tourism and its socio-economic functions and impacts in their respective economies;
  • calculate tourism value added for a given list of commodities and industries in a coherent system;
  • provide detailed information on the profile of employment in tourism industries; and
  • offer a reference framework for producing economic models and scenarios to allow a medium-term evaluation of the impact of policies on the tourism sector and its jobs.
  • 3. General structure of the OECD guidelines for a Tourism Satellite Account

    3.1 General conceptual framework

    Chapter XXI of the SNA93 attempts a general review of questions relating to a satellite accounts. One of the reasons put forward for establishing satellite accounts is that the national accounts do not give a detailed description of all aspects of an economy where certain subjects, such as tourism, are poorly identified.

    As an economic activity, tourism is already incorporated in the national accounts, since the associated activity falls within the boundaries of production. However, "tourism" is not identified as a specific activity, so that all the goods and services produced and consumed in satisfying tourism demand are combined with other elements in the basic accounts. The TSA provides a means of isolating these economic aspects of tourism so that they can be shown and analysed separately, while keeping them within the context of the rest of the economy.

    The TSA maintains the links with the national accounts, since these are the economic framework which is most widely used and understood, and the results will be much more credible if the TSA is based on and supported by that framework.

    3.2 The concept of tourism demand and the forms of tourism taken into account

    The TSA is based on a domestic concept. According to the WTO-OMT definitions, it covers internal tourism and considers the activities of residents and non-residents taking place within the country or region.

    There is no tourism industry in the true sense, as tourism is a concept based on demand and therefore defined via visitors' consumption expenditure. Tourism comprises "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". The TSA provides the mechanism for converting this concept into a means of identifying "who" produces "what" for the visitor, i.e. it records the "industries characteristic of tourism", namely those which produce goods which make up a significant proportion of tourism demand and whose existence is very heavily dependent on tourism demand or would be seriously affected by any loss of tourism.

    The term "visitor" concerns both same-day visitors ("excursionists") and those travelling for more than 24 hours ("tourists"), while a "visit" or "trip" covers travel for both business purposes ("business trips") and private purposes (holidays, leisure, visiting friends and relatives, health treatment, religion).

    Tourism demand covers expenditure effected to satisfy the visitor's needs or wishes during the trip. Tourist expenditure is defined as "the total consumption expenditure made by a visitor or on behalf of a visitor for and during his/her trip and stay at destination". This expenditure must be effected outside the usual environment, a concept which providers of tourism statistics have some difficulty in applying. For example, transport, accommodation, meals or other similar expenditure are the outgoings necessary for persons outside their usual environment in order to satisfy their needs for accommodation, food and leisure activities as visitors. Capital purchases do not meet this criterion.

    To encourage international comparability, the TSA recommends a common list of industries and commodities characteristic of tourism in accordance with standard international classifications (CITI. Rev. 3 and CPC).

    The TSA also examines some of the thornier measurement issues, such as how to treat package tours, consumer durables, second homes, non-market production (such as the provision of museums and galleries, free or at a very low charge), the principles of evaluation, the statistical units and what gross fixed capital acquisition should be included in the account and by which units.

    3.3 The basic tables

    The TSA comprises a set of 14 inter-linked tables, each showing a different aspect of tourism. Taken together, these tables provide an overall view of tourism as a socio-economic phenomenon. They provide a means by which demand for tourism commodities can be linked to production of tourism commodities by tourism industries. The TSA is accompanied by an employment module which presents highly detailed information. Annex 1 sets out in detail the information which can be obtained from the tables, including the employment module.

    3.4 Tourism value added

    The derivation of tourism value added is central to the whole development of the TSA . Tourism suffers a lack of credibility as it is not a standard "industry" and so its socio-economic significance has proved difficult to measure. Consequently, without an objective means of measuring what is tourism's value added in comparison with other standard industries, there is no way to assess its significance. The TSA specifies how we can calculate tourism value added by using basic information.

    3.5 Employment

    Employment information is particularly important for tourism. For one thing, this is an industry with great employment potential, which often provides a point of entry to the jobs market. For another, it is probably more difficult to quantify employment in tourism than in many other branches because of certain peculiarities such as its seasonal nature, shifts in working hours, the small size of most establishments or the importance of part-time and family work.

    The employment module supports the TSA on these various points and provides an essential complement to analysis by giving some of the answers on the characteristics of the "labour" factor which cannot be found in the TSA (see Annex 1).

    4. A pragmatic approach for the OECD countries

    By developing guidelines for a Tourism Satellite Account and an employment module, the OECD Tourism Committee is providing its members with a reference framework, which will enable them to set up national tools to measure the economic importance of tourism within a broader context. This tool has already been widely used by a number of countries.

    The TSA offers a framework, which can be applied in a flexible manner. The OECD Tourism Committee has developed its model in such a way that not all its aspects need to be developed at once. In fact, the opposite applies: that, while it has a comprehensive framework separate aspects, separate tables, each designed for a specific analysis purpose, can be constructed incrementally so that a building block approach is envisaged. Presented in its entirety, the TSA may appear to place considerable resource and data demands on Member countries. However, as a staged implementation is planned, the TSA will permit useful data to emerge at an earlier date and avoid placing excessive demands on Member countries to provide all the information at once.

    The TSA allows to develop the set of tourism statistics consistently with this central tool and encourages countries to progressively harmonise and standardise the primary sources of statistical data (household surveys, accommodation surveys, consumption expenditure surveys, etc.).

    4.1 Implementation at national level

    For some fifteen years now, the OECD Tourism Committee has been trying to make tourism statisticians and national accountants aware of the need to develop better statistical tools to define and measure the economic importance of tourism. Some countries, such as Canada, have pioneered the development of such tools. However, most of the Member countries took a long time to realise the benefits of these methods, e.g. by the practical implementation of the OECD tourism economic accounts, which began in 1991. The countries can therefore be divided into different categories:

  • Countries which are not yet interested in the tourism satellite account on budget cost grounds or because tourism is not a sufficiently important activity for the country concerned.
  • Countries which are studying the technical and financial feasibility of a tourism satellite account (Hungary, United Kingdom, etc.).
  • Countries which are currently producing a model of tourism satellite account (Australia, New Zealand, Mexico, Switzerland, etc.).
  • Countries which already have a model tourism satellite account (Canada, United States, Norway, Poland, Sweden, etc.) or which have more or less complete forms of tourism economic accounts (Austria, France, Spain, Switzerland, etc.).
  • Through its Statistical Working Party, the OECD Tourism Committee is supporting this work by devising innovative methods for the economic quantification of tourism (e.g. the method for calculating tourism value added), by regularly examining the work done at national level and comparing it with other experiments, and by promoting the best practices introduced in national statistical offices.

    The purpose of these efforts is to help to improve the effectiveness of tourism policies and actions, to augment the existing means of evaluating these policies and to bring greater recognition of the scope of tourism, its nature and the role it plays in developed economies.

    5. Application for policy

    The public authorities lack reliable, detailed information necessary for devising tourism policies. The TSA provides a practical conceptual reference framework, reconciling tourism supply and demand, for which the data produced by various statistical sources must be compatible. It helps the policy-makers to understand what tourism is, its socio-economic impact and the role it plays in trade, investment and economic development. Thus, the TSA helps to organise the decision-making process in a more systematic way. It provides those involved in tourism with a common, credible methodology and offers a complete data base with mutually consistent data, comparable over time, for the purpose of measuring the economic importance of tourism at national level.

    By being consistent with the SNA93, the TSA enables policy-makers to compare the tourism industry with other national industries and thus to steer their policy decisions by taking an overall view of tourism in relation to other sectors of the economy. The TSA reveals which industries benefit from tourism and shows tourism in the context of the national economy. If they follow the guidelines proposed by the TSA, Member countries will then be able to make international comparisons. This gives them a new tool for evaluating the performance of their tourism policies in a context of increasingly global tourism activity.

    The TSA provides an in-depth understanding of the structure of the tourism industry. It enables us to identify the characteristic branches of tourism which generate the most value added, those which create the most jobs and those where gross fixed capital formation is highest. Among other things, the available information may be used to target investment at certain branches of tourism, to optimise human resources where the most obvious weaknesses lie and to support the development of niche activities.

    The focus on jobs via the employment module, the importance of the data supplied, their level of detail and their symmetry with the monetary data shed new light on the role of tourism in creating, preserving and diversifying jobs in the economy, the number and structure of those jobs and the levels of remuneration. These data thus allow policy-makers to devise employment strategies based on sound information and to target their measures in order to maximise the growth of tourism and its contribution to employment. The TSA enables us to see how much employment depends on tourism.

    The TSA provides a framework for analysis, which can be adapted later to calculate the socio-economic impact of tourism at regional level and facilitate the use of tourism policies as a tool for regional development.

    The TSA provides an analysis framework for the construction of impact models to measure the effects of indirect tourism demand. Because, being concerned only with direct tourism demand, the TSA offers its users a clear distinction between observations in the field and imputed or "modelled" results.

    6. Conclusions: towards the implementation of a Tourism Satellite Account

    It will take time to implement the TSA, and it will be introduced by stages. It will probably be several years before most OECD countries are in a position to complete the majority of the tables. However, the existence of the TSA already offers guidelines, which will enable Member countries to steadily improve the consistency and credibility of tourism statistics on a harmonised basis. Ultimately, the TSA will thus provide an essential tool for defining and measuring the economic importance of tourism.

    However, other tourism indicators are still needed to monitor the economic development of tourism. In view of the human, statistical and financial resources needed and the necessity to continue such work over a long period, countries should conduct feasibility studies before deciding to develop a TSA at national level. At first it may be preferable to concentrate the resources on certain key indicators (such as the measurement of expenditure connected with tourism) or on a particular dimension of the account (e.g. employment).

    However, the TSA does offer a unique tool for defining and quantifying the economic importance of tourism. By producing credible figures it can provide national tourism administrations, industry and all the players involved with information to guide their decisions, gain greater political recognition for tourism and improve the effectiveness and evaluation of tourism policies.

    Annex 1. Information provided by the tables and the employment module

    Tables 1, 2 and 3 provide much of the basic information on tourism from an economic point of view.

    Tables 1 and 1A "Production account of branches of characteristic tourism industries" are the starting point from the supply side: they identify the characteristic tourism industries, their commodity output, their intermediate inputs and the resultant value added. They enable us to identify the relationship between the tourism commodities produced and the corresponding industries, to know what intermediate products are necessary for creating this supply and, as a result, to calculate the value added of tourism and the associated industries. Nevertheless, their primary aim is to identify the characteristic tourism industries.

    Tables 2 and 2A "Tourism supply and demand, by type of commodity and type of visitor" bring together the demand and supply of tourism commodities. They provide the essential elements of tourism, as a demand-based concept. The tables break down the information by commodity and by type of visitor. Without this information, estimates of the value added of tourism will have limited value.

    Using this commodity-based information, there is the need to present the data on an industry basis in order to derive tourism value added for each industry. This is done in Tables 3 and 3A "Deliveries of tourism supply from characteristic tourism and other industries, to meet tourism demand by different types of visitors", which also indicate which industry's output is acquired by which type of visitor. In addition, the table introduces the "tourism ratio". These tables provide the means of linking supply and demand for commodities with the industries, which make them.

    Using the information obtained from Tables 3 and 3A we can calculate the tourism value added. For many analysts, this aggregate is the central feature of a TSA and the primary purpose for developing one. The purpose of Tables 4 and 4A "Tourism value added of characteristic tourism and other industries" is to calculate the value added resulting from tourism demand in characteristic tourism industries and in other industries.

    Table 5 "Tourist employment of characteristic tourism and other industries" provides data on employment in characteristic tourism industries. The information in this table can be combined with that in Table 3 to derive average compensation of employees by tourism industries as well as indicating the compensation by hour. The employment module provides more detailed information.

    Tables 6 and 6A "Visitors characteristics, same-day visitors and tourists" are linked to Tables 2 and 2A in that they provide the connection between the values of tourism expenditure with the volume and type of visitors (resident or non-resident). Such information can play a major role in tourism promotion and marketing.

    Table 7 "Characteristic tourism industries Gross capital acquisition" and Table 8 "Characteristic tourism industries Gross capital stock" provide information about the other primary input into the productive process: capital. Information on the role of capital is still very important. Table 7 offers information on the acquisition of this capital. Table 8 does the same for the stock of capital broken down by type of asset. The information enables us to analyse such subjects as returns to capital employed and the effects on capital-producing industries.

    Tables 9 to 14 set out in volume terms the measurements quantified in Tables 1, 2, 3, 6, 7 and 8. The importance of volume measures over a time series is well known to economists and other users of national accounts as a more meaningful way of understanding how (if) growth is occurring [not only in terms of the series being examined but also in relative terms with other aspects of the economy (other industries, commodities)].

    The "A" tables have the same basic layout as the tables to which they relate, except that package tours are recorded on a "gross basis", that is, the output of tour operators is recorded as the value of their sales, not just the margins, as that would correspond to the net method.

    By analogy with the main account, the information available in the employment module includes total employment, the number of employees, self-employed persons, total hours worked, full-time equivalents, total pay and average hourly wages, the main characteristics of the labour market (sex, education, age, nationality, seniority, full-time and part-time), the number of establishments and the tourism ratio for each of the branches characteristic of tourism. The aim is to calculate a representation of the extent to which tourist expenditure generates employment.

    1. Administrator, OECD Tourism Committee
    2. OECD (1999), OECD Guidelines for a Tourism Satellite Account and an employment module (to be published in first quarter of 2000).
    3. OECD (1991), Manual on tourism economic accounts.
    4. UN, IMF, WB, OECD and CEC (1993), System of National Accounts 1993.
    5. UN and WTO (1993), Recommendations on tourism statistics.