Measuring TOTAL TOURISM DEMAND - sete.gr

GENERAL GUIDELINES FOR DEVELOPING THEGENERAL GUIDELINES FOR DEVELOPING THE

VOLUME1

MeasuringTOTAL TOURISM DEMAND

1

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Copyright © 2000 World Tourism Organization

General Guidelines for Developing theTourism Satellite Account (TSA)

Measuring TOTAL TOURISM DEMAND

ISBN: 92-844-0388-X

Published by the World Tourism OrganizationMadrid, Spain

All rights reserved. No part of this book may be reproducedor transmitted in any form or by any means, electronic ormechanical, including photocopying, recording or by anyinformation storage and retrieval system without permissionfrom the World Tourism Organization.

The designations employed and the presentation of materialin this publication do not imply the expression of anyopinions whatsoever on the part of the Secretariat of theWorld Tourism Organization concerning the legal status ofany country, territory, city or area or of its authorities orconcerning the delimitation of its frontiers or boundaries.

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The General Guidelines for developing the Tourism Satellite Account (TSA) comprisesfour Technical Documents issued by the World Tourism Organization (WTO) to pro-vide guidance to National Statistical Offices and National Tourism Administrations inthe implementation of the Tourism Satellite Account as described in Tourism SatelliteAccount (TSA): Recommended Methodological Framework, adopted by the UnitedNations Statistical Commission at its thirty first session, in March 2000.

This Volume 1 Measuring of Total Tourism Demand was produced by the WTODepartment of Statistics and Economic Measurement of Tourism primarily through thework of two consultants, who did all of the original drafting:

Dr. Douglas C. Frechtling, Chair, Department of Tourism and HospitalityManagement, The George Washington University,

Technical Document No 1: Measuring Visitor Final Consumption Expenditure inCash, and

Mrs. Marion Libreros, expertise on National Income Accounts, Technical Document No 2: Measuring Tourism Demand.

The harmonization of all the Technical Documents (TD)1 was done by Dr. DouglasC. Frechtling, Mrs. Marion Libreros and Mr. José Quevedo, consultants of WTO.

The final supervision and editing (of the production of this volume) was done byMr. Antonio Massieu, Chief, Statistics and Economic Measurement of Tourism at WTO,assisted by Ms Rosa Songel.

MEASURING TOTAL TOURISM DEMAND

3OMT ¥ WTO ¥ BTO

Foreword

1 TD No 1: Measuring Visitor Final Consumption Expenditure in Cash.

TD No 2: Measuring Tourism Demand.

TD No 3: Measuring the Supply of Tourism Goods and Services.

TD No 4: Measuring Tourism Gross Domestic Product.

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Currency of country ACurrency of country BCaribbean Tourism OrganizationCentral Product Classification, Ver.1.0Statistical Office of the European CommunitiesFinancial Intermediation Services Indirectly MeasuredInternational Hotel and Restaurant AssociationInternational Labour OrganizationNon Profit Institutions Serving HouseholdsOrganisation for Economic Co-operation and DevelopmentPacific Asia Travel AssociationStandard International Classification of Tourism Activities, 1993System of National Accounts, 1993System of Tourism Statistics List of Tourism Characteristic ActivitiesList of Tourism Characteristic ProductsTechnical DocumentTourism Gross Domestic ProductTourism Satellite AccountList of Tourism Characteristic ActivitiesList of Tourism Characteristic ProductsTourism Satellite Account: the Conceptual FrameworkTourism Satellite Account: Recommended Methodological FrameworkList of Tourism Specific ProductsTourism Value AddedUnited NationsUnited Nations Statistical CommissionWorld Travel and Tourism CouncilWorld Tourism Organization

CACB

CTOCPC

EUROSTATFISIM

IH&RAILO

NPISHOECDPATA

SICTA 93SNA93

STSTCATCP

TDTGDP

TSATSA/TCATSA/TCP

TSA:CFTSA:RMF

TSPTVAUN

UNSCWTTCWTO


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List of abbreviationsand acronyms

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I.

II.

III.

IV.

Pages

The Tourism Satellite Account (TSA) project and General Guidelines for its preparation 9

General introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Technical Document No. 1:Measuring Visitor Final Consumption Expenditure in cash

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Visitor consumption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

A. Concepts and definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

B. Visitor consumption classifications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

B.1. Visitor consumption while traveling . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24B.2. Pre-trip visitor consumption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25B.3. Post-trip visitor consumption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

C. Forms of vistor consumption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Main categories of visitor on-trip expenditure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

A. Package travel, package holidays and package tours . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

B. Accommodation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

C. Food and drinks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

D. Transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

E. Recreation, culture and sporting activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

F. Shopping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

G. Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39

Expenditure estimation methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

A. Expenditure estimation methods and their applicability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41


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B. Existing data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

C. Visitor surveys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

C.1. Diary surveys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44C.2. Surveys at accommodation establishments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45C.3. Surveys at border entry/exit points . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47C.4. Surveys onboard transportation vehicles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48C.5. Surveys at popular visitor places . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

D. Household surveys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

D.1. Questionnaire left for self-completion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50D.2. Use of telephone surveys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50D.3. Use of mail surveys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51D.4. Use of ongoing household surveys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51

E. Tourism establishment surveys . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

F. Central bank data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

G. Expenditure models . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55

Placing visitor expenditure data in the appropriate TSA tables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

Annex A: Tourism consumer durable goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

Annex B: Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63

Technical Document No. 2: Measuring Tourism Demand

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

Some definitions from the TSA: A conceptual approach to tourism demand . . . . . . . 69

A. Visitor consumption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69

B. Tourism Gross Fixed Capital Formation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73

C. Tourism collective consumption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74

D. Total Tourism demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74

V.

I.

II.


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Table of Contents (cont.)

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III. Topics presented and discussed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75

A. Visitor consumption and its different components . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75

A.1. Visitor consumption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75

a. What is included and what is excluded . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75b. Why distinctions between components must be made . . . . . . . . . . . . . . . . . . . . . . . 78

A.2. The transactions in kind within tourism total consumption . . . . . . . . . . . . . . . . . . 79

a. Barter transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79b. Production for own final use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79c. Income received in kind . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80d. Valuation of transactions in kind . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81

B. Visitor consumption and the consumption of non-market services produced by general government and non-profit institutionsserving households . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81

B.1. Individual and collective non market services: definition . . . . . . . . . . . . . . . . . . . . . . . . 81B.2. Valuation and nature of non-market services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83B.3. Treatment in SNA93 and in the TSA:RMF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85

C. Social transfers in kind . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85

D. Visitor consumption and direct purchases by businesses related to tourism . . 87

E. Visitor consumption and the use of goods and services on trips . . . . . . . . . . . . . . . . . . . . . . 92

F. Visitor consumption and second homes used for tourism purposes . . . . . . . . . . . . . . . . . 93

F.1. Estimating the imputed value of housing services of owner occupieddwellings to their owners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93

F.2. Second homes used mainly for tourism purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93

a. When a significant reference market exists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94b. When there is no significant market that can validly be used as

a reference . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94

F.3. Inviting a visitor to stay at one’s home or at one’s second home . . . . . . . . . . . . 94F.4. Maintenance costs, do-it-yourself repairs, major improvements

to second homes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95F.5. Second home equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96


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F.6. When a second home becomes the main residence of a householdor vice versa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96

F.7. Timesharing arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96

a. The deeded interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98b. The leased interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 98c. Maintenance fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99d. Special assessments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99e. The timeshare stock company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99f. Timeshare summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99

From theory to practice: how to approach the measurement of total tourism demand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101

A. Statistical observation and estimation procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101

B. General view of potential sources of information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102

C. Proposals for estimation of these items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104

C.1. Barter transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104C.2. Production for own final use: housing on own account . . . . . . . . . . . . . . . . . . . . . . . . . . 104C.3. Transfers in kind received from other households . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105C.4. Transactions in kind mainly between businesses and their

employees for business travel and business guests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105C.5. Social transfers in kind, except the provision of individual

non-market services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107C.6. Individual non-market services that are part of visitor consumption . . . . 108C.7. Tourism collective non-market services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109C.8. Tourism gross fixed capital formation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110

D. Special valuation issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112

D.1. Code sharing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112D.2. Frequent flyer programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112D.3. Special valuation issues for international tourism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 112

a. Principles recalled . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113b. Application of these principles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114

Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119

Bibliography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 120

IV.

V.


8 OMT ¥ WTO ¥ BTO

Pages


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1. Ever since 1995 the World Tourism Organization (WTO) has been advancing thedevelopment of the TSA project in order to promote the harmonization and compa-rability, national and international alike, of the tourism statistics necessary for mea-suring and analysing the impact of tourism.

2. Besides working on a methodological design that will enable countries with highlyvaried statistical infrastructure to use this new tool in order to meet those aims, WTOhas devoted special attention to ensuring that its annual and national scope of refer-ence, as well as the present definition of certain aggregates and variables, can beextended in the future.

3. In accordance with the resolutions approved by the Enzo Paci World Conference on theMeasurement of the Economic Impact of Tourism (Nice, France, June 1999), WTO under-took not only to secure approval by the United Nations Statistical Commission (UNSC) ofthe basic principles contained in the Tourism Satellite Account (TSA): Conceptual Framework(TSA:CF) 1 (document presented at the Conference and direct precursor of the text finallyapproved by the UNSC) but also to draw up an action plan with the following aims:

• to develop the System of Tourism Statistics (STS);

• to prepare a set of materials and instructions to assist in the development of a TSAin countries with differing levels of technical skills, resources, needs and experience;

• to devise a programme of seminars and technical meetings in the various territo-ries to continue the work of applying the definitions and classifications;

• to design programmes for introducing the concepts and principles of the concep-tual framework for preparation of the TSA;

• to provide advice, exchange information and coordinate programmes with a viewto determining the training needs of the countries, and of the developing countriesin particular, for implementing the Conference recommendations;

• to assist the developing countries in preparing a TSA;

• to support the organization of TSA-related pilot studies.


9OMT ¥ WTO ¥ BTO

THE TOURISM SATELLITE ACCOUNT (TSA) PROJECTAND GENERAL GUIDELINES FOR ITS PREPARATION

1 Hereinafter referred to as TSA:CF

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4. Consequently, the term “project” associated with the TSA encompasses much more thanthe set of concepts, definitions, classifications and tables presented in the documentTourism Satellite Account (TSA): Recommended Methodological Framework(TSA:RMF).2 This text is the core of the project, since it includes the basic design ele-ments approved by the UNSC at its thirty-first session (29 March – 3 April 2000).

5. The term “project” is also a reference to its gradual development over time, since ini-tially the term “common conceptual framework” was applied to reflect the consensusreached on two points: the first is that two of the ten tables of the TSA (tables 8 and9 concerning gross fixed capital formation and collective consumption) will not betaken into account for purposes of international comparability of the results achieved;and the second is that the comparability of possible extensions to the present designof the TSA is not sought.

6. With the presentation of these four technical documents (begun in the second half of1998), WTO is launching a compilation of texts that, under the generic title ofGeneral Guidelines for Developing the Tourism Satellite Account (TSA), will include var-ious contributions so that each of the countries that decide on a TSA will have accessto a set of basic guidelines for preparing its own draft. In addition, WTO will providethem with other kinds of technical assistance in the form either of field missions or ofregional seminars for the technical staff of national tourism administrations, nationalstatistical offices and central banks.

7. The reader of these documents should bear in mind the following considerations:

- on the one hand, they constitute an initial contribution providing the technicalstaff responsible for the TSA in a given country (regardless of the level of its statis-tical infrastructure) with practical elements supplementing those of a strictlymethodological nature contained in the central document. These documents havenot been designed as manuals for two reasons: first, because of the still limitedexperience gained in working on the TSA (making it unthinkable that WTOshould seek to specify a common practical approach to be adopted by all the coun-tries in preparing a set of composite statistics – a characteristic it shares with theSystem of National Accounts, for whose preparation the United Nations has notproduced manuals); and, second, because the recommendations adopted by theUNSC clearly state that they do not constitute a requirement for the countriesdeveloping a TSA. Rather they should be interpreted as an important step in a jointprocess leading to the subsequent development of an international system oftourism statistics. Many of the subjects addressed are complex and require subse-quent analysis. It is felt that if countries produce a TSA, this will promote thedevelopment of standards, and it is also hoped that the circulation of these recom-mendations will encourage other countries to consider the advantages of preparingTourism Satellite Accounts.

- on the other hand, because as part of the process followed since the endorsementat Nice of TSA:CF as the document to be used as the basis for preparing tourismsatellite accounts, until the approval by the UNSC in March 2000 of the draftTSA:RMF, WTO has spelled out and clarified some important aspects of these ele-ments, such as the components of visitor consumption, the net valuation principle


10 OMT ¥ WTO ¥ BTO

2 Hereinafter referred to as TSA:RMF

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to be used for tourism packages and the output of travel agencies and the valuationprinciple to be applied for the register of goods, etc. Consequently, these docu-ments (begun and largely completed before finalizing the methodological design ofthe TSA) do not reflect those aspects as they were presented in documentTSA:RMF, even though all the texts are consistent with it.

8. These Technical Documents (TDs) should therefore be regarded as initial contributionsthat need to be improved and expanded upon as the countries inform us of their expe-rience in preparing the TSA. They have been distributed in two volumes as follows:

Volume 1: Measuring Total Tourism Demand:

– Technical Document No. 1: Measuring Visitor Final Consumption Expenditurein Cash (TD No. 1)

– Technical Document No. 2: Measuring Tourism Demand (TD No. 2)

Volume 2: Measuring Tourism Supply

– Technical Document No. 3: Measuring the Supply of Tourism Goods and Services(TD No. 3)

– Technical Document No. 4: Measuring Tourism Gross Domestic Product (TDNo. 4)

9. The general purpose of each TD is to provide a basic introduction to the referencesubject and suggestions on how to prepare the necessary information and statistics forthe related TSA tables, pointing out their advantages and disadvantages. The specif-ic purpose is to give guidance on the sources of information that can be used for cal-culating each entry in the TSA tables. The four TDs cover the main subjects of the10 TSA tables: TD No. 1 - tables 1, 2 and 3, TD No. 2 - tables 4, 8 and 9, DT No.3 - tables 5, 7 and 10 and DT No. 4 - table 6.

10. The contents of these four TDs making up the General Guidelines for Developing theTourism Satellite Account (TSA) are summarized in the General Introduction whichfollows this Presentation and, in greater detail, in Chapter 1 of each document:Introduction; subsequently, some general observations are made on the approach toand limitations of the documents.

11. First, the TDs set out to explain and develop the concepts, definitions, classificationsand accounting rules included in the central document Tourism Satellite Account(TSA): Recommended Methodological Framework, and to offer guidance on theirpossible specific contents, describe some of the limitations that the countries willencounter in practice, spell out the need to adjust them to the specific features of thecountry provided their comparability in time and space (national and international)is respected and to advise on certain lines of research for improving and elaboratingon the present methodological design of the TSA.

12. Second, the TDs contain recommendations for gathering the basic statistical data tobe used in the TSA: (1) analyse the possible sources of information available (census-es and statistical surveys, administrative records, national accounts, researched


11OMT ¥ WTO ¥ BTO

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tourism variables, periodicity, etc.); (2) detect any gaps existing in the tourism statis-tics; and (3) draw up a Programme of Tourism Statistics in accordance with the tech-nical and economic resources assigned and with the priorities of the draft TSA to beprepared, applying the criteria of flexibility and gradualism. It should be pointed outthat the TDs make no reference to a specific method of approach for gathering basictourism data, because such methodologies are the responsibility of the national insti-tutions that produce basic information (public and possibly private), in particularnational tourism administrations, national statistical offices and central banks.

13. Third, in offering guidance on the possible sources of information that may be usedfor calculating each entry, generally speaking no description is given of the various“estimation methods” that may be applied, except for certain specific tourism areaslike tourism packages (breakdown into components), travel agencies and the pur-chase of goods (net valuation), second homes for tourism use by the owner, the recordin national currency of the transactions carried out in foreign currency, tourism valueadded (TVA) and tourism gross domestic product (TGDP).

14. These General Guidelines for Developing the Tourism Satellite Account (TSA) should bestudied and used, together with other documents related to the TSA, in particular:

• Tourism Satellite Account (TSA): Recommended Methodological Framework.UN-WTO-OECD-EUROSTAT, New York (the central document, the future edi-tion of which will be published in the course of 2000).

• Tourism Satellite Account (TSA): the Conceptual Framework, WTO, Nice, June1999 (in particular Annex 5 which incorporates outlines of worksheets in relationto certain aspects of special importance).

• Recommendations on Tourism Statistics, 1993 (both the first part and the secondwhich includes the Standard Industrial Classification of Tourism Activities -SITCA).

• List of Tourism Specific Products (TSP) (included in the central document).

• List of Tourism Characteristic Products (TSA/TCP) (included in the central doc-ument).

• List of Tourism Characteristic Activities (TSA/TCA) (included in the central doc-ument).

• First Ibero-American Seminar on tourism statistics for developing the TourismSatellite Account: supplementary texts, Madrid, 19-23 April 1999.

• Technical Manuals published by WTO in the course of 1995

– Technical manual No. 1: Concepts, Definitions and Classifications for TourismStatistics.

– Technical manual No. 2: Collection of Tourism Expenditure Statistics.– Technical manual No. 3: Collection of Domestic Tourism Statistics.– Technical manual No. 4: Collection and Compilation of Tourism Statistics.



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A. BACKGROUND

1. In June 1991, the World Tourism Organization (WTO) and the Government ofCanada organized an International Conference on Travel and Tourism Statistics inOttawa, which brought together representatives of national tourism administrations,the tourism industry, national statistical offices and international and regional organi-zations to consider the development of reliable tourism statistics. The Conferenceadopted a set of resolutions that defined the statistical needs of governments andtourism industries for analysis, market research, industry performance and tourismforecasts. These comprised recommendations relating to concepts, definitions andclassifications covering various tourism activities.

2. Following the Ottawa Conference, the WTO established a Steering Committee com-posed of representatives of governments, international organizations (including theOrganisation for Economic Co-operation and Development –OECD–, Commissionof the European Communities –EUROSTAT–, United Nations – UN–, Pacific AsiaTravel Association –PATA–, International Hotel and Restaurant Association -IH&RA-, Caribbean Tourism Organization –CTO– and World Travel and TourismCouncil –WTTC–) and the tourism industries, to carry out a concrete work programfor the implementation of the recommendations of the Conference. At its 27th Session,held in New York in FebruaryMarch 1993, the United Nations StatisticalCommission adopted a report prepared by the WTO under the guidance of theSteering Committee that contained recommendations relating to tourism statisticalstandards and the work program for the implementation of those standards. TheWTO work program included the publication of technical manuals and their presen-tation at regional seminars around the world to assist countries in implementing therecommendations on concepts, definitions and classifications for tourism statistics.1

3. The Ottawa Conference also recommended “that the concept of satellite accountingsystem which derives its main aggregates and basic concepts from the United NationsSystem of National Accounts be supported.”2 As background for this recommenda-tion, the new System of National Accounts adopted by the United Nations and other


13OMT ¥ WTO ¥ BTO

General Introduction

1 These WTO Technical manuals are: No. 1: Concepts, Definitions and Classifications for Tourism Statistics; No. 2: Collection of Tourism

Expenditure Statistics; No. 3: Collection of Domestic Tourism Statistics; No. 4: Collection and Compilation of Tourism Statistics.

2 United Nations and World Tourism Organization, Recommendations on Tourism Statistics, New York, 1994, ¶98. This document is ref-

erenced hereafter as “UN/WTO Recommendations”.

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multi-lateral agencies in 19933 proposed that countries develop functionally orientedsatellite accounts to supplement National Account estimates of standard sectors of aneconomy. Such satellite accounts share with the main national accounting frameworkmost of its concepts, definitions and modes of representation of the functioning of aneconomy through transactions and transactors, but employ a magnifying glassfocussed on an issue or area of particular interest, such as tourism.

4. The analysis of tourism using this type of account has the major advantage that itmakes it easier for a country to relate the economic aspects of its tourism activity toother national economic variables and to examine their mutual relationships. As aconsequence, such a tourism satellite account can provide a set of tools for policymakers and others who wish to make informed economic decisions.

5. To develop the structure of a TSA, WTO convened an Ad Hoc Group of Experts onTourism Satellite Accounts in 1995 to develop the conceptual framework necessary toimplementing such accounts. This group met regularly to mid-1999 and was com-prised of representatives from the OECD, EUROSTAT, WTTC, the InternationalLabor Organization (ILO), PATA, IH&RA, CTO, as well as a number of national sta-tistical offices and national tourism administrations. The elements of such an accountare presented in the World Tourism Organization (WTO) document, Tourism SatelliteAccount (TSA): The Conceptual Framework4, designed to guide the work of national sta-tistical organizations, national tourism administrations, and other agencies interestedin rigorous measurement of tourism’s economic effects in a national economy.

6. In June 1999, WTO convened the Enzo Paci World Conference on the Measurement of theEconomic Impact of Tourism in Nice, France. Noting that the exchange of information andexperience on tourism between countries will be enhanced by a common conceptual under-standing of tourism linkages to Systems of National Accounts, the Conference recognizedthat the development of international standards for Tourism Satellite Accounts represents asignificant need. Furthermore, the Conference adopted “the general principles contained inthe document Tourism Satellite Account (TSA): The Conceptual Framework and recommend-ed that WTO “develop a package of materials and guidance that supports development of aTSA in countries of diverse expertise, resources, needs and experience.” The set of GeneralGuidelines for Developing the Tourism Satellite Account (TSA): Measuring Total TourismDemand and Measuring Tourism Supply comprise this package of materials.

7. In September 1999, a WTO-OECD-EUROSTAT Inter-Secretariat Working Group,was created with the purpose of establishing a common conceptual framework inaccordance with the conclusions of the Enzo Paci World Conference.

8. The United Nations Statistical Commission (UNSC) at its thirty first session (29February – 3 March 2000) adopted the document Tourism Satellite Account (TSA):Recommended Methodological Framework,5 presented by WTO, OEDC andEurostat to UNSC and based on the Nice Conference document, Tourism SatelliteAccount (TSA): the Conceptual Framework, with the issues and drafting changes agreedby the Inter-Secretariat Working Group.



3 United Nations, International Monetary Fund, Commission of the European Communities, Organisation for Economic Co-operation and

Development, World Bank. System of National Accounts 1993. New York (referred to herein as SNA93)

4 Hereafter referred to as TSA Conceptual Framework or TSA:CF.

5 Hereafter referred to as TSA:RMF.

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9. The document TSA:RMF recognizes that tourism – “the activities of persons travel-ing to and staying in places outside their usual environment for not more than oneconsecutive year for leisure, business and other purposes,”6 – in a country producescertain impacts on consumption, expenditures, income, investment, government rev-enue and employment in that country’s economy. Many of these consequences resultfrom the spending of visitors in preparation for trips away from home, during suchtrips, and after returning home from such trips. Others are related to “other agents”such as businesses, government units, non-profit institutions serving households(NPISHs). The document TSA:RMF provides a framework for estimating these con-sequences of tourism in a national economy consistently with the way in which othermajor sectors are measured in the National Accounts.

10. The “visitor” is the central agent in producing the economic impacts that are record-ed in the document TSA:RMF. The visitor is defined as:

Any person traveling to a place other than that of his/her usual environment forless than 12 months and whose main purpose of trip is other than the exercise ofan activity remunerated from within the place visited.7

11. Other concepts and definitions are also presented, such as:– visitor consumption, – internal tourism consumption (central aggregate of direct “visitor demand”), – total tourism demand (a broader concept of tourism demand: visitor consumption

completed by tourism collective consumption and tourism gross fixed capital for-mation),

– on the demand perspective and on the supply perspective:• list of tourism characteristic activities (TSA/TCA) and products (TSA/TCP), • tourism industries, • tourism value added (TVA), • tourism gross domestic product (TGDP) and tourism employment.

Finally, several tables were prepared for the elaboration of these tourism variables.

12. The Tourism Satellite Account is to be seen from two different perspectives:

(a) as a new statistical instrument for international standardization of concepts, classi-fications, definitions, tables and aggregates, which will allow for valid comparisonsfrom country to country, between groups of countries, and make also these esti-mates comparable with other internationally recognized macroeconomic aggre-gates and compilations;

(b)as a building process to guide countries in the development of their own system oftourism statistics, the main objective being the completion of the TSA, whichcould be viewed as a synthesis of such a system.


15OMT ¥ WTO ¥ BTO

B. FOCUS OF THE TOURISM SATELLITE ACCOUNT

6 UN/WTO Recommendations, ¶9.


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13. Tourism is by nature a demand phenomenon. Consequently, it is logical that Volume1 relate, first of all, to tourism aspects on the demand perspective. It containsTechnical Documents No 1 and No 2.

14. Technical Document No 1: Measuring Visitor Final Consumption Expenditure in Cashonly covers the estimate of the most important component of visitor consumption: thevalue of the products purchased by visitors out of their own cash income while travel-ing on trips away from home, and expenditure engaged before and after the trip andrelated to it. It provides guidance for the completion of TSA tables 1, 2 and 3.

15. Technical Document No 2: Measuring Tourism Demand, studies first of all, the othercomponents of visitor consumption, mainly, expenditure in kind and secondly, itintends to guide countries in the determination and compilation of the other compo-nents of total tourism demand: tourism collective consumption and tourism gross fixedcapital formation. It provides guidance for the completion of TSA tables 4, 8 and 9.

16. Volume 2 relates to goods and services which are relevant to the analysis of visitorconsumption and, specifically, to tourism characteristic activities that produce suchgoods and services. This volume takes into consideration all subjects related to visi-tor consumption on the supply perspective. It contains the Technical Documents No3 and No 4.

17. The general goal of Technical Document No 3: Measuring the Supply of Tourism Goodsand Services is to provide an introduction and overview of the subject. It provides abroad guidance on the development of statistics about tourism supply and also guid-ance for the completion of TSA tables 5, 7 and 10.

18. The main purpose of Technical Document No 4: Measuring Tourism Gross DomesticProducts is to provide a full set of credible indicators of the economic importance oftourism in a country, within the context of international comparability. It also showspractical problems and requirements to develop such indicators. It also provides guid-ance for the completion of TSA table 6.

19. The General Guidelines for developing the Tourism Satellite Account (TSA) (Volumes 1and 2) are designed to assist National Statistical Offices, National TourismAdministrations and Central Banks of those countries interested in implementing aTSA. They provide basic information not only on concepts, definitions, classifica-tions and possible sources of information to be used, but also on how the proposedtables should be elaborated ensuring, in such a way, that harmonization and compa-rability of tourism results can be reached at the international level.

20. Volumes 1 and 2 may also be helpful to individual researchers or organizations that maywish to understand how a TSA can be implemented in a concrete form. Moreover, per-sons interested in better understanding what is meant by tourism demand and supply,consistent with WTO standards, may also find these volumes of interest.



C. SCOPE OF THE GENERAL GUIDELINES FOR DEVELOPINGTHE TOURISM SATELLITE ACCOUNT (TSA)

D. INTENDED READERSHIP

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Measuring VisitorFinal Consumption

Expenditure in Cash

Technical Document No. 1

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I. Introduction

Tourism consumption produces consequences in a national economy in terms ofincome, production, employment, tax revenue, etc. An important component oftourism consumption is visitor final consumption expenditure in cash: the value of theproducts purchased by visitors out of their own cash income while traveling on tripsaway from home, in preparation for one or more trips, and related to a trip after return-ing home. This document defines terms related to understanding and measuring visitorfinal consumption expenditure in cash in a national economy, presents classifications forrecording such expenditures, enumerates alternative methods for estimating theseexpenditures, and indicates where these expenditures should be recorded in the tablesrecommended for a TSA.

This document only covers the estimation of the visitor final consumption expenditurein cash component of visitor consumption. The measurement of other elements of visi-tor consumption is discussed in Tourism Satellite Account Technical Document No. 2:Measuring Tourism Demand.

This document is laid out in five chapters and two annexes. Chapter II covers the con-cepts and definitions of visitor final consumption expenditure in cash from the System ofNational Accounts 1993, classifications and the forms of visitor consumption. Chapter IIIpresents the main categories of this expenditure while traveling and what is included ineach. Chapter IV. discusses the various methods available for estimating the classifica-tions of visitor final consumption expenditure in cash. Chapter V indicates how theresults of visitor final consumption expenditure in cash measurement should be record-ed in the TSA Tables 1, 2 and 3.

Annex A presents the list of tourism consumer durable goods that should be consideredfor inclusion in a country’s pre-trip expenditure estimation. Annex B provides referencesuseful for further background and discussion of the concepts presented in this document.

This document should be studied and used in conjunction with other materials onTourism Satellite Account, most notably:

(a) Tourism Satellite Account (TSA): Recommended Methodological Framework,UN-WTO-OECD-EUROSTAT, New York (forthcoming edition to the publishedduring the year 2000).

Measuring Visitor Final Consumption Expenditure in Cash

19OMT ¥ WTO ¥ BTO

1.1.

1.2.

1.3.

1.4.

1.5.

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(b) Tourism Satellite Account (TSA): the Conceptual Framework, WTO, 1999.

(c) General Guidelines for developing the Tourism Satellite Account (TSA), TechnicalDocuments:

TD No 2: Measuring Tourism Demand (volume 1). TD No 3: Measuring the Supply of Tourism Goods and Services (volume 2).TD No 4: Measuring Tourism Gross Domestic Product (volume 2).

(d) The Standard International Classification of Tourism Activities (SICTA 93).

(e) The list of Tourism Specific Products (TSP).

(f ) The list of Tourism Characteristic Products (TSA/TCP).

(g) The list of Tourism Characteristic Activities (TSA/TCA).



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2.1.

2.2.

2.3.

Consumption in SNA93 is an activity in which institutional units use up goods or ser-vices.1 It is comprised of final consumption and intermediate consumption. Final con-sumption is the activity of using up goods and services by individual households, govern-ment units or non-profit institutions serving households (NPISHs) to satisfy their individ-ual or collective needs or wants, whether the institutional unit has purchased the good orservice or not.2 Intermediate consumption is the activity of using up inputs into process-es of production during the accounting period.3 It consists of the value of the goods andservices consumed as inputs by a process of production, excluding fixed assets whose con-sumption is recorded as consumption of fixed capital4 and excluding expenditures on valu-ables5.

Final consumption can be recorded on an acquisitions basis or on an expenditure basis.When recorded on an acquisitions basis, the purpose is to identify the units that actu-ally acquire the goods and services and benefit from their use, either immediately or sub-sequently (called “actual final consumption”).6 Goods and services are said to be acquiredby institutional units when they become the new owners of the goods or when deliveryof the services to them is completed.7

Expenditure in SNA93 is the value of the amount a buyer pays, or agrees to pay, to aseller in exchange for goods or services that the seller provides to him/her or to anotherinstitutional unit designated by the buyer.8 In the System, expenditure is attributed to theunit that ultimately bears the costs as distinct from the unit that may make payment tothe seller.9 Expenditure occurs at the times when a buyer incurs a liability to a seller, usu-ally when the ownership of the good is transferred to the new owner or the delivery of aservice by a producer is completed to the satisfaction of the consumer.10 If a good, ser-


21OMT ¥ WTO ¥ BTO

II. Visitor consumption

A. CONCEPTS AND DEFINITIONS

1 SNA93 ¶1.49.

2 SNA93, ¶¶1.49, 9.8.

3 SNA93, ¶1.49.

4 SNA93, ¶¶6.157-172.

5 SNA93. ¶¶6.147-148

6 SNA93, ¶9.74.

7 SNA93, ¶9.32.

8 SNA93, ¶9.22.

9 SNA93, ¶9.23.

10 SNA93, ¶9.24.

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vice or asset other than cash is used in the exchange (transactions in kind), values mustbe imputed for the expenditure.11 When final consumption is recorded on an expendi-ture basis, the purpose is to identify the institutional unit that incurs the expenditureand hence controls and finances the amount of the expenditure (called “final consump-tion expenditure”). The value of total final consumption in the economy is the same,however, whether the acquisitions basis or the expenditure basis is used.12

These considerations give rise to the following basic concept:

Visitor consumption – the total consumption expenditure made by a visitor or onbehalf of a visitor for and during his/her trip and stay at destination.

Visitor final consumption expenditure (total) is made of two components: the compo-nent in cash, and the component in kind: the component in cash corresponds to thoseexpenditure made from the cash resources of the visitor, including transfers or other pay-ments in cash received from others (money received as a gift from other households..). Thecomponent in kind corresponds to those goods and services received directly as such (the giftof an airline ticket, of a suitcase, an invitation to a show…) from other institutional units.

Figure 2.1 portrays the components of visitor consumption. The item called visitor finalconsumption expenditure in cash, in the upper left hand side is covered in this docu-ment. The other elements of visitor consumption are covered in WTO’s Tourism SatelliteAccount. Technical Document No. 2: Measuring Tourism Demand.

All acquisition of goods and services by a visitor that SNA93 would consider as part ofhousehold final consumption expenditure in cash is included within the boundary of vis-itor final consumption expenditure in cash. In principle, no consumption good or ser-vice is excluded by its nature, with a few exceptions which will be discussed further on.If a product is acquired by a visitor on a trip or trips, or in preparation for one or moretrips, it may be included. The special case of consumer durable goods of important unitvalue, such as automobiles and camping equipment, that are purchased prior to a tripand used on multiple trips as well as in local venues, is discussed in detail below.

Two general clarifications are important. First, there are payments related to a trip that visitorsmight make which are excluded from visitor consumption by SNA93 conventions. These arethose which do not correspond to the purchase of consumption goods and services, such as:

• the payment of taxes and duties not levied on products;

• the payment of interest (net of FISIM corresponding to the visitor)13, including thoseon expenditure made during and for trips;

• the purchase of financial and of non financial assets, including land, works of arts and

2.4.

2.5.

2.6.

2.7.

2.8.



10 SNA93, ¶9.24.

11 SNA93, ¶¶9.27-28.

12 SNA93, ¶9.74.

13 Financial Intermediation Services Indirectly Measured (FISIM) refer to those services provided by financial intermediaries for which they

do not charge explicitly, but only implicitly through the difference in interest rates charged to borrowers and to lenders. SNA93 recom-

mends to allocate the total output of this activity as consumption among the various recipients or users of the services for which no explic-

it charges are made: this can be the case of visitors. See SNA93 ¶¶ 6.124 to 6.131.

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2.9.

other valuables; • all transfer payments in cash such as donations to charities or to other individuals and

which do not correspond to the payment for goods or services.

Second, any purchases on a trip for commercial purposes, that is, for resale or use ina production process or on behalf of his/her employer by a visitor on a business tripare excluded. (These are either intermediate consumption or gross fixed capital for-mation of the producing unit).

In the case of the re-sale of a motor vehicle or other consumer durable item which is pur-chased on a trip but then sold at the conclusion of the trip, the value to be consideredwithin visitor consumption is the difference between the original purchase price and the


23OMT ¥ WTO ¥ BTO

(1) This always represents the most important component of total consumption of, or on behalf of, visitors. It covers what is usually

meant by “visitor expenditure”, but SNA93 obliges to use more precisely defined terms.The term “in cash” does not necessarily

mean a disbursement of “cash” but refers to all visitors final consumption expenditure which are not in kind.

(2) The term “tourism” refers to those transfers for tourism purposes addressed to potential visitors.

(3) The area in grey represents the part of total consumption of or on behalf of visitors which corresponds strictly to the transposition

of SNA93 concept of household actual final consumption to visitors (both residents and non residents).

(4) Includes the expenditure on transport and accommodation of employees on business trips and those made by business, government

and NPISH on behalf of guests outside their usual environment.

(5) Visitor consumption refers to total consumption of or on behalf of visitors and could, consequently, also be termed as “visitor demand”.

Figure 2.1.The components of visitor consumption

Visitor final consumptionexpenditure in cash (1) Visitor final

consumptionVisitor barter transactions expenditure (total)

Visitor production Visitor final Visitor actualfor own consumption finalfinal use expenditure in kind consumption

Counterpartof income in kind

Tourism socialsecutiry

benefits in kind (2)

Tourism social Tourism social Visitorassistance transfers in consumption

benefits in kind (2) kind (5)

Individual nonmarket tourism (3)

servicesTourism business

expenses (4)

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price received upon re-sale by the visitor. No allocation is made for costs of use.

Visitor consumption is defined as the total consumption expenditure made by a visitor oron behalf of a visitor for or during his/her trip and stay at destination. It includes the valueof goods and services purchased by visitors (or by others on behalf of him/her) on a trip, inpreparation for one or more trips, or as the result of activities on a trip or received in kind.

Classifications concern all components of visitor consumption, but are mainly used forvisitor final consumption expenditure in cash, so that descriptions will be made princi-pally by reference to this component. Figure 2.2 shows the classifications of visitor con-sumption according to the moment the expenditure is made and the nature of the good

2.10.

2.11.

2.12.

2.13.



B. VISITOR CONSUMPTION CLASSIFICATIONS

B.1. Visitor consumption while traveling


or service purchased. The central category of visitor consumption is visitor on-trip expenditure made whileactually traveling away from home. The TSA includes all expenditure made by the visi-tor while traveling away from home, except those categories listed above in ¶2.8.

WTO recommends that visitor on-trip consumption be measured in the following sevenmain categories of products:14

1. Package travel, package holidays and package tours2. Accommodation3. Food and drinks4. Transport5. Recreation, culture and sporting activities6. Shopping7. Other

A detailed discussion of the types of products included in each main category of visitorconsumption while traveling is provided in Chapter III. It is useful to note here, howev-er, that item 6. Shopping includes goods acquired on trips, while item 7. Other refers to ser-vices acquired on trips. While the estimation of classifications 2 through 7 are straight-forward, the complex estimation of the components of item 1. Package travel, package

Figure 2.2. Visitor final consumption expenditure.Durable goods

Pre-trip Non-durable goods

Services

Visitor consumption On-trip By expenditure classification

Post-trip Services

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2.15.

2.16.

2.17.

2.18.

2.19.

holidays and package tours is specially treated in Chapter III.

Pre-trip visitor consumption comprises the value of goods and services acquired byhouseholds in preparation for, or anticipation of, one or more trips. Such acquisitionsinclude durable goods, non-durable goods, and services. The following items are exclud-ed from this category:

(a) any purchases for commercial purposes, that is, for resale or use in a productionprocess or on behalf of a business (these are intermediate consumption of thebusiness);

(b) purchases of financial or non-financial assets, such as land, housing, capital goods,works of art and other valuables (these appear in the SNA93 capital accounts).

(c) other expenditures excluded from tourism consumption listed above in ¶2.8.

Pre-trip visitor final consumption expenditure on durable goods is the value of durablegoods acquired by a household in preparation for, or anticipation of, one or more trips.SNA93 defines a consumer durable good as “a good that may be used for purposes ofconsumption repeatedly or continuously over a period of a year or more.”15

Consequently, such goods that households acquire for use on trips are included in thiscategory, and are termed, “tourism consumer durable goods”:

A tourism consumer durable good is a good that may be used for purposes of tourismrepeatedly or continuously over a period of a year or more.16

We can distinguish one sub-category of such tourism consumer durable goods that are ofrelatively low unit value, such as golf balls, camping knives, beach toys, and travel alarmclocks. It may well not be worth the effort for the compiling country to measure the valueof these separately, but they might be covered in larger categories of goods such as golfequipment, camping equipment, toys and small travel appliances, respectively.

The other value sub-category of such tourism consumer durable goods is those of rela-tively high unit value. These include ski equipment, scuba diving gear, recreational boats,cameras, and recreational vehicles and caravans, among others. The purchase of these foruse on one or more trips is of significant consequence to the compiling country, andattempts should be made to identify their value by item category.

The value of tourism consumer durable goods in a country for a year is indicated by the pur-chases of these goods by or on behalf of domestic, outbound or inbound visitors. Estimationof this value is aided by recognizing five types of tourism consumer durable goods:

Type A. Goods whose nature limits them predominantly to use on trips away from theusual environment, such as luggage, recreational vehicles and camping equip-


25OMT ¥ WTO ¥ BTO

B.2. Pre-trip visitor consumption

a. Tourism consumer durable goods

15 SNA93, ¶9.38

16 World Tourism Organization, The Tourism Satellite Account: the Conceptual Framework, chapter V, section B.1. Hereafter, this document is

referred to as TSA:CF.

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ment. Total sales of these in a country might be considered visitor consumptionon this type of durable. The compiling country should, of course, distinguishsales of these to residents from sales to inbound visitors through appropriatesurveys of visitors or supply establishments.17

Type B. Relatively inexpensive items designed for use on trips away from home (the lowvalue sub-category), such as “travel accessories”, which are typically appliancesthat are smaller and lighter in weight than used at home, and which oftenaccommodate multiple voltages and socket configurations. Examples includeclothes irons, hair dryers, voltage converters and alarm clocks. Total sales ofthese in a country might be considered visitor consumption on this type ofdurable. The compiler should, of course, distinguish sales of these to residentsfrom sales to inbound visitors through appropriate surveys of visitors or supplyestablishments.

Type C. Furniture, appliances, and other items located in second homes. Care must betaken to ensure that these items are individually purchased by households. Ifthey are purchased by builders or owners and included in the sales price of thedwelling unit to a household, then they are not separately accounted for astourism consumer durable goods.

Type D. Consumer durable goods whose tourism usage depends on the location of thepurchaser’s residence. For example, if the purchaser of scuba diving equipmentlives near a bay, then this equipment may have little tourism usage. On theother hand, if the owner lives far from suitable diving sites, then his/her use ofsuch diving equipment is confined to trips away from home and is thus totallydevoted to tourism use. Other items dependent on their owners’ residence loca-tions for tourism content include other water sports equipment, winter sportsequipment, camping equipment, and off-road vehicles.

Type E. All other consumer durable goods that are purchased in preparation for oranticipation of a trip. These are not readily identifiable as tourism consumerdurable goods by their nature (Types A and B above), the location of their pur-chaser (Type D), or their location in second homes (Type C). These includemany types of sporting goods (e.g., tennis racquets, golf clubs), wearing appar-el and shoes (e.g., safari jackets, walking shoes, golf gloves), bicycles and acces-sories, automobiles and light trucks, and laptop computers.

This discussion has focused on consumer durable goods purchased before a trip, whichcan be called, “pre-trip tourism consumer durable goods”. All goods, whether durables ornot, purchased during the trip are included in visitor consumption while traveling,except for the items listed as excluded from visitor consumption in ¶2.8.

2.20.

2.21.



17 See WTO unpublished document: Conducting and Processing a Visitor Survey: Instructional Materials, 1994, by Dr. Douglas C. Frechtling.

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2.22.

2.23.

2.24.

2.25.

2.26.

2.27.

Annex A includes a listing of tourism consumer durable goods.

There are quite a few goods that consumers buy and may use primarily related to travelaway from home but fail to satisfy the definition of durable goods: they are not capableof being used repeatedly or continuously over a period of more than one year, assuminga normal or average rate of physical usage. These can be termed “tourism non-durableconsumer goods purchased for a trip”. This class includes non-durable goods acquired byhouseholds prior leaving on a single trip and used up on that trip. Examples include foodand beverages, suntan lotion, motor fuel, photographic film, batteries for travel acces-sories and cameras, non-durable sporting goods (e.g., tennis balls), and tobacco products.While individually these goods are of low unit value, collectively they might account fora significant portion of tourism consumption. Consequently, a country may choose toestimate expenditure for this entire class rather than components of it.

There are also certain services purchased in anticipation of a given trip and whose usageoccurs before the trip begins, such as inoculations against disease, boarding kennels forpets, and airline ticket delivery services. These are included in visitor consumption, as well.

Households also purchase certain services after and as the result of a given trip, and thecollective value of these for a country is called “post-trip visitor consumption”. Such ser-vices include photographic film development, and repair of motor vehicles, cameras, orother durable goods used on a trip.

The Tourism Satellite Account recognizes various forms of tourism consumption to helpcountries distinguish different venues of tourism consumption.18 They are derived fromthe forms of tourism.

Domestic tourism consumption includes pre-trip visitor consumption on non-durablegoods and services, post-trip visitor consumption, and on-trip consumption by visitorswhile traveling within the visitors’ country of residence. The final destination of the vis-itor might be within or outside the country of residence, but the consumption activity,which is referred to, has to take place within this country of reference. It might includegoods or even services produced abroad or by non-residents but sold within the countryof reference (imported goods or services).

Outbound tourism consumption embraces all visitor on-trip consumption, whichhappens in countries other than the one in which the visitors reside. It necessarilyexcludes pre-trip visitor consumption on non-durable goods and services and post-tripvisitor consumption related to these trips as these occur within the country of residence


27OMT ¥ WTO ¥ BTO

18 See UN/WTO Recommendations, ¶¶11-14, and TSA:RMF .¶¶ 2.60-2.67.

b. Non-durable goods purchased in anticipation of a trip

c. Services purchased in anticipation of a trip

B.3. Post-trip visitor consumption

C. FORMS OF VISITOR CONSUMPTION

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and are included within domestic tourism consumption.Inbound tourism consumption includes the value of purchases of non-resident visitorstraveling within the compiling country but limited to purchases from producers residentwithin that country. Purchases of international transportation on carriers of the countryvisited are also contained in this class, even though the purchase may occur outside thecompiling country. Purchases form non resident producers are excluded.

Internal tourism consumption encompasses all visitor consumption within the com-piling country that is consistent with the concept of internal tourism (inbound anddomestic visitor activity in a country). It is the sum of Inbound Tourism Consumptionand Domestic Tourism Consumption. It is the consumption of both resident and nonresident visitors within the economic territory of the country of reference and/or thatprovided by residents.

National tourism consumption comprises all visitor consumption by residents of thecompiling country regardless of where it occurs, within or outside the country of refer-ence. It is the sum of Domestic Tourism Consumption plus Outbound TourismConsumption.

International tourism consumption equals the sum of Inbound Tourism Consumptionplus Outbound Tourism Consumption, and represents all tourism consumption relatedto international travel to or from the compiling country.

Figure 2.3 indicates the types of visitors that should be covered in order to measure eachcategory of visitor consumption for each form of tourism consumption. A country candetermine what visitor consumption categories must be measured for complete estima-tion of each form of tourism consumption. For example, if a country chose to measureInternal Tourism Consumption (row D), it would need to estimate visitor consumptionin the following categories:

(a) pre-trip non-durable goods purchased by resident visitors (column 3);(b) pre-trip services purchased by resident visitors (column 4);(c) on-trip expenditure by all visitors (resident and non resident) (column 5);(d) post-trip expenditure by resident visitors (column 6).

The methods available to estimate these expenditures are outlined in Chapter IV.

2.28.

2.29.

2.30.

2.31.

2.32.

2.33.



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29OMT ¥ WTO ¥ BTO

Figure 2.3. Visitor Consumption Category Componentsof the Forms of Tourism Consumption

Visitor comsumption Category

1. Form of tourism 2. Pre-trip 3. Pre-trip 4. Pre-trip 5. On-trip 6. Post-tripconsumption durable non-durable services

goods goods

A.Domestic Resident Resident Resident Resident Resident

visitors visitors visitors visitors within visitors

(whatever (whatever (whatever the domestic (whatever

their their their economy their

destination) destination) destination) destination)

B. Outbound Resident

visitors

outside the

domestic

economy

C.Inbound Non resident

visitors

within the

domestic

economy

D. Internal Resident Resident Resident Resident Resident


(whatever (whatever (whatever the domestic (whatever

their their their economy & their

destination) destination) destination) inbound destination)

visitors

F. National Resident Resident Resident Resident Resident


(whatever (whatever (whatever and outside (whatever their

their their their the domestic destination)

destination) destination) destination) economy

G.International Resident

visitors

outside the

domestic

economy &

inbound

visitors

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The following discussion addresses the types of products (i.e., goods and services) thatare covered in each of the seven standard WTO classifications of visitor consumptionwhile traveling:

1. Package travel, package holidays and package tours.2. Accommodation.3. Food and drinks.4. Transport.5. Recreation, culture and sporting activities.6. Shopping.7. Other.

A package tour (or tour package, package travel or holiday package) comprises two ormore distinct products, which are purchased by the visitor as a single entity. Such pack-ages usually, but not necessarily, include transportation and accommodation, but mayalso include meals, car rental, sightseeing tours, admission to theaters or attractions, orany other product of interest to a tourist. There is a single price for the whole package,which is usually cheaper than the aggregated cost of the items if purchased separately bythe visitor. A package tour may or may not include an overnight stay. There are packagetours for same-day visitors that include, for example, a sightseeing tour plus a meal andadmission fees to one or more attractions.

For purposes of accounting for the impact of visitor consumption19 on package tours onthe TSA, the components of the packages must be distinguished and assigned to appro-priate product categories. For example, the airfare portion of an air package tour wouldbe attributed to air transport services, while the hotel lodging component would beassigned to that product category.

3.1.

3.2.

3.3.



III. The main categories of visitor on-trip consumption

19 TSA:RMF ¶ 2.73, ¶2.74 and Chapter III, sections B.2.3 and B.2.4.

A. PACKAGE TRAVEL, PACKAGE HOLIDAYS AND PACKAGE TOURS.

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3.4.

3.5.

3.6.

Following is a list of products that may be included in a package tour. Visitors surveyedfor their expenditure patterns and indicating they traveled on package tours should beasked to enumerate which of these items are included:

(a) International air fare.(b) Air fare within the country visited.(c) Rental car.(d) Limousine or bus service to and from airport.(e) Tour guide for entire trip.(f ) International bus/motorcoach transport.(g) Bus/motorcoach transport within the country visited.(h) International railroad transport.(i) Railroad transport within the country visited.(j) International cruise ship transport.(k) Boat/ship transport within country visited.(l) Accommodation.(m) Food and drinks.(n) Commercial guided tours such as sightseeing tours.(o) Entertainment and recreation admission and use fees.

The following describes the method of estimating the components of package tours20: Itcomprises surveying tour operators about the percentage distribution of components ofa package tour to the compiling country and apply the mean distribution derived to grosspackage tour expenditures for travel in the host country for each of the inbound, out-bound and domestic tour categories. This method has the advantage of providing all ofthe detail required in this worksheet:

(a) it enumerates all of the product categories;

(b)it distinguishes domestic, inbound and outbound tour package expenditure fromeach other;

(c) it distinguishes components produced within the compiling country from thoseproduced outside of it.

The method is composed of the following steps:

A. Obtain a list of tour operators bringing inbound visitors to your country. This maybe obtained from your National Tourism Administration or industry sources.

B. Select a sample of these tour operators to be surveyed. See chapter 6 of WTO’sCollection and Compilation of Tourism Statistics, Technical Manual No. 4, or chap-ter 4 of WTO’s Collection of Domestic Tourism Statistics, Technical Manual No. 3.

C. Develop a questionnaire asking for the distribution of package tour revenues.Following is a questionnaire that could be used to gather these data:


31OMT ¥ WTO ¥ BTO

20 See TSA:CF Annex 5, Worksheet 2a.

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Question A: For the average tour package you sell to visitors to <compiling country>,what is the distribution of costs for each the following components21:

Accommodation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . __%

Food and beverage services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . __%

International passenger transport . . . . . . . . . . . . . . . . . . . . . . __%

Passenger transport in country visited . . . . . . . . . . . . . . __%

Tourist guide . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . __%

Cultural services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . __%

Recreation and other entertainment services . . __%

Travel agency commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . __%

All other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . __%

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100%

D. In the questionnaire, ask where most of each component is produced.

Question B: For each of the following components, check those where most of theproduction takes place in <compiling country>:

Accommodation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Food and beverage services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

International passenger transport . . . . . . . . . . . . . . . . . . . . . .

Tourist guide . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Cultural services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Recreation and other entertainment services . .

Travel agency commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

All other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .



21 These product categories are drawn from TSA:CF Annex 5.

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E. In the questionnaire, ask for the residency of the tour operator. For example,

Question C: Is your company a resident of <compiling country>?22

Yes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

No . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F. In the questionnaire, ask for total receipts from the sale of tours to the compilingcountry. For example:

Question D: What were your total annual receipts from the sale of all tours to <com-piling country>?

_______ units of currency

G. Mail or fax survey questionnaires to the sample. See sources in step B. above.

H. Compile the responses to Question A to produce the mean distribution of packagetour expenses for the components for tour operators resident in the compiling coun-try, and non-resident tour operators (Question C in step E. above). The followingexample illustrates this procedure:

Assume 2 tour operators bringing visitors from outside the compiling countryrespond to the survey. Tour operator 1 reports the following distribution:

Accommodation = 40%Food and beverages = 10%International passenger transport = 10%Recreation and other entertainment services = 10%Travel agency commissions = 10%All other = 20%

Tour operator 2 reports:

Accommodation = 40%Food and beverages = 0%International passenger transport = 20%Recreation and other entertainment services = 0%Travel agency commissions = 10%All other = 30%


33OMT ¥ WTO ¥ BTO

22 A tour operator or any other institutional unit with a center of economic interest in the economic territory of a country, that is, engages

for an extended period (one year or more being taken as a practical guideline), or intends to engage for such a period, in a significant

amount of economic production of goods or service there, or own land or buildings located there, is considered a resident institutional unit

in that country. (SNA93, ¶¶2.22, 14.22).

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The simple mean of these percentages is:

Accommodation = (40+40) : 2 = 40%Food and beverages = (10+0) : 2 = 5%International passenger transport = (10+20) : 2 = 15%Recreation and other entertainment services = (10+0) : 2 = 5%Travel agency commissions = (10+10) : 2 = 10%All other = (20+30) : 2 = 25%

Total = 100%

I. Compute the total tour operator receipts from sales of tours to the compiling coun-try by whether the tour operator is resident of the compiling country or a non-resi-dent. For example, If the sum of your respondents’ replies to Question D. in step F.is $1,000,000, and these respondents represent 10% of all inbound tour operators res-ident of countries outside the compiling country, then total tour operator receiptsfrom non-residents are= $1,000,000 ÷ 10% = $10,000,000.

J. Multiply the mean distribution from step H. by the sum obtained in step I. to obtainthe amounts spent on each component for tour operators resident in the compilingcountry, and for non-resident operators. For example, applying the mean distributionfrom step H. for non-resident tour operators to total receipts from step I. produces:

Accommodation = 40% x $10,000,000 = $4,000,000Food and beverages = 5% x $10,000,000 = $500,000International passenger transport = 15% x $10,000,000 = $1,500,000Recreation and other entertainment

services beverages = 5% x $10,000,000 = $500,000Travel agency commissions beverages = 10% x $10,000,000 = $1,000,000All other = 25% x $10,000,000 = $2,500,000

Total = $10,000,000

K. Determine the distribution of the components produced in the compiling countryand outside, for resident and non-resident tour operators from the survey results fromQuestion B in step D. For example, again, assume only two non-resident tour opera-tors responded. Tour operator 1 produces the following response to Question B:

Accommodation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . √

Food and beverage services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . √

International passenger transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . √

Cultural services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . √

Recreation and other entertainment services . . . . . . . . . . . . . . . . . . . . . . . . √

Travel agency commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

All other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .



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Tour operator 2 checks the following:

Accommodation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . √

Food and beverage services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . √

International passenger transport . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Cultural services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . √

Recreation and other entertainment services . . . . . . . . . . . . . . . . . . . . . . . √

Travel agency commissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

All other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

The average for the tour operators responding for production in the compiling coun-try is thus:

Accommodation = 100%Food and beverage services = 100%International passenger transport = 50%Cultural services = 100%Recreation and other entertainment services = 100%Travel agency commissions = 0%All other = 0%

L. Distribute each of the component proportions in step K. to production in the com-piling country or outside the compiling country for each category of tour operator res-idence, according to the results of Question D in step F. For example, for non-resi-dent tour operator expenses by component from step J, using the compiling countryproduction proportion from step K:

Accommodation = 100% x $4,000,000 = $4,000,000

Food and beverages = 100% x $500,000 = $500,000

International passenger transport = 50% x $1,500,000 = $750,000

Recreation and other entertainment services beverages = 100% x $500,000 = $500,000

Travel agency commissions beverages = 0% x $1,000,000 = $0

All other = 0% x $2,500,000 = $0

Total = $5,750,000 spent by non-resident tour operators on production in the compil-ing country on inbound tours.


35OMT ¥ WTO ¥ BTO

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M. Similarly, compute the amount spent on production outside the compiling countryfor each tour component by non-resident tour operators, amount spent on produc-tion in the compiling country for resident tour operators, and amount spent on pro-duction outside the compiling country for resident tour producers.

N. Place the results of expenditure in each of the four categories for inbound tours.23

The same steps should be followed for computing the expenditure estimates for out-bound tours and domestic tours.

Expenditure in category 2. Accommodation includes the following:

(a) costs of accommodation in collective accommodation establishments, such ashotels and similar establishments, camping sites, holiday camps, etc.;

(b)accommodation site expenses relating to caravans or other mobile homes, andmooring expenses for boats;

(c) hire of caravan or mobile home (but not selfpropelled vehicles);

(d)cost of accommodation on public transport where there is a separate charge foraccommodation from that for transportation (e.g., sleeping cars on trains).

The expenditure estimates for this category should be placed in the “hotel and otherlodging services” line in TSA Tables 1, 2 and 3, according to whether it relates toinbound, domestic or outbound tourism consumption.24

When the price of accommodation includes one or more meals, such as a resort offeringthe American plan, the total cost should be considered accommodation expenditure.However, if the costs of meals are broken out on the final bill, these should be includedin food and drinks expenditure.

This expenditure class includes visitor consumption on:

(a) food and beverages consumed in restaurants, cafes, bars, taverns, and clubs;

(b)food and beverages consumed in places of entertainment where the main purposeof attending that place is to eat or drink; where the main purpose of attending theplace is entertainment and the cost is inclusive of food and drink, the expenditureshould be included in item 5 below, “Recreation, culture and sporting activities”;

3.7.

3.8.

3.9.

3.10.

3.11.



23 See TSA:CF, Annex 5, Worksheet 2a.

24 See TSA:CF, Chapter IV, section D.

B. ACCOMMODATION

C. FOOD AND DRINKS

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3.12.

3.13.

3.14.

3.15.

3.16.

(c) food and beverages consumed in accommodation establishments where the expen-diture can be separated from the charge for accommodation;

(d)food and beverages received on a means of public transport where these are chargedseparately and not included in the transport fare;

(e) prepared or unprepared food and beverages at retail outlets for consumption off thepremises; this includes food and beverages purchased at supermarkets, grocerystores, market stands, fast food or takeaway establishments, and other retail foodoutlets.

The expenditure estimates for this category should be placed in the “food and beverageserving services” line in TSA Tables 1, 2 and 3, according to whether it relates toinbound, domestic or outbound tourism consumption.

Expenditure on transport covers the following visitor expenditure on a trip:

(a) travel between the visitor’s place of residence and an airport or other transport ter-minal, such as by taxicab, bus or limousine;

(b) travel from origin transport terminal to destination transport terminal;

(c) travel between transport terminals and places of accommodation;

(d) travel to and from the visitor’s residence and all places visited by personal motorvehicle;

(e) same-day trips undertaken from a destination, such as sightseeing excursions.

Expenditure in this category comprises:

(a) fares and related charges on public means of transport, e.g., airplanes, cruise ships,trains, motorcoaches and taxis;

(b) fuel and other running costs of private transport incurred during the trip;

(c) repairs to vehicles and purchase of parts by visitors;

(d) transport vehicle hire expenses, such as auto rental;

(e) parking expenses, tolls, airport taxes and similar charges.

Where meals are included in the fare for a public means of transport, such as on a cruise,the full cost should be treated as a transport expense. Where meals are paid for separate-ly, their cost should be allocated to item 3. Food and drinks of ¶3.1.

Also, where sleeping accommodation is included in the fare for a public means of trans-port, such as on a cruise ship, train or airplane, the full cost should be treated as a trans-


37OMT ¥ WTO ¥ BTO

D. TRANSPORT

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port expense. Where accommodation is paid for separately from the transportation fare,this cost should be included in item 2. Accommodation of ¶3.1.

The expenditure estimates for this category should be placed in the appropriate categoryunder “Passenger Transport” in TSA Tables 1, 2 and 3, according to whether they relateto inbound, domestic or outbound tourism consumption.

Item 5. Recreation, culture and sporting activities of ¶3.1., comprises the costs of under-taking these activities, including the cost of hire or purchase of necessary equipment.Expenditure on this item includes:

(a) admission fees to museums, parks of all types (e.g., amusement parks, themeparks, game parks), cultural and sports shows and events;

(b) rental and other fees paid for use of recreational and sport facilities and equip-ment;

(c) admission or cover fees at entertainment establishments, such as night clubs, dis-cotheques and gambling places, and net gambling losses; expenditure on food andbeverages in a place of entertainment should be included in this category when themain purpose of attending that place is for entertainment; where the main pur-pose is to eat or drink and the cost is inclusive of some entertainment, the totalexpenditure should be included in item 3. Food and drinks of ¶3.1.;

(d) purchase, repair and maintenance costs of recreational and sporting goods whileon a trip;

(e) fuel and other running costs for visitor’s own recreation and sporting equipment(excluding costs relating to transport);

(f ) fees paid for instruction required to enable the visitor to undertake particularsporting and recreational activities while on the trip (e.g., skiing lessons, divinglessons); and

(g) costs of short excursions and hired guides (excluding transport expenses, whichshould be included in item 4. Transport of ¶3.1.).

The expenditure estimates for this category should be placed in the “Cultural services”or “Recreation and other entertainment services” line in TSA Tables 1, 2 and 3, accord-ing to whether they relate to inbound, domestic or outbound tourism consumption.

3.17.

3.18.

3.19.



E. RECREATION, CULTURE AND SPORTING ACTIVITIES

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3.20.

3.21.

3.22.

3.23.

3.24.

3.25.

Item 6. Shopping of ¶3.1., comprises expenditure on goods (but not services) not else-where classified purchased for or during the trip. The following items are excluded:

(a) food and beverages, which are included in item 3. Food and drinks of ¶3.1.;

(b) transport related items, which are included in item 4. Transport of ¶3.1.;

The expenditure estimates for this category should be placed in the “goods” categoryunder “Connected products” in TSA Tables 1, 2 and 3, according to whether they relateto inbound, domestic or outbound tourism consumption.

The situation regarding the appropriate classification of expenditure during a trip onitems that might be described as works of art and purchase of jewelry is a difficult one.These may be purchased primarily for personal use or, alternatively, for investment pur-poses, and often for a combination of both. The inclusion or exclusion of expenditure onthese items should be decided in accordance with the following guidelines:

(a) if purchased by or on behalf of a business (either for resale, investment, or for dec-oration, such as an office or building), then exclude;

(b)if purchased solely for investment, then exclude;

(c) if purchased for personal use (of visitor or other person), then include.

Purchases of goods in duty free areas are covered by this expenditure item. For someresearch purposes, it may be useful to separately identify the goods purchased dutyfree.

Item 7. Other comprises consumption on services (but not goods) not elsewhere classi-fied for or during the trip. Specifically excluded from this category are:

(a) accommodation services, which are included in item 2. Accommodation of ¶3.1.;

(b) food and beverage services, which are included in item 3. Food and drinks of ¶3.1.;

(c) transport services, which are included in item 4. Transport of ¶3.1.;

(d) recreation, culture or sporting services, which are included in item 5. Recreation,cultural and sporting activities of ¶3.1.;

Some examples of the types of services that are included in item 7. Others are of ¶3.1.:

(a) currency exchange and travelers’ cheques charges, and other taxes and charges forproducts but not directly attributable to accommodation, transport, or otherexpenditure categories;


39OMT ¥ WTO ¥ BTO

F. SHOPPING

G. OTHER

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(b) travel insurance;

(c) communication items such as telephone calls and postage;

(d) commissions and fees paid to businesses for travelrelated services, where thesecharges are separately identified;

(e) developing/printing of photographic film;

(f ) personal services such as haircutting, saunas, massages, beauty care, dry cleaning,etc.;

(g) repair of luggage and other travel accessories.

The consumption estimates for this category should be placed in the “services” line under“Connected products” in TSA Tables 1, 2 and 3, according to whether it relates toinbound, domestic or outbound tourism consumption.

3.26.



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4.1.

4.2.

There are a number of estimation methodologies available to countries to estimate visi-tor final consumption expenditure in cash for the TSA:

A. Use of existing data.

B. Household (HH) surveys.

C. Visitor surveys:

1. Diary method.

2. At accommodations.

3. At border entry/exit points.

4. Onboard transport vehicles.

5. At popular visitor places.

D. Tourism establishment surveys.

E. Central bank data.

F. Expenditure models.

Each of these is based on unique assumptions, requires specific sample designs or othermeans of obtaining data, and produces results with different limitations. Figure 4.1 indi-cates the methodologies that are conceptually appropriate for each expenditure categoryby type of visitor. The following discussion of each of these methodologies will suggestthe optimum methodology for each of these fields.


41OMT ¥ WTO ¥ BTO

IV. Expenditure estimationmethods

A. EXPENDITURE ESTIMATION METHODS AND THEIR APPLICABILITY

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The following sections discuss 10 methodologies that have been used to estimate visitorfinal consumption expenditure in cash in various countries at various times, indicatingtheir particular strengths and weaknesses. This section draws heavily on the WTO’sCollection of Tourism Expenditure Statistics: Technical Manual No. 2. This manual providessamples of questionnaires and other data collection instruments and useful tabulationsfor each of the expenditure methods.

4.3.



Figure 4.1. Methodologies Applicable to Measuring Visitor final consumptionExpenditure in cash and by Type of Visitor

Type of Visitor

1. Visitor expenditure 2. Domestic visitors 3. Outbound visitors 4. Inbound visitors

A.Pre-trip durables Existing data; Existing data;

HH surveys HH surveys

B. Pre-trip non-durables HH surveys; HH surveys;

Visitor surveys: Visitor surveys:

Diary,Accom., Diary, Exit

Transport, Places Transport

C.Pre-trip services HH surveys; HH surveys;


Diary,Accom., Diary, Exit,

Transport, Places Transport

D.On-trip HH surveys;Visitor HH surveys; Visitor surveys:

surveys: Diary, Visitor surveys: Diary,Accom.,

Accom., Diary, Entry, Exit,Transport,

Transport, Transport; Places;

Places; Central bank; Tourism establisment

Tourism establishment Expenditure Surveys;

Surveys; models Central bank;

Expenditure Expenditure

models models

E. Post-trip HH surveys; HH surveys;


Diary Diary

Note: HH = household

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4.4.

4.5.

4.6.

4.7.

4.8.

4.9.

Before undertaking any new collection of visitor expenditure data, it is essential to checkwhether the required data, or similar data, are already available. A country’s NationalStatistical Office and the National Tourism Administration are likely sources of suchexisting data (often called “secondary data”). Other agencies such as government regula-tory agencies, taxing authorities, universities, and multi-lateral organizations such as theOECD, Eurostat, the World Bank Group and the International Monetary Fund, shouldalso be investigated as possible sources.

A rich source of such data may be the collective accommodation establishments in acountry. The WTO document, Collection, Processing and Presentation of AccommodationStatistics: Instructional Materials25 can be extremely useful to a country adopting thismethod. It should be noted, of course, that such data do not cover same-day visitors toa country, or those staying at homes of friends or relatives or at non-collective accom-modations.

There are a number of advantages of using existing secondary data:

(a) usually available at minimal cost;

(b) data may be immediately available;

(c) often collected by agencies with high data collection standards.

There are also disadvantages to using existing data on visitor final consumption expen-diture in cash:

(a) user has no control over the scope, coverage or quality of the data;

(b) the data may be too old to be useful;

(c) the data may not be available in most the useful form for your use, e.g., in an elec-tronic database, on diskette, or on CD-ROM.

You will have to carefully weigh the positive and negative features of the existing data onvisitor final consumption expenditure in cash available to you before deciding to usethem.

Because tourism is a demand side activity, the direct method of collecting expendituredata is from the visitors themselves while in the country, city, region or other places vis-ited. This is best done through sample surveys of visitors at appropriate places. The WTOdocument, Conducting and Processing a Visitor Survey: Instructional Materials,26 providesdetailed guidance for conducting such surveys.


43OMT ¥ WTO ¥ BTO

25 WTO unpublished document: Collection, Processing and Presentation of Accommodation Statistics: Instructional Materials, 1995.

26 WTO unpublished document: Conducting and Processing a Visitor Survey: Instructional Materials, 1994, by Dr. Douglas C. Frechtling.

B. EXISTING DATA

C. VISITOR SURVEYS

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Direct collection of new or primary data has several advantages:

(a) obtains data directly from the visitor;

(b) allows detailed expenditure data to be collected;

(c) allows characteristics of the visitor (e.g., demographic characteristics) and the trip(e.g., length of stay, purpose of trip) to be associated with the expenditure.

There are also several challenges to collecting useful visitor expenditure data directly fromvisitors:

(a) it is difficult to identify survey interview points that will provide valid estimatesfor domestic visitors in most countries, and for inbound and outbound visitors incountries without border formalities;

(b) it requires considerable training and experience in conducting sample surveysamong visitors to obtain valid data;

(c) it can be expensive to gather valid and appropriate data;

(d) some visitors may not agree to report expenditure data while traveling.

There are five methods of conducting data collection among samples of visitors to andwithin a country, and each is discussed in the subsections below:

1. Diary surveys.

2. Surveys at accommodation establishments.

3. Surveys at border entry/exit points.

4. Surveys on board transport vehicles.

5. Surveys at popular visitor places.

This method involves identifying a sample of visitors before or at the beginning of theirtrip or entry into a country and asking them to record their expenditures in a diary dur-ing their trip or visit. Certain information on the visitors and their trips may also berequested, such as demographic details, trip purpose, and transport mode. The visitor isinstructed to mail back the completed diary to the data collection organization at the endof the trip or visit.

A basic survey using the diary method might collect expenditure only for the whole trip.A more complex version might identify individual places where expenditures take placeeach day, and perhaps other details. Expenditure details would be recorded and tabulat-ed for each place visited.

4.10.

4.11.

4.12.

4.13.

4.14.



C.1. Diary surveys

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4.17.

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4.19.

There are a number of advantages to this method:

(a) it can provide detailed information on daily expenditures;

(b) it can eliminate memory or recall problems when the data are recorded as theexpenditure occurs;

(c) it allows you to link expenditures to the characteristics of reporting visitors andtheir trips.

There are also a number of difficulties inherent in this approach to estimating visitorexpenditure data:

(a) it can be difficult to identify a representative sample of visitors before they leaveon their trips (of course, this is not a problem for inbound visitors entering at con-trolled border points);

(b) it can be difficult to obtain agreement of the majority of visitors approached tomaintain the diary, thus leading to low survey response rates and invalid estimates;

(c) many visitors who agree to participate will not complete an accurate record ofexpenditure for the full period of their trip, leading to low response rates;

(d) the diary may not be returned to the organization collecting the data until wellafter the visit is completed;

(e) being required to record expenditures in a diary may change visitor expenditurepatterns, making these responses less representative of all such visitors’ expen-diture.

This method involves the collection of data from a sample of guests in a sample of col-lective accommodation establishments in a country. Two methodologies can be distin-guished here:

(a) collection of the complete data in interviews with selected guests onsite; or,

(b) giving questionnaires to selected guests for completion and return after they havefinished their trip.

The first method is preferred as it results in a more representative sample and higherresponse rates. However, under this method respondents have not completed their tripsso they cannot report total trip or visit expenditure details. This approach can only pro-vide estimates of mean daily expenditure of the guests.

Because expenditure patterns differ during a visit (e.g., some visitors may leave the pur-chase of expensive souvenirs to the end of the visit) and are influenced by the length ofthe visit, care must be taken in the sample selection procedure to ensure that the resultsare representative by varying the stage of the visit at which respondents are interviewed.


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C.2. Surveys at accommodation establishments

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While it may be suitable to collect expenditure for individual guests, it is recommendedthat the response unit be all the occupants of a selected room. It is usual for those guestswho are sharing a room (e.g., families) to have a common funding source. Total expen-diture should be collected for all the occupants of the selected room and divided by thenumber of occupants to arrive at an average expenditure per visitor.

Some accommodation surveys are conducted by way of leaving questionnaires in gue-strooms and inviting guests to complete and return them at the end of their trip. Thismethodology is not recommended for expenditure surveys as the response rates tend tobe extremely small and survey results are likely to be quite biased.

A more complex version of surveys at accommodation establishments could ask respondents toreport pretrip expenditures and anticipated length of trip to which these expenditures apply, aswell as expenditures on the trip to date and length of trip to date. Again, because of differentexpenditure patterns during the trip, the methodology must take account of this to ensure theresults are representative. In this case, average daily expenditure would be calculated as follows:

Mean daily trip expenditure (to the date of the survey) = (Pretrip expenditure total nights expected on trip) +

(Ontrip expenditures to date number of nights on trip to date)

Anticipated trip expenditure = Mean daily trip expenditure X anticipated length of the trip.

The advantages of the accommodation survey method of obtaining visitor expenditureestimates are:

(a) it can provide detailed information on expenditure;

(b) it significantly reduces recall problems among respondents;

(c) use of personal interviews enables more accurate data to be collected;

(d) it can link expenditure to characteristics of visitors.

The disadvantages of this method are:

(a) it requires fairly complex sampling procedures to ensure the samples drawn arerepresentative of all guests staying in collective accommodations;

(b) where facetoface interviews by skilled interviewers are conducted, this method canbe expensive;

(c) where forms are given to guests to complete and return after they have finishedtheir trip, response rates may be very low and results biased;

(d) it provides expenditure estimates only for those visitors staying at the types ofaccommodation covered, and does not cover visitors staying in private accommo-dations or sameday visitors;

(e) it requires the cooperation of the selected establishments’ operators, as well as thatof the selected guests.

4.20.

4.21.

4.22.

4.23.

4.24.



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4.26.

4.27.

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4.29.

4.30

This methodology is best employed where international travelers are required to stop forimmigration control procedures at borders or ports of entry into a country. Detailedinstructions for conducting such surveys can be found in the WTO publicationCollection and Compilation of Tourism Statistics: Technical Manual No. 4 and in documentConducting and Processing a Visitor Survey: Instructional Materials.27

Surveys at border points are suitable for estimating international visitor expenditure only.These surveys involve the collection of data from a sample of arriving or departing visi-tors from a sample of border points. They can be used to obtain information on expen-diture by inbound visitors to the country when they are departing; and outbound visi-tors, i.e., residents of the country visiting abroad, when they are returning home.

The methodology is similar to that outlined above for surveys at accommodation estab-lishments. The data may be obtained by:

(a) collection of the complete data in facetoface interviews with the selected visitors;

(b) giving questionnaires to selected visitors for completion and return either as theyleave the country or after they have arrived home from their trip.

The first method is preferable as it results in a more representative and controlled sam-ple. However, it has the disadvantages that time available for the interview may be lim-ited, and it is more expensive than the second method. The second method reduces sur-vey costs but often results in low response rates, casting doubts on the validity of the sur-vey results.

Where the immigration control points are located in a transport terminal (e.g., an inter-national air terminal), surveys of international inbound visitors may be conducted in awaiting area that is only used by international travelers.

There are a number of advantages of such surveys:

(a) where international travelers must pass through border control points, thismethod can provide expenditure estimates covering all inbound or outbound vis-itors.

(b) they can provide reasonably detailed information on expenditure;

(c) they limit expenditure recall problems somewhat;

(d) use of personal interviews enables more accurate data to be collected;

(e) they enable visitor expenditure to be linked to visitor characteristics.


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C.3. Surveys at border entry/exit points

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There are also several drawbacks to such surveys:

(a) they can only be used for international visitor expenditures;

(b) they can require fairly complex sampling procedures to ensure representativeresults;

(c) where facetoface interviews by skilled interviewers are conducted, this method canbe expensive;

(d) where questionnaires are given to visitors for completion on return after they havefinished their trip, response rates can be low, casting doubt on the validity of theresults;

(e) the time available for interviewing visitors may be limited.

Surveys may be undertaken on board public means of visitor transport, e.g., airliners,trains, cruise ships, and motorcoaches. The methodology is similar to that outlined forsurveys in accommodation establishments and at border points. It may be used for:

(a) non-resident visitors arriving in or departing the country on international carriers,

(b) resident visitors departing or arriving in the country on international carriers, or

(c) resident visitors and non-resident inbound visitors traveling on domestic carrierswithin the country.

The value of this method may depend on the number of different transport optionsthat are available to the visitor. For example, where access to a destination is limited toone type of transport means, such surveys can be representative of all visitors to thatdestination. This is the case for island countries where access is effectively limited topassenger airplane or cruise ship. In these cases, such surveys are equivalent to bordersurveys. Similar situations may apply to a particular part of a country accessible onlyor mainly by public transportation, enabling expenditures for that area to be fairlyaccurately estimated.

Where many visitors access a country by private automobile, this method is not valid forenumerating all visitors in a country, since such visitors may have very different expen-diture patterns from visitors using public transport modes. However, this method may bevery useful for gathering visitor expenditure data for certain types of visitors to a coun-try, such as long-haul (e.g., off-continent) visitors to the country.

Guidance for conducting such surveys can be found in the WTO publication Collectionand Compilation of Tourism Statistics: Technical Manual No. 4 and in documentConducting and Processing a Visitor Survey: Instructional Materials.28

4.31.

4.32.

4.33.

4.34.

4.35.




C.4. Surveys on board transport vehicles

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4.36.

4.37.

4.38.

4.39.

4.40.

4.41.

Surveys of visitors may be conducted in places where a high proportion of visitors can beexpected to be found, such as transport terminals, popular tourist attractions, naturalparks, coastal areas, and shopping malls in tourist destination areas.

For expenditure data, these surveys have similar advantages and disadvantages to surveysonboard transport modes. Their value depends on the degree to which visitors inter-viewed at those places are representative of all visitors, or of the group of visitors whoseexpenditure is being measured. Where it is thought that all visitors to a destination arelikely to be found at a particular place, such as a single access point such as a highway ortransport terminal, then this can be a valid venue for data collection. Care needs to betaken, however, to be sure that the sample is representative of the defined population.

Visitors may be interviewed about their expenditures in preparation for the trip, as wellas on their trip up to the date of the interview. In addition, they might be asked to recordfuture information about their expenditures through the diary method, and to return thecompleted diaries after they return home.

There are several problems with this method that must recognized:

(a) the sample may not be truly representative of all visitors to the country and theremay be substantial bias present in the survey responses;

(b) where visitors are asked to record future expenditures, their response rates forreturning completed diaries may be low;

(c) these surveys are subject to “length of stay bias,” where a visitor spending fournights in a place has twice the probability of being interviewed as a visitor spend-ing two nights; removing this bias requires the assistance of a trained statistician.

Guidance for conducting such surveys can be found in the WTO publication Collectionand Compilation of Tourism Statistics: Technical Manual No. 4 and in documentConducting and Processing a Visitor Survey: Instructional Materials.29

Household surveys can provide several means of collecting tourism expenditure data:

(a) by identifying potential visitors before their trip and giving them diaries to com-plete on their daily expenditure during their trip;

(b) by identifying individuals who have returned from a trip and who can provideinformation on expenditures made on that trip;

(c) at any time, household residents can be surveyed about their pre-trip and post-tripexpenditures.


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C.5. Surveys at popular visitor places

D. HOUSEHOLD SURVEYS

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The first means implements the diary system discussed above. The second and thirdmeans of data collection are more commonly used and are discussed below.

Household surveys can be used to collect expenditure data relating to domestic tripsand outbound trips. They are also the only source of complete resident data on expen-ditures on tourism durable goods. The classic approach is to send interviewers to select-ed households to conduct personal or face-to-face interviews to gather the informationrequired.

This method involves first the selection of households and then the selection of individ-uals in the households. The selection of individuals may be based on selecting one per-son per selected household, or possibly every member of the household. The selectedindividuals are asked if they took a qualifying trip within a certain period of time. If so,then details of the expenditure relating to that trip are asked. The choice of the recallperiod is a crucial decision. The longer the recall period, the more trips are covered andtherefore the more expenditure data collected for a given interview. However, the longerthe period, the greater the difficulty respondents have recalling expenditures details accu-rately, and, therefore, the worse the data quality will be. One month is considered a use-ful compromise for respondent recall of trip activities.

Within the recall period, information may be collected either only on the last trip taken,or on all trips taken. There are sampling and data quality issues to be considered here.Generally, data quality is better if only the last trip is included. Where this is done, it maystill be useful to record the total number of trips taken (without details), to help arrive ata better estimate of the resident population’s total number of trips taken.

There are a number of variations of the household survey that may be considered, as dis-cussed here.

Alternatively, an interviewer can identify whether a household contains a visitor, and ifso, leave a questionnaire for the visitor to fill out and mail back to the interviewer. Thismethod can be used where there is a reliable, punctual postal system, and is cheaper thanconducting facetoface or telephone interviews. However, response rates can be low, andtherefore the validity of the survey results can be affected, unless there are fairly intensivefollowup procedures. Also, this method may not provide such good quality data as wheninterviewers are present to prompt and assist respondents.

Interviewing household members by telephone is valid in countries where 85 percent ormore of households are accessible by telephone, and it is considerably cheaper thanfacetoface interviews. Moreover, these allow for supervisory control over the interview-ing, can be conducted quickly if necessary, and are less subject to uncertain weather con-ditions than personal interviews in respondents’ homes. One drawback is that exhibitscannot be shown to respondents to improve recall.

4.42.

4.43.

4.44.

4.45.

4.46.

4.47.

4.48.



D.1. Questionnaire left for selfcompletion and return

D.2. Use of telephone interviews

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4.49.

4.50.

4.51.

4.52.

4.53.

Surveys of households in a country may be done by mail. To be effective, this methodrequires a reliable, punctual postal service in the country and a high rate of literacy. Insome developed countries, researchers have noted low and declining response rates forsuch surveys. Apparently residents receive large quantities of mail and the surveys get lost,or they actively refuse to spend the time filling out and mailing back the questionnaires.

In some countries, the National Statistical Office conducts continuing surveys of the res-ident population in order to assay employment trends, income changes, health conditions,and other social characteristics. It may be possible to add tourism expenditure questionsto such surveys at relatively small cost. Also, private market research agencies often con-duct omnibus household surveys in which one survey vehicle is used to ask questions fora number of different users, thus spreading the collection costs among them.

Household surveys are origin based surveys, i.e., they identify visitors at their place of ori-gin. However, it is common to seek data relating to places visited, particularly in the caseof domestic tourism. Consequently, it is usually necessary to conduct the household sur-vey on a national basis, as visitors to a specific destination may reside in any part of thecountry.

Household surveys may be used to identify and collect expenditure data from inboundvisitors who are staying in private accommodation. In this case, the survey has the char-acteristics of an accommodation survey, discussed above. Since this method usually onlycovers a small proportion of inbound visitors, and is expensive since many householdshave to be approached before one is found with a visitor, it is not recommended, partic-ularly where border surveys are possible. It may possibly serve as a supplement to anaccommodation survey when no other practical option is available.

The advantages of gathering visitor expenditure estimates from household surveys areseveral:

(a) this method provides data on total trip expenditure since the visit has been com-pleted;

(b) it allows details of visitors and their trips to be associated with the expenditure,e.g., demographic characteristics and trip purpose;

(c) it permits relatively good quality data to be obtained, by (i) interviewers’ assistanceand prompting; (ii) encouraging respondents to access relevant records, such ascredit card bills, receipts, etc.; and (iii) enabling consultation with other membersof the family who may have knowledge of the trip expenditure;

(d) the sampling frame which allows households to be chosen to be interviewed is welldeveloped in many countries, allowing for representative samples to be drawn;

(e) it enables representative data to be obtained for all domestic or outbound visitors;


51OMT ¥ WTO ¥ BTO

D.3. Use of mail surveys

D.4. Use of ongoing household surveys

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(f ) it is the best sampling method for obtaining the most complete expenditure dataon tourism consumer durable goods.

There are also a number of challenges to using this source of data on visitor expenditures:

(a) sampling procedures may be quite complex to ensure representative samples,requiring the assistance of trained survey statisticians;

(b) depending on the lapsed period since the reference trip was completed, the quali-ty of the data may suffer from poor respondent recall;

(c) these surveys are relatively expensive, due to: (i) the need to use skilled personnel,such as sampling experts, interviewers and experienced supervisors; (ii) a largenumber of households may have to be approached before a qualified returned vis-itor is identified; (iii) the interview may be lengthy, discouraging completeresponse, and, (iv) the need for the survey to be conducted at the national level.

For additional information on conducting household surveys to obtain visitor expendi-ture data see the WTO publications Collection of Domestic Tourism Statistics: TechnicalManual No. 3 (chapter 5) and Collection and Compilation of Tourism Statistics: TechnicalManual No. 4 (chapter 5).

As tourism is defined in demand side terms, the collection of tourism expenditure statis-tics from the supply side is an indirect method. This method involves obtaining infor-mation on visitor expenditure from the suppliers of products to visitors. The difficultiesof obtaining visitor expenditure from the supply side include the following issues:

(a) since visitors can purchase a wide range of goods, what businesses should beincluded in the survey to ensure that significant visitor expenditure is not exclud-ed?, and,

(b) since businesses that supply visitors also sell some of their products to nonvisitors,i.e., local residents, how can the portion of their revenue attributable to visitordemand be measured?

The development of the List of Tourism Specific Products (TSP) and the StandardInternational Classification of Tourism Activities (SICTA) by WTO can help a countrydetermine what establishments to survey for this method. However, it is likely that onlya few productive activities will qualify as selling virtually all of their distinctive productsto visitors. For many countries, these include:

(a) public air passenger transportation;

(b) intercity rail passenger transportation;

(c) cruise ship transportation;

(d) intercity motorcoach transportation;

4.54.

4.55.

4.56.

4.57.



E. TOURISM ESTABLISHMENT SURVEYS

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4.61.

4.62.

4.63.

(e) collective accommodation (room rentals);

(f ) commercial campground and caravan site accommodation;

(g) travel agency services;

(h) tour operator services.

Surveying these establishments as to their sales can indicate visitor expenditures for cer-tain related products. However, there are many more products that visitors purchase thancovered here. Moreover, there may be no way to distinguish the forms of tourism givingrise to these expenditures (i.e., inbound visitors versus domestic visitors), or the charac-teristics of the related trips or visitors.

Detailed instructions for conducting establishment surveys are found in chapter 6 ofWTO’s Collection and Compilation of Tourism Statistics, Technical Manual No. 4, or chap-ter 4 of WTO’s Collection of Domestic Tourism Statistics, Technical Manual No. 3.

The system of foreign currency exchange in many countries can provide a basis for esti-mating gross expenditures of international inbound and outbound visitors. This methodof estimating international visitor expenditure is based on an administrative informationsystem where banks, foreign currency exchange centers, and other agencies, such as hotelsand travel agencies, report all foreign currency transactions to the central or reserve bank.From this the central bank compiles figures on the buying and selling of foreign curren-cy by international visitors.

Whether this method can be adopted in any particular country, and how effective it isfor basing expenditure estimates, depends on the administrative system in place and therecord keeping practices involved. These differ from country to country, and this discus-sion is confined to the general issues involved.

For this method to work effectively, the system must:

(a) distinguish foreign currency transactions generated by non-resident visitors fromall other transactions;

(b) include all transactions undertaken by non-resident visitors; and,

(c) ensure that the transactions are clearly recorded, identified and transmitted to thecentral bank or other compiling authority.

While this method of estimating tourism expenditure is currently used by a number ofcountries, not all of these requirements are always met. There are many examples of howthis might happen:

(a) visitors might arrive at or depart from the country bringing or taking the nation-al currency with them;


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F. CENTRAL BANK DATA

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(b) residents exchanging foreign currency might be recorded as visitors;

(c) transactions might occur at unauthorized offices;

(d) transactions might be undertaken on a black market where the official rate ofexchange is different from the market value;

(e) pre or postvisit payments made in the country of origin may be difficult to traceand identify;

(f ) internal systems for compensation of cumulated debts between tour operators andtravel agencies of different countries (or between branch offices of the same com-pany) might make it difficult to determine what relevant transactions have takenplace;

(g) imports and exports which, though legal, have not been declared in the local cur-rency, may give rise to transactions that cannot be statistically identified;

(h) some agencies buying and selling currency may report only net figures (i.e., thebalance on foreign exchange transactions in a currency at the end of an account-ing period) and not gross purchases and sales of currencies;

(i) resident business owners may stockpile the foreign currency they receive from vis-itors for use when they travel abroad.

The extent to which these and other activities occur and inhibit estimation of expendi-ture through this method varies from country to country. Where these may result inunderstated figures, the data may still be useful in monitoring changes over time, assum-ing that the understatement is relatively consistent over time.

The use of this method does not depend on the country having a foreign currency con-trol system. Most countries, including those without control systems, require foreign cur-rency exchange dealers to report all foreign currency transactions to the central bank, orto a similar official institution.

While the central bank method is used most commonly for estimating expenditure forinternational inbound visitors, it may also be used for estimating expenditure by resi-dents traveling abroad. Because outbound visitors purchase foreign currency in the des-tination countries, agencies in those countries are involved in the reporting process. Thiscan make it more difficult to ensure that transactions by visitors are identified as suchand are reported separately from other transactions. Consequently, estimates of expen-diture by outbound visitors from this source may not be as reliable as those for inboundvisitors.

Despite these problems, there are some advantages to this method:

(a) where the appropriate controls are in place as listed above, this method may pro-vide a relatively reliable estimate of gross international visitor expenditure;

(b) it often provides a monthly time series of the movements in international visitors’expenditure;

4.64.

4.65.

4.66.

4.67.



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4.68.

4.69.

4.70.

4.71.

4.72.

(c) it is a relatively inexpensive source, using data already available in the administra-tive process;

(d) the results are generally known a month or two after completion of the transac-tions, making it possible to promptly monitor changes in tourism expenditure.

Given the difficulties of accurately estimating visitor expenditure by surveys noted above,economic models have been developed to simulate this spending. They take particular noteof the problems visitors have in recalling expenditures in household surveys, and substitutecertain secondary data from tourism establishments for household survey responses.

There are two basic models in use in several countries that can provide acceptable esti-mates of tourism expenditure:

(a) the expenditure ratio model, and

(b) the cost factor expenditure model.

The expenditure ratio model rests on a foundation of certain expenditurerelated datathat are readily available and relatively sound. To this is added a superstructure of travelexpenditure relationships that build up to a total of all travel spending in a country orother area.

The simplest version of this approach comprises four steps:

(a) gather data on collective accommodation room receipts in the area under studyfrom revenue or licensing authorities, or from the establishments themselves;

(b) conduct a survey among visitors to obtain estimates of expenditure on lodging atthese collective accommodation establishments and total expenditure in the country;

(c) compute the ratio of total visitor spending from the survey to the estimate ofspending on rooms in collective accommodations from the survey;

(d) multiply this ratio by the collective accommodation room receipts gathered in thefirst step, and the product is total spending by visitors in the area.

In order to achieve valid and accurate results, this approach must satisfy the following cri-teria.

(a) The survey sample is large enough and the response rate is high enough to producevalid estimates of the totalexpenditure tolodgingreceipts ratio for individual areas.

(b) Survey respondent recall bias (i.e., respondent inability to remember expendituresaccurately) does not distort this ratio.

(c) Surveys are conducted annually rather than assuming the ratio remains stable overseveral years.


55OMT ¥ WTO ¥ BTO

G. EXPENDITURE MODELS

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(d) The accommodation room receipts data are accurate for a particular year and notdistorted by payment of past taxes and penalties for previous periods or underre-porting to the revenue authority.

(e) Survey respondents only report what they spent in the country rather than totaltrip expenditures or spending in other countries.

(f ) The model takes appropriate account of tourists staying with friends and relativesand sameday visitors.

The cost factor expenditure model is a hybrid of household surveys and establishmentsurveys. It assumes visitors can recall certain details of their past travel with accuracy, e.g.,when the trip was taken, where nights were spent, means of transport used. Householdsurveys can provide measures of certain visitor activity levels, for example,

(a) number of people in the travel party;

(b) month of the year the trip took place;

(c) nights spent in various places;

(d) nights spent in various accommodations;

(e) the point visited farthest from the visitor’s residence;

(f ) transport modes used.

Surveys of tourism industry establishments or secondary data sources such as tax records canprovide estimates of “cost factors” related to the activity levels, such as the average cost of:

(a) a roomnight in collective accommodation in a particular place visited during agiven month;

(b) flying one mile from the origin to the destination;

(c) driving one mile in a rental automobile or the visitor’s own automobile;

(d) a meal in a place visited.

Finally, each activity level is multiplied by the relevant cost factor to obtain an estimateof visitor spending on that category of expenditure.

In order to be valid, the cost factor expenditure model requires30:

(a) accurate estimates of the perunit costs of various visitor activities; and

(b) reliable estimates of visitor activities in places visited.

4.73.

4.74.

4.75.

4.76.



30 For more detail on the cost factor expenditure model, see Frechtling (1994), pp. 374-375.

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4.77.

4.78.

4.79.

These examples illustrate two of the most popular types of methodologies used to devel-op tourism expenditure models, some of which are highly complex. This is an area wherefurther development work may provide standardized models, although an appropriatemethod, in any particular country or area, depends on what data are available and theexpertise of the researchers available. Trained economists and computer specialists arerequired to ensure the model is valid and reliable.

The general advantages of expenditure models are:

(a) where required data are available, they may be a relatively cheap method of deriv-ing expenditure estimates;

(b) they do not require visitors to remember details of their expenditures, only certainsalient trip characteristics;

(c) they can relate expenditures to visitor characteristics and places visited;

(d) they can be used for estimating domestic, outbound and inbound visitor expen-ditures.

Disadvantages include:

(a) these models require availability of considerable amounts of reliable data to pro-vide the estimates required;

(b) researchers must have detailed and sound knowledge of the area under study;

(c) they require computer programming of the relationships in the model for soundresults in most cases.


57OMT ¥ WTO ¥ BTO

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V.Placing visitor expenditure data in the appropriate TSA tables

Visitor final consumption expenditure in cash data are collected by one or more of themeans described in Chapter IV in order to contribute to the Tourism Satellite AccountTables 1, 2 and 3.31 Table 1 shows Inbound Tourism Consumption by Product, Table 2shows Domestic Tourism Consumption by Product and Table 3 presents OutboundTourism Consumption by Product in terms of visitor final consumption expenditure incash, for the accounting period.

Since each of these tables requires special accounting for visitor expenditure on pack-age tours, it is useful to begin the discussion of filling in these three tables with thisaccounting.

Visitor expenditure on tour packages can be considered in the context of purchasing anindividual product distinct from other tourism specific products such as transportation,accommodations or food and beverages. This treatment is called the “gross valuation ofpackage tours” and obscures the role of specific productive activities in producing thecomponents of a package tour.

Indeed, package tours are collections of tourism specific products that are bound togeth-er and offered for a single price to the consumer. If we are to understand the impact oftourism consumption on the economy of a compiling country, we need to disaggregatethe collection and consider the consumption of individual products. This disaggregationproduces the “net valuation of package tours”.

In order to produce this net valuation of package tours and gauge the impact of packagetour consumption on the compiling economy, we need to determine the following:

(a) distinguish the volumes of consumption of each of domestic tour packages, out-bound packages and inbound tour packages;

(b) for outbound and inbound tour packages, distinguish volumes of consumption ofpackages produced by domestic firms from consumption of tours produced byfirms located in countries other than the compiling country;

5.1.

5.2.

5.3.

5.4.

5.5.

31 TSA:RMF Chapter IV, section C.

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5.6.

5.7.

(c) for outbound and inbound tour packages, determine the value of the componentsproduced domestically from those produced outside the compiling country;

(d) for domestic, outbound and inbound tour packages, determine the values ofexpenditure on each component, including the value of commissions paid to tourpackage retailers such as travel agencies.

These various package tour magnitudes are shown in their appropriate TSA relationshipin Worksheet 2a of Annex 5 of Tourism Satellite Account (TSA): The ConceptualFramework. This worksheet highlights the fact that some of the components of certainpackage tours do not produce an impact on the compiling country and are thus outsidethe scope of that country’s TSA: the components of inbound packages that are notdomestically produced (columns (4)b and (5)b. Examples would be international airtravel on foreign carriers and non-resident tour operators’ gross margins on inboundpackage tours.

The balance of the columns and rows of Tables 1, 2 and 3 contain estimates of visitorspending on individual products, as described above.

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The following list of tourism durable goods is meant to be suggestive to countries includ-ing them in their TSAs. The categories are taken from the United Nations CentralProduct Classification (CPC, Ver. 1.0, 1998).

Codes Product Name

28228, 28236, Snowsports gear knit, snowsports gear not knit, safety headgear36970

28228, 28236, Hiking, climbing, camping, biking, hunting clothing38440

29410 Ski-boots, snowboard boots, and cross-country ski footwear

29320, 29490 Sports footwear, other sports footwear

32240, 32230 Atlases, maps, charts, travel guides

48322 Cameras, other photographic equipment

49921, 49930 Bicycles, vehicles n.e.c.

38440 Tennis racquets, golf clubs and other sports and recreationequipment

38410 Snow-skis and other snow-ski equipment, downhill, cross-coun-try, snowboards,

49611, 49612 Gliders balloons

38420, 49490 Scuba gear, kayaks, canoes, water skis, surfboards, sailboards

27160, 44822 Hiking, climbing gear, tents, cooking, backpacking gear

Annex A: Tourism Consumer Durable Goods

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Codes Product Name

44730, 38450 Guns, fishing rods and tackle

29210 Saddles, riding gear

29220 Luggage, travel sets for personal toilet

49113, 49910, Automobiles, vans, campers, trailers, motorcycles, snowmobiles, 49116, 49119, special purpose vehicles49222

49622, 49623 Light aircraft, heavy aircraft

49410, 49490 Sailboats, rowboats/canoes



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Chau, Peter (1988).The Canadian Tourism Economic Impact System. Ottawa, Canada: Tourism Canada.

Frechtling, Douglas C., (1994).“Assessing the impacts of travel and tourism: measuring economic benefits” in J. R. BrentRitchie and Charles R. Goeldner, editors, Travel, Tourism and Hospitality Research: AHandbook for Managers and Researchers, second edition.

Frechtling, Douglas C., (1994).“Economic impact models” in Stephen F. Witt and Luiz Moutinho, editors, TourismMarketing and Management Handbook, second edition.

United Nations Department for Economic and Social Information and Policy Analysisand World Tourism Organization (1994).Recommendations on Tourism Statistics.

United Nations, International Monetary Fund, Commission of the EuropeanCommunities, Organisation for Economic Co-operation and Development, World Bank(1993). System of National Accounts 1993. (referred to herein as SNA93).

United Nations, World Tourism Organization, Organization for Economic Cooperationand Development, Commission of the European Communities. “Tourism SatelliteAccount (TSA): Recommended Methodological Framework, adopted by United NationsStatistical Commission at its 31st session in March 2000 (referred to herein a TSA:RMF)

U. S. Travel Data Center (1991).Revision of the Travel Economic Impact Model: Final Report to the U.S. Travel and TourismAdministration.

World Tourism Organization (1994).Conducting and Processing a Visitor Survey: Instructional Materials.

World Tourism Organization (1995).Collection of Tourism Expenditure Statistics, Technical Manual No. 2.

World Tourism Organization (1995).Collection of Domestic Tourism Statistics, Technical Manual No. 3.


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Annex B: Bibliography

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Tourism Organization (1995).Collection and Compilation of Tourism Statistics, Technical Manual No. 4.

World Tourism Organization (1995).Collection, Processing and Presentation of Accommodation Statistics: Instructional Materials.

World Tourism Organization (1999).Tourism Satellite Account (TSA): The Conceptual Framework.



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MeasuringTourism Demand

Technical Document No. 2

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1.1.

1.2.

1.3.

The present document intends to guide countries in the determination and compilationof all the components of “Total Tourism Demand” for the Tourism Satellite Account.Total tourism demand refers to a broader concept than that of visitor consumption, as itnot only includes “the total consumption made by a visitor or on behalf of a visitor forand during his/her trip and stay at destination” (the definition of visitor consumption)but it also includes other important expenditures required by proper service to visitors,namely the acquisition of produced fixed capital goods and the consumption of collec-tive non-market services related to tourism by general government, and which are notincluded within the previous concept of visitor consumption.

This extension of the coverage towards forms of demand different from visitor con-sumption reflects the idea that these other forms of demand have direct impact on theeconomy and are directly related to the activity of visitors. Without the existence of spe-cial physical investments to bring in, to accommodate, to feed and to entertain visitors,they would not come to a specific location. Without the action of the public authorityto coordinate, regulate, and promote the actions of the different private agents, and tomake such locations ready to receive visitors, the level of tourism activity would not beas important as it is. Additionally, these other forms of demand constitute sets with nointersection either with visitor consumption, or among themselves: they are totally addi-tive so that Total tourism demand is a meaningful concept to be measured.

If currently, as the document TSA:RMF has been presented, the concept of “Totaltourism demand” has not been given much importance, it is not because of a lack ofinterest in such a concept but because of the conceptual and practical difficulties in goingmuch beyond visitor consumption. The present document intends to emphasize eco-nomic aggregates and help to open new venues in two main directions: the measurementof visitor consumption beyond that of tourism individual consumption in cash1, and theconsideration of two additional components of demand, such as, tourism gross fixed cap-ital formation and tourism collective consumption.

Measuring Tourism Demand

67OMT ¥ WTO ¥ BTO

I. Introduction

1 Which is the focus of the manual Tourism Satellite Account. Technical Document No 1: Measuring Visitor Final Consumption Expenditure in

cash and has been traditionally the main or unique center of attention in studies of tourism demand.

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This document is organized in a way to guide the reader from an abstract understandingof the concept of tourism demand following SNA93 principles, to a more concreteapproach, where many of the doubts which may arise in the precise delimitation of theconcepts are resolved. This will lead to the completion of Tables 4, 5, 6, 8, and 92 of theTourism Satellite Account (TSA): Recommended Methodological Framework.3 A finalsection will provide guidance on locating or generating the statistical data required toprogress from concept to reality.

This document should be studied and used in conjunction with other materials onTourism Satellite Account, most notably:

(a) Tourism Satellite Account (TSA): Recommended Methodological Framework,UN-WTO-OECD-EUROSTAT, New York (forthcoming edition to the pub-lished during the year 2000).

(b) Tourism Satellite Account (TSA): the Conceptual Framework, WTO, 1999.

(c) General Guidelines for developing the Tourism Satellite Account (TSA), TechnicalDocuments:

TD No 1: Measuring Visitor Final Consumption Expenditure in Cash, (volume 1)TD No 3: Measuring the Supply of Tourism Goods and Services (volume 2) TD No 4: Measuring Tourism Gross Domestic Product (volume 2)

(d) The Standard International Classification of Tourism Activities (SICTA 93).

(e) The list of Tourism Specific Products (TSP).

(f ) The list of Tourism Characteristic Products (TSA/TCP).

(g) The list of Tourism Characteristic Activities (TSA/TCA).

1.4.

1.5.



2 And worksheets No. 1, 3a, 3b, Annex 5 of the TSA:CF.

3 Hereafter referred to as TSA:RMF.

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2.1.

2.2.

2.3.

2.4.

Within the basic definitions used in the TSA framework, visitor consumption is definedas“ the total consumption expenditure made by a visitor or on behalf of a visitor for orduring his/her trip and stay at destination”, or in other words, the acquisition of con-sumption goods and services by a visitor or on behalf of him/her, for tourism purposes,irrespective of the moment the payment is made, and irrespective of the nature of thegood and service acquired as long as the expenditure is a consumption expenditure of thevisitor or an expenditure the benefit of which can be clearly and unambiguously assignedto the visitor. All consumption expenditure by a visitor or on his/her behalf for or dur-ing a trip and stay at a destination is considered as being for tourism purposes.

Visitor consumption not only includes out of pocket consumption expenditures made byvisitors from their own resources (including transfers received from other institutionalunits or other forms of income in cash), but also all forms of income in kind receivedfrom other institutional units, as well as transactions on own account, and barter trans-actions, consistent with the concept of household actual consumption of SNA93.Additionally, it also includes expenditures on consumption goods and services made byproducing units on their behalf but which also benefit these units and that SNA93 wouldrather consider as intermediate consumption of these producing units.

The TD No 1 on visitor expenditure4 focuses on out of pocket consumption expendi-tures, which correspond to what is most commonly considered as visitor consumptionexpenditure (the proper denomination should include the term “in cash”). The presentdocument focuses on the other components that make up visitor consumption, describetheir content, and give some indication on how to focus their measurement. Figure II.1,which follows, illustrates in a schematic mode the coverage of visitor consumption, whichshall be explained in detail further on.

The scope of visitor consumption might vary, according to the forms of tourism that areconsidered and the geographical boundaries within which visitor consumption isobserved. In this document, the terms “visitor consumption” and “tourism consumption”have the same meaning.


69OMT ¥ WTO ¥ BTO

II. Some definitions from the TSA: a conceptual approach to total tourism demand

4 Tourism Satellite Account Technical Document No 1: Measuring Visitor Final Consumption Expenditure in cash.

A. VISITOR CONSUMPTION

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Figure II.1. The components of visitor consumption

Visitor final consumptionexpenditure in cash (1) Visitor final

consumptionVisitor barter transactions expenditure (total)

Visitor production Visitor final Visitor actualfor own consumption finalfinal use expenditure in kind consumption

Counterpartof income in kind

Tourism socialsecutiry

benefits in kind (2)

Tourism social Tourism social Visitorassistance transfers in consumption

benefits in kind (2) kind (5)

Individual nonmarket tourism (3)

servicesTourism business

expenses (4)

(1) This always represents the most important component of total consumption of, or on behalf of, visitors. It covers what is usually

meant by “visitor expenditure”, but SNA93 obliges to use more precisely defined terms.The term “in cash” does not necessarily

mean a disbursement of “cash” but refers to all visitors final consumption expenditure which are not in kind.

(2) The term “tourism” refers to those transfers for tourism purposes addressed to potential visitors.

(3) The area in grey represents the part of total consumption of or on behalf of visitors which corresponds strictly to the transposition

of SNA93 concept of household actual final consumption to visitors (both residents and non residents).

(4) Includes the expenditure on transport and accommodation of employees on business trips and those made by business, government

and NPISH on behalf of guests outside their usual environment.

(5) Visitor consumption refers to total consumption of or on behalf of visitors and could, consequently, also be termed as “visitor demand”.

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2.5.

2.6.

2.7.

Following the forms of tourism defined by the UN/WTO Recommendations5 and thedefinitions proposed in document TSA:RMF6, we have:


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Domestic tourism: is the tourism ofresident visitors within the economicterritory of the country of reference;

Inbound tourism: is the tourism ofnon resident visitors within the eco-nomic territory of the country of ref-erence;

Outbound tourism: is the tourism ofresident visitors outside the economicterritory of the country of reference;

Internal tourism: is the tourism of vis-itors, both resident and non resident,within the economic territory of thecountry of reference;

National tourism: is the tourism ofresident visitors, within and outsidethe economic territory of the countryof reference.

Domestic tourism consumption:comprises the consumption of resi-dent visitors within the economic ter-ritory of the country of reference;

Inbound tourism consumption: com-prises the consumption of non resi-dent visitors within the economic ter-ritory of the country of referenceand/or that provided by residents;

Outbound tourism consumption:comprises the consumption of resi-dent visitors outside the economic ter-ritory of the country of reference andprovided by non residents;

Internal tourism consumption: com-prises the consumption of both resi-dent and non resident visitors withinthe economic territory of the countryof reference and/or that provided byresidents;

National tourism consumption: com-prises the consumption of resident vis-itors, within and outside the econom-ic territory of the country of reference.

Domestic tourism consumption is the consumption of resident visitors within theircountry of reference. The final destination of the visitor might be within or outside thecountry of reference but the consumption activity that is referred to has to take placewithin this country of reference. It might include goods or services produced abroad orby non-residents but sold within the country of reference (imported goods and services).This definition is broader than the common understanding of the term “domestic” with-in tourism statistics (involving residents of the country of reference travelling andremaining within the country) as domestic tourism consumption includes what was tra-ditionally identified as the domestic portion of outbound tourism consumption.

Inbound tourism consumption is the consumption of non-resident visitors within theeconomic territory of the country of reference. Purchases, which took place in othercountries, are excluded. The goods and services purchased in the country of referencemay have been imported.

5 See UN/WTO Recommendations, ¶¶11-14.

6 See TSA:RMF, ¶¶ 2.61-2.66.

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Outbound tourism consumption is the consumption of resident visitors outside the eco-nomic territory of the country of reference. It does not include those goods and servicesacquired for or after the trip within the country of reference. This definition is narrowerthan the common understanding of the term “outbound” within tourism statistics (involv-ing residents of the country of reference travelling to another country) as it excludes whatwas traditionally identified as the domestic portion of outbound tourism consumption.

Internal tourism consumption comprises all consumption of visitors both resident andnon-resident within the economic territory of the country of reference. It is the sum ofdomestic tourism consumption and inbound tourism consumption. It might include goodsand services imported into the country of reference and sold to visitors. This aggregate pro-vides the most extensive measurement of visitor consumption in the country of reference.

National tourism consumption comprises all consumption of resident visitors withinand outside the economic territory of the country of reference. It is the sum of domestictourism consumption and outbound tourism consumption. These purchases mayinclude domestically produced goods and services and goods and services imported fromnon-resident producers.

The scope of the TSA is restricted to the activities of visitors within, entering or leavingthe economic territory of the country of reference. The implication of the increase in thegeneral flows of visitors all over the world on a given economy will not be considered, aslong as these flows do not correspond to movements within, towards or from the eco-nomic territory of the country of reference. For instance, the effect of the direct trans-portation of a visitor from country A to country B by an airline of country C will not berecorded in the TSA of country C because the visitor has not entered nor left the eco-nomic territory of country C. Similarly, the increase of the supply of souvenirs or otherobjects produced in an economy to be sold in another will not be considered within theTSA of the economy where these goods have been produced.

Each of these different aspects of consumption is important, and when possible, they willbe taken into consideration. But in some cases, particularly those which are the specificfocus of the present document (which is to present those components of visitor con-sumption not covered by WTO Tourism Satellite Account. Technical Document No. 1),these classifications cannot always be applied, because it is difficult to determine whichspecific type of tourism (e.g., inbound, outbound, domestic) is involved. This difficultyis recognized in the tables of document TSA:RMF. Tables 1, 2 and 37 are restricted tovisitor final consumption expenditure in cash. The breakdown by forms of tourism forthe part of visitor consumption additional to visitor final consumption expenditure incash is never required, although in some cases it might be possible to obtain such data.

As a consequence and in practice, by forms of tourism we shall restrict to the measure-ment of visitor final consumption expenditure in cash although some measurement ofthe additional components of visitor final consumption may also sometimes be possible.Adjustments for visitor final consumption expenditure in kind, tourism social transfersin kind, and intermediate consumption for tourism purposes of resident producing unitswill thus usually be estimated globally and added in a global form in order to obtaininternal tourism consumption.

2.8.

2.9.

2.10.

2.11.

2.12.

2.13.



7 And worksheets No. 1, 3a, 3b, Annex 5 of the TSA:CF.

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2.14.

2.15.

2.16.

2.17.

2.18.

2.19.

By definition, tourism gross fixed capital formation consists of the net acquisition of pro-duced fixed assets in the economy in order for those to be incorporated or to participatein some way to the supply of goods and services to visitors.

The analysis of gross fixed capital formation, is particularly important for tourism becausethe existence of a basic infrastructure in terms of transport, accommodation, recreation,centres of interest, etc., determines to a large extent the nature and intensity of visitor flows.Nevertheless, the identification, of capital goods the acquisition or production of which aredriven by the needs of visitors present both conceptual and practical difficulties.

In some cases, this relationship to the supply to visitors is relatively simple to identify assome fixed assets are specifically designed in order to participate in the production oftourism services. If tourism did not exist, such assets would be severely impacted in termsof their utility to non-tourism applications.

Others are those acquired by the tourism industries, which are considered to be dedicat-ed to the service of visitors. Besides tourism specific produced assets described above,such includes for instance hotel computer systems and laundry facilities. They are con-sidered tourism-related, not due to the nature of the assets themselves, but due to the usewhich is made of them by a tourism characteristic producer.

Others finally have a relationship to tourism that is more difficult to define and to establish in ameasurable form. They refer principally to infrastructure put in place by public authorities to facil-itate tourism at a specific moment in time or which in fact facilitate tourism although this wasnot necessarily the primary objective of the investment. In some cases, they are needed in the pro-duction process of particular tourism services although they are not necessarily economically partof this production process. For example, there is no possibility of using an airliner without an air-port, no road transportation is possible without roads, and most visitors will not stay in a locationwhere there is no basic infrastructure in terms of the provision of basic public services such aswater, sewage, electricity, telecommunications, and health services. Different cases are possible:

(a) The asset might have been produced or acquired with the purpose of being usedexclusively or principally by visitors, such as development of areas specifically fortourism purposes;

(b) At the time the investment was made, it might have been done with the view of its exclu-sive or principal use by visitors at a given point in time (e.g., investments for a special eventsuch as the Olympic Games, an important international meeting, etc.), but a later, non-tourism use is taken into consideration in the decision making process for this investment;

(c) It might be directed generally to all activities and also favor tourism (e.g., an air-port, open to all type of traffic, a non-toll road, a hospital in an area visited by vis-itors), because in its absence tourism would probably be of a lesser intensity.

It is clear that the major difficulty at this stage is to find a method to assign to tourism as a pur-pose the amount of investment which will also benefit many other productive activities andconsumers: This situation is critical in the case of infrastructure provided by non tourism activ-ities but it also happens at the level of the gross fixed capital formation of characteristic tourismactivities, which, as will be shown, benefit more consumers and users than exclusively visitors.


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B. TOURISM GROSS FIXED CAPITAL FORMATION

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The situation is much more complex though in the case of infrastructure as describedabove, and the design of the criteria to assign to tourism investment made in these con-ditions have not been developed for the time being.

As a consequence, at this stage we shall restrict to the two first cases: gross fixed capital forma-tion in specific produced assets and investment by the tourism industries, once eliminated thepossible double counting (most investment in tourism specific produced fixed assets occurswithin the tourism industries). No intent will be made to elaborate a criterion to allocate thisinvestment to tourism consumption: the whole investment will be considered as tourism grossfixed capital formation. While the two first categories can be easily measured, this is not so forthe third category, relating principally to basic infrastructure, for which the process of identifi-cation and of allocation to tourism might present more theoretical and practical difficulties.

Finally, it must be observed that tourism gross fixed capital formation of the compiling econ-omy relates to those produced fixed assets owned by resident producers, but excludes thosewhich operate on the economic territory but owned by non residents. This observation is par-ticularly relevant in the case of mobile assets (aircrafts, trains, boats, autobuses ): those ownedby resident producers are considered within the concept, but those owned by non residentsare excluded, even if they operate in the economic territory of the country of reference.8

However until more discussion and research is carried out no specific aggregate is pro-posed for the purposes of international comparison. Any of the aggregates noted abovemay be of interest to countries in compiling their TSAs. Notwithstanding these mea-surement difficulties, the concept of tourism gross fixed capital formation is consideredwithin a broader notion of Total Tourism Demand.

Tourism collective consumption is comprised of those collective non-market serviceswhich unambiguously benefit visitors and/or those activities that serve them directly (i.e.,the tourism industries). A list of such services is proposed as a guidance in order to esti-mate such variable. Tourism collective consumption applies usually within the econom-ic territory of the country of compiling the TSA.

Total Tourism Demand is defined as the sum of these three variables. The documentTSA:RMF only introduces this variable in an aggregated form and recommends it beused as a complementary estimate of the size of tourism until more experience is achievedwith its calculation and use.

Total tourism demand refers to demand generated by tourism in the economic territoryof the country of compilation, and is equal to the sum of internal tourism consumption,tourism gross fixed capital formation and consumption of collective non-market servicesrelated to tourism by general government.

2.20.

2.21.

2.22.

2.23.

2.24.

2.25.

2.26.



8 This applies only in terms of ownership: entering an aircraft belonging to a non-resident is not entering the economic territory of the coun-

try of residence of the owner of the aircraft.

C. TOURISM COLLECTIVE CONSUMPTION

D. TOTAL TOURISM DEMAND

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3.1.

3.2.

3.3.

3.4.

Instead of developing this document along the different components of visitor con-sumption as they have been presented in Figure 2.1, we shall try to take the topics in amore discussion wise way, less conceptual but still within a theoretical perspective, unit-ing some by affinity, as for instance those relating to the expenses by businesses, or non-market services, individual and collective, so that their scope and precise meaning can bemore easily understood within a contrasting analysis.

The concept of visitor consumption focuses on the behavior of the visitor as a unit offinal consumption: all acquisitions for purposes different from final consumption areexcluded. We should thus consider how SNA93 considers this function of householdsand apply it directly to that of individuals in their roles of visitors.

Tourism individual consumption expenditure refers to a limited set of expenditures. Notonly does it not include all acquisition of goods and services made by an individual ass/he is on a trip away from his/her usual environment, but it also excludes all expendi-ture that do not correspond to a purchase of consumption goods and services.

Expenditures that are included are as follows:

(a) all acquisition of consumption goods and services during a trip, without anyrestriction regarding their unit values and future use after the trip; this includes allgoods that can be used repeatedly for more than one trip but have been purchasedon a trip (consumer durable goods);

(b) all consumption goods and services purchased for at trip, i.e., before or after butwith the clear purpose of being used on a specific trip. This includes: all con-sumption of services made before a trip and clearly related to it (e.g. inoculations,passports, medical control,..); all consumption of goods of small unit value pur-chased before a trip that are intended for use on the trip or are brought along as


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III. Topics presentedand discussed

A. VISITOR CONSUMPTION AND ITS DIFFERENT COMPONENTS

A.1. Visitor consumption

a. What is included and what is excluded

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gifts; all purchase of tourism single purpose consumer durables; all consumptionof services purchased after the trip and clearly related to the trip (e.g. photographdevelopment, dry cleaning, etc.);

(c) all purchase of tourism single purpose consumer durables made outside the con-text of a specific trip.

However, some special cases have to be mentioned, as follows.

(a) All unused non-refundable tickets and cancellation costs of unused reservations,for any type of service to be used on a trip, should be included as they have beenacquired by the would-be visitor within a consumption process.

(b) The financial leasing of vehicles or any other consumer durable good should betreated consistently with SNA93, that is, these durables are considered as acquiredtotally by the lessee at the beginning of the lease for their market value. The flowsof periodical payments correspond to payment of interest and service of a loan andare not considered to be consumption expenditure.

(c) The resale of goods purchased for their use on a trip (such as vehicles purchasedby non-residents free of tax for a short period of time) should also follow the prin-ciples of SNA93. At the time of purchase, the good is considered as any other goodand a consumption expenditure is recorded equal to the transaction value of thegood; at the time of the resale (which can be in a different accounting period fromthe purchase), the sales value received by the seller (net of transfer costs) is con-sidered to be negative visitor consumption. This principle also applies to the can-cellation of a financial lease contract.

(d) In SNA93, the issuance of passports and other types of licenses is considered asthe sale of a service, as there is a direct benefit for the beneficiary of the passportor license. This is not the case for the payment for the issuance of a visa which isconsidered as a tax payment because the intention pursued with such a control bythe authorities of a country is to protect its nationals from undesirable foreigners,not to protect the visitor.

(e) In the case of the purchase of insurance policies to be used on trips, such as insur-ance against flight cancellation or accident, or any type of travel insurance, it is nec-essary (in order to insure consistency with SNA93) to separate the purchase of theservice provided by insurance companies from the net insurance premiums (a trans-action of the use of income account) which permit insurance claims in case of theoccurrence of the eventuality covered by the policy. Only the portion correspond-ing to the purchase of the service should be included within visitor consumption.

Expenditures that are excluded are the following:

(a) Purchases of goods and services by visitors that are not to be considered as con-sumption goods or services due to their nature or their intended use. Three typesof situation may occur:

(i) Purchases for business or commercial purposes refers to goods or services pur-chased on behalf of a business (which can also be the household, in its capaci-

3.5.

3.6.



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ty as producer) to which the visitor belongs or on the behalf of which the visi-tor is acting, for the business’s later use as intermediate consumption or fixedcapital formation. Also included here are goods that a visitor purchases not forhis/her personal use or as a personal gift but in order to resell back in his/herusual environment. This situation is particularly important in free trade zonesin the vicinity of countries with high levels of import duties.9

(ii) Purchases for the visitor’s fixed capital formation. Visitors, in their capacity asconsumption units, only have one form of fixed capital formation: dwellings.As fixed capital formation, dwellings are excluded from visitor consumption.This restriction also applies to all purchases of services and goods in order tomake structural improvements to a construction or to land, as they are consid-ered as inputs for a productive activity: construction for own account as a pro-duction activity and not a consumption activity.

(iii)The purchase of valuables such as jewelry and art objects acquired and pos-sessed as stores of value over time are excluded from consumption expenditure.Each country, within the restrictions of feasibility, should establish what shouldbe the conditions that define such situation.

(b) Payments that are not the purchase of goods and services are also excluded fromvisitor consumption, such as:

(i) Interest payments including those paid as such or included in credit card pay-ments or within term payments for package tours, etc., or on any purchase ofgoods and services should be excluded from visitor consumption with theexception of an estimation of the corresponding FISIM when feasible andworthwhile10; mortgage interest payments on second homes and interest pay-ments on financial leasing of automobiles should also be excluded.

(ii) Taxes other than those included in the purchaser’s price of the goods and ser-vices purchased or those levied at the inbound border on goods purchasedabroad. For instance, wealth or property taxes on tourism second homes, pur-chase of licenses to own or use motor vehicles, boats or aircraft, or licenses tohunt, shoot or fish are treated in SNA93 as taxes and are thus excluded fromvisitor consumption11. The same applies the amount paid for visas, which areto considered to be taxes in SNA93 since they finance controlling the entranceof visitors into the country for the protection of those who reside in the com-piling economy, not for the benefit of visitors.


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9 Nevertheless, if visitors have received money from another household, in order to purchase a good to be used as consumption good, this

purchase has to be included within visitor consumption, as the purpose of the purchase is not to be used in a production process nor to

engage in a commercial transaction.

10 The treatment of the Financial Intermediation Services Indirectly Measured (or FISIM) should lead to the consumption of such services

by visitors, but due to the difficulties of the estimation, it can be disregarded.

11 SNA93, ¶9.62.

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(iii)Transfer payments to other households or non-profit institutions serving house-holds (NPISHs), which cannot be considered as the payment for a servicesreceived (as gifts to charities in cash or in kind, money gifts to other households)12

are considered to be neither positive consumption nor negative consumption.

(iv)Transactions on non-produced fixed assets, particularly land, which is not aconsumption good and thus its purchase cannot be considered as a consump-tion expenditure.

(v) Transactions on financial assets such as the interventions in financial marketsor instalment payments for second homes or tourism vehicles, or the periodicpayments for a financial lease.

(c) The consumption of services outside the boundary of production of SNA93 (i.e.,services produced on own account by households, which, within the SNA93 con-cepts are not “produced”) should also be excluded from the measurement.

In most cases, the visitor him/herself purchases the goods and services acquired astourism consumption and pays in cash or charges this out of his/her own resources. But,as we have seen, visitor consumption is not restricted to purchases by visitors but itrelates to acquisitions by visitors, that is, to the value of the goods and services thatbecome the property of visitors to be consumed by them. These acquisitions can occurthrough final consumption expenditure and through social transfers in kind.

Consumption expenditure and expenditure in general do not necessarily imply a pay-ment expressed in a cash transfer at the time of purchase. Some consumption expendi-ture by households can also be in kind, as in the case of barter transactions, productionfor own final use by households, and income (mainly remuneration and transfers)received in kind from other institutional units, and the counterpart of which is classifiedby SNA93 as part of consumption expenditure by household.

Such cases are also possible in accounting for tourism, and as we seek complete coverageof visitor consumption without omission or duplication, these other cases have to be madeexplicit and studied accordingly. Special valuation problems, such as those to be found inthe case of non-market services and the fact that the visitor him/herself is not necessarilyaware of having benefited from a given form of consumption and/or is unaware of its totaleffective value (such as invitations to complimentary meals) makes it necessary to explicitall the components of visitor consumption according to these characteristics.

In other words, visitor consumption can be the deed of the visitor him/herself or of a thirdparty on his/her behalf. This has been explained in detail, from the SNA93 point of view indocument TSA:RMF. In this document, an explanation in plain language of the differentcomponents will be given, with the exception of final consumption expenditure in the form ofcash transactions, in value by far the most important component of visitor consumption. This,in recognition of its special importance, is discussed separately in Tourism Satellite Account.Technical Document No 1: Measuring Visitor Final Consumption Expenditure in cash.

3.7.

3.8.

3.9.

3.10.



12 If goods and services are purchased by households in order to be given as gifts to third parties, they are included within visitor consumption.

b. Why distinctions between components need to be made

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3.11. Within visitor consumption, transactions in kind are all those by means of which thefinal consumer of a good or service (that is, the visitor) has acquired this good or ser-vice without giving in exchange any type of financial asset. This occurs in the follow-ing cases:

Definition: the two transactors exchange goods or services that they consider to be ofequal economic value.

Example: the exchange of homes during vacation time, the exchange of housingservices, or the exchange of children between two families in order for them tolearn a second language which generates an exchange of a complex mix of goodsand services.

Treatment in SNA93: there is no financial counterpart and only entries in the goodsand services account.

For TSA: no net additional production as compared to the case where no such barterexists, only a transformation of a non-tourism consumption expenditure into atourism consumption expenditure.

Definition: This type of output consists of goods or services that are retained for theirown final use by the owners of the enterprises in which they are produced. As corpo-rations have no final consumption, output for own final consumption is producedonly by unincorporated enterprises. It usually refers mainly to goods as there are noservices produced by households on own account, with the exception of housing ser-vices on own account which constitute statistically an important part of this produc-tion for own final use.

Example: In the case of tourism consumption, production for own final use refersalmost exclusively to housing services provided by tourism accommodation onown account, since SNA93 does not consider within the boundary of productionthose services provided by consumer durable goods similar to those considered ascapital goods when owned by businesses (e.g., the use of privately-owned motorvehicles).

Treatment in SNA93: A value of service is imputed equal to the equivalent commer-cial value on the market. For housing services on own account, a rent is imputed sim-ilar to the commercial rent of another home of equal physical condition and under asimilar pattern of occupancy.

In the TSA: A vacation home is considered to produce a flow of housing services tohis owner as a tourism service. In the case of a main home shared by visitors and non-visitors, there is a shift from non-tourism consumption to tourism consumption.


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A.2. Transactions in kind within visitor consumption

a. Barter transactions

b. Production for own final use

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Definition: These transactions refer to all forms of income by households which donot correspond to transactions on goods and services (production or sale of a prod-uct) and which counterpart is not a financial asset.

Examples: Goods or services provided to employees as remuneration are a good exam-ple of remuneration in kind. Medicines given to beneficiaries as social security bene-fits are other examples of income received in kind.

Why some transactors prefer transactions in kind rather transactions in cash: Thereare several reasons that might favor the use of payments of income in kind. In theremuneration of employees, it might be cheaper for the employer (when it is his ownoutput, or when he can obtain the goods at a lesser price than the one used to valuethem in terms of income paid) or generate a fiscal benefit for the employee (in somecountries, income in kind is not taxed), or allow for a targeted use of the income (caseof social benefits in kind).

Reimbursements are included within the concept of income in kind: If an employeepays for his meals while traveling outside his/her usual environment and is later reim-bursed (against his/her invoice) by the employer, this amount is considered to beincome in kind. The same occurs for medicines and other health services paid and thentotally or partially reimbursed by the social security system. These reimbursements areconsidered as payments in kind because there is no possible choice of the use of theamount received since it necessarily is used to acquire the related good or service.

Main cases of income in kind: These are compensation of employees in kind, whilethe case of tourism is discussed extensively below.

• Property income (interest payment, dividends, and rent on land); dividend pay-ments might take the form of new shares in ownership; rent on land might be paidthrough the produce of this land;

• Premiums in lotteries and tombolas in kind (e.g., win a ticket to destination X witha lump sum of cash in the amount of Y) (different from free travel resulting fromearning airline miles, which is discussed below);

• Transfers from other households, resident or non-resident; transfers are “somethingvs. nothing transactions”;

• Insurance claims in kind: the repair of the damage incurred by a car in an accidentbut not the equivalent money value;

• Social transfers in kind are discussed below.

Treatment in SNA93: In national accounts, transactions in cash and transactions inkind are given the same treatment (although there are special categories to classifythem), the only exception being the so-called “social transfers in kind” which are dis-cussed below. The total value of the income in kind is included within the same cat-egory of income and the expenditure on the income in kind is assigned to the house-hold benefiting from this payment.



c. Income received in kind

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3.12.

3.13.

Treatment in the TSA: The same treatment as in SNA93 applies: transactions in cashare treated separately from transactions in kind, in order to ensure complete coverageand avoid duplication of values.

Transactions in kind should be valued in the TSA following SNA93 principles. Since thebuyers do not pay cash or expect to pay cash, values have to be imputed for the expen-ditures using the appropriate prices of similar goods or services sold for cash on the mar-ket. For example, workers receiving remuneration in kind are treated as making expen-ditures equal to the market value of the goods or services received (at producers’ prices ifproduced by the employer or at purchasers’ prices if bought by the employer), the costsof the expenditures being met out of the income they are deemed to receive as remuner-ation in kind.13

There is no better source for defining individual and collective non-market services thanSNA93 itself:

An individual consumption good or service is one that is acquired by a householdand used to satisfy the needs and wants of members of that household. Individualgoods and services can always be bought and sold on the market, although they mayalso be provided free, or at prices that are not economically significant, as transfers inkind. In practice, all goods and most services are individual.14

A collective consumption service is a service provided simultaneously to all membersof the community or to all members of a particular section of the community, such asall households living in a particular region. Collective services are automaticallyacquired and consumed by all members of households in question, without any actionof their part. Typical examples are public administration and the provision of securi-ty, either at a national or local level. Collective services are the “public goods” of eco-nomic theory. By their nature, collective services cannot be sold to individuals on themarket, and they are financed by government units out of taxation or other incomes.15

A price is said to be not economically significant when it has little or no influence onhow much the producer is prepared to supply and is expected to have only a margin-al influence on the quantities demanded. It is thus a price that is not quantitativelysignificant from the point of view of either supply or demand. Such prices are likely


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13 SNA93, ¶ 9.28.

14 SNA93, ¶9.42.

15 SNA93, ¶9.43.

d. Valuation of transactions in kind

B. VISITOR CONSUMPTION AND THE CONSUMPTION OF NON-MARKET SERVICES PRODUCED BYGENERAL GOVERNMENT AND NON-PROFIT INSTITUTIONS SERVING HOUSEHOLDS (NPISHS)

B.1. Individual and collective non-market services: definition

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to be charged in order to raise some revenue or achieve some reduction in the excessdemand that may occur when services are provided completely free, but they are notintended to eliminate such excess demand. Once a decision has been taken on admin-istrative, social or political grounds about the total amount of a particular non-mar-ket good or service to be supplied, its price is deliberately fixed well below the equi-librium price that would clear the market. The difference between a price that is noteconomically significant and a zero price is, therefore, a matter of degree. The pricemerely deters those units whose demands are the least pressing without greatly reduc-ing the total level of demand.16

As prices that are not economically significant may reflect neither relative productioncosts nor relative consumer preferences, they do not provide a suitable basis for valuingthe outputs of goods or services concerned. The non-market output of goods or ser-vices sold at these prices is, therefore, valued in the same way as goods or services pro-vided free, i.e., by their costs of production. Part of this output is purchased by house-holds, the remainder constituting final consumption expenditures by government unitsor NPISHs.17

Examples of such not economically significant prices are those charged for the entranceto many museums, concerts and many important cultural events, and those oftencharged in public universities and schools, and in public hospitals.

From a welfare point of view, the important characteristic of an individual good orservice is that its acquisition by one household, person or group of persons brings no(or very little) benefit to the rest of the community. While the provision of certainindividual health or education services (for example, vaccination or immunization)may bring some external benefits to the rest of the community, in general the indi-viduals concerned derive the main benefit. Thus, when a government unit or NPISHincurs expenditures on the provision of individual goods or services, it must decidenot only how much to spend in total but how to allocate, or distribute, the goods orservices among individual members of the community. From the point of view of eco-nomic and social policy, the way in which they are distributed may be as important asthe total amount spent.18

Differences between individual and collective services may be summarized as in Figure 3.1.

3.14.

3.15.



16 SNA93, ¶6.50.

17 SNA93, ¶6.51.

18 SNA93, ¶9.82.

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3.16.

3.17.

Individual and collective non-market services are both valued by their costs of produc-tion, because, by definition, there is no existing economically significant price to valuethem.

In the case of collective non-market services, the value of production by general govern-ment is equal to the value of final consumption expenditure by the same general gov-ernment on those collective non-market services. It must be pointed out that governmentconsumption of collective non-market services, which is a final consumption expendi-ture, differs from the consumption of inputs necessary for this production process, whichare intermediate consumption of general government.


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Figure 3.1: Contrasts between Individual Non-market Servicesand Collective Non-market Services

Individual non-market goods and services

Goods may be included

Essentially “private” goods and services

Although they might be delivered simultane-ously (e.g., a school class or public transporta-tion), it may be possible to observe and recordthe acquisition of the good or service by theindividual household and also the time atwhich it took place

The beneficiary must have agreed to the pro-vision of the good or service and take what-ever action is necessary to make it possible,for example, by attending a school or clinic

The good or service must be such that itsacquisition by one household or person, orpossibly by a small, restricted group of per-sons, precludes its acquisition by other house-holds or persons

Partial payments by the beneficiaries are pos-sible

They might be provided by NPISHs and gen-eral government to households out of theirown non-market production or out of pur-chases from market producers

Collective non-market services

Goods may not be included

Essentially “public” services

Collective services can be delivered simulta-neously to every member of the community

The use of such services is usually passive anddoes not require the explicit agreement oractive participation of all the individuals con-cerned

The provision of a collective service to oneindividual does not reduce the amount avail-able to others in the same community or sec-tion of the community: there is no rivalry inacquisition

By definition, no partial payment can occur bydefinition

Only general government can produce andprovide collective non-market services

B.2. Valuation and nature of non-market services

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In the case of individual non-market services, when a partial payment occurs the value ofproduction is still obtained using the costs of production. However, consumption expen-diture by households is estimated through the amount of the partial payments, while therest of the value is assigned as final consumption expenditure of government or NPISHon individual non-market services.

In most cases, there is no major difficulty in identifying individual non-market servicesfrom collective ones: individual non-market services benefit persons which can be indi-vidually identified, while collective services benefit society as a whole, or part of it. Theseconsist mostly of the provision of security and defense, the maintenance of law and order,legislation and regulation, the maintenance of public health, the protection of the envi-ronment, and research and development.

Nevertheless, there are some borderline cases on which is necessary to comment by quot-ing relevant portions of SNA93:

Expenditures incurred by governments at a national level in connection with individ-ual services . . . are to be treated as collective when they are concerned with the for-mulation and administration of government policy, the setting and enforcement ofpublic standards, the regulation, licensing or supervision of producers, etc. For exam-ple, the expenditures incurred by Ministries of Health or Education at a national levelare to be included in collective consumption expenditures as they are concerned withgeneral matters of policy, standards and regulation. On the other hand, any overheadexpenses connected with the administration or functioning of a group of hospitals,schools, colleges or similar institutions are to be included in individual expenditures.For example, if a group of private hospitals has a central unit that provides certaincommon services such as purchasing, laboratories, ambulances, or other facilities, thecosts of these common services would be taken into account in the prices charged topatients. The same principle must be followed when the hospitals are non-market pro-ducers: all the costs which are associated with the provision of services to particularindividuals, including those of any central units providing common services, shouldbe included in the value of expenditures on individual services.19

This means that collective non-market services in areas where individual non-market ser-vices seem to prevail do exist but refer exclusively to general administration, policy mak-ing, enforcement of standards, and the like. In the case of tourism, examples includeshort tourism courses in education and provision of health services to visitors.

Many discussions have surrounded the issue of highway construction and maintenanceby the public authority. Construction, clearly, is not the provision of non-market goodsand services but the acquisition, by the public authority, of a produced non-financialasset that can be produced on own account or purchased in the market (this is mostly thecase: private entrepreneurs construct a public road under a commercial contract).Regarding maintenance, the treatment to be given, as collective non-market services, isexplicitly described as follows in SNA93:

Many government expenditures benefit enterprises as much as households; expendi-tures on the cleaning, maintenance and repair of public roads, bridges, tunnels, etc.

3.18.

3.19.

3.20.

3.21.

3.22.



19 SNA93,¶9.86.

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3.23.

3.24.

3.25.

3.26.

3.27.

3.28.

including the provision of street lighting are examples. These are individual serviceswhose consumption can be monitored and for this reason they are frequently provid-ed on a market basis by charging tolls on road usage. However, it would be difficult toseparate the services provided free to households from those provided free to enterpris-es and, by convention, all these expenditures are treated as collective final expenditure.20

Similar analyses can be applied to the cleaning and supervision of the beaches, and all theareas of national parks and other areas under the supervision of public authorities andwhich are provided on a free and open basis.

Individual non-market services and collective non-market services are treated very differ-ently in SNA93, and consequently in the Tourism Satellite Account. In SNA93, withinthe first general presentation, final consumption expenditure of government and ofNPISHs include the value of individual consumption not covered by partial payments byhouseholds and of collective non-market services.

In an additional presentation, an adjustment is made for the social transfers in kind byNPISHs and general government, and the consumption of individual non-market ser-vices of both sectors is transferred to that of households, due to the fact that the benefi-ciaries of such services can be identified and the value corresponding to each of them canbe established. However, this is not the case for collective non-market services, and thoseremain part of the actual final consumption of government.

Similar procedures are applied in document TSA:RMF. Partial payments made by visi-tors are included within visitor consumption in cash as any other purchase of goods andservices. Regarding the portion that SNA93 includes within social transfers in kind, asthe beneficiaries of the individual non-market services can be identified (those attendingcourses, those going to the hospital, those visiting museums or parks, etc.), these indi-vidual non-market services whose beneficiaries are visitors are assigned to visitor con-sumption in kind.

As this is not the case for collective non-market services where benefits for visitors ortourism in general can be established globally but not individually, these are not assignedto visitor consumption but considered within a different concept named: “tourism col-lective consumption”, which is one of the components of the aggregate called “totaltourism demand”.

SNA93 defines social transfers in kind as follows.

Individual goods and services provided as transfers in kind to individual households bygovernment units (including social security funds) and NPISHs whether purchased onthe market or produced as non-market output by government units or NPISHs;21


85OMT ¥ WTO ¥ BTO

20 SNA93,¶9.88.

21 SNA93, ¶8.99.

B.3. Treatment in SNA93 and in document TSA:RMF

C. SOCIAL TRANSFERS IN KIND

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They are of three types:

(a) Social security benefits in kind.

(b) Social assistance benefits in kind.

(c) Transfers of individual non-market services provided by non-profit institutionsserving households (NPISHs) and general government.

Transfers in kind are transactions between economic agents that are without quid proquo, that is, where one agent gives something (a good or a service, but it might also beany type of non-financial asset) with an economic value to another without receiving anyvalue in exchange.

Social transfers in kind are different from other transfers in kind, not because of theirnature, but because of their treatment in SNA93. In previous versions of SNA, theamounts now considered as social transfers in kind were considered as integrally con-sumed by general government, and no benefit in terms of income and consumption wasrecorded for households that were effectively favored by the expenditure by governmentor NPISH.

In SNA93, social transfers in kind are identified and in a first approximation are nottransferred to households either as income or as consumption expenditure, so that theconcept of disposable income is similar to the one used in previous SNA frameworks.Nevertheless, in a second round, their value is added to disposable income in order toobtain the concept of “adjusted disposable income” at the same time that they are addedto the final consumption expenditure of households to conform to the aggregate “actualfinal consumption of household” without modifying the balancing item of saving for anyof the transactors.

The objective of this adjustment is to improve comparability between nationaleconomies where the direct role of government and NPISH in redistributive policiesthrough social transfers in kind might present important differences. As a consequence,the concept of household final consumption expenditure includes all transfers in kindreceived by households with the exception of social transfers in kind, which are addedonly in a second round to lead to the concept of actual final consumption of households.

The same construction holds for visitor consumption. Social transfers in kind are onlyadded in a second round when going from consumption in cash by forms of tourism(Tables 1 to 3 in document TSA:RMF) to total internal tourism consumption (Table 4)because they do not correspond to out of pocket consumption expenditure by the visitorand they are difficult to assign by forms of tourism, not because the theory does not allowto identify the beneficiary, but because it is difficult, if not impossible, practically to iden-tify him/her by most existing statistical sources.

Regarding individual non-market services, their nature has already been discussed previ-ously so that we shall only give a brief description of what social security and social assis-tance benefits in kind refer to.22

3.29.

3.30.

3.31.

3.32.

3.33.

3.34.

3.35.



22 The interested reader should refer to SNA93,¶¶8.55 to 8.83, and ¶¶8.99 to 8.104.

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3.36.

3.37.

3.38.

3.39.

3.40.

These two categories refer to benefits (reimbursement of actual payments by beneficiariesor in kind) which are proper to the social security systems of each country. The first arebenefits in kind (medicines, practitioner and hospital services, etc.) recognized by thesocial insurance systems. The second are similar in nature to the first but are not provid-ed within the context of a social insurance system but directly by government to individ-uals not covered by these social insurance systems. These benefits consist basically of ser-vices associated with medical care. They may be provided to visitors, such as during an ill-ness or accident occurring to a visitor, or in the case of a particular medical situation of anindividual which causes him/her to seek care outside his/her usual environment.

These occurrences of visitor consumption are not as infrequent as they might seem. Somehospitals might have such a strong reputation that visitors come there to receive medicaltreatment from distant locations, and part or all of the treatment might be paid by socialsecurity systems. Some resorts specialize in health tourism, providing spas, centers forthalassotherapy, and the like, and the treatment, or part of its value, might be received bythe visitor as a social transfer in kind from the social security system to which s/hebelongs.

Within the conceptual framework of SNA93, only General Government and NPISHscan make expenditures on behalf of third parties (households) and these are the so-calledconsumption of individual non-market services that are transferred to householdsthrough social transfers in kind.

All consumption expenditures made by producing units (including Business, GeneralGovernment and NPISHs as producers), benefiting directly visitors, be they employees,guests, or the children and family of their employees, are considered as costs of produc-tion for these producing units.23

As expenses related to tourism and included within their operating costs, businessesmight consider the following:

(a) lump sums allocated to employees for business travel in order to cover all or partof these expenses, such as transportation, accommodation, food, laundry, person-al calls;

(b) direct payment or reimbursement of similar expenses made by employees or guestsof the business;

(c) operating costs of vacation homes owned by the producing unit rented to theemployees, or the net value between these costs and the amount charged to thebeneficiaries;

(d) operating costs of vacation centers for the children of the employees owned by theproducing unit, or the net value between these costs and the amount charged thebeneficiaries;


87OMT ¥ WTO ¥ BTO

D. VISITOR CONSUMPTION AND DIRECT PURCHASES BY BUSINESSES RELATED TO TOURISM

23 We shall say “businesses” for short, although all types of producing units, incorporated and unincorporated, market and non-market, might

be involved.

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(e) eventually, the estimation of the cost of free travel (or at a very reduced price) toemployees and their family by airlines or other transport companies;

(f ) eventually, the estimation of the cost of the provision of hotel accommodation freeor at a very reduced price to employees and their family by hotels or other accom-modation providers.

The issue is to qualify these costs. In the context of SNA93, they are not considered tobe expenditure “on behalf ” of their employees or guests but as intermediate consump-tion, remuneration in cash or remuneration in kind paid by these businesses. In the con-text of document TSA:RMF however, for the individual being invited, the employee onbusiness travel and the family member in vacation, all consumption expenditure associ-ated with his/her trip away from his/her usual environment, (which, as we shall see,might be different from the amount allocated to him by business) is part of his/hertourism consumption because what matters within this point of view, is the purpose thatinduces the consumption (the fact of being away from the usual environment), not whois responsible for its payment.

Whether it is remuneration in cash, remuneration in kind, or an intermediate consump-tion according SNA93 will determine whether it is part of the following categories ofexpenses which have been defined in the compilation of the TSA:RMF: visitor con-sumption in cash, visitor consumption in kind (remuneration in kind) or other tourismindividual consumption (i.e., business tourism expense).

Within the general conceptual framework of SNA93, in the case of amounts referring toemployees, the general criterion to be applied is the following: when the goods and ser-vices are used by employees in their own time and at their own discretion for the directsatisfaction of their needs or wants, they constitute remuneration in kind and are incomefor the employees. However, when employees are obliged to use the goods or services inorder to enable them to carry out their work, they constitute intermediate consumptionfor the producing unit (i.e., the business).

Nevertheless, the application of this criterion is not always very easy and clear cut, andsome precise recommendations are added, which, in the case of tourism, are particularlyrelevant:

(a) Transportation and hotel services provided while the employee is traveling onbusiness are considered as intermediate consumption; the use of these services is adirect consequence of the fact of being away from the usual environment.

(b) All other expenditures including meals and drinks consumed when traveling onbusiness are included within remuneration in kind.

(c) In the case of a lump sum given to an employee for him/her to meet transporta-tion, lodging and other expenses, the portion which s/he spends for transportationand accommodation should be considered as intermediate consumption of theproducing unit, while the rest of the amount provided would be a remunerationin cash, as there is free disposal of the amount received.

3.41.

3.42.

3.43.

3.44.



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3.45.

3.46.

3.47.

3.48.

89OMT ¥ WTO ¥ BTO

When the beneficiary is a guest, then all of these expenditures (e.g., payments (for trans-port fares, hotel and restaurant bills) are considered as intermediate consumption accord-ing to SNA93. The guest may not necessarily be solely on a business trip. The trip mightalso include leisure activities, such as attending sports or cultural events.

Figure 3.2 below summarizes the different situations and their treatment in SNA93 andin document TSA:RMF.

All these analysis seem to complicate the situation: would it not be sufficient to ask thevisitors how much they spent and the businesses how much of their operating costs isattributable to tourism in order to obtain a fair estimation of visitor consumption?

The answer is “no”. With this procedure, used without control of the componentsinvolved, there is no way of ensuring total coverage of visitor consumption without omis-sion or duplication. What will the visitor answer when asked about his/her expenditure asto the total amounts charged irrespective of who paid for it or the amounts s/he paid fromhis/her own pocket? What if s/he pays a hotel bill that is subsequently reimbursed by thebusiness s/he works for, or on the contrary, s/he only signs the bill and the business is thencharged? Or the case where the employee has to pay only part of the total bill, the restbeing charged to the business? What if the hospital bill is paid directly by the social secu-rity program, letting the visitor pay only a fraction of it, or if the visitor has to pay thewhole amount, with a later reimbursement? What should the visitor report: the totalamount invoiced, regardless of who and when it is settled? Only the amount which ischarged for him to pay directly? What is the corresponding internal tourism consumptionthat should figure in the TSA and in analyses of visitor consumption?

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Figure 3.2 Visitor Consumption and direct purchases by businesses related to tourism

A.Transactions by businesses

1. Lump sum allocations to employ-ees to cover their travel expenses,including transportation andaccommodation.

2. Reimbursement of transportationand/or accommodation costs;transportation and/or accommo-dation costs directly met by theemployer.

3. Lump sum payments to employeesto meet the costs of accommoda-tion and other personal expenses.

4. Reimbursement of all costs relatedto employee travel.

5. Expenditures related to the travelof guests of the business

B.Treatment in SNA93

The part corresponding to the effec-tive costs in transportation andaccommodation is considered asintermediate consumption by thebusiness. The rest is considered asincome – remuneration in cash, and asexpenditure – final consumptionexpenditure of employees.The expen-diture by visitors on items other thanaccommodation and transportation isconsidered as final consumptionexpenditure of employees.

Intermediate consumption by thebusiness.

The part corresponding to the effec-tive costs of accommodation is con-sidered as intermediate consumptionby the business. The rest is consid-ered as employee income – remuner-ation in cash.The expenditure by theemployees on items different fromaccommodation is considered to befinal consumption expenditure ofemployees.

The part corresponding to the effec-tive costs in transportation andaccommodation is considered to beintermediate consumption by thebusiness. The rest is considered asincome – remuneration in kind – andas expenditure – final consumptionexpenditure of employees.

Intermediate consumption by thebusiness

C. Treatment in Tourism Satellite Account

The part corresponding to the effec-tive costs of transportation andaccommodation is considered withinvisitor consumption as “businesstourism expenses”, i.e., part of visitorconsumption in kind. The rest is nottaken into consideration in the TSA.The expenditure by visitors on itemsother than accommodation andtransportation is considered to bevisitor final consumption expenditurein cash.

“Business tourism expenses”, part ofvisitor consumption in kind

The part corresponding to the effec-tive costs in accommodation is con-sidered within visitor consumption as“business tourism expenses” and partof visitor consumption in kind. Therest is not taken into account in theTSA. Expenditure by visitors on itemsother than accommodation and trans-portation is considered to be visitorfinal consumption expenditure in cash.

The part corresponding to the effec-tive costs in transportation andaccommodation is considered withinvisitor consumption as “businesstourism expenses” within visitor con-sumption in kind. The rest is consid-ered to be income – remuneration inkind.As expenditure, it is classified asvisitor final consumption in kind.

“Business tourism expenses” withinvisitor consumption in kind

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91OMT ¥ WTO ¥ BTO

A. Transactions by businesses

6. Operating costs of vacation cen-

ters or similar, operated by the

business for their employees

and/or their families.

7.Transfer of a lump sum to another

entity dependent on the business

that is in charge of managing a

vacation center for employees

and their families.

8. Market value of free (or almost

free) transportation of employees

and families by airlines or other

transportation companies

9. Market value of free (or almost

free) accommodation of employ-

ees and families by hotels or

other accommodation businesses

B.Treatment in SNA93

The portion paid by employees is

final consumption expenditure. The

excess of the operating costs over

these partial payments is income –

remuneration in kind, and as final

consumption expenditure.

This payment is considered to be a

current transfer from the business to

the entity, usually an NPISH.The addi-

tional value charged to visitors is

considered to be final consumption

expenditure. The part of the value

not charged to visitors is considered

to be production (and consumption)

of non-market individual tourism ser-

vices

The portion paid by the visitor is


expenditure. In theory, the market

value of the transportation provided

to the employees and their families

should be valued, both in production

of the business and in its remunera-

tion in kind (difference between the

value of production and the portion

paid by the visitor).




value of the accommodation provid-

ed to employees and their families


of the business, and as remuneration

in kind (difference between the value

of production and the portion paid by

the traveler).

C. Treatment in Tourism

Satellite Account

The portion paid by employees is vis-

itor final consumption expenditure in

cash. The excess of the operating

costs over these partial payments is

income – remuneration in kind, and

as expenditure – visitor final con-

sumption expenditure in kind.

The portion paid by employees is vis-

itor final consumption in cash. The

excess of operating costs over these

partial payments is income – remu-

neration in kind, and expenditure –

visitor final consumption expenditure

in kind.




value of the transportation provided

to the employees and their families


of the business and in its remunera-

tion in kind (difference between the

value of production and the portion

paid by the visitor).

The portion paid by the visitor is vis-

itor final consumption expenditure in

cash.The excess of the market value

over these partial payments is income

– remuneration in kind and as expen-

diture – visitor final consumption

expenditure in kind.

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In order to verify the coverage of the data that has been collected, to insure comparabil-ity among data provided by different sources and thus its additivity, it is necessary toidentify separately each component, and check how each of them is reported.

It is also important to note that the value reported by producing units as travel costs usu-ally do not match total tourism consumption on business trip. Travel costs might includenot only the expenditures effectively charged by an employee and paid against invoices, butmay also include the lump sums, such as per diem expenses, that are paid to the employee.The visitor may use it entirely on his/her trip or spend less or more. Additionally, these trav-el costs might also include certain expenses of businesses on recreation centers they are own-ing and other types of travel by employees or their family that businesses may cover.

According to SNA93 principles, goods and services are used when institutional unitsmake use of them in a process of production or for the direct satisfaction of human needsor wants. In the case of goods, the distinction between acquisition and use is clear.Producers acquire goods that they may hold for varying periods of time before physical-ly using them up in processes of production. Households may hold consumption goodsbefore using them for the satisfaction of their needs or wants. Few goods are so perish-able that they have to be used immediately. Even most foodstuffs need not be eatenimmediately and can be consumed until some time after they have been acquired.

For producing units, SNA93 allows for the possibility of acquiring and maintaininggoods in inventory before their use. This is not the case for households (in their activityas final consumer), however, which are deemed to acquire goods and services exclusivelyfor the direct satisfaction of human needs or wants. For these transactors, there is no pos-sibility of holding inventories, so that all that is acquired is deemed to be consumed inthe spot: no distinction can be made between acquisition and use.

As a consequence, so also is the focus of the TSA:RMF. It measures the acquisition of goodsand services by visitors by direct purchase in cash, through transactions in kind, productionon own account, or transfers in kind (including social transfers in kind), whether these goodsare perishable, or consumer durables. It does not measure their use during a trip. Even ser-vices that have been purchased but not utilized are considered as “consumed” by the visitorwhen there is no refund or only a partial refund of the value of the service, such as for non-refundable tickets, or of cancellation fees retained on reservation of services not used.

This type of decision has important consequences for the interpretation and use of theresults of the TSA. If a consumer durable good is purchased by a visitor on a trip, its totalvalue is recorded as visitor consumption at the moment of the acquisition regardless ofits use over its life span. When it is used in other circumstances, other trips or othertimes, no allocation is made for the use of the good itself. The document TSA:RMF onlyrecords the acquisition of goods and services necessary to the functioning of previouslyacquired durable goods (maintenance costs, fuel, etc.) but does not impute any value totake into account the “using up” of a good (i.e., depreciation). Nevertheless, if the samegood is rented from a rental company, the total rental value is recorded as consumptionexpenditure during the trip in which such rental occurs. This rental value includes in itsbase an allocation for the use of the good established from its purchase value and its ser-vice life. As a consequence, it is important to observe that a system such as the TSA:RMF

3.49.

3.50.

3.51.

3.52.

3.53.

3.54.



E. VISITOR CONSUMPTION AND THE USE OF GOODS AND SERVICES ON TRIPS

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3.55.

3.56.

3.57.

3.58.

3.59.

3.60.

proposed here cannot be used to compare validly the costs of using a durable good whenowned versus when rented.

A way out can consist of collecting additional information on goods used during trips andtheir characteristics, in terms of purchase value, service life, moment of purchase, intensityof use, etc. Compilation of costs of use can then be established, but outside the system. Insome cases, users might consider this information useful, and should collect it accordingly.

The document TSA:RMF provides a discussion on the issue of second homes used main-ly for tourism purposes.24 Nevertheless, there are still some connected issues that needfurther clarification, and they are discussed here.

SNA93 specifies that goods and services produced for the own final use of their produc-ers and included within the boundary of production should be valued “at the basic pricesat which they could be sold if offered for sale on the market”.25 It is observed though that“when reliable market prices cannot be obtained, a second best procedure must be usedin which the value of the output of the goods or services produced for own use is deemedto be equal to the sum of their costs of production”26.

In applying this recommendation to the case of services provided by owner-occupieddwellings, SNA93 observes that as in most cases well-organized markets for rented hous-es exist for most countries, the first method of valuation can usually be used. When suchis not the case, the second method should be employed.

SNA93 does not provide any specific indications concerning the procedures to be usedto estimate the housing services provided by second homes, so that the general procedureshould be used.

First of all, it has to be observed that the market situation for rented vacation homes is nothomogeneous. While in certain areas and situations a market for rented vacation homesexists and its relative importance is such that it can validly be used as a reference for the esti-mation of an imputed rent for owner-occupied second homes, such is not always the case.Vacation homes outside well-known and appreciated resorts might be mostly owner-occu-pied. This situation has to be taken into consideration when selecting the method to beused for the measurement of this imputed rent. If a significant market exists, then the mar-ket will be the reference. If no significant market exists, then the estimation has to be madeindirectly, using the costs of production as reference, as discussed below.


93OMT ¥ WTO ¥ BTO

F.2. Second homes used mainly for tourism purposes

F.1. Estimating the imputed value of housing services of owner occupieddwellings to their owners

24 Chapter II, section B.5.2.

25 SNA93 ¶6.85

26 SNA93 ¶6.85

F. VISITOR CONSUMPTION AND SECOND HOMES USED FOR TOURISM PURPOSES

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When a significant market exists for vacation homes, these are usually not rented for thewhole yearly period (as is the case for main homes), but on the contrary they are rentedto different households for short periods of time, such as by the week or by the month.If the owner of such housing units behaves rationally, s/he anticipates that the accom-modation will be vacant part of the year. According to the conditions of the market, therent s/he charges when there is demand is such that the yearly costs of production of theservice are more than covered by the yearly gross income generated by these rents.Considered under a different perspective, the lack of income corresponding to the peri-ods where the vacation home is vacant is compensated by the excess of the income overthe costs for the periods when it is rented.

In order to estimate correctly the market reference to be applied to owner-occupieddwellings, the flow of annual rent has to be considered, since there is a compensation ofthese monthly flows during the year, and not the average monthly rent generated whenthe unit is occupied multiplied by 12. The latter procedure would lead to a serious over-valuation of the estimated income to be associated to the accommodation unit.

When such a reference market does not exist, SNA93 recommends measuring the pro-duction (and consumption) for own final use by the costs of production. These shouldinclude all the components that a rational transactor takes into consideration when pre-ferring the ownership to lease: that is, not only direct costs of production such as main-tenance costs, but also taxes such as specific property taxes and the opportunity cost ofimmobilizing its capital in such an asset.

It may be observed that in both cases no condition has been established regarding theeffective use, or the pattern of use, of this second home by its owner. The owner may visitit or not, for the estimation depends solely on the characteristics of the home itself. As aconsequence, a tourism service on own account might be produced and consumed evenwithout the visit of any individual.

Finally, a second home used principally for own account and for tourism purposes mightalso be leased to third parties. In such a case, the estimation of the service provided onown account should take into consideration the value of the lease received. Then thevalue of own account production (and of own account consumption) is equal to the totalvalue that has been estimated minus the amount received from the lease.

Inviting a visitor to stay at a host’s home or at his/her second home for free does notgenerate an addition to the supply of goods and services in the economy, as thishome or second home already provides housing services per se, which is determinedby the nature of the construction, not by its inhabitants. As a consequence, this is anexample of a situation where a visitor does not generate an increase in the GrossDomestic Product of the economy, only a displacement between tourism use andnon-tourism use.

3.61.

3.62.

3.63.

3.64.

3.65.

3.66.



F.3. Inviting a visitor to stay at one’s home or at one’s second home for free

a. When a significant reference market exists.

b. When there is no significant market that can validly be used as a reference

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3.67.

3.68.

3.69.

3.70.

3.71.

3.72.

If the visitor is received in the main home of the host, there is a net transfer in kind underthe form of housing services on own account from the host to the visitor and a netincrease in tourism use of the service balanced by a net decrease of non-tourism use ofthe service. If the visitor is received in the second home of the host, there is a net trans-fer in kind, under the form of housing services on own account from the host to the vis-itor, but no change in the use, as the service provided by the second home has alreadybeen qualified as a tourism use. Nevertheless, it is doubtful that any country has thecapacity to measure such flows of tourism services on a macroeconomic scale.

In SNA93, in general all expenses related to decoration, maintenance and small repairsincluding repairs to fixtures which are commonly carried out by tenants as well as byowners of a home are considered to be final consumption expenditure of the household.This is also the case for second homes held for tourism purposes.

The maintenance costs of second homes held principally for tourism purposes aregiven exactly the same treatment as those of the main home. They are intermediateconsumption of the production process of housing services on own account, provid-ed they are ordinary and regular, and have to be undertaken periodically in order tomaintain the asset over its expected life time. Such expenses include external andinternal painting, wall replastering, roof repairing, and maintenance of the electricalcircuits.

Expenditures on major improvements – is reconstructions, renovations or enlargementsto dwellings – are not considered to be repairs and maintenance. They are excluded fromhousehold final consumption expenditure and from intermediate consumption of theproducer of housing services and are treated as gross fixed capital formation of the own-ers of those dwellings.

In the case of do-it-yourself repairs to second homes, we have the same three categories:

(a) if small repairs, decoration and maintenance of fixtures, the production of the ser-vice of own-account is outside the boundary of production, and only the purchaseof materials is considered as final consumption expenditure;

(b) if current maintenance, it is considered as intermediate consumption of the pro-duction process of housing services on own account;

(c) if important repairs and modification, which alter the expected service life of the asset,or modify its structure and appearance, it is classified as gross fixed capital formation.

For the purpose of the TSA:RMF the same treatments hold. Those classified as finalconsumption expenditure are included within visitor final consumption expenditure.Those classified as intermediate consumption are outside the boundary of visitor con-sumption. Finally, those considered to be gross fixed capital formation are part oftourism gross fixed capital formation. This means that all goods and services purchasedfor the decoration or small repairs of the second home or associated do-it-yourself activ-ities are part of visitor final consumption expenditure. All other purchases are outsidethe scope of visitor consumption.


95OMT ¥ WTO ¥ BTO

F.4. Maintenance costs, do-it-yourself repairs, major improvements to second homes

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The equipment of a dwelling in terms of furniture, appliances, linens, kitchen wares,tableware, fixtures, and decorative items are recognized in SNA93, in a way that shouldbe applied accordingly in the TSA for second homes held principally for tourism pur-poses. These items should be classified in two different categories:

(a) Those of a relatively bulky size and which are usually found already installed infully equipped homes such as refrigerators, dishwashers, stoves and laundry wash-ers and dryers. When those items are bought in order to equip a new house, theyare considered as intermediate consumption for the equipped house, which is con-sidered as a whole as a complex non-financial asset. When they are later purchasedto replace existing damaged items or to upgrade the quality of the house, they arestill to be treated as intermediate consumption of either the production of hous-ing services on own account, or the production of housing improvements (grossfixed capital formation).

(b) All other items constitute final consumption expenditure of households.

Applying these classifications to the context of visitor consumption, all acquisition ofequipment for a second home held for tourism purposes and different from the basicinfrastructure of domestic appliances and fixtures found in fully equipped homes is con-sidered to be visitor final consumption expenditure.

What happens when a second home becomes the main residence of a household or vice-versa? There are cases when a second home becomes the main residence of a householdas, for example, on the retirement of the major breadwinners. The reverse situation mightalso happen within similar circumstances. It must be observed that, following SNA93principles, this reorganization of assets has to be considered as a reorganization of networth and not as a transaction on gross fixed capital formation.

The terms “timeshare”, “vacation ownership”, and “interval ownership” are commonlyused to cover many different situations whose common origin can be traced to the sameinitial experience, which took place in 1967 at Super-Devoluy, a ski resort in France,where apartments were built with the specific object of selling their “usufruct” to differ-ent vacationers on a weekly basis.

The “owners of the usufruct” had no specific right in the asset itself and could not makemodifications to it, neither structurally nor in terms of its decoration or furniture. Theywere not the owners of the assets themselves, but solely of their use at a given momentin time. This week of which they were the owners could be used for their own enjoyment,or they could delegate to the management of the project to rent the apartment to a thirdparty. For the owners of the usufruct, this solution allowed them to reduce sharply thecosts of maintenance of this property while not using it, as these were spread over theowner of the asset itself and the other owners of the usufruct.

3.73.

3.74.

3.75.

3.76.

3.77.



F.6. When a second home becomes the main residence of a household or vice versa.

F.5. Second home equipment

F.7. Timesharing arrangements

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3.78.

3.79.

3.80.

3.81.

3.82.

3.83.

The duration of the contract of such purchases was usually tied to the duration of theusage life of the accommodation that was the object of the contract, but could also beless. These “weeks” could be sold to third parties. When the apartment was sold to anoth-er developer, the timeshare contract was solely transferred to this third party, which wastied contractually to the owners of the timeshare.

This type of property allowed the owners of the timeshare to own a vacation home onlyfor the period of time in which they planned to use it, thus reducing substantially thecosts of owning a vacation apartment in a ski resort. Nevertheless, these owners lost someflexibility in time (they had to buy a predetermined week, the same every year) and inspace (the location of the apartment was fixed).

Such a form of ownership, where the ownership of an asset and the right to use it are con-sidered as two different assets and thus capable of being traded separately on differentmarkets, allowed substantial flexibility that was soon put into practice and such schemesrapidly grew in the U.S., Spain, and many other locations. Weeks in the same accom-modation were exchanged between individuals, and then weeks in different locationswere exchanged.

Companies saw an opportunity to offer new, flexible products to vacationers. Throughthe administration of various resorts offered for similar prices they were able to offer forsale “rights on weeks” in their resorts as a package, with different variants and over dif-ferent time periods. Other companies specialized in the exchange and resale of suchunits.

As a consequence, we are now facing a complex situation all covered under the sameglobal denomination of timeshare or vacation ownership. Besides those contracts fol-lowing the initial idea, vacation ownership timesharing has been extended to the rightto use specific weeks of a resort or a family of resorts during a specific time period.

The original form of usufruct has also evolved and can now take the following differentownership forms: deeded property, leased property, or even a share in a stock company.National governments may not authorize all forms of ownership within their economicterritories, however.

(a) A deeded interest, also called ownership in fee simple, is owned outright forever,for the property title does not expire. It is an absolute right that can be sold, leased,or even willed to the owner’s heirs.

(b) A leased interest is a right to use a unit restricted to a specific week during a fixednumber of years. Upon the expiration of the lease term, the right to use will gen-erally terminate and return to the resort owner. With a leased interest, you knowthe terms and conditions of the leases prior to making the decision to buy. Thetime of the use can be either fixed or floating, in which case weeks might also be“stored” or passed over to future years.

(c) In the case of a stock company, resorts issue shares of ownership in the propertyor properties that they are selling. Rather than owning a deed to a property, whatis owned is a share in the company that entitles the owner to use of a residentialunit for a set time each year.


97OMT ¥ WTO ¥ BTO

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The creation and net purchase of a timeshare contract of a usufruct type (that is, differ-ent from the “stock company” case), present special difficulties in coverage in theTSA:RMF, specifically as to what the economic nature of these contracts is. In particu-lar, is it a consumption product, and therefore should it figure in visitor consumption forits total market value at the moment it is purchased by a visitor? Is it a component of itsfixed capital formation? Or is it of a different nature? Should we impute an annual valueof consumption over the life span of the contract, or assign the total value in the momentof the purchase (as for any durable good)? Should all of these contracts be treated in thesame way (which should be highly desirable), or is it necessary to analyze separately thedifferent types of contracts available in the market?

First of all, it is clear that when buying a timeshare, legally speaking there is no right of own-ership of a physical asset. National laws of these countries point out that the tenant of a time-share has no right to the asset itself, only to its use and this is what the concept of usufructunderlines.

Nevertheless, clearly in its initial form, but also in a more global way in the extended deed-ed form, this usufruct reduces the economic value of the asset that is the object of the con-tract for its owner. In particular, its existence obliges the owner to give up its use to theowner of the timesharing title. In a certain way, it can be said that the market value of theproduced asset that is the object of the timesharing contract (which can be a specificaccommodation unit, or a “share” within a condominium or a family of condominiums)belongs at the same time both to its legal owner and to the owner of the usufruct of thisasset. The creation of the deeded usufruct consists implicitly of selling part of the usagevalue of the asset to the new owner of the deeded interest. This usage value decreases overtime as the asset under the contract of usufruct is used and decays, and the number offuture weeks of potential use decreases. In this, both “owners” see their asset depreciate.

For the buyer of the deeded interest, the purchase is tourism gross fixed capital forma-tion as it is for any purchase of a dwelling unit for own account. For the seller, even inthe case of the creation of a new obligation, it is a decrease in its tourism gross fixed cap-ital formation, as it is considered that the physical owner ‘shares” a part of his property.Globally for the economy, even when there is a creation of a timesharing program onexisting assets, there is no aggregated effect with the exception of the net transfer costs.The same happens when such contracts are resold.

This eliminates the issue of the classification of timeshare units within the product clas-sification of tourism fixed capital formation. Units offered under a timeshare scheme usu-ally do not present physical characteristics that make them different from other units ofthe same kind. It characterizes forms of exploitation of an asset but it does not charac-terize it physically. There should not be any special item in the tourism product classifi-cation that references timeshare units or projects.

In the case of a leased interest, the duration of the usufruct contract is limited in timeand fixed before hand. As a consequence, the value of the contract can be interpreted as

3.84.

3.85.

3.86.

3.87.

3.88.

3.89.



a. The deeded interest

b. The leased interest

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3.90.

3.91.

3.92.

3.93.

a pre-purchase of a rent for a fixed week for a fixed number of years. This could not bethe solution for the previous category of deeded interest because as the period of thescheme is not limited in time, the number of periods to which the title corresponds isinfinite. As a consequence, the purchase of the leased timeshare is a financial transaction(a pre-purchase of a commodity) and there is an annual consumption of rental servicesequal to the annual decrease of the market value of the timeshare title.

In both cases, titleholders are deemed to pay an annual fee toward the maintenance andupkeep of the timeshare unit. These periodic payments generate the right for the servicesusually provided. Consequently, these are part of tourism final consumption expenditure.They are another example of tourism consumption not necessarily associated to a specif-ic trip, as these payments are not associated to an effective trip by the title holder, as s/hecan transfer the right to use the timeshare to a third person or trade it for use on somefuture trip.

In some cases, a fee can be assessed over and above the annual maintenance fee by theresort pro rata among the timeshare owners. This fee is intended to defray expenses relat-ed to major repairs and refurbishing of the timeshare resort’s equipment, facilities andunits. In the case of a deeded interest, this special assessment is part of its gross fixed cap-ital formation, since it increases the market value of the asset that is the object of thetimesharing contract. In the case of a leased interest, this special assessment should beestablished in proportion to the time during which the timeshare holder will benefit fromsuch new investment, and thus it should be considered as an increase in the value of thepre-purchase of the rent for the years which are still to come.

In the case of a stock company, a timesharing title is like a share in a company: the pur-chase of the timeshare is the purchase of a share and entitles the shareholder to the resid-ual value of the incorporated enterprise that issued them. Consequently, it is outside theboundary of document TSA:RMF. The payment of a maintenance fee is also usually partof the contract. Special assessments usually must be accompanied by the issuance of addi-tional shares.

In summary, it is not possible to suggest a unique classification and treatment for all thedifferent possibilities existing under the generic term, “timesharing scheme”, so that foreach broad category a different solution has been suggested. If new modes of timeshar-ing schemes were to appear, then they should be classified into one these three main cat-egories that have been identified, using as criteria the duration of the obligation and thenature of the ownership right. The treatment in TSA:RMF document of different trans-actions relating to the different forms of timeshare programs is summarized in Figure 3.3.


99OMT ¥ WTO ¥ BTO

c. Maintenance fees

d. Special assessments

e. The timeshare stock company

f. Timeshare summary

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Figure 3.3: Summary of Treatment of Timeshare Transactions in the TSA by Form of Ownership

Form of Timeshare Scheme



A.Transaction

1. Construction of units tobe offered under atimeshare scheme

2. Sale (or resale) of unitsoffered under atimeshare scheme

3.Annual transaction in theTSA

4.Special assessments

B. Deeded interest

Tourism Gross FixedCapital Formation

For the buyer: + TourismGross Fixed CapitalFormationFor the seller: – TourismGross Fixed CapitalFormationNet effect: + Tourism GrossFixed Capital Formation forthe value of the transfercosts

Maintenance fees are partof visitor consumption

For the developer, itcorresponds to Gross FixedCapital Formation, a part ofwhich is turned over to thetimeshare holders for theamount they are charged:only the net partcorresponds to him; for theowner of the timeshare, theamount paid is TourismGross Fixed CapitalFormation

C.Leased interest


Creation of a financial assetfor prepayment of rentingservices

Maintenance fees are partof visitor consumption; theannual decrease of themarket value of the leasedinterest is considered asrent paid.

For the developer, itcorresponds to Gross FixedCapital Formation; for thetimeshare holder, theamount charged is anincrease in the financialasset corresponding toprepayments of rent.

D.Stock company


Issuance or trade of equityshare

Maintenance fees are partof visitor consumption

For the developer, itcorresponds to Gross FixedCapital Formation; for thetimeshare holder, it is anincrease in its equity.

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4.1. Before beginning statistical measurement of visitor consumption and total tourismdemand, it is necessary to have some knowledge about what is of importance and whatis of interest regarding tourism from those who have mandated the elaboration of aTourism Satellite Account in a country. As the system is proposed as a flexible scheme, itis necessary to define what a compiler will have to compile according to the needs andwants which have been identified, often in response to the following questions:

(a) Is the country solely interested by inbound tourism? This may be legitimate in coun-tries where the average income level does not allow much internal mobility, or wherethe expenses associated with these movements are not considered as important interms of political issue.

(b) Is the country interested by tourism restricted to certain areas of the country, identi-fied as typical tourism destinations?

(c) Is there awareness of the coverage of tourism that goes beyond to movement forleisure, pleasure or recreational purposes, or is there interest for the time being in con-centrating solely on leisure tourism?

(d) What is the importance of second homes, of timesharing schemes, and of packagetours within the tourism economy? How do they operate? Is this mode of operationhomogeneous throughout the country, or are there some tourism areas with very par-ticular operating procedures requiring special analysis and studies?

(e) What is the importance of transactions in kind regarding tourism? Do businessenterprises or other types of institutions organize or supply vacation facilities? Howare they financed? What is the importance of the amounts paid by visitors versus theamounts provided from other sources?

(f ) Is there an acknowledgement of the importance of certain activities for tourism (i.e.,tourism characteristic activities) and the importance of tourism to certain activities?Which of them would need to be better known and analyzed from a statistical pointof view?

IV. From theory to practice: howto approach the measurementof total tourism demand

A. STATISTICAL OBSERVATION AND ESTIMATION PROCEDURES

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A first step should be to conduct a study of tourism, perhaps in the form of a pilot studyor a feasibility study with a triple objective:

(a) To find out what is important concerning tourism in the country, using material ofa descriptive type and particularly covering two aspects: visitor final consumptionexpenditure in cash by forms of tourism, and all other components of visitor con-sumption. Then tourism gross fixed capital formation and tourism collective con-sumption can also be considered, with a lesser degree of priority;

(b) Using all the available statistical data and mobilizing all with some relationship to thetopic, to establish what is already known about tourism in economic terms, how itrelates to the descriptive view on tourism, and which are the areas totally unknownbut which might exist and be of interest;

(c) To establish how much of the TSA could readily be compiled, in order to make a firstdiagnostic of what information is available and how good and consistent it is.

This would provide the basis for deciding which part of the system would receive high-er priority and would lead to the establishment of a plan of action for the developmentof the TSA.

Identifying the payer is the first step towards the establishment of a system of statisticalobservation because who pays usually will also be the best potential source of informa-tion on the transaction.

In the measurement of visitor final consumption expenditure in cash there are few majorproblems in defining the payer since it is usually the visitor him/herself. However, thisissue is more problematic when looking at other components of visitor consumption andof total tourism demand. In some cases s/he might be unaware of having benefited fromsuch transaction, as is the case for certain non-market services. But even if the visitor isaware of having received a component of visitor consumption from a third party, s/heoften ignores its value.

Reviewing the different components of total tourism demand, the object of the presentdocument, we might propose the following payers:

(a) In the case of barter transactions, the visitor or his household should be in a posi-tion where it could estimate the value of what they have given in exchange for whathas been received, and by deduction, what is received is also estimated since its totalvalue is equal, by definition of a barter transaction.

(b) In the case of production for own final use, which refers to housing on ownaccount produced by second homes, the owner of the housing unit should be ableto provide the parameters needed in order to estimate this value. Indirect measure-ments could also be developed using statistical data on second homes and their pat-terns of occupancy.

4.2.

4.3.

4.4.

4.5.

4.6.

B. GENERAL VIEW OF POTENTIAL SOURCES OF INFORMATION

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(c) In the case of transfers in kind received from other households, visitors should beat least able to provide a summary description of such transfers (e.g., invitations tolunch or dinner outside the house, presents received, invitations to entertainment).At the same time, these items could also be validly estimated from the supply sidewhere the occurrence and the estimation of the value of such transactions could bethe object of special statistical observation. Nevertheless, such estimation should onlybe done if it is considered of sufficient importance that it would provide a new insightin the phenomenon of tourism.

(d) In the case of other types of transactions in kind, mainly between Productionunits: Business, General Government and NPISHs, and their employees forbusiness travel and business guests, and addressing the remuneration in kind andintermediate consumption, these visitors should also be able to identify, at least qual-itatively, the expenses paid by resident businesses on their behalf, and identify also theresidence of the provider (necessary to meet the requirements of Table 4 ofTSA:RMF).27 Nevertheless, this information should be scrutinized and arranged inconcordance with that provided by the main informer, the businesses themselves,provided their financial statements contain the information in such a way that it isuseful for these purposes.

(e) For other components of remuneration in kind by businesses, such as net operat-ing costs of recreation centers for children and family, businesses should be in theposition to provide this information. A special survey on this issue might be helpful,aiming principally at big enterprises, because it is logical to establish such facilitiesand to manage them directly if the number of beneficiaries is high.

(f ) Social security benefits in kind; social assistance benefits in kind. The providersof such benefits should be the main reporters of these transactions. Nevertheless, theidentification of such tourism transactions among the many benefits in kind provid-ed by social security programs and the public entities providing social assistance doesnot seem easy to achieve. If the residence of the beneficiary might usually be knowndue the existence of regionally organized systems, the residence of the provider ofbenefits in kind seems more difficult to identify at an aggregated level.

(g) For individual non-market services provided by non-profit institutions servinghouseholds (NPISHs), the providers of the services will be the best sources to reporton these transactions. The identification of tourism transactions among the manythey conduct is the difficult issue. A prior classification of NPISHs according to theirmain function could certainly help focus the problem, as many of them have the pro-vision of recreation away from home as their main function.

(h) The providers of individual and collective non-market services provided by gen-eral government are in the best position to provide this information. Here also, afirst necessary step would be to classify the agencies of government according to theirmain functions, which would help, in each case, to identify the possible transactionsrelated to tourism individual and collective non-market services.

27 And worksheet 3b, Annex 5, of TSA:CF.

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(i) National accounts data on gross fixed capital formation in specific goods and ser-vices are an excellent source provided a rather high degree of detail is available.Otherwise, the same methodology applied to the general compilation of nationalaccounts could be applied to obtain the breakdown that is required.

(j) The tourism industries should be the best source of gross fixed capital formation bythe tourism industries, and this issue is treated in Tourism Satellite Account.Technical Document No. 3: Measuring the Supply of Tourism Goods and Services.

This means that for the compilation of a Tourism Satellite Account it shall be necessaryto consider a broad array of statistical sources going far beyond surveys of visitors. Thesecannot be sufficient due to the diversity of the components of visitor consumption andof total tourism demand.

In tourism, barter transactions occur exclusively between households. Although in manycircumstances barter results from exchange among friends and family members and thusare purely informal transactions, some institutions have developed the matching of sup-pliers and consumers (principally of homes and international exchange for children) as abusiness or as a service to the community. In many such cases, there is a charge for theservice, so administrative records probably exist that could be surveyed. The surveyshould identify the type of barter transaction, residences of the participants, breakdownby products, and an estimation of the value of the services received and those provided.

The basic issue consists of estimating the services provided by second homes used fortourism purposes. Two complementary issues must be considered here: first, an identifi-cation of the accommodation units to be covered by this measurement, and second, thevalue of the service to be assigned to each of these units.

Not all second homes have to be considered in this estimation, but only those that arenot the principal place of residence of any member of the household owning the secondhome. Additionally, this home should not be principally visited by any of the membersof the household in order to conduct from there a remunerated activity.

Housing censuses should be used to establish the existence of second homes, and can pro-vide the basic framework. However, if a de facto system of census is used which is often thecase in less developed countries, this can generate a bias because the place where the house-hold is found on the day of the census might then be considered as its main residence.

In a census, it is usually difficult to specify the characteristics of second homes because they arevacant most of the time and nobody is there to give information about them. As a consequence,the census would basically provide a number of units, their geographic location, and some grosscharacteristics that can be collected by looking at the building from the outside. As a consequence,it may not be easy to exclude those that do not satisfy the criterion that has been established.

4.7.

4.8.

4.9.

4.10.

4.11.

4.12.

C. PROPOSALS FOR ESTIMATION OF THESE ITEMS

C.1. Barter transactions

C.2. Production for own final use: housing on own account

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4.13.

4.14.

4.15.

4.16.

4.17.

4.18.

As more information is required, both from a physical perspective and on the costs asso-ciated with this ownership in order to value the flow of related services, these should beobtained through special questions in a household survey concerning second homes. Sucha survey would determine if the second home qualifies as used for tourism purposes, thequality of the house (size, number of rooms, appliances, etc.), its location (in particular inorder to decide whether the first or the second method of estimation should be used), thepossibility of this home of being rented to third parties in certain circumstances, the costsof maintenance and other costs associated with its ownership and its market value.

Regarding the value of the flow of imputed services to be attached to second homes, inchapter III, section F.2 above, a proposal is made on the principles to be applied to thismeasurement.

For second homes located in places where own account and rented units are both com-mon modes (e.g., ski resorts, mountain cabins, beach resorts), the standard system can beapplied, that is, to apply the annual rent observed for leased properties to similar prop-erties held on own account. In places where this situation does not occur, estimationthrough costs including opportunity costs of the immobilization of capital should beemployed.

The coverage of this item will depend heavily on the statistical resources of the countryand the availability of detailed and current information on households. Formerly, suchan entry could cover a great variety of transactions that occur between individuals notbelonging to the same household, such as accommodation, food, transportation, andentertainment provided free of charge by a host to a visitor, through a purchase from aprovider, such as paying for a restaurant meal.

Provided the information is considered to be of significant value and can be obtained atreasonable cost, it should be sought. Household surveys can provide the information onsuch transfers provided by resident units. And surveys of visitors could give the otherview on the issue from the point of view of the beneficiary. Nevertheless, it is likely thatthese two points of view might differ greatly, and reconciliation would prove difficult.

The chart presented in chapter III, section D above is intended to give a summary of themain types of situations in which businesses are involved in one way or other in visitorconsumption corresponding to their employees or to the guests of the business. It madethe point that it was necessary to obtain from businesses some detail about the way theexpenses were made. In fact, this is not an easy task because the accounting system in usemight not allow to differentiate between transportation and accommodation on onehand, and other expenses on the other, or from expenses based on invoices and thosebased on the allocation of a lump sum when these amounts have a different classificationand impact on the tourism satellite account.

C.3. Transfers in kind received from other households

C.4. Transactions in kind mainly between businesses and their employees for businesstravel and business guests

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Nevertheless, this task is required in order to establish the national accounts of a coun-try following the recommendations of SNA93. Thus, it should have been done, at leastin a general fashion, if the compiling country has adopted SNA93 recommendations.The compilation of the TSA should be based on such estimations that may then onlyneed to be reviewed and discussed. The principal typically tourism-related task shouldthen consist of obtaining a breakdown, first by categories of products, and then by suchother criteria as needed and feasible.

A basic issue is to find out whether the policies concerning the payment of a lump sumto traveling employees (e.g., per diem expenses) are used to reflect effectively theexpected value of the employee’s expenses by the employee or include, implicitly, andaddition to the salary. Or on the contrary, does the policy require that the employeeshould bear certain travel-related expenses him/herself. If no component of addition(or subtraction) to the salary is suspected, then the total amount reported by the com-pany can be used as an estimate of the total amount of the expenses by the employeeor guest on travel, irrespective of its detailed classification according to type of incomeand class of expenditure.

A direct survey of companies on the methods used to establish the amount of thelump sum (if it exists) may guide the compilers. If it is based on the study of effectiveexpenditures as reported periodically by employees, or on a special field study, it canbe assumed that the amount corresponds to the expenditure value we seek. If not,then there may be elements of remuneration involved. The challenge is to estimatehow much.

Other general ideas can also be suggested for employing information available in certainbusinesses or entities and trying to extrapolate it to other, similar organizations so thatfew distortions are introduced by this procedure. Producing units should be grouped byenterprises (since such policies are usually established for a whole company) and classi-fied by main activity and size. They should be then classified according to the scope ofthe coverage of lump sum payments: that is, a lump sum payment covering expensesexcept for transportation expenses, or except for transportation and accommodation,expenses.

On the other hand, visitors on business travel and guests traveling on the account of busi-nesses should be asked questions that make it possible to relate to the information col-lected from the employing companies. Such information includes class of employer, sizeand sector of activity (e.g., government agency, NPISH, private company). Regarding theexpenses inherent in the travel, such as who pays what, amounts paid, existence of a lumpsum, remuneration arrangements, relationships between this lump sum received andexpenses effectively paid, this information would be tourism specific and might be col-lected by National Tourism Administrations.

Relating these two different sources of information might give some insight on the dif-ferent amounts to be included as remuneration in kind on the one hand, and tourismintermediate consumption of businesses on the other, both of which are required to movefrom the measurement of internal tourism consumption expenditure in cash to totalinternal tourism consumption. The precise procedures to be followed depend from caseto case and should be developed according to the situation.

4.19.

4.20.

4.21.

4.22.

4.23.

4.24.

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4.25.

4.26.

4.27.

4.28.

This information is needed in order to feed28 tables showing visitor consumption. Adistinction is required between social security benefits in kind and social assistancebenefits in kind. Additionally, social security benefits in kind should also be brokendown between those that result from a reimbursement and those that are provideddirectly. In terms of products, the breakdown required focuses primarily on tourismcharacteristic and connected products. Nevertheless, in the case of social security andsocial assistance benefits in kind, most of the consumption will be concentrated inmedical care and medicines. For the sake of analysis, those products might be interest-ing to be pointed out, even if they are not specifically required, with this breakdownin the table.

Those items covered by this measurement are social security and social assistance bene-fits in kind, the inception of which supposes the movement of the beneficiary fromhis/her usual environment. This can happen under the following circumstances:

(a) The beneficiary, while outside his/her usual environment, requires the provision ofthe service inherent to the benefit s/he is entitled to, such as a sudden illness or acci-dent which requires the intervention of the social security scheme to which s/hebelongs or the use of social assistance benefits.

(b) The provision of the benefit in kind requires the beneficiary to travel outside his/herusual environment in order to attend a hospital in another city, region or even coun-try, to reside for a short period (less than a year) in a convalescent home or rehabili-tation center, or to visit a spa.

The identification of the service provided as a part of visitor consumption of the benefi-ciary requires the identification of where the benefits in kind are provided to each bene-ficiary. Here again, two sources have to be reconciled: on the one hand, the payer, thesocial security institutions and providers of social assistance benefits, and on the other,the beneficiary. Reconciliation is not straightforward: the payers know the total amountsof benefits but cannot easily identify the place where the benefit occurs as related to theplace of residence of the beneficiary, and on the other hand the visitors can identify ifthey have received a social security or social assistance benefit while on a trip but in mostof the cases may not have the information which requires a valuation of social transfersin kind received. Only in the case of social security benefits in kind resulting from a reim-bursement of expenses can the needed information easily be obtained from the visitorssince they initially were in charge of the disbursement.

One solution might be to estimate from the visitor’s information the nature of thesocial transfer in kind received (e.g., a visit to a physician, a prescription, some num-ber of days in a hospital in this special field, some number of days in a convalescenthome) and then use tables and pro-forma statements to estimate a global value of thetransfers in kind received.

C.5. Social transfers in kind, except the provision of individual non-market services

28 And worksheet 1 (first 4 columns), Annex 5 of TSA:CF.

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The inclusion of individual non-market services within the estimation of social transfersin kind29 and of visitor consumption (Table 4) requires previous identification of theirexistence and of the entities that provide them in order to estimate their general impor-tance. This helps us decide how detailed and costly our estimation of this entity will be.Before taking the decision to enter the phase of detailed measurement, which wouldrequire the mobilization of new information and thus important costs.

Tourism individual non-market services can be provided both by general governmentand by non-profit institutions serving households. In general terms, it can be said thatwe encounter an individual non-market service when visitors are provided with a servicefor which the price charged does not correspond, structurally and in principle, to thetotal cost of production of the service.

The main areas concerning tourism where individual non-market services might occurare the following:

(a) cultural events provided to visitors, such as public or private sites with restrictedaccess, exhibitions, shows, concerts, and the like;

(b) recreation services provided by national parks and other public areas with controlledaccess , with or without admission fee;

(c) tourism services provided by vacation centers owned by non-profit institutions serv-ing households or some government agency on a subsidized basis; this may covertransportation, accommodation, food, recreation, etc.

(d) education services through short courses provided by education centers for non-resi-dents on a non-market basis;

(e) provision of subsidized accommodation and/or food to the participants in such courses.

Most of these correspond to tourism characteristic products, but some might be relatedonly to tourism connected products.

The value of the non-market services provided as a social transfer in kind is estimated as the dif-ference between the current costs of production and the amount collected through direct pay-ment by the beneficiaries of the service, if any. The amount collected through direct paymentis part of the consumption expenditure (in cash) of the beneficiary. The rest is considered associal transfers in kind received by these beneficiaries and added to the amount of consumptionexpenditure by visitors (with other components) to conform to the concept of consumption.

It is thus necessary to identify the institutions which provide these services and to exam-ine their financial records in order to establish the production accounts relative to thesespecific services. The part of the costs of production of the services not covered by theamounts charged to users is the value of the non-market services provided and consumedby households as social transfers in kind.

4.29.

4.30.

4.31.

4.32.

4.33.

4.34.

C.6. Individual non-market services that are part of visitor consumption

29 See worksheet 1, Annex 5 of TSA:CF.

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4.35.

4.36.

4.37.

4.38.

4.39.

4.40.

4.41.

This is the kind of work which is typically developed by the National Statistical Agencieswhich, in the compilation of the national accounts of a country, are in charge of estab-lishing the production and institutional accounts of the public sector and of non-profitinstitutions serving households. Collaboration with those agencies in charge of tourismstatistics would be fruitful in order to identify specifically the possible tourism content ofthese social transfers in kind.

If only visitors, domestic or international, benefit from the services provided, then all thevalue of the non-market service is attributable to tourism consumption of individualnon-market services. If such is not the case, a distribution of total production and con-sumption has to be made between visitors and non-visitors. Statistics on attendance atvenues and events frequented by visitors and non-visitors might provide a structure toproduce such distributions.

Tourism collective non-market services are part of total tourism demand. Table 9 in doc-ument TSA:RMF is designed to organize the data referring to the production and con-sumption of tourism collective non-market services.

Tourism collective non-market services are provided exclusively by general governmentas part of its function of regulating the economy, establishing the rules of social organi-zation, setting and enforcing public standards, regulating, licensing and supervising pro-ducers, and the like. Their special characteristics, as compared to individual non-marketservices, have been discussed above and summarized in a chart to be found in chapter III,section B.1 above.

To identify such services as tourism specific ones might seem to contradict their defini-tion, since it is considered that society as a whole benefits from collective non-market ser-vices. Nevertheless, some might be considered as specifically oriented towards the visitorsor the activities that serve them principally in the area of standard setting, regulation,licensing and promotion. For instance, this is the case of units of government especiallyin charge of tourism affairs. Others might have to do with the provision of security, main-tenance and cleaning of beaches, ski resorts and other areas visited mostly by visitorsprincipally in peak seasons.

A collective reflection on this issue within the specific context of the compiling countryamong national accountants, members of National Tourism administrations, and thosein charge of the compilation of the TSA might be very helpful to define which servicesare considered to be relevant, which are the administrations which are providing them,the level of government involved (i.e., national, regional or local), and which methodcould be used to extract these services from the global amount already estimated (or tobe estimated) for the national accounts.

A critical revision of the list of such services suggested by WTO might be necessary asit has been established a priori without previous knowledge of their real importance inindividual countries. It might happen that some services might have a much greaterimportance than others yet are not specifically referenced in Table 9 of documentTSA:RMF. This should be evaluated by a compiling country with reference to its ownnational experience.

C.7. Tourism collective non-market services

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In some countries, tourism promotion is a function within the general government inaddition to the regulatory activities and responsibilities proper to the administration oftourism affairs. As a consequence, its treatment as collective non-market service is legiti-mate and straightforward. In other countries, this function has been left entirely to theprivate sector, or is developed through different forms of joint ventures between the pub-lic administration and the private sector concerned by tourism development. In thosecases, tourism promotion cannot be considered as a non-market service as its productionis financed, totally or in part, by the private sector, which strictly speaking is buying theservices through the payments it makes to these specific entities.

In this case, the service loses its characteristic of a non-market service. Nonetheless, thetotal amount spent on promotion has an important analytical value and should be col-lected and presented in one way or other. It is suggested in this case to add a memo entryto Table 9 of document TSA:RMF in order to record the total production cost of pro-motion. In certain cases, this may be equivalent to the production account of the specialentities that have been given this task.

Finally, it should not be forgotten that the TSA follows the same principle of recording asthose of SNA93, that is, transactions are recorded on an accrual basis. This is not usuallythe principle of recording used in public finance. As a consequence, special care should betaken in determining the sources of information to be used, and on the adjustments thatmight be required if the information used does not follow the SNA93 principles.

The document TSA:RMF considers for the time being two main categories of tourismgross fixed capital formation:

(a) gross fixed capital formation by tourism characteristic activities (i.e., the tourismindustries) according to the proposed list of gross fixed capital formation items asshown in Table 8 and Annex IV of document TSA:RMF;

(b) gross fixed capital formation in the economy by Public Administrations and otherindustries (connected and non specific) in capital goods which can be considered onlyfor tourism purposes, as shown in Table 8 of document TSA:RMF.

In the future, and when greater experience and knowledge has been accumulated con-cerning the allocation of investments, particularly public investment, to a specific func-tion when various uses are possible, this concept should be extended and other recom-mendations will be necessary.

The extension of the specific work to be done in the area of tourism gross fixed capitalformation depends on the level of advance of the national accounts of the compilingcountry and the level of detail and consistency in which gross fixed capital formation byproducts and activities is already established within this framework.

Tourism accommodation. This heading includes two items: hotels and other collectiveaccommodation and tourism dwellings. Tourism dwellings include the net acquisitionand major improvements and repairs to second homes used mainly for tourism purpos-es on own account by resident and non-resident households. Those constructed and

4.42.

4.43.

4.44.

4.45.

4.46.

4.47.

4.48.

C.8. Tourism gross fixed capital formation

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4.49.

4.50.

4.51.

4.52.

4.53.

4.54.

acquired mainly to be commercially rented to third parties or to be commercializedunder timesharing schemes should be classified under the heading of “hotels and othercollective accommodation”.

As previously observed, the identification of construction of dwellings for the purpose oftheir tourism use should be the object of special statistical observation since in manycases there are no physical characteristics of the construction indicating they are fortourism purposes. Countries might choose to focus initially in the geographic areas thatare important tourism destinations.

Other buildings and structures: under this heading the intent is to identify those build-ings and other structures which tourism use is clearly defined. This category includesrestaurants and buildings serving food and beverages; buildings and infrastructures forthe transport of passengers by land, sea and air; buildings for cultural services (museums,theatres, halls for artistic exhibitions, …); constructions for sports, recreation and enter-tainment (ski resorts, snow cannons and trail grooming equipment, marinas, etc.). Insome countries, special railway tracks have been installed to be used exclusively for thetransportation of passengers at specially high speed (e.g., the TGV in France, the AVE inSpain) for significant distances and these installations could validly be considered as pri-marily for tourism purposes.

The specific identification of these buildings and other structures requires TSA compil-ers to go beyond the usual classification of capital goods and to determine the local situ-ation of the activities of visitors. This additional classification has to be considered, if pos-sible, in the national classification of fixed capital goods, to be applied at least in majortourism areas of the country where it might have significant statistical meaning.

Passenger transport equipment: this category includes: land transport (automobiles,motorcycles, autocaravans, passenger wagons,…); sea transport (yachts, cruise ships,…)and air transport (helicopters, aeroplanes, air-ships,…).

Regarding machinery and equipment, it is recommended that TSA compilers focus onthe special equipment to be used by the characteristic tourism activities. Typical exam-ples of such machinery are ski lifts, chair lifts, cable cars and any other types of trans-portation mainly used by skiers to get to the top of ski fields, equipment for the indus-trial preparation of meals, and all the special equipment required for the commercialtransportation of visitors.

Beyond this product approach, the document TSA:RMF also recommends adding thegross fixed capital formation of tourism characteristic activities in all other capital goodsdifferent from those referenced above. Moreover, an activity (i.e., establishment)approach has to be followed, different from the institutional (i.e., enterprise) approachwhich is the one that results directly from the study of balance sheets.

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In order to establish properly the value of internal tourism consumption, it is necessary toidentify the country of residence of the provider of the good or service that is consumed.In the case of flights operated under a code sharing agreement, there might be ambiguity.

Code sharing is an agreement between two (or more) airlines to operate a flight on a jointbasis. The flight receives two (or more) codes, one from each airline, identifying it as belong-ing to the network of both of them. The companies usually provide connection of the flightwith other flights of their own company. It is operated jointly by all of them, any of themputting the aircraft and/or the crew and/or the ground service, or any combination. Passengershave tickets that bear one of the flight codes. They are considered to be transported by thecompany the code of which they bear on their ticket. This is also the rule applied for the allo-cation of the revenue generated by the flight and the responsibility in case of a crash.

Frequent flyer programs are programs by which consumers accumulate points as a resultof using the services of an airline, or any other provider of service affiliated with the pro-gram, such as hotels, car rental companies, and credit card companies. When a sufficientnumber of points have been accumulated, they give the consumer the right to an upgradefrom any of the service affiliated to the program, or to fly free, stay free at a hotel, or renta car for free. Frequent flyer programs intend to develop customer loyalty, and are typi-cally commercial strategies by which customers are drawn to use the same providers inthe hope of earning access to a free service.

How should such premiums be treated in the system, for the provider of the service onone side and for the customer on the other?

From the point of view of the provider, although the service has been provided, it has notbeen paid for at the moment of the provision but during all the time in which pointshave been accumulated. In a certain way of thinking, the points that were awarded cor-respond to a discount on the price of the product for which the points are exchanged,which discount materializes in the moment in which the free service is provided. It is analternative way of giving a discount, but with a strategy that ensures continuous loyaltyto the company at a lesser cost, as all points accumulated do not lead necessarily to theiruse. As a consequence, no adjustment in production needs to be made.

If it is clear from the supply point of view, then no adjustment has to be made from thedemand point of view either. The same argument holds: the “free” travel has already beenpaid for in all the previous purchases of services that lead to the accumulation of points.

International tourism presents special valuation difficulties due to the fact that the currencyof the country visited differs from that of the country of residence of the visitor. Theexchange rates which the visitors encounter may be one of the reasons for the visitor to be

4.55.

4.56.

4.57.

4.58.

4.59.

4.60.

4.61.

D. SPECIAL VALUATION ISSUES

D.1. Code sharing

D.2. Frequent flyer programs

D.3. Special valuation issues for international tourism

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4.62.

4.63.

entering or leaving the compiling country, because s/he perceives it as cheap (or expensive)when converting his/her expected expenditures in the country visited to the currency ofhis/her country of residence. As a consequence, an adequate valuation of the flows that occurin different currencies is crucial to the understanding of the flows of international tourism.

Annex 2, section B.1 of the TSA:CF presents the principles to be applied which are exact-ly those to be used in national accounts and balance of payments accounts when this sys-tem is valued in the national currency of the compiling country. However, some furtherguidance is necessary to show how to apply them.

The first basic principle is the following: all transactions in the TSA have to be recordedin national currency, whatever the currency used to make the payment. This is a necessi-ty if the TSA is to be made comparable with other national variables and subsystemsderived from a country’s national accounts. The application of this principle is furtherdetailed:

“The appropriate exchange rate to be used . . . is the market rate prevailing on thetransaction date, or, if that is not available, the average rate for the shortest periodapplicable. The midpoint between buying and selling rates should be used so any ser-vice charge - the spread between the midpoint and those rates - is excluded.”30

The difference between the value using the midpoint and the buying or selling ratecorresponds to the value of the service, identified as “foreign exchange services”(81333 of the Central Product Classification), implicitly acquired from the “bureaude change” or bank, at the moment in which the currency to make the transaction isbeing purchased through the exchange of currency: this service should be consideredas part of tourism final consumption expenditure.31

When various official exchange rates exist, which is the market rate to be used? “Underan official multiple exchange rate regime, i.e., when two or more exchange rates areapplicable to different categories of transactions, favoring some and discouraging others,those rates incorporate elements similar to those of taxes or subsidies . . . . The amountof the implicit tax or subsidy can be calculated for each transaction as the differencebetween the value of the transaction converted into national currency at the actualexchange rate applicable and the value of the transaction converted at a “unitary rate”, thelatter calculated as a weighted average of all official rates used for external transactions.”32

Finally, in the case of the existence of a black or parallel market for foreign currency,international inbound visitors might be tempted to buy national currency in thesemarkets in order to obtain a more favorable exchange rate. If this parallel market isnot part of the official exchange rate regime, the transfer does not occur between thevisitor and the general government, but between the sellers and the buyers in this par-allel market, once the intermediary has been remunerated for his services.”33

a. Principles recalled

30 SNA93, ¶14.78.

31 TSA:CF, Annex 2¶A.2.8.



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The application of these principles is not very easy. Even if a fixed parity exists betweenthe national currency of the country visited and that of the country of residence, theremight still be variations in the expression of an expenditure in one or the other currencydue to the fees charged by financial intermediaries. Additionally, a different currency(usually the U.S. dollar) might also have been used in some transactions, thus alteringthe formal equivalence in the expression of the expenditure in one or the other currency.

This situation is obviously much more acute when fluctuations over time are important,or when there is an attractive black market with important differences in exchange ratesas referred to the official one. The use of one or another of the currencies (or of an inter-mediate one, in most of the cases the U.S. dollar) will generate important differences,which should be taken into consideration.

Additionally, not all expenditures are paid for in the same currency or using the samefinancial instrument, such as cash, credit card, term payment, bank draft, travelerscheque. This may generate differences in the implicit exchange rate for each transactionfinally charged to the payer and to the receiver, and therefore differences in the valuationsexpressed in different currencies.

The complexity of the situation so described rules out definitively the use of a flat orunique conversion rate, which is a method commonly used to give a prompt solution tothe problem. Within this context of heterogeneous exchange rates according to transac-tors and specific transactions, the value of visitors’ expenditure has to be viewed withintwo different perspectives: the demand perspective (the cost for the buyer), and the sup-ply perspective (the income for the seller). Although the values exchanged in an exchangetransaction between the seller and the buyer are necessarily equal for the transaction totake place, the perception of the final cost of such a transaction (in terms of its purchas-ing power within the economy of residence of each of them) might differ significantlybetween the seller and the buyer.

In case of international tourism, the visitor will express the cost of any purchase in termsof his/her national currency (or an intermediate currency, such as the U.S. dollar), theconversion of which shall be influenced by the exchange rate s/he has obtained effective-ly for the money exchanged and used for this specific purchase. On the contrary, the sell-er will express it in terms of the amount of the national currency s/he has received (direct-ly in the transaction, or once converted in national currency by another exchange trans-action) because this is his/her effective income and s/he is not concerned about the mech-anism through which the buyer has obtained the currency used in the transaction.

As a consequence, as the match between supply and consumption occurs in the nationalcurrency of the country where this transaction takes place (the compiling country), it is nec-essary to collect information which enables the compilers to get back to this situation in afairly detailed way. This might mean that in the case of international visitors, detailed infor-mation on each category of expenses should be collected in the currency in which it hasbeen paid, which might lead to the use of two or even three different currencies: the nation-al currency of the country visited, the currency of reference for this visitor, which may beeither the national currency of the country of residence of the visitor, or some other inter-national currency such as the U.S. dollar. A package tour purchased previous to a trip mighthave been paid in the national currency of the country of residence of the visitor, and the

4.64.

4.65.

4.66.

4.67.

4.68.

4.69.

b. Application of these principles

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4.70.

4.71.

4.72.

4.73.

4.74.

4.75.

4.76.

4.77.

same is usually the case for international transportation, and also, in some cases, of the pre-payment of hotels done through a travel agency before a trip. In some countries, hotelsrequire rooms purchased by non-residents to be paid for in U.S. dollars. Finally, most ofsmall expenses in the place visited are paid using the national currency of this country.

Additionally, information should be collected on the amounts effectively swapped inbureaus de change or in informal transactions on the black market or other foreignexchange venues and on the implicit exchange rate resulting from each transaction. Thisinformation will provide the inputs to establish the value of foreign exchange servicesimplicitly acquired by the visitors, as well as the means of conversion of transactions real-ized with these exchanged currencies.

Some examples can illustrate the different situations. Let us suppose the case of inboundtourism: visitor V1 comes from country B and visits country A (the country compilingthe TSA). Let us further suppose that the average mid-point rate of exchange between thenational currency of B (CB) and national currency of A (CA) is: 100 CB = 1 CA.

Previous to his departure, V1 buys a ticket on an airline which is a resident airline ofcountry A (if it is not, the amount paid does not enter in this TSA) for which he pays10000 CB. What is the amount, which should figure in the TSA for country A?

In the purchase of international transportation, the channel through which the transportcompany receives the payment made by a visitor is a complex one. It circulates in par-ticular through the travel agency used to book the flight, the resident offices of the air-line and the international clearinghouse for international airline transactions.

Moreover, international fares are usually expressed in U.S. dollars and converted to nation-al currencies using some predefined rate of exchange: this information can be found onthe ticket itself. The value to be reported in CA, the currency of country A, is the value inU.S. dollars converted into CA using the average mid-point rate of exchange of the U.S.dollars. The rate of exchange used between CB and the U.S. dollar has no effect for coun-try A because it reflects transactions between two non-residents of country A.

Visitor V1 makes purchases with his credit card and invoices are in the currency CA, whichvalue has meaning for the economy. When visitor V1 returns home and considers the costto him of this purchase, he will have to consult the statement from his credit card company,where the expense is then converted into the currency in which he holds his credit card.

Visitor V1 changes 10000 CB in a bureau de change and receives only 92 CA (instead of the100 CA) he was expecting because the financial intermediary might be charging a differentexchange rate for buying and selling in order to protect himself from the exchange risk and acommission and perhaps even a tax on the commission. If no breakdown is available (in mostcases), then we might suppose that the whole difference (8 CA) between the value receivedand the value expected corresponds to the implicit purchase of “foreign exchange services”.

Economy A receives effectively from visitor V1 10000 CB that, valued at the official mar-ket unitary midpoint rate, is worth 100 CA. V1 thinks he is buying 100 CA with thisamount, but he is only receiving 92 CA, the rest corresponding to a “forced” purchase of“foreign exchange services”. The expenses made with this amount in currency of CA areall to be reported by V1 in the currency of A as it is in this currency that V1 has beencharged and has paid. This transaction is summarized in Figure 4.1.

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In the case of using the black market, the situation is slightly different. Usually the dif-ference between the official exchange rate and the one obtained in this market is ratherhigh, in order to justify the risks of entering in this market (punishment if caught maybe very high fines or incarceration). It usually exists because the access to the official mar-ket is difficult for residents so that there exists a demand for foreign currency not met bythe official foreign exchange mechanism. Beside the purchase of foreign exchange servicesfrom the intermediary between buyer and seller of foreign currency there is also animplicit transfer from the resident buying the foreign currency to the visitor selling it.

An example can make this clear. Let us suppose that the rates on the black market are thefollowing:

(a) black market buying rate for CB: (rate applied to the sales of currency CB by the vis-itor and the corresponding purchase of currency CA): 100 CB = 1.5 CA

(b) black market selling rate for CB: (rate applied to purchases of currency CB by resi-dents): 100 CB = 1.7 CA

If 1.6 CA is the midpoint between the buying and the selling rate in the black market, atransaction of 10000 CB in the black market will be recorded as in Figure 4.2.

4.78.

4.79.

4.80.

Figure 4.1: Summary of Foreign Exchange Example of Inbound Visitor Selling toOfficial Foreign Exchange Agency

1. Purchase of CA 92 CA 2. Sale of 10000 CB worth 100 CA

3. Purchase of foreign exchange services 8CA

TOTAL 100 CA TOTAL 100 CA

Figure 4.2: Summary of Foreign Exchange Example of Inbound Visitor Selling to theBlack Market

1. Purchase of CA 150 CA 2. Sale of 10000 CB worth 100 CA

3. Foreign exchange services(1.6 – 1.5) x 100 10 CA

4.Transfer received from residentsas buyers of CB

(1.6 – 1.0) x 100 60 CA TOTAL 160 CA

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4.81.

4.82.

4.83.

4.84.

4.85.

4.86.

The expenses made with this amount in the CA currency are all to be reported by V1 inthe currency of A as it is in this currency that visitor V1 has been charged and has paid.Additionally, the purchase of foreign exchange services and the transfer received have alsoto be recorded by the compiling country.

Now let us now examine the case of outbound tourism: visitor V2 comes from countryA and visits country B (the country compiling the TSA). Let us suppose that the averagemid-point rate of exchange between Currency of B (CB) and Currency of A (CA) is: 100CB = 1 CA. Previous to his departure, V2 buys a ticket on an airline (resident or not inA) for which he pays 100 CA.

Contrary to the case previously described, there is now in country A an implicit purchaseof “foreign exchange services” when the ticket is purchased, which is the differencebetween the value (in CA) effectively paid, and the value which would result from apply-ing the midpoint average exchange rate between currency CA and the U.S. dollar to thevalue in dollars of the ticket.

Visitor V2 makes purchases with his credit card. These are invoiced in CB, but visitor V2is charged on his credit card in CA or any other currency in which he holds his card. Itis this value which has to be considered as her expenditure as expressed in CA.

Visitor V2 changes 100 CA in a bureau de change. For this, he receives only 9200 CBinstead of the 10000 CB he was expecting. This results because the financial intermedi-ary may charge a different exchange rate for buying versus selling in order to cover him-self from the exchange risk and a commission, and perhaps a tax on this commission. Ifno breakdown is available (in most cases), then we might suppose that the whole differ-ence (8000 CB) between the value received and the value expected corresponds to theimplicit purchase of “foreign exchange services”.

Economy B receives effectively from visitor V2 100 CA that valued at the official marketunitary midpoint rate is worth 10000 CB. Nevertheless, visitor V2 thinks that he is buy-ing 10000 CB with this amount, but he only receives 9200 CB, the rest correspondingto a “forced” (or implicit) purchase of “foreign exchange services”. This case is summa-rized in Figure 4.3.

Figure 4.3: Summary of Foreign Exchange Example of Outbound Visitor Selling toOfficial Foreign Exchange Agency

1. Purchase of CB 9200 CB 2. Sale of 100 CA worth 10000 CB

3. Purchase of foreign exchange services 800 CB

TOTAL 10000 CB TOTAL 10000 CB

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The expenses made with this amount of CB currency are all to be reported by V2 in thecurrency of country B as it is in this currency that visitor V2 has been charged and haspaid. When compiling the TSA for country A, these expenditures have to be convertedto CA by the compilers using this average mid-point official exchange rate, since the dif-ference in exchange has already been taken care of through the purchase of foreignexchange services.

In the case of using the black market, the situation is also slightly different. There is alsoan implicit transfer from the resident buying the foreign currency to the visitor selling it.Let us suppose that the rates on the black market are the following:

(a) Black market buying rate for CA (rate applied to the sales of currency A by visitor V2and the corresponding purchase of currency CB): 1 CA = 150 CB

(b) Black market selling rate for CA (rate applied to purchases of currency A by resi-dents): 1 CA = 170 CB

If 160 CB is the midpoint between the buying and the selling rate in the black market,a transaction of 100 CA in the black market will be recorded as shown in Figure 4.4.

The expenses made with this amount in CA currency are all to be reported by visitor V2in the currency of A as it is in this currency that V2 has been charged and has paid. Thecompiler should then convert these values in CA using the midpoint average official rate.Additionally, the purchase of foreign exchange services and the transfer received have alsoto be recorded by the compiler and converted into CA using the same rate.

4.87.

4.88.

4.89.

4.90.

Figure 4.4: Summary of Foreign Exchange Example of Outbound Visitor Selling tothe Black Market

1. Purchase of CA 15000 CB 2. Sale of 100 CA worth 10000 CB

3. Foreign exchange services(160 – 150) x 100 1000 CB

4.Transfer received from resident (Buyers of CA)(160 – 100)x100 6000 CB

TOTAL 16000 CB TOTAL 16000 CB

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5.1.

5.2.

The broadening of the concept of visitor consumption beyond visitor final consumptionexpenditure in cash has important consequences from a practical point of view for thetype of information that is required from visitors in a survey. In almost every case that wehave discussed herein (e.g., transfers in kind, social transfers in kind, housing on ownaccount or for free, barter transactions), the recourse to visitor surveys seemed to be anecessity, although in many cases, this information should be corroborated or comple-mented by other sources.

This might require from countries a serious review of the contents of the existing orplanned surveys in order to cover also these aspects of consumption. Nevertheless, thismight lead to an amount of information that it is impossible to manage and to obtain fromsurvey respondents, who might be overwhelmed by the quantity of information requested.It might be necessary, therefore, to think about families of surveys, each specializing indiverse aspects of the phenomenon but which statistical design would allow researchers tocross check the information, and to obtain a mutual completion of the picture.

V.Conclusion

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United Nations and World Tourism Organization (1994). Recommendations onTourism Statistics. New York. (referred herein as UN/WTO)

United Nations, International Monetary Fund, Commission of the EuropeanCommunities, Organisation for Economic Co-operation and Development,World Bank (1993). System of National Accounts Serie F No2 Rev 4 New York:.(referred to herein as SNA93)

United Nations, Commission of the European Communities, Organisation forEconomic Co-operation and Development, World Tourism Organization (2000).Tourism Satellite Account: Recommended Methodological Framework. New York

World Tourism Organization (1999). Tourism Satellite Account: The ConceptualFramework. Madrid, Spain.

World Tourism Organization (2000). Tourism Satellite Account. Technical Document No1: Measuring Visitor Final Consumption Expenditure in cash. (referred to here in as“TSA Technical Document No. 1”)

World Tourism Organization (2000). Tourism Satellite Account. Technical Document No3: Measuring the Supply of tourism goods and services. (referred to here in as “TSATechnical Document No. 3”)

World Tourism Organization (2000). Tourism Satellite Account. Technical Document No4: Measuring Tourism Gross Domestic Product. (referred to here in as “TSA TechnicalDocument No. 4”)

Bibliography

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