World Tourism Market Defining and understanding the world tourism market

1. World Tourism Market Defining and understanding the world tourism market Henryk F. Handszuh

Explanation of Concepts
Part II. Supply responding to Demand

2. Statistical understanding of tourism: supply meaning offer

• From the supply side, tourism is brought down to the
production and supply of all types of products (goods,
services), including, in the first place, “tourism
characteristic products”, to satisfy the needs of those on
the move (travellers). The producers and suppliers can
be (or are) both the private enterprise and the public
sector
– Tourism characteristic products, in the statistical
sense (TSA), are those whose output would be
unnecessary or significantly reduced in the absence
of demand from potential and active travellers)

3. Tourism supply

• TSA definitions and categories relating to tourism supply
– Relation to WTTC, IMF
• Tourism products versus services as defined by TSA
• Tourism and travel related services as defined by WTO (GATS)
• EU definitions of tourism supply, services, provider, recipient
– National practice (Poland)
• EU definitions of tourism products as packages
• Tourism product defined by the tourism sector

4. The nature of tourism supply

• Tourism supply is understood as the direct provision to
visitors of the goods and services that make up tourism
expenditure
• The analysis of tourism supply consists, first, in showing
how the conditions are created that enable producers to
provide goods and services to visitors, and, second, in
describing the processes, the production costs and the
economic performance of the suppliers in the tourism
industries

5. What is TSA:RMF? Tourism Satellite Account: Recommended Methodological Framework

• A common national accounts methodology agreed upon
by the secretariats of (UN)WTO, OECD and Eurostat
(European Commission) with the Statistical Commission
and the Statistics Division of the United Nations, each
seeking to „measure tourism economic impacts”, in
particular:
(1) „to provide detailed and analytical imformation on all
aspects of tourism” (to include):
– The composition of tourism consumption
– The productive activities most concerned by the
activities of visitors (and)
– Relationships with other productive activities

6. What is TSA:RMF (for) ? (2)

(2) to measure the quantative importance of tourism in the
country of reference by means of „aggregates”
– Main aggregates
– Other aggregates
Aggregates are believed “to have an important political
impact because they measure the quantitative
importance of tourism in the country of reference. This
impact cannot be disregarded.”
Sources:
TSA:RMF. Commission of the European Communities, OECD, World
Tourism Organization, United Nations Statistics Division; Luxembourg,
Madrid, New York, Paris 2001, ISBN 92-844-0437-1, 2001
Positioning Tourism in Economic Policy: Evidence and Some Proposals;
2nd T.20 Ministers Meeting, Republic of Korea, 11-13 October 2010,
UNWTO Statistics and Tourism Satellite Account Programme

7. TSA aggregates?

Main aggregates
Other aggregates
• Internal tourism
consumption in cash
• Internal tourism
consumption (in cash and
kind)
• Value added of the
tourism industries
• Tourism value added
• Tourism GDP
• Tourism employment
• Tourism gross fixed
capital formation
• Tourism collective
consumption
• Total tourism demand

8. The supply side by TSA

• TSA pursues “credibility in the measurement of tourism’s
contribution from the supply side of the economy, i.e.
from the perspective of industries”, whereby:
– “In the traditional sense” industries are classified
according to what they produce
– Tourism is defined by the demand for products
coming from a special type of consumer, the visitor

9. The supply side by TSA (2)

• The tourism sector is the cluster of production
units in different industries, whereas:
– The SNA 1993 (system of national accounts) defines
an industry as “a group of establishments engaged in
the same kind of productive activities”
• The System of National Accounts, 1993 (SNA93) was
produced jointly by the OECD, the United Nations Statistical
Division, the International Monetary Fund, the World Bank
and the Commission of the European Communities

10. The supply side by TSA (3)

• Out of all goods and services (products), one can
identify:
– Tourism-specific products (170)
• Products whose supply would cease to exist in meaningful
quantity in the absence of visitors
• Products that represent a significant share of tourism
consumption
• Products whose absence might significantly affect tourism
consumption

11. Breakdown of tourism-specific products

• Tourism characteristic products
– to be commonly identified everywhere, in all countries
(e.g. hotel services)
• Tourism-connected products
- residual, not to be found everywhere (e.g. specific adventure
tourism services)
Each type of service (as a product) is recognized in the Central
Product Classification (CPC/Code), the International
Standard Industrial Classification of All Economic Activities
(ISIC) and the Standard International Classification of
Tourism Activities (SICTA)

12. TSA 2008 classification of tourism products

A. Consumption products
A.1. Tourism characteristic products
1. Accommodation services for
visitors
1.a. Accommodation services
for visitors other than 1.b
1.b. Accommodation services
associated with all types of
vacation home ownership
2. Food-and beverage-serving
services
3. Railway passenger transport
services
4. Road passenger transport
services
5. Water passenger transport
services
6. Air passenger transport
services
7. Transport equipment rental
services
8. Travel agencies and other
reservation services
9. Cultural services
10. Sports and recreational
services
11. Country-specific tourism
characteristic goods
12. Country-specific tourism
characteristic services
A.2 Tourism connected products
A.3. Non-tourism related consumption
products
B. Non-consumption products
B.1. Valuables
B.2. Other non-consumption products

13. TSA 2008 tourism industries

1. Accommodation for visitors
1.a. Accommodation for visitors
other than 1.b
1.b. Accommodation associated
with all types of vacation home
ownership
2. Food-and beverage-serving
industry
3. Railway passenger transport
4. Road passenger transport
5. Water passenger transport
6. Air passenger transport
7. Transport equipment rental
8. Travel agencies and other
reservation services industry
9. Cultural industry
10. Sports and recreational industry
11. Retail trade of country-specific
tourism characteristic goods
12. Other country-specific tourism
characteristic industries

14. Characteristic tourism products left out from TSA 2008 product classification

• Cruise services
• MICE
• Transport supporting services
– Parking
– transport equipment
– transport maintenance and repair
• Tourist guide services
– Other guide than “tourist guide” (mountain, hunting, etc)
• Trade fair and exibition services
• Fishing, hunting licence
• Travel insurance services

15. 2008: IMF takes TSA on board

• The United Nations and the International Monetary Fund
(IMF) identify tourism as a specific area of economic
activity and point to the Tourism Satellite Account as the
appropriate tool for deriving key aggregates and
internationally comparable indicators on the
macroeconomic contribution of the sector worldwide.
Sources: UN System of National Accounts 2008 (SNA,
2008); IMF’s Balance of Payments and International
Investment Position Manual, Sixth Edition (BPM6)

16. World Travel and Tourism Council (WTTC) adopted its own tourism satellite account (from Oxford Economics)

• A demand –side approach with a comprehensive definition of its
scope, linked by economic models to supply-side concepts
• Relies heavily on economic modelling techniques
• Provides largely bigger figures than than those by UNWTO’s TSA
Tourism Satellite
• Accounting methodology (TSA:RMF 2008) quantifies
only the direct contribution of Travel & Tourism. But
WTTC recognises that Travel & Tourism's total
contribution is much greater, and aims to capture its
indirect and induced impacts through its annual
research…
Source: WTTC 2011 World Economic Impact Report

17. Indirect relationship of GATS with TSA

• Through GATS (The General Agreement on Trade in Services),
WTO looks also into the trade in tourism services (document W/120)
– Sector 9: Tourism and Travel Related Services
• Hotels and restaurants (12 elements)
• Travel agencies and tour operator services (2)
• Tourist guides services (1)
• Other
• These are not all possible “Tourism and Travel Related Services” at
all
– A number of genuine tourism-related services according to TSA
and EU have been left behind and attributed to other sectors (the
“other” category is not supposed to refer to them)

18. Observations to TSA 2008

• Under TSA, the term “product” equals service
which is understood as an economic outcome or
output of a specific (industrial, productive)
activity
• TSA 2008 appears less specific than TSA 2000
with respect to tourism services (or products),
but more specific with respect to concepts (e.g.
travel agencies/tour operators are now regarded
as reservation systems)

19. Observations to TSA 2008 (2)

• TSA 2008 considers meetings, conferences and
conventions as activities “of any business, in any
sector of the economy” and that “its
characteristic output is not mostly consumed by
visitors, but by their conveners”, therefore, “this
strong connection with tourism does not imply
that the meetings industry qualifies as a tourism
industry”
• The TSA term of tourism product is different
from the legal, travel industry and marketing
term of a tourism product (or package)

20. Some TSA findings

• The bigger and the more varied an economy, the smaller
contribution of tourism to GDP (e.g. Canada, Germany,
Japan, USA)
• Tourism’s higher contribution in countries combining a
relative high prosperity (consumption) level (even under
the crisis) and natural holiday assets close to source
markets (France, Italy, Spain). This is largely due to
simultaneous domestic tourism consumption.
• Higher contribution of international visitor consumption in
comparison to other export categories in some
developing countries/LDCs: because of otherwise limited
(undeveloped) economy in other areas (the Caribbean,
Egypt, Morocco, Maldives…)
– This possibly limits their economic development possibilities in
other productive areas (the case of small islands)

21. Consequences of TSA approach

• Important for lobbying purposes
– The self-proclaimed largest service industry in the world
• a mantra repeated to closed circuits and audiences
• tourism is by far the most lobbied sector
• Belief that “more tourism” (number of consumers, income, value
added, “tourism GDP”, jobs) should automatically give rise to a
better economy and a better life at destinations, in particular thanks
to spillover (multiplying effects) or tourism consumption-driven
production in a large number of (other) sectors
• It is therefore argued (UNWTO Statistics) that accurate
TSA (the more accurate and the more internationally
comparable data, the better) may or even must give rise
to tourism policies (objective largely not fulfilled)

22. TSA outcomes and peculiarities

• TSA is believed to have become a required modern standard in
national statistics accounts
• TSA calculations (by central statistical bureaus) are already in place
or under implementation in some 60 countries
– USA updates its TSA data every 3 months
• UNWTO has committed to publish its TSA world figures every 3
years (which it doesn’t…)
but
• The public at large, media and politicians do not know about the
TSA „recommended framework”
– They continue to consider tourism, as always, as travel at leisure
for recreation and holidays (sightseeing, excursions)
• “a tourism destination” is normally considered to denote a place
where to go on holidays

23. Other TSA shortcomings

• Sole emphasis is placed on economic and monetary aspects, not
really „all aspects”
• TSA approach does not readily (automatically) translate into the
concept of „tourism services”
• Social, qualitative and cultural aspects are disregarded (e.g. access
to paid holidays, tourism income (re) distribution, quality of life at
destinations, governance aspects)
• TSA does not analyze the loss of demand for locally available and
unused supply of consumer products - due to consumer
externalization (lost consumers) - in „the usual environment”
• TSA data are notoriously not used to compare with other productive
sectors or industries

24. US Travel and Tourism Satellite Account Scope and terminology (elements subject to analysis): international comparability at

risk
• Traveler accomodations
• Transportation
– Passenger air transportation
– All other transportation-related
• Food services and drinking places
• Recreation, entertainment and shopping
– Recreation and entertainment
– Shopping

25. Tourism supply defined in EU documents: Regulation (EU) No 692/2011 on statistics (binding for central statistical offices)

Tourism supply defined in EU documents:
Regulation (EU) No 692/2011 on statistics
(binding for central statistical offices)
• Tourism supply is defined as „tourism industry”
• Tourism industry is brought down (in statistics) just to
„tourist accommodation establishments” including:
— hotels and similar accommodation,
— holidays and other short-stay accommodation,
— camping grounds, recreational vehicle parks and trailer
parks
• Supply (tourist accommodation establishments) is
expressed in terms of:
– Number of establishments
– Capacity (number of bed places and bedrooms)

26. Definition of services by Directive 2006/123 on services in the internal market (free circulation of services) (Article 4)

1) ‘service’ means any self-employed economic activity, normally
provided for remuneration.
2) ‘provider’ means any natural person who is a national of a Member
State, or any legal person ….established in a Member State, who
offers or provides a service;
- WTO (trade) refers to the term “supplier” and defines “supply
of a service” (production, distribution, marketing, sale,
delivery)
3) ‘recipient’ means any natural person who is a national of a Member
State or who benefits from rights conferred upon him by Community
acts, or any legal person …established in a Member State, who, for
professional or non-professional purposes, uses, or wishes to use, a
service;

27. (Tourism) services covered by EU Directive on services in the internal market (2006/123) -1

• (33) The services covered by this Directive concern a wide variety
of ever-changing activities, including business services such as
management consultancy, certification and testing;
• facilities management, including office maintenance;
• advertising; recruitment services; and the services of commercial
agents. The services covered are also services provided both to
businesses and to consumers, such as legal or fiscal advice; real
estate services such as estate agencies; construction, including the
services of architects; distributive trades; the organisation of trade
fairs;
• car rental; (and)
• travel agencies.

28. (Tourism) services covered by EU Directive on services in the internal market (2006/123) - 2

• Consumer services are also covered, such as those in the field of
tourism, including tour guides;
• leisure services, sports centres and amusement parks;
• and, to the extent that they are not excluded from the scope of
application of the Directive, household support services, such as
help for the elderly.
• Those activities may involve services requiring the proximity of
provider and recipient, services requiring travel by the recipient
or the provider
• and services which may be provided at a distance, including via the
Internet

29. (Tourism) services not covered by 2006/123 (Article 2)

This Directive shall not apply to:
• services in the field of transport, including port services,...;
• financial services, such as banking, credit, insurance and reinsurance.;
• healthcare services; whether or not they are provided via
healthcare facilities, and regardless of the ways in which they are
organised and financed at national level or whether they are public
or private;
• gambling activities which involve wagering a stake with pecuniary
value in games of chance, including lotteries, gambling in
casinos…;
• private security services;

30. Relationship to GATS

• “This Directive concerns only providers established in a
Member State and does not cover external aspects”.
“It does not concern negotiations within international
organisations on trade in services, in particular in the
framework of the General Agreement on Trade in
Services (GATS)”

31. Tourism and travel related services in the General Agreement on Trade in Services (GATS)

• Services are not defined per se but, as in the case of the EU
(Directive 2006/123), are identified by the scope of the agreement
application and specifically enumerated (document W/120)
– The term “Services”, therefore, “includes any service in any
sector except services supplied in the exercise of government
authority” (Article 1: Scope and Definition)
• Like in the case of TSA, each listed service activity has a CPC
(central product classification) number, e.g. 7174 (travel agencies
and tour operator services)
• WTO takes (publishes) data on trade in tourism services taken from
the IMF statistics

32. Some peculiarities and inconsistencies Relation to TSA, statistics regulation (692/2011) and travel package directive

• Specific categories of services are not identified with
CPC numbers
• Business services partly refer to inputs to (tourism)
industries and/or tourism products (also understood as
such by the tourism sector), partly to stand-alone
services made available to final tourism consumers )
• The definition of “consumer services in the field of
tourism” excludes a number of genuine tourism services;
the services directive is not compatible with tourism
statistics regulation (and vice versa)

33. Some peculiarities and inconsistencies Relation to TSA, statistics regulation (692/2011) and travel package directive

• Healthcare services are excluded but nevertheless are part of
“health tourism” (or “medical tourism”)
• Travel agencies services are shown separately from “consumer
services in the field of tourism” (such as tour guides) or “leisure
services”
• Terminology and content excluding transport services was not
consistent with travel package directive 90/314 (which did address
transport and health)
• Note: this directive, however, was enacted under the category of consumer
protection, not “tourism”

34. Tourism product as a “package” by EU

• A ready-made package of services, as defined by (EU) 90/314
Council Directive 90/314/EEC of 13 June 1990 on package travel,
package holidays and package tours, consisting of a few interrelated
services needed for a trip or stay at a destination. Its territorial
coverage can be variable, from focalized (e g cruise) to broad (city,
region, country)
• 1. 'package' means the pre-arranged combination of not fewer than
two of the following when sold or offered for sale at an inclusive
price and when the service covers a period of more than twenty-four
hours or includes overnight accommodation:
• (a) transport;
• (b) accommodation;
• (c) other tourist services not ancillary to transport or accommodation
and accounting for a significant proportion of the package.

35. End of Part III

36. Diapositiva 36

37. …and further in Poland

• Tourist services under the Polish Classification of (Economic)
Activities (Polska Klasyfikacja Działalności)
• Activity of tourist agents (79.11.A)
• Activity of tourist intermediaries (79.11.B)
• Activity of tourism organizers (79.11.Z)
– Rozporządzenie Rady Ministrów z dnia 24.12.2007 r.
w sprawie Polskiej Klasyfikacji Działalności (PKD)

38. Tourism product by the tourism sector

A “tourism product” represents a combination of different aspects
(characteristics of the places visited, modes of transport, types of
accommodation, specific activities at destination, etc.) around a specific
centre of interest, such as nature tours, life on farms, visits to historical and
cultural sites, visits to a particular city, the practice of specific sports, the
beach, etc.
The notion of “tourism product” is not related to the concept of “product”
used in economic statistics, but rather used by professionals in the tourism
business to market specific packages or destinations
It is then possible to speak of specific types of “tourism products”, such as
culinary tourism, ecotourism, sun-and-sand tourism, agro-tourism, health
tourism, winter tourism, etc.
Source (quatations): United Nations, International Recommendations for Tourism
Statistics 2008

39. Summary – two types of tourism products

By TSA and the like,derived from
services
• Where “tourism products” are
represented by industries
which are the means for
attaining a tourism product as
understood by (tourism)
industry
• These, in general, are
independent of travel
motivations (“centres of
interest”), but their required
type, content or level (choice)
do depend on travel
motivations as well as on the
relative propensity to travel
(economic, cultural,
demographic)
• By travel (tourism) organizers,
whether professional or
individuals themselves (selforganizers), also “DMOs”
(„destination marketing
organizations”), whereby
amounting to:
– “combination of different
aspects” and inputs
– “around a specific centre of
interest”
• also depending on the
relative propensity to
travel (income, social
origin, age)

40. Application of trade in goods to leisure tourism Tourism Area Life Cycle (TALC): applies to tourism products and tourist

destinations (from R.W. Butler)

41. End part II

Explanation of concepts
Supply responding to demand