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Appendix 2: Methodology

Direct tourism value added

Tourism expenditure and direct tourism value added (or tourism's contribution to gross domestic product (GDP)) are the two major economic aggregates derived in a tourism satellite account (TSA).

Tourism expenditure measures the value of products purchased by visitors, whether before, during, or after travel.

Direct tourism value added measures the value of the output of tourism products by industries, less the value of goods and services used in their production (intermediate consumption). When summed across all industries, it shows the direct value added to the economy by tourism.

Tables 6, 7, 8, and 9 detail the process used to measure direct tourism value added. This involves the following steps:

  • Table 6 presents tourism expenditure by type of product. (It is further dissected by type of tourist in table 7.)
  • Tourism expenditure by type of product is matched with the total supply of products in the annual supply and use tables of the New Zealand economy. The tourism product ratio for each product is derived by dividing the value of tourism expenditure by total supply of the product.
  • Each industry’s supply by product is multiplied by the tourism product ratio, to calculate tourism supply by industry. Table 8 presents tourism supply for tourism-characteristic industries, all other industries, and imports.
  • Tourism supply is then divided by total output by industry, to give tourism industry ratios – the proportion of each industry’s total output that is purchased by tourists.
  • The tourism industry ratios are multiplied through each industry’s production account. The resulting series are summed to obtain total tourism value added. Table 9 presents total tourism value added resulting from tourism-characteristic industries and all other industries.

The same methodology underlies the calculation of direct tourism value added for final and provisional accounts, and is ordered according to the steps above. However, the derivation of inputs into the calculation process and the level at which calculations are performed differ between final and provisional accounts. There are three main reasons for this:

  • The lack of balanced supply and use results for the provisional accounts limits the level at which expenditure by product can be calculated for business and government travellers.
  • The same constraints apply to the supply of tourism products. The absence of balanced supply and use accounts means the supply of each product by industry cannot be derived reliably at the same level of detail as in a final account.
  • The industry production accounts, and therefore industry value added, are provisional and are yet to be balanced within a supply and use framework to derive a final GDP figure.

Differences in the derivation of input data for final and provisional accounts are outlined in the following sections.

Calculating tourism expenditure

Table 7 presents tourism expenditure by type of product and by type of tourist: international (international visitors and international students); household; and business and government. Descriptions of how expenditure by the three types of tourist are calculated as outlined below.

International tourism expenditure

International tourism expenditure comprises both international visitors’ and international students’ expenditure.

Final accounts

Expenditure by international tourists in New Zealand is derived from the International Visitors Survey (IVS) published by the Ministry of Business, Innovation, and Employment. This sample survey is extrapolated up to full population estimates using migration data. The IVS data is supplemented with breakdowns from balanced supply and use accounts, consumers price index (CPI) weightings, and tourism producers' own data. In some instances, tourism producers can provide estimates of the proportions of their output consumed by international visitors.

Broad-level valuations of international visitors' expenditure in New Zealand are derived from transportation and travel services items in the balance of payments (BoP). IVS data is a major source for BoP statistics, but a number of supplementary sources are also used. TSA totals are obtained after excluding people who are visiting New Zealand specifically to obtain medical treatment (an adjustment needed because of a conceptual difference between TSA and BoP statistics). These totals are then broken into tourism products. The initial breakdown comes from the IVS, which groups expenditure into 10 major groups (for example, transport, meals, sightseeing). These expenditures are then further split into TSA tourism products, using proportions from balanced supply and use accounts. These splits are compared with other data sources, and refinements made where additional estimates are available.

Provisional accounts

The same basic data source, the IVS, is also used in the provisional accounts. However, in the absence of supply and use tables, the IVS is not broken down to the same level of product detail found in final accounts. The breakdown derived for the latest final account is used to derive the initial product breakdown for the provisional years. This initial product breakdown is subsequently refined during the balancing process (covered in more detail later in this appendix, see ‘Balancing tourism expenditure and tourism production’).

Tourism expenditure by international students

Tourism expenditure by international students studying for less than 12 months in New Zealand is calculated using the following steps:

  • Total international student numbers are obtained from the Ministry of Education.
  • The number of international students studying in New Zealand for less than 12 months is derived as a proportion of total student numbers by using short-term passenger arrivals visiting New Zealand for education or medical purposes.
  • Expenditure on course fees is calculated using the Ministry of Education's Export Education Levy data, which is a census of international students studying in New Zealand. It includes average course fees for students studying at schools, tertiary education institutes, and private tertiary establishments (such as English language schools).
  • Expenditure on living costs (including accommodation costs) is calculated consistent with that of BoP. This involves rating forward average course fee data using predetermined living cost ratios, on a per student basis.
  • Expenditure on airfares by short-term students is calculated by multiplying the numbers of students in New Zealand for less than 12 months as a proportion of total international arrivals, by the total airfare income of resident airlines (from BoP).
  • Total tourism expenditure by international students in New Zealand for less than 12 months is the sum of expenditure on course fees, living costs, and airfares.

Household tourism expenditure

Household tourism expenditure, shown as household demand in table 6, consists of four components. These are:

1. Household domestic travel expenditure

The Domestic Travel Survey (DTS) measures the expenditure and behaviours of domestic travellers within New Zealand. It provides information on the nature of domestic travel activity, including the origin and destination of domestic travellers. DTS data collection began in 1999, and data is available as both quarterly and annual series.

The DTS data supplied by the Ministry of Business, Innovation, and Employment to Statistics NZ is categorised by purpose of travel, expenditure type, and length of trip (either day trip or overnight trip). The four travel purposes are: holiday, visiting friends and relatives, business, and other. The eight expenditure categories are: transport, accommodation, food, alcohol, gifts and souvenirs, recreation, other shopping, and gambling. DTS expenditure levels are available by purpose of travel, expenditure category, and length of trip.

The DTS captures approximately 80 percent of domestic household expenditure in the TSA. The remaining 20 percent is calculated using separate estimates for outbound travel purchased from New Zealand-resident firms, off-trip purchases of tourism-specific consumer durable goods, and imputed rental on holiday homes.

Final accounts

The DTS is a key data source in calculating domestic household expenditure in the TSA. Data obtained from the DTS is supplemented with data from the Household Economic Survey (HES) and other sources.

DTS business expenditure data and data from the other three DTS travel purpose types are used to estimate part of TSA domestic household expenditure. For each of the eight expenditure categories mentioned above, a predetermined proportion of the DTS business expenditure is included within TSA domestic household expenditure. For example, 67 percent of DTS business expenditure on alcohol is considered to be within the scope of TSA domestic household expenditure, which reflects the business tourist paying for 67 percent of their alcohol consumption without being compensated by their organisation. The remaining 33 percent is considered to be consumption for which the business tourist is compensated by their organisation. This amount is therefore not classified as TSA domestic household expenditure.

Provisional accounts

Total domestic household expenditure for provisional March years is calculated by applying movements from the March year DTS data to the latest final domestic household expenditure values. Other data sources, such as annual reports and the HES, are also incorporated into the calculations. This mechanism provides the initial product expenditure levels, which are subsequently modified during the balancing process (covered in more detail later in this appendix, see ‘Balancing tourism expenditure and tourism production’).

2. Outbound travel purchased from New Zealand-resident firms

Final accounts

Household tourism expenditure in the TSA includes expenditure on overseas travel, where New Zealanders purchase New Zealand-produced goods and services. This expenditure includes fares paid to resident air carriers for flying a household tourist overseas, commissions paid to resident travel agents for booking household outbound travel, pre-paid travel insurance, and vaccinations needed by household outbound tourists. This expenditure is estimated from a variety of sources, including BoP data, the HES, and company annual reports.

Provisional accounts

Household outbound tourism expenditure for provisional accounts is calculated by using product breakdowns from the latest final account, to split household consumption expenditure groupings. For example, household tourism expenditure on travel insurance is rated forward by using total household consumption expenditure on insurance. Annual movements in the appropriate household consumption expenditure category are used to estimate expenditure, based on the latest final account. Expenditure estimates are subject to modification during the supply and use confrontation (covered in more detail later in this appendix, see ‘Balancing tourism expenditure and tourism production’).

3. Off-trip purchases of tourism-specific consumer durable goods

Final accounts

Off-trip expenditure by households on tourism-specific consumer durables (such as tents and sleeping bags) is included in household tourism expenditure. These off-trip purchases are based on data from the HES and are added to the on-trip purchases of these goods. Off-trip tourism expenditure is defined in ‘Tourism expenditure’ in appendix 1 ‘Conceptual framework’. Further discussion on consumer durables in the TSA is in the ‘Special treatments’ section later in this appendix.

Provisional accounts

Domestic household purchases of tourism-specific consumer durables for the provisional years are calculated by using household consumption expenditure groupings, to split products down to a detailed level. Annual movements in the household consumption expenditure groupings are used to estimate expenditure at the detailed product level, for each provisional account. The detailed product level is then reaggregated to the published tourism product level. Expenditure estimates are subject to modification during the balancing process (covered in more detail later in this appendix, see ‘Balancing tourism expenditure and tourism production’).

4. Imputed rental on holiday homes

All years

The TSA includes an imputed rental on dwellings owned by households that are used as holiday homes. The total number of holiday homes is calculated using data from the Census of Population and Dwellings. The imputed weekly rental price is calculated using census data, movements in the appropriate consumers price index, and accommodation survey occupancy rates. This is multiplied by the number of weeks in the year to give an annual imputed rental price. The number of holiday homes is then multiplied by the annual imputed rental price to give the total imputed rental value.

Business and government travel expenditure

Final accounts

Business travel expenditure is drawn from intermediate consumption, by product, of private sector industries in the balanced supply and use accounts. This is supplemented by other data sources, including the Annual Enterprise Survey. DTS business expenditure data are not used to derive the TSA business expenditure estimates. To avoid double-counting, the DTS business expenditure categories that are included within TSA domestic household expenditure (such as 67 percent of the alcohol category mentioned earlier in this appendix, see ‘Household tourism expenditure’) are not incorporated into the TSA business expenditure estimates.

Travel expenditure by local authority and central government agencies and departments (ie, non-market units) is sourced from a sample of agencies, and the results are applied across all authorities and agencies. Travel expenditure by local and central government market units uses the same supply and use method as for business travel.

Provisional accounts

Travel expenditure is part of the intermediate consumption of businesses and government. In the absence of balanced supply and use accounts, intermediate consumption is first derived using a variety of data sources, including GST purchases, annual reports, and results from the Annual Enterprise Survey. The ratio of travel expenses to total intermediate consumption from the latest final account is then applied. This provides the initial product breakdown, which is subsequently modified during the balancing process (covered in more detail later in this appendix, see ‘Balancing tourism expenditure and tourism production’).

As with the final accounts, DTS data is not used in estimating TSA business and government expenditure.

Production of tourism goods and services

Final accounts

Analysing the production of tourism-characteristic and tourism-related products starts with the production accounts by industry that underlie the supply and use table. Within the balanced supply and use accounts, each industry's output and intermediate consumption are broken down into products. Final demand categories such as household consumption expenditure and exports are also broken down by product. For the TSA, output product data from balanced supply and use tables are rearranged to focus on tourism-characteristic and tourism-related products. Total sales by each industry are arranged into tourism-characteristic, tourism-related, and non-tourism-related products.

Provisional accounts

Constraints on the availability of data for provisional accounts (no balanced supply and use results available) mean that supply by product is shown only for tourism-characteristic industries and for all other industries. Without balanced supply and use accounts, total output by industry is derived using a variety of indicators, including GST sales, the Retail Trade Survey, the Annual Enterprise Survey, the Accommodation Survey, and annual reports. This output is then broken down into the supply of tourism products by using the latest final account breakdown of output by product and industry. This provides the initial product breakdown, which is subsequently modified during the balancing process (covered in more detail in ‘Balancing tourism expenditure and tourism production’, see below).

Balancing tourism expenditure and tourism production

Final accounts

Supply and use balancing is an established and integral process when compiling the national accounts. It is used "for checking the consistency of statistics on flows of goods and services obtained from quite different kinds of statistical sources" (Inter-Secretariat Working Group on National Accounts, 1993). The supply and use balancing process rigorously examines diverse data sources, reconciling them in a framework that reduces the error margins implicit in the individual data sources.

The supply and use approach provides the best framework to bring the demand and supply sides of the economy into balance. The usual process is to confront supply and demand by product, and perform adjustments so that the value of the supply of each product is equal to the value used. Adjustments are made to either supply or demand, depending on the relative strength of each data source. In doing so, the potential for errors that may result from using a single data source, either supply- or demand-based, is reduced. Similar checking of supply and use by product, which underlies Statistics NZ’s annual supply and use models, was also performed in the TSA.

The TSA begins with the balanced supply and use tables, so all products are balanced in terms of their total supply and total use. These 'product accounts' are broken down further into their tourism and non-tourism components. The resulting tourism supply and tourism use may no longer be balanced as a consequence of the methodology used to make this split. The same type of data confrontation used in supply and use balancing is then used in the TSA to ensure that tourism supply is equal to tourism use.

A typical example of how this process is undertaken is as follows:

  1. Compare the total supply of tourism-characteristic and tourism-related products with the total direct tourism demand and non-tourism demand for these products. This comparison identifies areas where the tourism product ratio is unexpected or obviously incorrect. Note that GST is deducted from tourism expenditure for this comparison – so production for and expenditure on tourism products are both valued in producers’ prices.
  2. Re-examine the methodology used, checking for errors, conceptual inconsistencies, and methodological problems.
  3. Compare the strength of the respective supply- and demand-side data sources, identifying areas where particular strengths and weaknesses lie. Typically, the strengths are in the supply-side industry and product data, and the total demand by type of tourist data. Demand for individual products is often considered to be of weaker quality.

The focus is to strengthen the breakdown of total tourism expenditure types into products. The first step is to look for any extra data sources to provide indications of what these should be. Where possible, changes are incorporated. In areas where no data is available, iterative changes are made to these products, keeping particular areas of confidence 'locked'. This process is continued until the ratios for each product come into line with expectations. The outcome of the balancing process is a strengthened analysis and a complete set of tourism product ratios – that is, the proportion of the supply of products that make up tourism demand. The tourism industry ratios, and thus tourism value added, are derived from these.

Provisional accounts

The same checking of supply and use by product that underlies the annual supply and use analysis is also performed in the provisional accounts. However, due to data constraints, the process is at a more aggregated product level. Furthermore, the relative strengths of supply and use data sources are quite different between provisional and final accounts.

Calculating direct tourism value added

Derivation of the tourism product ratio

Tourism consumption for each product is divided by total supply to give the tourism product ratio. This ratio measures the proportion of a product’s output that is used by tourists.

Derivation of tourism supply and the tourism industry ratio

Calculation of tourism supply and the tourism industry ratio for each industry is an important intermediate step in deriving direct tourism value added and employment.

Tourism supply by product by industry is derived by applying the tourism product ratio (from table 7) to the supply of that product by each industry. Total tourism supply by each industry is then calculated by summing tourism supply for all products.

For example, the tourism product ratio for accommodation services was applied to the output of all industries supplying this product. This gave tourism supply of accommodation services by each industry. Tourism supply by each industry was then divided by total industry output, to give the tourism industry ratio. It is worth noting that although the accommodation industry is the dominant supplier of accommodation services they are not the sole supplier as other industries can also supply this product.

While the calculation of the tourism industry ratio and tourism supply by industry is an important step in deriving direct tourism value added, neither is shown in provisional years as these values are themselves derived from the gross output of each industry. Table 8 shows total supply and tourism supply by product for tourism-characteristic and all other industries.

Derivation of direct tourism value added

The tourism industry ratio is applied to the production account for each industry to obtain direct tourism value added.

Production accounts by industry are not available for provisional years. Therefore, before tourism value added can be calculated, provisional production accounts for each industry are derived. Data from a variety of sources, including GST sales and purchases, annual reports, and the Annual Enterprise Survey, are used to break down the latest published total value added to give value added by industry.

Final TSA account tables present full production accounts, as well as tourism production accounts by industry. Direct tourism value added in provisional TSA accounts is split by tourism-characteristic and all other industries. This reflects the less detailed nature of total value added by industry in years in which tourism value added is derived as a subset.

A major assumption is made in the compilation of the TSA relating to the use of the tourism product ratio and the tourism industry ratios. The industry technology assumption is that the input requirements of tourism and non-tourism products are identical for an industry. That is, if 50 percent of the output of an industry is goods and services sold to tourists, then 50 percent of its inputs are used to produce those goods and services. This is likely to be a more valid assumption for an industry that makes a range of products that are very similar, requiring similar inputs. However, in some instances the assumption is likely to be less valid; for example where an industry has a low degree of tourism specialisation, and a diverse range of products are produced.

An alternate assumption is to relate specific inputs to outputs, that is – a product technology assumption. However, this approach is not easily implemented due to the lack of sufficiently detailed product data. Industry data, on the other hand, is far more readily available. Both the industry and product technology assumptions are sanctioned by the UNWTO.

Direct tourism employment

Direct tourism employment (see table 12), is derived by applying tourism industry ratios to the number of people employed in each industry. This approach produces a value for the number of people in each industry as a result of tourism.

Employee numbers (people employed full-time, part-time, or full-time equivalent) by each industry are sourced from the Quarterly Employment Survey (QES). Exceptions are the water transport and agriculture industries, as the QES does not survey employment for some parts of these industries. Their employee numbers come from the Household Labour Force Survey (HLFS).

Working proprietor numbers (people employed full-time, part-time, or full-time equivalent) by each industry are sourced from the HLFS. The QES is not suitable as a data source because it counts only working proprietors with employees.

Before the Tourism Satellite Account: 2004, the tourism employment series was compiled mainly from the Annual Frame Update Survey (AFUS). From 2003 the AFUS was unable to provide a comprehensive full-time/part-time employment split. As a consequence, the TSA tourism employment series from 2004 (subsequently back-cast) uses QES and HLFS data. The series currently available is for all years from 2001.

Tourism industry profitability

Tourism gross operating surplus as a percentage of total tourism output is one measure of tourism profitability. It reflects national accounting rather than commercial concepts. Gross operating surplus is before interest and depreciation.

Indirect effects of tourism

Indirect imports and tourism value added

As described in appendix 1 (see ‘Relating direct tourism value added and tourism expenditure’), the basis of a TSA’s measure of indirect tourism value added (or tourism's indirect contribution to GDP) is:

  Total tourism expenditure 
less  GST 
equals  tourism demand 
less  imports sold directly to tourists by retailers 
   
equals  tourism output 
less  tourism intermediate consumption (inclusive of goods for resale) 
equals  direct tourism value added 
   
  Tourism intermediate consumption (inclusive of goods for resale) 
less  imports used in production of goods and services sold to tourists 
equals  indirect tourism value added. 

The derivation of imports used in producing goods and services sold to tourists and indirect tourism value added are discussed below.

Imports used in production of goods and services sold to tourists

Indirect tourism imports represent imported products not sold directly to tourists, but used in producing tourism supply.

The value of imports used in producing products sold to tourists is calculated using the table of cumulated import coefficients of industries, and categories of final demand, from 1996 input-output tables. This is the most recent cumulated import coefficients table available. It may be updated when the relevant tables from more recent years become available. The cumulated imports coefficients table shows how many units of imports are required for an industry to produce a unit of output. Tourism supply by industry is derived as part of the direct tourism value added calculation. Multiplying this supply by the relevant import coefficients by industry produces the value of imports used in producing goods and services sold to tourists.

Indirect tourism value added

Indirect tourism value added may be calculated directly by using the supply and use framework, or derived indirectly as a residual item. The indirect method calculates total tourism expenditure (excluding GST), then subtracts direct tourism value added, imports sold directly to tourists by retailers, and imports used in the production of goods and services that are sold to tourists.

Final accounts

Indirect tourism value added is calculated directly using the table of industry by industry total requirements from 1996 input-output tables, the most recent total requirements table available.

Provisional accounts

Indirect tourism value added is derived using the subtraction method, after first deriving imports used in production of goods and services sold to tourists. The advantage of this method is that it is simpler, does not require multiple iterations, and industry total value added is a less critical input.

Indirect tourism employment

The numbers of full-time equivalent (FTE) employees indirectly employed in tourism are presented in table 4.

Final accounts

Indirect tourism employment takes, as its starting point, indirect tourism value added by industry. The ratio of indirect tourism value added to direct tourism value added is calculated, and multiplied by direct tourism employment, to give indirect tourism employment by industry. These industry estimates are summed to calculate the total FTE employees indirectly employed in tourism.

Provisional accounts

For provisional years, neither direct tourism value added nor indirect tourism value added is available by industry in the New Zealand System of National Accounts (NZSNA). Therefore, the ratio of total indirect tourism value added to total direct tourism value added, by industry, is calculated for the latest final year. This is multiplied by total direct tourism employment, to give the total FTE employees indirectly employed in tourism.

Supply and use framework

Final accounts

The TSA is a rearrangement of the NZSNA. More specifically, the tables for final accounts are derived from the annual supply and use analyses of the New Zealand economy. Supply and use analyses are both a statistical and economic representation of the economy, broken down by industry, product, primary input category (for example, compensation of employees, consumption of fixed capital), and final demand category (such as household consumption expenditure and exports). By adopting the supply and use framework, a tourism industry can be presented in the same way as those for the agriculture and manufacturing industries are presented. It is then possible for tourism to be compared with other industries and with total national accounts aggregates, such as GDP.

Additionally, by compiling the TSA within a supply and use framework, derived tables may be produced that allow further analyses. For example, an impact analysis can be completed, which allows the user to trace the direct and indirect impact of tourism expenditure on the economy. This shows the flow-on effects of tourism, as expenditure on tourism products impacts first on industries that directly supply tourists, and then on industries that provide indirect inputs to the industries supplying tourists.

The supply and use structure also allows economic data on tourism to be easily linked to non-financial data such as employment. Balanced supply and use accounts provide detail, at the product level, of both the structure of industry output (supply), and the demand for these products by business and final demand categories (eg household spending). They are the starting point from which a TSA is derived.

Provisional accounts

Balanced supply and use accounts are not yet available for provisional years. Only total economy-wide value added has been published for these years. Therefore, aggregated supply of products sold to tourists by industry are calculated. This involves:

  • deriving the output of each industry (as outlined earlier in this appendix)
  • breaking down total output into supply of each tourism product, using the industry output breakdown from the latest available supply and use analysis. This provides the initial product breakdown, which is subsequently modified during the balancing process
  • calculating value added by industry within the constraint of published total value added.

The absence of balanced supply and use accounts results in less robust estimates of tourism value added for these later years.

Special treatments

This section details a number of areas in TSA methodology that receive special treatment.

Treatment of the margin

In the national accounts, purchases of retail goods can effectively be split into three components:

  • the margin (or 'mark-up') of the retailer selling the product
  • the margin charged by the wholesaler
  • the price received by the manufacturer.

The treatment adopted in the TSA is illustrated using the following example:

A tourist purchases a jersey for $100, comprising a $10 mark-up from the retailer (who has direct contact with the tourist), a $15 margin from the wholesaler, and $75 charged by the manufacturer.

  • the full purchase price of the jersey ($100) is recorded as total tourism expenditure
  • the margin (or mark-up) by the retailer selling the jersey to the tourist is the retail output ($10) from which direct tourism value added is then derived
  • the remaining $90 is the price received by the manufacturer ($75) and the margin charged by the wholesaler ($15); neither of these has direct contact with the tourist and is the output from which indirect value added is derived.

Consumer durables

Two types of expenditure on consumer durables are included in tourism expenditure in a TSA, consistent with UNWTO recommendations:

  • Conceptually, all consumer durables acquired on a trip are included in tourism demand. This includes the purchase of high-value consumer durables during a trip, such as motor vehicles, even though the primary purpose may not be for tourism use. The estimate of purchases of motor vehicles by households while on trips is related to the proportion of New Zealanders living in rural areas. This is based on the assumption that rural residents will travel outside their 'usual environment' (defined in appendix 1) to purchase a motor vehicle. It is recognised that the usual environment for a rural New Zealander may well include urban areas that fall outside the strict TSA definition of 'usual environment'. While the measurement makes some attempt to take this into consideration, there is little hard data with which to refine it. As a result, these estimates may be revisited in the future.
  • Off-trip purchases of a specific range of consumer durables with very high tourism use are included. For example, luggage and tents are acquired primarily for tourism purposes, so are always considered tourism expenditure. TSAs have defined a set of consumer durables with very high tourism use, based on a list developed by the OECD that is supplemented with consumer durables having high tourism use in New Zealand. (See appendix 3 ‘Tourism product classification’ for items included as tourism consumer durables.)

Holiday homes

An imputed rental on owner-occupied dwellings is calculated in the national accounts. This is to avoid distortions over time resulting from changes in the number of people renting rather than owning homes (otherwise, an increase in the number of people renting homes would increase GDP). This imputed rental is applied to both first and second homes (which includes holiday homes).

Although a holiday home may not be in full-time use, the assumption is made that it is available to be used all year, and therefore the rental from owning the holiday home is allocated to tourism expenditure.

For a TSA, demand for holiday homes is assumed to come solely from domestic recreational tourists, due to a lack of data on the origin of holiday homes. Total supply of holiday homes is set equal to the total imputed holiday home rental (and therefore total demand) of domestic household tourists, as holiday home supply is provided solely for the purposes of tourism.

Package tours

TSAs apply the net approach to recording package tour expenditure, where the organiser's margin for arranging the tour is recorded as the sole output, while the components of the tour are treated as being purchased directly by the tourist.

For example, a travel agent sells a package tour to a tourist. The travel agent (organiser) records a margin from the sale of the package tour. The expenditure on each of the components of the tour is captured under the respective industry’s output.

Travel agency services

There are two major ways in which travel agents obtain their income. Firstly, income is earned by buying travel products (generally at a bulk discount) and selling them to travellers, thereby earning a margin. Secondly, an agent may book a traveller's fare or accommodation with the service provider, and receive commission from the service provider (on behalf of the traveller). There are special treatments in TSAs for each of these means of generating income:

  • Where travel agents have sold travel to travellers, then travellers are recorded as having bought travel (from the travel provider) and travel agency services (the travel agent's margin).
  • Where travel agents have received commissions, providers are assumed to have purchased travel agency services on behalf of the tourist. This means that these travel agency services are included in direct tourism demand and therefore contribute to direct tourism value added. Consequently, business travel expenditure includes a high level of demand for travel agency services.

Non-market output consumed by tourists

The New Zealand TSA does not include an imputation for the provision of individual non-market tourism services in total tourism consumption. These services include information centres, museums, and libraries, and any other services that tourists use without having to pay for them, such as national parks. This is a recommended inclusion in UNWTO TSA methodology.

To implement the UNWTO recommendation requires:

  • a very detailed functional breakdown of the expenditure of government and non-profit institutions, that is, separately identifying those entities which provide 'individualised' services
  • splitting this expenditure between tourist and non-tourist consumption.

Identifying individualised and collective non-market consumption is a recommendation from System of National Accounts 1993 (Inter-Secretariat Working Group on National Accounts, 1993). However, this has been only partly implemented (local government has not been fully split). In areas that have been split, the breakdowns are not sufficiently detailed for TSA purposes.

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