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Tourism value added

Direct tourism value added

Direct tourism value added calculations are usually made at a finer level of industry detail than is presented in table 9.

The tourism industry ratio is calculated by dividing tourism supply by industry by the total supply for that industry. The tourism industry ratio represents the proportion of each industry’s output that is consumed by tourists.

Tourism industry ratios are multiplied through each production account for all industries to produce direct tourism value added. This is summarised and presented in table 9 for the years ended March 2009–12.

Table 9

Direct tourism value added, year ended March 2009–12.

Point to note from table 9:

  • Between 2009 and 2012, direct tourism value added (also referred to as tourism’s direct contribution to GDP) decreased 4.9 percent, a lower rate than the contribution to GDP from domestic production, which increased 9.5 percent.

As shown in figure 1, total expenditure on goods and services by tourists ($23.4 billion in 2012) consists of three components:

  • Goods and services worth $20.0 billion produced in New Zealand and directly purchased by tourists. Direct tourism output consisted of $4.6 billion of intermediate inputs, and $6.2 billion of direct tourism value added.
  • Imports of $2.1 billion sold directly to tourists by retailers.
  • GST of $1.3 billion paid on goods and services purchased by tourists.

Domestically produced goods are sold directly to tourists by retailers, and only the retail margin (production value of the turnover of the retailer) of these sold goods is recorded in the direct tourism value added. The value added in the production of these goods is not part of tourism direct gross value added but is to be considered within the indirect effects.

Indirect tourism value added and imports

As well as measuring direct tourism value added, Tourism Satellite Account: 2012 reports on indirect tourism value added (or tourism’s indirect contribution to GDP). This broader measure goes beyond the value added generated by producers directly supplying tourism products, and embraces the total value added of all producers both directly and indirectly.

Measuring indirect tourism value added involves tracing the flow-on effects of businesses’ intermediate purchases that are used directly in producing tourism products (see figure 1) and measuring the cumulative value added these purchases generate.

For example, the intermediate purchases of the ‘accommodation’ and ‘cafes and restaurants’ industries include items such as electricity, bedding, and food purchased from other industries or imports. In turn, these other industries will have made intermediate purchases from other industries (or from overseas) in order to produce the items they sell to the accommodation and cafes and restaurants industries. So the sequence continues, until all intermediate purchases can be directly accounted for, either as value added or imports.

Measuring indirect tourism contribution to GDP involves summing the value added of each industry that is generated throughout this sequence. The New Zealand TSA covers the intermediate consumption related to direct tourist expenditure. Total tourism expenditure can be explained in terms of:

  • direct tourism value added
  • indirect tourism value added
  • imports (those directly sold to tourists and those used indirectly in production)
  • GST.

Note that some of tourism’s indirect demand for intermediate inputs will not be met by the output of New Zealand producers, but by imports that provide no direct contribution to New Zealand’s GDP. For more information, refer to Quarterly gross domestic product: sources and methods (2008).

Table 10 summarises the relationship between the various components of tourism expenditure.

Table 10

Tourism expenditure by component, year ended March 2009–12.

Direct tourism value added does not necessarily show the same movement as tourism expenditure. This is because changes in expenditure patterns flow through into the composition of industries that supply products consumed by tourists.

Changing industry composition flows through into other economic aggregates. This can lead to a result where the different industries that contribute to tourism have varying value added to output ratios.

Movements in the value of imports sold directly to tourists and in imports used in the production of goods and services sold to tourists are strongly influenced by exchange rate variations and changes in the mix of products purchased. Table 10 shows that in the year ended March 2012 these imports increased 2.3 percent, while total tourism expenditure rose 2.4 percent.

Tourism expenditure can also be presented by the share of each component, as shown in table 11 for the years ended March 2009–12.

Table 11

Share of tourism expenditure by component, year ended March 2009–12.  

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