Tourism Satellite Account for Switzerland, 2001 and 2005 Basic principles, methodology and results

Transcription

1 Tourism Satellite Account for Switzerland, 2001 and 2005 Basic principles, methodology and results Neuchâtel, 2008

2 The Swiss Statistics series published by the Federal Statistical Office (FSO) covers the following fields: 0 Statistical Base and Overviews 1 Population 2 Territory and Environment 3 Employment and Income from Employment 4 National Economy 5 Prices 6 Industry and Services 7 Agriculture and Forestry 8 Energy 9 Construction and Housing 10 Tourism 11 Mobility and Transport 12 Money, Banks, Insurance Companies 13 Social Security 14 Health 15 Education and Science 16 Media, Information Society, Sport 17 Politics 18 Public Administration and Finance 19 Crime and Criminal Justice 20 Economic and social Situation of the Population 21 Sustainable Development, regional and international Disparities

3 Swiss Statistics Tourism Satellite Account for Switzerland, 2001 and 2005 Basic principles, methodology and results Editing Published by Thomas Baumann, Ueli Schiess Swiss Federal Statistical Office FSO State Secretariat for Economic Affairs SECO Office fédéral de la statistique (OFS) Neuchâtel, 2008

4 IMpressum Published by: Federal Statistical Office (FSO) State Secretariat for Economic Affairs (SECO) Information: Thomas Baumann, FSO, Phone +41 (0) Editors: Thomas Baumann, FSO, Phone +41 (0) Ueli Schiess, FSO, Phone +41 (0) Realization: Section National Accounts Obtainable from: Federal Statistical Office, CH-2010 Neuchâtel Phone +41 (0) / Fax +41 (0) / order@bfs.admin.ch Order number: Price: CHF 14 (VAT not incl.) Series: Swiss Statistics Field: 10 Tourism Original text: German Translation: FSO Translation Service Frontispiece: Photo Switzerland Tourism Graphics/Layout: FSO Copyright: FSO, Neuchâtel 2008 reproduction with mention of source authorized (except for commercial purposes) ISBN:

5 List of contents List of contents Preface 5 Summary Value added Value added in 2001, by product Value added in 2005, by product The tourism share of value added 26 1 Introduction Why a tourism satellite account for Switzerland? Employment Tourism employment in 2001, by product Tourism employment in 2005, by product History of the tourism satellite account Relationship to the national accounts Terminology and definitions 11 2 Methodology and procedure Structure of the tourism satellite account The tables in the tourism satellite account The products in the tourism satellite account Database and calculation methodology of the tourism satellite account Preliminary remarks Tourism-characteristic products Tourism-connected and non-tourism-specific products Differences from the tourism satellite account for Interpretation and analysis of results The importance of tourism in the Swiss economy Gross value added Employment Nominal labour productivity Alternative criteria to evaluate the role of tourism in the Swiss economy 34 List of abbreviations 37 Glossary 38 Bibliography 40 Appendix 1: TSA tables 43 3 Results Consumption Tourism consumption by visitor type Tourism consumption by product 23 Appendix 2: Gross value added index, employment in full-time equivalents (FTE) and nominal productivity FSO Tourism Satellite Account 3

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7 Preface Preface The calculation of the value added generated by Swiss tourism in a satellite account has certainly been one of the most important statistics projects of recent years. It was a big challenge for all involved to process the fragmented tourism statistics in accordance with the sophisticated method of the national accounts. The significance of tourism to the national economy has thus been recorded in a statistically sound and scientific manner. Value added statements are necessary to formulate a tourism policy committed to sustained growth. The promotion of high value added forms of tourism is a precondition for growing the tourism business sectors in a way that saves resources and is socially acceptable. The aim is to increase the value added per tourist. Only then will tourism businesses be able to at least partially offset the competitive disadvantages in the factor market, which are connected to the seasonality of demand. As a highly developed economy, Switzerland has reached a stage of development in which tourism faces a big challenge to keep up with the rest of the economy. Although the CHF 12.6 billion value added generated by the tourism sector remains high and continues to grow, tourism appears to be losing ground compared to the rest of the economy. The share of gross domestic product accounted for by the value added of tourism fell from 3.1% in 2001 to 2.9% in A strong and dynamic tourism economy is highly significant for our country. Switzerland must continue to play a leading role as a tourism country in the global market. We thank the Federal Statistical Office for its excellent cooperation. We were very fortunate to work with Vice Director Ruth Meier, a first-class tourism expert who had worked on the development of satellite accounts at an international level. Special thanks also go to Messrs Thomas Baumann and Ueli Schiess for the calculation and processing of the data. Mr Davide Codoni of the Tourism Department of the State Secretariat for Economic Affairs provided them with key assistance in this task. State Secretariat for Economic Affairs Dr. Eric Scheidegger Deputy Director Ambassador Head of the Promotion Activities Directorate 2008 FSO Tourism Satellite Account 5

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9 summary Summary In 2005, the value added generated in Switzerland by tourism amounted to approximately CHF 12.6 billion. This represents almost 2% or CHF 234 million more than in However, as the value added of the whole economy in the same period showed much stronger growth of 8%, the contribution made by tourism to the total value added fell from 3.1% to 2.9%. Total tourism consumption amounted to CHF 32.6 billion in 2005, almost 2% or CHF 504 million more than in With CHF 30.4 billion, the largest part of this was attributable to directly generated revenue. The other components of tourism consumption (fictitious rental earnings from owner-occupied holiday accommodation, public contributions to transport, culture and tourism promotion) accounted for only CHF 2.1 billion. In 2001 revenue from tourism amounted to CHF 30.2 billion. The other components of tourism consumption generated revenue of CHF 1.9 billion. The index of gross value added as shown in the satellite account has been falling since It fell to 96.2 points in 2001, reaching 98 points in 2005 (base 1998=100). The four most important factors influencing the progress of value added generated by tourism are changes in exchange rates, the economic situation in visitors countries of origin, the terrorist attacks in New York of 11th September 2001 and the bankruptcy of Swissair. Employment trends as shown in the tourism satellite account also took a downward turn. The employment index stood at 86.8 points in 2001 and in 2005 at 82.2 points. This reflects a strong increase in the nominal productivity of the tourism sector between 2001 and 2005, which stood only slightly below that of the economy as a whole. The first tourism satellite account for Switzerland was published in 2003 as part of a pilot project and was based on the reference year The tourism satellite accounts for the years 2001 and 2005 presented here mark the introduction of a tourism satellite account for Switzerland which will be compiled on a regular basis. Fundamental methodological differences exist between the tourism satellite account of 1998 and the satellite account for 2001 and These differences are to be found not so much in the structure, the definitions or the type of goods, services and monetary indicators, but mainly in the sources and survey methodology used. In compiling the tourism satellite accounts for 2001 and 2005, special attention was paid to developing a method which reliably reflects the actual changes with regard to the monetary aspects of tourism. Owing to the differences in methodology mentioned, it has however proved more difficult to identify accurately the changes between the findings of 1998 and 2001 based on the figures available. According to the figures from the tourism satellite account for 1998, the value added of tourism in 1998 amounted to approximately CHF 12.9 billion. Tourism consumption amounted to CHF 30.6 billion. The authors of this report consider the relatively high level of consistency between the findings of the satellite accounts for 2001 and 2005 with those of the tourism satellite account for 1998 as a success that should not be underestimated. Although both satellite accounts used a fundamentally different method and were carried out completely independently from one another, they arrived at roughly the same result. One could hardly imagine better confirmation of the findings at hand than that of another team, at another point in time, using a completely different method obtaining practically identical results. The findings of the tourism satellite account 1998 confirm the results for 2001 and 2005 in the same way that the results of the tourism satellite accounts 2001 and 2005 back up the figures from the satellite account for FSO Tourism Satellite Account 7

10 Summary The structure of the present report is as follows: Chapter 1 presents the background and framework of the tourism satellite account and how it came into being. The principal definitions are also introduced. Chapter 2 describes the compilation of the tourism satellite accounts 2001 and 2005 and the methodology used. Chapter 3 presents the results and Chapter 4 interprets these results in the context of the national economy. 8 Tourism Satellite Account FSO 2008

11 Introduction 1 Introduction 1.1 Why a tourism satellite account for Switzerland? Tourism is very important to both the Swiss economy and regional politics, and for this reason it is frequently the subject of discussion, both in political circles and in society generally. A strong need therefore exists among politicians and others for reliable statistics on which to base their decisions and discussions. It is the purpose of the tourism satellite account to meet this need. The tourism satellite account (TSA) is the principal synthesis statistic 1 on which measurement of the economic effects of tourism is based. Its purpose is to accurately record tourism s importance to different sectors of the economy, as well as tourism s contribution to the economy in terms both of value added and employment. To achieve this, the TSA does not derive its data from a survey of its own, but makes use of various existing base statistics. These base statistics include, for example, the results of surveys of households or travellers, or surveys conducted among companies. A quite considerable number of such base statistics are available in Switzerland, the results of which do not need to be consistent with one another and generally are not. It is therefore not normally possible for the TSA to simply apply these base statistics: it must first compare, reconcile and harmonise 2 them with one another. The TSA is thus based on a synthesis of the base statistics used. In view of the fact that in this process of comparing and harmonising the base statistics, the TSA clarifies any inconsistencies and eliminates any coincidental discrepancies between the individual surveys, it can claim to be a reference system for analysing the economic aspects of tourism. For the TSA to be both coherent and comparable, precisely defined concepts and terminology are required. This comparability is, on the one hand, temporal in nature, in that it should be possible to compare a country s tourism satellite accounts with one another over time; on the other hand, it is geographical in nature, in that it should also be possible to compare the satellite accounts of individual countries or regions with one another. To ensure that both temporal and geographical comparability are assured, there are internationally agreed guidelines for the creation of tourism satellite accounts. And as TSAs are also primarily concerned with the economic aspects of tourism, that is to say the aspects of tourism that relate to the economies of individual countries, the concepts and terminology used in them should be the same as those used in the analysis of national economies. However, the reference system for economic analysis at national level is the national accounts, and for this reason the concepts and terminology used for the TSA should be largely coherent with those used in national accounting. 1 Terms marked with an arrow are explained in the glossary, which can be found in the appendix to this report. 2 This procedure is the same as that used in the national accounts FSO Tourism Satellite Account 9

12 Introduction 1.2 History of the tourism satellite account On the theoretical side, the World Tourism Organization (WTO), an offshoot of the United Nations dedicated to tourism, began preliminary work on the production of guidelines on the creation of tourism satellite accounts as far back as In 1991 the Manual on Tourism Economic Accounts was published, followed in 1997 by the Tourism Satellite Account (TSA): The Conceptual Framework, and in 2001 by the Tourism Satellite Account: The Recommended Methodological Framework (TSA: RMF). The TSA: RMF is currently being revised, but it nevertheless provides a stable theoretical basis for the production of tourism satellite accounts that can claim validity worldwide, and the current Swiss TSA is based on it. On the practical side, the first TSA was produced for Canada in 1994, and in recent years an increasing number of countries have also produced them, including Switzerland. In 2003 the Swiss Federal Statistical Office (FSO), together with the Swiss State Secretariat for Economic Affairs (SECO), published the first TSA for Switzerland, which took 1998 as its year of reference. The aim of this first TSA was to establish the feasibility of a TSA for Switzerland and to produce a preliminary estimate of the economic importance of tourism in Switzerland. The tourism satellite accounts for the years 2001 and 2005 referred to in this document represent the transition to regular production of a TSA for Switzerland. 1.3 Relationship to the national accounts The TSA is very closely related to the national accounts. Both the term satellite account and the concept of a satellite account actually derive from national accounting, and the System of National Accounts 1993, the globally recognised reference and regulatory work for national accounting, devotes one of its 21 chapters to satellite accounts. Besides the tourism satellite account, there is a series of other satellite accounts relating to other areas of the economy. The concept of the satellite account was primarily created in order to analyse specific national economic problems that fall outside the scope of the national accounts but using the terminology and concepts of national accounting and managing to retain a certain comparability with the aggregates of the national economy either because these problems fall outside the sector structure of the national accounts 3, or because aspects that are not covered by national accounting need to be investigated. 4 A satellite account and therefore also the TSA, uses many of the concepts and much of the terminology of national accounting, but can also deviate from them in some areas. Certain concepts that are used in the TSA derive in all respects from national accounting and can only be understood in that context for example, the concept of value added. Other concepts, such as employment, are well understood generally, and the TSA could use another definition for it than that used in national accounting. However, in cases where the TSA seeks to relate employment in the tourism sector ( tourism employment ) to employment within the economy in general, it would seem wise to use the same definitions as are used in national accounting. The definition of production is also the same as that used in national accounting: for example, household production as generated by the members of a household, for example the preparation of meals at home or journeys made in a private vehicle, is not taken into account as a service. 3 Example: the tourism satellite account. 4 Example: household production satellite account, FSO (2004). 10 Tourism Satellite Account FSO 2008

13 Introduction In terms of methods used, national accounting is based on parity of production, income and use of production (consumption and investment): these correspond to the same variables, as measured at three different points in the economic cycle. In the case of the TSA, parity between income and use of production does not apply the system is open: income from the tourism sector is spent in other sectors of the economy, whilst income from other sectors is spent in the tourism sector. There is still parity between production and use of production within the tourism sector, however. This is the fundamental equation upon which the TSA is based. And just as, in national accounting, tallying the figures for GDP calculated using three mutually independent approaches (the production approach, the income approach and the use of production approach 5 ) assures quality, so too should production 6 and use of production be calculated as independently from one another as possible for the TSA and still tally. So what is this tourism sector, and why is it reported using a satellite account? Tourism, unlike other industries in the national accounts, is defined by the demand side: Tourism is not the production or consumption of goods or services of a particular industry tourism is what touristic visitors demand, regardless of which goods or services that might be. The demand created by tourism thus affects many different industries, even if only slightly in some cases. Conversely, barely a single industry is one hundred per cent tourism-based even a certain proportion of pre-eminent tourism services such as overnight stays in hotels is accounted for by guests who could not be defined as touristic visitors. However, because the system of national accounts is based on a particular number of industries that cover the entire economic structure of a country, the tourism sector cannot be included in the core system of national accounts; instead, it must be accounted for outside the national accounts system hence the term satellite account. 1.4 Terminology and definitions The TSA is concerned with trips made by visitors. 7 Visitors are travellers on trips outside their usual environment. The usual environment corresponds to the geographical boundaries within which an individual displaces himself/herself within his/her regular routine of life. It consists of the direct vicinity of his/her home and place of work or study and other places frequently visited. 8 Any other place in which a traveller makes an uninterrupted stay of more than 12 months is also considered as part of his/her usual environment. The definition of usual environment is not internationally identical, but one or more of three criteria frequency, distance and duration are normally used. An often-used criterion for frequency, for example, is whether a place is visited less than once a week, on average, over the course of a year. An often-used criterion for distance is a minimum distance of 15 or 30 kilometres from the place of residence, workplace or place of study. As regards the duration of a trip, a minimum of 3 or 4 hours is normally required for it to be defined as touristic. For the base statistics 9 applied to the Swiss TSA, a combination of the frequency criterion and the duration criterion is used: For a trip to be defined as touristic, the destination may be visited less than once a week, on average, over the course of a year, and the duration of the trip must be at least 3 hours. Visitors can also be divided into categories. For this, the following criteria are used: visitors place of residence, purpose of the trip and duration of the trip. 5 Generally also called: expenditure approach. 6 Production is in national accounts terminology also called: resources. 7 In common parlance, visitors are often referred to as tourists ; however, in the academic terminology used here, the term tourists only includes visitors staying one or more nights. 8 Eurostat, WTO, UNSTAT, OECD (2001): page Survey on travel behaviour of the Swiss resident population in 2003, microcensuses on travel hehavior 2000 and FSO Tourism Satellite Account 11

14 Introduction Place of residence: on the basis of their permanent place of residence, visitors fall into two categories domestic visitors and foreign visitors. Domestic visitors are Swiss nationals or foreigners whose permanent place of residence is Switzerland; foreign visitors are Swiss nationals or nationals of other states whose permanent place of residence is outside Switzerland. Purpose of the trip: visitors also fall into two categories on the basis of the purpose of their trip visitors for whom the main purpose of the trip is private and visitors for whom the main purpose of the trip is business. All trips made by self-employed and employed persons acting in the exercise of an activity on behalf of their own business or that of their employer are business trips. On the other hand, business trips do not include trips for which the purpose is to exercise an activity remunerated from within the place visited. Paid leave and holidays organised by an employer for its employees also do not constitute business trips. Furthermore, expenditure made for private purposes during a business trip is not allocated to business trips, but to private trips. All trips that are not business trips are private trips. Duration of the trip: Trips can be divided into those involving overnight stays and those not involving overnight stays. The former can be further divided into long and short trips, although this is of no significance for the TSA. Visitors on trips involving overnight stays are called tourists: Visitors on trips not involving overnight stays are called same-day visitors. A total of 2 3 =8 combinations, i.e. visitor types, can be obtained from these three criteria, although only five of them are used for the purposes of the TSA. These five visitor types are: Domestic visitors on private trips involving overnight stays; Domestic visitors on private trips not involving overnight stays; Domestic visitors on business trips; Foreign visitors on trips involving overnight stays; Foreign visitors on trips not involving overnight stays. Figure 1: The five types of visitor referred to in the tourism satellite account Visitors Domestic Visitors Foreign Visitors Private trips Business trips Business trips Private trips Private trips involving overnight stays Private trips not involving overnight stays Trips involving overnight stays Trips not involving overnight stays 12 Tourism Satellite Account FSO 2008

15 Introduction Figure 2: The three forms of tourism referred to in the tourism satellite account Origin of visitors National International Travel destination National Domestic tourism Inbound tourism International Outbound tourism As regards domestic business trips, no distinction is made in the TSA between trips involving overnight stays and trips not involving overnight stays 10 ; also, no distinction is made between business trips and private trips made by foreign visitors. 11 It is also possible to combine travel destination with origin of visitors, which produces the following forms of tourism (see Figure 2). The empty cell represents trips made by foreigners outside Switzerland. However, on the basis of the TSA: RMF s definition, these are not included in the TSA, even if they generate revenue for the domestic economy. 12 The TSA comprises the whole of domestic tourism and inbound tourism, as well as the portion of revenue that is generated within Switzerland by outbound tourism, for example by flights booked with Swiss airlines, or by travel insurance taken out with Swiss insurance companies. With the exception of the above example, what is important here is not the travel destination, but where the tourism use of production, or tourism consumption, occurs, and in this respect the TSA adheres strictly to the domestic concept as applied in national accounting. 10 The Swiss TSA follows the TSA:RMF in this respect, although a distinction between business trips involving overnight stays and business trips not involving overnight stays would be entirely conceivable. 11 With domestic trips, a distinction is made between business trips and private trips, because the former represent intermediate consumption but the latter represent final demand. From the point of view of the domestic economy, however, all trips from foreigners represent final demand business trips made by foreign visitors being intermediate consumption only from the point of view of other countries. 12 This is why, for example, Swiss airlines' revenue from transfer traffic (e.g. Athens-London, transfering in Zurich) is not taken into account in the TSA FSO Tourism Satellite Account 13

16 Methodology and procedure 2 Methodology and procedure The Swiss tourism satellite account uses the concepts and definitions of national accounting, and in the small number of cases where this is not the case reference is explicitly made to this fact. In layout and structure, it adheres as closely as possible to the recommendations of the 2001 version of the TSA: RMF. The table sequence in the TSA obeys the following logic: Tourism use of production [hereafter referred to as tourism consumption ] is calculated first. This is then shown in relation to total domestic production. The result is then used in the next step, which is to calculate value added and employment generated by tourism. 2.1 Structure of the tourism satellite account The TSA is divided into tables, which are themselves arranged by type of tourism product The tables in the tourism satellite account The Swiss TSA is made up of six tables. These tables correspond to tables 1, 2, 4, 6 and 7 in the TSA: RMF. 13 Tables 3, 5 and 8 to 10 in the TSA: RMF are not used in the Swiss TSA. Also, although Table 5 of the Swiss TSA does not feature in the table system of the TSA: RMF it is nevertheless required to calculate value added. 13 The titles of the tables in the TSA: RMF are as follows: Table 1: Table 2: Table 3: Table 4: Table 5: Table 6: Table 7: Table 8: Table 9: Inbound tourism consumption, by products and categories of visitors Domestic tourism consumption, by products and ad hoc sets of resident visitors Outbound tourism consumption, by products and categories of visitors Internal tourism consumption, by products and types of tourism Production accounts of tourism industries and other industries Domestic supply and internal tourism consumption, by products Employment in the tourism industries Tourism gross fixed capital formation of tourism industries and other industries Tourism collective consumption, by functions and levels of government Table 10: Non-monetary indicators Tables showing tourism consumption Tables 1 3 (Tables 1 4 in the TSA: RMF) record tourism consumption in Switzerland. Consumption is made up of two components direct demand 14 and the other components 15 of tourism consumption. Formula 1: Tourism consumption = direct demand + other components of consumption Table 1 (Table 1 in the TSA: RMF) records direct demand in inbound tourism, i.e. tourism revenue from foreign visitors in Switzerland. A distinction is made here between two types of visitor same-day visitors and visitors making overnight stays. Table 2 (Table 2 in the TSA: RMF) shows direct demand, i.e. revenue, from domestic visitors in Switzerland. This includes both revenue from domestic tourism and revenue generated by outbound tourism and earned in Switzerland. These are shown separately. A distinction is also made in Table 2 between three types of visitor private travellers making overnight stays, same-day visitors and business travellers. 14 Direct demand corresponds to expenditure made by visitors or by third parties on behalf of visitors in cash, using credit cards, or in settlement of invoices for services consumed. The date applied here is not the date of payment but the date on which a tourist service is used or on which ownership of goods is transferred. 15 The other components are services which visitors consume but do not pay for directly. These may be transport services, health services or cultural institutions receiving financial support from the public purse, or fictitious rental earnings from owner-occupied holiday accommodation. And although owners of holiday accommodation obviously make expenditure on the construction and maintenance of their accommodation, they do not pay directly (rent) for using them. 14 Tourism Satellite Account FSO 2008

17 Methodology and procedure Table 3 (Table 4 in the TSA: RMF) shows direct tourist demand from foreign and domestic visitors in relation to total tourist demand in Switzerland. Finally, the other components of tourism consumption are added in order to calculate total tourism consumption in Switzerland. Tables showing production, value added and employment Table 4 (Table 6 in the TSA: RMF) shows total tourism consumption in Switzerland in relation to domestic production (output). In order to make this comparison, certain adjustments need to be made: tourism consumption must be adjusted for value added tax in order to obtain tourism consumption at purchasers prices excluding value added tax. Conversely, taxes on products and transport costs must be added to, and subsidies on products subtracted from, basic prices to obtain domestic production at purchasers prices excluding VAT. 16 The comparison between tourism consumption and domestic production is then made at purchasers prices excluding VAT. On the basis of the tourism shares in Table 4, Table 5 calculates tourism output (at basic prices) and value added by tourism. In the same way, Table 6 (Table 7 in the TSA: RMF) calculates employment in the tourism sector in full time equivalents. Output, value added and employment here correspond exactly to the definition used in national accounting. The results of tables 5 and 6 can be used to calculate the proportion of total value added accounted for by tourism value added and the proportion of total employment accounted for by employment in the tourism sector. However, two points need to be stressed here: 1. The proportion of total value added before adjustment accounted for by tourism value added is not the same as the proportion of the gross domestic product (GDP) accounted for by tourism, as is often wrongly assumed. The GDP represents total value added before adjustment plus taxes on products minus subsidies on products. Formula 2: Gross domestic product = total value added + taxes on products subsidies on products Therefore, value added by tourism should logically only be compared with value added within the economy as a whole, and not with GDP. 2. In principle, intermediate consumption is not taken into account in the calculation of GDP - or total value added before adjustment according to the national accounts 17. On this point, the TSA differs in its definition from the national accounts because, for the calculation of the proportion of total value added accounted for by tourism, the business trips of resident visitors are also taken into account. Business trips represent intermediate consumption as they are inputs into the production of other goods and services. 16 Basic prices correspond to the effective cost of producing a good or a service, as incurred in local production units, or the effective gross revenue of the local production units from the sale of a product. Basic prices include taxes on production minus subsidies on production, but not taxes on products minus subsidies on products, the cost of transporting the product to the buyer or value added tax. Taxes on products are taxes that are levied per value unit or per physical unit of a product. The purchasers price is the price, exclusive of deductible value added tax, that a buyer must pay for a product. In addition to the basic price it also includes taxes on products minus subsidies, non deductible value added tax and transport costs, which in the case of services often equal zero, as the products are not normally transported to the buyer: instead, the buyer comes to the place where the service is provided. Because the amount of VAT is not calculated at the level of branches in the Swiss national accounts, the TSA uses purchasers prices excluding VAT. 17 The intermediate consumption of one enterprise (1) is the output of one or several another enterprises (2). For simplicity of presentation it is assumed that there is just one enterprise (2). It is shown as input in the production account of enterprise 1 on the debit side and as output in the production account of enterprise 2 on the credit side. However, if the production accounts of all the enterprise are consolidated, enterprise 1 s intermediate consumption appears on both the debit and the credit side of the consolidated account, so the two entries offset each other exactly. This is why intermediate consumption cannot be included in the calculation of GDP (or total value added) FSO Tourism Satellite Account 15

18 Methodology and procedure The products in the tourism satellite account The TSA is arranged by product. Products are goods and services consumed by visitors. 18 This stands in contrast to the national accounts of Switzerland and to the TSA for 1998, both of which are arranged by industries. At an initial level, a distinction is made between tourism-specific and non-tourism-specific products. Tourism-specific products are characterised by the fact that they fulfil at least one of the following two conditions: Tourism consumption accounts for a considerable proportion of total consumption of this product; Tourism consumption of this product accounts for a considerable proportion of total tourism consumption. Tourism-specific products, again, are sub-divided into tourism-characteristic and tourism-connected products. Tourism-characteristic products are products, whose tourism-specific character could be said to have worldwide validity. For this purpose, the TSA: RMF contains a list in which these products are specified and defined. As far as tourism-connected products are concerned, individual countries can include other products of considerable importance to tourism in the country in question. For Switzerland, examples of such products are services provided by the health sector and the retail trade. Figure 3: Breakdown of touristic goods and services All goods and services Tourism-specific goods and services Non-tourism-specific goods and services Tourism-characteristic goods and services Tourism-connected goods and services Accommodation services Food and beverage serving services Passenger transport services Travel agency, tour operator and tourist guide services Cultural services Recreation and other entertainment services Miscellaneous tourism services 18 Examples are accommodation and passenger transport services, i.e. goods and services included in the UNSTAT Central Product Classification (CPC), but not tourism products such as: beach holidays, trips to cities or cultural tourism. 16 Tourism Satellite Account FSO 2008

19 Methodology and procedure 2.2 Data base and calculation methodology of the tourism satellite account Preliminary remarks This section deals with the calculation of tourism consumption in tables 1 3 in the TSA. A description of how tables 4 6 are calculated can be found in Section In principle, tourism production and tourism consumption should be calculated separately and independently from one another in the TSA 19 as in national accounting. This would be the equivalent of subjecting the results to automatic quality control. In the current situation with regard to data, however, this is only partially possible. There are still major gaps, particularly on the consumption side. As a consequence an integrative approach is usually adopted, as with the TSA for 1998: instead of duplicated and separate calculations, production-side and consumption-side approaches are used in conjunction, to complement one another. 20 On the other hand, tourist demand from foreign visitors tallies with the figures on the tourism balance sheet. 21 The method of calculation mainly used in the TSAs for 2001 and 2005 takes advantage of a peculiarity of Swiss tourism, namely the geographical concentration of tourism in Switzerland. Major cities apart, a significant portion of tourism consumption can be attributed to a few prominent tourism destinations. This makes it possible to localise tourism for statistical purposes and to estimate the economic effect of tourism by comparing these localities with similar, though non-touristic, localities. In the remainder of this report, this procedure will be referred to as the spatial analysis of production. By contrast, the TSA for 1998 was largely based on the estimates of experts. The Swiss TSA is primarily based on the following four sources: the input-output table for Switzerland 22, the establishment census, survey on travel behaviour of the Swiss resident population 2003 and the 2000 and 2005 microcensuses on travel behaviour. A large number of other base statistics is also used, and these will be dealt with in more detail in the next section. 19 This can also be described as supply- or production-side and demandside calculation. The suppliers/producers are the companies: this means that the calculations are based on company data or company surveys. The demand comes from touristic visitors: this means that the data normally comes from surveys of visitors and households. 20 However, even if consumption-side data of sufficient quality were available, it would never be able to provide sufficient detail to supply information on all products listed in the TSA the cost of conducting surveys would be far too high. This is why comparison of production and consumption will only ever be possible on an aggregated level. 21 The following three accounts on the tourism balance sheet are used: Tourism involving overnight stays in accommodation establishments and with relatives and friends, same-day, transit and other tourism, and stays in hospitals. The following four accounts, which are not used in the tourism balance sheet for systemic reasons, are also taken into account here: passenger air transport, supporting passenger transport services, part of passenger rail traffic and miscellaneous tourism services. As, in the case of same-day, transit and other tourism, it is impossible to determine what portion should be attributed to visitors and what portion to travellers within their usual environment, all income is attributed to visitors. 22 Because the figures in the national accounts are periodically revised, the input-output table for Switzerland must be periodically updated accordingly. The Swiss TSA is based on the input-output tables for 2001 and 2005, status June FSO Tourism Satellite Account 17

20 Methodology and procedure An example of spatial analysis of production For the purposes of the spatial analysis of production, all Swiss local authorities are assigned to one of the following three categories: villages (rural, non-municipal authorities) with populations of less than 10,000, towns with populations of between 10,000 and 30,000 and cities with populations of over 30,000. The geographical analysis of production is based on a list of almost exactly 200 tourist villages. Other localities are included where necessary. All except two (Einsiedeln and Davos) fall into the village category. The average population of the tourist villages is around 1350 and is thus slightly below the average for all villages in Switzerland, which is around The analysis is based on employment in full-time equivalents per industry and local authority according to the establishment census. For example, in order to calculate tourism s share of the retail trades of watches and jewellery or sports goods or the taxi business, employment in tourist villages and the other non-tourist villages must first be calculated. The next step is to calculate employment per inhabitant in the non-touristic villages and to project this figure onto the touristic villages. This gives a fictitious figure showing how high employment would have to be in the tourist localities in order to cover non-tourist requirement. The difference between actual employment and the fictitious figure calculated then corresponds to tourism s share of employment. These calculations are then repeated for the two touristic towns, Einsiedeln and Davos, as well as, if necessary, for other localities. One could also regard the cities of, for example, Zürich, Geneva, Lugano and Lucerne as touristic cities for the purpose of calculating tourism s share of the retail trade in watches and jewellery, and compare them with the other cities, and for the taxi business the municipalities where the international airports of Zürich and Geneva are located would also definitely have to be included. The percentage share of total employment in the industry that is accounted for by touristic employment calculated in this way corresponds to tourism s percentage share of production in this industry. Tourism consumption is then obtained by multiplying tourism s percentage share of production by total production for the industry Tourism-characteristic products Accommodation services The accommodation account comprises accommodation services in the hotel and other lodging services sectors, as well as in owner-occupied holiday dwellings. Unlike the TSA for 1998, the TSAs for 2001 and 2005 are based throughout on the consumption of products. Accordingly, but unlike the TSA for 1998, only accommodation services are included for the hotel and other lodging services sectors, and catering services are, without exception, allocated to the account food and beverage serving services. This is why consumption attributed to hotels is lower in the TSAs for 2001 and 2005 than in the TSA for 1998, but consumption attributed to food and beverage serving services is higher. The figures for accommodation services in hotels are calculated on the basis of the statistics on tourist accommodation (HESTA) and the statistics for value added tax. As regards the statistics for value added tax, the Swiss TSA takes advantage of the fact that accommodation services are taxed at a special rate and shown separately. The figures for accommodation services in the other lodging services sector are based on the statistics for the other lodging services sector 23 for the number of overnight stays, as well as on various other sources of figures for revenue for accommodation services per overnight stay. Fictitious rental income from owner-occupied holiday dwellings is calculated on the basis of the number of second homes in touristic localities according to the 2000 Population Census and the statistics for construction and for empty dwellings in Switzerland. This number is multiplied with average rental prices for flats and houses by number of rooms and type of local authority according to the 2003 survey of the structure of rental prices and figures of the national accounts. Figures for fictitious rental income are for whole years, regardless of whether or for how long such accommodation is occupied during the year. 23 Statistics for overnight stays in the other lodging services sector ceased to be compiled from the end of The values for 2005 therefore had to be extrapolated using a suitable method of calculation. 18 Tourism Satellite Account FSO 2008

21 Methodology and procedure Food and beverage serving services This account includes all catering services in outlets serving food, regardless of whether these are hotels or restaurants. It is based on the data in the survey on travel behaviour of the Swiss resident population 2003 on expenditure on food and beverages per day trip or overnight stay in different kinds of accommodation, which were extrapolated to 2001 and The figures for overnight stays in different kinds of accommodation are calculated on the basis of the survey on travel behaviour of the Swiss resident population 2003 and the statistics on tourist accommodation (HESTA), and the figures for day trips on the basis of the 2000 and 2005 microcensuses on travel behaviour. Passenger transport services The figures for passenger traffic services in the area of transport services are calculated on the basis of a number of different sources: Rail traffic is calculated on the basis of the figures in the microcensuses on travel behaviour, the Swiss railway accounts and the balance of payments figures issued by the Swiss National Bank. The revenue of the cableways, funiculars and skitows is calculated on the basis of the Swiss Federal Statistical Office (FSO) s statistics on public transport. Road traffic, both local and long-distance, is calculated on the basis of the microcensuses on travel behaviour and FSO s statistics on public transport, as well as, for taxis, a spatial analysis of production. Tourism revenue from water traffic is also calculated on the basis of FSO s statistics on public transport. Tourism revenue from passenger air transport is calculated on the basis of the relevant production account in the national statistics, the annual reports of individual airlines, the balance of payments figures issued by the Swiss National Bank and the statistics on civil aviation traffic. Unlike the TSA for 1998, the TSAs for 2001 and 2005 do not take account of revenue from international transfer passengers travelling with Swiss airlines. As regards international air transport, revenue from inbound international passengers is calculated on the basis of the proportion of the total number of foreign passengers accounted for by air passengers whose destination is Switzerland, while revenue from outbound domestic passengers corresponds to the difference between total income from international passenger air transport services and income from inbound international air passengers. In the case of domestic air transport, tourism revenue is based on a detailed analysis of the business purpose of the individual airlines. Revenue from the supporting passenger transport services includes the airport charges levied on passengers by the Swiss national airports. These were calculated on the basis of the statistics on civil aviation traffic and the annual reports of the national airports. The figures for rentals of passenger transport vehicles are based on a spatial analysis of production and those for rentals of other vehicles on an analysis of the business purpose of the companies concerned. Travel agency, tour operator and tourist guide services For travel agents and tourism associations/tourist offices as for the retail trade only margins are taken into account. Unlike the TSA for 1998, the TSAs for 2001 and 2005 make a distinction between travel agents and tourism associations/tourist offices, based on a detailed analysis, or breakdown, of the establishment census by business purpose of establishments. The calculations for travel agency, tour operator and tourist guide services are also based on the relevant production account in the national accounts, as well as for the figures on state financial support for tourism associations/tourist offices on both the federal government accounts and the state government accounts. Cultural services For museums, the calculations are based on base data from Mottaz Baran (2006) 24 and, for the rest of the area of culture, on data from annual reports and other sources. Recreation and other entertainment services The calculations for the area of recreation (mainly sport) and other entertainment services are largely based on a spatial analysis of production. Also, for the area of gaming casinos, data from the Swiss Gaming Commission was used. 24 The author takes no responsibility for the manner in which her data for the calculations in the tourism satellite account have been used FSO Tourism Satellite Account 19

22 Methodology and procedure Miscellaneous tourism services Tourism consumption in the area of banking and insurance services was calculated using data from the Swiss National Bank s statistics on payment transactions, annual reports of Swiss Bankers Prepaid Services AG and data from the statistics on insurance against loss and damage issued by the Swiss Federal Office of Private Insurance (FOPI). The figures for the other tourism services comprise the issuing of passports as well as visa fees at Swiss embassies. They were calculated on the basis of data from the Swiss Federal Office of Police and the federal government accounts Tourism-connected and non-tourism-specific products Tourism revenue for the retail trade was calculated using a spatial analysis of production. It must be borne in mind that with the retail trade, only the margin on products sold is taken into account: the merchandise itself, together with the margins for merchandise transport services and the wholesale trade, are categorised as nontourism-specific goods. In the case of service stations, like in retail trade, only the margin is taken into account. The figures for consumption by domestic visitors are based on the data in the microcensuses on travel behaviour; for estimating petrol tourism by international visitors, an econometric model was used. The calculations for health care are based for foreign visitors on the data in the tourism balance sheet, and for domestic visitors, on a detailed breakdown of hospital statistics by canton of origin of patients. For the calculations in the area of communications, data produced by the Swiss Federal Office of Communications and annual reports of the domestic telecommunications companies were used. The figures for other tourism services 25 are based on a spatial analysis of production. Non-tourism-specific products are retail merchandise and petrol (excluding the margin for the retail trade and the margin for petrol filling stations). The figures for these are based on retail trade sales statistics and figures on petrol sales Differences from the tourism satellite account for 1998 As the general methodological differences have already been addressed in Section 2.2.1, this section will only deal with specific differences at the level of individual products. The main differences between the TSAs for 2001 and 2005 and the TSA for 1998 are a follows: Hotels and catering: in the TSA for 1998, the hotels' revenue from catering was allocated to the account Hotels, whereas in the TSAs for 2001 and 2005 it is allocated to food and beverage serving services. Passenger transport services air transport: unlike in the TSA for 1998, in the TSAs for 2001 and 2005 transfer traffic attributable to international passengers is not taken into account. Travel agency, tour operator and tourist guide services: unlike in the TSA for 1998, in the TSAs for 2001 and 2005 travel agents and tourism associations are analysed separately, with the result that 100% of consumption is no longer attributed to domestic visitors. Miscellaneous tourism services: this account was not shown separately in the TSA for A small portion of the tourism consumption of the banks can be found in the TSA for 1998, in the account Banks in the Tourism-connected industries ; travel insurance charges and passport and visa fees were however not taken into account in the TSA for The account Banks in the Tourism-connected industries in the TSA for 1998 was thus removed from the TSAs for 2001 and Retail trade: the TSAs for 2001 and 2005 attempt, for the first time, to record the full extent of the shopping tourism of private same-day visitors. Only part of this account could be taken into account in the TSA for 1998, as the subjects surveyed themselves often did not class this type of day trip as a touristic activity. The result is that a somewhat higher estimate of tourism consumption in the retail trade and the non-tourism-specific products (retail merchandise and petrol) is made in the TSAs for 2001 and 2005 than in the TSA 25 This position should not be confounded with the position 7.3 in the TSA: RMF 2001, also named other tourism services. 20 Tourism Satellite Account FSO 2008