http://www.nwda.co.uk/pdf/EnglishRegions_TSA_ReportAug05 by Northwest Regional Development Agency

Tourism Satellite Account – First Steps – English Regions

FIRST STEPS TOURISM SATELLITE ACCOUNT PROJECT: English Regions

August 2005

Dr. Jane Bryan Calvin Jones* Dr. Max Munday* Dr. Annette Roberts Welsh Economy Research Unit, Cardiff Business School

*Tel: 029 2087 6042/5089 Fax: 029 2087 4419 Email: jonesc24@cf.ac.uk mundaymc@cf.ac.uk

With:

Employment Estimates: Prof. Iain McNicoll Donald McLellan

Regional Modelling: Dr Adam Blake Professor Thea Sinclair

Strathclyde University

Christel DeHaan Tourism and Travel Research Institute, Nottingham University Business School.

iain.mcnicoll@strath.ac.uk d.maclellan@mis.strath.ac.uk

Thea.Sinclair@Nottingham.ac.uk Adam.Blake@Nottingham.ac.uk

Acknowledgements: We would like to thank Phil Reddy of the North West Regional Development Agency for assistance and advice. However, responsibility for the contents of this report rests with the authors.

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Tourism Satellite Account – First Steps – English Regions 1 INTRODUCTION – ENGLISH REGIONS FIRST STEPS.........................................................................................................................................4

1.1TOURISM IN THE ENGLISH REGIONS................................................................................................. 4 1.2TSA FOR ENGLISH REGIONS........................................................................................................ 4 1.3FIRST STEPS ENGLISH REGIONS PROJECT OBJECTIVES......................................................................... 5 1.4STRUCTURE OF THE REPORT......................................................................................................... 6 2 THE ANATOMY OF THE TOURISM SATELLITE ACCOUNT ............................................................................................................................... 7

2.1THE ECONOMIC MEASUREMENT OF TOURIST ACTIVITY ......................................................................... 7 2.2THE TSA FRAMEWORK.............................................................................................................. 8 PRACTICAL ISSUES IN THE CONSTRUCTION OF A TSA ............................................................................... 9 2.3TSA CONSTRUCTION: CONCEPTUAL ISSUES...................................................................................... 10 2.4TOURISM SATELLITE ACCOUNT: KEY OUTPUTS.................................................................................. 13 3 TOURISM SATELLITE ACCOUNTS: PREVIOUS RESEARCH ...........................................................................................................................15

3.1THE DEVELOPMENT OF THE TSA ............................................................................................... 15 3.2HOW ARE TSAS BEING USED?................................................................................................... 16 3.3SUB-NATIONAL TSA DEVELOPMENT CASES: CANADA.......................................................................... 16 3.4SUB-NATIONAL TSA DEVELOPMENT CASES: NORWAY......................................................................... 18 3.5SUB-NATIONAL TSA DEVELOPMENT CASES: SPAIN............................................................................ 19 3.6SUB NATIONAL TSA DEVELOPMENT CASES: WALES............................................................................ 20 3.7SUB NATIONAL TSA DEVELOPMENT CASES: SCOTLAND........................................................................ 23 3.8SUB NATIONAL TSA DEVELOPMENT – A SUMMARY...........................................................................23 4 ENGLISH REGIONS – THE CONSULTATION PROCESS................................................................................................................................... 25

4.1INTRODUCTION....................................................................................................................... 25 4.2BACKGROUND TO THE FIRST STEPS CONSULTATION........................................................................... 25 4.3CONSULTATION PROCESS........................................................................................................... 26 4.4KEY ISSUES ‘SYNTHETIC’ VERSUS ‘BESPOKE’ TSAS........................................................................... 27 4.5STRATEGIC REQUIREMENTS OF INTEREST GROUPS............................................................................. 27 ISSUES RELATING TO OWNERSHIP OF OUTPUTS........................................................................................ 28 DATA ISSUES............................................................................................................................. 28 REFRESHING THE AGENDA.............................................................................................................. 30 5 TSAS FOR THE REGIONS: THE DATA ISSUES..................................................................................................................................................31

INTRODUCTION............................................................................................................................ 31 5.2POSSIBLE AMENDMENTS TO TSA STRUCTURE FOR ENGLISH REGIONS..................................................... 31 5.3 INTERNATIONAL INBOUND TOURISTS’ CONSUMPTION........................................................................... 32 5.4DOMESTIC (UK) TOURISTS’ CONSUMPTION (STAYING TOURISTS)............................................................. 33 5.5DOMESTIC (UK) TOURISTS’ CONSUMPTION (DAY VISITORS).................................................................. 34 5.6DOMESTIC TOURISTS’ OUTBOUND CONSUMPTION ............................................................................. 36 5.7THE PRODUCTION OF ‘TOURISM’ INDUSTRIES IN ENGLISH REGIONS......................................................... 37 5.8ENGLISH REGIONS: SUPPLY AND DEMAND RECONCILIATION................................................................... 39 5.9TSA TABLE 7 EMPLOYMENT MODULE .......................................................................................... 39 5.10SUMMARY: TSA FOR ENGLISH REGIONS.................................................................................... 40 6 METHODOLOGY....................................................................................................................................................................................................42

6.1ESTIMATION OF TOURISM CONSUMPTION & SUPPLY IN ENGLISH REGIONS................................................. 42 6.2MATRIX BALANCING................................................................................................................. 44

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Tourism Satellite Account – First Steps – English Regions

7 RESULTS: TOURISM IN THE ENGLISH REGIONS............................................................................................................................................. 47

7.1GROSS VALUE ADDED............................................................................................................. 47 7.2TOURISM EMPLOYMENT IN ENGLISH REGIONS: BACKGROUND & METHOD................................................. 50 7.3TOURISM EMPLOYMENT: RESULTS................................................................................................ 51 7.4ESTIMATES FOR 2001-2003.................................................................................................... 53 8 RECOMMENDATIONS: TOWARDS ENGLISH REGIONS TSAS.........................................................................................................................54

8.1IMPROVING THE INSTITUTIONAL AND STATISTICAL LANDSCAPE................................................................. 54 8.2OPTIONS FOR ACTION AT REGIONAL LEVEL..................................................................................... 61 8.3CONCLUSIONS........................................................................................................................ 64 9 SELECTED REFERENCES AND SOURCES: GENERAL.................................................................................................................................... 67

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Tourism Satellite Account – First Steps – English Regions

1 1.1

INTRODUCTION – ENGLISH REGIONS FIRST STEPS

TOURISM IN THE

ENGLISH

REGIONS

1.1.1 Tourism has been targeted by many regional development agencies as key in shaping future development prospects. However, information on which to assess the current or future role of tourism is lacking at the national, and particularly the subnational level. Definitions of tourism activity continue to be problematic, with regional strategies often centred only on parts of tourism services such as accommodation provision, or travel services. 1.1.2 The information available on tourism activity in the English regions is diverse, with large amounts of information relating to physical volumes and the type and scope of tourism activity. However, at this level there is very little information on the role of tourism in the generation of gross value added1, in the generation of tax returns, or in the creation of investment and employment, both directly and indirectly. Problems in understanding the sector and its development are linked to a narrow conception of what tourism represents. 1.1.3 Tourism across the English regions encompasses the activities of an extensive set of industries and services that just includes hotels, restaurants, transport services and travel agencies. Tourism is then a ‘demand side’ event such that all the consumption of goods and services by visitors to an area falls within the sector’s scope. 1.1.4 A developed Tourism Satellite Account would, then, be a framework for a systematic compilation and reconciliation of statistical data from various sources concerning demand by visitors (domestic and foreign) and the supply of tourism products (whether domestic or imported) in each of the English regions. This reconciliation would enable an understanding of tourism’s contribution to regional value added, employment and of the tourism dependence of individual regional industries.

1.2 TSA

FOR

ENGLISH

REGIONS

1.2.1 A better understanding of the contribution of tourism to the economies of the English regions would be an aid to strategic economic planning. Interest in the English regions parallels the wider set of First Steps and other TSA projects, which include the pilot development of a UK TSA (DCMS, 2004), and TSAs for Wales and Scotland. 1.2.2 The English regions element of the TSA First Steps project set provides an audit of the extant data to inform construction of a pilot TSA, and examines critical data gaps. The report then describes the estimation of key TSA cell values for the English regions by Nottingham and Cardiff Universities using a synthetic approach to allocate English tourism demand and supply across those regions. Gross Value Added (GVA) can be thought of as a measure of the economic ‘wealth’ created in an area. It differs from the formerly quoted measure, GDP, principally as it does not include expenditure taxes such as VAT. 1

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1.2.3 Numerous OECD and developing nations have seen value in developing TSAs, and in the standardised framework of construction, led by the World Tourism Organisation in collaboration with other international agencies (EUROSTAT et al, 2001). An improved accounting of tourism sector transactions and activity at the national and sub-national level will undoubtedly provide important information for policymakers, in particular in terms of directing scarce resources, and in identifying critical elements in sector success or failure. 1.2.4 In summary, the development of a TSA for each of the English regions would result in tourism activity being better included in the mainstream of economic analysis. The TSA might also provide information relating to the following:       

The contribution of tourism to regional value added Tourist regional consumption spending The role of tourism in regional employment and earnings generation The linkages between the tourism sector and other regional industry groups The tax receipts attendant on tourism activity Tourist industry capital spending A means of comparing the scale, scope and performance of the tourist industry across the English regions, and with Scotland, Wales and Northern Ireland.

1.3 FIRST STEPS ENGLISH

REGIONS

PROJECT OBJECTIVES

1.3.1 The English regions TSA First Steps project has the following objectives:  



  

To describe the nature of a tourism satellite account, and its uses for policymakers. To review literature relating to best practice on the construction of a TSA, with special reference to previous research that has constructed TSAs for regional and other economies, and to examine previous research and reports, highlighting the uses to which a TSA can be put. To undertake consultation with regional authorities with the objective of gaining access to statistics, gaining information on institutional frameworks, and potential user priorities. To interrogate the current data available nationally and in each of the regions which could be used to construct a basic tourism satellite account framework, highlighting information gaps, and providing recommendations for new data acquisition which balance issues of marginal costs to practical use within the TSA framework. To provide the data inputs required to produce a partial TSA for the English regions, and to explain the methods for creating a synthetic regional TSA. To report on the results from construction of a synthetic regional TSA. To provide a set of recommendations showing further research steps to develop the pilot TSA framework.

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1.4 STRUCTURE

OF THE REPORT

1.4.1 This sub-section summarises the structure of the report. It is important that this report is read in conjunction with the UK First Steps report produced by the Department of Culture Media and Sport (DCMS, 2004). Further elements of technical methodology and assumptions are also in the DCMS report. Sections 2 and 3 of the English regions’ report in some measure replicate those found in other First Steps projects (UK and Crown Dependencies). 1.4.2 The second section of the report is an introductory reader on TSAs. The section describes the ‘anatomy’ of the TSA, and deals with how economic activity in the tourism sector is measured. The section describes the TSA conceptual framework, the constituent tables of a TSA, and then reviews the practical issues involved in the construction. 1.4.3 The third section reviews historical TSA development. This comprises an examination of TSA developments in other states with special reference to regional economies. The fourth section comprises the results of the consultation exercise undertaken with regional and local tourism organisations. This consultation informed issues of user needs and expectations from a developed TSA framework. 1.4.4 The fifth section reports on the data review and provides a checklist and commentary on the current data available to inform construction of a regional TSA. Key data sources are reviewed in a structured format on a TSA table by table basis to gain information on:     

Statistical data source and timeliness Compilation method Use within TSA construction Limitations of data source in TSA construction Key gaps in data available (with this latter informing the development of recommendations).

1.4.5 The materials developed in the fifth section provide a platform for inputs into the TSA construction process. The sixth section then describes the data that was used in synthetic TSA table construction for the English regions, and the methods used to construct the tables. The seventh section reports on the results from the modelling process and highlights the key findings from the developed TSA tables. 1.4.6 The final section describes the issues which the various tourism authorities in the English regions need to consider before progressing further towards a fully developed TSA. The section goes on to provide recommendations for further development. This section of the report links closely to the strategic recommendations from the Allnutt Review of Tourism Statistics as well as the UK pilot TSA project, and the recommendations from the TSA linked projects in Ireland, Scotland, and Wales.

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THE ANATOMY

OF THE

TOURISM SATELLITE ACCOUNT

2.1 THE ECONOMIC MEASUREMENT

TOURIST ACTIVITY

2.1.1 The economic consequences of the activity of visitors to a particular area have never been easy to measure. This is because tourists (or any other visitors) require a wide range of goods and services during their visit. It is, then, extremely difficult to trace the expenditure of tourists in a rigorous and thorough manner. A visitor will demand products obviously associated with ‘tourism’, including accommodation and travel services and also will demand other services, whether purchased directly or not. 2.1.2 A number of proxies for tourist-related economic activity have historically been used by responsible agencies. These can be broadly categorised as expenditure based estimates and employment-based estimates2. 2.1.3 Expenditure based estimates have reported the importance of tourism as equating to the gross tourism receipts within the given region over a given year. Whilst this may be a reasonable measure of tourism turnover or ‘output’ for an economy, it is a less useful way of thinking about the economic importance of tourism, for example in supporting incomes and jobs. This is because gross receipts will likely overestimate resultant activity. 2.1.4 Firstly, some of the monies spent within an area will be used to purchase goods manufactured outside the area. Secondly, a portion of gross expenditure is taken in taxes by government and cannot be considered a direct economic injection to the economy, although the resultant disbursement by government may of course comprise an eventual benefit. 2.1.5 The over-estimates of ‘economic importance’ inherent in a crude tally of expenditures or receipts have often been compounded when agencies have attempted to contextualise tourism within the wider economy. It has been common practice to divide gross tourism receipts (a rough measure of turnover) by the Gross Value Added3 of the reference economy to obtain a measure of ‘tourism dependence’. This alone is likely to overstate true tourism dependence (in value added terms) by at least a factor of two for most economies. This problem has occurred in some UK regions.

Tourism activity has also been subject to economic impact modelling on numerous occasions, but these ‘multiplier’ analyses do not avert the many data difficulties, and introduce a whole new set of conceptual issues which are not related to a ‘simple’ account of activity. They are thus are not discussed here. 3 Gross Value Added, or GVA is similar to Gross Domestic Product, GDP, except for the treatment of some taxes and some other minor issues. 2

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2.1.6 Employment based estimates result from a sector or industry view of tourism. Employment in ‘tourist related’ activities such as accommodation, attractions and recreation is summed to estimate how much employment is tourist-dependent. However, tourism is not an industry-specific activity, demanding goods and services from across the economy. Thus, employment-based approaches usually fail to count that portion of employment in ‘non-tourist related’ sectors, which is nevertheless tourist dependent (retail is a good example). Conversely, a tally of employment in tourism industries or occupations ignores the fact that not all such employees will rely upon tourism for employment. 2.1.7 Added to the conceptual issues above, employment-based measures of tourism encounter great practical difficulties. Definitions of the industries or occupations which are ‘tourist related’ vary greatly across time, and between studies and geographies.

2.2 THE TSA FRAMEWORK 2.2.1 The Tourism Satellite Account is intended to measure economic activity consequent on tourism in a way which enables comparison with other economic activities taking place in the same reference area. Hence, tourism must be contextualised and visible within the accounting frameworks of the area in question, as indeed will be other industries. 2.2.2 The solution is therefore to add complexity to existing systems of national or area accounts4 (called SNAs) in order to reveal tourism activity more fully. There are a number of advantages to placing a measurement of tourism within the established accounting frameworks, additional to the ability to compare tourism with other economic activity.    

The measurement of tourist-related economic activity is greatly enhanced; Dual use of statistical methodologies and data brings cost savings and improved understanding; The methodology of TSA derivation can be referenced within the wider and longstanding methodology associated with national accounting; Some international/inter-state comparability may be possible.

2.2.3 The process of adding complexity to national accounts has been characterised as the creation of a ‘satellite’ to the SNA (hence TSA). For the English Regions the approach would notionally be a satellite to the individual Regional Accounts. It leads to the development of the set of tables which comprise the TSA. The full set of ten tables include inbound and outbound tourism consumption, supply of tourism products, tourism dependent employment, tourism capital expenditure, and common (public sector) expenditure on tourism. 2.2.4 No country yet has fully estimated all ten tables and the detailed structure of several tables are not finalised. Meanwhile at the sub-national level progress has been limited due to data, resource and conceptual issues (see Section 3). The term national accounts is used here but the application and process would be similar for a region with a set of regional accounts. 4

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2.2.5 There are, nevertheless, clear guidelines on which tables might be reasonably estimated, and upon the most appropriate priority for this process. Furthermore, EUROSTAT has produced a manual for the implementation of a TSA which explains in some detail how a TSA might be estimated within accounting structures which are compliant with the European System of National Accounts (ESA95). 2.2.6 Figure 2.1 shows the agreed structure of the full TSA.

Figure 2.1 – Tourism Satellite Account – The Constituent Tables Table 1 2 3

Coverage Inbound tourism expenditure Domestic tourism expenditure Outbound tourism expenditure

Domestic ‘tourism final consumption’ Production of tourism commodities

5 6 7 8 9 10

Domestic supply & consumption by product Employment & labour use Tourism fixed capital formation (investment) Tourism collective consumption Non-monetary indicators

Notes Part of aggregate demand; i.e. an export Part of domestic total consumption Not generally linked to other TSA tables so is often not estimated Synthesised from Tables 1 & 2. For example the services and products of ‘tourist related’ industries but also of non-tourist related industries A reconciliation of Tables 4 & 5. The heart of the TSA Structure not yet fully agreed Rarely reported due to conceptual difficulties Government spending on tourism, rarely estimated e.g. tourism volumes/nights; types of tourist etc. Structure can reflect most useful indicators

2.2.7 In many cases countries have found it difficult to reliably estimate TSA Table 6, the reconciliation of supply and demand. Hence, headline figures for tourism activity, including gross value added due to tourism, cannot be derived. As an interim step WTO suggest the estimation of those tables which are easiest. A state will usually have good information on inbound tourism expenditure as this is necessary to estimate the balance of payments. Additionally, other elements of tourism consumption may be estimated. It will often be necessary to adapt existing information to make it ‘fit’ the TSA structure and, unless data sources are of particularly high quality, this process may also involve an element of imputation and educated guesswork until data sources can be improved or restructured.

PRACTICAL ISSUES

IN THE

CONSTRUCTION

OF A

TSA

2.2.8 There are substantial problems inherent in moving from an existing set of tourism statistics to a SNA-integrated account. Whilst some of these are conceptual and methodological in nature, the most difficult issues tend to be those related to the availability and reliability of tourism and economic accounting data. The construction of a fully-fledged TSA requires;  

information on the nature of tourists’ expenditure by individual commodities; information on how the economy supplies the commodities that tourists buy, for example whether through imports or local production;

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

the ability to place the above information consistently within an accounting framework such that demand can properly be equated to supply for every commodity which is of interest.

2.2.9 Different areas have different statistical priorities; thus one country may have very good information on tourists’ spending, but less good information on how the economy in general operates. Alternatively, there may not be a well-developed and thoroughgoing system of national accounts within which to place the available data. 2.2.10 Surveys will often report the expenditure of tourists for only a small number of different commodities, whereas a full TSA might report on 15-20 ‘tourism specific products’. There will therefore be a stage of analysis where information is collated from a variety of sources to support the further disaggregation of tourist expenditure data into specific commodities. Once this has been achieved, the data can be amended to reflect the treatment of expenditure in national accounts. 2.2.11 The above implies that, for most areas, a two-pronged approach to the derivation of a tourism satellite account is appropriate. The first strand of a project might construct an ‘experimental’ TSA. This would use existing data sources and require some estimation to come to an initial account. This might provide some information regarding the importance and nature of tourism within an economic area, but might be subject to error from a variety of sources, be these data-related, structural or conceptual. 2.2.12 The second strand of the TSA project should seek to improve the reliability of the account in the longer term. Areas to be addressed might include    

2.3 TSA

Improvements in the reliability, timeliness, scope and disaggregation of tourists’ expenditure data; Similar improvements in the quality and disaggregation of data regarding the supply of tourism-specific products; Construction and design of primary surveys that reflect national accounting methodologies and processes, to make integration more efficient; Involvement of qualified statisticians in the TSA estimation and data validation process.

CONSTRUCTION:

CONCEPTUAL

ISSUES

2.3.1 Examination of the developed TSAs between different countries reveals a commonality of concepts and broad definitions. For example, crucial to a common understanding of the economics of tourism is agreement on the definition of the terms visitors, usual environment and visitor consumption (Figure 2.2). Also crucial are the methods by which direct linkages between visitors to a state and producers within a state are traced.

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Figure 2.2 – Central Concepts in the TSA Concept

Description

Notes

Visitor

A person traveling to a place other than that of their usual environment for less than twelve months and whose main purpose of trip is not an activity remunerated within the place visited.

Can include residents of the region, residents of other parts of the country or international visitors.

Usual Environment

The usual environment corresponds to the geographical boundaries within which an individual travels during the regular routine of life, both the direct vicinity of home and place of work or study, and other places frequently visited. The term has two dimensions: frequency – places which are frequently visited by a person (on a routine basis) are considered as part of her/his usual environment even though these places may be located at a considerable distance from her/his place of residence; distance – places located close to the place of residence of a person are also a part of her/his usual environment even if the actual spots are rarely visited.

The ‘usual environment’ judgement is made (sometimes only by implication) according to which respondents are eligible to be included in tourism surveys; for example in GB Leisure Day Visits Survey, those whose trip lasts over 3hrs are considered tourists.

Visitor Expenditure

Expenditure that is made by, or on behalf of, the visitor before, during and after a trip, that trip being outside the visitor’s usual environment. Source: Derived from WTO:RMT and UN TSA

In practical terms usually only includes expenditure during the trip.

2.3.2 Each of these apparently straightforward definitions has raised a number of issues which have only recently been resolved. This includes a concept as understandable and important to the TSA as a Visitor. Within the TSA is included, additional to all ‘leisure visitors’ all economic activity consequent upon the expenditures of;     

Those visiting friends and relatives Foreign students resident in a country for less than one year Business travellers who are paid by companies outside the reference (i.e. regional) economy Those staying in a country for health treatment for less than one year Religious pilgrims

2.3.3 This conceptual point has significant methodological consequences, with many visitor surveys only covering the expenditure of ‘traditional’ tourists, leaving significant data gaps which can be difficult to fill in the short term. 2.3.4 Linked to the above is the concept of Usual Environment, which is more conceptually difficult, yet just as important for a consistent measure of tourism activity. For a full review of the usual environment concept please see the UK First Steps report.

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2.3.5 As can be seen from Figure 2.2, the TSA also takes a reasonably broad view on Visitor Expenditure, including all purchases within the reference (regional) economy which are made for the purpose of the trip whether this is before, during or after the trip in question. This itself raises a number of issues. For example, expenditure by businesses on behalf of employees who travel is properly part of the TSA consumption universe 5. More problematic is expenditure on durable goods which may have a lifespan greater than a single trip, or indeed be multi use (such as a mountain bike used on tourist trips and also during general leisure activities). 2.3.6 TSAs report headline indicators not just for tourists in the round, but also for different types of tourists. There is a high degree of commonality regarding how the tourist economy should be divided between types of tourist (Figure 2.3). Figure 2.3. – Types of Tourism Type

Description

Inbound

The tourism of non resident visitors within the economic territory of the reference region.

Domestic

The tourism of resident visitors within the economic territory of the reference region in their non-usual environment, both as day visitors and overnight tourists.

Outbound

The tourism of resident visitors outside the economic territory of the reference region.

Internal

The tourism of visitors, both resident and non resident, within the economic territory of the reference region.

National

The tourism of resident visitors, within and outside the economic territory of the reference region.

Source: Adapted from WTO; www.world-tourism.org

The treatment of expenditures by businesses within the TSA is a complex issue and is fully dealt with in McNicoll (2004), an addenda to the UK First Steps report. 5

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2.4 TOURISM SATELLITE ACCOUNT: KEY

OUTPUTS

2.4.1 Whilst the structure and presentation of Tourism Satellite Accounts vary between countries and over time, there is a high degree of commonality in the headline outputs and indicators which are used to indicate the size and importance of the tourism economy. An example of the outputs of the TSA development process is given in Section 3 of this report for Canada and Wales. 2.4.2 Initial estimation of TSA Tables 1 through 4 will give the user a ‘broad brush’ estimation of the size of tourism activity based on tourism consumption. However, an element of this consumption is attributable to sectors and activities which do not add value in the reference economy. This would include sales taxes payable by tourists, and that portion of supply to tourists which is imported into the economy before being sold. These ‘leakages’ mean that measures of tourism consumption are not a good measure of economic activity, and, consequently, of the income and employment which arises from tourism spending. 2.4.3 An interim stage on the road to a full suite of indicators is a measure of the value added of tourism industries (VATI). This estimate can be derived from TSA Table 5, and simply sums the value added of all those industries which are defined as ‘tourism characteristic’. This is a very different measure of activity than those based on tourism consumption noted above, and has the benefit of relating to value added produced within the reference economy. However, the use of this measure brings manifold difficulties. As the "tourism character" of a particular output is not defined by its nature but by the purpose pursued by the consumer, there is a larger gap between the output of tourism industries (domestic supply) and internal tourism consumption (domestic demand) than for other ‘functional activities’ such as health or education. Moreover, the definition of ‘tourism characteristic’ industries varies between countries and studies. For these reasons, VATI, similarly to consumption based measures, should be considered as only an interim measure of tourism activity. 2.4.4 There are several indicators relating to the tourism economy which are only available following a developed TSA (i.e. where TSA Table 6, the reconciliation between demand and supply, has been fully estimated). Probably the single most important of these is tourism value added (TVA). This is defined by WTO as the value added generated by tourism industries and other industries of the economy in response to internal tourism consumption. 2.4.5 TVA includes the proportion of value added generated by all industries in the process of provision of goods and services to visitors or would be visitors, or to third parties for their benefit. It includes the tourism-dependent output of industries which are not traditionally thought of as tourism-related. Additionally, because value added consists in part of compensation to labour, TVA can be disaggregated to show the impact of tourism upon workers’ incomes within the reference economy. Figure 2.4 describes some of the outputs of the TSA process.

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Figure 2.4 – Headline Outputs of the TSA Process Output

TSA Table

Tourism Consumption

1-4

Notes Interim measure. No direct link to economic activity within the reference region.

Value Added of Tourism Industries

Interim measure. Includes the output of tourism characteristic industries which is not due to tourism demand.

Tourism Value Added

A central output of TSA process. Enables comparison with other industries within reference economy.

Tourism Ratios

Ratio of supply which is due to tourism demand. Can refer to industries or products.

Tourism Dependent Employment

The employment generated directly by the activity of tourism industries in response to visitor consumption. Problematic due to lack of employment statistics in many systems of national accounts. Source: Derived in part from WTO; www.world-tourism.org

2.4.6 The estimation of Table 6 in the TSA structure also allows the derivation of tourism ratios. Tourism ratios indicate the extent to which an industry or product is dependent upon the demand of tourists, and can be defined in industry or product terms. A tourism product ratio represents the proportion of supply of that product which is purchased by tourists. A tourism industry ratio represents the proportion of that industry’s output consumed by tourists. 2.4.7 The headline indicators discussed so far exclude one which is often given primary importance in public policy circles: employment. However, there are a number of difficulties with the nature of tourism-related employment itself which is more likely to be seasonal and/or part-time than for other types of employment. Moreover, in many tourism sub-sectors, owner-managers are an important source of labour, with the returns to this labour very poorly measured 6. This means that the most suitable structure for Table 7 is open to some debate. 2.4.8 Even within WTO procedures and recommendations there remain methodological and measurement issues yet to be fully resolved in developing a TSA – these are examined in more detail in DCMS (2004).

See Jones, Munday and Roberts (2003).

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TOURISM SATELLITE ACCOUNTS: PREVIOUS

3.1 THE DEVELOPMENT

OF THE

RESEARCH

TSA

3.1.1 As early as 1983 the WTO emphasised the importance of contextualising the economic consequences of tourism within established systems of national accounts (WTO, 1983). Throughout the 1980s, pioneering work was undertaken by Statistics Canada, who investigated the practical application of satellite accounting techniques to tourism. 3.1.2 In 1994 the United Nations and WTO published Recommendations on Tourism Statistics, subsequently superseded for TSA purposes by the Tourism Satellite Account: Recommended Methodological Framework of 2001. This latter document was agreed not only by the UN and WTO but also OECD and EUROSTAT, the statistical directorate of the European Union. EUROSTAT has subsequently published an implementation manual, aimed at helping statisticians on the detail of compiling a TSA within ESA95 compliant national accounting systems 7. 3.1.3 In summary, then, the 1990s and early 21st Century have seen all relevant international organisations agree on the TSA as the most appropriate method of measuring the economic value of tourism. WTO and non-WTO members alike have accepted the efficacy of the TSA in enumerating the economic importance of tourism. 3.1.4 The adoption by EUROSTAT of the TSA as a preferred methodology, and its harmonisation with OECD and WTO standards in 2000, has provided a spur and a resource for European countries wishing to develop an account. Moreover, the implementation of the European System of National Accounts (1995) has meant that the comparability of any so developed TSAs should be relatively high. 3.1.5 A small number of EU member states have published Tourism Satellite Accounts, notably Sweden, Spain and Austria. There is some variance between the structure, coverage and presentation of the accounts (as might be expected with ‘early adopters’), and a number of other countries are in the process of developing accounts. 3.1.6 To date, with the exceptions mentioned above, EU countries have not been to the fore in the development of TSAs. This is expected to change following the strong guidance given by EUROSTAT in its collaboration with WTO on the usefulness of results arising from accounts already under development, and considering the usefulness to the TSA project of the already standardised systems of national accounts between EU countries.

Henceforth ‘WTO compliant’ will refer to TSA developments which aim to be compliant under the WTO, UN, EUROSTAT and OECD agreed Recommended Methodological Framework and other relevant documents. 7

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3.2 HOW

ARE

TSAS

BEING USED?

3.2.1 Whilst the integration of tourism activity alongside a system of national accounts is an interesting statistical exercise, the development of the satellite should have practical implications, for example, being explicitly linked to public funding decisions, or at the very least being connected to a series of timely industry monitoring indicators. 3.2.2 The overall impression from reviewed statistical sources and associated commentary is that the predominant role of the TSA hitherto has been in terms of pure advocacy i.e. showing the economic significance of the industry at a moment in time, and whether the industry should be considered key for developmental purposes. 3.2.3 Canada is a good example of where TSAs have been a starting point for more complex policy-relevant analysis8. In the Canadian case, the prime objective underlying development was to demonstrate the ‘legitimate, visible and significant standing of tourism in the Canadian national economy’. 3.2.4 The Canadian TSA has also provided a foundation for a Tourism Economic Impact Model, which can show amongst other things, the effects of changes in patterns of tourism consumption, and changes in the marketing mix (i.e. effects of more intense promotion to different national visitors). Moreover, the Canadian TSA has been linked to the future development of benchmarking tools, and micro-economic tourism indicators allowing private sector operators to compare their performance with industry norms in terms of productivity, growth, and earnings. The development of such micro-economic tools also links to a risk-assessment tool for both the public and private sector. 3.2.5 The underlying message from the above is that the development of a TSA should be seen as part of a wider process in providing useful policy-relevant tourism sector information for the public and private sectors. The static TSA has a role in advocacy and marketing, and can also inform policy on investment, education and training. However, the static account can also form the basis for other relevant development including timely tourism sector indicators, a framework for national and subnational modelling, and micro-level benchmarking. 3.2.6 There are fewer examples of TSA construction at the sub-national level. The next sub sections provide some illustrative case material.

3.3 SUB-NATIONAL TSA

DEVELOPMENT

CASES: CANADA

3.3.1 As with TSAs in general, Canada remains towards the forefront of developments at the sub-national scale, with the Provincial and Territorial Satellite Accounts (PTSA). The initial accounts were developed for reference year 1996, covering the country’s twelve regions, and have now been updated to 1998 (Barber Dueck & Kotsovos, 2003). 8

See e.g. Meis (1999)

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3.3.2 The accounts provide ‘headline’ tourism indicators for each region which enable a good understanding of the scale and scope of tourism activity in each area. The adopted methodology provides for the derivation of variables including;     3.3.3

Tourism GDP (or TGVA) as a proportion of all-economy GVA Tourism employment as a proportion of all employment in the region Tourism balance-of-trade for each region Growth rates from 1996-1998 As well as these headline indicators, the accounts provide details on the nature of tourism consumption in different regions, for example, reporting upon the types of commodities purchased, and by which types of tourists (domestic, international or inter-provincial).

3.3.4 The Canadian Provincial Accounts benefit from a developed sub-national economic accounting structure. However, Canada has also benefited from an occasional series of Input-Output Tables (1974, 1979, 1984 and 1990) which, although not of ‘benchmark’ quality, no doubt provided critical support for the initial estimation of the PTSA). 3.3.5 The commitment to regional Input-Output in Canada has been cemented with a new regional Input-Output program since 1997. This demands comparable statistical quality for every region’s Input-Output data, based upon significantly improved resources such as new and expanded regional surveys (Siddiqi and Salem, 2002). The Input-Output structure has latterly provided detail regarding key economic indicators, published as the annual Provincial Economic Accounts (see www.statscan.ca). 3.3.6 Despite the above benefits, it is clear that constructing the PTSA is far from easy. A number of supporting surveys have limitations (for example, in allocating expenditure to Provinces) which lead to a process of reconciliation which relies, in part, upon research judgement as to the most appropriate methods and as to which of conflicting sources is most reliable (Barber Dueck & Kotsovos, 2003). 3.3.7 There is a keen demand within Canada for policy-relevant tools that arise from a better understanding of tourism activity. For example the Tourism Economic Assessment Model (TEAM) and the Sports Tourism Economic Assessment Model (STEAM) are both widely used to examine the provincial and territorial economic impacts of tourism and sport-tourism activity.9 3.3.8 It is interesting to note that whilst these regional commercial models boast sophisticated econometric techniques and reliance on the ‘latest Statistics Canada data’ they do not appear, explicitly at least, to incorporate the results of the PTSA estimation (although differing tax rates in Provinces are accounted for).

For more information on these products see http://conferenceboard.ca/ctri/impact.htm and http://www.canadiansporttourism.com/eng_doc.cfm?DocID=20 9

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3.4 SUB-NATIONAL TSA

DEVELOPMENT

CASES: NORWAY

3.4.1 Statistics Norway publishes aggregated details of tourism supply (industry output) and value added at regional level (2000). This is provided for three identified industries: hotels and restaurants, transportation and entertainment industries. However, Statistics Norway in collaboration with other Norwegian institutions is developing a far more sophisticated Regional Tourism Satellite Account (Braendvang et al, 2001). 3.4.2 The Norwegian researchers note the paucity of international guidance regarding the regionalisation of TSAs, but follow the natural option of treating each region as a small nation. Norway benefits from a well developed regional accounting framework, with each region having accounts for 175 industries and 1,000 products (albeit with the industry-product relationship the same in each region). 3.4.3 With such well developed supply-side information the major challenge is then to estimate tourism demand for each area. Here, the authors recognise some weaknesses in available national surveys and a combination of data sources are used, for example on numbers of guest nights by type of accommodation and on gross consumption from tourism surveys. This resulted in a less than perfect rendering of tourism consumption, for example with researchers unable to disentangle average spend by type of accommodation. 3.4.4 As has been found elsewhere, the RTSA process provided challenges in ensuring consistency with the national TSA. In Norway, the sum of regions’ consumption did not tally with the national TSA, with the latter assumed as more reliable. 3.4.5 Unlike Canada, Norway does not report headline indicators of regional tourism activity, such as gross value added or tourism-dependent employment. Rather, they restrict themselves to ‘second level’ indicators such as the level of tourists’ consumption, and the output of tourism-related industries (these nevertheless giving an insight into the distribution of tourist activity in the country). However, given the extensive nature of regional accounting in Norway, it is to be expected that as the reliability of the RTSA estimation process improves, these other indicators will be produced. 3.4.6 Sub-national TSA development in Norway has been driven by the need for regional statistics in the planning and study of tourism, and by a desire for a more consistent and realistic appreciation of the economic impact of tourism activity and of associated infrastructure. Simulations of changes in tourism consumption have been assessed, using the accounts for Hordaland to estimate the direct and indirect impacts of increases in tourist revenues (Braendvang et al, 2001).

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3.5 SUB-NATIONAL TSA

DEVELOPMENT

CASES: SPAIN

3.5.1 Given the importance of tourism to Spain and its uneven distribution, it is unsurprising that the National Statistical Institute (INE) is examining methodologies to regionalise key variables from the Spanish TSA. Spain has interesting parallels with the UK in that its autonomous regional structure enables a ‘multi speed’ approach, where more interested or technically advanced regions can progress in advance of others. 3.5.2 The National Statistical Institute recognises the difficulties involved in regionalising a full TSA and thus as a first stage attempts to regionalise only tourism (current) consumption demand, considering this the most important constituent part of the TSA in an understanding of tourism’s importance to an economy. 3.5.3 Spain also shares with the UK problems with the quality of tourism expenditure estimates at sub-national scale derived from tourism surveys. The INE thus takes a two pronged approach. Firstly, accessing other surveys (such as those on family expenditure and travel) provides an indirect assessment of likely levels of expenditure (and in some cases origin-by-destination matrices). Secondly, and for certain commodities, the level of tourism supply in each region is used as an indicator of demand, with tourism product ratios assumed at 100% and thus, for these products, supply assumed as identical to demand. 3.5.4 This latter approach is justified by reference to the national Spanish TSA which shows, for example, that over 99% of demand for hotel products is tourist-related. For the UK, where the relevant proportion is around 70%, this method of assuming an identity would likely lead to significant error. However, this approach does have the benefit of incorporating ‘bottom up’ (i.e. regionally specific) information into the TSA regionalisation process. 3.5.5 Even at this early stage, the method does give an indication of the spatial distribution of tourism economic activity. Work is underway in Spain with the specific intention of improving tourism surveys to better support regional TSA estimation. Meanwhile, a number of regions (Andalusia notable among them) are developing regional TSA programmes managed at this spatial scale by the appropriate regional authority. These approaches rely more heavily upon regional data than the regionalised Spanish account. In the case of Andalusia, attention has focussed upon an accounting of the supply side, particularly in terms of accommodation capacity10. 3.5.6 The above means that Spain is probably unique in having both a ‘bottom up’ and regionalised national account approaches applied to the same region. When full results are available from both processes, there may be an opportunity to compare the relative strengths and weaknesses of each approach.

“The singularity of the territory in tourism accounting: Andalusia as a case study Working Group for the Development of a TSA-Andalusia.” Enzo Paci papers on Measuring the Economic Significance of Tourism Vol. 3, 2003). 10

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3.6 SUB

NATIONAL

TSA

DEVELOPMENT CASES:

WALES

3.6.1 Work has been undertaken in Wales which provides a good example of the outputs of a ‘bottom up’ TSA construction process, and the way in which TSA-linked developments will be used to inform policy. This may be of particular relevance to the English regions. 3.6.2 A partial TSA for Wales was developed for the Wales Tourist Board for 1998, and has now been updated to 2000. The Welsh TSA has been used in a number of ways by public and private sector users: 



To highlight the significance of tourism value added in Wales and how it is distributed between profits, wages and other categories with industry concern about the amount of value-added that is retained in the region. To demonstrate the nature of tourism employment in Wales, and how effective growth of tourism might be in reducing unemployment and increasing activity rates.

3.6.3 The Welsh TSA project revealed that total tourism expenditure in Wales amounted to almost £3.5 billion in 2000 (2.6% of all demand in the Welsh economy). The most important portion of tourism expenditure, around £1.5bn of this total, was expenditure made by day-trippers. A further £240m was expenditure by Welsh residents staying in Wales on holidays, business trips and visiting friends or relatives. 3.6.4 Of those visiting Wales, those originating from the rest of the UK were by far the most important in terms of expenditure, with receipts five times higher from (rest of) UK residents than from overseas. Figure 3.1 shows the composition of expenditure by type of tourist.

Figure 3.1 – Tourism Consumption in Wales, 2000 Tourist Type

£m

Welsh Residents Staying in Wales

£242

Welsh Residents’ spending before leaving for trips outside Wales

£133

Visitors from the Rest of the UK

£1,403

Visitors from the Rest of the World

£267

Day-trippers

£1,450

Total Tourism Expenditure in Wales

£3,495

3.6.5 In terms of the products which are purchased by tourists (Figure 3.2), restaurant and beverage services were the most notable, attracting £720m of all expenditure on Welsh goods and services. The high propensity of tourists (particularly day trippers) to spend on shopping is revealed in distribution margins of around half a billion pounds.

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3.6.6 Meanwhile tourists spend £360m on recreation services and a similar amount on transportation services (this latter largely excluding private transport costs such as fuel). Almost a third of all tourists’ expenditure, £920m, was on products which were not identified as tourist-related. This evidences the holistic nature of touristrelated economic activity, affecting almost all sectors of the regional economy. Figure 3.2 - Total Tourism Consumption by Commodity Product All Tourism Products 1 Accommodation Services 1.1 Hotel services 1.2 Guest house, bed & breakfast services 1.3 Non-serviced accommodation 1.4 Second homes & static caravan services on own account 2 Restaurant, bar and catering services 3 Passenger transport services 3.1 Railway transport services 3.2 Other land transport services 3.3 Water and air transport services 3.5 Ancillary transport services 4 Travel agency and tour operator services 5 Recreation, cultural and other entertainment services 5.1 Recreation etc. services 5.2 Tourist attractions 6 Tourism connected products 6.1 Post & telecoms services 6.2 Financial and Insurance Services 6.3 Rental services 6.4 Health services All other products Distribution margins Total Tourism Consumption

£m 2,060 480 260 70 90 60 720 350 40 160 110 40 50 360 250 110 90 10 30 30 30 920 510 3,495

Note: totals will not add due to rounding. More detail available in TSA Table 4

3.6.7 The Welsh TSA estimates the supply of tourism commodities in the region, and the scale of the producing industries. Figure 3.3 shows the scale of such supply for each of thirteen identified tourism-related industries. The Welsh Input-Output Tables for 2000 are a key source for estimating the size of tourism industries, although extensive further work is needed to estimate what tourism products are supplied by which industries (e.g. how much restaurant fare is provided by hotels) (see WERU, 2004 for more details on the Welsh Input-Output project).

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Figure 3.3 – Tourism Industries in Wales, 2000 Product

Output, £m

Hotels Guest houses Non-serviced Second home & caravan ownership (imputed) Restaurant, bars & canteens Railways Other land transport Sea & air transport Other transport services Travel agency and tour operators Recreation services Attractions Renting of moveables All identified industries All other industries Total Output

330 63 70 60 1,055 215 1,015 95 815 75 1,680 125 295 5,895 61,775 67,670

Note: totals will not add due to rounding.

3.6.8 The reconciliation of supply and demand enables the full range of TSA ‘headline variables’ to be estimated, including tourism ratios for industries and products, tourism gross value added and (by extension of the account) tourism dependent employment. 3.6.9 There are several lessons for the English regions from the Welsh experience of TSA construction. The development of the TSA system was not a short-term project. In Wales, the project has been ongoing since 1999 and involved an extended partnership between tourism agencies, the regional development agency and the university sector. This need not be especially resource intensive in financial terms, but is resource intensive in terms of the development of suitable partnerships between agencies, and in terms of iteratively learning the ‘art’ of TSA construction over an extended period. 3.6.10 In this respect the Welsh project has mirrored exactly the WTO suggestion that a sustained inter-institutional platform is the most appropriate mechanism for regional and national TSA development. The hope in the UK is that existing partnerships between agencies with responsibility for tourism statistics will be strengthened such that the production of a reliable and robust TSA on an ongoing basis, at both the national and regional spatial scales, will be feasible. 3.6.11 In Wales the TSA has also been an important building block in modelling frameworks to examine the estimated regional effects of tourism and sporting events. For example, the TSA framework has informed analysis of the economic impacts of the Rugby World Cup 1999, the Brecon Jazz Festival, the World Rally Championship (WRC) Rally of GB, and the development of the Blaenavon World Heritage site (see Jones and Munday, 2004).

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3.7 SUB

NATIONAL

TSA

DEVELOPMENT CASES:

SCOTLAND

3.7.1 Scotland has long had more developed and complete regional accounts than the remainder of the UK, with Input-Output Tables produced ‘in house’, first by the Scottish Office, and latterly by the Scottish Executive. The Input-Output Tables for 2000 have then provided the basis for TSA development in the region. 3.7.2 Scottish development parallels that in Wales, relying heavily on international technical guidelines and utilising similar data sources. The analytical teams worked together closely to ensure consistency of method and data. However, due to the analysis being undertaken by the Scottish Executive (in conjunction with VisitScotland), the work there benefits from more direct access to official data sources11.

3.8 SUB NATIONAL TSA DEVELOPMENT – A SUMMARY 3.8.1 As the preceding sections reveal, a number of countries are proceeding with subnational TSA development through regionalising the national account, and a small number of regions are developing TSAs with a more ‘bottom up’ approach, in terms of both project management and data use. Figure 3.4 summarises. Figure 3.4 – Sub-National TSA Developments Country

Notes

Officially Available Results

Canada

Regionalised national account in second iteration (reference year 1998).

Headline TSA variables including tourism value added and employment

Norway

Regionalised national account for 2000

Partial results inc. value added of tourism industries, and industry employment

Spain

Regionalised national account (1) and ‘bottom up’ accounts (2) both in development

Partial. Estimates of regional tourism consumption (2) & regional tourism product supply (3). Neither yet fully developed.

United Kingdom

Hybrid method in Scot & Wales using national & regional data sources (both 2000)

Full set of TSA outputs available inc. value added and tourism dependent employment

3.8.2 Sub-national TSA developments take a number of forms though most adhere to WTO national conceptual TSA guidelines, treating the region as a small nation. They are at varying stages of development, and use different mixes of regionally-allocated national data, and specific regional information sources. In some cases the regional account indicators sum to the national TSA indicators, and in others they do not. 3.8.3 There is thus a great degree of flexibility available to a region or nation wishing to derive sub-national TSAs. WTO does not provide specific advice on the development of sub-national TSAs, although informal guidance is readily available. There is no ‘one size fits all’ approach for regions to follow. 11

Full information on the Scottish project is available in Hayes and Boag (2004)

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3.8.4 What is clear however, is that in most countries where sub-national TSA development has occurred, there has existed a strong focus on well-developed regional accounting over a reasonably long period. This has provided both a statistical framework for developed TSAs, and baseline information regarding (particularly) the tourism supply side in a region. Important, however, is the existence of human capital within regions, or within national accounting agencies, which can be brought to bear on regional TSA construction. 3.8.5 In regions which have varying levels of sub-national autonomy and statistical resources (such as the UK and Spain), development has been two (or multi) speed. It is likely that this model will be replicated in other countries where tourism is unevenly spread.

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ENGLISH REGIONS – THE CONSULTATION PROCESS

4.1 INTRODUCTION 4.1.1 The next section reports briefly on the outcome of consultations undertaken during the course of the English Regions First Steps project, and highlights key conclusions arising from them, which are further discussed in the final section of this report. 4.1.2 A key objective of the English Regions First Steps project was to collect views from representatives of regional tourism agencies and development agencies. The research team were keen to examine how a regional TSA framework might be used, whether it would be relevant to the needs of planning authorities, and whether some elements of the TSA framework would be more relevant than others.

4.2 BACKGROUND

THE FIRST STEPS CONSULTATION

4.2.1 A TSA Technical Workshop was held in Glasgow at the beginning of 2003 with the aim of examining the next steps towards the construction of UK, Ireland and subnational TSAs. The workshop was attended by a senior WTO statistician, representatives from DCMS and ONS, and others from England, Scotland, Wales and Northern Ireland. As a result of this, and of further meetings, there was agreement that monies should be sought for the development of national TSAs from the EU. 4.2.2 A strong recommendation of these meetings was that any overarching TSA project framework should have a regional dimension, and that this should be co-ordinated so that a consistent approach could be adopted from the outset. At this point, having understood the potential value of regional TSAs and the importance of developing a co-ordinated regional voice, English RDAs nominated the North West Development Agency (NWDA) as a co-ordinating agency for the development of the regional TSA scoping and construction framework. 4.2.3 The NWDA then produced and distributed ‘Tourism Satellite Accounts: A Briefing Paper’ in May 2003 to all nine English RDAs, which provided essential preparatory information on TSAs. This document described the nature and purpose of national accounts, explained the structure of the TSA, and gave the background which had led to the decision to produce a UK TSA. 4.2.4 The briefing document also strongly recommended that a joint Regional Development Agency (RDA) approach be taken and that progress should be jointly funded by each RDA. As well as tabulating in some detail the potential benefits of TSAs, the document initiated a review of tourism statistics, which required recipients to feedback their organisational needs with respect to data and to inventory existing data generation and its application.

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4.2.5 A meeting was held in September 2003, following up the May briefing document and regional data review exercise. At this point, interested parties were well aware of the paucity of national and regional tourism statistics, and had expressed a desire for improvements to tourism data. However, uncertainties regarding the future of the Regional Tourist Boards remained. 4.2.6 Also in September, a technical workshop took place in Cardiff, hosted by Wales Tourist Board. Representatives at this event included DCMS, ONS VisitScotland, VisitBritain, the Scottish Executive, and Bord Failte from Ireland, and the Northern Ireland Tourist Board. At this workshop a provisional TSA for Wales was presented as an example of a regional TSA. 4.2.7 Towards the end of 2003 the Welsh Economy Research Unit of Cardiff Business School was commissioned to undertake 3 TSA projects. These were:   

the First Steps UK TSA, the First Steps English Regions TSA (jointly with University of Nottingham), the First Steps Crown Dependencies TSA Scoping project.

4.3 CONSULTATION PROCESS 4.3.1 An important element of the consultation process for the English Regions project occurred in February 2004 when the TSA English Regions Consulting Group met in Birmingham with representatives of the research team. Prior to this meeting, participants were provided with Chapters 1 and 2 of the First Steps UK TSA project, which gave detailed conceptual information, in addition to key technical detail. Participants included representatives from each of the English RDAs (for details see Appendix 1). 4.3.2 The research team presented a synopsis of the TSA structure, process and application to the meeting, and this was followed by questions. During the afternoon, each of the representatives communicated their particular interests, data needs, organisation structure, key contacts and special issues. Minutes of the meeting were subsequently distributed to participants by NWDA. 4.3.3 Following the meeting, a data audit was undertaken by the research team (see section 5) in order to confirm the types of tourism economic information currently available and used by the regional authorities and agencies, and to confirm the types of data generated by specific regional organisations (local surveys). Results of that review are summarised in Appendix 2. 4.3.4 The main consultation allowed a range of issues to be examined, and reservations and queries to be put forward and answered. These are set out below under explanatory sub-headings.

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4.4 KEY

ISSUES

‘SYNTHETIC’

VERSUS

‘BESPOKE’ TSAS

4.4.1 The English Regions’ First Steps project produces ‘synthetic’ TSA estimates rather than ‘bespoke’ outputs. Synthetic Tables are based on UK information that has been mechanically adjusted to the regional level, using control totals, in the absence of regional primary data. While there continues to be an absence of regular and coordinated Input-Output tables for the UK regions (detailing inter-regional trade patterns), and detailed regional surveys of tourism expenditures, this less than ideal basis for TSA construction will prevail. Hence, initial regional TSA tables will only provide a broad estimate of the significance of tourism activity in each region. 4.4.2 It was noted that even if the project had been undertaken with the support of bespoke regional Input-Output tables as currently specified for the UK, the structure of those tables would not provide an ideal basis for TSA construction. This is particularly due to the lack of a separate accounting of accommodation and serviced food products, of travel agents and tour operators, or of recreational and visitor services. 4.4.3 Any progress in moving away from ‘synthetic’ tables will be data intensive, requiring additions to existing surveys and data provided for regions. It will also be essential to achieve consistency in both how new data is accumulated and in the methods used to construct base Input-Output tables. 4.4.4 The Allnutt and Allsopp reviews both highlighted that many users of regional data would welcome greater detail of trade values in relation to tourism and other activities between UK regions. However, the same Reviews acknowledged that the costs of getting companies to report information at this level, in the absence of any fiscal relevance, would be prohibitive. 4.4.5 The fact that some regions (Wales and Scotland, for example) have already developed their own trading estimates (with respect to the rest of UK) shows the possibilities of producing such accounts, while also demonstrating that such ‘bottom up’ development may be associated with unwelcome inconsistencies across regions.

4.5 STRATEGIC REQUIREMENTS

INTEREST GROUPS

4.5.1 During the consultation the several respondents raised issues relating to the relevance of TSAs in planning future marketing activity, with some questioning the usefulness of a system of tourism account. The research team showed that TSAs provided a foundation for more complex planning and modelling applications. 4.5.2 Particular doubts were expressed regarding the value of TSAs over and above mechanisms such as MOSAIC (a marketing process) and /or forecasting tools. However, the research team noted that TSAs were essentially accounting frameworks, and while prerequisite to forecasting (as is any good information), were not themselves tools for that purpose.

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ISSUES

RELATING TO OWNERSHIP OF OUTPUTS

4.5.3 Connected to the above questions were issues of ownership of TSAs and any subsequent and linked impact and planning models developed from the framework. 4.5.4 One identified way forward discussed was the convening of a separate resource group representing the combined interests of RDA partners and accountable to them, who together would agree funding arrangements, appoint the appropriate expertise to construct regional accounts, and provide steerage. However, an underlying challenge to the development of a consistent regional accounting approach, having equal ownership, would be posed by a political and economic framework which was moving towards increasing regional autonomy, and hence greater inter-regional competition. 4.5.5 Participants of the consultation had within their remits specific tourism projects, including perhaps the development of new tourist attractions, safeguarding existing resources and/or improving existing commercial offer in conjunction with the private sector. They were then concerned to learn how their investment in regional TSAs might contribute to improvements in optimising the benefits of these or other specific tourism projects. 4.5.6 While potentially regional TSAs (further down the development line) could be useful in estimating the financial impact of a tourism project or investment, the applications of first stage TSAs are more limited, and cannot be used to derive multipliers. However, they do provide best estimates (hitherto absent) of the value of tourism at the regional level. This information could be used, for example, to estimate some of the supply implications resulting from an overall change in tourist demand. 4.5.7 Participants in the consultation also highlighted certain circumstances where a tourism resource was shared by more than one region/RDA. For example, Sherwood Forest occupies parts of both East and West Midlands. This situation accentuates the need for co-operation between RDAs and for consistent methodologies, but also highlighted that statistical tools based upon existing administrative areas may not always suit policy purposes directly. 4.5.8 Participants also observed that the tourism sector in different regions varied in terms of absolute size and growth. Other variations were recognised in the quality and quantity of resources that could be diverted to tourism, and in the responsiveness of regions to shocks and stimuli, with London being acknowledged as a fast moving region in this respect. This was understood to have implications for the prioritisation of resources.

DATA ISSUES 4.5.9 Even before the results of a subsequent data audit, it was clear that the quality of tourism expenditure data was generally understood to be very poor, both at national and regional levels. Detail on data audit for English Regions TSAs is found in section 5 of this report.

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4.5.10 Other data collection relating to accommodation occupancy rates and numbers of visitors, for example, is much better developed, having a direct bearing on the management of tourism services, while being easier to measure than expenditure patterns. 4.5.11 Concerns about the quality of data led to some discussion on possible ONS engagement in collating better data. However, following the Allsopp review it was not felt realistic to expect ONS resources to underpin regional efforts to improve local tourism data in the currently devolving political context. This is not to say that the ONS could not be called upon to augment existing regional data/analysis, or be enlisted to provide support and advice on existing regional data/analysis. 4.5.12 Over and above the absence of quality expenditure data (a problem which exists nationally as well as regionally) is an absence of data on visitor flows between regions, except that which may be loosely inferred from traffic flows, tourist attraction surveys and the IPS, for example. 4.5.13 The Allnutt Review of Tourism Statistics has encouraged regional agencies/tourism boards to explore data deficiencies and, as a result, self-awareness in this respect is currently very high. For example, the One NorthEast Tourism team published a Tourism Data Audit which describes moves to develop a library of tourism research publications including reports, case studies and journals in order to promote information use. 4.5.14 Many of the views expressed in that report mirror earlier consultations, including this one. A number of the participant organisations currently use local models such as those provided by Cambridge Econometrics and STEAM, which in their turn used UKTS and IPS. There was some concern that changes arising from the Allnutt Review (which might include the development and sophistication of regional TSAs) may threaten the ways ‘in which these surveys are funded and managed, which could lead to inconsistencies in data collection and difficulties in producing trend data.’ (One NorthEast Tourism Team, May 2004).

Figure 4.1. Checklist of How Key Tourism Statistics Sources Used at Regional Level Usage/Data

IPS

UKTS

LDVS

Cambridge Econ * *

Informing tourism strategy ** ** ** Examining composition of sector in ** ** * region Use in liaison with tourist providers ** ** * * Advocacy purposes ** * * * Comparisons with other regions *** *** ** * Press/public * * * *** Widely used; ** used by some RDAs/RTBs; * used by few RDAs/RTBs.

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Tourism Satellite Account – First Steps – English Regions

REFRESHING

THE AGENDA

4.5.15 The consultation process had two principal objectives. First, it gave attendees the opportunity to further explore the concept of regional TSAs, and for them to pose technical questions relating to the ‘construction’ process. Second, members of the research team were given an opportunity to tap directly into the considerable knowledge shared by the attendees. 4.5.16 Beyond that, the process gave an airing to questions which could not be answered on the day, and indeed which may not be answerable within this report but which are nonetheless important and will need further debate (see also recommendations and conclusions section of this report). 4.5.17 Among these are the potential value of regional TSAs in the field of advocacy for individual tourism projects and as an integral part of the whole range of development agency/regional assembly policy. 4.5.18 Other issues relate to access of regional TSAs by private sector organisations; a feature which requires early consensus. Experiences in Wales and Scotland may be helpful in this discussion. The research team emphasised the importance of a strong institutional base for the development of regional and national TSAs during the introduction to the consultation and in provided documentation.

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Tourism Satellite Account – First Steps – English Regions

TSAS

FOR THE

REGIONS: THE DATA ISSUES

INTRODUCTION 5.1.1 This section outlines the data requirements of regional TSA tables. A summary of potential data sources for TSA construction of those tables is presented in tabular form in the appendix of the First Steps Tourism Satellite Account Report for the UK (see DCMS, 2004). In this section we assess the availability and reliability of identified data sources at the English regional scale. As might be expected, data availability is problematic, particularly in terms of the estimates of tourism consumption which as central to TSA construction. 5.1.2 As the earlier section showed, regional TSA development elsewhere has treated the region as a ‘small nation’ and thus regional tables would ideally mirror UK tables 1, 2, 3, 5, and 6 (with 4 being an amalgams of Tables 1 and 2). UK Table 7 is under development, but good data is anyway available to construct this employmentrelated table for English regions. 5.1.3 What follows is an assessment of the data sources available to estimate the consumption of different types of tourists, and the production of tourism commodities within each region. Figure 5.1 Structure of TSA Table 1: Inbound Regional Tourism Consumption by Products and Categories of Visitors (Visitor Final Consumption in Cash) £million

Holiday

(a)

Business (b)

VFR etc (c)

Total (a+b+c)

Total of 1+2+3

etc.

etc

Characteristic Products 1 Accommodation Services 2 Restaurant, bar and catering services 3… Y Non Tourism Products Z Distribution margins Total Inbound Consumption

5.2 POSSIBLE AMENDMENTS

TSA STRUCTURE

FOR

ENGLISH REGIONS

5.2.1 Closely following WTO guidelines, a constructed regional TSA would identify any consumption within the region by non-residents whether UK resident or overseas as ‘inbound’ and thus properly accounted in TSA Table 1. However, given the very different characteristics and spending of UK and non-UK resident visitors it is likely that RDAs would benefit from a separate accounting of each.

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5.2.2 The above approach would also be desirable as TSA Table 2 (consumption of domestic residents in the reference economy) cannot currently (or indeed in the near future) be reported to WTO standards. Then, regional TSA Table 2 becomes the spending of UK residents in the reference region whether resident in that region or not (see section 5.4 following for more detail). As data sources improve, it may be that the spending of region-residents can be identified separately.

5.3

INTERNATIONAL INBOUND TOURISTS’ CONSUMPTION

5.3.1 The International Passenger Survey (IPS) was the core data source for the construction of UK tables and is indeed key in the estimates of overseas visitors’ spending used in UK National Accounts. It is commissioned by the ONS and involves over 250,000 interviews each year as travellers leave the UK. Data collection is stratified to reflect different transport modes. 5.3.2 The ONS also conducts Expenditure Trailers on an ad hoc basis to collect additional information on the spending of overseas residents on different commodities. The 1997 trailer used 16 categories of expenditure, including accommodation, food, alcohol, transport and clothing. A new expenditure trailer is scheduled for 2006. 5.3.3 Detailed IPS data is presented in Travel Trends, and includes numbers of visits, nights and spending by purpose and area of visit. Four categories of visit are reported, that is, Holiday, Visiting friends and relatives, Business and Other. The data is timely and is released monthly. 5.3.4 The IPS sample represents around 0.2% of all travellers as they leave the UK. While the sampling error for all UK expenditure is less than 3%, sampling error increases as the size of the area data is applied to decreases. 5.3.5 Travel Trends provides data on number of visits, nights and spending by UK county for each year. This information will assist in estimating overseas gross expenditure by region. However, there is no information available for spending on individual commodities at sub-national scale, and expenditure information (for counties) is not available by purpose of visit (holiday, business, VFR) although volumes are provided. 5.3.6 It may be that interrogation of the raw IPS database could provide some additional information on commodity spending by region. However, sampling errors would likely be considerable at this scale. Perhaps more fundamentally, the conceptual basis of allocating spending is unclear. The allocation of international and interregional travel fares, for example, to individual regions would require serious consideration, even if the base data were available and reliable. 5.3.7 In summary then we can currently make an estimate of gross tourism receipts from overseas tourists by region using IPS data, although the magnitude of sampling errors, and the conceptual framework underlying the allocation of consumption remains unclear.

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Tourism Satellite Account – First Steps – English Regions

5.4 DOMESTIC (UK) TOURISTS’

CONSUMPTION

(STAYING TOURISTS)

5.4.1 At national level, TSA Table 2 refers to tourism consumption (expenditure) by residents of the nation within the national economy, either for the purposes of a trip at home or abroad. 5.4.2 At the regional level an ‘ideal’ TSA Table 2 would report expenditures by regionresidents within the region for trips which might encompass only the home region, be to elsewhere in the UK or be for trips abroad. Thus TSA Table 2 includes spending on travel within the region before leaving on a trip, but not monies spend whilst outside the home region. 5.4.3 The same commodity groups as other TSA Tables would be used, and if data permitted, sub-divisions by purpose of visit. The primary source of data on the expenditures of UK domiciled tourists in the UK is the United Kingdom Tourism Survey (UKTS). The UKTS is an annual, national consumer survey, using a stratified random sample. In 2000, 55,000 interviews were conducted. 5.4.4 UKTS work is jointly sponsored by VisitBritain, VisitScotland, the Wales Tourist Board and the Northern Ireland Tourist Board, and is available on the StarUK website. The principal value of the survey is its measurement of trips taken away from home by UK residents lasting one night or more. Trips are categorised as either holidays, visits to friends and relatives (VFR), business and conferences or any other purpose. 5.4.5 Information is collected on number of nights, accommodation and transport used, activities undertaken, and location by type. Hence UK resident tourism is measured in terms of volume (trips taken and nights away from home) and value (spending). Expenditure data is restricted to nine commodity groups. 5.4.6 English regional data is not typically included in the published UKTS, providing full data only for the constituent countries of Great Britain. However, in 2000 a one-off disaggregation of data provided broad detail on volume and value for English Tourist Board areas, by purpose of visit and duration of stay. 5.4.7 Fuller information from UKTS is published for English Tourist Board Areas on www.staruk.com but the levels of statistical error are unclear. Information is also reported on the domicile of visitors, meaning an region-by-region origin and destination matrix (volumes) could be constructed from this dataset although this would likely be subject to large errors. 5.4.8 The geography of the English Tourist Board regions was close enough to GORs to enable an approximation of tourism consumption by UK domiciled tourists to be made for each English region for 2000. As the best (indeed only) information on spend in England, these estimates have informed the construction of the synthetic TSAs reported on in Section 7 of this report (see Section 6 for more detail on methodology). 5.4.9 From 2000 onwards, UKTS data is gathered from telephone interviews, using random direct dialling, and conducted by the British Market Research Bureau (BMRB). Response rates can be as low as 30%. Welsh Economy Research Unit

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Tourism Satellite Account – First Steps – English Regions

5.4.10 As the Review of Tourism Statistics by Allnutt reports, problems with the UKTS are twofold. First, statistical reliability is problematic particularly for sub-UK analysis and in respect of expenditure. Secondly, a recall methodology based essentially on ‘cold (telephone) calling’ which requires respondents to remember detail of multitrips undertaken in the prior two months is unlikely to be robust. 5.4.11 Furthermore, the expenditure-related questions in the UKTS arise at the end of an extended questionnaire which largely focuses on attitudinal data collection. This too is likely to impair accuracy. 5.4.12 The new survey methodology does involve longer contact with consumers, and improves the capture of frequent travellers away from home for long periods, and hence reduces under-estimations of these type of traveller, which had been identified in the old survey. A more detailed critique of the UKTS methodology can be found in DCMS (2004) and in Allnutt (2003). 5.4.13 The contract to undertake the UKTS will be re-specified in 2006, and there may be the opportunity for some incremental methodological improvements. However, in the absence of significant extra resource, accuracy and reliability are unlikely to improve significantly in respect of key TSA inputs. 5.4.14 In summary, the information on staying UK domiciled visitors at English-regional level is poor. The UKTS as currently specified is not likely to provide reliable estimates of expenditure (or indeed volumes) at this scale. No other consistent data source exists to supplement UKTS. The contract for UKTS is shortly to be retendered for the 2006 edition onward.

5.5 DOMESTIC (UK) TOURISTS’

CONSUMPTION

(DAY VISITORS)

5.5.1 Day visits appear to be the most important component of tourism expenditure in the UK, and in Scotland and Wales (DCMS, 2004; WTB 2004). Such visits are not part of the UKTS sampling frame which records only overnight stays. 5.5.2 Until 1998 information regarding day visitors came from the UK Day Visits Survey, which measured participation in leisure day visits by the adult population (aged 15 and over). Data covered the types of activities undertaken, transport methods, distances, and destinations in addition to the value of those visits. 5.5.3 This survey was commissioned by a broad consortium of organisations including the DCMS, UK tourist boards, Countryside Agency, Forestry Commission and the Environment Agency, and undertaken by the National Centre for Social Research in 1994, 1996 and 1998. Day visitor information was related to destinations and not residence of day visitors. 5.5.4 This survey has been replaced by the GB Leisure Day Visits Survey 2002-2003, sponsored a consortium of responsible organisations. The survey used a random sample of GB residents (aged 16 and over); 6,600 people were interviewed resulting in a 43% response rate12. 12

The full GB Leisure Day Visits Survey is available for download from www.countryside.gov.uk

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Tourism Satellite Account – First Steps – English Regions

5.5.5 A gap in data exists between the cessation of the 1998 survey and the onset of the GB Leisure Day Visits Survey in 2002/3. More worryingly, it is far from clear whether the survey is to continue in its current form. If data on the consumption of day visitors are not collected in a consistent manner across the GB or UK (and allocated to GORs), then regional TSAs, however constructed, will be of no value. 5.5.6 The survey only covers home-based leisure visits. Business day trips are not included, as with previous surveys. Data coverage is similar to the survey it replaces, but excludes day trips by GB residents to Northern Ireland. Very few leisure day trips between Northern Ireland and Great Britain were recorded in previous surveys. Twelve expenditure categories were used. 5.5.7 The definition of the total ‘population’ (i.e. those trips which are considered tourist in nature) is crucial to estimates of expenditure. The above surveys have defined tourist trips as those which last more than 3 hours in total. This, then, by implication is the definition of ‘usual environment’ outside which a trip-maker can be considered a tourist under international guidelines. 5.5.8 GBDVS provides extensive information on spending by 18 categories in each GOR as a destination, and as a trip origin (although there is not a full origin-destination matrix). 5.5.9 Sources of error in the GBDVS can include response errors, where difficulties may have arisen from poor recollection of detail, or result from questionnaire design. Non-response errors may result from refusals to be interviewed, failure to make contact, or where non-respondents differ from respondents. 5.5.10 Sampling errors on overall expenditure are just under 10% for GB and Scotland (that is to say we can be 95% certain that the true figure is within + or – 10% of the reported figure) and around 15% for Wales, which has an enhanced sample compared to its population size, and indeed a bigger absolute sample than for Scotland. This may indicate that results in Wales are more variable. 5.5.11 Although not reported, it is likely that sampling errors relating to purchases of individual commodities, or relating to gross expenditure in each GOR will be very high. There is an average sample size of about 400 responses per GOR. As can be imagined, the estimates regarding purchases of individual commodities in each GOR cannot be considered reliable. 5.5.12 It is unclear whether GBDVS will be repeated in its current form. Even if it is undertaken again, given current levels of resource and current methodology (where expenditure details are collected as during a largely attitudinal survey), the survey is unlikely to provide a robust basis for any developed regional TSA. A summary of the data sources that could support an estimate of tourism consumption in English regions is provided in Figure 5.2 below.

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Tourism Satellite Account – First Steps – English Regions

5.5.13 Figure 5.2 Tourism Internal Consumption Data at Regional Level Consumption element International Arrivals

Data source IPS

Relevant TSA Table 1

Reporting level

Comments

Around 50 English counties/UAs. Can be amalgamated to GORs

UK Resident Holidaymakers

UKTS

1, 2

Day Trippers

GBDVS

1, 2

10 English tourism regions (reasonably close fit to GORs) GORs

Provides gross expenditure but no commodity breakdown. No expenditure information by type of tourist/purpose. One off additional analysis for 2000 only. Gross expenditure, plus commodity breakdown for each GOR, though reliability of latter uncertain.

5.6 DOMESTIC TOURISTS’ OUTBOUND CONSUMPTION 5.6.1 UK Table 3 describes tourism consumption by UK residents overseas. It depended principally on the IPS for a reliable control total, and the UKTS and UK Supply and Use Tables (itself partly compiled from IPS and other information) for producing share of expenditure by product category. Expenditure was not broken down by category of tourist. 5.6.2 In the regional context, a table could describe spending by a region’s residents overseas (i.e. outside the UK), which could be guided by data from the Family Expenditure Survey (FES; which estimates holiday spending abroad and is reported by GOR). However, exploratory work at the UK level suggests that expenditure levels reported in FES differ greatly from (and are much smaller than) estimates provided in IPS and UKTS. 5.6.3 There is no information available on the spending of region-residents in different parts of the UK, save from (partially) in the FES which does not identify whether UK holiday-related spending is undertaken in the home region or outside. The situation is similar for day visits, where GBDVS reports total expenditure for each GOR as an origin of visits, but does not specify whether trips are taken outside the reference region, in whole or part. 5.6.4 This poor data provision may change as regions gain greater autonomy, and require a better regional accounting of overall consumption. However, currently a derivation of regional outbound tourism consumption would be difficult in the extreme, as would an estimate of tourism balance of trade for any region or between English Regions. TSA Table 3 does not in any case link directly to other TSA Tables.

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Tourism Satellite Account – First Steps – English Regions

5.7 THE PRODUCTION

‘TOURISM’ INDUSTRIES

ENGLISH REGIONS

5.7.1 TSA Table 5 recounts the production of tourist-related goods and services within a reference economy. Among those commodities and industries separately identified at UK level are accommodation, transport sectors, travel agencies, and recreational services. Table 5 identifies which industries in an economy produce which products. Thus, in Table 5 we see how much serviced food sales arise from sales of restaurants, and how much from other industries, including as sold in hotel restaurants for example. 5.7.2 A regional Table 5 would balance regional tourism product outputs with total regional industry output. The accounting of the production of tourism industries would also include an estimate of value added for tourism industries (VATI). 5.7.3 Information regarding production in English Regions arises from two main sources; the Annual Business Inquiry (ABI), part two of which reports financial information (latest for 2002), and the Office for National Statistics Regional Accounts data which provides estimates of gross value added for GORs by industry, the latter using a variety of source data. Estimates of gross value added can vary between the two sources; initial investigation revealed differences of up to 10% in key tourism-related sectors. 5.7.4 Neither of these (related) data sources are fully fit for purpose in estimating the TSA Table 5 for English regions. There are an number of common reasons why this is the case, whilst each dataset has its own specific limitations. 5.7.5 The major barrier to assessing the English-regional tourism ‘supply side’ is the complete lack of information on the production of tourism commodities. Whilst there is some information on the size of regional tourism-related industries, this is only relevant to part of the Table 5 estimation. We simply do not know, of the total output of (say) the hotel industry in a region, how much consists of restaurant or entertainment products. Thus, we cannot balance demand and supply for each tourism product (or indeed any other product) as the TSA demands. 5.7.6 This situation is reflected in the UK National Accounts, which do not present a full product by industry matrix on a timely basis (the last published is for 1990). For the UK TSA, inference was drawn from other TSAs, and advice taken from experienced industry analysts, and this used in conjunction with the limited data available in the UK SNA to estimate Table 5 for the UK. 5.7.7 ONS produced figures for regional industry GVA (latest for 2001) might be used in the estimation of industry scale in English regions. However, these are produced with inadequate industry disaggregation (15 industries) for TSA purposes. Tourism industries identified in TSAs globally include, for example, accommodation and serviced food separately identified, whereas they are reported as a single industry in the GVA tables. The situation is similar for other industries such as transport services and recreation13. 13

Tourism industries are also, of course, inadequately identified in UK SNA..

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5.7.8 Additional to the above, the regional GVA estimates are just that – and currently only that. No estimates are published of the output (or indeed turnover) of regional industries. Regional GVA is decomposed into compensation of employees and other value added, but this is not published for each industry. 5.7.9 To the above limitations must be added the fact that regional estimates of GVA are produced on a five year ‘rolling average’ basis, this intended to smooth out volatility in year-on-year changes in estimates. However, a rolling average approach does not square at all with the need to balance supply and demand in a single period or indeed with the very notion of an ‘economic account’. 5.7.10 For the above reasons, the ONS Regional Accounts as currently published (i.e. as GVA estimates) are of limited use in TSA construction, except perhaps as a ‘quality assurance’ check on any constructed account. The main source of supply-side information in regions to aid TSA construction will then arise from the results of the Annual Business Inquiry. 5.7.11 The Annual Business Inquiry (ABI) is the main government survey of companies in Britain. It is conducted in two parts: one dealing with employment, the other with financial information. The financial inquiry covers about two thirds of the UK economy whilst the employment part is far wider. 5.7.12 The ONS has produced ABI estimates from 1998 to 2001 for English Government Regions (GORs), using a consistent methodology across the UK with regional estimates constrained to UK national estimates at the all industry level. Variables reported include turnover, employment costs, capital formation and approximate value added, although further variables are available on request. 5.7.13 The ABI financial information (which is of interest in constructing TSA Table 5) is immediately available at SIC Division level (2-digit) and further disaggregations are available, if stringent disclosure rules are not breached. 5.7.14 There are, however, some problems involved in assessing the output of industries using ABI data. Firstly, although turnover is reported output is not and conceptual differences (for example changes in stock levels, treatment of goods for resale etc.) means they cannot be treated as identities. Additionally, hitherto the ABI sampling frame has not been specified to ensure adequate coverage of industries in each region, which raises issues about the reliability of regional data at industry level. 5.7.15 Added to sampling difficulties are conceptual ones. Although ABI is nominally a workplace-based survey, it is not clear whether multi-plant companies which have a presence in a number of regions (for example large hotel chains) have their output apportioned to regions in the most appropriate manner. Indeed, perusal of the data suggests that they may not. Further discussion of the ABI at regional level can be found in Allsopp (2004).

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Tourism Satellite Account – First Steps – English Regions

5.7.16 In summary, ABI is currently the best tool to assess the level of supply of tourism products in English regions. However, sampling and conceptual issues means that any current assessment of regional output should take account of employment estimates (whether from ABI Part 1 or the Local Labour Force Survey, or both) as well as the financial estimates reported in ABI Part 2.

5.8 ENGLISH

REGIONS:

SUPPLY

AND

DEMAND RECONCILIATION

5.8.1 TSA Table 6 reconciles supply and demand for each tourism product for the economy in question. Thus, in addition to the supply of domestic (i.e. regional) industry, we must also account for the supply of products through (regional) imports that also service part of tourism demand. The accounting of imports is the major addition to TSA Table 5 (apart from taxes) which enables this reconciliation. 5.8.2 There is virtually no information available regarding trade flows between English regions, or even the level of imports into each region (be this from the rest of the UK or abroad)14. Although some Customs and Excise data has become available recently, it only relates to goods and not services (which of course comprise the bulk of tourism demand). 5.8.3 In the absence of bespoke primary surveys (such as supported the Welsh TSA project) the derivation of this part of Table 6 will then rely either upon an adjustment to the relevant cells in the UK Supply and Use Tables, or the estimation of imports through indirect or modelled means. Neither approach is particularly satisfactory. Similarly, the application of taxes and subsidies to each product in each region would rely upon UK results, applying UK ratios to the regional output of products (which is itself not directly observable).

5.9 TSA

TABLE

7 EMPLOYMENT MODULE

5.9.1 TSA Table 7 (detailing employment) benefits from two well established data sources the Annual Business Inquiry (Part 1) and the Labour Force Survey (latterly Local Labour Force Survey). The first is a workplace-based survey of businesses covering the large majority of the GB economy, the latter a resident survey covering economic activity. 5.9.2 Relevant variables available from the Annual Business Inquiry (Part 1) include employee jobs, and splits by gender and full-time, part-time. However, use of the ABI to estimate tourism employment by industry highlights a number of limitations. Firstly, estimates only cover employee jobs, excluding the self employed and ownerlabour which is an important part of several tourism industries’ labour force. Secondly, there is no information on seasonal employment (as the name suggests, the ABI is an annual survey held in December/January), or on the level of hours worked for part-time employees.

Except for work undertaken in Plymouth Business School to derive Input-Output Tables for the South West, http://www.swbem.org.uk/ 14

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Tourism Satellite Account – First Steps – English Regions

5.9.3 Sampling errors for the ABI are not published at regional level, and a lack of regional stratification by industry means that there may be problems with sample sizes in certain industries, particularly in peripheral or smaller GORs. 5.9.4 Variables in the ABI Part 2 (the financial part of the survey) ameliorate the first problem somewhat, including estimates of working proprietors as well as employees on a given day (in December). There is also an estimate of average employment for the reference year, again including proprietors. However, the nature of the algorithm used to estimate seasonal changes by industry, or the data source used is unclear. Given the lack of primary business data sources other than ABI, It is unlikely that the estimates of average employment will be sophisticated or accurate for tourism industries in specific regions. Thus, the December/January timing of the ABI survey is of particular concern for tourism. 5.9.5 The Local Labour Force Survey (LFS) contains data on the level of self employment, hours worked – both of which are of importance in a tourism context – and remuneration (for a selection of the sample). Detail is also available regarding qualifications and occupations and seasonal patterns of labour supply can be inferred. 5.9.6 Whilst the published version of the survey is limited in terms of reported variables, the raw (anonymised) returns are available for academic and other uses (at www.data-archive.ac.uk). These enable very sophisticated analyses regarding the nature of the workforce. However, the LFS sampling frame is complicated and bespoke analysis requires a high degree of expertise. 5.9.7 The LFS is, of course, a sample survey and sampling problems will arise when reporting upon individual industries in specific regions. Additionally, estimates of gross workforce numbers made from the sample will not match other sources (such as ABI) due to differences in scope and methodology, and to sampling error. Moreover, comparison of some variables with other published sources at regional level (such as reported levels of remuneration compared with the New Earnings Survey) suggest the possibility of systematic bias (in this case under-reporting income) should be carefully considered) 5.9.8 In summary, notwithstanding the above, regional employment modules (Table 7) can be produced using the Local Labour Force Survey and ABI in conjunction, although the limitations discussed above should be noted. Further details on the construction of Table 7 in this pilot account are provided in Section 7.2.

5.10 SUMMARY: TSA FOR ENGLISH REGIONS 5.10.1 Given the above data difficulties, it is clear that the estimation of a tourism satellite account for each English region would be extremely difficult. Any such account would be subject to significant estimation errors, driven mostly by inadequate sample sizes at regional scale in surveys of both consumption and production.

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Tourism Satellite Account – First Steps – English Regions

5.10.2 There is simply no information available on what products are produced by which industries, and these product-industry relationships may well vary significantly across England, as the nature of tourism industries is different, for example, in London and more rural GORs. Additionally, information on regional imports, where it does exist, is wholly inadequate for the task in hand. 5.10.3 It may be that following the Allsopp Review of Statistics for Economic Policymaking and DCMS Tourism Statistics Improvement Initiative the situation will improve in the medium term. However, even if these reviews spark a genuine improvement in the reliability of data at the regional level (and even this will require significantly improved resources) the structural issues regarding the fitness of purpose for available statistics for TSA estimation will likely remain for a considerable time. For example we might hope that in the next 5-10 years accommodation and restaurant sectors are separately reported in UK National Accounts, but having access to such a sophisticated account for regions seems far off. 5.10.4 Despite the above, the presentation of TSA variables for English regions at this stage has several benefits. For example, an account demonstrates to potential users the nature of the TSA, and the type of variables that are derived, such as tourism value added, tourism ratios etc. It also provides some ‘broad brush’ indications regarding the scale of activity, and perhaps encourages policymakers and others to think about how TSAs can be used and developed in the regional policy context. 5.10.5 The following section therefore relates the methodology used to estimate a synthetic TSA for English regions. The synthetic TSA uses the best available regional data in conjunction with the results of the UK project to reconcile supply and demand at the regional scale. However, the variable quality of these data sources should not be forgotten when perusing the results of the exercise presented in Section 7.

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Tourism Satellite Account – First Steps – English Regions

METHODOLOGY

6.1 ESTIMATION

TOURISM CONSUMPTION & SUPPLY

ENGLISH REGIONS

6.1.1 As earlier sections have shown, a critical aspect of a developed Tourism Satellite Account is the reconciliation between supply and demand for each identified tourism product. This is achieved via the extension of the System of National Accounts (SNA) (which reconciles supply and demand for all products in an economy). 6.1.2 English Regions do not have an equivalent of the SNA which reconciles supply and demand for products. Therefore this reconciliation must be achieved through other means, using information available on tourism consumption, and on the size of regional industries. This can then be combined with intelligence gained during the compilation of the UK TSA to estimate the supply and demand of commodities at the regional level. This methodology will enable an approximation of tourism gross value added to be made for each region. 6.1.3 There are, then, significant data gaps at the regional spatial scale. However, some information on tourism consumption and the supply of goods is available. Figure 6.1 (replicated from Fig 5.2) indicates what available surveys tell us about tourism expenditure at regional level. Figure 6.1 Tourism Consumption Data at Regional Level Consumption element International Arrivals

Data source IPS

Relevant TSA Table 1

Reporting level

Comments

Around 50 English counties/UAs. Can be amalgamated to GORs

UK Resident Holidaymakers

UKTS

1, 2

Day Trippers

GB DVS

1, 2

10 English tourism regions (reasonably close fit to GORs) GORs

6.1.4 As revealed above, it is possible to make a reasonable estimate of gross tourism expenditure for English Regions (leaving aside the reliability issues discussed elsewhere). However, there are additional complexities in constructing the early tables of the TSA at the regional scale. 6.1.5 TSA Table 1 deals with ‘inbound’ consumption and Table 2 with ‘domestic’ tourism consumption. At the regional scale then, the spending of a resident of the North West visiting the North East should be allocated to Table 1, whereas that of a North East resident in the North East to Table 2. The data sources do not allow this level of detail and thus TSA Tables 1 and 2 are reported in summary, and aggregated. Welsh Economy Research Unit

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Tourism Satellite Account – First Steps – English Regions

6.1.6 There are other elements of tourism consumption which must be accounted for that are not addressed (explicitly) in the source surveys. For example, monies spent by overseas residents on fares to UK carriers must be added, as must monies spent by UK residents on fares and other items before the embark upon trips abroad. 6.1.7 Given the lack of direct information, English totals for these elements were allocated to regions based upon the level of employment in the air and sea transport industries. 6.1.8 On the supply-side the situation is similar, with some information available regarding the general size of industries in regions, but little or no information on the supply of tourism products. A fully developed TSA requires us to estimate this supply, yet information on regional supply is solely industry based. Thus, we can estimate the output (or at least turnover) of, for example, accommodation providers for each region, but cannot say how much of this output is of restaurant products. 6.1.9 This situation was replicated at the UK level for a number of products and similar estimation methodologies were used as for the UK TSA. The results of TSAs developed by other countries were used as guidance, as was the TSA for Wales. 6.1.10 Figure 6.2 shows the information that was used to estimate the supply of tourism products for English regions. Figure 6.2 – Supply Data at Regional Level Data Source

Annual Business Inquiry ONS Regional Accounts GVA Estimates

Reporting level GORs

GOR

Selected Variables

Comments

Approx Gross Value Added, turnover, employment costs Gross Value Added

2-digit SIC; ‘raw’ data; workplacebased. No direct information on industry output 16 industry groups inc. hotels & rest. Regional data calculated as 5yr moving average; residence based

6.1.11 As Figure 6.2 indicates, there is an overlap between the information available from the ABI and regional accounts. Estimates of gross value added can vary between the two sources; initial investigation revealed differences of up to 10% in key tourismrelated sectors. 6.1.12 Given this choice of sources, the ABI was used to constrain the size of industries in regions. This is because;   



ABI data is available at a greater level of disaggregation – for example, no GVA information is available from regional accounts for individual transport sectors; Information is available on turnover from ABI but not regional accounts, giving a better basis for the estimation of industry output; The ‘rolling average’ approach for regional accounts, designed to smooth out volatility, means regional aggregate data do not refer properly to a single reference year The workplace (rather than residence) base of ABI gives a better indication of in which GOR tourism supply actually occurs

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Tourism Satellite Account – First Steps – English Regions

6.1.13 There are of course a number of issues regarding the reliability and accuracy of the ABI raw dataset at regional level, and a number conceptual issues regarding the regional allocation of the output of multi-plant operations. Nevertheless, the ABI was considered the most appropriate indicator of regional supply. We expect the quality of the regional ABI data to improve considerably as the recommendations of the Allsopp Review of Economic Statistics for Policymaking are implemented.

6.2 MATRIX BALANCING 6.2.1 The above procedures give estimates on the supply side for industry GVA and output in each English region. These must be combined with tourism demand estimates for each region in a way that allows tourism GVA and employment to be derived. Simple procedures for doing this tend to result in regional TSA tables that might be described as ‘implausible’. 6.2.2 Although we have reasonably robust estimates for tourism expenditure in each region, once this is broken down into spending categories the robustness of the estimates weakens. Furthermore, IPS estimates of spending by category are derived from the last time the expenditure trailer was run and in any case do not correspond to the TSA classifications of commodities. Attempts to classify tourism spending on each product from the surveys suffer at the regional level from lack of data robustness far more than at the national level. 6.2.3 Simply using national shares of expenditure at the regional level leads to TSA tables that are implausible because in this case there are many instances where derived tourism demand would exceed local supply; for example, products and industries such as ‘water transport services’ and ‘air transport services’ tend to suffer in this regard because production is geographically different. Some regions produce very little water transport services yet a simple expenditure-share method of TSA construction will give tourism demand for these services that exceeds supply. 6.2.4 Similarly, simple allocations of spending on products leads to situations where tourism ratios – the percentage of demand that is sold to tourists – to vary widely between regions for no apparent reason other than that using national expenditure shares is obviously incorrect; where, for example, the rate of provision of hotel services is higher than the national average, it might be expected that tourists use accommodation services at a higher than average rate, and simple allocation methods cannot account for this.

Welsh Economy Research Unit

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Tourism Satellite Account – First Steps – English Regions

6.2.5 A matrix balancing procedure has therefore been used that makes the best use of all available information. This means that information from the UK TSA is used on the breakdown of different types of spending pattern and on the patterns of industrial output – which products are produced by which industries. Spending patterns are taken for eight categories of expenditure from the UK TSA, and regional totals for each of the eight categories are used. These categories are: 1 2

4 5 6 7 8

International inbound tourism (spending in the region by foreign tourists) UK inbound tourism (spending in the region by UK residents from outside England as they visit England) UK residents going abroad (spending in the region by UK residents from outside England as they go abroad) English holidaymakers (spending in the region by tourists resident in England) English residents going abroad (spending in the region by English residents as they go abroad) Fares reallocation [re-allocation of international travel fares) Tourism Day visits Other Components of tourism demand (second homes)

6.2.6 For each of these spending categories, total expenditure in each region is constrained to match the control totals taken from data sources. 6.2.7 For categories 1, 2 and 4 above, in which the UK TSA contains data by purpose of visit, initial levels of spend are set by proportioning out the “holiday”, “business” and “other” or “VFR” plus “other” according to control totals on spending by purpose of visit. In other words, in regions which are more intensively visited by business travelers, the spending patterns in these three categories are more like the UK pattern of spending by business travelers than other regions. 6.2.8 For the other categories listed above, initial levels of spending by product are set by proportioning out the relevant column in the UK TSA. 6.2.9 For each region, initial values in the industry columns of the TSA tables are set by proportioning out the UK TSA values to these regions. This means that a region with a larger accommodation sector will have initial values of production of accommodation and restaurant services that are in proportion to the UK TSA for this sector.

Welsh Economy Research Unit

Cardiff Business School

Tourism Satellite Account â&#x20AC;&#x201C; First Steps â&#x20AC;&#x201C; English Regions

6.2.10 Using these initial values, an unbalanced TSA table was produced for each region and then balanced using a technique known as maximum entropy. This technique has been used by other researchers in different situations (e.g. McDougal, 1999; Robinson et al. 2001) where a balanced matrix needs to be found that satisfies adding-up constraints and data is sparse. This method essentially derives the most likely value of each cell of the TSA table that leads to a balanced matrix. Entropy balancing is not a replacement for data gathering, but can be used to fill in the gaps where some data in a table is unknown, but where the totals in the table are known. 6.2.11 The balanced TSA table for each region was then used to compute tourism GVA; the results are presented below. 6.2.12 The following section recounts the illustrative results from the regional modelling process. All results are, like the UK, Welsh and Scottish TSAs for base year 2000.

Welsh Economy Research Unit

Cardiff Business School

Tourism Satellite Account – First Steps – English Regions

RESULTS: TOURISM

IN THE

ENGLISH REGIONS

7.1 GROSS VALUE ADDED 7.1.1 Figure 7.1 shows variables derived from the balancing of consumption and supply for English regions by Nottingham University. Tourism GVA varies as a percentage of total regional GVA from 2.6% in the West Midlands to 5.3% in London. Tourism GVA for England as a whole is 3.9% of English total GVA, the same figure as for the UK as a whole. 7.1.2 Tourism GVA is highest as a percent of total regional GVA in London (5.3%), the South West (5.0%) and the South East (4.4%). Only these regions have higher tourism intensities than the England and UK averages. The lowest figures are recorded in the West Midlands (2.6%), Yorkshire and the Humber (2.8%) and the East of England (2.9%). Figure 7.1: Tourism Gross Value Added in English Regions (2000) Tourism Ratio of GVA to Tourism GVA Percent of Consumption tourism (£m) regional GVA (£m) consumption North East

823

3.1%

2,134

0.386

North West

2,750

3.3%

7,407

0.371

Yorkshire and The Humber

1,657

2.8%

4,431

0.374

East Midlands

1,637

3.0%

4,779

0.342

West Midlands

1,772

2.6%

4,617

0.384

East of England

2,376

2.9%

7,237

0.328

London

7,089

5.3%

20,614

0.344

South East

5,835

4.4%

17,948

0.325

South West

3,044

5.0%

8,025

0.379

England

26,983

3.9%

77,193

0.350

32,010

3.9%

89,613

0.357

7.1.3 Tourism GVA is essentially determined by two elements: the level of tourism consumption and the value of GVA for each pound of tourism consumption. The ratio of GVA to tourism consumption differs between regions because of two reasons: firstly, the types of goods and services that tourists consume in each region differ, and secondly, the value added in each industry per unit of output may vary between regions. The method adopted to balance supply and demand takes full account of all these factors.

Welsh Economy Research Unit

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Tourism Satellite Account – First Steps – English Regions

7.1.4 For example, in London, which has the highest level of tourism consumption, tourists consume more of the goods and services that have a lower value added content, particularly air transport services, which reduces the ratio of GVA to tourism consumption. Meanwhile, the value added content of key industries such as hotels and accommodation is higher in London than the UK average, which tends to increase the ratio of GVA to tourism consumption. The ratio of GVA to tourism consumption is lower in London (0.357) than the UK average (0.361), which indicates that the first effect, of different tourism consumption patterns, is more important than the second effect of industry value added content in determining the ratio of GVA to tourism consumption in London. The primary reason why London’s tourism GVA is the highest proportion of regional GVA is because tourism consumption is highest in this region. 7.1.5 Figures 7.2 and 7.3 on the following page, present further results from the TSA estimation process. Tourism ratios on supply indicate what percentage of a product’s supply is consumed by tourists (Figure 7.2). This demonstrates that the accommodation supply in the South West is most ‘tourist oriented’ (70% of supply) and in the West Midlands least tourist oriented (49%) 7.1.6 Meanwhile, Figure 7.3 provides a breakdown of overall tourist consumption by product heading. For example in London and the South East a far higher proportion of tourism spend (36% and 39% respectively) was on transport services than in other regions such as the Yorkshire and Humberside (11%) and the West and East Midlands (both 12%). 7.1.7 This latter finding illustrates an important policy point. The location of transport infrastructure and particularly entry points to the UK will have a significant impact upon the level of tourism GVA in regions. There is no ‘level playing field’ where the size of each region’s potential tourism economy is based only upon its natural or developed attractions. 7.1.8 Figure 7.2 and 7.3 provide a wealth of data. However, it should not be forgotten that this data is based on a mechanical allocation of UK level data using control totals that are themselves suspect. The results should then be considered as giving only an indication of the nature and scale of the tourism economy in each region, and as an illustration of what kinds of variables would emerge from a developed TSA.

Welsh Economy Research Unit

Cardiff Business School

Tourism Satellite Account – First Steps – English Regions

Figure 7.2 Tourism Ratios on Supply (2000) NE

YH.

A Tourism Products A1 Tourism Characteristic Products 1 Accommodation Services 1.1 Hotels and lodging services 1.2 Second homes services 2 Restaurant, bar and catering services (excl. canteens)

20%

21%

16%

20%

17%

18%

22%

31%

29%

25%

60%

59%

61%

60%

49%

57%

65%

57%

70%

71%

58%

57%

58%

59%

48%

53%

65%

55%

66%

70%

100% 100%

100%

100% 100% 100% 100% 100% 100%

100%

32%

35%

37%

36%

29%

34%

31%

36%

44%

43%

12%

10%

14%

28%

30%

13%

19%

25%

17%

13%

23%

11%

30%

20%

16%

10%

12%

3.3 Water transport services

64%

36%

25%

92%

44%

19%

46%

45%

57%

36%

3.4 Air transport services

65%

62%

83%

62%

72%

64%

68%

65%

79%

63%

4 Travel agency and tour operators

99%

99% 100% 100% 100%

99%

100%

5 Recreation & oth. entertainment

11%

10%

15%

13%

15%

10%

6 Tourism connected products

3 Passenger transport services 3.1 Railway transport services 3.2 Other land transport services

3.5 Ancillary transport services

6.1 Post & telecoms services

6.2 Fin. and Insurance Services

6.3 Rental services

6.4 Health services

B1 All other products

Distribution margins

Figure 7.3 – Tourism Consumption by Product (2000) NE

YH.

A Tourism Products

62%

63%

60%

51%

62%

65%

71%

70%

60%

63%

A1 Characteristic Products

11%

12%

10%

11%

15%

11%

1 Accommodation Services

10%

11%

10%

13%

10%

1.2 Second homes services 2 Restaurant, bar and catering services (excl. canteens)

26%

25%

29%

24%

29%

21%

17%

25%

20%

18%

16%

11%

12%

26%

36%

39%

13%

24%

3 Passenger transport services

3.1 Railway transport services

3.2 Other land transport services

11%

10%

18%

27%

29%

15%

3.4 Air transport services

3.5 Ancillary transport services

10%

6.1 Post & telecoms services

6.2 Fin. and Insurance Services

6.3 Rental services

6.4 Health services

17%

20%

27%

19%

16%

21%

20%

B1 All other products

11%

13%

14%

13%

11%

15%

Distribution margins

62%

63%

60%

51%

62%

65%

71%

70%

60%

63%

1.1 Hotels and lodging services

3.3 Water transport services

4 Travel agency and tour operators 5 Recreation and oth. ent. 6 Tourism connected products

Welsh Economy Research Unit

Cardiff Business School

Tourism Satellite Account – First Steps – English Regions

7.2 TOURISM EMPLOYMENT

ENGLISH REGIONS: BACKGROUND & METHOD

7.2.1 Tourism employment is not a ‘core’ part of the TSA largely because employment is not often reported as part of the system of national accounts. However, the WTO (and most developed TSAs) recognise the importance of employment as a policy variable, and TSA Table 7 comprises the employment module, detailing tourism employment by (typically) full and part time, by gender and by industry of employment. 7.2.2 The development of TSA Table 7 for English Regions benefits from well developed data sources such as the Annual Business Inquiry and Labour Force Survey. However, as Section 5 revealed these data sources have a number of problems and limitations. These limitations mean that at pilot stage the employment module for English Regions cannot be as disaggregated as for the UK (indeed problems exist in developing an employment module even at UK level). 7.2.3 The methodology for estimating employment in tourism industries for English Regions follows (in large part) that adopted for the UK First Steps report, presented fully in McNicoll and McLellan (2004), available from www.culture.gov.uk. However, data restrictions have necessitated a number of alterations, most notable amongst them;   

The aggregation of the 11 tourism industries identified at UK level into 6 industries No separate identification of self-employment and owners’ labour for each region No separate identification of full-time equivalent employment.

7.2.4 It should be noted that all figures are workplace estimates. Slightly different figures would be achieved if employment were based on place of residence, but the workplace figure is more closely allied with TSA concepts and methods (i.e. workers are counted where they and their firms produce the tourism service). 7.2.5 It is important to remember that presentation of figures does not imply reliability. For some industries, notably renting of movables and sea and air transport services, employment and sample sizes are very low in some regions (notably North East, East & East Midlands). However, in the interests of usability and completeness, we have published these figures although their reliability is suspect. 7.2.6 Figure 6.6 provides information on tourism industry employment and tourismdependent employment. We have additionally published the totals for employment, and tourism-dependent employment for the UK. This latter is for information only and UK totals are not comparable to those for English regions. 7.2.7 This is because the regional TSAs are predicated on financial flows, and industry employment is arrived at separately. Estimates of tourism industry employment (presented in the top part of Figure 6.6) are consistent with UK estimates as far as data quality allows. Estimates of tourism-dependent employment are not.

Welsh Economy Research Unit

Cardiff Business School

Tourism Satellite Account – First Steps – English Regions

7.2.8 The application of tourism-industry ratios to employment to estimate tourismdependent employment (following the method suggested by EUROSTAT) ‘marries’ separately estimated data. However, the balancing required to estimate industry ratios for regions introduces inconsistencies with the UK account which cannot easily be resolved. We cannot constrain both financial and employment data to notional English totals whilst retaining the internal integrity of the account. 7.2.9 Figure 6.6 then can provide an indication of the relative levels of tourism-dependent employment between English Regions (as here the methodology is the same and uses the best available data) but these cannot be aggregated to an English total which is comparable (by industry) with either the UK total, or with TSAs developed in Wales and Scotland which have the benefit of being based on regional accounts.

7.3 TOURISM EMPLOYMENT: RESULTS 7.3.1 Perusal of Figure 6.6 reveals that employment in tourism industries varies from 740,000 in London to 146,000 in the North East. London and the South East account for 42% of all employment in tourism industries in England. 7.3.2 London too has the highest proportion of its workers involved in tourism industries, almost 18%, whilst the East Midlands has the lowest (under 11%). Overall in England, 13.9% of all workers are employed in tourism industries as defined. 7.3.3 Hotels and Restaurants is the largest employer; typically between 30% and 40% of all employment in tourism industries is within this hospitality sector. 7.3.4 Turning to tourism dependent employment, Figure 6.6 indicated that it is the South East which has the highest number of workers who are dependent on tourism receipts for their employment (240,000 workers). The total comprised over 6% of all employment in the South East, also the highest of any region. 7.3.5 The smallest total tourism-dependent employment was found in the North East, at 46,000 (4.4%). However, this was far from the lowest proportion of the workforce of any region; both the West Midlands and East of England had 3.4% of their workforce directly dependent upon tourism. Tourism dependent-employment is not reported by industry due to reliability issues. It should be remembered that these totals do not account for any jobs supported by tourism indirectly through supply chain or wage effects.

Welsh Economy Research Unit

Cardiff Business School

Tourism Satellite Account â&#x20AC;&#x201C; First Steps â&#x20AC;&#x201C; English Regions

Figure 7.4 Tourism Industry and Tourism Dependent Employment (2000) Thousands 1,2 Hotels & accommodation; restaurants etc. 4,5 Railways; Other land transport 6,7 Water & Air Transport 8,9 Other transport serv.; travel agents etc. 10 Recreation services 11 Renting of moveables Total tourism industries Rest of the economy Total Economy Thousands Total tourism industries Rest of the economy Total Economy As percent of total regional employment

Welsh Economy Research Unit

Total Workers West East London Mids

North East

North West

Yorks & Humber

East Mids

South East

South West

Eng.

65.4

171.2

128.6

77.7

110.2

102.5

311.7

319.7

108.3

1,395.1

1,760.6

22.5

69.0

45.0

44.9

39.2

96.4

123.9

85.7

37.1

563.7

677.2

4.7

13.6

9.9

8.5

10.6

11.1

18.9

17.0

9.8

104.1

123.2

10.4

36.0

23.6

28.1

35.7

19.9

72.9

57.7

37.4

321.7

373.9

33.8 6.0 142.8 908.6 1,051.4

97.6 13.2 400.5 2,574.3 2,974.8

48.5 10.6 266.1 1,891.3 2,157.4

28.2 9.5 196.9 1,661.2 1,858.1

56.3 14.1 266.1 2,069.9 2,336.0

79.8 19.0 328.7 2,117.3 2,446.0

164.3 44.9 736.6 3,430.7 4,167.3

102.9 23.2 606.3 3,219.4 3,825.6

43.4 12.9 248.9 1,872.7 2,121.6

654.9 153.4 3,193.0 19,745.4 22,938.4

759.5 172.2 3,866.6 23,295.4 27,162.0

North East

North West

Yorks & Humber

Total Tourism Dependent Employment East West South East London Mids Mids East

South West

Eng.

UK (for info only)

37.7 8.5 46.2

110.2 23.8 134.0

76.0 16.6 92.5

51.7 18.7 70.4

63.5 15.1 78.6

64.9 17.7 82.7

184.5 35.3 219.8

202.0 36.6 238.7

85.6 27.2 112.8

876.1 199.7 1,075.7

1061.8 202.9 1264.6

4.4%

4.5%

4.3%

3.8%

3.4%

5.3%

6.2%

5.3%

4.7%

Cardiff Business School

Tourism Satellite Account – First Steps – English Regions

7.4 ESTIMATES

FOR

2001-2003

7.4.1 As noted elsewhere TSAs have increasingly been used as a benchmark to produce more timely information. In the UK First Steps Report, information on changes in tourism consumption since 2000 was applied to estimates of tourism GVA and employment to produce estimates of these variables for years since 2000. 7.4.2 We have replicated this methodology here to provide key TSA estimates for regions for 2001 – 2003. These estimates assume key TSA relationships between consumption and value added remain unchanged. Changes in regional expenditure traced in the UKTS and IPS for 2001-2003 inform the analysis, with other elements of consumption assumed as following the UK average for each region. 7.4.3 To maintain internal consistency the denominator upon which percentage of GVA figures are based is that derived for the 2000 TSA (based largely upon ABI2 data) amended for changes in 2001 and 2002 with trend data from ONS regional accounts. Thus derived denominators for regional value added from Figure 7.5 will not match published ONS estimates. 7.4.4

There is ample warning elsewhere in this document regarding the quality of information which informs English Regions TSAs. These caveats apply even more to any trend analysis. The information provided in Figure 7.5 below should be taken as providing only the broadest indication of trends since 2000. However, there is general agreement between IPS, UKTS and GBDVS that tourism consumption remained static at best in nominal terms between 2001 and 2002, perhaps showing some limited signs of recovery (in nominal terms at least) in 2003.

Figure 7.5 Tourism Value Added since 2000 £m

2000

Tourism Value Added 2001 2002

2003

Percent of Regional Value Added 2000 2001 2002 2003

North East

823

822

742

747

3.10%

2.92%

2.55%

2.37%

North West

2,750

2,718

2,624

2,674

3.30%

3.12%

2.84%

2.75%

1,657

1,675

1,501

1,509

2.80%

2.71%

2.33%

2.24%

1,637

1,551

1,488

1,516

3.00%

2.74%

2.47%

2.38%

1,772

1,811

1,769

1,839

2.60%

2.42%

2.33%

2,376

2,325

2,355

2,403

2.90%

2.63%

2.54%

2.45%

Yorkshire and The Humber East Midlands West Midlands East of England London

7,089

6,702

6,577

6,565

5.30%

4.75%

4.48%

4.20%

South East

5,835

5,808

5,840

5,854

4.40%

4.13%

3.94%

3.85%

South West

3,044

3,000

2,881

2,938

5.00%

4.64%

4.18%

4.09%

26,983

26,410

25,775

26,043

4.20%

3.90%

3.60%

3.50%

England

Welsh Economy Research Unit

Cardiff Business School

Tourism Satellite Account – First Steps – English Regions

RECOMMENDATIONS: TOWARDS ENGLISH REGIONS TSAS

8.1 IMPROVING

THE

INSTITUTIONAL

AND

STATISTICAL LANDSCAPE

8.1.1 Many of the recommendations which arise from the English Regions First Steps project parallel those of the wider UK First Steps project. This is unsurprising given the commonality of relevant datasets and institutional structures. It is therefore strongly recommended that this section is read in conjunction with the appropriate sections of the UK First Steps project (DCMS, 2004). The main recommendations from the UK report are included in this report as Appendix 3. 8.1.2 The UK ‘Next Steps’ agenda was set in the context of strong international interest in an improved accounting of tourism activity, and with recognition that well developed TSAs could inform new policy and resource directions, and provide intelligence for better intervention. This international drive was re-affirmed in a speech by HansWerner Schmidt, the Administrator responsible for tourism at the European Commission. His speech indicated that the next revision of EUROSTAT directives on the collection of tourism statistics would include the requirement for each country to present data which would eventually enable the production of national TSAs15. 8.1.3 Despite the above, further TSA development at the UK level is predicated on improvements to key tourism statistics data, and on the construction of a new ‘institutional platform’ to enable the provision of these statistics. There are, then, strong links between the UK TSA Next Steps agenda and the main data and structural recommendations from the Allnutt Review of Tourism Statistics (and indeed the wider Allsopp Review of Economic Statistics). 8.1.4 The English Regions Next Steps agenda is thus in large part dependent on the nature of improvements at the UK-national level. For example, if the Office for National Statistics, DCMS and its partners do not act on the main recommendations from the Allnutt and Allsopp Reviews, only very limited progress will be possible at the regional level towards (non-synthetic) TSAs. 8.1.5 However, this does not mean that regional development agencies and tourism bodies should take a passive stance. For example, the RDAs and their partners are in a position to lobby the ONS (and others) with respect to several key issues. These are detailed below and are included as key recommendations for action. Paras 8.1.5 – 8.1.8 deal with statistical issues, and 8.1.9 – 8.1.13 with structural/institutional issues.

Speech at DCMS TSA event, English Heritage Theatre, London 19th November 2004 Welsh Economy 54 Research Unit 15

Cardiff Business School

Tourism Satellite Account – First Steps – English Regions

8.1.6 A proper regional stratification of the 2006 expenditure trailer of the International Passenger Survey – As Section 5 indicates, the regional allocation of tourism consumption is a key issue for TSA development. Issues regarding UKTS and day visitors are complex and institutional responsibilities varied. However, with international visitors subject to a detailed expenditure survey in 2006 the opportunity exists to ensure a proper accounting of associated regional consumption which would inform future TSA construction. Despite the Allsopp Review indicating the need for ONS surveys to have a better developed regional element, it is not clear whether this will be instigated in time for the 2006 trailer. Thus, discussions with ONS should begin as a matter of urgency to ensure proper specification of the 2006 trailer as regards location of spending. This may involve a contribution by RDAs to any marginal survey costs, but this money would be very well spent. 8.1.7 Improvement to regional accounting structures and the development of survey-based regional Input-Output frameworks – The Allsopp Review will undoubtedly result in improved regional accounting in the near term. However, ONS or the Allsopp Review does not currently have any plans to develop Input-Output (or equivalent) Tables at regional level. Scotland and Wales already benefit from these Tables, enabling a deeper understanding of the entire regional economy. Meanwhile, in England regional accounts are predicated upon a narrow methodology, with limited variables and industries available, and requiring presentation in a ‘five-year average’ form to smooth volatility. These accounts are of limited policy use for RDAs and moves towards regional Input-Output are to be encouraged. A number of existing examples indicate the ways in which this can be done. In the South West in particular, the Higher Education sector has developed Input-Output Tables. In Scotland, even predating devolution, the Scottish Office and latterly executive have undertaken developments using their privileged access to data and influence on survey and sample design. Meanwhile, the North West RDA has undertaken an extremely extensive tourism user survey with a strong consumption elements. RDA should consider all these factors and their usefulness in moving towards developed TSAs. 8.1.8 Integration of Tourism-useful questions into any new ONS Surveys – Existing surveys such as the General Household Survey and family expenditure survey are of limited use in TSA construction due either to the lack of spending data, or a lack of information regarding the use of products purchased. Any re-engineering of ONS household surveys should not ignore the needs of tourism and TSA development, either at the national or regional scale, and representations should be made to ONS, either through DCMS and/or directly to ensure this is the case.

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Tourism Satellite Account – First Steps – English Regions

8.1.9 Improved sub-divisions of industries within the UK Input-Output framework – In common with many other systems of national account, many industries/products of interest in tourism supply are presented in the UK accounts in a very aggregated form, hindering TSA construction. In particular the further disaggregation of accommodation and restaurant/catering services; ancillary transport services and travel agency operations and recreation services in annually produced Supply and Use Tables would be of significant benefit. There is adequate disaggregation within existing (and proposed) SIC structures to identify these discrete tourism products and industries, and results for individual sectors (such as hotels) are reported in the ABI, suggesting the data might support further disaggregation in Input-Output tables. 8.1.10 Improvements to the methods employed in surveys such as UKTS, and any (replacement) day visitor survey in line with the Allnutt recommendations – Tourism partners are at a crossroads regarding tourism statistics. One option is to continue with surveys more or less ‘as is’, perhaps with marginal resource improvements to increase reliability of estimates. The second option would be a ‘ground up’ reworking of tourism statistics to ensure comparability and regional reliability across the board. In terms of regional TSA construction, the second option is, unsurprisingly, recommended as consumption data collected as part of a (long) visitor profiling survey is unlikely to be of the highest quality, however large the sample. RDAs should continue the dialogue with DCMS, VisitBritain and partners to asses the likely costs of any re-engineering of statistical tools, and in particular the marginal cost involved in making results reliable at the regional scale. Options such as the integration of tourism spending data into general household surveys should be considered, in conjunction with ONS wherever possible. We would strongly suggest that marginal improvements to existing surveys are unlikely to provide reliable data at regional level and that a ground-up reconsideration of how tourism consumption data is collected is long overdue. 8.1.11 The imposition of new structures to take responsibility for national and regional tourism statistics – Much of the blame for ongoing under-resourcing of tourism statistics in the UK (and consequent poor statistical base) is due to the lack of a clarity on responsibility for tourism statistics. Some surveys are undertaken by ONS, and others by tourism agencies or coalitions of agencies. The resultant statistical landscape is confused, incoherent and unhelpful for policy development. This description applies to the national case – for English regions, the situation is worse, with yet more agencies, and potential partners and users involved. Bringing order to this situation, and establishing clear lines of responsibility for the design of relevant surveys and collection methodologies to a single agency (at national level) is a pre-requisite to further TSA development. Meanwhile, the drive for these developments, however undertaken, must come from the RDAs as the bodies with primary responsibility for tourism at regional level.

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8.1.12 Given the re-contracting of the UKTS for 2006-on, the current uncertainty over GBDVS and the re-engineering of core ONS surveys following the Allsopp Review, there exists a unique opportunity for RDAs to influence the tourism statistical landscape in the UK. Equally, if this does not happen now, either through lack of resource or will, it is likely that the prospects for robust regional TSAs will not improve for a many years. 8.1.13 Following the above, the full involvement of the respective regional observatories in TSA development would be recommended, through the auspices of the Association of Regional Observatories (ARO; see para 8.2.2). The creation of new structures to take responsibility for tourism statistics is critical. There is general agreement that tourism has been (until 2001 at least) a fast growing UK (and international) sector, but this is not always reflected in the resources used to track its development. In particular, if there is movement towards a Tourism Statistics Unit as Allnutt suggests, then the nature of regional involvement in refining surveys, and developing resources should be quickly clarified. 8.1.14 The English RDAs and their tourism partners must address how far they have a common agenda with regard to improvements in the regional tourism statistical base. The consultation exercise undertaken in the current study highlighted very diverse priorities between different groups. For example, it is clear that some require less a statement of account regarding tourism activity in their regions, and others more a forecasting or impact model. An indication of potential use would best be gained through examination of their use in Wales (Jones et al 2003) and Scotland (Hayes and Boag, 2004) in the latter case including the development of timely indicators linked to GVA estimates. A thorough audit of regional user requirements of tourism statistics might then provide the basis for a common agenda, or the realisation that a common approach is inappropriate. The latter case will result in wasted resources, replication of research activity, and poor comparability of methods. 8.1.15 The existence of a common agenda does not imply there is a single way forward toward the development of tourism satellite accounts at the regional scale. As Section 8.2 following shows, there are a number of options, in terms of methodology and the division of responsibilities, each with its own strengths and weaknesses. However, irrespective of the method used to achieve the medium-term goal of fully developed accounts the immediate priority must remain the derivation of a new institutional structure to take forward the improvements suggested in the Allnutt Review of Tourism Statistics, and in this report. This enduring institutional structure must be as wide as possible including RDAs and other public bodies, the industry and academic stakeholder. Without clarity regarding responsibilities in this area, any marginal improvements to existing surveys will have a negligible impact on the long term prospects of TSA development.

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8.1.16 Throughout, this report has stressed that a developed TSA is not a tourism impact model, although a satellite account is a foundation for such analysis. The clear requirement for such tools stresses the need for improvements to/development of regional accounting and Input-Output frameworks, such that analysis of indirect impacts of visitor activity benefit not only from on an improved understanding of regional tourism activity, but also a better understanding of regional economic activity in general.

Recommendations in this report A proper regional stratification of the 2006 expenditure trailer of the International Passenger Survey Improvement to regional accounting structures and the development of survey-based regional Input-Output frameworks Improved sub-divisions of industries within the UK Input-Output framework Improvements to the methods employed in surveys such as UKTS, and any (replacement) day visitor survey in line with the Allnutt recommendations The imposition of new structures to take responsibility for national and regional tourism statistics Full involvement of the respective regional observatories in TSA development Thorough audit of regional user requirements of tourism statistics

Expected cost

Benefits in terms of regional TSA construction

Low

High

High (if survey based)

High

Low

High

Low

Medium

Low

8.1.17 Finally, the English RDAs should carefully consider the nature of the synthetic approach developed here (by Nottingham University) to produce an estimate of the main parameters in TSA Table 6, the reconciliation of tourism supply and demand. There are limits to this type of approach (mostly in adequately representing the different natures of English regional economies) but this method can be of use in the short term. The synthetic approach has the advantage of a common method and timely results and provides a useful indication of the critical tourism flows within a region. However, any detailed comparisons (for example of tourism productivity) across regions will remain problematic even if estimates of overall supply and gross consumption improve. As has been shown in countries such as Norway and Canada the allocative/synthetic approach is probably suited best to estimate headline totals for key variables â&#x20AC;&#x201C; although even here caveats remain16. For example the derivation of tourism value added requires detail on the production of tourism services by different industries; detail which is likely to default to the national average in any synthetic approach. Welsh Economy Cardiff Business 58 Research Unit School 16

Tourism Satellite Account – First Steps – English Regions

8.1.18 The synthetic approach has significant cost advantages, but even a synthetic/modelled approach requires the robust and correctly stratified tourism consumption and supply data that currently does not exist. The marginal costs in developing a more survey based TSA framework for the UK regions could be high. In some regions (such as Wales), the marginal cost of this approach is offset by the bespoke nature and policy-usefulness of the resulting account but this may not be the case in less tourism-dependent regions. The Welsh approach (to take the best developed regional example, probably globally) includes the following benefits;     

Bespoke survey of tourism providers to establish key parameters including labour use, import propensities, customer base etc. Disaggregation of sub-sectors to enable discrete policies (e.g. hotels, guest houses & non-serviced accommodation) Analysis of sub-sectors including productivity, occupational demand, profitability etc. Basis upon extant Input-Output tables enables impact analysis including economic multipliers for each sub-sector Useful starting point for sub-regional analysis

8.1.19 It is important to note that the Welsh experience shows TSA development to be incremental, long term and involved. However, it also shows that benefits and understanding can be achieved at points ‘along the path’ rather than being totally ‘end-loaded’. 8.1.20 Additional to the above, further developments in Wales are likely to include a tourism consumption survey to complement existing data and improve the usefulness of the TSA in guiding marketing/promotional spend, and in the longer term integration into a Welsh Environmental Satellite Account. 8.1.21 Figure 8.1 below provides a brief synopsis of the strengths and weaknesses of the synthetic and bespoke approaches. When considering Figure 8.1 it should be remembered that without detail from each individual RDA on the longer term uses of a TSA and without a detailed costing of each method one approach cannot be recommended above another (particularly as currently available data enable the robust construction of neither), except to say that a synthetic approach will always constitute a model of tourism economy in a region and never a ‘true’ account.

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Tourism Satellite Account – First Steps – English Regions

Figure 8.1 Synthetic and Bespoke Approaches to TSA development Synthetic approach Bespoke approach Strengths • Relatively lower Cost • Gives the best/truest picture of tourism economy in each region • Can be developed quickly • Provides the full range of TSA variables • Provides a small number of key indicators – clarity for policy • Enables detailed policy development (e.g. following productivity analysis) • Some use in advocacy • Internationally compliant & thus very • Flexible – can be adapted to best use useful for advocacy available data • Provides impetus for a more general improvement in regional economic statistics Weaknesses • Does not reflect differences in tourism • Costly, and necessarily a long term supply & demand in diverse regions process • Should not be used for detailed • Requires enduring institutional regional comparison structure • Difficult to assess size of standard • Requires improvement in economyerrors wide regional economic data • Non-transparent estimation methods • Requires allocation of supply & demand by indirect measures • Requires detailed modelling expertise • Cannot actually be characterised as a TSA in WTO/EUROSTAT guidelines

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Tourism Satellite Account – First Steps – English Regions

8.2 OPTIONS

FOR

ACTION

REGIONAL LEVEL

8.2.1 This report has established that TSA development is a process rather than a one-off event and this shapes the scenarios that the research team suggest for moving forward. In any case, there is a clear benefit in continuing to ally the regional TSA project with developments at the UK level. For example, we have suggested that for the UK, in the absence of any significant data re-engineering there may be value in revising the UK TSA in four or five years using similar methodologies as used for the First Steps report. If this is undertaken (and it should be remembered this is a ‘worst case’ scenario for the UK) there would be value in revising the synthetic regional accounts, if only to provide an up-to-date set of headline indicators, and to continue the impetus towards the development of ‘real’ accounts. It is unlikely that any account estimated in the future using a synthetic approach would be reliable enough to enable any sort of time-series analysis for individual regions. 8.2.2 There are three main development paths that the RDAs and their partners might follow. It is important to note that the following options would not operate in an institutional ‘vacuum’. Each English region has a regional observatory, charged with enabling access to key regional data and intelligence. Working on a range of economic, social, and environmental issues, they provide analysis of data and research, disseminate and widen access to intelligence and conduct research to fill data gaps. Any move toward regional TSAs would best be undertaken with the full cooperation of the observatories, probably through the forum of the Association of Regional Observatories. 8.2.3 UNIFORM APPROACH – This would be essentially a ‘top-down’ scenario whereby the English RDAs and their tourism partners establish a regional tourism statistics unit, which would set a common regional tourism statistics agenda, and provide a unified lobbying group to the ONS in London to improve the tourism statistical base as highlighted above. Such a unit could also co-ordinate the tourism statistics being collected by individual RDAs and work towards establishing best practice in new methods. As importantly, this unit might act to construct or commission survey based or synthetic TSAs, ensuring common methodological steps and definitions are taken, and working towards inter-regional, and international comparability. This unit could also construct/commission TSAs (and if appropriate) accompanying regional Input-Output frameworks, and work towards a standardised set of tourism industry indicators for the English regions. This approach would not extend to Wales and Scotland where better baseline statistics enable accounting far in advance of that in England.

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Tourism Satellite Account – First Steps – English Regions

8.2.4 DIVERSE APPROACH – Here each of the English RDAs would seek to create its own tourism statistics landscape. This would involve the identification of region-specific tourism priorities, and the tailor-made development of TSAs and associated tools to marry with these priorities. A development pattern here could be the creation of a regional tourism observatory (or as part of existing regional observatories), potentially involving experts from academia and industry. Such a unit could make best use of extant regional tourism statistics, develop regionally-specific surveys and bespoke analytical tools, and interpret results. 8.2.5 HYBRID APPROACH – There exists a de facto case in the UK of ‘multi-speed’ development of regional TSAs, with Scotland and Wales ahead of the English regions and Northern Ireland. Even in Scotland and Wales, the approach differs. There would be benefit in extending this approach to English regions, allowing those regions where tourism is particularly important to move towards bespoke accounts, whilst efforts continue through ARO and others to develop the ‘uniform’ approach that ‘leaves no region behind’. This approach is attractive and flexible. Also, the example of welldeveloped TSAs in some regions may be illustrative to others. However, it is not without dangers. If those regions with more interest and resource move ahead of others, care must be taken firstly, that the development of England-wide data and methods does not stymie; and secondly, that bodies such as ARO continue to push for data improvements at national level through ONS, DCMS and others. 8.2.6 STATUS QUO APPROACH – Clearly the fourth approach is to be passive, and rely on improvements that occur at the national level to filter down to improvements at regional level. This does have advantages in the short term where it may be possible to ‘free ride’ on the activities of ‘pathfinder’ agencies in terms of methodological development (this has happened to an extent as the Celtic nations have illustrated the options available to English Regions). However, this is costly in terms of not achieving a better accounting of tourism activity in the reference region, and with the added complication of marketing and planning resources being poorly focused – as is currently the case. 8.2.7 The strengths and weaknesses of the uniform and diverse approaches are summarised in Figure 8.2. The hybrid approach would seek to lever the best aspects of both, whilst avoiding the dangers outlined above and accepting the fact that some English regions are already seeking to develop TSAs in advance of England-wide developments. Thus the hybrid approach is recommended. 8.2.8 However, whichever approach is adopted adherence to WTO and EUROSTAT guidelines on the construction of national TSAs will provide a template that ensures that results are as comparable as possible.

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Tourism Satellite Account – First Steps – English Regions

Figure 8.2 Next Steps English Regions Uniform approach Diverse approach Strengths • Would improve general tourism • Regional tourism priorities statistics landscape in England addressed • Potential economies of scale and • Increases within-region capability scope in development and skills • Conduit for best development • Model has been shown to work for practice other areas of regional research (Wales, Scotland, South West) • Expertise focused • Local knowledge can be accessed • Effective lobbying group • Potentially easier to bring local • More easily get access to global industry and groups on board expertise • ‘Political’ problems minimised • Common methods for regionalising UK data, common sets of indicators and tables • Stronger leverage in commissioning expert research • Potentially quick results if will is there • Inter-region comparability possible • More likely to conform to international WTO standards Weaknesses • Single speed model • Loss of economies of scope and scale • Who contributes what? • Inter-regional comparison limited • Agreement of priorities could be • Lack of common conceptual complex development • Possible resistance from DTI and • Requires a long term commitment ONS across a number of agents • Top down paradigm setting (one approach fits all) • May be difficult to involve regional tourism industries in development

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Tourism Satellite Account – First Steps – English Regions

8.3 CONCLUSIONS 8.3.1 As this report has shown, the statistical resources required to construct robust and policy-relevant TSAs for the English Regions do not exist. Moreover, fragmented responsibilities for the collection of tourism statistics, the non-central involvement of the Office for National Statistics and the low level of resources allocated at national level to this area means the production of regional tourism satellite accounts – or indeed any accounting, forecasting or impact tools – which are reliable at regional level is unlikely should this situation persist. 8.3.2 In the short term, then, English RDAs should seek to influence these institutional (and hence statistical) structures to make the collection of tourism (expenditure and supply) data more coherent, focussed on specific goals and central to the collection of economic statistics more generally. 8.3.3 It is perfectly possible that the status quo at national level will persist for some time, particularly if greater levels of resource for the collection of tourism statistics are not forthcoming. In this case, RDAs must decide whether and how to pursue a strategy which will enable an accounting and understanding of the tourism economy in regions. There are a number of options, varying in cost, quality, timescale and flexibility. This report has outlined several, whilst providing an indication (through the synthetic modelling) of the nature of TSA outputs. 8.3.4 Further guidance can be found in the actions of the Scottish Executive and Wales Tourist Board17. It is crucial to reiterate again the significant scale and scope economies which would arise from a coordinated effort by RDAs in England towards the improvement of statistics regarding the tourism economy, and indeed of regional economies more generally. Further, there is an opportunity to create a consistent set of accounts for each region which adds to the UK account. Here, the economies of scale and scope in developing suitable UK wide data sources would be more significant still, although without the existence of English regional Input-Output Tables, methodological approaches (and levels of accuracy) would continue to differ. 8.3.5 In conclusion, then, it can be seen that the creation of fully comprehensive and robust tourism satellite accounts for the English Regions will be resource intensive and will require a focussed and coordinated approach on the part of a variety of agencies. The full policy benefits of the construction process would probably not be realised for a number of years, although in the interim modelled or synthetic accounts can provide valuable insight should data accuracy and reliability improve.

The background to Celtic developments is too detailed to replicate here but is referenced as Jones et al (2003) and Hayes and Boag (2004) Welsh Economy Cardiff Business 64 Research Unit School 17

Tourism Satellite Account â&#x20AC;&#x201C; First Steps â&#x20AC;&#x201C; English Regions

8.3.6 The alternative is the continued allocation of tourism and visitor-related resources (and the derivation of related public policy) based upon a wholly inadequate or ad hoc evidence base, and upon anecdote and instinct. It is our feeling that, given the pressing need of regions (including London) for a better understanding of the tourism economy and based on the results of the RDA consultation process, a uniform approach that satisfies all regions in an unrealistic outcome. Thus, we suggest that the moves of pathfinder regions towards TSAs be co-ordinated by, or at the very least reported to and benefit form input from, umbrella bodies such as ARO. 8.3.7 Figure 8.3 following provides some indication of the most important steps that can be taken with immediate effect to promote TSA regional development. These actions mostly have little or no cost implications.

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Tourism Satellite Account – First Steps – English Regions

Figure 8.3 Immediate Actions Towards Regional TSAs for English Regions Step Notes ‘External’ Actions Representations to ONS on Of key importance to TSA development, both commodity expenditure breakdown by region and 2006 IPS Trailer Regional extension of sampling points to include (e.g.) more stratification regional airports. IPS expenditure trailer will probably not be repeated for a number of years, so this is an important opportunity. Involvement in Contracting Currently regional data in UKTS is limited in scope and unreliable. RDAs should quickly integrate themselves of 2006-on UKTS into the process of contracting, even if this means a contribution to costs. ONS have in general accepted the results of the Allsopp Request a statement from ONS on Allnutt and Allsopp Review, and reacted positively to the Allnutt Review. It would be useful for RDAs to understand the likely timescale and scope of consequent improvements to regional ONS data. This would be of more general use than the TSA project. RDAs cannot give proper consideration to whether to Explore the nature of any develop bespoke consumption data until they GBDVS Replacement understand what will be generally available through Survey other sources. Given the importance of day-visits to most regions, RDAs should immediately resolve the status of the GBDVS, and the scope and outputs of any replacement. ‘Internal’ Actions It is important that the contents of this report be Report Dissemination disseminated as soon as possible and responses to it collated. Importantly, soundings should be taken as to the appropriateness of approaches outlined in 8.2.3 – 8.2.6. RDAs should identify how much money is likely to be Audit of Tourism available over the short and medium term to support Statistical Resources improvements to tourism data, for example through (financial) one-off and bespoke surveys as in the NW, for support of a regional agent, or for common resourcing of core assets. The level of resource will have implications for appropriate actions. RDAs should consider how far existing available staff Audit of Appropriate can technically support the development of regional Human Capital TSAs, be these economists or statisticians. This should, of course, include an audit of the expected role and resources of Regional Observatories. Either individually or together, RDAs should investigate Audit of Higher Education how far the HEIs in each region could help support TSA Institutions development through joint working.

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Tourism Satellite Account – First Steps – English Regions

SELECTED REFERENCES

AND SOURCES:

GENERAL

Allnutt D. (2003) Tourism Statistics Improvement Initiative: Review of Tourism Statistics: Draft report for the consideration by the Steering Committee, December. Australia Bureau of Statistics (2003) Framework for Australian Tourism Statistics 9502.0.55.001 HREF="http://www.abs.gov.au/" MACROBUTTON HtmlResAnchor www.abs.gov.au Barber-Dueck, C. and Kotsovos, D (2003) The provincial and territorial tourism satellite accounts for Canada HREF="http://www.canadatourism.com/" MACROBUTTON HtmlResAnchor www.canadatourism.com Braendvang et al (2001) Regional Impacts of Tourism in Norway: Regional Satellite Accounting for Tourism as a basis for Regional Input-Output Modelling European Regional Science Association Annual Congress, Zagreb 2001 HREF="http://www.ersa.org/" MACROBUTTON HtmlResAnchor www.ersa.org Bureau of Economic Analysis (2004) Industry Economic Accounts: Travel and Tourism HREF="http://www.bea.gov/bea/dn2/home/tourism.htm" MACROBUTTON HtmlResAnchor http://www.bea.gov/bea/dn2/home/tourism.htm DCMS (Department of Culture Media and Sport, 2004), First Steps Tourism Satellite Accounts Project, report by Cardiff Business School. EUROSTAT, OECD, UN & WTO (2001) Tourism Satellite Account: Recommended Methodological Framework HREF="http://www.world-tourism.org/" MACROBUTTON HtmlResAnchor www.worldtourism.org EUROSTAT (2003) European Implementation Manual on Tourism Satellite Accounts HREF="http://europa.eu.int/comm/eurostat" MACROBUTTON HtmlResAnchor http://europa.eu.int/comm/eurostat Jones C., Munday M. and Roberts A. (2003) Regional Tourism Satellite Accounts: A Useful Policy Tool? Urban Studies, Vol. 40, No. 13, 2777–2794 C. Jones & M. Munday (2004) Evaluating the economic benefits from tourism spending through Input-Output frameworks: issues and cases, Local Economy, May. Laimer and Smeral (2001) A Tourism Satellite Account for Austria. The Economics, Methodology and Results Statistik Austria and WIFO, Vienna, 2001 McDougal (1999) Entropy and RAS are Friends. GTAP Working Paper no. 6. www.gtap.org McNicoll I (2004) Issues arising concerning the treatment of “ Business Tourism” in a UK Tourism Satellite Account. A Briefing Paper Department for Culture, Media and Sport HREF="http://www.culture.gov.uk/" MACROBUTTON HtmlResAnchor www.culture.gov.uk McNicoll I, and McLellan D. (2004) The Employment module in the Initial UK Tourism Satellite Account: Methodological Issues and Empirical Estimation Department for Culture, Media and Welsh Economy Cardiff Business 67 Research Unit

School

Tourism Satellite Account – First Steps – English Regions Sport HREF="http://www.culture.gov.uk/" MACROBUTTON HtmlResAnchor www.culture.gov.uk Meis S. (1999) The Canadian Experience In Developing And Using The Tourism Satellite Account World Conference on the Measurement of the Economic Impact of Tourism Nice, France, June 15-18, 1999 HREF="http://www.wto.org/english/tratop_e/serv_e/nicepaper_e.pdf" MACROBUTTON HtmlResAnchor http://www.wto.org/english/tratop_e/serv_e/nicepaper_e.pdf OECD (1991) Manual on Tourism Economic Accounts HREF="http://www.oecd.org/" MACROBUTTON HtmlResAnchor www.oecd.org Office for National Statistics (2002) UK Input-Output Supply and Use Tables for 2000 HREF="http://www.statistcs.gov.uk/" MACROBUTTON HtmlResAnchor www.statistcs.gov.uk Office for National Statistics (2002) UK Input-Output Tables for1990 HREF="http://www.statistcs.gov.uk/" MACROBUTTON HtmlResAnchor www.statistcs.gov.uk Robinson, S., Cattaneo, A. and El-Said,M. (2001) “Updating and Estimating a Social Accounting Matrix Using Cross Entropy Methods”, Economic Systems Research 13(1):47-64. Hayes, C and Boag, C (2004) “Development of a Tourism Satellite Account for Scotland” in Scottish Economic Statistics 2004 pp12-28 Edinburgh: Scottish Executive Siddiqi, Y and Salem M (2002) Constructing Regional Input-Output Accounts: The Recent Canadian Experience 14th International Conference on Input-Output Techniques, Montreal, October 10-15, 2002 Statistics New Zealand (2004) Tourism Satellite Accounts - Reference Reports HREF="http://www.stats.govt.nz/" MACROBUTTON HtmlResAnchor http://www.stats.govt.nz Sultana, M, paper on Maltese TSA development presented at WTO (2003) Workshop on Tourism Satellite Accounts, Bucharest, Romania. Wilton David (1998) Recent Developments in Tourism as Revealed by the National Tourism Indicators Canadian Tourism Commission, Research report 1998-1 HREF="http://www.canadatourism.com/" MACROBUTTON HtmlResAnchor www.canadatourism.com WTO (2003) Workshop on Tourism Satellite Accounts, Bucharest, Romania November 2003

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Tourism Satellite Account – First Steps – English Regions

Appendix 1 English Regional Tourism Satellite Accounting (TSA) Consultation Forum Friday 27 February – 11.00 to 15.00 Advantage West Midlands offices Attendees Adam Godfrey, Strategy and Development Executive, South West Tourism Alan Searle, Sector Group Manager Tourism, Transport, Logistics & Media, SEEDA Catherine Flynn, Research Manager, Northumbria Tourist Board David Friesner, Head of Tourism Development, Leicester Shire Promotions Limited George Ashford, Senior Research Officer, East of England Tourist Board Jayne Young, Marketing Manager, Lincolnshire Tourism John Sargent, Tourism Cluster Manager, ONE Katie Huane, Sector Adviser, EEDA Louise Davis, Tourism Manager, YF Liz Robertson, Tourism and Culture Policy Adviser, EMDA Marion Nixon, Tourism Manager, Derby City Council Michelle Reeves, Strategy Development Advisor, LDA Nicola Rollason, Tourism Policy Officer, EMDA Nigel Jump, Economist, SWRDA Nigel Russell, Head of Research and Development, Visit Heart of England Paul Haydon, Researcher, South West Tourism Paul Hemphill, Promotions and Marketing Officer, Northumberland County Council Phil Reddy, Tourism Strategy Manager, NWDA Roger Allonby, Business Development Manager, Regional Centre for Tourism Business Stephen Mills, Tourism Consultant, SEEDA Trevor Cornfoot, Head of Tourism Development, AWM Sonia Davies, Research Officer, Peak District National Park Authority David Calway, Cumbria Tourist Board Nicola Christie, Northwest Regional Intelligence Unit Catriona Hayes, Office of the Chief Economic Adviser, Scottish Executive

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Tourism Satellite Account – First Steps – English Regions

Appendix 2 – Tourism Data Collection in English Regions: Results of Consultation Data Source/Title

Visitor Spending in the North West Adult and Youth Participation in Sport and the Arts in the North West Regional Occupancy Surveys Business Barometer UK Occupancy Survey Visitor Attraction Monitor How’s Business? Survey Ad Hoc Client Research Self-catering Occ Survey Caravan & camping Occ survey Various Visitor Surveys TRIPS (onenortheast) Tourist Information Centres – visit no. STEAM

From Aug 2004

Ad Hoc

Coverage (eg region, county, LA etc) County

From Aug 2004

Ad Hoc

County

Yes

Region/LA

Yes, but…

Jan 2004 Current Current

On-going/ Monthly Quarterly Monthly Monthly

Region Town Town

Yes Yes Yes

Current

Quarterly

Region

Yes

Current

On-going

Firm

2003/04

Yes but…

2002

Depends on region Annual/ad hoc

Yes but..

1995-2003

Ad hoc

By destination

On-going Monthly

district

Permission Needed Yes Yes

Annual

Culture 10 programme Impact Report NW Visitor Spending Adult/Youth Participation in Sport and the Arts in the NW

2003?

Northumberlan d/Durham Tyne/Wear

Welsh Economy Research Unit

Latest Date Available

Frequency (eg annual, ad hoc)

Ad hoc

Can you share access? Yes

No No

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Tourism Satellite Account – First Steps – English Regions

Appendix 3 - UK TSA First Steps Overarching Recommendations Summary Managing expectations

Recommended need to carefully manage expectations based on the pilot TSA framework produced, and need to take forward the main survey and data priorities, whilst maintaining the proactive interest of the key institutions in the context of the very real difficulties of construction.

Investigating user needs

Recommended that there is an active investigation into which organisations will (or might) use the pilot UK TSA including government, academia, business and other users.

Future TSA iterations

Recommended no further iteration of the UK TSA until key survey data is improved, with a core element of the TSA next steps needing to work on key elements of the Allnutt Review of Tourism Statistics to examine what data and surveys can practically be improved and at what cost. Were statistical base for TSA estimation not improved significantly, then recommended a re-estimation of the key TSA tables in 4-5 years. This reestimation would benefit both from a more fully developed conceptual model as EUROSTAT and WTO take forward the TSA project, and from the ‘learning’ undertaken during the estimation of this First Steps TSA.

Involvement of ONS

Recommended that in the short-term next steps TSA developments include ONS personnel on the project team, rather than simply as ‘observers’ on the steering committee. In the longer term, and assuming ONS cannot take the lead on TSA development, further iterations of the UK TSA should be constructed by the Tourism Statistics Unit proposed in the Allnutt Review, in close consultation with ONS.

Membership of World Tourism Organisation

Recommended examining case for UK membership of World Tourism Organisation, with such membership benefiting future TSA development. More generally stressed need to learn from international TSA developmental experience, and potential value of collaboration of statistical and methodological development.

Data recommendations

Recommended that a number of key points from Allnutt review should be investigated. In particular with respect to facilitation of further TSA development: Review of practicality, costs and benefits of making UKTS and DVS part or not part of Continuous Population Survey; Identification of resources available to maximise the sample and size of improved UKTS and DVS; Evaluation of the use of diaries for collection of UKTS and LDVS data;. Review of questionnaire content of UKTS and DVS; Maximise extent to which IPS analyses adopt UKTS/EU definitions, and evaluation of differences between UKTS and IPS definitions. Extend LDVS to cover business tourism trips Identification of resources available to fund expenditure trailer in IPS Ensure production of best possible regional input-output tables

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Tourism Satellite Account â&#x20AC;&#x201C; First Steps â&#x20AC;&#x201C; English Regions Data recommendations

Welsh Economy Research Unit

Recommended development of a separate UK Tourism Spending survey. A complete re-engineering of tourism spending statistics needed to be considered at an early stage of the TSA development process. Given uncertainties over future iterations of GBDVS the separation of tourism expenditure surveys from attitudinal surveys must be considered urgently. Where this was not possible recommended that spending classifications, concepts and definitions across the main UK tourism surveys should be matched.

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