TOUR1004

Economics for
Tourism, Hospitality &
Events

Week 7
The Economic Contribution
of Tourism

Dr Ya-Yen Sun
UQ Business School
Part 2: Tourism in the economy

Macro-economics
1. The economic contribution of tourism
2. Economic evaluation – Events
3. Tourism and the environment
Outline of today’s lecture
Economic contribution of tourism
q Global
q Australia

Things you lean – how to read the national/regional/city level

tourism satellite account report

This is important because it helps us to evaluate

• the performance of national / state/ city tourism
• job opportunities/ potential to the future
• understand some macro changes of tourism business
Outline of today’s lecture
Economic contribution of tourism
q Global
q Australia

Things you lean – how to read the national/regional/city level

tourism satellite account report

This is important because it helps us to evaluate

• the performance of national / state/ city tourism
• job opportunities/ potential to the future
• understand some macro changes of tourism business
Let us define the term first
• Economic contribution
Tourism economic significance, it refers to the contribution
that tourism-related spending makes to key economic
variables such as gross domestic product (GDP), gross
value added, household income, foreign exchange earnings,
and employment.

GDP,

$ GVA,
foreign earnings,
jobs
At the global level

Why tourism matters!

Source UNWTO
1.4 billion
international
visitors in 2018,
two years ahead of
forecast

Annual growth rate

is about 4~5 %

Source: UN World
Tourism Organization
QUIZE time
In 2017,
1. Top 3 countries that spend the most at foreign destinations?
(China, USA, Germany)
2. Top 3 destinations that receive most international arrivals?
(France, Spain, USA)

3. Top 3 destinations that receive most tourism earnings?

(USA, Spain, France)
4. The proportion of domestic tourism spending vs. international tourism
spending?
(71% vs. 29%)
5. Average annual growth rate expected for the international tourism to
2030
(3.3%)
Source: UN World Tourism Organization (https://www.e-unwto.org/doi/pdf/10.18111/9789284419029 )
How to map out tourism in Australia
FIGURE 1: THE GROWTH RATE OF
TOURISM, 2000–01 TO 2016–17

• Tourism is very sensitive to outside shocks!

• Tourism grow faster than the AU economy in
the past 3 years
Tourism in
Australia in
2018-2019

Source: Tourism
Research Australia
Key indicator 1
DOMESTIC CONSUMPTION IS
OUTPACING INTERNATIONAL
CONSUMPTION

• Among domestic tourists, the main

items of spend were transport (33
cents of every dollar spent) and
accommodation and food services
(29 cents).

• For every dollar spent by international

visitors, 25 cents was spent on
accommodation and food services, 20
cents on education, 18 cents on
transport.
KEY TOURISM CONSUMPTION PRODUCTS – DOMESTIC
AND INTERNATIONAL VISITORS 2018–19
Key indicator 2
TOURISM GROWTH IS
OUTPACING THE WIDER
ECONOMY
• In 2018–19, GDP from tourism was $60.8
billion, an increase of 6.0% on 2017–18.

Concepts
• Definition of GDP
https://www.youtube.com/watch?v=mjJ
mo5mN5yA

• Nominal GDP: GDP evaluated at current market

prices, including inflation or deflation.
• Real GDP: a macroeconomic measure of the
value of economic output adjusted for price
changes (i.e., inflation or deflation).
Please consider following scenarios and think about whether
they contribute to the Australia GDP
Answer
1 Visitor spend $ 1000 flying American Airline from Hawaii to Brisbane No

2 Visitor spend $ 1000 flying Qantas Airline from Hawaii to Brisbane Yes

3 Visitor spend $ 100 in Hilton Hotel in Brisbane that is owned by an Yes

American company

4 Visitor spend $ 100 in Ibis Hotel in Brisbane that is owned by an Yes

Australia company
Key indicator 3

Concepts

• GVA = GDP + subsidies - taxes

• This is the indicator that is used to

rank the economic importance of
tourism to other sectors.
Key indicator 4
TOURISM IS AUSTRALIA’S FOURTH
LARGEST EXPORT EARNER
• tourism exports = 39.1 billion
• Tourism imports = 58.3 billion
• Tarde deficit = 19.2 billion

Concepts
• Tourism imports = expenditure of outbound
tourism = a leakage of earnings
• Tourism exports = expenditure of inbound
tourism = bring in new money = earnings of
foreign receipts
• Balance of Trade = exports - imports
Australians
spending abroad

Foreigners spending
in Australia
Key indicator 5
• Tourism job is mostly female (54%),
compared to the workforce as a whole (47%).

• Tourism also has a high proportion of part-

time workers (48%), compared with the
national workforce (31%).

• Over the last 10 years, the 66% growth in

tourism GDP has been far higher than the
26% growth in tourism hours worked -
improvements in productivity. Reasons for
these improvements include increased use of
automated booking and check-in services,
more efficient payment platforms, and the
take up of new technologies.
Tourism Satellite Accounts

• UN standards now include Tourism Satellite Accounts

(TSA) that separately define a tourism sector
Tourism Satellite Accounts

TOURISM SATELLITE ACCOUNT 2016-17

REGIONAL DATA: LINK

What you can do with TSA

• Look up the absolute size of the tourism industry for

the country, state, region
• Look up absolute size of GDP, employment etc.
• Compare across regions, industries
• Monitor trends across time
• Describe the ‘tourism characteristic’ industries (>25% of
their sales is contributed by tourists)

“Tourism characteristic industries are defined as those industries that would

either cease to exist in their present form, or would be significantly affected if
tourism were to cease” Australian Bureau of Statistics
Let’s do a quick exercise
Please work with your classmates sit next to you, and
allocate answers for the following questions for Brisbane.

1. How much visitors spent in Brisbane last year?

2. How much foreigners has contributed to total tourism spending?
3. Which are the top 2 sectors that receive the most of the GVA from
tourism?
4. How many people are employed in the tourism industry in Brisbane
last year?
5. And what is the percentage of part-time employee in the Brisbane
tourism industry?

REGIONAL TSA DATA: LINK

Let’s look at the infographics of
Brisbane TSA

Additional information:

1. Gross regional product (GRP)

= regional GDP

2. Direct and indirect effect?

Link
Money flows through the
economy
i. Direct effects: Direct effects are economic changes in those
business or agencies that directly receive the visitor
spending.

ii. Indirect effects: Economic changes from industries that

supply goods and services to the business that sell directly
to the visitors.

iii. Induced effects: Economic changes in the region resulting

from employee income.
 Spending at hotels will support
other business & firms

Direct effect Indirect effect

e.g., $15000 hotel revenue from e.g., $100 for telephone, $50 for hair dryer,
visitors per room per year $100 for stream iron……..
 Visitor
consumption
Direct effects

Hotel Retailing

Restaurant
Jobs & wages

Indirect effects
Induced effects

Suppliers
Money flows through the
economy
Direct contribution = direct effect

Total contribution = direct + indirect effect

OR
Total contribution = direct + indirect + induced effect

Be careful when you read these figures as they may represent

different scopes (impacts).
Be careful in interpretation

Direct, indirect and

induced impact
Different impacts reported

For Australia
1. National TSA reports “Direct effects”

2. Regional TSA reports “Direct + Indirect effects”

For Global tourism impacts (by UNWTO and WTTC)

1. Tourism economic impacts report “Direct + Indirect + Induced effects”
Important Economic Indicators from
TSA

• Gross Domestic Product (GDP) = Value of final goods and services

produced in the country in a year
• Gross Value Added (GVA) = GDP minus net taxes or subsidies
• Tourism employment = Number of persons employed in directly
providing goods and services to tourists
• Tourism expenditure/consumption = aggregate of tourists’ spending
during trips
• Tourism exports = money into Australia from international tourists
How to use this TSA information

Career Consumer Government

• Career • What do they • Trace changes

planning spend • Design policy
• (location, • Where do they
sector, growth spend
potential)
TOURISM BUSINESSES IN
AUSTRALIA: JUNE 2014 TO 2019
• https://www.tra.gov.au/data-and-research/reports/tourism-
businesses-in-australia-june-2014-to-2019/tourism-
businesses-in-australia-june-2014-to-
2019?utm_medium=email&utm_source=Tourism+Matters
+Newsletter&utm_campaign=Tourism+Businesses+in+Au
stralia+-+2019
Leakages
• Leakages occur when part of the incremental demand
generated by tourism and the consequent earnings, rather
than being retained by the economy visited, are
appropriated by other economies in the form of imports of
goods and services to cater to the needs of tourists, or
through other forms of distribution and redistribution of the
primary income generated by the spending of visitors
Reading for Week 7

Tourism Satellite Accounts

– Tribe J. 2011, Chapter 12, page 279-285
– Dwyer et al. 2010, Chapter 7, page 246-256 (section 7.3)
Tourism Satellite Accounts
National State Regional

https://www.tra.gov.au/Economic-analysis/economic-value
What you can do with TSA

• Look up the absolute size of the tourism industry for

the country, state, region
• Look up absolute size of GDP, employment etc.
• Compare across regions, industries
• Monitor trends across time
Let’s do a quick exercise
Please allocate answers for the following questions for
Brisbane.

1. How much visitors spent in Brisbane in 2017/2018?

2. How much foreigners has contributed to total tourism spending?
3. Which are the top 2 sectors that receive the most of the GRP from
tourism?
4. How many people are employed in the tourism industry in Brisbane
last year?
5. And what is the percentage of part-time employee in the Brisbane
tourism industry?

REGIONAL TSA DATA: LINK (SELECT QLD, AND THEN BRISBANE)

Answers are here!
About Brisbane TSA

Additional information:

1. Gross regional product (GRP) = regional GDP

2. Direct and indirect effect?

Money flows through the
economy
i. Direct effects: Direct effects are economic changes in those
business or agencies that directly receive the visitor
spending.

ii. Indirect effects: Economic changes from industries that

supply goods and services to the business that sell directly
to the visitors.

iii. Induced effects: Economic changes in the region resulting

from employee income.
 Spending at hotels will support
other business & firms

Direct effect Indirect effect

e.g., $15000 hotel revenue from e.g., $100 for telephone, $50 for hair dryer,
visitors per room per year $100 for stream iron……..
 Visitor
consumption
Direct effects

Hotel Retailing

Restaurant
Jobs & wages

Indirect effects
Induced effects

Suppliers
Money flows through the
economy
Direct contribution = direct effect

Total contribution = direct + indirect effect

OR
Total contribution = direct + indirect + induced effect

Be careful when you read these figures as they may represent

different scopes (impacts).
Be careful in interpretation

Direct, indirect and

induced impact
Different impacts reported

For Australia
1. National TSA reports “Direct effects”

2. Regional TSA reports “Direct + Indirect effects”

For Global tourism impacts (by UNWTO and WTTC)

1. Tourism economic impacts report “Direct + Indirect + Induced effects”
REVIEW
Important Economic Indicators from
TSA

• Gross Domestic Product (GDP) = Value of final goods and services

produced in the country in a year
• Gross Value Added (GVA) = GDP minus net taxes or subsidies
• Tourism employment = Number of persons employed in directly
providing goods and services to tourists
• Tourism expenditure/consumption = aggregate of tourists’ spending
during trips
• Tourism exports = money into Australia from international tourists
How to use this TSA information

Career Consumer Government

• Career • What do they • Trace changes

planning spend • Design policy
based on • Where do they
information of spend
location,
sector and
growth
potential
Reading for Week 7

Tourism Satellite Accounts

– Tribe J. 2011, Chapter 12, page 279-285
– Dwyer et al. 2010, Chapter 7, page 246-256 (section 7.3)