Seminar of Quantitative Methods for Economics and Business 2"4/3r4 year, Degree inTourism ¥ semester PART I. STATISTICAL DAT SOURCES & Gniversidad de Huelva Uae ee MRR me UCI) Dr. Ramén Jiménez-Toribio Dr. David Castilla-Espino Unit 1. Tourism and its units of analysis 1.1. The heterogeneity and the complexity of tourism 1.2. The homogenization of concepts related to the tourism sector 1.3. The variables that measure activity in the tourism sector from the point of view of demand and supply1.1. The heterogeneity and the complexity of tourism DEFINITION: Tourism: It can defined as the activities undertaken by people travelling and staying in different places outside their usual environment for a consecutive period of time which is less than one year for leisure, business or other reasons. PROBLEMS: a) All people travelling can not be considered tourists and, consequently, all trips are not touristic. b) There are a large number of economic activities covering needs of tourists and non-tourists simultaneously. 1.1. The heterogeneity and the complexity of tourism We aim to answer questions such as: + Is a tourist a person who is in transit at the airport of a city? + Can a person who travels to a country which is different from their habitual residence for a stay longer than one year be considered a tourist? * Can a person who takes a quick trip to a city without an overnight stay be considered a tourist? + Regarding travel agent's sales, can they be attributed only to tourism revenues? *Concerning the product demand by customers of a supermarket in a touristic town, can it be completely considered tourist?1.1. The heterogeneity and the complexity of tourism DEFINITION: Tourism goods and services: They are those which are intended to meet the needs of visitors who go to a particular country or region. They can be classified as follows: a) Purely tourist or primary goods and services. b) Secondary or complementary goods and services. c) Indirect or intermediate activities and services. 1.1. The heterogeneity and the complexity of tourism This classification is based on the degree of dependence on tourism in each tourist good and service: a) Purely tourist or primary goods and services: They entirely depend on tourism. For example: travel agencies, hotels, car hire. b) Secondary or complementary goods and services: They partially depend on tourism. For example: catering, laundries. c) Indirect or intermediate activities and services: They are the ones which depend on tourism indirectly. For example: planning offices, universities, tourism schools, insurance services, accounting services, consulting services, management and promotion services (both public and private), photography services, financial services, retail, etc.1.1. The heterogeneity and the complexity of tourism It is noted that there may be fewer difficulties to account for tourism activities, goods and services in purely tourist goods. However, there are many more problems in other kinds of goods that are not only intended to meet the needs of visitors. The availability of reliable information is essential for entrepreneurs, researchers, policy-makers, planners, citizens, tour operators, etc. 1.1. The heterogeneity and the complexity of tourism The collection of information about the tourism sector is not easy because it is affected by other problems (Smith, 1993): + Difficulty of credible measures to describe the magnitude and impact of tourism on the economy. + Fragmentation and lack of organization in tourism. * Considerable variations of the tourism phenomenon depending on location and diversity of geographic sizes. + Difficulty to predict in the medium and long term because of the great dynamism of the sector and the exposure to sudden changes (changing tastes, wars, etc.). * Great diversity in the sector, which leads to wonder if tourism is truly a sector or a group of sectors.1.1. The heterogeneity and the complexity of tourism SOLUTION TO SOME OF _ THESE PROBLEMS: Suitable methodologies for data collection and data analysis have been suggested. These methodologies follow a strategy to homogenise definitions and classifications. 1.2. The homogenization of concepts related to the tourism sector THE NEED TO STANDARDISE DEFINITIONS Currently, it is generally recognised the need to work with standard definitions in any field of study. Nowadays, in the case of tourism, working with the definitions recommended by the WTO is widespread practice, though it is not universal. After a long process, this recognition has been reached. In this regard, the first step was the development of the recommendations made in 1937 by the Committee of Statistical Experts of the League of Nations. At that time, the first definition of international tourist was established.1.2. The homogenization of concepts related to the tourism sector DEFINITION: International tourist: A person who visits a country which is different from his habitual residence for more than twenty four hours. This general definition does not solve the problems which arise from the complexity of the tourism phenomenon. 1.2. The homogenization of concepts related to the tourism sector Technical Handbook on the Collection and Presentation of Domestic and International Tourism Statistics (WTO, 1981) * This handbook provides the definition of “international visitor" and the specification of people who are not considered international visitors. + It makes clear the distinction between excursionist and tourist. *A high degree of detail is achieved in tourism definitions.1.2. The homogenization of concepts related to the tourism sector Milestones in the 90s: *International Conference on Travel and Tourism Statistics held in Ottawa in June 1991, organized by WTO and the Government of Canada. + The Report on Tourism Statistics of the WTO, approved by the Statistical Commission of the United Nations in 1993. * The Standard International Classification of Tourism Activities (SICTA) is adopted. In recent years, the EU has also developed a policy on collecting information for tourism statistics. 1.2. The homogenization of concepts related to the tourism sector FROM THE DEFINITION OF TRAVELLER TO THE ONE OF TOURIST DEFINITION: Traveller: Any person who travels between two or more different countries or between two or more locations within their country of habitual residence. DEFINITION: Visitor: Any person who travels to a place other than their usual environment for less than twelve months and the main purpose of the trip is not to carry out an activity which is paid in the place visited.1.2. The homogenization of concepts related to the tourism sector Who does the tourism activity? The visitor. All travellers are not considered visitors. There are three remarkable characteristics related to displacement in the definitions of tourism and visitor: 1. It must be for a period of time which is less than a year. 2. It must be outside the habitual residence. 3. It must be because of leisure, business or work (which is not paid at the destination), etc. 1.2. The homogenization of concepts related to the tourism sector Table 1. Characterisation of travellers Characteristics Visitors Other travellers Geographical area of displacement Outside the usual environment: + Certain minimum travel distance. + Certain minimum length of absence. + Certain change of location. + Within the territorial unit of residence. + Outside the territorial unit of residence, + Border commuting for work or studies. Time frame of displacement ~Less than a year. jore than a year, + Daily Reason = Leisure, + Medical treatment. + Religious. + Family + Sports. + Business or work without being paid at the destination. * Return to the country for temporary visits. + Movements of employees of international organisations. + Labour migration + Paid work at the destination, + Diplomatic and military movements + Movements of refugees and nomads.1.2. The homogenization of concepts related to the tourism sector DEFINITIONS: Resident: A person who stays ina country or a place most of the year. Tourist: A visitor who stays at least one night in the place visited. Excursionist: A visitor who does not stay overnight in the place visited. DEFINITIONS: Domestic economic activity: It is done within the borders of a country both by its residents and non- residents. National economic activity: It is done by residents of a country within its borders or outside them. 1.2. The homogenization of concepts related to the tourism sector DEFINITIONS: Domestic tourism: It is developed by residents of a country travelling within their country. Inbound tourism: It is developed by non-residents travelling within a given country. Outbound tourism: It is developed by residents of a country travelling to another country. These categories can be grouped as follows: Internal tourism = Domestic tourism + Inbound tourism National tourism = Domestic tourism + Outbound tourism International tourism = Inbound tourism + Outbound tourism1.2. The homogenization of concepts related to the tourism sector DEFINITION: Trip: It is something taken every time an individual or a group leave their habitual residence for one or more reasons, go a certain distance to visit one or more locations with one or more means of transport and return to their habitual residence. DEFINITION: Holiday trip: It is a trip whose main purpose is leisure and includes four nights at least. 1.2. The homogenization of concepts related to the tourism sector Trip characteristics that are interesting for tourism analysis and frequently allow us to consider the tourism market segmentation are: the duration, the period or season when the trip is taken, the mean of transport, the price, the distance travelled, the motivation, the type of accommodation.1.2. The homogenization of concepts related to the tourism sector STANDARD INTERNATIONAL CLASSIFICATION OF TOURISM ACTIVITIES (SICTA) DEFINITION: Standard classification of activities: It consists of the classification of all economic activities in a comprehensive and coherent way, so that there is no possible ambiguity. In other words, each activity has a unique place in the classification. Globally, two classification systems to highlight are: + The International Standard Industrial Classification of all Economic Activities (ISIC). + Statistical Classification of Economic Activities in the European Community (NACE). 1.2. The homogenization of concepts related to the tourism sector Table 2. Activities in the top level of ISIC ‘A Agriculture, forestry and fishing B Mining and quarrying © Manufacturing D Electricity, gas, steam and air conditioning ‘supply E Water supply: sewerage, waste management and remediation activities F Construction & Wholesale and retail trade: repair of motor vehicles and motorcycles H Transportation and storage T Accommodation and food service activities J Information and communication K Financial and insurance activities L Real estate activities 'M Professional, scientific and technical activities N Administrative and support service activities © Public administration and defence: compulsory social security P Education Q Human health and social work activities R Arts, entertainment and recreation $ Other service activities T Activities of households as employers: undifferentiated goods- and services-producing activities of households for own use U Activities of extraterritorial organizations and bodies1.2. The homogenization of concepts related to the tourism sector Table 3. Section I: Accommodation and food service activities PT Name Percentage | Purchases of sales to| to tourism tourism T Accommodation T Hotels and motels with restaurant H M T | Hotels and motels without restaurant H M T | Hostels and mountain refuges (shelters) H L T | Camping space and camping facilities, trailer camps H L T | Accommodation for health purposes H L T | Other short-stay lodging facilities M L P| Food and beverage service activities P | Cafeterias M M P | Restaurants M M P | Fast-food outlets M M P| Catering M M P | Takeaway restaurants, fish-and-chips stands and ice M M cream parlours P__| Night clubs and dinner theatre M M 1.2. The homogenization of concepts related to the tourism sector SICTA also takes into account the rest of tourist activities that could be classified as: + Recreation, culture and business: recreation companies, sports facilities, casinos, theme parks, entertainment shows, ski resorts. + Trading: brokers of air transport and travel; travel agencies (wholesalers and retailers); central hotel reservation systems; sales agencies; etc. + In general, any activity which is not specifically touristic, but it can be consumed by tourists. The main difficulty in analysing the last point is that there is little statistical information about them. It usually consists of isolated studies conducted by hotel associations, consultants, etc.1.3. The variables that measure activity in the tourism sector from the point of view of demand and supply VARIABLES OF TOURIST DEMAND Tourist demand of a certain region or country is carried out by visitors, regardless of the fact that they are excursionists or tourists. Therefore, measuring the demanded quantity of tourist goods and services by these visitors is information of great importance to know the sector. Demand indicators are: + In physical units: the flow of tourists or tourist volume. + In monetary units: tourism expenditure. 1.3. The variables that measure activity in the tourism sector from the point of view of demand and supply The tourist volume can be measured by several variables, such as: + Number of trips. * Number of nights. * Number of stays and their length. + Number of tourists visiting a destination. DEFINITION: Tourist spending: It is the total consumption expenditure made by a visitor or on behalf of a visitor for the trip and their stay at the destination.1.3. The variables that measure activity in the tourism sector from the point of view of demand and supply Tourist spending is usually measured through: * Spending in the city or country of origin. + Spending at the destination. * Total expenditure (spending at the origin + spending at the destination). DEFINITION: Total expenditure: It is the spending made by a visitor during the trip and stay in the tourist destination (spending at the destination) and the spending made in the country of origin before departure (spending at the origin). 1.3. The variables that measure activity in the tourism sector from the point of view of demand and supply VARIABLES OF TOURIST SUPPLY Quantifying tourist supply is even more difficult than quantifying demand, because the diversity of activities that can be classified as touristic is very large and a lot of them are only partially devoted to tourism. On the supply side, the main concern is to quantify the production of tourist goods and services.1.3. The variables that measure activity in the tourism sector from the point of view of demand and supply There are companies which are devoted to tourism to a greater or lesser extent, that is, they can be related exclusively or partially to it. In this regard, the National Task Force on Tourism Data in Canada classifies companies on two levels according to their degree of dedication: + Level 1: Companies that would not exist without trips (those dedicated to accommodation, transport and travel services). + Level 2: Companies that would continue to exist without trips (those dedicated to recreational facilities, restaurants, retail, transport, culture and entertainment). 1.3. The variables that measure activity in the tourism sector from the point of view of demand and supply The most important primary activity: hotel supply There is a total consensus that hotel business is a primary or level 1 activity. Hotel supply is mainly measured by the capacity of tourist accommodation. It is usually measured by the following indicators: + Number of beds. * Number of months in which hotels are opened during the year. + Number of establishments by category. + Number of rooms.1.3. The variables that measure activity in the tourism sector from the point of view of demand and supply The potential supply of the hotel industry can be determined using the previous indicators. However, it is necessary to measure the degree of use of hotel capacity. To do it, the following indicators can be used: + Number of travellers accommodated. + Number of nights. These two approaches about capacity and the degree of occupancy allow us to compute the hotel occupancy rate, which provides us with a measure of the adequacy of demand to supply. The occupancy rate can be determined for a particular hotel or for an entire area or destination. 1.3. The variables that measure activity in the tourism sector from the point of view of demand and supply DEFINITION: Occupancy rate of a lodging: It is the proportion of bedrooms or bed-places of a tourism lodging which are occupied for a certain period of time. It is computed as follows: Total of overnight stays Occupancy rate = 2+ Total of bed -places x No.of nights where: * Total of overnight stays is the sum of the number of nights that bed-places of a lodging have been occupied over the period of time considered. *Number of nights represents the number of nights within the period of time considered.1.3. The variables that measure activity in the tourism sector from the point of view of demand and supply DEFINITION: Occupancy rate of a tourist area: It is the proportion of bedrooms or bed-places that make up the supply of tourism lodgings in the area which are occupied for a certain period of time. It is calculated as follows: Total of overnight stays Occupancy rate = +—___—___ Total of bed -places x No.of nights where: * Total of overnight stays is the sum of the number of nights that bed-places of hotels have been occupied in the area over the period of time considered. + Number of nights represents the number of nights within the period of time considered.