Document

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 6042/5089Fax: 029 2087 4419Email: [email protected] [email protected]

With:

Employment Estimates:Prof. Iain McNicoll Donald McLellan

Strathclyde University

[email protected] [email protected]

Regional Modelling:Dr Adam Blake Professor Thea Sinclair

Christel DeHaan Tourism and TravelResearch Institute, Nottingham University Business School.

[email protected]@Nottingham.ac.uk

Acknowledgements:

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

Welsh Economy 1 Cardiff BusinessResearch Unit School


1 INTRODUCTION – ENGLISH REGIONS FIRST STEPS.........................................................................................................................................41.1TOURISM IN THE ENGLISH REGIONS................................................................................................. 41.2TSA FOR ENGLISH REGIONS........................................................................................................ 41.3FIRST STEPS ENGLISH REGIONS PROJECT OBJECTIVES......................................................................... 51.4STRUCTURE OF THE REPORT......................................................................................................... 6

2 THE ANATOMY OF THE TOURISM SATELLITE ACCOUNT ............................................................................................................................... 72.1THE ECONOMIC MEASUREMENT OF TOURIST ACTIVITY ......................................................................... 72.2THE TSA FRAMEWORK.............................................................................................................. 8PRACTICAL ISSUES IN THE CONSTRUCTION OF A TSA ............................................................................... 92.3TSA CONSTRUCTION: CONCEPTUAL ISSUES......................................................................................102.4TOURISM SATELLITE ACCOUNT: KEY OUTPUTS.................................................................................. 13

3 TOURISM SATELLITE ACCOUNTS: PREVIOUS RESEARCH ...........................................................................................................................153.1THE DEVELOPMENT OF THE TSA ............................................................................................... 153.2HOW ARE TSAS BEING USED?................................................................................................... 163.3SUB-NATIONAL TSA DEVELOPMENT CASES: CANADA.......................................................................... 163.4SUB-NATIONAL TSA DEVELOPMENT CASES: NORWAY......................................................................... 183.5SUB-NATIONAL TSA DEVELOPMENT CASES: SPAIN............................................................................ 193.6SUB NATIONAL TSA DEVELOPMENT CASES: WALES............................................................................ 203.7SUB NATIONAL TSA DEVELOPMENT CASES: SCOTLAND........................................................................ 233.8SUB NATIONAL TSA DEVELOPMENT – A SUMMARY...........................................................................23

4 ENGLISH REGIONS – THE CONSULTATION PROCESS................................................................................................................................... 254.1INTRODUCTION....................................................................................................................... 254.2BACKGROUND TO THE FIRST STEPS CONSULTATION........................................................................... 254.3CONSULTATION PROCESS........................................................................................................... 264.4KEY ISSUES ‘SYNTHETIC’ VERSUS ‘BESPOKE’ TSAS........................................................................... 274.5STRATEGIC REQUIREMENTS OF INTEREST GROUPS............................................................................. 27ISSUES RELATING TO OWNERSHIP OF OUTPUTS........................................................................................ 28DATA ISSUES............................................................................................................................. 28REFRESHING THE AGENDA.............................................................................................................. 30

5 TSAS FOR THE REGIONS: THE DATA ISSUES..................................................................................................................................................31INTRODUCTION............................................................................................................................ 315.2POSSIBLE AMENDMENTS TO TSA STRUCTURE FOR ENGLISH REGIONS..................................................... 315.3 INTERNATIONAL INBOUND TOURISTS’ CONSUMPTION........................................................................... 325.4DOMESTIC (UK) TOURISTS’ CONSUMPTION (STAYING TOURISTS)............................................................. 335.5DOMESTIC (UK) TOURISTS’ CONSUMPTION (DAY VISITORS).................................................................. 345.6DOMESTIC TOURISTS’ OUTBOUND CONSUMPTION ............................................................................. 365.7THE PRODUCTION OF ‘TOURISM’ INDUSTRIES IN ENGLISH REGIONS......................................................... 375.8ENGLISH REGIONS: SUPPLY AND DEMAND RECONCILIATION...................................................................395.9TSA TABLE 7 EMPLOYMENT MODULE .......................................................................................... 395.10SUMMARY: TSA FOR ENGLISH REGIONS.................................................................................... 40

6 METHODOLOGY....................................................................................................................................................................................................426.1ESTIMATION OF TOURISM CONSUMPTION & SUPPLY IN ENGLISH REGIONS................................................. 426.2MATRIX BALANCING................................................................................................................. 44



7 RESULTS: TOURISM IN THE ENGLISH REGIONS............................................................................................................................................. 477.1GROSS VALUE ADDED............................................................................................................. 477.2TOURISM EMPLOYMENT IN ENGLISH REGIONS: BACKGROUND & METHOD................................................. 507.3TOURISM EMPLOYMENT: RESULTS................................................................................................ 517.4ESTIMATES FOR 2001-2003.................................................................................................... 53

8 RECOMMENDATIONS: TOWARDS ENGLISH REGIONS TSAS.........................................................................................................................548.1IMPROVING THE INSTITUTIONAL AND STATISTICAL LANDSCAPE................................................................. 548.2OPTIONS FOR ACTION AT REGIONAL LEVEL..................................................................................... 618.3CONCLUSIONS........................................................................................................................ 64

9 SELECTED REFERENCES AND SOURCES: GENERAL.................................................................................................................................... 67



1 INTRODUCTION – ENGLISH REGIONS FIRST STEPS

1.1 TOURISM IN THE ENGLISH REGIONS

1.1.1 Tourism has been targeted by many regional development agencies as key inshaping future development prospects. However, information on which to assess thecurrent or future role of tourism is lacking at the national, and particularly the sub-national level. Definitions of tourism activity continue to be problematic, withregional strategies often centred only on parts of tourism services such asaccommodation provision, or travel services.

1.1.2 The information available on tourism activity in the English regions is diverse, withlarge amounts of information relating to physical volumes and the type and scope oftourism activity. However, at this level there is very little information on the role oftourism in the generation of gross value added1, in the generation of tax returns, orin the creation of investment and employment, both directly and indirectly.Problems in understanding the sector and its development are linked to a narrowconception of what tourism represents.

1.1.3 Tourism across the English regions encompasses the activities of an extensive set ofindustries and services that just includes hotels, restaurants, transport services andtravel agencies. Tourism is then a ‘demand side’ event such that all theconsumption of goods and services by visitors to an area falls within the sector’sscope.

1.1.4 A developed Tourism Satellite Account would, then, be a framework for a systematiccompilation and reconciliation of statistical data from various sources concerningdemand by visitors (domestic and foreign) and the supply of tourism products(whether domestic or imported) in each of the English regions. This reconciliationwould 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 theEnglish regions would be an aid to strategic economic planning. Interest in theEnglish regions parallels the wider set of First Steps and other TSA projects, whichinclude the pilot development of a UK TSA (DCMS, 2004), and TSAs for Wales andScotland.

1.2.2 The English regions element of the TSA First Steps project set provides an audit ofthe extant data to inform construction of a pilot TSA, and examines critical datagaps. The report then describes the estimation of key TSA cell values for the Englishregions by Nottingham and Cardiff Universities using a synthetic approach toallocate English tourism demand and supply across those regions.

1 Gross Value Added (GVA) can be thought of as a measure of the economic ‘wealth’ created in an area. Itdiffers from the formerly quoted measure, GDP, principally as it does not include expenditure taxes such asVAT.



1.2.3 Numerous OECD and developing nations have seen value in developing TSAs, andin the standardised framework of construction, led by the World TourismOrganisation in collaboration with other international agencies (EUROSTAT et al,2001). An improved accounting of tourism sector transactions and activity at thenational and sub-national level will undoubtedly provide important information forpolicymakers, in particular in terms of directing scarce resources, and in identifyingcritical elements in sector success or failure.

1.2.4 In summary, the development of a TSA for each of the English regions would resultin 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 NorthernIreland.

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 forpolicymakers.

To review literature relating to best practice on the construction of a TSA, withspecial reference to previous research that has constructed TSAs for regional andother economies, and to examine previous research and reports, highlighting theuses to which a TSA can be put.

To undertake consultation with regional authorities with the objective of gainingaccess to statistics, gaining information on institutional frameworks, and potentialuser priorities.

To interrogate the current data available nationally and in each of the regionswhich could be used to construct a basic tourism satellite account framework,highlighting information gaps, and providing recommendations for new dataacquisition which balance issues of marginal costs to practical use within the TSAframework.

To provide the data inputs required to produce a partial TSA for the Englishregions, 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.



1.4 STRUCTURE OF THE REPORT

1.4.1 This sub-section summarises the structure of the report. It is important that thisreport is read in conjunction with the UK First Steps report produced by theDepartment of Culture Media and Sport (DCMS, 2004). Further elements oftechnical methodology and assumptions are also in the DCMS report. Sections 2and 3 of the English regions’ report in some measure replicate those found in otherFirst Steps projects (UK and Crown Dependencies).

1.4.2 The second section of the report is an introductory reader on TSAs. The sectiondescribes the ‘anatomy’ of the TSA, and deals with how economic activity in thetourism sector is measured. The section describes the TSA conceptual framework,the constituent tables of a TSA, and then reviews the practical issues involved in theconstruction.

1.4.3 The third section reviews historical TSA development. This comprises anexamination of TSA developments in other states with special reference to regionaleconomies. The fourth section comprises the results of the consultation exerciseundertaken with regional and local tourism organisations. This consultationinformed 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 andcommentary 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 basisto 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 theTSA construction process. The sixth section then describes the data that was usedin synthetic TSA table construction for the English regions, and the methods used toconstruct the tables. The seventh section reports on the results from the modellingprocess 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 theEnglish regions need to consider before progressing further towards a fullydeveloped TSA. The section goes on to provide recommendations for furtherdevelopment. This section of the report links closely to the strategicrecommendations from the Allnutt Review of Tourism Statistics as well as the UKpilot TSA project, and the recommendations from the TSA linked projects in Ireland,Scotland, and Wales.



2 THE ANATOMY OF THE TOURISM SATELLITE ACCOUNT

2.1 THE ECONOMIC MEASUREMENT OF TOURIST ACTIVITY

2.1.1 The economic consequences of the activity of visitors to a particular area have neverbeen easy to measure. This is because tourists (or any other visitors) require a widerange of goods and services during their visit. It is, then, extremely difficult to tracethe expenditure of tourists in a rigorous and thorough manner. A visitor willdemand products obviously associated with ‘tourism’, including accommodation andtravel services and also will demand other services, whether purchased directly ornot.

2.1.2 A number of proxies for tourist-related economic activity have historically been usedby responsible agencies. These can be broadly categorised as expenditure basedestimates and employment-based estimates2.

2.1.3 Expenditure based estimates have reported the importance of tourism as equatingto the gross tourism receipts within the given region over a given year. Whilst thismay be a reasonable measure of tourism turnover or ‘output’ for an economy, it is aless useful way of thinking about the economic importance of tourism, for examplein supporting incomes and jobs. This is because gross receipts will likelyoverestimate resultant activity.

2.1.4 Firstly, some of the monies spent within an area will be used to purchase goodsmanufactured outside the area. Secondly, a portion of gross expenditure is taken intaxes by government and cannot be considered a direct economic injection to theeconomy, although the resultant disbursement by government may of coursecomprise an eventual benefit.

2.1.5 The over-estimates of ‘economic importance’ inherent in a crude tally ofexpenditures or receipts have often been compounded when agencies haveattempted to contextualise tourism within the wider economy. It has been commonpractice to divide gross tourism receipts (a rough measure of turnover) by the GrossValue 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) byat least a factor of two for most economies. This problem has occurred in some UKregions.

2 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 conceptualissues 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 sometaxes and some other minor issues.



2.1.6 Employment based estimates result from a sector or industry view of tourism.Employment in ‘tourist related’ activities such as accommodation, attractions andrecreation is summed to estimate how much employment is tourist-dependent.However, tourism is not an industry-specific activity, demanding goods and servicesfrom across the economy. Thus, employment-based approaches usually fail to countthat portion of employment in ‘non-tourist related’ sectors, which is neverthelesstourist dependent (retail is a good example). Conversely, a tally of employment intourism industries or occupations ignores the fact that not all such employees willrely upon tourism for employment.

2.1.7 Added to the conceptual issues above, employment-based measures of tourismencounter great practical difficulties. Definitions of the industries or occupationswhich are ‘tourist related’ vary greatly across time, and between studies andgeographies.

2.2 THE TSA FRAMEWORK

2.2.1 The Tourism Satellite Account is intended to measure economic activity consequenton tourism in a way which enables comparison with other economic activities takingplace in the same reference area. Hence, tourism must be contextualised and visiblewithin the accounting frameworks of the area in question, as indeed will be otherindustries.

2.2.2 The solution is therefore to add complexity to existing systems of national or areaaccounts4 (called SNAs) in order to reveal tourism activity more fully. There are anumber of advantages to placing a measurement of tourism within the establishedaccounting frameworks, additional to the ability to compare tourism with othereconomic 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 asthe creation of a ‘satellite’ to the SNA (hence TSA). For the English Regions theapproach would notionally be a satellite to the individual Regional Accounts. It leadsto the development of the set of tables which comprise the TSA. The full set of tentables include inbound and outbound tourism consumption, supply of tourismproducts, tourism dependent employment, tourism capital expenditure, andcommon (public sector) expenditure on tourism.

2.2.4 No country yet has fully estimated all ten tables and the detailed structure of severaltables are not finalised. Meanwhile at the sub-national level progress has beenlimited due to data, resource and conceptual issues (see Section 3).

4 The term national accounts is used here but the application and process would be similar for a regionwith a set of regional accounts.



2.2.5 There are, nevertheless, clear guidelines on which tables might be reasonablyestimated, and upon the most appropriate priority for this process. Furthermore,EUROSTAT has produced a manual for the implementation of a TSA which explainsin some detail how a TSA might be estimated within accounting structures whichare 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 TablesTable Coverage Notes1 Inbound tourism expenditure Part of aggregate demand; i.e. an export2 Domestic tourism expenditure Part of domestic total consumption3 Outbound tourism expenditure Not generally linked to other TSA tables

so is often not estimated4 Domestic ‘tourism final

consumption’ Synthesised from Tables 1 & 2.

5 Production of tourismcommodities

For example the services and productsof ‘tourist related’ industries but also ofnon-tourist related industries

6 Domestic supply &consumption by product

A reconciliation of Tables 4 & 5. Theheart of the TSA

7 Employment & labour use Structure not yet fully agreed8 Tourism fixed capital formation

(investment)Rarely reported due to conceptualdifficulties

9 Tourism collectiveconsumption

Government spending on tourism, rarelyestimated

10 Non-monetary indicators e.g. tourism volumes/nights; types oftourist etc. Structure can reflect mostuseful indicators

2.2.7 In many cases countries have found it difficult to reliably estimate TSA Table 6, thereconciliation of supply and demand. Hence, headline figures for tourism activity,including gross value added due to tourism, cannot be derived. As an interim stepWTO suggest the estimation of those tables which are easiest. A state will usuallyhave good information on inbound tourism expenditure as this is necessary toestimate the balance of payments. Additionally, other elements of tourismconsumption may be estimated. It will often be necessary to adapt existinginformation to make it ‘fit’ the TSA structure and, unless data sources are ofparticularly high quality, this process may also involve an element of imputationand 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 tourismstatistics to a SNA-integrated account. Whilst some of these are conceptual andmethodological in nature, the most difficult issues tend to be those related to theavailability and reliability of tourism and economic accounting data. Theconstruction 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;



the ability to place the above information consistently within an accountingframework such that demand can properly be equated to supply for everycommodity which is of interest.

2.2.9 Different areas have different statistical priorities; thus one country may have verygood information on tourists’ spending, but less good information on how theeconomy in general operates. Alternatively, there may not be a well-developed andthoroughgoing 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 ofdifferent commodities, whereas a full TSA might report on 15-20 ‘tourism specificproducts’. There will therefore be a stage of analysis where information is collatedfrom a variety of sources to support the further disaggregation of tourist expendituredata into specific commodities. Once this has been achieved, the data can beamended 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 ofa tourism satellite account is appropriate. The first strand of a project mightconstruct an ‘experimental’ TSA. This would use existing data sources and requiresome estimation to come to an initial account. This might provide some informationregarding the importance and nature of tourism within an economic area, but mightbe subject to error from a variety of sources, be these data-related, structural orconceptual.

2.2.12 The second strand of the TSA project should seek to improve the reliability of theaccount in the longer term. Areas to be addressed might include

Improvements in the reliability, timeliness, scope and disaggregation oftourists’ expenditure data;

Similar improvements in the quality and disaggregation of data regarding thesupply of tourism-specific products;

Construction and design of primary surveys that reflect national accountingmethodologies and processes, to make integration more efficient;

Involvement of qualified statisticians in the TSA estimation and datavalidation process.

2.3 TSA CONSTRUCTION: CONCEPTUAL ISSUES

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



Figure 2.2 – Central Concepts in the TSA

Concept Description Notes

Visitor A person traveling to a place other than that oftheir usual environment for less than twelvemonths and whose main purpose of trip is not anactivity remunerated within the place visited.

Can include residents of theregion, residents of otherparts of the country orinternational visitors.

UsualEnvironment

The usual environment corresponds to thegeographical boundaries within which anindividual travels during the regular routine oflife, both the direct vicinity of home and place ofwork or study, and other places frequentlyvisited. The term has two dimensions: frequency– places which are frequently visited by a person(on a routine basis) are considered as part ofher/his usual environment even though theseplaces may be located at a considerable distancefrom her/his place of residence; distance – placeslocated close to the place of residence of a personare also a part of her/his usual environment evenif the actual spots are rarely visited.

The ‘usual environment’judgement is made(sometimes only byimplication) according towhich respondents areeligible to be included intourism surveys; for examplein GB Leisure Day VisitsSurvey, those whose triplasts over 3hrs areconsidered tourists.

VisitorExpenditure

Expenditure that is made by, or on behalf of, thevisitor before, during and after a trip, that tripbeing outside the visitor’s usual environment.

In practical terms usuallyonly includes expenditureduring the trip.

Source: Derived from WTO:RMT and UN TSA

2.3.2 Each of these apparently straightforward definitions has raised a number of issueswhich have only recently been resolved. This includes a concept as understandableand 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 manyvisitor surveys only covering the expenditure of ‘traditional’ tourists, leavingsignificant 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 moreconceptually difficult, yet just as important for a consistent measure of tourismactivity. For a full review of the usual environment concept please see the UK FirstSteps report.



2.3.5 As can be seen from Figure 2.2, the TSA also takes a reasonably broad view onVisitor Expenditure, including all purchases within the reference (regional)economy which are made for the purpose of the trip whether this is before, during orafter 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 theTSA consumption universe5. More problematic is expenditure on durable goodswhich may have a lifespan greater than a single trip, or indeed be multi use (such asa 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 fordifferent types of tourists. There is a high degree of commonality regarding how thetourist 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 territoryof the reference region.

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

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

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

National The tourism of resident visitors, within and outside the economicterritory of the reference region.

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

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



2.4 TOURISM SATELLITE ACCOUNT: KEY OUTPUTS

2.4.1 Whilst the structure and presentation of Tourism Satellite Accounts vary betweencountries and over time, there is a high degree of commonality in the headlineoutputs and indicators which are used to indicate the size and importance of thetourism economy. An example of the outputs of the TSA development process isgiven 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 notadd value in the reference economy. This would include sales taxes payable bytourists, and that portion of supply to tourists which is imported into the economybefore being sold. These ‘leakages’ mean that measures of tourism consumption arenot a good measure of economic activity, and, consequently, of the income andemployment 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 valueadded 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 basedon tourism consumption noted above, and has the benefit of relating to value addedproduced within the reference economy. However, the use of this measure bringsmanifold difficulties. As the "tourism character" of a particular output is not definedby its nature but by the purpose pursued by the consumer, there is a larger gapbetween the output of tourism industries (domestic supply) and internal tourismconsumption (domestic demand) than for other ‘functional activities’ such as healthor education. Moreover, the definition of ‘tourism characteristic’ industries variesbetween countries and studies. For these reasons, VATI, similarly to consumptionbased measures, should be considered as only an interim measure of tourismactivity.

2.4.4 There are several indicators relating to the tourism economy which are onlyavailable following a developed TSA (i.e. where TSA Table 6, the reconciliationbetween demand and supply, has been fully estimated). Probably the single mostimportant of these is tourism value added (TVA). This is defined by WTO as thevalue added generated by tourism industries and other industries of the economy inresponse to internal tourism consumption.

2.4.5 TVA includes the proportion of value added generated by all industries in theprocess of provision of goods and services to visitors or would be visitors, or to thirdparties for their benefit. It includes the tourism-dependent output of industrieswhich are not traditionally thought of as tourism-related. Additionally, becausevalue added consists in part of compensation to labour, TVA can be disaggregated toshow the impact of tourism upon workers’ incomes within the reference economy.Figure 2.4 describes some of the outputs of the TSA process.



Figure 2.4 – Headline Outputs of the TSA Process

Output TSA Table Notes

Tourism Consumption 1-4 Interim measure. No direct link to economicactivity within the reference region.

Value Added of TourismIndustries

5 Interim measure. Includes the output oftourism characteristic industries which is notdue to tourism demand.

Tourism Value Added 6 A central output of TSA process. Enablescomparison with other industries withinreference economy.

Tourism Ratios 6 Ratio of supply which is due to tourismdemand. Can refer to industries or products.

Tourism DependentEmployment

7 The employment generated directly by theactivity of tourism industries in response tovisitor consumption. Problematic due to lackof employment statistics in many systems ofnational 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 tourismratios. Tourism ratios indicate the extent to which an industry or product isdependent upon the demand of tourists, and can be defined in industry or productterms. A tourism product ratio represents the proportion of supply of that productwhich is purchased by tourists. A tourism industry ratio represents the proportionof that industry’s output consumed by tourists.

2.4.7 The headline indicators discussed so far exclude one which is often given primaryimportance in public policy circles: employment. However, there are a number ofdifficulties with the nature of tourism-related employment itself which is more likelyto be seasonal and/or part-time than for other types of employment. Moreover, inmany tourism sub-sectors, owner-managers are an important source of labour, withthe returns to this labour very poorly measured6. This means that the most suitablestructure for Table 7 is open to some debate.

2.4.8 Even within WTO procedures and recommendations there remain methodologicaland measurement issues yet to be fully resolved in developing a TSA – these areexamined in more detail in DCMS (2004).

6 See Jones, Munday and Roberts (2003).



3 TOURISM SATELLITE ACCOUNTS: PREVIOUS RESEARCH

3.1 THE DEVELOPMENT OF THE TSA

3.1.1 As early as 1983 the WTO emphasised the importance of contextualising theeconomic consequences of tourism within established systems of national accounts(WTO, 1983). Throughout the 1980s, pioneering work was undertaken by StatisticsCanada, who investigated the practical application of satellite accounting techniquesto tourism.

3.1.2 In 1994 the United Nations and WTO published Recommendations on TourismStatistics, subsequently superseded for TSA purposes by the Tourism SatelliteAccount: Recommended Methodological Framework of 2001. This latter documentwas agreed not only by the UN and WTO but also OECD and EUROSTAT, thestatistical directorate of the European Union. EUROSTAT has subsequentlypublished an implementation manual, aimed at helping statisticians on the detail ofcompiling a TSA within ESA95 compliant national accounting systems7.

3.1.3 In summary, then, the 1990s and early 21st Century have seen all relevantinternational organisations agree on the TSA as the most appropriate method ofmeasuring the economic value of tourism. WTO and non-WTO members alike haveaccepted the efficacy of the TSA in enumerating the economic importance oftourism.

3.1.4 The adoption by EUROSTAT of the TSA as a preferred methodology, and itsharmonisation with OECD and WTO standards in 2000, has provided a spur and aresource for European countries wishing to develop an account. Moreover, theimplementation of the European System of National Accounts (1995) has meant thatthe 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 ‘earlyadopters’), and a number of other countries are in the process of developingaccounts.

3.1.6 To date, with the exceptions mentioned above, EU countries have not been to thefore in the development of TSAs. This is expected to change following the strongguidance given by EUROSTAT in its collaboration with WTO on the usefulness ofresults arising from accounts already under development, and considering theusefulness to the TSA project of the already standardised systems of nationalaccounts between EU countries.

7 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 relevantdocuments.



3.2 HOW ARE TSAS BEING USED?

3.2.1 Whilst the integration of tourism activity alongside a system of national accounts isan interesting statistical exercise, the development of the satellite should havepractical implications, for example, being explicitly linked to public fundingdecisions, or at the very least being connected to a series of timely industrymonitoring indicators.

3.2.2 The overall impression from reviewed statistical sources and associated commentaryis that the predominant role of the TSA hitherto has been in terms of pure advocacyi.e. showing the economic significance of the industry at a moment in time, andwhether 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 morecomplex policy-relevant analysis8. In the Canadian case, the prime objectiveunderlying development was to demonstrate the ‘legitimate, visible and significantstanding of tourism in the Canadian national economy’.

3.2.4 The Canadian TSA has also provided a foundation for a Tourism Economic ImpactModel, which can show amongst other things, the effects of changes in patterns oftourism consumption, and changes in the marketing mix (i.e. effects of more intensepromotion to different national visitors). Moreover, the Canadian TSA has beenlinked to the future development of benchmarking tools, and micro-economictourism indicators allowing private sector operators to compare their performancewith industry norms in terms of productivity, growth, and earnings. Thedevelopment of such micro-economic tools also links to a risk-assessment tool forboth the public and private sector.

3.2.5 The underlying message from the above is that the development of a TSA should beseen as part of a wider process in providing useful policy-relevant tourism sectorinformation for the public and private sectors. The static TSA has a role in advocacyand marketing, and can also inform policy on investment, education and training.However, the static account can also form the basis for other relevant developmentincluding timely tourism sector indicators, a framework for national and sub-national modelling, and micro-level benchmarking.

3.2.6 There are fewer examples of TSA construction at the sub-national level. The nextsub 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 atthe sub-national scale, with the Provincial and Territorial Satellite Accounts (PTSA).The initial accounts were developed for reference year 1996, covering the country’stwelve regions, and have now been updated to 1998 (Barber Dueck & Kotsovos,2003).

8 See e.g. Meis (1999)



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

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

3.3.3 As well as these headline indicators, the accounts provide details on the nature oftourism consumption in different regions, for example, reporting upon the types ofcommodities purchased, and by which types of tourists (domestic, international orinter-provincial).

3.3.4 The Canadian Provincial Accounts benefit from a developed sub-national economicaccounting structure. However, Canada has also benefited from an occasional seriesof Input-Output Tables (1974, 1979, 1984 and 1990) which, although not of‘benchmark’ quality, no doubt provided critical support for the initial estimation ofthe PTSA).

3.3.5 The commitment to regional Input-Output in Canada has been cemented with a newregional Input-Output program since 1997. This demands comparable statisticalquality for every region’s Input-Output data, based upon significantly improvedresources such as new and expanded regional surveys (Siddiqi and Salem, 2002).The Input-Output structure has latterly provided detail regarding key economicindicators, published as the annual Provincial Economic Accounts (seewww.statscan.ca).

3.3.6 Despite the above benefits, it is clear that constructing the PTSA is far from easy. Anumber of supporting surveys have limitations (for example, in allocatingexpenditure to Provinces) which lead to a process of reconciliation which relies, inpart, upon research judgement as to the most appropriate methods and as to whichof 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 abetter understanding of tourism activity. For example the Tourism EconomicAssessment Model (TEAM) and the Sports Tourism Economic Assessment Model(STEAM) are both widely used to examine the provincial and territorial economicimpacts of tourism and sport-tourism activity.9

3.3.8 It is interesting to note that whilst these regional commercial models boastsophisticated econometric techniques and reliance on the ‘latest Statistics Canadadata’ they do not appear, explicitly at least, to incorporate the results of the PTSAestimation (although differing tax rates in Provinces are accounted for).

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



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 identifiedindustries: hotels and restaurants, transportation and entertainment industries.However, Statistics Norway in collaboration with other Norwegian institutions isdeveloping a far more sophisticated Regional Tourism Satellite Account (Braendvanget al, 2001).

3.4.2 The Norwegian researchers note the paucity of international guidance regarding theregionalisation of TSAs, but follow the natural option of treating each region as asmall nation. Norway benefits from a well developed regional accounting framework,with each region having accounts for 175 industries and 1,000 products (albeit withthe industry-product relationship the same in each region).

3.4.3 With such well developed supply-side information the major challenge is then toestimate tourism demand for each area. Here, the authors recognise someweaknesses in available national surveys and a combination of data sources areused, for example on numbers of guest nights by type of accommodation and ongross consumption from tourism surveys. This resulted in a less than perfectrendering of tourism consumption, for example with researchers unable todisentangle average spend by type of accommodation.

3.4.4 As has been found elsewhere, the RTSA process provided challenges in ensuringconsistency with the national TSA. In Norway, the sum of regions’ consumption didnot 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 tourismactivity, such as gross value added or tourism-dependent employment. Rather, theyrestrict themselves to ‘second level’ indicators such as the level of tourists’consumption, and the output of tourism-related industries (these neverthelessgiving 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 thatas the reliability of the RTSA estimation process improves, these other indicatorswill be produced.

3.4.6 Sub-national TSA development in Norway has been driven by the need for regionalstatistics in the planning and study of tourism, and by a desire for a moreconsistent and realistic appreciation of the economic impact of tourism activity andof associated infrastructure. Simulations of changes in tourism consumption havebeen assessed, using the accounts for Hordaland to estimate the direct and indirectimpacts of increases in tourist revenues (Braendvang et al, 2001).



3.5 SUB-NATIONAL TSA DEVELOPMENT CASES: SPAIN

3.5.1 Given the importance of tourism to Spain and its uneven distribution, it isunsurprising that the National Statistical Institute (INE) is examining methodologiesto regionalise key variables from the Spanish TSA. Spain has interesting parallelswith the UK in that its autonomous regional structure enables a ‘multi speed’approach, where more interested or technically advanced regions can progress inadvance of others.

3.5.2 The National Statistical Institute recognises the difficulties involved in regionalisinga full TSA and thus as a first stage attempts to regionalise only tourism (current)consumption demand, considering this the most important constituent part of theTSA 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 expenditureestimates at sub-national scale derived from tourism surveys. The INE thus takes atwo pronged approach. Firstly, accessing other surveys (such as those on familyexpenditure and travel) provides an indirect assessment of likely levels ofexpenditure (and in some cases origin-by-destination matrices). Secondly, and forcertain commodities, the level of tourism supply in each region is used as anindicator of demand, with tourism product ratios assumed at 100% and thus, forthese products, supply assumed as identical to demand.

3.5.4 This latter approach is justified by reference to the national Spanish TSA whichshows, 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 assumingan identity would likely lead to significant error. However, this approach does havethe benefit of incorporating ‘bottom up’ (i.e. regionally specific) information into theTSA regionalisation process.

3.5.5 Even at this early stage, the method does give an indication of the spatialdistribution of tourism economic activity. Work is underway in Spain with thespecific intention of improving tourism surveys to better support regional TSAestimation. Meanwhile, a number of regions (Andalusia notable among them) aredeveloping regional TSA programmes managed at this spatial scale by theappropriate regional authority. These approaches rely more heavily upon regionaldata than the regionalised Spanish account. In the case of Andalusia, attention hasfocussed upon an accounting of the supply side, particularly in terms ofaccommodation capacity10.

3.5.6 The above means that Spain is probably unique in having both a ‘bottom up’ andregionalised national account approaches applied to the same region. When fullresults are available from both processes, there may be an opportunity to comparethe relative strengths and weaknesses of each approach.

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



3.6 SUB NATIONAL TSA DEVELOPMENT CASES: WALES

3.6.1 Work has been undertaken in Wales which provides a good example of the outputsof a ‘bottom up’ TSA construction process, and the way in which TSA-linkeddevelopments will be used to inform policy. This may be of particular relevance tothe English regions.

3.6.2 A partial TSA for Wales was developed for the Wales Tourist Board for 1998, and hasnow been updated to 2000. The Welsh TSA has been used in a number of ways bypublic and private sector users:

To highlight the significance of tourism value added in Wales and how it isdistributed between profits, wages and other categories with industry concernabout the amount of value-added that is retained in the region.

To demonstrate the nature of tourism employment in Wales, and how effectivegrowth of tourism might be in reducing unemployment and increasing activityrates.

3.6.3 The Welsh TSA project revealed that total tourism expenditure in Wales amountedto almost £3.5 billion in 2000 (2.6% of all demand in the Welsh economy). The mostimportant portion of tourism expenditure, around £1.5bn of this total, wasexpenditure made by day-trippers. A further £240m was expenditure by Welshresidents staying in Wales on holidays, business trips and visiting friends orrelatives.

3.6.4 Of those visiting Wales, those originating from the rest of the UK were by far themost 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 expenditureby type of tourist.

Figure 3.1 – Tourism Consumption in Wales, 2000Tourist 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), restaurantand beverage services were the most notable, attracting £720m of all expenditure onWelsh goods and services. The high propensity of tourists (particularly day trippers)to spend on shopping is revealed in distribution margins of around half a billionpounds.



3.6.6 Meanwhile tourists spend £360m on recreation services and a similar amount ontransportation services (this latter largely excluding private transport costs such asfuel). Almost a third of all tourists’ expenditure, £920m, was on products whichwere not identified as tourist-related. This evidences the holistic nature of tourist-related economic activity, affecting almost all sectors of the regional economy.

Figure 3.2 - Total Tourism Consumption by CommodityProduct £mAll Tourism Products 2,0601 Accommodation Services 4801.1 Hotel services 2601.2 Guest house, bed & breakfast services 701.3 Non-serviced accommodation 901.4 Second homes & static caravan services on own account 602 Restaurant, bar and catering services 7203 Passenger transport services 3503.1 Railway transport services 403.2 Other land transport services 1603.3 Water and air transport services 1103.5 Ancillary transport services 404 Travel agency and tour operator services 505 Recreation, cultural and other entertainment services 3605.1 Recreation etc. services 2505.2 Tourist attractions 1106 Tourism connected products 906.1 Post & telecoms services 106.2 Financial and Insurance Services 306.3 Rental services 306.4 Health services 30All other products 920Distribution margins 510Total Tourism Consumption 3,495Note: 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 thescale of the producing industries. Figure 3.3 shows the scale of such supply for eachof thirteen identified tourism-related industries. The Welsh Input-Output Tables for2000 are a key source for estimating the size of tourism industries, althoughextensive further work is needed to estimate what tourism products are supplied bywhich industries (e.g. how much restaurant fare is provided by hotels) (see WERU,2004 for more details on the Welsh Input-Output project).



Figure 3.3 – Tourism Industries in Wales, 2000Product Output, £mHotels 330Guest houses 63Non-serviced 70Second home & caravan ownership (imputed) 60Restaurant, bars & canteens 1,055Railways 215Other land transport 1,015Sea & air transport 95Other transport services 815Travel agency and tour operators 75Recreation services 1,680Attractions 125Renting of moveables 295All identified industries 5,895All other industries 61,775Total Output 67,670Note: totals will not add due to rounding.

3.6.8 The reconciliation of supply and demand enables the full range of TSA ‘headlinevariables’ to be estimated, including tourism ratios for industries and products,tourism gross value added and (by extension of the account) tourism dependentemployment.

3.6.9 There are several lessons for the English regions from the Welsh experience of TSAconstruction. The development of the TSA system was not a short-term project. InWales, the project has been ongoing since 1999 and involved an extendedpartnership between tourism agencies, the regional development agency and theuniversity sector. This need not be especially resource intensive in financial terms,but is resource intensive in terms of the development of suitable partnershipsbetween agencies, and in terms of iteratively learning the ‘art’ of TSA constructionover an extended period.

3.6.10 In this respect the Welsh project has mirrored exactly the WTO suggestion that asustained inter-institutional platform is the most appropriate mechanism forregional and national TSA development. The hope in the UK is that existingpartnerships between agencies with responsibility for tourism statistics will bestrengthened such that the production of a reliable and robust TSA on an ongoingbasis, 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 modellingframeworks to examine the estimated regional effects of tourism and sportingevents. For example, the TSA framework has informed analysis of the economicimpacts of the Rugby World Cup 1999, the Brecon Jazz Festival, the World RallyChampionship (WRC) Rally of GB, and the development of the Blaenavon WorldHeritage site (see Jones and Munday, 2004).



3.7 SUB NATIONAL TSA DEVELOPMENT CASES: SCOTLAND

3.7.1 Scotland has long had more developed and complete regional accounts than theremainder of the UK, with Input-Output Tables produced ‘in house’, first by theScottish Office, and latterly by the Scottish Executive. The Input-Output Tables for2000 have then provided the basis for TSA development in the region.

3.7.2 Scottish development parallels that in Wales, relying heavily on internationaltechnical guidelines and utilising similar data sources. The analytical teams workedtogether closely to ensure consistency of method and data. However, due to theanalysis being undertaken by the Scottish Executive (in conjunction withVisitScotland), the work there benefits from more direct access to official datasources11.

3.8 SUB NATIONAL TSA DEVELOPMENT – A SUMMARY

3.8.1 As the preceding sections reveal, a number of countries are proceeding with sub-national TSA development through regionalising the national account, and a smallnumber of regions are developing TSAs with a more ‘bottom up’ approach, in termsof 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 insecond iteration (reference year 1998).

Headline TSA variables including tourismvalue added and employment

Norway Regionalised national account for 2000 Partial results inc. value added of tourismindustries, and industry employment

Spain Regionalised national account (1) and‘bottom up’ accounts (2) both indevelopment

Partial. Estimates of regional tourismconsumption (2) & regional tourismproduct supply (3). Neither yet fullydeveloped.

UnitedKingdom

Hybrid method in Scot & Wales usingnational & regional data sources (both2000)

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

3.8.2 Sub-national TSA developments take a number of forms though most adhere toWTO national conceptual TSA guidelines, treating the region as a small nation. Theyare at varying stages of development, and use different mixes of regionally-allocatednational data, and specific regional information sources. In some cases the regionalaccount 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 toderive sub-national TSAs. WTO does not provide specific advice on the developmentof sub-national TSAs, although informal guidance is readily available. There is no‘one size fits all’ approach for regions to follow.

11Full information on the Scottish project is available in Hayes and Boag (2004)



3.8.4 What is clear however, is that in most countries where sub-national TSAdevelopment has occurred, there has existed a strong focus on well-developedregional accounting over a reasonably long period. This has provided both astatistical framework for developed TSAs, and baseline information regarding(particularly) the tourism supply side in a region. Important, however, is theexistence 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 statisticalresources (such as the UK and Spain), development has been two (or multi) speed. Itis likely that this model will be replicated in other countries where tourism isunevenly spread.



4 ENGLISH REGIONS – THE CONSULTATION PROCESS

4.1 INTRODUCTION

4.1.1 The next section reports briefly on the outcome of consultations undertaken duringthe course of the English Regions First Steps project, and highlights key conclusionsarising 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 fromrepresentatives of regional tourism agencies and development agencies. Theresearch 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 someelements of the TSA framework would be more relevant than others.

4.2 BACKGROUND TO THE FIRST STEPS CONSULTATION

4.2.1 A TSA Technical Workshop was held in Glasgow at the beginning of 2003 with theaim of examining the next steps towards the construction of UK, Ireland and sub-national TSAs. The workshop was attended by a senior WTO statistician,representatives from DCMS and ONS, and others from England, Scotland, Walesand Northern Ireland. As a result of this, and of further meetings, there wasagreement that monies should be sought for the development of national TSAs fromthe EU.

4.2.2 A strong recommendation of these meetings was that any overarching TSA projectframework should have a regional dimension, and that this should be co-ordinatedso that a consistent approach could be adopted from the outset. At this point,having understood the potential value of regional TSAs and the importance ofdeveloping a co-ordinated regional voice, English RDAs nominated the North WestDevelopment Agency (NWDA) as a co-ordinating agency for the development of theregional TSA scoping and construction framework.

4.2.3 The NWDA then produced and distributed ‘Tourism Satellite Accounts: A BriefingPaper’ in May 2003 to all nine English RDAs, which provided essential preparatoryinformation on TSAs. This document described the nature and purpose of nationalaccounts, explained the structure of the TSA, and gave the background which hadled to the decision to produce a UK TSA.

4.2.4 The briefing document also strongly recommended that a joint RegionalDevelopment Agency (RDA) approach be taken and that progress should be jointlyfunded by each RDA. As well as tabulating in some detail the potential benefits ofTSAs, the document initiated a review of tourism statistics, which requiredrecipients to feedback their organisational needs with respect to data and toinventory existing data generation and its application.



4.2.5 A meeting was held in September 2003, following up the May briefing document andregional data review exercise. At this point, interested parties were well aware of thepaucity of national and regional tourism statistics, and had expressed a desire forimprovements to tourism data. However, uncertainties regarding the future of theRegional Tourist Boards remained.

4.2.6 Also in September, a technical workshop took place in Cardiff, hosted by WalesTourist Board. Representatives at this event included DCMS, ONS VisitScotland,VisitBritain, the Scottish Executive, and Bord Failte from Ireland, and the NorthernIreland Tourist Board. At this workshop a provisional TSA for Wales was presentedas an example of a regional TSA.

4.2.7 Towards the end of 2003 the Welsh Economy Research Unit of Cardiff BusinessSchool 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 projectoccurred in February 2004 when the TSA English Regions Consulting Group met inBirmingham 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 seeAppendix 1).

4.3.2 The research team presented a synopsis of the TSA structure, process andapplication to the meeting, and this was followed by questions. During theafternoon, each of the representatives communicated their particular interests, dataneeds, organisation structure, key contacts and special issues. Minutes of themeeting were subsequently distributed to participants by NWDA.

4.3.3 Following the meeting, a data audit was undertaken by the research team (seesection 5) in order to confirm the types of tourism economic information currentlyavailable and used by the regional authorities and agencies, and to confirm thetypes of data generated by specific regional organisations (local surveys). Results ofthat review are summarised in Appendix 2.

4.3.4 The main consultation allowed a range of issues to be examined, and reservationsand queries to be put forward and answered. These are set out below underexplanatory sub-headings.



4.4 KEY ISSUES ‘SYNTHETIC’ VERSUS ‘BESPOKE’ TSAS

4.4.1 The English Regions’ First Steps project produces ‘synthetic’ TSA estimates ratherthan ‘bespoke’ outputs. Synthetic Tables are based on UK information that has beenmechanically adjusted to the regional level, using control totals, in the absence ofregional primary data. While there continues to be an absence of regular and co-ordinated Input-Output tables for the UK regions (detailing inter-regional tradepatterns), and detailed regional surveys of tourism expenditures, this less than idealbasis for TSA construction will prevail. Hence, initial regional TSA tables will onlyprovide 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 ofbespoke regional Input-Output tables as currently specified for the UK, thestructure of those tables would not provide an ideal basis for TSA construction. Thisis particularly due to the lack of a separate accounting of accommodation andserviced food products, of travel agents and tour operators, or of recreational andvisitor services.

4.4.3 Any progress in moving away from ‘synthetic’ tables will be data intensive, requiringadditions to existing surveys and data provided for regions. It will also be essentialto achieve consistency in both how new data is accumulated and in the methodsused to construct base Input-Output tables.

4.4.4 The Allnutt and Allsopp reviews both highlighted that many users of regional datawould welcome greater detail of trade values in relation to tourism and otheractivities between UK regions. However, the same Reviews acknowledged that thecosts of getting companies to report information at this level, in the absence of anyfiscal relevance, would be prohibitive.

4.4.5 The fact that some regions (Wales and Scotland, for example) have alreadydeveloped their own trading estimates (with respect to the rest of UK) shows thepossibilities of producing such accounts, while also demonstrating that such‘bottom up’ development may be associated with unwelcome inconsistencies acrossregions.

4.5 STRATEGIC REQUIREMENTS OF INTEREST GROUPS

4.5.1 During the consultation the several respondents raised issues relating to therelevance of TSAs in planning future marketing activity, with some questioning theusefulness of a system of tourism account. The research team showed that TSAsprovided a foundation for more complex planning and modelling applications.

4.5.2 Particular doubts were expressed regarding the value of TSAs over and abovemechanisms such as MOSAIC (a marketing process) and /or forecasting tools.However, the research team noted that TSAs were essentially accountingframeworks, and while prerequisite to forecasting (as is any good information), werenot themselves tools for that purpose.



ISSUES RELATING TO OWNERSHIP OF OUTPUTS

4.5.3 Connected to the above questions were issues of ownership of TSAs and anysubsequent and linked impact and planning models developed from the framework.

4.5.4 One identified way forward discussed was the convening of a separate resourcegroup representing the combined interests of RDA partners and accountable tothem, who together would agree funding arrangements, appoint the appropriateexpertise to construct regional accounts, and provide steerage. However, anunderlying challenge to the development of a consistent regional accountingapproach, having equal ownership, would be posed by a political and economicframework which was moving towards increasing regional autonomy, and hencegreater 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 existingresources and/or improving existing commercial offer in conjunction with theprivate sector. They were then concerned to learn how their investment in regionalTSAs might contribute to improvements in optimising the benefits of these or otherspecific tourism projects.

4.5.6 While potentially regional TSAs (further down the development line) could be usefulin estimating the financial impact of a tourism project or investment, theapplications of first stage TSAs are more limited, and cannot be used to derivemultipliers. However, they do provide best estimates (hitherto absent) of the value oftourism at the regional level. This information could be used, for example, toestimate some of the supply implications resulting from an overall change in touristdemand.

4.5.7 Participants in the consultation also highlighted certain circumstances where atourism resource was shared by more than one region/RDA. For example, SherwoodForest occupies parts of both East and West Midlands. This situation accentuatesthe need for co-operation between RDAs and for consistent methodologies, but alsohighlighted that statistical tools based upon existing administrative areas may notalways suit policy purposes directly.

4.5.8 Participants also observed that the tourism sector in different regions varied interms of absolute size and growth. Other variations were recognised in the qualityand quantity of resources that could be diverted to tourism, and in theresponsiveness of regions to shocks and stimuli, with London being acknowledgedas a fast moving region in this respect. This was understood to have implications forthe prioritisation of resources.

DATA ISSUES

4.5.9 Even before the results of a subsequent data audit, it was clear that the quality oftourism expenditure data was generally understood to be very poor, both at nationaland regional levels. Detail on data audit for English Regions TSAs is found in section5 of this report.



4.5.10 Other data collection relating to accommodation occupancy rates and numbers ofvisitors, for example, is much better developed, having a direct bearing on themanagement of tourism services, while being easier to measure than expenditurepatterns.

4.5.11 Concerns about the quality of data led to some discussion on possible ONSengagement in collating better data. However, following the Allsopp review it was notfelt realistic to expect ONS resources to underpin regional efforts to improve localtourism data in the currently devolving political context. This is not to say that theONS could not be called upon to augment existing regional data/analysis, or beenlisted 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 existsnationally as well as regionally) is an absence of data on visitor flows betweenregions, except that which may be loosely inferred from traffic flows, touristattraction surveys and the IPS, for example.

4.5.13 The Allnutt Review of Tourism Statistics has encouraged regional agencies/tourismboards to explore data deficiencies and, as a result, self-awareness in this respect iscurrently very high. For example, the One NorthEast Tourism team published aTourism Data Audit which describes moves to develop a library of tourism researchpublications including reports, case studies and journals in order to promoteinformation use.

4.5.14 Many of the views expressed in that report mirror earlier consultations, includingthis one. A number of the participant organisations currently use local models suchas those provided by Cambridge Econometrics and STEAM, which in their turn usedUKTS and IPS. There was some concern that changes arising from the AllnuttReview (which might include the development and sophistication of regional TSAs)may threaten the ways ‘in which these surveys are funded and managed, which couldlead to inconsistencies in data collection and difficulties in producing trend data.’ (OneNorthEast Tourism Team, May 2004).

Figure 4.1. Checklist of How Key Tourism Statistics SourcesUsed at Regional LevelUsage/Data IPS UKTS LDVS Cambridge

EconInforming tourism strategy ** ** ** *Examining composition of sector inregion

** ** * *

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.



REFRESHING THE AGENDA

4.5.15 The consultation process had two principal objectives. First, it gave attendees theopportunity to further explore the concept of regional TSAs, and for them to posetechnical questions relating to the ‘construction’ process. Second, members of theresearch team were given an opportunity to tap directly into the considerableknowledge shared by the attendees.

4.5.16 Beyond that, the process gave an airing to questions which could not be answeredon the day, and indeed which may not be answerable within this report but whichare nonetheless important and will need further debate (see also recommendationsand conclusions section of this report).

4.5.17 Among these are the potential value of regional TSAs in the field of advocacy forindividual tourism projects and as an integral part of the whole range ofdevelopment agency/regional assembly policy.

4.5.18 Other issues relate to access of regional TSAs by private sector organisations; afeature which requires early consensus. Experiences in Wales and Scotland may behelpful in this discussion. The research team emphasised the importance of a stronginstitutional base for the development of regional and national TSAs during theintroduction to the consultation and in provided documentation.



5 TSAS FOR THE REGIONS: THE DATA ISSUES

INTRODUCTION

5.1.1 This section outlines the data requirements of regional TSA tables. A summary ofpotential data sources for TSA construction of those tables is presented in tabularform 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 ofidentified data sources at the English regional scale. As might be expected, dataavailability is problematic, particularly in terms of the estimates of tourismconsumption which as central to TSA construction.

5.1.2 As the earlier section showed, regional TSA development elsewhere has treated theregion 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 underdevelopment, but good data is anyway available to construct this employment-related table for English regions.

5.1.3 What follows is an assessment of the data sources available to estimate theconsumption of different types of tourists, and the production of tourismcommodities within each region.

Figure 5.1 Structure of TSA Table 1: Inbound Regional Tourism Consumption byProducts and Categories of Visitors (Visitor Final Consumption in Cash)£million Holiday(a) Business (b) VFR etc (c) Total (a+b+c)Characteristic Products

1 Accommodation Services

2 Restaurant, bar and cateringservices

3 …

Y Non Tourism Products

Z Distribution margins

Total Inbound Consumption Total of 1+2+3 etc. etc

5.2 POSSIBLE AMENDMENTS TO TSA STRUCTURE FOR ENGLISH REGIONS

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



5.2.2 The above approach would also be desirable as TSA Table 2 (consumption ofdomestic residents in the reference economy) cannot currently (or indeed in the nearfuture) be reported to WTO standards. Then, regional TSA Table 2 becomes thespending of UK residents in the reference region whether resident in that region ornot (see section 5.4 following for more detail). As data sources improve, it may bethat 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 theconstruction 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 andinvolves over 250,000 interviews each year as travellers leave the UK. Datacollection is stratified to reflect different transport modes.

5.3.2 The ONS also conducts Expenditure Trailers on an ad hoc basis to collect additionalinformation on the spending of overseas residents on different commodities. The1997 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 arereported, that is, Holiday, Visiting friends and relatives, Business and Other. Thedata is timely and is released monthly.

5.3.4 The IPS sample represents around 0.2% of all travellers as they leave the UK. Whilethe sampling error for all UK expenditure is less than 3%, sampling error increasesas 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 countyfor each year. This information will assist in estimating overseas gross expenditureby region. However, there is no information available for spending on individualcommodities at sub-national scale, and expenditure information (for counties) is notavailable by purpose of visit (holiday, business, VFR) although volumes areprovided.

5.3.6 It may be that interrogation of the raw IPS database could provide some additionalinformation on commodity spending by region. However, sampling errors wouldlikely be considerable at this scale. Perhaps more fundamentally, the conceptualbasis of allocating spending is unclear. The allocation of international and inter-regional travel fares, for example, to individual regions would require seriousconsideration, 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 fromoverseas tourists by region using IPS data, although the magnitude of samplingerrors, and the conceptual framework underlying the allocation of consumptionremains unclear.



5.4 DOMESTIC (UK) TOURISTS’ CONSUMPTION (STAYING TOURISTS)

5.4.1 At national level, TSA Table 2 refers to tourism consumption (expenditure) byresidents of the nation within the national economy, either for the purposes of a tripat home or abroad.

5.4.2 At the regional level an ‘ideal’ TSA Table 2 would report expenditures by region-residents 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 includesspending on travel within the region before leaving on a trip, but not monies spendwhilst outside the home region.

5.4.3 The same commodity groups as other TSA Tables would be used, and if datapermitted, sub-divisions by purpose of visit. The primary source of data on theexpenditures of UK domiciled tourists in the UK is the United Kingdom TourismSurvey (UKTS). The UKTS is an annual, national consumer survey, using a stratifiedrandom sample. In 2000, 55,000 interviews were conducted.

5.4.4 UKTS work is jointly sponsored by VisitBritain, VisitScotland, the Wales TouristBoard and the Northern Ireland Tourist Board, and is available on the StarUKwebsite. The principal value of the survey is its measurement of trips taken awayfrom home by UK residents lasting one night or more. Trips are categorised as eitherholidays, visits to friends and relatives (VFR), business and conferences or any otherpurpose.

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 measuredin 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 fulldata only for the constituent countries of Great Britain. However, in 2000 a one-offdisaggregation of data provided broad detail on volume and value for English TouristBoard areas, by purpose of visit and duration of stay.

5.4.7 Fuller information from UKTS is published for English Tourist Board Areas onwww.staruk.com but the levels of statistical error are unclear. Information is alsoreported on the domicile of visitors, meaning an region-by-region origin anddestination matrix (volumes) could be constructed from this dataset although thiswould likely be subject to large errors.

5.4.8 The geography of the English Tourist Board regions was close enough to GORs toenable an approximation of tourism consumption by UK domiciled tourists to bemade for each English region for 2000. As the best (indeed only) information onspend in England, these estimates have informed the construction of the syntheticTSAs reported on in Section 7 of this report (see Section 6 for more detail onmethodology).

5.4.9 From 2000 onwards, UKTS data is gathered from telephone interviews, usingrandom direct dialling, and conducted by the British Market Research Bureau(BMRB). Response rates can be as low as 30%.



5.4.10 As the Review of Tourism Statistics by Allnutt reports, problems with the UKTS aretwofold. First, statistical reliability is problematic particularly for sub-UK analysisand in respect of expenditure. Secondly, a recall methodology based essentially on‘cold (telephone) calling’ which requires respondents to remember detail of multi-trips 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 anextended questionnaire which largely focuses on attitudinal data collection. This toois likely to impair accuracy.

5.4.12 The new survey methodology does involve longer contact with consumers, andimproves the capture of frequent travellers away from home for long periods, andhence reduces under-estimations of these type of traveller, which had beenidentified in the old survey. A more detailed critique of the UKTS methodology canbe 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 bethe opportunity for some incremental methodological improvements. However, in theabsence of significant extra resource, accuracy and reliability are unlikely to improvesignificantly in respect of key TSA inputs.

5.4.14 In summary, the information on staying UK domiciled visitors at English-regionallevel is poor. The UKTS as currently specified is not likely to provide reliableestimates of expenditure (or indeed volumes) at this scale. No other consistent datasource exists to supplement UKTS. The contract for UKTS is shortly to be re-tendered 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 theUK, and in Scotland and Wales (DCMS, 2004; WTB 2004). Such visits are not part ofthe 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 15and 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 theDCMS, UK tourist boards, Countryside Agency, Forestry Commission and theEnvironment Agency, and undertaken by the National Centre for Social Research in1994, 1996 and 1998. Day visitor information was related to destinations and notresidence 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 randomsample of GB residents (aged 16 and over); 6,600 people were interviewed resultingin a 43% response rate12.

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



5.5.5 A gap in data exists between the cessation of the 1998 survey and the onset of theGB Leisure Day Visits Survey in 2002/3. More worryingly, it is far from clearwhether the survey is to continue in its current form. If data on the consumption ofday visitors are not collected in a consistent manner across the GB or UK (andallocated 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 notincluded, as with previous surveys. Data coverage is similar to the survey itreplaces, but excludes day trips by GB residents to Northern Ireland. Very fewleisure day trips between Northern Ireland and Great Britain were recorded inprevious surveys. Twelve expenditure categories were used.

5.5.7 The definition of the total ‘population’ (i.e. those trips which are considered tourist innature) is crucial to estimates of expenditure. The above surveys have definedtourist trips as those which last more than 3 hours in total. This, then, byimplication is the definition of ‘usual environment’ outside which a trip-maker canbe considered a tourist under international guidelines.

5.5.8 GBDVS provides extensive information on spending by 18 categories in each GOR asa destination, and as a trip origin (although there is not a full origin-destinationmatrix).

5.5.9 Sources of error in the GBDVS can include response errors, where difficulties mayhave arisen from poor recollection of detail, or result from questionnaire design.Non-response errors may result from refusals to be interviewed, failure to makecontact, 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 thereported figure) and around 15% for Wales, which has an enhanced samplecompared to its population size, and indeed a bigger absolute sample than forScotland. 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 ofindividual commodities, or relating to gross expenditure in each GOR will be veryhigh. There is an average sample size of about 400 responses per GOR. As can beimagined, the estimates regarding purchases of individual commodities in each GORcannot be considered reliable.

5.5.12 It is unclear whether GBDVS will be repeated in its current form. Even if it isundertaken again, given current levels of resource and current methodology (whereexpenditure details are collected as during a largely attitudinal survey), the survey isunlikely to provide a robust basis for any developed regional TSA. A summary of thedata sources that could support an estimate of tourism consumption in Englishregions is provided in Figure 5.2 below.



5.5.13

Figure 5.2 Tourism Internal Consumption Data at Regional LevelConsumptionelement

Datasource

RelevantTSA Table

Reporting level Comments

InternationalArrivals

IPS 1 Around 50 Englishcounties/UAs. Canbe amalgamated toGORs

Provides gross expenditurebut no commoditybreakdown. No expenditureinformation by type oftourist/purpose.

UK ResidentHolidaymakers

UKTS 1, 2 10 English tourismregions (reasonablyclose fit to GORs)

One off additional analysisfor 2000 only.

Day Trippers GBDVS 1, 2 GORs Gross expenditure, pluscommodity breakdown foreach GOR, thoughreliability of latteruncertain.

5.6 DOMESTIC TOURISTS’ OUTBOUND CONSUMPTION

5.6.1 UK Table 3 describes tourism consumption by UK residents overseas. It dependedprincipally on the IPS for a reliable control total, and the UKTS and UK Supply andUse Tables (itself partly compiled from IPS and other information) for producingshare of expenditure by product category. Expenditure was not broken down bycategory of tourist.

5.6.2 In the regional context, a table could describe spending by a region’s residentsoverseas (i.e. outside the UK), which could be guided by data from the FamilyExpenditure Survey (FES; which estimates holiday spending abroad and is reportedby GOR). However, exploratory work at the UK level suggests that expenditure levelsreported in FES differ greatly from (and are much smaller than) estimates providedin IPS and UKTS.

5.6.3 There is no information available on the spending of region-residents in differentparts of the UK, save from (partially) in the FES which does not identify whether UKholiday-related spending is undertaken in the home region or outside. The situationis similar for day visits, where GBDVS reports total expenditure for each GOR as anorigin of visits, but does not specify whether trips are taken outside the referenceregion, in whole or part.

5.6.4 This poor data provision may change as regions gain greater autonomy, and requirea better regional accounting of overall consumption. However, currently a derivationof regional outbound tourism consumption would be difficult in the extreme, aswould an estimate of tourism balance of trade for any region or between EnglishRegions. TSA Table 3 does not in any case link directly to other TSA Tables.



5.7 THE PRODUCTION OF ‘TOURISM’ INDUSTRIES IN ENGLISH REGIONS

5.7.1 TSA Table 5 recounts the production of tourist-related goods and services within areference economy. Among those commodities and industries separately identifiedat UK level are accommodation, transport sectors, travel agencies, and recreationalservices. 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 ofrestaurants, and how much from other industries, including as sold in hotelrestaurants for example.

5.7.2 A regional Table 5 would balance regional tourism product outputs with totalregional industry output. The accounting of the production of tourism industrieswould 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 whichprovides estimates of gross value added for GORs by industry, the latter using avariety of source data. Estimates of gross value added can vary between the twosources; initial investigation revealed differences of up to 10% in key tourism-relatedsectors.

5.7.4 Neither of these (related) data sources are fully fit for purpose in estimating the TSATable 5 for English regions. There are an number of common reasons why this is thecase, whilst each dataset has its own specific limitations.

5.7.5 The major barrier to assessing the English-regional tourism ‘supply side’ is thecomplete lack of information on the production of tourism commodities. Whilst thereis some information on the size of regional tourism-related industries, this is onlyrelevant to part of the Table 5 estimation. We simply do not know, of the total outputof (say) the hotel industry in a region, how much consists of restaurant orentertainment products. Thus, we cannot balance demand and supply for eachtourism 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 fullproduct by industry matrix on a timely basis (the last published is for 1990). For theUK TSA, inference was drawn from other TSAs, and advice taken from experiencedindustry analysts, and this used in conjunction with the limited data available in theUK SNA to estimate Table 5 for the UK.

5.7.7 ONS produced figures for regional industry GVA (latest for 2001) might be used inthe estimation of industry scale in English regions. However, these are producedwith inadequate industry disaggregation (15 industries) for TSA purposes. Tourismindustries identified in TSAs globally include, for example, accommodation andserviced food separately identified, whereas they are reported as a single industry inthe GVA tables. The situation is similar for other industries such as transportservices and recreation13.

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



5.7.8 Additional to the above, the regional GVA estimates are just that – and currentlyonly that. No estimates are published of the output (or indeed turnover) of regionalindustries. Regional GVA is decomposed into compensation of employees and othervalue 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 areproduced on a five year ‘rolling average’ basis, this intended to smooth out volatilityin year-on-year changes in estimates. However, a rolling average approach does notsquare at all with the need to balance supply and demand in a single period orindeed with the very notion of an ‘economic account’.

5.7.10 For the above reasons, the ONS Regional Accounts as currently published (i.e. asGVA estimates) are of limited use in TSA construction, except perhaps as a ‘qualityassurance’ check on any constructed account. The main source of supply-sideinformation in regions to aid TSA construction will then arise from the results of theAnnual Business Inquiry.

5.7.11 The Annual Business Inquiry (ABI) is the main government survey of companies inBritain. It is conducted in two parts: one dealing with employment, the other withfinancial information. The financial inquiry covers about two thirds of the UKeconomy whilst the employment part is far wider.

5.7.12 The ONS has produced ABI estimates from 1998 to 2001 for English GovernmentRegions (GORs), using a consistent methodology across the UK with regionalestimates constrained to UK national estimates at the all industry level. Variablesreported include turnover, employment costs, capital formation and approximatevalue added, although further variables are available on request.

5.7.13 The ABI financial information (which is of interest in constructing TSA Table 5) isimmediately available at SIC Division level (2-digit) and further disaggregations areavailable, if stringent disclosure rules are not breached.

5.7.14 There are, however, some problems involved in assessing the output of industriesusing ABI data. Firstly, although turnover is reported output is not and conceptualdifferences (for example changes in stock levels, treatment of goods for resale etc.)means they cannot be treated as identities. Additionally, hitherto the ABI samplingframe has not been specified to ensure adequate coverage of industries in eachregion, 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 aworkplace-based survey, it is not clear whether multi-plant companies which have apresence in a number of regions (for example large hotel chains) have their outputapportioned to regions in the most appropriate manner. Indeed, perusal of the datasuggests that they may not. Further discussion of the ABI at regional level can befound in Allsopp (2004).



5.7.16 In summary, ABI is currently the best tool to assess the level of supply of tourismproducts in English regions. However, sampling and conceptual issues means thatany current assessment of regional output should take account of employmentestimates (whether from ABI Part 1 or the Local Labour Force Survey, or both) as wellas 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 theeconomy 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 themajor 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 Englishregions, or even the level of imports into each region (be this from the rest of the UKor abroad)14. Although some Customs and Excise data has become availablerecently, it only relates to goods and not services (which of course comprise the bulkof tourism demand).

5.8.3 In the absence of bespoke primary surveys (such as supported the Welsh TSAproject) the derivation of this part of Table 6 will then rely either upon anadjustment to the relevant cells in the UK Supply and Use Tables, or the estimationof imports through indirect or modelled means. Neither approach is particularlysatisfactory. Similarly, the application of taxes and subsidies to each product ineach region would rely upon UK results, applying UK ratios to the regional output ofproducts (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 sourcesthe Annual Business Inquiry (Part 1) and the Labour Force Survey (latterly LocalLabour Force Survey). The first is a workplace-based survey of businesses coveringthe large majority of the GB economy, the latter a resident survey covering economicactivity.

5.9.2 Relevant variables available from the Annual Business Inquiry (Part 1) includeemployee jobs, and splits by gender and full-time, part-time. However, use of theABI to estimate tourism employment by industry highlights a number of limitations.Firstly, estimates only cover employee jobs, excluding the self employed and owner-labour 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 hoursworked for part-time employees.

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



5.9.3 Sampling errors for the ABI are not published at regional level, and a lack ofregional stratification by industry means that there may be problems with samplesizes 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 firstproblem somewhat, including estimates of working proprietors as well as employeeson a given day (in December). There is also an estimate of average employment forthe reference year, again including proprietors. However, the nature of the algorithmused 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 thatthe estimates of average employment will be sophisticated or accurate for tourismindustries in specific regions. Thus, the December/January timing of the ABI surveyis 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 – andremuneration (for a selection of the sample). Detail is also available regardingqualifications and occupations and seasonal patterns of labour supply can beinferred.

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 (atwww.data-archive.ac.uk). These enable very sophisticated analyses regarding thenature of the workforce. However, the LFS sampling frame is complicated andbespoke analysis requires a high degree of expertise.

5.9.7 The LFS is, of course, a sample survey and sampling problems will arise whenreporting upon individual industries in specific regions. Additionally, estimates ofgross workforce numbers made from the sample will not match other sources (suchas ABI) due to differences in scope and methodology, and to sampling error.Moreover, comparison of some variables with other published sources at regionallevel (such as reported levels of remuneration compared with the New EarningsSurvey) suggest the possibility of systematic bias (in this case under-reportingincome) 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 theconstruction 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 satelliteaccount for each English region would be extremely difficult. Any such accountwould be subject to significant estimation errors, driven mostly by inadequatesample sizes at regional scale in surveys of both consumption and production.



5.10.2 There is simply no information available on what products are produced by whichindustries, and these product-industry relationships may well vary significantlyacross England, as the nature of tourism industries is different, for example, inLondon and more rural GORs. Additionally, information on regional imports, whereit 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 Policymakingand DCMS Tourism Statistics Improvement Initiative the situation will improve in themedium term. However, even if these reviews spark a genuine improvement in thereliability of data at the regional level (and even this will require significantlyimproved resources) the structural issues regarding the fitness of purpose foravailable statistics for TSA estimation will likely remain for a considerable time. Forexample we might hope that in the next 5-10 years accommodation and restaurantsectors are separately reported in UK National Accounts, but having access to sucha sophisticated account for regions seems far off.

5.10.4 Despite the above, the presentation of TSA variables for English regions at this stagehas several benefits. For example, an account demonstrates to potential users thenature of the TSA, and the type of variables that are derived, such as tourism valueadded, tourism ratios etc. It also provides some ‘broad brush’ indications regardingthe scale of activity, and perhaps encourages policymakers and others to thinkabout 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 syntheticTSA for English regions. The synthetic TSA uses the best available regional data inconjunction with the results of the UK project to reconcile supply and demand at theregional scale. However, the variable quality of these data sources should not beforgotten when perusing the results of the exercise presented in Section 7.



6 METHODOLOGY

6.1 ESTIMATION OF TOURISM CONSUMPTION & SUPPLY IN ENGLISH REGIONS

6.1.1 As earlier sections have shown, a critical aspect of a developed Tourism SatelliteAccount is the reconciliation between supply and demand for each identifiedtourism product. This is achieved via the extension of the System of NationalAccounts (SNA) (which reconciles supply and demand for all products in aneconomy).

6.1.2 English Regions do not have an equivalent of the SNA which reconciles supply anddemand for products. Therefore this reconciliation must be achieved through othermeans, using information available on tourism consumption, and on the size ofregional industries. This can then be combined with intelligence gained during thecompilation of the UK TSA to estimate the supply and demand of commodities at theregional level. This methodology will enable an approximation of tourism gross valueadded to be made for each region.

6.1.3 There are, then, significant data gaps at the regional spatial scale. However, someinformation 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 tourismexpenditure at regional level.

Figure 6.1 Tourism Consumption Data at Regional LevelConsumptionelement

Datasource

RelevantTSA Table

Reporting level Comments

InternationalArrivals

IPS 1 Around 50 Englishcounties/UAs. Canbe amalgamated toGORs

Provides gross expenditurebut no commoditybreakdown. No expenditureinformation by type oftourist/purpose.

UK ResidentHolidaymakers

UKTS 1, 2 10 English tourismregions (reasonablyclose fit to GORs)

One off additional analysisfor 2000 only.

Day Trippers GB DVS 1, 2 GORs Gross expenditure, pluscommodity breakdown foreach GOR, thoughreliability of latteruncertain.

6.1.4 As revealed above, it is possible to make a reasonable estimate of gross tourismexpenditure for English Regions (leaving aside the reliability issues discussedelsewhere). However, there are additional complexities in constructing the earlytables of the TSA at the regional scale.

6.1.5 TSA Table 1 deals with ‘inbound’ consumption and Table 2 with ‘domestic’ tourismconsumption. At the regional scale then, the spending of a resident of the NorthWest visiting the North East should be allocated to Table 1, whereas that of a NorthEast resident in the North East to Table 2. The data sources do not allow this levelof detail and thus TSA Tables 1 and 2 are reported in summary, and aggregated.



6.1.6 There are other elements of tourism consumption which must be accounted for thatare not addressed (explicitly) in the source surveys. For example, monies spent byoverseas residents on fares to UK carriers must be added, as must monies spent byUK 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 allocatedto regions based upon the level of employment in the air and sea transportindustries.

6.1.8 On the supply-side the situation is similar, with some information availableregarding the general size of industries in regions, but little or no information on thesupply of tourism products. A fully developed TSA requires us to estimate thissupply, yet information on regional supply is solely industry based. Thus, we canestimate the output (or at least turnover) of, for example, accommodation providersfor 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 similarestimation methodologies were used as for the UK TSA. The results of TSAsdeveloped 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 tourismproducts for English regions.

Figure 6.2 – Supply Data at Regional LevelData Source Reporting

levelSelected Variables Comments

Annual BusinessInquiry

GORs Approx Gross ValueAdded, turnover,employment costs

2-digit SIC; ‘raw’ data; workplace-based. No direct information onindustry output

ONS RegionalAccounts GVAEstimates

GOR Gross Value Added 16 industry groups inc. hotels &rest. Regional data calculated as5yr moving average; residencebased

6.1.11 As Figure 6.2 indicates, there is an overlap between the information available fromthe ABI and regional accounts. Estimates of gross value added can vary between thetwo sources; initial investigation revealed differences of up to 10% in key tourism-related sectors.

6.1.12 Given this choice of sources, the ABI was used to constrain the size of industries inregions. This is because;

ABI data is available at a greater level of disaggregation – for example, no GVAinformation is available from regional accounts for individual transport sectors;

Information is available on turnover from ABI but not regional accounts, giving abetter basis for the estimation of industry output;

The ‘rolling average’ approach for regional accounts, designed to smooth outvolatility, means regional aggregate data do not refer properly to a single referenceyear

The workplace (rather than residence) base of ABI gives a better indication of inwhich GOR tourism supply actually occurs



6.1.13 There are of course a number of issues regarding the reliability and accuracy of theABI raw dataset at regional level, and a number conceptual issues regarding theregional allocation of the output of multi-plant operations. Nevertheless, the ABI wasconsidered the most appropriate indicator of regional supply. We expect the qualityof the regional ABI data to improve considerably as the recommendations of theAllsopp 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 andoutput in each English region. These must be combined with tourism demandestimates for each region in a way that allows tourism GVA and employment to bederived. Simple procedures for doing this tend to result in regional TSA tables thatmight be described as ‘implausible’.

6.2.2 Although we have reasonably robust estimates for tourism expenditure in eachregion, once this is broken down into spending categories the robustness of theestimates weakens. Furthermore, IPS estimates of spending by category are derivedfrom the last time the expenditure trailer was run and in any case do notcorrespond to the TSA classifications of commodities. Attempts to classify tourismspending on each product from the surveys suffer at the regional level from lack ofdata robustness far more than at the national level.

6.2.3 Simply using national shares of expenditure at the regional level leads to TSA tablesthat are implausible because in this case there are many instances where derivedtourism demand would exceed local supply; for example, products and industriessuch as ‘water transport services’ and ‘air transport services’ tend to suffer in thisregard because production is geographically different. Some regions produce verylittle water transport services yet a simple expenditure-share method of TSAconstruction will give tourism demand for these services that exceeds supply.

6.2.4 Similarly, simple allocations of spending on products leads to situations wheretourism ratios – the percentage of demand that is sold to tourists – to vary widelybetween regions for no apparent reason other than that using national expenditureshares is obviously incorrect; where, for example, the rate of provision of hotelservices is higher than the national average, it might be expected that tourists useaccommodation services at a higher than average rate, and simple allocationmethods cannot account for this.



6.2.5 A matrix balancing procedure has therefore been used that makes the best use of allavailable information. This means that information from the UK TSA is used on thebreakdown of different types of spending pattern and on the patterns of industrialoutput – which products are produced by which industries. Spending patterns aretaken for eight categories of expenditure from the UK TSA, and regional totals foreach of the eight categories are used. These categories are:

1 International inbound tourism(spending in the region by foreign tourists)

2 UK inbound tourism(spending in the region by UK residents from outside England as they visitEngland)

3 UK residents going abroad(spending in the region by UK residents from outside England as they goabroad)

4 English holidaymakers(spending in the region by tourists resident in England)

5 English residents going abroad(spending in the region by English residents as they go abroad)

6 Fares reallocation[re-allocation of international travel fares)

7 Tourism Day visits8 Other Components of tourism demand (second homes)

6.2.6 For each of these spending categories, total expenditure in each region isconstrained 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 ofvisit, 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 ofvisit. In other words, in regions which are more intensively visited by businesstravelers, the spending patterns in these three categories are more like the UKpattern 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 byproportioning 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 byproportioning out the UK TSA values to these regions. This means that a region witha larger accommodation sector will have initial values of production ofaccommodation and restaurant services that are in proportion to the UK TSA forthis sector.



6.2.10 Using these initial values, an unbalanced TSA table was produced for each regionand then balanced using a technique known as maximum entropy. This techniquehas 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 satisfiesadding-up constraints and data is sparse. This method essentially derives the mostlikely value of each cell of the TSA table that leads to a balanced matrix. Entropybalancing is not a replacement for data gathering, but can be used to fill in the gapswhere 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; theresults are presented below.

6.2.12 The following section recounts the illustrative results from the regional modellingprocess. All results are, like the UK, Welsh and Scottish TSAs for base year 2000.



7 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 supplyfor English regions by Nottingham University. Tourism GVA varies as a percentageof total regional GVA from 2.6% in the West Midlands to 5.3% in London. TourismGVA for England as a whole is 3.9% of English total GVA, the same figure as for theUK as a whole.

7.1.2 Tourism GVA is highest as a percent of total regional GVA in London (5.3%), theSouth West (5.0%) and the South East (4.4%). Only these regions have highertourism intensities than the England and UK averages. The lowest figures arerecorded in the West Midlands (2.6%), Yorkshire and the Humber (2.8%) and theEast of England (2.9%).

Figure 7.1: Tourism Gross Value Added in English Regions (2000)

Tourism GVA

(£m)Percent of

regional GVATourism

Consumption(£m)

Ratio of GVA totourism

consumptionNorth East 823 3.1% 2,134 0.386North West 2,750 3.3% 7,407 0.371Yorkshire and The Humber 1,657 2.8% 4,431 0.374East Midlands 1,637 3.0% 4,779 0.342West Midlands 1,772 2.6% 4,617 0.384East of England 2,376 2.9% 7,237 0.328London 7,089 5.3% 20,614 0.344South East 5,835 4.4% 17,948 0.325South West 3,044 5.0% 8,025 0.379England 26,983 3.9% 77,193 0.350UK 32,010 3.9% 89,613 0.357

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



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 addedcontent, particularly air transport services, which reduces the ratio of GVA totourism consumption. Meanwhile, the value added content of key industries such ashotels and accommodation is higher in London than the UK average, which tends toincrease the ratio of GVA to tourism consumption. The ratio of GVA to tourismconsumption is lower in London (0.357) than the UK average (0.361), whichindicates that the first effect, of different tourism consumption patterns, is moreimportant than the second effect of industry value added content in determining theratio of GVA to tourism consumption in London. The primary reason why London’stourism GVA is the highest proportion of regional GVA is because tourismconsumption is highest in this region.

7.1.5 Figures 7.2 and 7.3 on the following page, present further results from the TSAestimation process. Tourism ratios on supply indicate what percentage of aproduct’s supply is consumed by tourists (Figure 7.2). This demonstrates that theaccommodation 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 byproduct heading. For example in London and the South East a far higher proportionof tourism spend (36% and 39% respectively) was on transport services than inother regions such as the Yorkshire and Humberside (11%) and the West and EastMidlands (both 12%).

7.1.7 This latter finding illustrates an important policy point. The location of transportinfrastructure and particularly entry points to the UK will have a significant impactupon the level of tourism GVA in regions. There is no ‘level playing field’ where thesize of each region’s potential tourism economy is based only upon its natural ordeveloped attractions.

7.1.8 Figure 7.2 and 7.3 provide a wealth of data. However, it should not be forgotten thatthis data is based on a mechanical allocation of UK level data using control totalsthat are themselves suspect. The results should then be considered as giving onlyan indication of the nature and scale of the tourism economy in each region, and asan illustration of what kinds of variables would emerge from a developed TSA.



Figure 7.2 Tourism Ratios on Supply (2000)

NE NW YH. EM WM EE L SE SW UK

A Tourism Products A1 Tourism Characteristic Products

20% 21% 16% 20% 17% 18% 22% 31% 29% 25%1 Accommodation Services 60% 59% 61% 60% 49% 57% 65% 57% 70% 71% 1.1 Hotels and lodging services 58% 57% 58% 59% 48% 53% 65% 55% 66% 70% 1.2 Second homes services 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%2 Restaurant, bar and cateringservices (excl. canteens) 32% 35% 37% 36% 29% 34% 31% 36% 44% 43%3 Passenger transport services 12% 10% 5% 9% 6% 14% 28% 30% 13% 19% 3.1 Railway transport services 25% 17% 5% 13% 4% 23% 11% 30% 20% 16% 3.2 Other land transport services 5% 5% 4% 4% 3% 5% 10% 12% 9% 8% 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% 3.5 Ancillary transport services 1% 1% 1% 2% 1% 1% 2% 1% 2% 2%4 Travel agency and tour operators 99% 99% 99% 99% 99% 100% 100% 100% 99% 100%5 Recreation & oth. entertainment 7% 11% 10% 9% 15% 5% 3% 13% 15% 10%6 Tourism connected products 1% 1% 1% 1% 1% 1% 2% 1% 1% 1% 6.1 Post & telecoms services 1% 1% 1% 2% 1% 1% 3% 2% 2% 1% 6.2 Fin. and Insurance Services 1% 1% 1% 1% 1% 1% 2% 1% 1% 1% 6.3 Rental services 7% 1% 0% 1% 1% 1% 2% 1% 2% 2% 6.4 Health services 0% 0% 0% 0% 0% 0% 1% 0% 1% 0% B1 All other products 1% 1% 1% 2% 1% 1% 2% 2% 2% 1% Distribution margins 5% 5% 5% 7% 5% 5% 7% 7% 8% 4%

Figure 7.3 – Tourism Consumption by Product (2000)

NE NW YH. EM WM EE L SE SW UK

A Tourism Products 62% 63% 60% 51% 62% 65% 71% 70% 60% 63%A1 Characteristic Products 11% 11% 12% 9% 10% 9% 11% 7% 15% 11%1 Accommodation Services 10% 11% 11% 8% 9% 7% 10% 6% 13% 10% 1.1 Hotels and lodging services 1% 1% 1% 1% 1% 1% 0% 1% 2% 1% 1.2 Second homes services 26% 25% 29% 24% 29% 21% 17% 17% 25% 20%2 Restaurant, bar and cateringservices (excl. canteens) 18% 16% 11% 12% 12% 26% 36% 39% 13% 24%3 Passenger transport services 1% 1% 1% 1% 1% 1% 1% 1% 1% 1% 3.1 Railway transport services 4% 4% 4% 3% 3% 4% 4% 4% 5% 4% 3.2 Other land transport services 1% 1% 1% 0% 1% 3% 4% 4% 1% 3% 3.3 Water transport services 11% 10% 4% 7% 6% 18% 27% 29% 6% 15% 3.4 Air transport services 1% 1% 1% 1% 0% 0% 1% 0% 1% 1% 3.5 Ancillary transport services 3% 5% 3% 3% 4% 4% 4% 3% 2% 2%4 Travel agency and tour operators 3% 5% 5% 4% 7% 4% 4% 4% 4% 6%5 Recreation and oth. ent. 10% 6% 6% 8% 6% 5% 5% 5% 7% 3%6 Tourism connected products 2% 2% 2% 3% 2% 2% 2% 2% 2% 1% 6.1 Post & telecoms services 2% 2% 2% 3% 3% 2% 2% 2% 2% 1% 6.2 Fin. and Insurance Services 4% 0% 0% 1% 1% 0% 1% 0% 1% 1% 6.3 Rental services 2% 1% 1% 1% 1% 1% 1% 1% 2% 0% 6.4 Health services 17% 20% 20% 27% 19% 19% 16% 16% 21% 20% B1 All other products 11% 11% 13% 14% 13% 11% 8% 9% 11% 15% Distribution margins 62% 63% 60% 51% 62% 65% 71% 70% 60% 63%



7.2 TOURISM EMPLOYMENT IN ENGLISH REGIONS: BACKGROUND & METHOD

7.2.1 Tourism employment is not a ‘core’ part of the TSA largely because employment isnot often reported as part of the system of national accounts. However, the WTO(and most developed TSAs) recognise the importance of employment as a policyvariable, and TSA Table 7 comprises the employment module, detailing tourismemployment by (typically) full and part time, by gender and by industry ofemployment.

7.2.2 The development of TSA Table 7 for English Regions benefits from well developeddata sources such as the Annual Business Inquiry and Labour Force Survey.However, as Section 5 revealed these data sources have a number of problems andlimitations. These limitations mean that at pilot stage the employment module forEnglish Regions cannot be as disaggregated as for the UK (indeed problems exist indeveloping an employment module even at UK level).

7.2.3 The methodology for estimating employment in tourism industries for EnglishRegions follows (in large part) that adopted for the UK First Steps report, presentedfully in McNicoll and McLellan (2004), available from www.culture.gov.uk. However,data restrictions have necessitated a number of alterations, most notable amongstthem;

The aggregation of the 11 tourism industries identified at UK level into 6industries

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 figureswould be achieved if employment were based on place of residence, but theworkplace figure is more closely allied with TSA concepts and methods (i.e. workersare 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, wehave published these figures although their reliability is suspect.

7.2.6 Figure 6.6 provides information on tourism industry employment and tourism-dependent employment. We have additionally published the totals for employment,and tourism-dependent employment for the UK. This latter is for information onlyand 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 industryemployment 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 asdata quality allows. Estimates of tourism-dependent employment are not.



7.2.8 The application of tourism-industry ratios to employment to estimate tourism-dependent employment (following the method suggested by EUROSTAT) ‘marries’separately estimated data. However, the balancing required to estimate industryratios for regions introduces inconsistencies with the UK account which cannoteasily be resolved. We cannot constrain both financial and employment data tonotional 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-dependentemployment between English Regions (as here the methodology is the same anduses the best available data) but these cannot be aggregated to an English totalwhich is comparable (by industry) with either the UK total, or with TSAs developedin 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 from740,000 in London to 146,000 in the North East. London and the South Eastaccount 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 inEngland, 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% ofall 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 SouthEast which has the highest number of workers who are dependent on tourismreceipts for their employment (240,000 workers). The total comprised over 6% of allemployment 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, at46,000 (4.4%). However, this was far from the lowest proportion of the workforce ofany region; both the West Midlands and East of England had 3.4% of theirworkforce directly dependent upon tourism. Tourism dependent-employment is notreported by industry due to reliability issues. It should be remembered that thesetotals do not account for any jobs supported by tourism indirectly through supplychain or wage effects.




Figure 7.4 Tourism Industry and Tourism Dependent Employment (2000)Total Workers

Thousands NorthEast

NorthWest

Yorks &Humber

EastMids

WestMids East London South

EastSouthWest Eng. UK

1,2 Hotels &accommodation;restaurants etc.

65.4 171.2 128.6 77.7 110.2 102.5 311.7 319.7 108.3 1,395.1 1,760.6

4,5 Railways; Other landtransport 22.5 69.0 45.0 44.9 39.2 96.4 123.9 85.7 37.1 563.7 677.2

6,7 Water & Air Transport 4.7 13.6 9.9 8.5 10.6 11.1 18.9 17.0 9.8 104.1 123.28,9 Other transport serv.;travel agents etc. 10.4 36.0 23.6 28.1 35.7 19.9 72.9 57.7 37.4 321.7 373.9

10 Recreation services 33.8 97.6 48.5 28.2 56.3 79.8 164.3 102.9 43.4 654.9 759.511 Renting of moveables 6.0 13.2 10.6 9.5 14.1 19.0 44.9 23.2 12.9 153.4 172.2Total tourism industries 142.8 400.5 266.1 196.9 266.1 328.7 736.6 606.3 248.9 3,193.0 3,866.6Rest of the economy 908.6 2,574.3 1,891.3 1,661.2 2,069.9 2,117.3 3,430.7 3,219.4 1,872.7 19,745.4 23,295.4Total Economy 1,051.4 2,974.8 2,157.4 1,858.1 2,336.0 2,446.0 4,167.3 3,825.6 2,121.6 22,938.4 27,162.0

Total Tourism Dependent EmploymentThousands North

EastNorthWest

Yorks &Humber

EastMids

WestMids East London South

EastSouthWest Eng. UK (for

info only)Total tourism industries 37.7 110.2 76.0 51.7 63.5 64.9 184.5 202.0 85.6 876.1 1061.8Rest of the economy 8.5 23.8 16.6 18.7 15.1 17.7 35.3 36.6 27.2 199.7 202.9Total Economy 46.2 134.0 92.5 70.4 78.6 82.7 219.8 238.7 112.8 1,075.7 1264.6As percent of total regionalemployment 4.4% 4.5% 4.3% 3.8% 3.4% 3.4% 5.3% 6.2% 5.3% 4.7% 4.7%


7.4 ESTIMATES FOR 2001-2003

7.4.1 As noted elsewhere TSAs have increasingly been used as a benchmark to producemore timely information. In the UK First Steps Report, information on changes intourism consumption since 2000 was applied to estimates of tourism GVA andemployment 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 regionsfor 2001 – 2003. These estimates assume key TSA relationships betweenconsumption and value added remain unchanged. Changes in regional expendituretraced in the UKTS and IPS for 2001-2003 inform the analysis, with other elementsof consumption assumed as following the UK average for each region.

7.4.3 To maintain internal consistency the denominator upon which percentage of GVAfigures 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 regionalaccounts. Thus derived denominators for regional value added from Figure 7.5 willnot match published ONS estimates.

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

Figure 7.5 Tourism Value Added since 2000Tourism Value Added Percent of Regional Value Added

£m 2000 2001 2002 2003 2000 2001 2002 2003North 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%Yorkshire andThe Humber 1,657 1,675 1,501 1,509 2.80% 2.71% 2.33% 2.24%

East Midlands 1,637 1,551 1,488 1,516 3.00% 2.74% 2.47% 2.38%West Midlands 1,772 1,811 1,769 1,839 2.60% 2.60% 2.42% 2.33%East ofEngland 2,376 2,325 2,355 2,403 2.90% 2.63% 2.54% 2.45%

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%England 26,983 26,410 25,775 26,043 4.20% 3.90% 3.60% 3.50%

Welsh Economy Cardiff BusinessResearch Unit School

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8 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 Stepsproject parallel those of the wider UK First Steps project. This is unsurprising giventhe commonality of relevant datasets and institutional structures. It is thereforestrongly recommended that this section is read in conjunction with the appropriatesections of the UK First Steps project (DCMS, 2004). The main recommendationsfrom 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 inan improved accounting of tourism activity, and with recognition that well developedTSAs could inform new policy and resource directions, and provide intelligence forbetter intervention. This international drive was re-affirmed in a speech by Hans-Werner Schmidt, the Administrator responsible for tourism at the EuropeanCommission. His speech indicated that the next revision of EUROSTAT directives onthe collection of tourism statistics would include the requirement for each countryto 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 onimprovements 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 andstructural recommendations from the Allnutt Review of Tourism Statistics (andindeed the wider Allsopp Review of Economic Statistics).

8.1.4 The English Regions Next Steps agenda is thus in large part dependent on thenature of improvements at the UK-national level. For example, if the Office forNational Statistics, DCMS and its partners do not act on the main recommendationsfrom the Allnutt and Allsopp Reviews, only very limited progress will be possible atthe regional level towards (non-synthetic) TSAs.

8.1.5 However, this does not mean that regional development agencies and tourism bodiesshould take a passive stance. For example, the RDAs and their partners are in aposition to lobby the ONS (and others) with respect to several key issues. These aredetailed 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/institutionalissues.

15 Speech at DCMS TSA event, English Heritage Theatre, London 19th November 2004Welsh Economy Cardiff BusinessResearch Unit School

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8.1.6 A proper regional stratification of the 2006 expenditure trailer of theInternational Passenger Survey – As Section 5 indicates, the regional allocation oftourism consumption is a key issue for TSA development. Issues regarding UKTSand day visitors are complex and institutional responsibilities varied. However, withinternational visitors subject to a detailed expenditure survey in 2006 theopportunity exists to ensure a proper accounting of associated regional consumptionwhich would inform future TSA construction. Despite the Allsopp Review indicatingthe need for ONS surveys to have a better developed regional element, it is not clearwhether this will be instigated in time for the 2006 trailer. Thus, discussions withONS should begin as a matter of urgency to ensure proper specification of the 2006trailer as regards location of spending. This may involve a contribution by RDAs toany marginal survey costs, but this money would be very well spent.

8.1.7 Improvement to regional accounting structures and the development ofsurvey-based regional Input-Output frameworks – The Allsopp Review willundoubtedly result in improved regional accounting in the near term. However, ONSor the Allsopp Review does not currently have any plans to develop Input-Output (orequivalent) Tables at regional level. Scotland and Wales already benefit from theseTables, enabling a deeper understanding of the entire regional economy. Meanwhile,in England regional accounts are predicated upon a narrow methodology, withlimited variables and industries available, and requiring presentation in a ‘five-yearaverage’ form to smooth volatility. These accounts are of limited policy use for RDAsand moves towards regional Input-Output are to be encouraged. A number ofexisting examples indicate the ways in which this can be done. In the South West inparticular, the Higher Education sector has developed Input-Output Tables. InScotland, even predating devolution, the Scottish Office and latterly executive haveundertaken developments using their privileged access to data and influence onsurvey and sample design. Meanwhile, the North West RDA has undertaken anextremely extensive tourism user survey with a strong consumption elements. RDAshould consider all these factors and their usefulness in moving towards developedTSAs.

8.1.8 Integration of Tourism-useful questions into any new ONS Surveys – Existingsurveys such as the General Household Survey and family expenditure survey are oflimited use in TSA construction due either to the lack of spending data, or a lack ofinformation regarding the use of products purchased. Any re-engineering of ONShousehold 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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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/productsof interest in tourism supply are presented in the UK accounts in a very aggregatedform, hindering TSA construction. In particular the further disaggregation ofaccommodation and restaurant/catering services; ancillary transport services andtravel agency operations and recreation services in annually produced Supply andUse Tables would be of significant benefit. There is adequate disaggregation withinexisting (and proposed) SIC structures to identify these discrete tourism productsand industries, and results for individual sectors (such as hotels) are reported in theABI, suggesting the data might support further disaggregation in Input-Outputtables.

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 – Tourismpartners are at a crossroads regarding tourism statistics. One option is to continuewith surveys more or less ‘as is’, perhaps with marginal resource improvements toincrease reliability of estimates. The second option would be a ‘ground up’reworking of tourism statistics to ensure comparability and regional reliabilityacross 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 thesample. RDAs should continue the dialogue with DCMS, VisitBritain and partners toasses the likely costs of any re-engineering of statistical tools, and in particular themarginal cost involved in making results reliable at the regional scale. Options suchas the integration of tourism spending data into general household surveys shouldbe considered, in conjunction with ONS wherever possible. We would stronglysuggest that marginal improvements to existing surveys are unlikely to providereliable data at regional level and that a ground-up reconsideration of how tourismconsumption data is collected is long overdue.

8.1.11 The imposition of new structures to take responsibility for national andregional tourism statistics – Much of the blame for ongoing under-resourcing oftourism statistics in the UK (and consequent poor statistical base) is due to the lackof a clarity on responsibility for tourism statistics. Some surveys are undertaken byONS, and others by tourism agencies or coalitions of agencies. The resultantstatistical landscape is confused, incoherent and unhelpful for policy development.This description applies to the national case – for English regions, the situation isworse, with yet more agencies, and potential partners and users involved. Bringingorder to this situation, and establishing clear lines of responsibility for the design ofrelevant surveys and collection methodologies to a single agency (at national level) isa pre-requisite to further TSA development. Meanwhile, the drive for thesedevelopments, however undertaken, must come from the RDAs as the bodies withprimary 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 overGBDVS and the re-engineering of core ONS surveys following the Allsopp Review,there exists a unique opportunity for RDAs to influence the tourism statisticallandscape in the UK. Equally, if this does not happen now, either through lack ofresource or will, it is likely that the prospects for robust regional TSAs will notimprove for a many years.

8.1.13 Following the above, the full involvement of the respective regionalobservatories in TSA development would be recommended, through the auspices ofthe Association of Regional Observatories (ARO; see para 8.2.2). The creation of newstructures to take responsibility for tourism statistics is critical. There is generalagreement that tourism has been (until 2001 at least) a fast growing UK (andinternational) sector, but this is not always reflected in the resources used to trackits development. In particular, if there is movement towards a Tourism StatisticsUnit 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 acommon agenda with regard to improvements in the regional tourism statisticalbase. The consultation exercise undertaken in the current study highlighted verydiverse priorities between different groups. For example, it is clear that some requireless a statement of account regarding tourism activity in their regions, and othersmore a forecasting or impact model. An indication of potential use would best begained 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 timelyindicators linked to GVA estimates. A thorough audit of regional user requirementsof tourism statistics might then provide the basis for a common agenda, or therealisation that a common approach is inappropriate. The latter case will result inwasted resources, replication of research activity, and poor comparability ofmethods.

8.1.15 The existence of a common agenda does not imply there is a single way forwardtoward the development of tourism satellite accounts at the regional scale. AsSection 8.2 following shows, there are a number of options, in terms of methodologyand the division of responsibilities, each with its own strengths and weaknesses.However, irrespective of the method used to achieve the medium-term goal of fullydeveloped accounts the immediate priority must remain the derivation of a newinstitutional structure to take forward the improvements suggested in theAllnutt Review of Tourism Statistics, and in this report. This enduringinstitutional structure must be as wide as possible including RDAs and other publicbodies, the industry and academic stakeholder. Without clarity regardingresponsibilities in this area, any marginal improvements to existing surveys willhave 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 impactmodel, although a satellite account is a foundation for such analysis. The clearrequirement for such tools stresses the need for improvementsto/development of regional accounting and Input-Output frameworks, suchthat analysis of indirect impacts of visitor activity benefit not only from on animproved understanding of regional tourism activity, but also a betterunderstanding of regional economic activity in general.

Recommendations in this report Expected costBenefits in terms of

regional TSA constructionA proper regional stratification of the2006 expenditure trailer of theInternational Passenger Survey

Low High

Improvement to regional accountingstructures and the development ofsurvey-based regional Input-Outputframeworks

High (if surveybased)

High

Improved sub-divisions of industrieswithin the UK Input-Outputframework

Low High

Improvements to the methodsemployed in surveys such as UKTS,and any (replacement) day visitorsurvey in line with the Allnuttrecommendations

High High

The imposition of new structures totake responsibility for national andregional tourism statistics

High High

Full involvement of the respectiveregional observatories in TSAdevelopment

Low Medium

Thorough audit of regional userrequirements of tourism statistics

Low Low

8.1.17 Finally, the English RDAs should carefully consider the nature of the syntheticapproach developed here (by Nottingham University) to produce an estimate of themain parameters in TSA Table 6, the reconciliation of tourism supply and demand.There are limits to this type of approach (mostly in adequately representing thedifferent natures of English regional economies) but this method can be of use in theshort term. The synthetic approach has the advantage of a common method andtimely results and provides a useful indication of the critical tourism flows within aregion. However, any detailed comparisons (for example of tourism productivity)across regions will remain problematic even if estimates of overall supply and grossconsumption improve. As has been shown in countries such as Norway and Canadathe allocative/synthetic approach is probably suited best to estimate headline totalsfor key variables – although even here caveats remain16.

16 For example the derivation of tourism value added requires detail on the production of tourism servicesby different industries; detail which is likely to default to the national average in any synthetic approach.Welsh Economy Cardiff BusinessResearch Unit School

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

Bespoke survey of tourism providers to establish key parameters including labouruse, 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, profitabilityetc.

Basis upon extant Input-Output tables enables impact analysis includingeconomic 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 beincremental, long term and involved. However, it also shows that benefits andunderstanding 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 atourism consumption survey to complement existing data and improve theusefulness of the TSA in guiding marketing/promotional spend, and in the longerterm integration into a Welsh Environmental Satellite Account.

8.1.21 Figure 8.1 below provides a brief synopsis of the strengths and weaknesses of thesynthetic and bespoke approaches. When considering Figure 8.1 it should beremembered that without detail from each individual RDA on the longer term usesof a TSA and without a detailed costing of each method one approach cannot berecommended above another (particularly as currently available data enable therobust construction of neither), except to say that a synthetic approach will alwaysconstitute a model of tourism economy in a region and never a ‘true’ account.


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Figure 8.1 Synthetic and Bespoke Approaches to TSA developmentSynthetic approach Bespoke approach

Strengths• Relatively lower Cost• Can be developed quickly• Provides a small number of key

indicators – clarity for policy• Some use in advocacy • Flexible – can be adapted to best use

available data

• Gives the best/truest picture of tourismeconomy in each region

• Provides the full range of TSA variables• Enables detailed policy development

(e.g. following productivity analysis)• Internationally compliant & thus very

useful for advocacy• Provides impetus for a more general

improvement in regional economicstatistics

Weaknesses• Does not reflect differences in tourism

supply & demand in diverse regions• Should not be used for detailed

regional comparison• Difficult to assess size of standard

errors• 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

• Costly, and necessarily a long termprocess

• Requires enduring institutionalstructure

• Requires improvement in economy-wide regional economic data


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8.2 OPTIONS FOR ACTION AT REGIONAL LEVEL

8.2.1 This report has established that TSA development is a process rather than a one-offevent and this shapes the scenarios that the research team suggest for movingforward. In any case, there is a clear benefit in continuing to ally the regional TSAproject with developments at the UK level. For example, we have suggested that forthe UK, in the absence of any significant data re-engineering there may be value inrevising the UK TSA in four or five years using similar methodologies as used for theFirst 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 syntheticregional accounts, if only to provide an up-to-date set of headline indicators, and tocontinue the impetus towards the development of ‘real’ accounts. It is unlikely thatany account estimated in the future using a synthetic approach would be reliableenough 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 mightfollow. It is important to note that the following options would not operate in aninstitutional ‘vacuum’. Each English region has a regional observatory, charged withenabling access to key regional data and intelligence. Working on a range ofeconomic, social, and environmental issues, they provide analysis of data andresearch, disseminate and widen access to intelligence and conduct research to filldata gaps. Any move toward regional TSAs would best be undertaken with the fullcooperation of the observatories, probably through the forum of the Association ofRegional Observatories.

8.2.3 UNIFORM APPROACH – This would be essentially a ‘top-down’ scenario whereby theEnglish RDAs and their tourism partners establish a regional tourism statistics unit,which would set a common regional tourism statistics agenda, and provide a unifiedlobbying group to the ONS in London to improve the tourism statistical base ashighlighted above. Such a unit could also co-ordinate the tourism statistics beingcollected by individual RDAs and work towards establishing best practice in newmethods. As importantly, this unit might act to construct or commission surveybased or synthetic TSAs, ensuring common methodological steps and definitions aretaken, and working towards inter-regional, and international comparability. Thisunit could also construct/commission TSAs (and if appropriate) accompanyingregional Input-Output frameworks, and work towards a standardised set of tourismindustry indicators for the English regions. This approach would not extend toWales and Scotland where better baseline statistics enable accounting far inadvance of that in England.


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8.2.4 DIVERSE APPROACH – Here each of the English RDAs would seek to create its owntourism statistics landscape. This would involve the identification of region-specifictourism priorities, and the tailor-made development of TSAs and associated tools tomarry with these priorities. A development pattern here could be the creation of aregional tourism observatory (or as part of existing regional observatories),potentially involving experts from academia and industry. Such a unit could makebest use of extant regional tourism statistics, develop regionally-specific surveys andbespoke analytical tools, and interpret results.

8.2.5 HYBRID APPROACH – There exists a de facto case in the UK of ‘multi-speed’ developmentof regional TSAs, with Scotland and Wales ahead of the English regions andNorthern Ireland. Even in Scotland and Wales, the approach differs. There would bebenefit in extending this approach to English regions, allowing those regions wheretourism is particularly important to move towards bespoke accounts, whilst effortscontinue through ARO and others to develop the ‘uniform’ approach that ‘leaves noregion behind’. This approach is attractive and flexible. Also, the example of well-developed TSAs in some regions may be illustrative to others. However, it is notwithout dangers. If those regions with more interest and resource move ahead ofothers, care must be taken firstly, that the development of England-wide data andmethods does not stymie; and secondly, that bodies such as ARO continue to pushfor 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 onimprovements that occur at the national level to filter down to improvements atregional level. This does have advantages in the short term where it may be possibleto ‘free ride’ on the activities of ‘pathfinder’ agencies in terms of methodologicaldevelopment (this has happened to an extent as the Celtic nations have illustratedthe options available to English Regions). However, this is costly in terms of notachieving a better accounting of tourism activity in the reference region, and withthe 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 aresummarised in Figure 8.2. The hybrid approach would seek to lever the best aspectsof both, whilst avoiding the dangers outlined above and accepting the fact that someEnglish regions are already seeking to develop TSAs in advance of England-widedevelopments. Thus the hybrid approach is recommended.

8.2.8 However, whichever approach is adopted adherence to WTO and EUROSTATguidelines on the construction of national TSAs will provide a template that ensuresthat results are as comparable as possible.


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Figure 8.2 Next Steps English RegionsUniform approach Diverse approach

Strengths• Would improve general tourism

statistics landscape in England• Potential economies of scale and

scope in development• Conduit for best development

practice• Expertise focused• Effective lobbying group• More easily get access to global

expertise • Common methods for regionalising

UK data, common sets of indicatorsand tables

• Stronger leverage in commissioningexpert research

• Potentially quick results if will isthere

• Inter-region comparability possible• More likely to conform to

international WTO standards

• Regional tourism prioritiesaddressed

• Increases within-region capabilityand skills

• Model has been shown to work forother areas of regional research(Wales, Scotland, South West)

• Local knowledge can be accessed• Potentially easier to bring local

industry and groups on board• ‘Political’ problems minimised

Weaknesses• Single speed model• Who contributes what?• Agreement of priorities could be

complex • Possible resistance from DTI and

ONS• Top down paradigm setting (one

approach fits all)• May be difficult to involve regional

tourism industries in development

• Loss of economies of scope and scale• Inter-regional comparison limited• Lack of common conceptual

development• Requires a long term commitment

across a number of agents


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8.3 CONCLUSIONS

8.3.1 As this report has shown, the statistical resources required to construct robust andpolicy-relevant TSAs for the English Regions do not exist. Moreover, fragmentedresponsibilities for the collection of tourism statistics, the non-central involvement ofthe Office for National Statistics and the low level of resources allocated at nationallevel to this area means the production of regional tourism satellite accounts – orindeed any accounting, forecasting or impact tools – which are reliable at regionallevel 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 andsupply) data more coherent, focussed on specific goals and central to the collectionof 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 notforthcoming. In this case, RDAs must decide whether and how to pursue a strategywhich will enable an accounting and understanding of the tourism economy inregions. There are a number of options, varying in cost, quality, timescale andflexibility. This report has outlined several, whilst providing an indication (throughthe synthetic modelling) of the nature of TSA outputs.

8.3.4 Further guidance can be found in the actions of the Scottish Executive and WalesTourist Board17. It is crucial to reiterate again the significant scale and scopeeconomies which would arise from a coordinated effort by RDAs in England towardsthe improvement of statistics regarding the tourism economy, and indeed of regionaleconomies more generally. Further, there is an opportunity to create a consistentset of accounts for each region which adds to the UK account. Here, the economiesof scale and scope in developing suitable UK wide data sources would be moresignificant still, although without the existence of English regional Input-OutputTables, 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 androbust tourism satellite accounts for the English Regions will be resource intensiveand will require a focussed and coordinated approach on the part of a variety ofagencies. The full policy benefits of the construction process would probably not berealised for a number of years, although in the interim modelled or syntheticaccounts can provide valuable insight should data accuracy and reliability improve.

17 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 BusinessResearch Unit School

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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 adhoc evidence base, and upon anecdote and instinct. It is our feeling that, given thepressing need of regions (including London) for a better understanding of thetourism economy and based on the results of the RDA consultation process, auniform approach that satisfies all regions in an unrealistic outcome. Thus, wesuggest 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 bodiessuch as ARO.

8.3.7 Figure 8.3 following provides some indication of the most important steps that canbe taken with immediate effect to promote TSA regional development. These actionsmostly have little or no cost implications.


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Figure 8.3 Immediate Actions Towards Regional TSAs for English Regions Step Notes

‘External’ ActionsRepresentations to ONS on2006 IPS Trailer Regionalstratification

Of key importance to TSA development, bothcommodity expenditure breakdown by region andextension of sampling points to include (e.g.) moreregional airports. IPS expenditure trailer will probablynot be repeated for a number of years, so this is animportant opportunity.

Involvement in Contractingof 2006-on UKTS

Currently regional data in UKTS is limited in scope andunreliable. RDAs should quickly integrate themselvesinto the process of contracting, even if this means acontribution to costs.

Request a statement fromONS on Allnutt and Allsopp

ONS have in general accepted the results of the AllsoppReview, and reacted positively to the Allnutt Review. Itwould be useful for RDAs to understand the likelytimescale and scope of consequent improvements toregional ONS data. This would be of more general usethan the TSA project.

Explore the nature of anyGBDVS ReplacementSurvey

RDAs cannot give proper consideration to whether todevelop bespoke consumption data until theyunderstand what will be generally available throughother sources. Given the importance of day-visits tomost regions, RDAs should immediately resolve thestatus of the GBDVS, and the scope and outputs of anyreplacement.

‘Internal’ ActionsReport Dissemination It is important that the contents of this report be

disseminated as soon as possible and responses to itcollated. Importantly, soundings should be taken as tothe appropriateness of approaches outlined in 8.2.3 –8.2.6.

Audit of TourismStatistical Resources(financial)

RDAs should identify how much money is likely to beavailable over the short and medium term to supportimprovements to tourism data, for example throughone-off and bespoke surveys as in the NW, for supportof a regional agent, or for common resourcing of coreassets. The level of resource will have implications forappropriate actions.

Audit of AppropriateHuman Capital

RDAs should consider how far existing available staffcan technically support the development of regionalTSAs, be these economists or statisticians. This should,of course, include an audit of the expected role andresources of Regional Observatories.

Audit of Higher EducationInstitutions

Either individually or together, RDAs should investigatehow far the HEIs in each region could help support TSAdevelopment through joint working.


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9 SELECTED REFERENCES AND SOURCES: GENERAL

Allnutt D. (2003) Tourism Statistics Improvement Initiative: Review of Tourism Statistics: Draftreport for the consideration by the Steering Committee, December.

Australia Bureau of Statistics (2003) Framework for Australian Tourism Statistics 9502.0.55.001HREF="http://www.abs.gov.au/" MACROBUTTON HtmlResAnchor www.abs.gov.au

Barber-Dueck, C. and Kotsovos, D (2003) The provincial and territorial tourism satellite accountsfor Canada HREF="http://www.canadatourism.com/" MACROBUTTON HtmlResAnchorwww.canadatourism.com

Braendvang et al (2001) Regional Impacts of Tourism in Norway: Regional Satellite Accounting forTourism as a basis for Regional Input-Output Modelling European Regional Science AssociationAnnual Congress, Zagreb 2001 HREF="http://www.ersa.org/" MACROBUTTON HtmlResAnchorwww.ersa.org

Bureau of Economic Analysis (2004) Industry Economic Accounts: Travel and TourismHREF="http://www.bea.gov/bea/dn2/home/tourism.htm" MACROBUTTON HtmlResAnchorhttp://www.bea.gov/bea/dn2/home/tourism.htm

DCMS (Department of Culture Media and Sport, 2004), First Steps Tourism Satellite AccountsProject, report by Cardiff Business School.

EUROSTAT, OECD, UN & WTO (2001) Tourism Satellite Account: Recommended MethodologicalFramework HREF="http://www.world-tourism.org/" MACROBUTTON HtmlResAnchor www.world-tourism.org

EUROSTAT (2003) European Implementation Manual on Tourism Satellite AccountsHREF="http://europa.eu.int/comm/eurostat" MACROBUTTON HtmlResAnchorhttp://europa.eu.int/comm/eurostat

Jones C., Munday M. and Roberts A. (2003) Regional Tourism Satellite Accounts: A Useful PolicyTool? Urban Studies, Vol. 40, No. 13, 2777–2794

C. Jones & M. Munday (2004) Evaluating the economic benefits from tourism spending throughInput-Output frameworks: issues and cases, Local Economy, May.

Laimer and Smeral (2001) A Tourism Satellite Account for Austria. The Economics, Methodologyand 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 TourismSatellite Account. A Briefing Paper Department for Culture, Media and SportHREF="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 SatelliteAccount: Methodological Issues and Empirical Estimation Department for Culture, Media andWelsh Economy Cardiff BusinessResearch Unit School

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Sport HREF="http://www.culture.gov.uk/" MACROBUTTON HtmlResAnchorwww.culture.gov.uk

Meis S. (1999) The Canadian Experience In Developing And Using The Tourism Satellite AccountWorld Conference on the Measurement of the Economic Impact of Tourism Nice, France, June15-18, 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 2000HREF="http://www.statistcs.gov.uk/" MACROBUTTON HtmlResAnchor www.statistcs.gov.uk

Office for National Statistics (2002) UK Input-Output Tables for1990HREF="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 AccountingMatrix 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” inScottish Economic Statistics 2004 pp12-28 Edinburgh: Scottish Executive

Siddiqi, Y and Salem M (2002) Constructing Regional Input-Output Accounts: The RecentCanadian Experience 14th International Conference on Input-Output Techniques, Montreal, October10-15, 2002

Statistics New Zealand (2004) Tourism Satellite Accounts - Reference ReportsHREF="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 TourismSatellite Accounts, Bucharest, Romania.

Wilton David (1998) Recent Developments in Tourism as Revealed by the National TourismIndicators Canadian Tourism Commission, Research report 1998-1HREF="http://www.canadatourism.com/" MACROBUTTON HtmlResAnchorwww.canadatourism.com

WTO (2003) Workshop on Tourism Satellite Accounts, Bucharest, Romania November 2003


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Appendix 1 English Regional Tourism Satellite Accounting (TSA) Consultation Forum

Friday 27 February – 11.00 to 15.00Advantage 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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Appendix 2 – Tourism Data Collection in English Regions: Results of Consultation

Data Source/Title Latest DateAvailable

Frequency(eg annual, ad

hoc)

Coverage(eg region,county, LA

etc)

Can youshare

access?

Visitor Spending in theNorth West

From Aug 2004 Ad Hoc County Yes

Adult and YouthParticipation in Sportand the Arts in theNorth West

From Aug 2004 Ad Hoc County Yes

Regional OccupancySurveys

On-going/Monthly

Region/LA Yes, but…

Business Barometer Jan 2004 Quarterly Region YesUK Occupancy Survey Current Monthly Town YesVisitor AttractionMonitor

Current Monthly Town Yes

How’s Business?Survey

Current Quarterly Region Yes

Ad Hoc ClientResearch

Current On-going Firm No

Self-catering OccSurvey

2003/04 Depends onregion

LA Yes but…

Caravan & campingOcc survey

2002 Annual/ad hoc LA Yes but..

Various VisitorSurveys

1995-2003 Ad hoc By destination PermissionNeeded

TRIPS (onenortheast) On-going district YesTourist InformationCentres – visit no.

Monthly Yes

STEAM Annual Northumberland/Durham

No

Culture 10 programmeImpact Report

2003? Ad hoc Tyne/Wear No

NW Visitor SpendingAdult/YouthParticipation in Sportand the Arts in the NW


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Appendix 3 - UK TSA First Steps Overarching Recommendations Summary

Managingexpectations

Recommended need to carefully manage expectations based on the pilotTSA framework produced, and need to take forward the main survey anddata priorities, whilst maintaining the proactive interest of the keyinstitutions in the context of the very real difficulties of construction.

Investigating userneeds

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

Future TSAiterations

Recommended no further iteration of the UK TSA until key survey data isimproved, with a core element of the TSA next steps needing to work onkey elements of the Allnutt Review of Tourism Statistics to examine whatdata and surveys can practically be improved and at what cost. Were statistical base for TSA estimation not improved significantly, thenrecommended a re-estimation of the key TSA tables in 4-5 years. This re-estimation would benefit both from a more fully developed conceptualmodel 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 developmentsinclude ONS personnel on the project team, rather than simply as‘observers’ on the steering committee. In the longer term, and assumingONS cannot take the lead on TSA development, further iterations of theUK TSA should be constructed by the Tourism Statistics Unit proposed inthe Allnutt Review, in close consultation with ONS.

Membership ofWorld TourismOrganisation

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

Datarecommendations

Recommended that a number of key points from Allnutt review should beinvestigated. In particular with respect to facilitation of further TSAdevelopment: Review of practicality, costs and benefits of making UKTS and DVS part ornot part of Continuous Population Survey; Identification of resources available to maximise the sample and size ofimproved 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, andevaluation of differences between UKTS and IPS definitions.Extend LDVS to cover business tourism trips Identification of resources available to fund expenditure trailer in IPSEnsure production of best possible regional input-output tables


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Datarecommendations

Recommended development of a separate UK Tourism Spending survey. Acomplete re-engineering of tourism spending statistics needed to beconsidered at an early stage of the TSA development process. Givenuncertainties over future iterations of GBDVS the separation of tourismexpenditure surveys from attitudinal surveys must be consideredurgently. Where this was not possible recommended that spendingclassifications, concepts and definitions across the main UK tourismsurveys should be matched.


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