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Analyses - May 16, 2006

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May 2006

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Print Facts and figures, Geographic markets, Management,

Number of tourists or tourism revenues?

Should tourism-industry growth be measured in international arrivals or in economic benefits? Which category would we rather be performing best in? Where does Canada stand in the stats? In a country-by-country comparison, we realized we were on the wrong track in trying to analyze the increase in international tourism revenues in 2004 compared to 2003.

Baffling figures

The World Tourism Organization (WTO) reported that – after declining for three consecutive years – international tourism revenues rose 9% in 2004, while also making it clear that this increase was expressed in local currencies at constant prices, thus neutralizing the effects of exchange rate fluctuations and inflation.

When you look at the 2004 growth of international tourism revenues over 2003 in US dollars (WTO statistics), there is much to be amazed by!

  • Worldwide, the increase was 18.8%.
  • Asia-Pacific posted an increase of 31.8% and the Middle East 24.8%.
  • In Europe, only one country (Hungary) posted growth of less than 10%.
  • In Asia-Pacific, a majority of destinations (12 out of 15 countries) experienced an increase of more than 20%.
  • Canada can be thrilled with a 21.8% increase in tourism revenues.

However, when you look at the 2004 growth of international tourism revenues over 2003 in euros (WTO statistics), there is much to be disturbed by!

  • Worldwide, the increase was 8%.
  • Asia-Pacific posted an increase of 19.8% and the Middle East 13.5%.
  • In Europe, only two countries (Ukraine and Poland) posted growth of more than 10%.
  • In Asia-Pacific, just under half the destinations (six out of 15 countries) experienced an increase of more than 20%.
  • Canada did well with a 10.7% increase in tourism revenues.

In light of these statistics, it becomes difficult to compare revenue growth rates among countries. In effect, if the yen gained more ground against the euro over the year than the Canadian dollar did, the growth rate reflects the change in the exchange rate as much as the change in revenues. It would be fairer and more illuminating if the revenue statistics were produced in local currencies and constant prices.

In which category do we want to perform best?

France was the No. 1 destination in the world in international arrivals, but third in tourism revenues. And not only did France post the worst showing in terms of average spending per international arrival among the top 12 revenue-makers, it performed worse than many other destinations as well. Conversely, the US was third in arrivals, first in revenues, and did very well in average spending (Table 1).

Unfortunately, the lack of statistics on such factors as length of stay prevents a more precise picture of the situation. But other interesting points emerge from juggling the statistics (tables 1 and 2):

  • The US had 38% fewer arrivals but 45% more revenues than France. The tourist visiting the US spent three times more than in France, or $1,616 US versus $544 US.

  • The US and Germany did well in all three categories (revenues, arrivals and average spending).

  • In 2003, Australia was the top performer in average spending, according to the statistics (4.4 million arrivals, $10.3 billion US in revenues, average spending of $2,370 US). In 2004, it was in 10th position in revenues, but did not make it into the top 20 in arrivals (the Netherlands was in 20th place, with 9.6 million). It essentially posted the same revenues as Canada, with four times fewer arrivals than Canada.

  • Japan and Belgium (2003 arrivals data) were in the top 20 in revenues (in 20th was Malaysia, with $8.2 billion US), but did not make it into the top 20 in arrivals. Their ratio of average spending was obviously very high.

  • Although they didn’t make it onto the list of top 20 revenue earners, many countries (Table 2) managed to turn in better performances on average spending than some of the top 20 revenue-earning countries.

  • Hong Kong, Poland, Hungary and Ukraine, all in the top 20 in arrivals, fared poorly in average spending, at less than $500 US.

  • Despite six million arrivals, Tunisia did not manage to generate substantial economic spin-offs, with average spending of just $318 US per international arrival.

  • With average spending of $702 CAD in 2004 (3.3 million foreign tourists and 2.3 billion CAD in revenues), Quebec surpassed the Canadian average.

What should we conclude?

When figures show France can be proud of recording 75 million international arrivals but that it managed to obtain an average spending rate of only $544 US, you have to ask yourself if the statistics speak for themselves, if they should be challenged, if information essential for accurate analysis is missing, if the methodologies were consistent?

An analysis of the data leads to the conclusion that more arrivals do not necessarily equal more revenues. In this vein, many countries would like visitors to spend more.

In the UK, the Office for National Statistics recorded an 11% increase in tourists in 2004 (27.3 million) compared to 2003, and an 8% gain in revenues (£12.8 billion). Despite these positive results, VisitBritain is obviously working to raise visitor numbers, but in particular to boost how much they spend.

Among the leading destinations, Italy had a relatively poor 2004 compared to 2003. The 2.2% dip in the number of overnight stays (336.8 millions) and the 2.4% decline in the average length of stay (4.06) cast a shadow over the revenue picture.

The situation was similar for tourism professionals in Spain, where “fewer tourists and more profitability” has become the new credo of major hotel chains and others in the industry. Government officials also feel it would be better to have fewer tourists, but for longer stays. Visitors numbers advanced 3.4% in 2004 (53.6 million), but revenue volume did not keep pace, constituting a drop in average spending.

In Quebec, the Association touristique régionale (ATR) de la Gaspésie faced a similar situation: while tourist numbers rose, visitors were not staying as long or spending as much as previously. To counter the problem, the ATR increased its presence in promotional markets, invested in training programs based on the client approach, and launched a “Quality” initiative.

Obviously, the methodology and recording of data can differ from country to country, making comparisons difficult. But beyond the figures, the question remains interesting: is the goal to attract more tourists with all the consequences of that, or is it to increase economic benefits in a perspective of sustainable development?

Sources:

- Alves, Jose. “L’Espagne remet en cause son modèle touristique,” Les Échos, No. 19338, January 27, 2005, p. 26.
- McGrath, Ginny. “Britain Needs Big Spenders,” Travelmole, February 9, 2005.
- World Tourism Organization. “Tourism Highlights,” 2005 edition.
- Voilà.fr. “L’Italie a connu une mauvaise année touristiques en 2004,” [www.voila.fr], February 11, 2005.

 

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