Income and Expenditure Accounts Technical Series
Canadian Tourism Satellite Account, 2012

Release date: March 30, 2017

Tourism highlights

Introduction

The Tourism Satellite Account (TSA) has become the internationally accepted framework by which to measure tourism activity in an economy. The Canadian Tourism Satellite Account (CTSA) follows the international guidelines adopted by the United Nations Statistical CommissionNote 1 and is rooted in the Canadian System of Macroeconomic Accounts (CSMA).

As such, the CTSA provides measures of the economic importance of tourism in terms of expenditures, gross domestic product and employment, which are comparable with similar measures from CSMA for the overall Canadian economy. It also permits a comparison with other industries in terms of output, employment and other economic metrics.

The CTSA provides a coherent framework within which to integrate and analyze economic statistics relevant to tourism in terms of supply (i.e., industry) and demand (i.e., tourist). It also defines what are considered to be the tourism commodities and the tourism industries, and as a result has helped to shape the development of tourism statistics in Canada.

Lastly, the CTSA serves as the foundation for a variety of related statistical products including i) the National Tourism Indicators, which provides timely quarterly macroeconomic information on the state of tourism in Canada; ii) the Tourism Human Resource Module, which provides detailed annual information on jobs and employment in the tourism industries; and iii) studies on the government revenue that can be attributed to tourism.

This report presents the CTSA for the reference year 2012, incorporating the final input‑output data for that year. Detailed tables for the year 2012, as well as a brief description of concepts, definitions, sources and methods are included in the appendix.

Tourism in Canada

Tourism gross domestic product (GDP) was $33.6 billion in 2012, or 2.0% of economy‑wide GDP. Tourism expenditures in Canada were $80.2 billion, with about 4 out of every 5 dollars spent by Canadians and the remainder spent by international visitors in Canada. About 675,600 jobs in Canada were attributable to tourism in 2012.

Tourism's contribution to GDP in Canada (2.0% in 2012) has remained fairly steady across various iterations of the Canadian Tourism Satellite Account. Tourism's contribution to employment in Canada has also remained fairly stable (3.8% in 2012).

Transportation largest contributor to tourism gross domestic product

The transportation industry, at $7.5 billion, was the largest contributor to tourism GDP in 2012. About $4.7 billion of that was attributable to air transportation. Tourism GDP for accommodation was $6.8 billion, with nearly 80% coming from the hotel industry. Tourism GDP for food and beverage services was $5.0 billion.

Tourism employment highest in food and beverage services

In 2012, about 203,000 jobs were generated by tourism activity in the food and beverage services industry, more than any other tourism industry. The food and beverage services industry’s contribution to jobs attributable to tourism (30.0%) is greater than its contribution to tourism GDP (14.9%). This could be due in part to the higher concentration of part‑time, lower wage jobs in that industry.Note 2

The hotel industry accounted for 107,100 of the 139,500 jobs attributable to tourism in accommodation. There were 80,600 jobs attributable to tourism in the transportation industry, of which 49,200 were in air transportation.

Almost 40% of tourism spending on transportation

Of the $80.2 billion in tourism expenditures in 2012, about $31.0 billion, or 38.7%, was on transportation goods and services such as passenger transport and vehicle rental, repairs and parts, and fuel.

Overall, passenger air transport, at $15.7 billion, was the largest expense, followed by use of private vehicle for tourism ($12.4 billion),Note 3 meals from restaurants ($9.1 billion) and hotels ($8.6 billion).

Domestic demand accounted for 80% of tourism spending

In 2012, about 80% (or $64.1 billion) of tourism spending was attributable to domestic demand. This includes any spending by Canadians in Canada on a Canadian leg of an international trip as well as any fares paid to Canadian carriers on international trips.

Transport accounted for $26.2 billion, most of which was on passenger air transport ($12.7 billion) and use of private vehicle for tourism ($11.8 billion). Canadian visitors in Canada also spent $9.8 billion on food and beverage services and $7.0 billion on accommodation services. Expenditures on non-tourism goods and services, such as groceries and clothing, were $10.2 billion.

International visitors spent $16.0 billion in Canada in 2012

International visitors in Canada spent $16.0 billion in 2012, with airfares ($3.0 billion) being the largest contributor. Tourism spending on transportation was $4.8 billion, while $3.7 billion and $2.7 billion were spent on accommodation and food and beverage services, respectively.

There were 16.3 million overnight trips to Canada in 2012, the most since 2008, due in part to increased travel from emerging overseas markets such as China.Note 4Note 5

Although overnight travel from the United States was at its highest level since 2008, it was still 26.5% lower in 2012 than a decade earlier.Note 5 Same‑day car travel from the United States, an indicator of cross‑border shopping, was at its lowest level since record‑keeping began in 1972.

Tourism’s contribution to tourism industries

About 86.8% of the travel services industry’s economic activity was reliant on tourism in 2012, more than any other industry. This is expected, as the industry caters mostly to tourists.

Tourism accounted for 73.2% of the economic activity in the air transportation industry and 63.4% in the accommodation industry. The remainder can be attributable to economic activity not related to tourism, such as freight services, or meals and alcohol served to local residents.

Among the major industry groupings, food and beverage services was the least dependant of tourism activity, at 20.5%. This is expected, as most of the food and beverage services industry relies on local residents.

Tourism’s contribution to other industries

Various industries not identified as “tourism industries” produce goods and services that are purchased by tourists (i.e., groceries, clothing and alcohol bought in stores). In 2012, tourists spent $13.1 billion on such goods and services, more than on accommodation and food and beverage services. Tourism generated 141,000 jobs in these industries.

Conclusion

The CTSA measures the impact of tourism in the Canadian economy. It shows that in 2012 tourism continued to be an important part of the Canadian economy both in terms of output (GDP) and employment. Tourism also benefited “non‑tourism” industries, such as retail trade.

The CTSA also provides the detailed industry and commodity benchmarks that are incorporated in the National Tourism Indicators (NTI). In addition, it provides the detailed tourism commodity and industry ratios that are applied in the Tourism Human Resource Module (HRM) as well as in the study on government revenue attributable to tourism. The results from the CTSA 2012 will be incorporated in the NTI and the study on government revenue, and in the HRM.

Appendix A Concepts and definitions used in the Canadian Tourism Satellite AccountNote 6

Concepts

The Canadian Tourism Satellite Account (CTSA) is based on the concepts and methodologies of the System National Accounts (SNA). This internationally recognized system is an integrated framework of statistics that allows for the measurement of a country’s economic production. It outlines the structure of the economy and the contribution of each industry.

Satellite accounts, such as the CTSA, have the structure and principles of the national accounts but are developed as an extension to the national accounts system — thus the name “satellite”. The subject matter of the satellite account usually cannot be explicitly found in the core accounts and thus a special calculation is required. Satellite accounts tend to focus on specific aspects, be it social or economic, such as tourism, natural resources, transportation, or environment. Their presentation and adherence to national accounting principles allows an analyst to compare the satellite account (or area of interest) with the entire economy as measured by the SNA. With the Tourism Satellite Account (TSA), one can therefore answer the question of how important is tourism in Canada, by comparing all tourism activities into one coherent account.

For the CTSA, the supply and use tables from the input‑output (IO) accounts in the Canadian System of Macroeconomic Accounts (CSMA) are particularly important. These tables measure and analyze productive activity in the economy focusing on the producers and purchasers of commodities within the various industries. They show the total output and use of commodities by industries, as well as the primary costs (or inputs) associated with production of the commodities. However, tourism is not an industry identified within the CSMA, as it is dependent on the consumer’s purchases as a tourist, rather than on the production of certain goods and services. Constructing the CTSA, therefore, requires splitting industries into their tourism and non‑tourism components. By aggregating the value added for each tourism component, tourism GDP may be calculated.

Definitions

Tourism is defined in the CTSA as the set of productive activities that cater mainly to visitors. A visitor is a traveller taking a trip to a main destination outside his/her usual environment, for less than a year, and for any main purpose (business, leisure or other personal purpose) other than to be employed by a resident entity in the country or place visited.Note 7 The concept of tourism is broad, covering more than just “leisure travel”; it includes travel for business, leisure and other personal reasons, such as visiting friends and relatives, religious purposes and medical treatment.

The concept of usual environment relates to the place where the individual lives and works or studies and includes any other places frequented. This notion is not precisely defined in the international standard, thereby allowing a country to apply the tourism concept to its own specifications. For operational purposes, Canada has defined the concept of “outside the usual environment” as same‑day trips that are out‑of‑town and forty kilometers or more one way from home and all overnight trips that are out‑of‑town. Crossing an international border, however, is considered tourism no matter the distance travelled. Routine trips (i.e., those that are made at least once a month) are excluded from tourism, in order to better reflect the notion of usual environment.

In the TSA, people who are engaged in tourism are called visitors. Those who stay one or more nights away from home are called tourists, while those who spend no nights away from home are called same‑day visitors. In the CTSA, the term tourist is used to denote all visitors, whether they are same‑day or overnight visitors.

Tourism demand is defined as total spending by tourists on domestically produced commodities. This includes all spending by same‑day and overnight visitors, Canadian and non‑resident. Total tourism demand can be split into two components: domestic demand and international demand. Domestic demand includes the expenditures associated with tourism activity within Canada by Canadian residents. International demand, also called exports, consists of the expenditures by non‑residents in Canada on tourism. Business, government and personal tourism expenditures are included for all types of demand. The CTSA also calculates international tourism imports which are expenditures associated with tourism activity by Canadians outside Canada.

A tourism commodity is a good or service for which a significant part of its total demand comes from visitors. Thus, air passenger transportation would be a tourism commodity, while groceries, although occasionally bought by tourists, are considered a non‑tourism commodity. As another example, meals from restaurants are deemed to be tourism commodities because a significant part of the demand comes from tourists, even though restaurants primarily serve local residents. In Canada, tourism commodities also include goods bought solely for the purpose of travel (e.g., motor homes, tent trailers and luggage). These so‑called “pre‑trip” expenses are included because the vast majority of spending on these items is in anticipation of taking tourism trips. These items may of course be used for non‑tourism purposes as well, but these other uses are considered to be minimal. See Appendix D for the list of tourism commodities in the CTSA.

Tourism consists of a mix of industries and parts of industries and the various commodities they produce. An industry is a grouping of establishments that provide similar commodities to businesses and persons. A tourism industry is defined as one that would continue to exist only at a significantly reduced level of activity as a direct result of an absence of tourism. Some industries are included as tourism even though the majority of their output can be attributed to non‑tourism. The food and beverage services and recreation and entertainment industries are examples. Such industries are included because without tourism, their level of activity would be significantly reduced. See Appendix C for the list of tourism industries in the CTSA.

Another important definition in the construction of the CTSA is that of tourism supply. This is the total production of the tourism commodities bought by tourists and non‑tourists in Canada. Canadians also buy goods and services outside of Canada, but these are not included in tourism supply. In contrast to the supply and use tables where the supply of a commodity always equals its demand, the supply of a tourism commodity usually exceeds tourism demand as defined in the CTSA. This is because tourism supply includes the total production of a tourism commodity whether it is purchased by a tourist or not. For example, 100 units of a tourism commodity (i.e., accommodation services) is produced within a given economy (i.e., total tourism supply of accommodation services = 100). This tourism supply of accommodation services is available to be purchased both by tourists and non‑tourists. If tourists purchase 90 units, tourism demand would equal 90 units and the commodity ratio (ratio of tourism demand to supply) for accommodation services would become 90% (90/100). The remaining 10% would be purchased by non‑tourists.

The tourism commodity ratio is useful in identifying the proportion of a tourism commodity that is actually purchased by tourists. In the example above, 90% of accommodation services are purchased by tourists. This ratio is also helpful in the data validation process especially in the reconciliation of demand and supply estimates, and in estimating the share of an industry’s employment that is generated by tourism.

Tourism GDP is defined as the unduplicated value of production, within the boundaries of a region (i.e., Canada), of goods and services purchased by tourists. In the CTSA, tourism GDP is valued at basic prices, the same method of valuation as in the supply and use tables of the Canadian SNA. Only direct GDP, as opposed to indirect GDP, is measured. Indirect GDP refers to the upstream effects of economic activity (e.g., the manufacture of linens used in hotels). Although these indirect effects are important, they are beyond the scope of the CTSA which focuses on the GDP generated by the production of goods or services consumed directly by tourists. Indirect effects can however be calculated in economic impact models based on the CTSA. Tourism GDP is estimated using the sum of incomes (i.e., the returns to labour and capital from production) attributable to tourism. The components include wages and salaries, supplementary labour income, mixed income and other operating surplus (including profit and depreciation).

Tourism employment is a measure of the number of jobs in tourism and non‑tourism industries held by the self‑employed, employees and unpaid family workers. Tourism employment includes only jobs directly attributable to tourism. These are jobs generated from tourism consumption (demand), net of non‑tourism demand arising from local consumption. Thus, in the food and beverage services industry, only those jobs that are directly associated with tourism are counted in the CTSA as jobs generated by, or attributable to, tourism. On the other hand, jobs generated by the agriculture industry to support production in the food and beverage services industry (i.e., indirect employment) are not included.Note 8

Tourism employment, or jobs generated by tourism, differs from jobs in tourism industries as defined in the Human Resource Module (HRM) of the Tourism Satellite Account. The HRM includes employment in tourism industries, regardless of whether the jobs cater to tourists or non‑tourists.

Appendix B Sources and methods for the Canadian Tourism Satellite AccountNote 9

Data sources

Several main data sources are used for the Canadian Tourism Satellite Account (CTSA). Demand estimates are derived from two main sources, the Travel Survey of Residents of Canada (TSRC) and the International Travel Survey (ITS), both conducted by Statistics Canada. The TSRC provides data for domestic business and personal tourism expenditure by province and territory. It also supplies information that identifies the reasons for visiting a region, the duration of stay and the activities undertaken while at the tourist location. The survey is a monthly supplement to the Labour Force Survey (LFS). The TSRC provides totals for tourism expenditure, within a given region, as well as inter‑provincially (inter‑provincial exports and imports). The TSRC, however, does not provide travel origin data for the territories, only travel destinations are available. Information from Statistics Canada’s Survey of Household Spending (SHS) along with Input‑Output supply data, are used to fill this gap. Estimates for pre‑trip expenses, a portion of domestic demand, rely on the supply and disposition method using supply and use data.

The ITS provides estimates for non‑resident demand (separately for the United‑States and other countries) within Canada as well as imports of tourism (Canadian spending abroad). This survey was initially conducted to provide data for Canada’s Balance of Payments with other countries.

Estimates for tourism supply are derived from Statistics Canada’s supply and use tables; as are GDP and its components, labour income, mixed income and operating surplus. The supply and use tables are constructed using several large matrices of data that record the inputs (what is needed to make a good or service) and output (the goods and services provided). The supply table shows the supply of various commodities by industry and therefore tourism supply can be calculated using these data. The supply and use tables also provide a matrix of value added or GDP.

Employment data come from the Canadian Productivity Accounts of the Canadian System of Macroeconomic Accounts (CSMA). These Accounts provide information on employment following System of National Accounts principles and using the input‑output (IO) industry classification. At the aggregate level, the number of jobs in this database is benchmarked to the Labour Force Survey. The industry distribution of these jobs, however, is primarily based on information from the Survey of Employment, Payrolls and Hours, although other industry survey and administrative sources are used as well.

Methodology

The goal of the CTSA is to measure the economic activity of tourism, including tourism GDP, employment, demand and supply. To do this, the CTSA takes demand data from the travel surveys (i.e., the TSRC and the ITS) and calculates its contribution to GDP and employment. However, the source data for tourism are dissimilar in that some are based on commodity detail while others are based on industry detail. That is, demand data from the TSRC and ITS are built up using commodity details while GDP and employment data use industry breakdowns. Thus, a link needs to be made between commodities and industries. Supply, which can be calculated using either commodity or industry detail, is the linking factor between these variables. A demand/supply ratio, as discussed below, can be calculated for each commodity. This ratio is then moved into the industry framework so that tourism GDP and employment can be estimated using the information provided by the demand surveys.

Supply

The starting point for the calculation of supply is the supply and use tables, which give a detailed accounting of all the industries in the economy and the commodities they supply. The first step is to discern the industries that supply tourism commodities to visitors (see appendix C for a complete list of tourism industries). However, the industry categories provided in the published supply and use tables are not detailed enough for the CTSA.Note 10 For example, the supply and use tables display industry estimates only for the total food and beverage industry. The CTSA needs to split this industry, using information from IO detailed calculations, into sub‑industries since some of these sub‑industries may not be included in the tourism account. In this case, two sub‑industries within the food and beverage industry are full‑service restaurants and caterers. Full‑service restaurants are considered a tourism industry and their supply is included in the estimate. Caterers are omitted since they are a non‑tourism industry. Similarly, only tourism commodities remain in the calculation of total supply. In other words, only those commodities in the full‑service restaurants industry that are purchased by tourists are retained (e.g., meals) while non‑tourism commodities are taken out (e.g., legal services).

After the tourism sub‑industries and tourism commodities have been identified, supply shares are calculated. The supply shares are equal to a sub‑industry’s portion of the total output for a commodity within an industry. For example, if two sub‑industries each provided one half of an industry’s supply of meals, then the supply shares would equal 50% for these commodities for each sub‑industry. These shares are used later to allocate demand by industry. It should be noted that taxes are added to all supply estimates obtained from the supply and use tables to move the data from producer prices to purchaser prices, thereby matching the pricing used for the demand data.

Demand

The calculation for tourism demand in the CTSA begins with the survey data in the TSRC and the ITS. The first step is to split the existing commodity detail provided in the surveys into the detail used in the supply and use tables in order to allow appropriate demand/supply reconciliation. For some commodities, the existing survey data does provide appropriate detail. For example, survey information for the transportation commodities is sufficient to split these commodities into their IO counterparts. For accommodation, information on nights spent in different types of accommodation is available from the survey and is used to split the commodities into the IO classifications. Personal expenditure data from the income and expenditure accounts are used to split the remaining commodities into the IO framework.

Once tourism demand is calculated using the same commodities as supply, supply shares are used to allocate the demand into sub‑industries. As mentioned above, if 50% of meals is supplied by a sub‑industry, this sub‑industry is also allocated 50% of demand. After the demand data are distributed across industries, demand/supply ratios are calculated for each industry. These ratios are simply the total tourism demand of an industry divided by its total tourism supply. This ratio indicates what portion of an industry’s output is attributed to tourism activity. Thus, if an industry demand/supply ratio equals 40%, this share of the industry’s total output comes from tourism. These demand/supply ratios are later used to calculate tourism GDP and employment.

To increase the analytical usefulness of the data, demand is split into domestic demand and non‑resident demand (international demand or exports) using information from the TSRC and ITS. Data are also calculated for international imports. The availability of both export and import data allows for the calculation of the tourism trade balance.

Several additions are made to the survey data to provide a more complete estimate of tourism demand (see Table B1). The first of these additions is to include the fares paid by Canadians on international trips made using Canadian carriers (Canadian fares of international trips). Since this service is produced domestically, it is included in domestic demand.

An additional calculation is required to include the domestic tourism spending of residents of the three Canadian territories who are excluded from the TSRC. Supply (revenue) data are available for all the tourism commodities in the territorial supply and use tables. International demand is derived from the ITS and inter‑provincial demand (i.e., spending by residents of the ten provinces who visit the territories) is derived from the TSRC. Domestic demand for the territories is calculated using data from the SHS, which provides estimates of spending on tourism commodities such as accommodation and food and beverages.Note 11

Pre‑trip expenses or spending made by a traveller before a trip but for the sole purpose of travelling is another important addition made. These expenses include motor homes, pleasure boats, travel and tent trailers, luggage and travel sets, tents and camping equipment and sleeping bags. The commodities included in pre‑trip expenses were calculated using a supply and disposition method. Total exports of these goods were subtracted from total supply (including imports and items manufactured) of these items to obtain total disposition for Canada.

A special calculation is made in the CTSA for travel agency commissions which are not specifically identifiable in the travel surveys. This entails removing a fraction of the spending on various tourism commodities (e.g., air fares and hotel bills) and reallocating it to spending on services of travel agents. Essentially the demand for travel agency services is equated to the supply, as this commodity is used almost exclusively by tourists. The supply is just the commissions on travel arrangements and tour packages, which in the IO framework serve as the measure of output of the travel arrangements industry.

A final adjustment to the data arises from the demand/supply reconciliation. As commodities are reconciled between demand and supply, the tourism commodity ratio for a given commodity is examined. This ratio is at times considered too high or too low. This is particularly true for commodities for which little spending occurred. These issues were treated on a case‑by‑case basis. For example, suppose that after adding all relevant information for passenger air transport (information from the two travel surveys and estimates from the SHS), total passenger air transport demand is 80% of total supply. The non‑tourism exclusions to air travel demand could not account for this 20% difference. Therefore, the 80% total is adjusted upward to reflect a more realistic tourism commodity ratio for passenger air transport. In some cases, tourism demand can exceed supply for a given commodity. The supply and demand estimates are then examined to see which is of higher statistical quality and an adjustment is made based on this information.

Gross domestic product

Tourism GDP and its components, labour income, mixed income and other operating surplus, are obtained from the input table of the supply and use tables. GDP is again calculated by sub‑industry, just like supply, either through information obtained for the sub‑industries or, if no information is available, allocated by supply shares. The tourism industry ratios are then used to calculate tourism GDP. In other words, if the tourism industry ratio for a given industry is 50%, one half of the industry’s GDP is allocated to tourism. This method also allows for the calculation of tourism labour income, mixed income and operating surplus associated with tourism.

A special calculation is made to derive GDP for the “other industries”. These “other industries” (such as retail trade) are defined as non‑tourism industries, or industries that do not meet the criteria for tourism industries but obtain some benefit from it. They produce some commodities bought by tourists. These commodities include groceries, alcoholic beverages from stores, pre‑trip expenses, motor vehicle parts and repair and motor vehicle fuel and some other miscellaneous commodities (e.g., toiletries). Final domestic demand data are used to distribute these values across commodities. These data are then moved into an industry framework using shares of output for these commodities. The totals are then multiplied by input shares so that the GDP components can be isolated.

Employment

Like GDP, employment is calculated at the industry level. Therefore, the employment calculation uses the same tourism industry ratios as GDP to calculate the tourism portion of each industry. Thus, if the tourism industry ratio for an industry is 50%, half of this industry’s employment is allocated to tourism. This calculation is done for all tourism‑related industries and then the shares are summed to arrive at total tourism employment within Canada. As mentioned before, employment data by industry come from the Canadian Productivity Accounts of the CSMA. The employment data are available only at an industry level too aggregated for the CTSA. Wages and salaries, from the GDP calculation, are used to allocate employment across the sub‑industries.

Appendix C Tourism industries of the Canadian Tourism Satellite Account

Appendix D Tourism commodities of the Canadian Tourism Satellite Account

Appendix E Tourism expenditure by commodity, Canada, 2012

Appendix F Gross domestic product and employment for tourism and non‑tourism industries, Canada, 2012

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Notes

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