Latest Developments in the Canadian Economic Accounts
The 1986 to 2020 revisions of the National Tourism Indicators

1. Introduction

With the release of the first quarter 2021 estimates of the National Tourism Indicators (NTI) in June 2021, all data were revised from the first quarter of 1986 to the fourth quarter of 2020. Updated benchmarks from the 2017 Provincial and Territorial Tourism Satellite Account (PTTSA) were incorporated. Other sources of new and revised data and some methodological changes were introduced as well. This article explains the impact of new and revised data on the NTI.

The NTI are benchmarked to the 2017 PTTSA, which is anchored to the 2017 Supply and Use Tables (SUT). The SUT are available almost three years after the end of the reference period. As a result, the PTTSA is published well after the fact. The NTI, on the other hand, use tourism ratios from the PTTSA as well as other aggregate economic indicators to provide an up-to-date and quarterly view of tourism’s economic landscape. New PTTSA benchmarks, updates to the PTTSA tourism ratios and new and revised economic indicators all lead to revisions to the NTI.

Between 2017 and 2020, tourism spending in nominal terms was revised down for all years. For 2017 specifically, tourism spending was revised down from $97.2 billion to $96.0 billion due to the introduction of the PTTSA benchmarks which included a combined effect of domestic demand being revised down from $75.8 billion to $70.1 billion and an upward revision to exports, from $21.5 billion to $25.9 billion.

The growth rate of tourism spending was revised down from 6.6% to 6.4% in 2017, while growth was revised up from 5.1% to 5.6% in 2018, and from 2.8% to 2.9% in 2019. In 2020, which saw the largest decline in tourism spending on record as a result of the COVID-19 pandemic, growth was revised down from -49.2% to -49.7%.

On a quarterly basis, between the first quarter of 2017 and the fourth quarter of 2020, growth in tourism spending (in real terms) was revised up in eight quarters, down in five quarters and unchanged in three quarters (see Table 1.2). Revised quarterly growth rates were within 0.2 percentage points of previously-published estimates in 10 of 16 quarters. Larger revisions were observed in the later part of 2020 which was not unexpected due to difficulties in measuring tourism economic activity in the wake of the COVID-19 pandemic.

2. Sources of revisions

The revisions to the NTI mostly came from updated benchmarks from the 2017 PTTSA. Methodological changes, and new and revised indicators from the Canadian System of Macroeconomic Accounts (CSMA) also contributed to the revisions. These revisions are described below.

2.1 Provincial and Territorial Tourism Satellite Account, 2017

The NTI are benchmarked to the Canada totals of the 2017 PTTSA, which was released in April 2021. Supply-side and gross domestic product (GDP) estimates of the PTTSA were derived from the 2017 supply and use tables (SUT) and survey data. Demand-side estimates were derived from the Travel Survey of Residents of Canada (domestic demand) and the International Travel Survey (exports). Demand-side estimates for the residents of the territories were derived from the 2017 SUT. Employment estimates were based on the Canadian Productivity Accounts.

Changes to source data used for the 2017 PTTSA largely contributed to revisions to the NTI. These changes include:

1. A redesign of the International Travel Survey for reference year 2013, which generally led to increased spending by international visitors;
2. Methodological changes to source data from the SUT, which led to significant increases in tourism output for passenger water transportation and convention fees. These increases were also reflected in the demand for these products;
3. Downward revisions to tourism specific industries within the Canadian Productivity Accounts resulting from updates to various CSMA source data as well as historical revisions to the Survey of Employment, Payroll and Hours;

2.2 Methodological changes

The methodological framework used to produce the 2017 PTTSA was also applied to estimates from 2014 to 2016. This updated framework allows the NTI to be more closely aligned conceptually with the benchmark PTTSA over the period. For example, for 2014 to 2016, previous estimates of tourism demand for accommodation services was calculated by applying product ratios from PTTSA benchmarks to previously calculated supply estimates, which were derived from household final consumption expenditure indicators. The PTTSA framework, on the other hand, uses spending variables from the travel surveys to calculate tourism demand for accommodation services. As a result in 2016, spending on accommodation services was revised from $13.1 billion to $13.6 billion and nominal growth revised from +7.4% to +8.3% for the same year.

2.3 Revisions to the Canadian System of Macroeconomic Accounts

The regular annual revisions to household final consumption expenditure, to GDP by industry and to the balance of payments for the period 2017 to 2019 in November and December 2020 led to quarterly updates to NTI estimates for this period. Revisions to the same accounts for 2020 in May and June 2021 also led to quarterly updates to the NTI.

As a result of these revisions, new benchmark information from other sources, notably the Survey of Household Spending, as well as transportation, food services and drinking places and accommodation industry surveys, was brought into the NTI indirectly. This affected the NTI quarterly movements and annual levels for all open years (2017 to 2020).

3. Impact of revisions on the National Tourism Indicators, 2017 to 2020

NTI estimates for 2017 to 2020 were revised to incorporate the benchmarks from the 2017 PTTSA and revisions to the CSMA.

3.1 Revisions to components of tourism demand (nominal terms)

Annual revisions to the components of tourism demand (in current dollars) varied in 2017, which in turn affected the following period of 2018 to 2020. The largest contributor to the downward revision was in food and beverage services (see Table 2). Non-tourism goods and services (e.g., groceries, urban transit and other miscellaneous products) and transportation also contributed to the downward revision, which was partially offset by upward revisions in other tourism goods and services (e.g., recreation and entertainment, and travel services) and accommodation.

Tourism exports were revised up significantly due to the incorporation of the 2017 PTTSA, which introduced data from a redesigned International Travel Survey. This redesign included updated questionnaires, expanded coverage (larger distribution of questionnaires on the U.S.-Canada border) and improved imputation methods. Upward revisions to exports followed similar revisions to other data from the CSMA, such as the balance of payments. For 2017, exports were revised up $4.5 billion, a 20.8% increase from previous estimates. Similar percentage change revisions were made to subsequent years.

Domestic tourism spending was revised down $5.7 billion in 2017 to $70.1 billion. The 2017 revision was a 7.5% decline from previous estimates. In subsequent years, downward revisions were less severe, ranging between 3.9% in 2020 and 6.6% in 2018 and 2019.

3.2 Revisions to components of tourism demand (growth rates in real terms)

Annual growth rates of tourism spending (in real terms) varied over the 2017 to 2020 period (see Table 3). Growth in transportation was revised closer to nominal growth estimates in general, lessening the impact of price changes over the period which were volatile due to fuel prices. Accommodation growth was also generally revised closer to growth in nominal terms, which also saw price volatility over the period. Growth in food and beverage services and non-tourism goods and services were revised in line with current dollar estimates in all years except 2020 where prices were implicitly revised.

Growth in other tourism goods and services was revised up 2.6 percentage points in 2017, similar to the 2.8 point upward revision in nominal terms. This was mainly due to the processing change to rely on the PTTSA methodology for annual growth from 2014 to 2017. Revisions in this category were minimal for 2018 and 2019 but more significant in 2020, with a downward revision of 1.9 percentage points.

3.3 Revisions to employment generated by tourism demand

Tourism employment, or jobs attributable to tourism demand, was revised significantly downwards. In 2017, tourism employment was revised down 7.9% to 677,500 jobs (see Table 4). Downward revisions were similar in all years, ranging from 7.5% in 2019 to 8.1% in 2020.

The revisions to tourism employment were largely due to downward revisions to other industries^Note , which had revisions ranging from -17.8% to -18.7% over the period. However, all tourism categories saw declines, with total tourism industries revisions ranging from -4.7% to -5.1% over the same period. These revisions mostly stemmed from the implementation of the new PTTSA benchmarks in 2017, which brought in new data sources such as the supply and use tables, Canadian Productivity Accounts and estimates from the travel surveys. The combined effect of these new data sources led to generally lower estimates of jobs attributable to tourism demand.

3.4 Revisions to tourism gross domestic product (growth rates in real terms)

Tourism GDP annual growth rates were revised down in 2017 and 2020, and relatively unchanged in 2018 and 2019 (see Table 6). The implementation of the PTTSA methodology in 2016 impacted 2017 growth as an increased reliance on SUT and survey data allowed for more refined tourism ratios for that year. The revision to 2020 is related more to the volatility and challenges faced during COVID-19.

4. Impact of revisions on the National Tourism Indicators, 2014 to 2016

NTI estimates for 2014 to 2016 were revised to align with the methodology used to build the 2017 PTTSA. The data sources and processing system used to create the 2017 PTTSA were leveraged to allow the NTI to be more in line conceptually with the benchmark PTTSA for years back to the last PTTSA done in 2014.

Tourism demand (in current dollars) was lowered in all years, ranging between -1.1% and -2.7%. Growth rates to annual tourism demand (in nominal terms) were unrevised in 2014, revised up 1.1 percentage points in 2015 and 0.7 points in 2016.

Employment generated by tourism was revised down in all years. Downward revisions were between 7.8% and 9.1%. These revisions resulted in annual growth being unrevised in 2014, and upward revisions of 0.3 percentage points in 2015 and 1.2 points in 2016.

Growth in tourism GDP (in real terms) was revised down 0.4 percentage points in 2014, up 1.5 points in 2015 and up 1.1 points in 2016.

5. Impact of revisions on the National Tourism Indicators, 1986 to 2013

NTI estimates for 1986 to 2013 were revised to align with the new 2017 PTTSA benchmarks and resulting NTI estimates for 2014. All components of tourism demand, GDP and employment were revised. This realignment did not incorporate new source data. Its purpose was to minimize any potential breaks in the time series.

Annual tourism demand (in current dollars) was lowered in all years and the downward revisions ranged from $0.5 billion (in 1988) to $2.2 billion (in 2013). Tourism demand was revised down between 1.6% (in 1995) and 2.7% (in 2013) from the previously-published estimates. Growth rates to annual tourism demand (in nominal terms) were all within 0.6 percentage points of the previously-published growth rates.

Employment generated by tourism demand was revised down in all years and the downward revisions ranged from -8.9% (in 2010) to -10.1% (in 1991). Growth rates to tourism employment were all within 0.2 percentage points of the previously-published estimates.

Growth rates to annual tourism GDP (in real terms) were all within 0.7 percentage points of the previously-published estimates, and all but five were within 0.3 percentage points.

6. National Tourism Indicators revision policy

The NTI revision policy allows for regular incorporation of new and revised data, including regular benchmarking to the PTTSA. Revisions to the NTI are the result of new or revised data in the core economic accounts. The revision policy serves to improve the reliability and accuracy of the NTI time series estimates. It is consistent with the policy followed for the CSMA, which governs four types of revisions: current, annual, comprehensive, and updating to a new base year (currently 2012). Each of these are described below.

During the current reference year, estimates for any quarter are subject to revision at any subsequent quarter within the same year. For instance, a first-quarter estimate is revised on the release of the second-, third-, and fourth- quarter estimates for the same year. These are called current revisions, and allow improvements to estimates through the incorporation of the most up-to-date information available (including revisions to source data as a result of late reporting).

At the time of a first- and third-quarter releases, all estimates for a given number of years back from the current year are subject to revision. These annual revisions allow for the incorporation of the most up-to-date information from censuses, annual surveys, taxation statistics, public accounts, etc., which become available well after the fact. The number of years open to revision mirror the CSMA revision for that year. Furthermore, when a new set of PTTSA benchmarks is incorporated into the NTI, the revision period is extended back to the previous PTTSA. Thus, the window for revision in the NTI varies according to the frequency of PTTSA updates and any revisions to standard macroeconomic indicators in that year.

Estimates are also subject to periodic comprehensive revisions mainly to introduce new concepts, implement refined methods, and incorporate newly available data sources. Comprehensive revisions typically result in changes to the entire time series.

Updating of estimates in real terms to a new reference year (currently 2012), as with the third quarter 2018 release of the NTI, is normally carried out every five years. Updating of constant price series is done to remove bias in measures of inflation-adjusted growth as relative prices in the economy evolve away from those of the base year. Updating of constant price series involves revisions to only price indices and constant price aggregates, leaving aggregates at current prices unaffected.