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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 Commission¹ and is rooted in the Canadian System of National Accounts (CSNA).

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 CSNA for the overall Canadian economy. It also permits a comparison with other industries in terms of such things as output and employment.

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

Last, the CTSA serves as the foundation for a variety of related statistical products including (1) the National Tourism Indicators, which provide timely quarterly macroeconomic information on the state of tourism in Canada, (2) the Tourism Human Resource Module which provides detailed annual information on jobs and employment in the tourism industries, and (3) studies on the government revenue that can be attributed to tourism.

This report presents the CTSA for the reference year 2004, incorporating the final Input-Output data for that year. Detailed tables for the year 2004, as well as a brief description of concepts, definitions, sources and methods are included in the appendix.

Tourism grew from 2002 to 2004

Tourism gross domestic product (GDP)² reached $23.9 billion in 2004, up 2.5% from 2002. This is equal to 2.0% of economy-wide GDP in that year. Tourism expenditures climbed to $58.6 billion in 2004, a 3.7% increase from their level in 2002. The number of jobs in the Canadian economy grew 3.9% over this period, whereas tourism jobs remained fairly steady at 610,600.

Table 1 Tourism gross domestic product by industry, Canada

Air transportation industry weakness continues

The profits of Canada's air transportation industry were lower in 2004, compared with 2002. Increasing demand for low-cost travel, declining demand for premium business travel, increased security and insurance costs in the aftermath of 9/11 as well as the volatility in fuel prices all affected the industry's bottom line. The airline industry was also going through a restructuring in 2004.

Tourism GDP for air transportation, at $2.7 billion, tumbled 13.7% from its level in 2002. This led, in turn, to a 7.3% drop in tourism GDP for the transportation industry overall.  Tourism employment in the air transportation industry decreased 7.5% from 2002.

Air transportation's share of tourism GDP in transportation shrank almost 4 percentage points to 52.0%, while its share of tourism jobs fell 1 percentage point to 63.8%. At the same time, the share of tourism spending on passenger air transportation dropped three percentage points to 51.9% of the total for transportation.

Tourism employment edged down

Tourism contributed 3.8% of all jobs in Canada in 2004, accounting for 610,600 jobs. This was down marginally (-0.1%) from 2002. Tourism provided the most jobs to the accommodation industry (161,600) with the food and beverage services industry a close second (145,300). About 20% of tourism jobs were in non-tourism industries. Tourism accounted for 120,500 jobs in these industries, mostly in retail, manufacturing, and wholesale trade. Between 2002 and 2004 tourism employment in transportation fell 5.9% to 73,300 jobs, as a result of job losses and restructuring in the airline industry.

Table 2 Tourism employment by industry, Canada

Tourism spending in Canada rose

Tourism demand in Canada reached $58.6 billion in 2004, up 3.7% from 2002. Transportation recorded the largest share of spending, at $20.9 billion or 35.6% of the total. Spending by Canadians and non-residents travelling in Canada on non-tourism commodities (clothing, footwear, souvenirs, groceries, alcoholic beverages purchased at retail, etc.) decreased slightly by 1.4%. At 16.7%, other tourism commodities (composed of recreation and entertainment, travel agency services and pre-trip expenses) had the third largest share of tourism expenditures in 2004. Accommodation spending increased 1.9% from its level in 2002 to reach $9.2 billion, 15.6% of the total in 2004.

Table 3 Tourism spending by commodity, Canada

Table 4 Tourism demand in Canada

Domestic demand comprised two-thirds of tourism spending

Over two-thirds of tourism spending in 2004 was attributable to domestic demand, slightly higher than in 2002. In 2004, Canadians made 175.1 million trips in Canada (153.5 million intra-provincial trips and 21.6 million inter-provincial trips). Canadians spent $41.1 billion on tourism in Canada, up 6.9% from 2002. This includes any non-fare spending by Canadians in Canada on a Canadian leg of an international trip as well as any fares paid if this international trip uses a Canadian carrier.³ In 2004, 9.5% of tourism demand was attributable to Canadians travelling on an international trip. In 2004, non-residents made over 38.8 million trips to Canada. Non-residents accounted for $17.5 billion of tourism spending in Canada, down 3.2% from 2002.

Tourism imports increased

In 2004 Canadian residents made 41.8 million trips outside the country, the first increase since 2000. Canadians travelling abroad spent $23.8 billion, up 15.2% from 2002. Canadians spent more travelling outside Canada than foreigners spent in Canada. The tourism trade deficit was $6.2 billion, a deterioration from a deficit of $2.5 billion in 2002. This is the largest tourism trade deficit seen since the 1992 CTSA. The tourism trade balance compares the amount Canadians spent abroad on tourism against what non-residents spent in Canada.

Tourism contribution to tourism industries

Travel services are the most reliant on tourism insofar as 91.6% of the industry's economic activity comes from tourism. Other industries most affected are air transportation and accommodation. For air transportation, tourism accounted for 78.4% of the industry's GDP. It accounted for 65.6% of the economic activity of the accommodation industry. These shares may appear low, however, the air transportation industry includes freight services while the accommodation industry includes meals and alcohol served to local residents (non-tourists), which reduce the share due to tourism. The food and beverage industry with a 17.0% share of tourism GDP is the least reliant on tourism among the major tourism industries.

Tourism's contribution to "non-tourism industries"

Various industries not identified as "tourism industries" produce goods and services that are purchased by tourists (i.e., groceries, souvenirs and other retail goods). In 2004, tourists spent $9.9 billion buying such goods and services (more than was spent on accommodation). This was down 1.4% from 2004.

In 2004, these "other industries" accounted for 24.7% of tourism GDP, up from 2002. Tourism generated 120,500 jobs in these industries.

Conclusion

The CTSA measures the impact of tourism in the Canadian economy. It shows that in 2004 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 now on a regular, biennial basis in the National Tourism Indicators (NTI). In addition, it provides the detailed tourism commodity and industry ratios that are applied in the Human Resource Module (HRM) as well as in the study on government revenue attributable to tourism. The results from the CTSA 2004 will be incorporated in the NTI and the study on government revenue, and in the HRM.

This is the last CTSA based on the Canadian Travel Survey (CTS). The next update of the CTSA, for reference year 2006, will be based on the new domestic travel survey, Travel Survey of Residents of Canada (TSRC) and the new definition of tourism. As well several refinements will be made to better align with the recently revised international guidelines as outlined in the Tourism Satellite Account: Recommended Methodological Framework 2008 (TSA:RMF 2008).⁴ The next update will put the CTSA and its spin-offs (the National Tourism Indicators, the Human Resource Module of the TSA, and the module on government revenue attributable to tourism) on a comparable footing with the new data published from the TSRC.

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Notes :

1. See Tourism Satellite Account - Recommended Methodological Framework. Organisation for Economic Co-operation and Development, the Statistical Office of the European Community, the United Nations and the World Tourism Organisation, May 2001.
2. All references to GDP are at "basic prices" (see Appendix A). All growth rates of dollar denominated series are in nominal terms.
3. Fares paid by Canadians for international trips made using Canadian carriers are payments for a service that is produced domestically, and therefore are included in domestic demand.
4. See Tourism Satellite Account - Recommended Methodological Framework 2008. Organisation for Economic Co-operation and Development, the Statistical Office of the European Community, the United Nations and the World Tourism Organisation, 2008.