Tourism satellite account: Methodology

Direct tourism value added Tourism expenditure and direct tourism value added (or tourism’s contribution to gross domestic product (GDP)) are the two major economic aggregates derived in a tourism satellite account (TSA). Tourism expenditure measures the value of products purchased by visitors, whether before, during, or after travel. Direct tourism value added measures the value of the output of tourism products by industries, less the value of goods and services used in their production (intermediate consumption). When summed across all industries, it shows the direct value added to the economy by tourism. Tables 10, 11, 12, and 13 detail the process used to measure direct tourism value added. This involves the following steps. Begin with tourism expenditure by type of product (presented in table 10 – and further dissected by type of tourist in table 11). Match tourism expenditure by type of product with the total supply of products in the annual supply and use tables of the New Zealand economy. Derive the tourism product ratio for each product by dividing the value of tourism expenditure by total supply of the product. This represent the proportion of each industry’s output that is consumed by tourists. Multiply each industry’s supply by product by the tourism product ratio, to calculate tourism supply by industry. Table 12 presents tourism supply for tourism-characteristic industries, all other industries, and imports. Divide tourism supply by total output by industry, to give tourism industry ratios – the proportion of each industry’s total output that is purchased by tourists. Multiply the tourism industry ratios through each industry’s production account. Sum the resulting series to obtain total tourism value added. Table 13 presents total tourism value added resulting from tourism-characteristic industries and all other industries. The same methodology underlies the calculation of direct tourism value added for final and provisional accounts and is ordered according to the steps above. However, the derivation of inputs into the calculation process and the level at which calculations are performed differ between final and provisional accounts. The main reasons for this are: the lack of balanced supply and use results for the provisional accounts limits the level at which expenditure by product can be calculated for business and government travellers the same constraints apply to the supply of tourism products – the absence of balanced supply and use accounts means the supply of each product by industry cannot be derived reliably at the same level of detail as in a final account the industry production accounts, and therefore industry value added, are provisional and are yet to be balanced within a supply and use framework to derive a final GDP figure. Differences in deriving input data for final and provisional accounts are outlined in the following sections. Domestically produced goods are sold directly to tourists by retailers, and only the retail margin (produced value of the turnover of the retailer) of these sold goods is recorded in the direct tourism value added. The value added in the product of these goods is not part of tourism direct gross value added but is to be considered with the indirect effects. Calculations of direct tourism value added are usually made at a more detailed industry level than is what is presented in table 13. For reason of confidentiality and practicality, we show on the aggregate level of calculations in this account. Calculating tourism expenditure Table 11 presents tourism expenditure by type of product and by type of tourist: international (international visitors and international students); household; and business and government. We describe below how we calculate expenditure by the three types of tourist. International tourism expenditure International tourism expenditure comprises expenditure from international visitors and international students. Final accounts Expenditure by international tourists in New Zealand is derived from the International Visitor Survey (IVS) published by the Ministry of Business, Innovation and Employment (MBIE). The IVS is a sample survey of approximately 8,900 international visitors to New Zealand aged 15 years or older per year, excluding individuals whose purpose of visiting New Zealand was to attend a recognised educational institute, and are foreign-fee-paying students. The IVS draws its visitor sample based on measures of the actual number of target population visitors who departed New Zealand from our international airports over the survey time period in the previous year. Using actual historical visitor departure information, time periods are randomly selected with the probability of being selected based on the number of flights during that period – periods with no flights will have no probability of being selected, while those with a high number of flights have a high probability. For Auckland, Wellington, and Queenstown airports, two-hour time periods are used, while for Christchurch airport it is a four-hour time period. The IVS uses a two-part collection process. The first part involves screening departing visitors during the selected time periods for eligibility and collecting email addresses. The second part, where the bulk of the information is captured, is via an online survey, a link to which is sent to those eligible and agreeing to participate. Each respondent within the sample is weighted to represent their fraction of the total number of all international visitors departing New Zealand using migration data within the survey’s target population. Survey response weights are adjusted to reflect the unequal probabilities of respondent selection from the composition of the target population and known discrepancies between the sample and the population definitions. The IVS data is supplemented with breakdowns from balanced supply and use accounts, consumers price index (CPI) weightings, and tourism producers’ own data. In some instances, tourism producers can provide estimates of the proportions of their output consumed by international visitors. Broad-level valuations of international visitors’ expenditure in New Zealand are derived from transportation and travel services items in the balance of payments (BoP). IVS data is a major source for BoP statistics, but several supplementary sources are also used. Small updates have been made to the source data in some years. We break down these totals into tourism products, using proportions from balanced supply and use accounts. We compare these splits with other data sources, and refine the totals where additional information is available. Provisional accounts The same basic data source, the IVS, is also used in the provisional accounts. However, in the absence of supply and use tables, the IVS is not broken down to the same level of product detail found in final accounts. We use the breakdown for the latest final account to derive the initial product breakdown for the provisional years. This initial product breakdown is subsequently refined during the balancing process (covered in more detail later in Balancing tourism expenditure and tourism production). COVID-19 measurement The IVS collection at international airports was suspended once border restrictions were introduced near the end of March 2020. This consequently reduced the sample size for the March 2020 quarter, and led to no survey data being collected in the subsequent quarters making up the year ended March 2021 and 2022. Stats NZ developed a model of international expenditure using electronic card transaction data and international visitor numbers. This was first published in June 2020 as an experimental series: Visitor expenditure in New Zealand using an experimental series. Only expenditure was modelled as other variables published as part of the IVS release (such as travel methods, visitor satisfaction, and locations travelled to), could not be obtained. The performance of this model was monitored by Stats NZ over each quarter as visitor expenditure estimates were published. Spending on international cards did not change in line with the fluctuations in visitor stock numbers, resulting in increasingly unrealistic estimates of daily spend per visitor from some countries, notably the People’s Republic of China and the United Kingdom. In the absence of reliable card data on travel expenditure, Stats NZ moved to using daily spend per visitor estimates from the IVS in the model, collected pre-COVID-19. These estimates are calculated at country by purpose of visit level, by length of stay categories. A visitor’s length of stay in New Zealand is a useful explanatory variable for how much they spend per day. Long-staying visitors typically spend significantly less per day than short-staying visitors. Visitor stocks can be categorised by the same length of stay categories. For visitors that have departed, the arrival and departure dates are used. For visitors that are still in New Zealand, we estimate the likelihood that they are in each length of stay class in estimating the visitor stocks for each length of stay category. Further detail can be found at Change to methodology for estimating visitor expenditure in New Zealand for the June 2021 quarter. Cruise ship expenditure by international visitors Background Historically, New Zealand’s international visitor expenditure measurement and macro-economic outputs, including the TSA, have not captured the full value of expenditure undertaken by cruise travellers. This was due to the IVS being limited to airport departures, therefore only those cruise travellers who completed their cruise in New Zealand before flying out were accounted for. Consequently, this did not account for the significant and growing number of cruise travellers who fly in and cruise out, and cruise in and cruise out of New Zealand. Everyone who completes border clearance whether arriving by air or sea, is within scope for the arrivals/departures of international travel statistics. Transit passengers who do not complete border clearance are excluded from these statistics. For cruise ship travellers, analysis from 2015 to 2020 shows that about three-quarters are transit passengers, meaning they are not included in international travel statistics. The remaining one-quarter enter or leave New Zealand by air before or after their cruise. These passengers complete boarder clearance and are therefore included in international travel statistics. Stats NZ enhanced the New Zealand Cruise Association’s (NZCA) method for calculating expenditure undertaken by cruise travellers and sourced additional administrative data. The key data sources that enabled this development are: cruise ship schedules cruise ship manifests of passenger and crew key firms involved in the provision of goods and services to ships key firms involved in the provision of shore excursions international card transaction data. How we calculate cruise ship expenditure by international visitors Data sources For each cruise season, NZCA provides us with a ship schedule outlining the dates and port locations together with arrival and departure timings relating to each specific cruise ship visit. We source cruise ship manifests containing the count and details of passengers and crew from the New Zealand Customs Service. We receive international card transaction data with Worldline (formerly Paymark) merchants (subsequently scaled to the full population of merchants) from Marketview Ltd, with date, time, country of card issue, location (territorial authority), transaction value, and industry identifiers. We source cash factors from the IVS to provide a comprehensive estimate of expenditure across key payment mediums. Linking data Using card transaction data, we link international-cardholding cruise travellers who make a transaction on two dates and at two territorial authorities with a particular cruise ship voyage. We take into account timing parameters to ensure transactions occur within the timing the ship is in port, as well as factoring in allowances for disembarking and embarking. Using information from shore excursion operators and regional tourism organisations about available tourism activities, we establish a geographic location around each port that a cruise visitor could be expected to travel and spend. We get additional information from shore excursion operators regarding overland tours (disembarking at one port before re-joining at another) to ensure dates, timings, and geographic locations for capturing associated shore-based card expenditure. Exclusions and scaling We then apply exclusions to matches based on the particular industry spent in and the use of the card outside of the geographic locations aligned with the ship schedule. The resultant dataset is scaled up by Marketview Ltd to represent the full population of merchants in New Zealand and provided to Stats NZ. Unique international passenger (excluding New Zealand passport holders) and actual crew counts by nationality (passport) as determined by Stats NZ are used to scale the determined card spend. Cash factors are applied reflecting the propensity and breakdown of key nationalities card to cash use. Output The resultant output is produced by quarter, by country of origin, and by port. It is subsequently added to the following data sources: shipping agents – expenditure related to ship visits logistics, including port fees, customs security, and minor repairs and utilities bunkering – the provision of marine fuels providoring – the provision of produce and other supplies shore excursions – a range of tours or activities organised for passengers on behalf of the cruise line and the destination. These data sources are provided directly from several firms involved on an annual basis. Note: Airfares for international passengers and crew are excluded as is cruise ship expenditure by domestic travellers. The domestic cruise expenditure is recorded within existing domestic tourism estimates but is not currently separately identifiable. The combination of these data sources enables comprehensive cruise ship expenditure estimates ton be derived for the years ended June 2015–2020 when cruise activity occurred. In the year ended June 2021 and June 2022, no cruise ship expenditure or visitation was recorded in New Zealand – in line with Stats NZ’s measurement scope – due to COVID-19 border restrictions. Since the year ended June 2023, Stats NZ has not produced cruise ship expenditure or visitation estimates. Data before 2015 is not available due to the limitations of some key data inputs. No modelling is undertaken to determine estimates before 2015. Tourism expenditure by international students International students are defined as those studying in New Zealand for less than 12 months. Tourism expenditure by international students is calculated using the following steps. Obtain total international student numbers from the Ministry of Education. Derive the number of international students studying in New Zealand for less than 12 months as a proportion of total student numbers, by using the number of short-term passenger arrivals visiting New Zealand for education purposes. Calculate expenditure on tuition fees using the Ministry of Education’s Export Education Levy data (inclusive of GST), a census of international students studying in New Zealand. It includes average tuition fees for students studying at schools, tertiary education institutes, and private tertiary establishments (such as English language schools). Note that the tourism satellite account incorporates historic changes to export education data (student numbers). Calculate expenditure on living costs (including accommodation costs) consistent with how it is calculated by BoP. This involves taking average tuition fee data and applying predetermined living cost multipliers for each type of student. Calculate expenditure on airfares by short-term students by multiplying the number of students in New Zealand for less than 12 months as a proportion of total international arrivals, by the total airfare income of resident airlines (from BoP). Sum expenditure on tuition fees, living costs, and airfares, to obtain the total tourism expenditure by international students in New Zealand for less than 12 months. Note that the calculation of international student expenditure for those studying less than 12 months differs from the calculation of education exports derived from balance of payments data, reflecting different conceptual approaches Household tourism expenditure Household tourism expenditure, shown as household demand in table 11, consists of four components: household domestic travel expenditure outbound travel purchased from New Zealand-resident firms off-trip purchases of tourism-specific consumer durable goods imputed rental on holiday homes. 1. Household domestic travel expenditure The tourism satellite account uses an administrative data source based on electronic card transaction data to collect and determine household domestic travel expenditure. The Household Tourism Expenditure Estimates (HTEE), developed by Stats NZ and funded by MBIE, cover the years since March 2009. Before the year ended March 2009, we used data from the Domestic Travel Survey (DTS) undertaken by MBIE. The DTS collected the expenditure and behaviours of domestic travellers within New Zealand. The DTS data collection began in 1999, with data available as both quarterly and annual series through to its cessation in 2013. The DTS data provided information on the nature of domestic travel activity, including the origin and destination of domestic travellers. MBIE categorised the data by purpose of travel, expenditure type, and length of trip (either day trip or overnight trip). The four travel purposes were: holiday, visiting friends and relatives, business, and other. The eight expenditure categories were: transport, accommodation, food, alcohol, gifts and souvenirs, recreation, other shopping, and gambling. DTS expenditure was available by purpose of travel, expenditure category, and length of trip. We then supplemented the DTS with additional household tourism expenditure for outbound travel, off-trip purchases, and imputed rental on holiday homes – using a mix of sources and methods, as outlined in the following sections. In the year ended March 2014, the DTS was replaced by a developmental version of the HTEE, which was further developed and fully integrated into Tourism satellite account: Year ended March 2015. We have made additional refinements to these estimates for Tourism satellite account. The HTEE use geographic information to determine tourism spending in New Zealand by New Zealanders and is available from the year ended March 2009. The DTS is used in determining prior year estimates. HTEE source data Electronic card transaction data is provided to us by Marketview Ltd, who acquires this from two main sources: Worldline (formerly Paymark) – the largest electronic card payment network in New Zealand Modelled data (Marketview) – historically derived from spending by Bank of New Zealand (BNZ) cardholders, which excludes any personal identifiers (we call this depersonalised spending). Worldline data Data is derived from all transactions made at merchants on the Worldline network, used by approximately 70 percent of New Zealand retailers. The dataset includes all eftpos and credit card transactions made at these retailers. There is no link to the person making the transaction, but transactions are linked to merchants. The Worldline dataset excludes ‘cash-out’ transactions. From this data a complete valuation of New Zealanders’ spending can be generated, comprising: day of the week and time of the day where in New Zealand the transaction occurred ANZSIC06 (Australian and New Zealand Standard Industrial Classification 2006) storetype domestic or internationally issued card. Marketview modelled data Marketview’s modelled data, used in previous releases of the HTEE, uses depersonalised spending on BNZ debit and credit cards. This dataset is based on the depersonalised eftpos (debit card) and credit card spending of approximately 600,000 cardholders (aged 15 years and above) in the New Zealand retail market. Raw spending data is weighted and aggregated to provide a representative sample of the national population. The dataset included spending at Worldline and non-Worldline retailers. It excludes ‘cash out’ transactions and bank transfers. This enables Marketview to observe: electronic card spending at virtually all merchants in New Zealand, regardless of whether the merchant uses the Worldline network or not where in New Zealand the transaction occurred whether the transaction was conducted at a physical store or online. For the year ended March 2021, changes in the data provision arrangement between BNZ and Marketview has resulted in additional modelling to household tourism spending for the period over the second half of the measurement year. With input from Stats NZ, Marketview undertook historical analysis across the previous five years, including making allowances for COVID-19 lockdown periods, Easter holidays, and a trend comparison with Worldline merchant activity. Modelling was undertaken at subnational geographies to build a national household tourism spending estimate for the specific period. This subsequently enabled the determination of a full 12- month dataset for the year ended March 2021, which was ultimately fed through the Stats NZ balancing process. For this release, ongoing challenges remained in enabling a household tourism spending derivation. In the absence of any BNZ customer-based data, Stats NZ and Marketview used comprehensive analysis of merchant-based card transaction activity from Worldline applying the same 40km household tourist definition radius to distinguish between local resident and household tourist spending. This radius was concentrated to the largest urban centre within a customer (cardholder’s) territorial authority, instead of a customer’s actual address, together with any spending outside the cardholder’s home territorial authority. In each case, spending was specific to that which is consistent with existing tourism and HTEE-defined ANZSIC industries and determined across the time series. Annual movements were analysed and compared to that of the customer-based data which were in close alignment to both the detailed industry and aggregate levels. From the resultant 2024 and 2025 merchant-derived household tourist spending levels, the 2024/2025 industry movements were applied to the 2024 HTEE (the base year) to determine a 2025 provisional HTEE dataset. Associated proportions were carried across from the 2024 year to the 2025 year. Sample management From Marketview’s long-term relationship with BNZ, we know the sample used in the modelled data was both geographically and demographically distributed in line with the New Zealand population, although small variations exist down to an area unit/customer age level. A further weighting was calculated by determining the distribution of cardholders and comparing this to the distribution of the overall population. Marketview uses Stats NZ’s area unit population estimates as the basis for the national population. This enables the distribution to change over time, as each year of the data was compared with a different population estimate. For example, Marketview data from 2022 is weighted according to the 2021 population estimates. This ensures significant population changes – such as after the Canterbury earthquakes, or new subdivisions opening – are accounted for in the dataset. The weighting factor is applied to the dataset by age (in five-year bands starting at 15–19), by census area unit, and by month. This weighting ensures the distribution of cardholders matches the distribution of the national population, by age, location, and over time. Weighting by age and location ensures management of any bias in the sample, as income and wealth typically increase with age, and wealth can correlate with where a person lives. Combining data sources By combining Worldline and Marketview’s modelled data, Marketview produces a dataset that accurately quantifies: the value of spending of each transaction the source and origin of those payments, for example, business vs personal, domestic vs international tourist where in New Zealand the cardholder lives (the area unit the card resides in) where each transaction took place, for example, physical store vs online, Auckland vs Invercargill the industry category of the merchants, as defined by ANZSIC06 codes the time and day of the purchase. It is important to note that in combining these two sources, all individual cardholder and merchant information is aggregated to a point where no individual cardholder or merchant’s activity can be derived. Defining household tourism expenditure Household tourism expenditure is defined as expenditure that occurs outside a 40km radius of the meshblock in which the cardholder’s address is located, and aligns with industries defined as tourism industries. The 40km reflects the New Zealand definition of travel outside one’s usual environment. Tourism industries encompass both characteristic and related industry data along with selected non-tourism industries. Marketview applies this 40km radius to the combined Worldline and its modelled dataset to determine the HTEE. Exceptions are made where regular behavioural spending patterns show a person’s usual environment extends to an area outside the 40km radius, such as commuters. This is removed from the HTEE. Additional data on internet transactions is collected specifically for selected tourism industries that require travel to consume a purchased good. For example, internet expenditure on accommodation and air passenger transport is collected. Scaling household tourism expenditure data to total economy As electronic card data reflects only one aspect of household tourism expenditure across the New Zealand economy, Marketview upscales their dataset by adding in a factor for cash and other payment methods. This is calculated as the difference between electronic card spending and total economy spending based on ANZSIC06 industry information supplied from our Annual Enterprise Survey (AES). For example, Marketview may record the total value of electronic card spending in ANZSIC06 industry G4110 at $100 for the year, with 10 percent being tourism ($10). The total industry value of G4110 as calculated from the AES was $120. The Marketview card value is thus upscaled by a multiple of 1.2, yielding a total market value of $120, consistent with the AES. The tourism component is still 10 percent, hence tourism spending for that year is calculated at $12. The assumption used is that consumer and business spending on cash versus card on tourism and non-tourism related trips are equal. The HTEE dataset The HTEE dataset provided by Marketview covers the years 2009–2025. At the time of compilation, AES data was available to the 2024 financial year. To produce the HTEE through to 2025, Marketview estimated the value of each industry in the 2025 provisional year by applying movements for each industry from additional Stats NZ data sources, including GST data, to the 2024 AES data. For example, Marketview took annual movements in spending for ANZSIC06 industry G4110 from the Retail Trade Survey. They applied this to the 2024 AES data to determine a 2025 provisional estimate. They estimated other industries from data indicators sourced from Stats NZ. For example, Marketview took annual movements in spending for ANZSIC06 industry G4110 from the Retail Trade Survey. They applied this to the 2024 AES data to determine a 2025 provisional estimate. They estimated other industries from data indicators sourced from Stats NZ. Marketview will update the provisional year estimate as AES data becomes available and indicator data is updated as part of the annual publication cycle of the TSA. Turning industry-based HTEE into tourism products The HTEE industry dataset is then broken down into tourism-defined products using annual supply-use commodity proportions and retail industries sales data. For validation purposes it is then confronted against household consumption expenditure commodity data net of overseas visitor expenditure and New Zealanders’ travel expenditure abroad. This isolates New Zealanders’ spending within New Zealand, allowing for a comparison on an equivalent expenditure basis with the HTEE. Additional household tourism expenditure While the HTEE dataset provided by Marketview captures most household tourism expenditure, the TSA supplements the HTEE product breakdowns with its own product expenditure estimates. These include some off-trip purchases of tourism-specific consumer durable goods and imputed rental on holiday homes. Both the HTEE and additional Stats NZ tourism product data then provide the initial expenditure levels to feed into the balancing process. These levels can be subsequently modified where necessary (the balancing process is covered in more detail in Balancing tourism expenditure and tourism production). 2. Outbound travel purchased from New Zealand-resident firms All years Household tourism expenditure in the TSA includes expenditure on overseas travel, where New Zealanders purchase New Zealand-produced goods and services. This expenditure includes fares paid to resident air carriers for flying a household tourist overseas, commissions paid to resident travel agents for booking household outbound travel, pre-paid travel insurance, and vaccinations needed by household outbound tourists. We estimate this expenditure from sources including the HTEE and company data. 3. Off-trip purchases of tourism-specific consumer durable goods All years Off-trip expenditure by households on tourism-specific consumer durables (such as tents and sleeping bags) is included in household tourism expenditure. These off-trip purchases are based on data sourced from the HES together with supply-side product data and are added to the on-trip purchases of these goods. Off-trip tourism expenditure is defined in Tourism expenditure in Conceptual framework. Read more about consumer durables in the TSA in the Special treatments section later in this section. 4. Imputed rental on holiday homes All years The TSA includes an imputed rental on dwellings owned by households that are used as holiday homes. We calculate the total number of holiday homes using data from the Census of Population and Dwellings and an annual volume change indicator. We calculate annually an average weekly imputed rental price derived from national accounts imputed rental data. We multiply this price by the number of weeks in the year to give an annual imputed rental price. We then multiply the number of holiday homes by the annual imputed rental price to give the total imputed rental value. Business and government travel expenditure Final accounts Business and government travel expenditure is drawn from intermediate consumption of industry data in the balanced supply and use accounts. We calculate it by applying product ratios reflecting travel expenses to total intermediate consumption for each of business and government from the latest final account. This provides the initial product breakdown, which we subsequently modify during the balancing process (covered in more detail later in this section – see Balancing tourism expenditure and tourism production). Provisional accounts In the absence of balanced supply and use accounts, we first derive intermediate consumption by applying a variety of data sources, including the Annual Enterprise Survey, GST purchases, and annual report data to the latest final account year. Each year is then subsequently derived from the previous year’s totals by applying key data source movements. We then apply the product ratio reflecting travel expenses to the derived total intermediate consumption for each of business and government. This provides the initial product breakdown, which we subsequently modify during the balancing process. Production of tourism goods and services Final accounts Analysing the production of tourism-characteristic and tourism-related products starts with the production accounts by industry that underlie the supply and use table. Within the balanced supply and use accounts, we break down each industry’s output and intermediate consumption into products. Final demand categories such as household consumption expenditure and exports are also broken down by product. For the TSA, we rearrange output product data from balanced supply and use tables to focus on tourism-characteristic and tourism-related products. We arrange total sales by each industry into tourism-characteristic, tourism-related, and non-tourism-related products. Provisional accounts Constraints on the availability of data for provisional accounts (no balanced supply and use results available) mean that supply by product is shown only for tourism-characteristic industries and for all other industries. Without balanced supply and use accounts, we derive total output by industry using indicators from the business financial data collection (BFD). This is a comprehensive source of economic survey data, administrative data from Inland Revenue, and financial data collected directly from businesses. We break down this output into the supply of tourism products by using the latest final account breakdown of output by product and industry. This provides the initial product breakdown, which we subsequently modify during the balancing process (covered in more detail below, Balancing tourism expenditure and tourism production. Balancing tourism expenditure and tourism production Final accounts Supply and use balancing is an established and integral process when compiling the national accounts. It is used “for checking the consistency of statistics on flows of goods and services obtained from quite different kinds of statistical sources” (Inter-Secretariat Working Group on National Accounts, 2008). The supply and use balancing process rigorously examines diverse data sources, reconciling them in a framework that reduces the error margins implicit in the individual data sources. The supply and use approach provides the best framework to bring the demand and supply sides of the economy into balance. The usual process is to confront supply and demand by product and perform adjustments so that the value of the supply of each product is equal to the value used. We make adjustments to either supply or demand, depending on the relative strength of each data source. In doing so, the potential for errors that may result from using a single data source, either supply- or demand-based, is reduced. We also performed similar checking of supply and use by product, which underlies Stats NZ’s annual supply and use models. The TSA begins with the balanced supply and use tables, so we balance all products in terms of their total supply and total use. We break down these ‘product accounts’ further into their tourism and non-tourism components. The resulting tourism supply and tourism use may no longer be balanced because of the methodology used to make this split. We then use the same type of data confrontation as used in supply and use balancing to ensure that tourism supply is equal to tourism use. A typical example of how this process is undertaken follows: Compare the total supply of tourism-characteristic and tourism-related products with the total direct tourism demand and non-tourism demand for these products. This comparison identifies areas where the tourism product ratio is unexpected or obviously incorrect. Note that GST is deducted from tourism expenditure for this comparison – so production for and expenditure on tourism products are both valued in producers’ prices. Re-examine the methodology used, checking for errors, conceptual inconsistencies, and methodological problems. Compare the strength of the respective supply- and demand-side data sources, identifying areas where particular strengths and weaknesses lie. Typically, the strengths are in the supply-side industry and product data, and the total demand by type of tourist data. Demand for individual products is often considered to be of weaker quality. The focus is to strengthen the breakdown of total tourism expenditure types into products. The first step is to look for any extra data sources to provide indications of what these should be. Where possible, we incorporate changes. In areas where no data is available, we make iterative changes to these products, keeping particular areas of confidence ‘locked’. We continue this process until the ratios for each product come into line with expectations. The outcome of the balancing process is a strengthened analysis and a complete set of tourism product ratios – that is, the proportion of the supply of products that make up tourism demand. The tourism industry ratios, and thus tourism value added, are derived from these. Provisional accounts The same checking of supply and use by product that underlies the annual supply and use analysis is performed in the provisional accounts. However, due to data constraints, the process is at a more aggregated product level. Furthermore, the relative strengths of supply and use data sources are quite different between provisional and final accounts. Calculating direct tourism value added Derivation of the tourism product ratio Tourism consumption for each product is divided by total supply to give the tourism product ratio. This ratio measures the proportion of a product’s output that is used by tourists. Derivation of tourism supply and the tourism industry ratio Calculation of tourism supply and the tourism industry ratio for each industry is an important intermediate step in deriving direct tourism value added and employment. To derive tourism supply by product by industry, we apply the tourism product ratio (from table 11) to the supply of that product by each industry. We then calculate total tourism supply by each industry by summing tourism supply for all products. For example, we applied the tourism product ratio for accommodation services to the output of all industries supplying this product. This gave tourism supply of accommodation services by each industry. We then divided tourism supply by each industry by total industry output, to give the tourism industry ratio. Note that although the accommodation industry is the dominant supplier of accommodation services it is not the sole supplier, as other industries can also supply this product. While calculating the tourism industry ratio and tourism supply by industry is an important step in deriving direct tourism value added, neither is shown in provisional years as these values are themselves derived from the gross output of each industry. Table 12 shows total supply and tourism supply by product for tourism-characteristic and all other industries. Derivation of direct tourism value added The tourism industry ratio is applied to the production account for each industry to obtain direct tourism value added. Production accounts by industry are not available for provisional years. Therefore, before we can calculate tourism value added, we derive provisional production accounts for each industry. We use data from a variety of sources, including GST sales and purchases, annual reports, and the Annual Enterprise Survey, to break down the latest published total value added to give value added by industry. Final TSA account tables present full production accounts, as well as tourism production accounts by industry. Direct tourism value added in provisional TSA accounts is split by tourism-characteristic and all other industries. This reflects the less detailed nature of total value added by industry in years in which tourism value added is derived as a subset. We make a major assumption relating to the use of the tourism product ratio and the tourism industry ratios in compiling the TSA. The industry technology assumption is that the input requirements of tourism and non-tourism products are identical for an industry. That is, if 50 percent of the output of an industry is goods and services sold to tourists, then 50 percent of its inputs are used to produce those goods and services. This is likely to be a more valid assumption for an industry that makes a range of products that are very similar, requiring similar inputs. However, in some instances the assumption is likely to be less valid; for example, where an industry has a low degree of tourism specialisation, and a diverse range of products are produced. An alternate assumption is to relate specific inputs to outputs – that is, a product technology assumption. However, this approach is not easily implemented due to the lack of sufficiently detailed product data. Industry data, on the other hand, is far more readily available. Both the industry and product technology assumptions are sanctioned by the UNWTO. Tourism employment The total number of people employed in tourism does not necessarily correlate with movement in total tourism expenditure or direct value added. The difference may be due to a lag between growth in an industry and decisions to employ new staff, or a shift in the number of hours worked, or output for each person employed. We use tourism industry ratios to allocate tourism employment numbers by industry. This approach assumes that for each industry, a given dollar value of output will require a fixed quantity of labour input, regardless of whether tourists or non-tourists produce the products. The provisional industry data is derived by applying employer monthly schedule and Household Labour Force Survey movements by industry to year ended March for the previous year employee and working proprietors’ data respectively sourced from linked employer-employee data. From here, provisional tourism industry ratios for the year ended March for the current year– representing the proportion of tourism spend to industry output – are applied to these counts before aggregating to a total. Percentage changes are undertaken at the aggregate level. Direct tourism employment Direct tourism employment adds another dimension to measuring the role of tourism in the New Zealand economy, focusing on the impact on employment. Table 16 shows the number of people directly employed in tourism, grouped by the employees and working proprietors. Direct tourism employment (see table 6) is derived by applying tourism industry ratios to the number of people employed in each industry. This approach produces a value for the number of people in each industry as a result of tourism. In Tourism satellite account, employment numbers come from linked employer-employee data (LEED) annual statistics by each industry. Employment and tourism employment are presented by the number of people employed, for both employees and working proprietors, with a series available from 2000. LEED data is based on administrative tax data, where the number of hours worked is not available, so we cannot provide a full-time and part-time split. Further discussion about LEED is covered in tourism employment source data. Tourism industry profitability Measuring tourism industry profitability provides a deeper analysis of the tourism sector. This measure provides time-series data on variables at an industry level, allowing comparison across time, within an existing industry, and across industries. Table 17 show gross operating surplus and gross mixed income as a percentage of total tourism output for tourism industries and for all non-tourism related industries. This measure reflects economic rather than accounting concepts. Data is presented up to the latest balanced supply and use year. Gross operating surplus and gross mixed income figures are reported before deducting interest and economic depreciation. Tourism gross operating surplus and gross mixed income as a percentage of total tourism output is one measure of tourism profitability. It reflects national accounting rather than commercial concepts. Gross operating surplus and gross mixed income is before interest and depreciation. Indirect effects of tourism Indirect value added Indirect value added comes from tourism through producing the intermediate inputs used in producing goods and services sold to tourists, although there is no direct relationship between the producer of the intermediate inputs and the tourist. Measuring indirect tourism value added involves tracing the flow-on-effects of businesses’ intermediate purchases that are used directly in producing tourism products and measuring the cumulative value added these purchases generate. For example, the intermediate purchases of the ‘accommodation’ and ‘food and beverage services’ industries includes items such as electricity, bedding and good purchased from other industries or inputs. In turn, these other industries will have intermediate purchases from other industries (or from overseas) to produce the items they sell to the accommodation, and food and beverage services industries. The sequence continues, until all intermediate purchases can be directly accounted for, either as value added or imports. Indirect tourism value added may be calculated directly by using the supply and use framework or derived indirectly as a residual item. The indirect method calculates total tourism expenditure(excluding GST), then subtracts direct tourism value added, imports sold directly to tourists by retailers, and imports used in the production of goods and services that are sold to tourists. Final accounts Indirect tourism value added is calculated directly using the table of industry-by-industry total requirements of 2020 input-output tables – the most recent total requirements table available. Provisional accounts Indirect tourism value added is derived using the subtraction method, after first deriving imports used in production of goods and services sold to tourists. The advantage of this method is that it is simpler, does not require multiple iterations, and industry total value added is a less critical input. Indirect tourism contribution to GDP Measuring indirect tourism’s contribution to GDP involved summing the value added of each industry that is generated throughout this sequence. The New Zealand Tourism satellite account covers the intermediate consumption related to direct tourist expenditure. Total tourism expenditure can be explained in terms of: direct tourism value added indirect tourism value added imports (those directly sold to tourists and those used indirectly in production) GST Some of tourism’s indirect demand for intermediate inputs will not be met by the output of New Zealand producers, but by imports that provided no direct contribution to New Zealand’s GDP. For more information, refer to Overview of sources and methods for quarterly gross domestic product: Updates and COVID-19 adjustments. Direct tourism value added does not necessarily show the same movement as tourism expenditure. This is because changes in spending patterns affect the composition of industries that supply products to tourists. Changing industry composition also affects other economic aggregates. This can lead to variations in value added to output ratios across different tourism-related industries. Movement in the value of imports sold directly to tourists and in imports used in the production of goods and services sold to tourists are strongly influenced by exchange rate variations and changes in the mix of products purchased. Table 14 summarises the relationship between tourism expenditure components. Tourism expenditure can also be presented by the share of each component, as shown in table 15. Indirect imports and tourism value added As described in Relating direct tourism value added and tourism expenditure, the basis of a TSA’s measure of indirect tourism value added (or tourism’s indirect contribution to GDP) is: Total tourism expenditure less GST equals tourism demand less imports sold directly to tourists by retailers equals tourism output less tourism intermediate consumption (inclusive goods for resale) equals direct tourism value added Tourism intermediate consumption (inclusive of goods for resale) less imports used in production of goods and services sold to tourists equals indirect tourism value added. We discuss below the derivation of imports used in producing goods and services sold to tourists and indirect tourism value added. Imports used in production of goods and services sold to tourists Indirect tourism imports represent imported products not sold directly to tourists but used in producing tourism supply. We calculate the value of imports used in producing products sold to tourists using the table of cumulated import coefficients of industries, and categories of final demand, from 2020 input-output tables. This is the most recent cumulated import coefficients table available and the application of these latest tables has been incorporated in Tourism satellite account. It may be updated when the relevant tables from more recent years become available. The cumulated imports coefficients table shows how many units of imports are required for an industry to produce a unit of output. Tourism supply by industry is derived as part of the direct tourism value added calculation. Multiplying this supply by the relevant import coefficients by industry produces the value of imports used in producing goods and services sold to tourists. Indirect tourism employment Table 5 presents the number of people employed indirectly in tourism. Final Accounts Indirect tourism employment takes, as its starting point, indirect tourism value added by industry. We calculate the ratio of indirect tourism value added to value added, and multiply it by employment by industry, to give indirect tourism employment. We sum these industry estimates to calculate the number of people employed indirectly in tourism. Provisional accounts For provisional years, neither direct tourism value added nor indirect tourism value added is available by industry in the New Zealand System of National Accounts (NZSNA). Therefore, we calculate the ratio of indirect tourism value added to value added, by industry, from the latest final year. We multiply this by employment by industry, to give the number of people employed indirectly in tourism. Supply and use framework The tourism supply of an industry is derived by summing the value of tourism products sold by that industry. This value is derived by multiplying the total supply (national production plus imports) by its corresponding tourism product ratio. As supply and use tables for the provisional year are not yet available for the release, we derive an initial value of supply by product by industry for the same period from various sources. Table 12 shows total supply and tourism supply by product for the years ended March. Points to note from table 12 is that goods and services can be consumed/purchased by tourists and non-tourists. The tourism product ratio indicates the proportion of a product’s supply that is purchased by tourists. Final accounts The TSA is a rearrangement of the NZSNA. More specifically, we derive the tables for final accounts from the annual supply and use analyses of the New Zealand economy. Supply and use analyses are both a statistical and economic representation of the economy, broken down by industry, product, primary input category (for example, compensation of employees, consumption of fixed capital), and final demand category (such as household consumption expenditure and exports). By adopting the supply and use framework, a tourism industry can be presented in the same way as those for the agriculture and manufacturing industries are presented. It is then possible for tourism to be compared with other industries and with total national accounts aggregates, such as GDP. Additionally, by compiling the TSA within a supply and use framework, we can produce derived tables that allow further analyses. For example, an impact analysis can be completed, which allows the user to trace the direct and indirect impact of tourism expenditure on the economy. This shows the flow-on effects of tourism, as expenditure on tourism products first affects industries that directly supply tourists, and then industries that provide indirect inputs to the industries supplying tourists. The supply and use structure also allows economic data on tourism to be easily linked to nonfinancial data such as employment. Balanced supply and use accounts provide detail, at the product level, of both the structure of industry output (supply), and the demand for these products by business and final demand categories (for example, household spending). They are the starting point from which a TSA is derived. Provisional accounts Balanced supply and use accounts are not yet available for provisional years. Only total economywide value added has been published for these years. Therefore, we calculate aggregated supply of products sold to tourists by industry. This involves: deriving the output of each industry (as outlined above in Production of tourism goods and services) breaking down total output into supply of each tourism product, using the industry output breakdown from the latest available supply and use analysis. This provides the initial product breakdown, which we subsequently modify during the balancing process calculating value added by industry within the constraint of published total value added. The absence of balanced supply and use accounts results in less robust estimates of tourism value added for these later years. The absence of balanced supply and use accounts results in less robust estimates of tourism value added for these later years. Employment source data Linked Employer-Employee Data (LEED) LEED uses existing administrative data from the Inland Revenue taxation system and business data from Stats NZ’s Business Register (BR). LEED provides statistics on a variety of job measurements including the number of people employed, number of filled jobs, job flows, worker flows, mean and median earnings for continuing jobs and new hires, and total earnings. This information gives an insight into the operation of New Zealand’s labour market on both a quarterly and annual basis from national, regional, and territorial authority perspectives. The LEED annual statistics cover all individuals (‘employees’) who either receive income from which tax is deducted at source, or from self-employment. In LEED, the employer is the geographical unit or physical location of the business rather than the administrative reporting unit. For example, a nationwide retail chain may have one Inland Revenue reporting unit covering all its retail branches. In LEED, each branch is considered to be a distinct employer. For inclusion in LEED annual statistics, a person must: be aged 15 years and over at the start of the tax year have received non-zero income with tax deducted at source through the Employer Monthly Schedule (EMS) system, or self-employment income in the reference period. All income measures are before tax. The tourism satellite account uses the LEED annual table 1.5: Main earnings source, by industry (ANZSIC06) measure, which allocates a person to the industry where they have generated the most earnings from in the tax year. Linked employer-employee data has more information about LEED employment. Employment and tourism employment estimates Employment and tourism employment are presented by the number of people employed, for both employees and working proprietors, with a series available from 2000. For the provisional year, LEED annual statistics are not available at the time of publication of the tourism satellite account. We use aggregate level estimates for the provisional year. We update these estimates as LEED becomes available as part of the annual publication cycle of the tourism satellite account. Estimates for both employees and working proprietors are derived using differing employment data sources. Employee estimates for the provisional year are derived using a more timely summary source of EMS data. This data is currently used as an experimental series and business size indicator for the Statistical Business Register. For the purposes of the TSA, the annual March month movements are then applied to LEED employee industry data. Working proprietor estimates for the provisional year are derived by applying the year ended March (quarterly mean) annual Household Labour Force Survey (HLFS) industry movements to the latest LEED working proprietor industry data. From here, provisional year tourism industry ratios – the proportion of tourism spend to output by industry – are then applied to the above counts prior to aggregation to totals. Consumer durables: please see Conceptual framework and Tourism product classification. Tourism employment LEED examples The following tourism industry examples illustrate how to use the LEED-based ‘number of people employed in tourism’ measure. Examples of how employment would be measured from a LEED filled-jobs measure perspective are provided for comparison. Khloé holds three part-time jobs in Queenstown – at a tourist attraction, in a restaurant, and at an accommodation provider. During the year Khloé’s highest earnings were generated from the restaurant, therefore she would be assigned to the food and beverage services industry. Under the LEED-based measures this equates to: • number of people employed = 1 • number of filled jobs = 3. Kobe holds a full-time job in summer in Ohakune working at an outdoor equipment retail store. In winter, he works full time at the cafés on the ski field. Over the year Kobe generated more earnings from the retail store than his café work, therefore he would be assigned to the retail trade industry. Under the LEED-based measures this equates to: • number of people employed = 1 • number of filled jobs = 2. Michael is an owner-operator running two seasonal businesses in Nelson – one sightseeing, and the other fishing tours. As a working proprietor, Michael has a unique ID number and the businesses he runs have their own separate ID numbers. The same rule for jobs data can be applied to working proprietors, where the link between the person and geographic business location is the key relationship. For Michael’s two seasonal businesses, the data is recorded as: Name of business Owner ID number Business ID number Michael’s first seasonal business 12345 98765 Michael’s second seasonal business 12345 87654 Most of Michael’s self-employed income was generated from his first seasonal business, therefore he would be allocated to that business’s industry. Under the LEED-based measures this equates to: • number of people employed = 1 • number of filled jobs = 2. Kim and Shaquille live together in Wellington on the understanding that Kim is the breadwinner and Shaquille is the homemaker. Kim operates her own small business selling music souvenirs to tourists during the week, while on the weekends she works for the local holiday park. Shaquille helps at the holiday park in the month of February – his only employment for the year. Kim’s highest earnings were generated from her retail business, therefore she would be allocated to the retail trade industry. Shaquille’s employment would be allocated to the accommodation industry. Under the LEED-based measures this equates to: • number of people employed = 2 (1 Kim and 1 Shaquille) • number of filled jobs = 3 (2 Kim and 1 Shaquille). Special treatments This section details areas in TSA methodology that receive special treatment Treatment of the margin In the national accounts, purchases of retail goods can effectively be split into three components: the margin (or ‘mark-up’) of the retailer selling the product the margin charged by the wholesaler the price received by the manufacturer. The treatment adopted in the TSA is illustrated in the following example. A tourist purchases a jersey for $100, comprising a $10 mark-up from the retailer (who has direct contact with the tourist), a $15 margin from the wholesaler, and $75 charged by the manufacturer. The breakdown is as follows. The full purchase price of the jersey ($100) is recorded as total tourism expenditure. The margin (or mark-up) by the retailer selling the jersey to the tourist is the retail output ($10) from which direct tourism value added is then derived. The remaining $90 is the price received by the manufacturer ($75) and the margin charged by the wholesaler ($15). Neither of these has direct contact with the tourist and is the output from which indirect value added is derived. Consumer durables Two types of expenditure on consumer durables are included in tourism expenditure in a TSA, consistent with UNWTO recommendations: Conceptually, all consumer durables acquired on a trip are included in tourism demand. This includes the purchase of high-value consumer durables during a trip, such as motor vehicles, even though the primary purpose may not be for tourism use. The estimate of purchases of motor vehicles by households while on trips is related to the proportion of New Zealanders living in rural areas. This is based on the assumption that rural residents will travel outside their usual environment (defined in Conceptual framework) to purchase a motor vehicle. It is recognised that the usual environment for a rural New Zealander may well include urban areas that fall outside the strict TSA definition of ‘usual environment’. While the measurement attempts to take this into consideration, there is little hard data with which to refine it. As a result, these estimates may be revisited in the future. Off-trip purchases of a specific range of consumer durables with very high tourism use are included. For example, luggage and tents are acquired primarily for tourism purposes, so are always considered tourism expenditure. TSAs have a defined set of consumer durables with very high tourism use, based on a list developed by the OECD that is supplemented with consumer durables having high tourism use in New Zealand. (See Tourism product classification for items included as tourism consumer durables.) Holiday homes An imputed rental on owner-occupied dwellings is calculated in the national accounts. This is to avoid distortions over time resulting from changes in the number of people renting rather than owning homes (otherwise, an increase in the number of people renting homes would increase GDP). This imputed rental is applied to both first and second homes (which includes holiday homes). Although a holiday home may not be in full-time use, we assume it is available to be used all year, and therefore allocate the rental from owning the holiday home to tourism expenditure. For a TSA, we assume demand for holiday homes to come solely from domestic recreational tourists, due to a lack of data on the origin of holiday homes. We set total supply of holiday homes equal to the total imputed holiday home rental (and therefore total demand) of domestic household tourists, as holiday home supply is provided solely for the purposes of tourism. Package tours TSAs apply the net approach to recording package tour expenditure, where the organiser’s margin for arranging the tour is recorded as the sole output, while the components of the tour are treated as being purchased directly by the tourist. For example, a travel agent sells a package tour to a tourist. The travel agent (organiser) records a margin from the sale of the package tour. The expenditure on each of the components of the tour is captured under the respective industry’s output. Travel agency services Travel agents obtain their income in two major ways. Firstly, they earn income by buying travel products (generally at a bulk discount) and selling them to travellers, thereby earning a margin. Secondly, an agent may book a traveller’s fare or accommodation with the service provider and receive commission from the service provider (on behalf of the traveller). TSAs use special treatments for each of the following means of generating income. Where travel agents have sold travel to travellers, we record travellers as having bought travel (from the travel provider) and travel agency services (the travel agent’s margin). Where travel agents have received commissions, we assume providers to have purchased travel agency services on behalf of the tourist. This means that these travel agency services are included in direct tourism demand and therefore contribute to direct tourism value added. Consequently, business travel expenditure includes a high level of demand for travel agency services. Non-market output services consumed by tourists The New Zealand TSA does not include an imputation for providing individual non-market tourism services in total tourism consumption. These services include information centres, museums, and libraries, and any other services that tourists use without having to pay for them, such as national parks. This is a recommended inclusion in UNWTO TSA methodology. To implement the UNWTO recommendation requires: a very detailed functional breakdown of the expenditure of government and non-profit institutions, that is, separately identifying those entities which provide ‘individualised’ services splitting this expenditure between tourist and non-tourist consumption. Identifying individualised and collective non-market consumption is a recommendation from System of national accounts 2008 (Inter-Secretariat Working Group on National Accounts, 2008). However, we have only partly implemented this (local government has not been fully split). In areas that have been split, the breakdowns are not sufficiently detailed for TSA purposes. References Inter-Secretariat Working Group on National Accounts (2008). System of national accounts 2008. Available from http://unstats.un.org. United Nations Statistics Division, Statistical Office of the European Communities, Organisation for Economic Co-operation and Development, World Tourism Organization (2008). Tourism satellite account: Recommended methodological framework. Available from www.oedc.org en-NZ