Enhancing financial and economic yield in tourism: Sector performance and business benchmarks report: Analysing New Zealand's tourism satellites accounts for measures of sector performance and business benchmarks

Abstract

Establishing the economic contribution of visitor activities to national or local gross domestic product (GDP) has been the primary use of Tourism Satellite Accounts (TSA). Visitor consumption is distributed throughout numerous sectors of the economy where expenditure, value-added and the financial yield of constituent enterprises provides a mechanism for comparing the performance of tourism's characteristic industries against the rest of the economy. The paper submits that measures of economic performance at sector level and financial yield at enterprise level are more reliable indicators of tourism's sustainability within an economy than volumetric measures such as visitor consumption or income. The concept of tourism yield is revisited, defined and measured in terms of enterprise-level economic performance. Furthermore, this paper outlines a methodology based on economic value measurements for determining the relative performance of sectors contributing to a TSA. Over the period 1997-2004 the performance of tourism's characteristic industries (Accommodation, Transport and Recreation) as a value-creator and productive employer fell short of what was being achieved by tourism's related industries (Retail). Outputs from Tourism's characteristic industries displayed 1.2 percent real growth but succumbed to inflationary pressures; absorbing steadily rising costs and reducing production efficiency without adjusting prices so as to maintain value growth. This behaviour was not seen in tourism's related industries where real growth was almost six percent over the same period. Throughout the same period New Zealand's labour productivity growth was relatively low at an annual average of 1.1 percent but tourism's characteristic industries fared less well - averaging negative growth, yet tourism's related industries averaged 1.7 percent annual growth. Tourism characteristic industry labour content rose and production efficiencies (technology, process improvement, etc) that may have occurred were masked by visitor arrival growth. New Zealand's visitor arrival growth averaged 6.55 percent per annum and was amongst the highest in the world. Should visitor volume growth decline, the degree to which tourism enterprises will be able to maintain their position in the labour market and invest in product leadership is questionable. Over the analysis period tourism in New Zealand has been characterised by strong growth in visitor numbers, particularly from traditional markets. A detailed analysis of the TSA from 1999-2003 indicates that visitor growth has not been matched by productivity gains. Overall average financial yield of individual tourism characteristic firms are modest, and the sector as a whole is buoyed by the strong performance of its retail (supermarkets, clothing, souvenir. .. ,) components. These trends are particularly evident for the accommodation sector.