U.S. travel and tourism satellite accounts for 1992

Survey of Current Business, July, 1998 by Sumiye Okubo, Mark A. Planting

This article presents prototype travel and tourism satellite accounts (TTSA'S), which are a second set of extensions developed in 1998 to the U.S. input-output (I-O) accounts.(1) Satellite accounts are rearrangements of information from the national economic accounts and other sources for the purpose of analyzing specific economic activities more completely than is possible within the structure of the basic accounts (see the box "Satellite Accounts").(2) The TTSA'S integrate information on the flows of commodities that are related to travel and tourism activities but that are not identified in the standard presentation of the I-O accounts.(3)

There is strong motivation to develop analytical measures of travel and tourism activities in the United States. Travelers are important consumers of U.S. production, and the industries that cater to travelers use a substantial share of output from other industries, add substantial economic value to other industries' outputs, and employ large numbers of people. Furthermore, both travel in the United States by foreigners and travel abroad by U.S. residents have grown dramatically in recent years.

The TTSA'S define travel and tourism as the economic activity generated inside the United States by "visitors" of all types--for business and pleasure, by residents and nonresidents alike--and outside the United States by U.S. residents.(4) The TTSA'S extend the I-O accounts in that they attempt to measure an economic activity (travel and tourism) undertaken by only a subset of purchasers (visitors) and involving only a subset of purchases (tourism demand). This task first requires the identification of the commodities that are purchased by visitors and the corresponding industries that produce these commodities. This task is further complicated because tourism is inherently defined in relative geographic terms-like distance from home--and because many of the activities that are undertaken by visitors--such as dining out in restaurants--are also undertaken by nonvisitors, that is, people who are close to their homes. Therefore, deriving the output and value added of tourism industries is less straightforward than for a conventional industry producing a conventional commodity, such as iron and steel.

The basic building blocks of I-O accounts are commodities, most of which are not readily distinguishable by type of consumer. Therefore, in developing the TTSA'S, the share of each commodity purchased by visitors had to be estimated. The information available to allocate commodities between visitors and nonvisitors is generally based on relatively small sample surveys and indirect methods. In the prototype TTSA'S, three different methodologies were used, and estimates are presented as a range, rather than as a single estimate.

The following are highlights from the new TTSA'S for 1992 (table 1):

* Value added in travel and tourism represented 1.9-2.2 percent of U.S. gross domestic product (GDP). The industry with the highest value added was the hotels and lodging industry.

* Expenditures for travel and tourism accounted for 4.6-5.3 percent of U.S. GDP. The largest category of expenditures was expenditures for passenger air travel services.

* Employment in travel and tourism activities accounted for 3.2-3.7 percent of total employment in the United States. The average compensation per tourism employee was $21,400 per year, but compensation varied widely by industry.

Table 1.--Key Indicators of Tourism Activity: Range of
Estimates 1992

            De-         Value       Employ-          Percent
            mand        added        ment     Share of GDP   Share
            (billions   (billions   (thou-                    of
               of          of                 De-    Value   employ-
            dollars)    dollars)    sands)    mand   added   ment

Method 1.   284.2       120.5       3,749     4.6    1.9     3.2
Method 2.   294.9       124.5       3,933     4.7    2.0     3.3
Method 3.   332.8       135.7       4,353     5.3    2.2     3.7

NOTE.--See the section "Methodological Overview" for a discussion of the three methods.

The first section of this article describes the development of the TTSA'S. The second section provides a conceptual overview of the TTSA'S, including their relationship to the I-O accounts. The third section describes the major components of the TTSA'S. The fourth section provides an overview of the methodology used to estimate the TTSA'S. The fifth section summarizes the TTSA estimates for 1992. The final section outlines future work and extensions.

Background

The activities of travel and tourism are covered in the national economic accounts, but the system underlying the classification of output in the I-O accounts--the Standard Industrial Classification (SIC) system--does not facilitate separately identifying tourism, as the SIC was primarily designed to present industry statistics without regard to the purpose of the purchase of output. A measure of tourism activities would be understated if it included only the output of industries that are typically associated with tourism activities--hotels and air, water, and rail transportation--because it would exclude expenditures on other types of commodities, such as eating and drinking places, that represent a relatively important share of tourism expenditures but that cannot be separately identified. On the other hand, that measure would be grossly overstated if it included all the expenditures on eating and drinking because it would also include expenditures by local residents.