When we talk of the supply side of tourism we are really talking about the provision to visitors of the goods and services that make up tourism expenditure. This Tourism Supply will be made up of the activities of a wide range of sectors or industries.
Within this we are interested in analysing data for individual establishments that produce the goods or services that tourism consumes.
The establishment is defined as ‘an enterprise or part of an enterprise that is situated in a single location and in which only a single productive activity is carried out or in which the principal productive activity accounts for most of the value added.’
In this respect each unit belonging to a chain will be considered as a separate establishment. This is an important distinction as often data, for example on turnover, is collected for ‘head office’ locations and not at the establishment level. Wherever possible we should seek to undertake analysis at the establishment level (the location where tourists consume goods and services).
3.1 The Tourism Industries
In this section we outline some specific measurement issues relating to the main tourism characteristic activities (sometimes called the Tourism Industries):
accommodation for visitors
food and beverage serving activities
passenger transportation activities
travel agencies and other reservation activities
sports and recreation activities
country specific tourism activities
3.1.1 Accommodation for visitors
It is important that accommodation is classified in such a way that the information contained can be appropriately linked to the data obtained on the demand side.
We have already seen how this classification can be broken down into different categories of accommodation as shown in the following table. Any analysis of the accommodation sector should take into account the following categories where possible:
hotels and similar accommodation
recreational vehicle parks, trailer parks and camping grounds
holiday centres and villages
other holiday and other collective accommodation
rented accommodation (short term holiday lettings)
Accommodation services are provided, either on a commercial (market) basis, that is as a paid service; or on a non-commercial (non-market) basis, either, as a service provided without charge by family or friends, or on own-account (owner-occupied vacation homes).
The accommodation units provided can take many forms; fully serviced and furnished guest rooms or suites; completely self-contained units of one or more rooms with kitchen, with or without daily and other regular housekeeping services. They can consist of shared accommodation units such as in youth hostels.
The services provided may include a range of additional ones such as food and beverage services, parking, laundry services, the use of swimming pools, exercise rooms, recreational facilities and conference and convention facilities. One or more of these characteristics can be chosen for setting up market segments.
In many cases surveys of accommodation establishments are the most important information source on supply as it normally relatively easy to obtain. In a more detailed regional breakdown the data of the accommodation statistics are most frequently the only source of information on tourism flows.
To depict tourism flows the number of arrivals (particularly internationally) and nights spent are the most used indicators.
Of these two, nights spent are more appropriate to reflect the performance of the accommodation industry and the impact of the tourists stay for the place visited as this indicator takes into account the full effect of the duration of the stay.
Dividing the number of nights spent by the number of arrivals provides the average length of stay which can be used as an analytical indicator to offer additional information on the kind of tourism in a country or region.
The following variables are most frequently used to describe the accommodation capacities:
months operating in the year
number of rooms or accommodation units (gross, net) (the net indicator takes into consideration the fact that rooms might not always be available for guest accommodation)
number of bed places (gross, net) (the net indicator takes into consideration the fact that bed places might not always be available for guest accommodation)
revenue per available room (REVPAR)
occupancy rates (gross, net) by rooms or accommodation units (an indicator to be associated with revenue per room)
occupancy rates (gross, net) by bed places (an indicator to be associated with flows of visitors); Below is an example of how to calculate this indicator (from the Eurostat Methodological Manual on Tourism Statistics, 2011):
Occupancy rate of bed places
where: ORBP – Occupancy rate of bed places
bdoi – The number of days during which bed i (including extra bed) is occupied in the reference period
BDAi – The number of days during which bed i (including extra bed) is available in the reference period
i – Bed place number (sequential number 1 through n)
n - Total number of bed in the establishment
Example 1 (no extra beds were used): A hotel has capacity of 50 bed places (permanent) and 10 extra beds (all are available for checking-in). 40 permanent beds were occupied for the whole month (for example, June). No extra beds were used.
According to the formula above occupancy rate of bed places will be following:
Example 2 (extra beds were used): A hotel has capacity of 50 bed places (permanent) and 10 extra beds (all are available for checking-in). All permanent beds were occupied for the whole month (for example, June) and moreover five extra beds were used for 15 days.
According to the formula above occupancy rate of bed places will be following:
3.1.2 Food and beverage serving activities
A feature of food and beverage serving activities is that, although they are considered tourism characteristic activities, establishments in these industries also cater to a large degree to non-visitors or local residents.
For some establishments but also for the industry as a whole, these non-visitors might represent the majority of customers, permanently or at certain times of the year only.
As is the case for accommodation for visitors, food and beverage serving activities can also be provided, on a non-market basis, by family, friends or relatives.
For this reason, it is important to classify visitors by type of accommodation (identifying separately non-market or serviced accommodation) as well as purpose of trip (identifying visiting family and friends) in order to be able to validate the amount of expenditure in food and beverage serving services by different categories of visitors.
Different categories of establishments providing food and beverage services in each country should be identified, although there is no general classification that would fit all the variants.
For example, there are generally full-service restaurants with or without beverage service, sometimes referred to as fine dining, family restaurants with full service, self-service restaurants or cafeterias with seating, take-out or take-away establishments, stands or street vendors with fixed locations, bars, and night clubs.
Some additional non-monetary information associated with food and beverage serving activities, might be of interest and are shown in Box 6.
Box 6 Non monetary items relating to the food and drink sector
for restaurants with seating:
for take-out establishments:
for bars and night-clubs:
3.1.3 Passenger transportation
'Long distance passenger transport activities are to be considered as tourism characteristic activities. The expenditure on transportation often represents an important share of total tourism expenditure by visitors, particularly in the case of visitors travelling by air' (IRTS, 2008).
For analytical purposes, passenger transportation is usually considered under two different categories: transportation to or from the destination, and transportation at the destination.
This is particularly important in the case of international travel, because of the need to identify the economy that will benefit from the expenditure associated with transportation.
In order to do this, it is necessary to identify the residence of the carrier(s), a process which might be problematic when more than one carrier is involved. In the case of domestic travel it is necessary to identify where the service is delivered and who is the service provider in order to identify the economy (at the national or local level) that benefits from the expenditure.
It is important to classify trips by the main mode of transport (as seen previously) but it should be noted that this may not result in all types of transport used on the trip being accounted for.
Some additional non-monetary information associated with the supply of passenger transportation services, are of interest, and these are shown in Box 7.
Box 7 Non monetary items relating to the transport sector
Long distance public transportation:
Rental of vehicles:
3.1.4 Travel agencies and other reservation activities
Visitors (or potential visitors), when planning and organizing their trip, often use the services of travel agencies in order to get information on different alternatives and for making their bookings (transport, accommodation, recreation activities either packaged or individually purchased, etc.).
Their function consists mainly of selling the right to use a certain service provided by others at a certain moment in time and within certain conditions.
Their role is to provide information and other services to the visitor and they are the intermediary in the purchase of certain services, although they might also provide additional services such as accompanying tours, guiding services, etc.
These agencies and reservation services operate in some ways as 'retailers' of these services that are sold to the public.
However, their function is different from that of a retailer of a good because it is still the producer of the service who finally serves the consumer. There is no substitution of relationships, only an efficient way for producers to make their products available to the public and sell them (IRTS, 2008).
Their functions consist mainly of selling the right to use a certain service provided by others at a certain moment of time and within certain conditions. Gross revenues of travel agencies on reservation services are of three kinds:
those collected directly from visitors through a specific invoice
gross commercial margins representing retail trade services when travel agents remunerate themselves implicitly through a retail trade operation
commissions paid by the providers of tourism services when they operate as their agents, similar in operation to retail trade services on a fee or contract basis
It is worthwhile to further define some sub-categories of interest within the travel agency sector.
Tour operators: businesses that combine two or more travel services and sell them through travel agencies or directly to final consumers a single product for a single price.
Package tour: should not be viewed as a product per se, but rather as the sum of its components, including the gross margin of the tour operator and that of the travel agency that sells it to the public.
Gross margin of tour operator: is the price that the visitor pays to the operator minus the value of the components that make up the tour at the prices the operator paid for those components.
In addition to the information on their own activity, travel agencies and other reservation activities constitute an important source of information on the services that are purchased through their intermediation, both in monetary terms as well as in non-monetary terms.
Travel agencies should be able to provide quantitative information on the number and values of products sold, categories of destinations, types of clients – business, others, (trips and/or packages either domestic/outbound/inbound), and other information. In summary travel agencies should hold information on the following:
trips without package
inbound trips without package
outbound trips without package
3.1.5 Cultural Activities
Cultural activities when applied to the tourism sector include a number of sub-classes in terms of the Standard Industrial Classifications (SIC) proposed in International Recommendations, in particular:
support activities for the performing arts
operation of arts facilities
operation of historical sites and buildings and similar visitor attractions
botanical & zoological gardens and nature reserves activities (IRTS, 2008).
3.1.6 Sports and Recreation activities
The following Standard Industrial Classification sub categories are used to determine the make up of sports and recreation activities that are relevant to tourism:
gambling & betting activities
operation of sports facilities
other sports activities
activities of amusement parks and theme parks
other amusement and recreation activities (not covered elsewhere)
renting and leasing of recreational and sports goods (IRTS, 2008)
3.1.7 Country specific tourism goods and services
Country specific tourism goods are highlighted in the International Recommendations on Tourism Statistics (IRTS, 2008) as an area where there can be some latitude or flexibility in including certain SIC categories that might be of particular importance in the context of the tourism sector of individual countries.
In the case of the UK the country specific SIC categories attempt to capture the important activities of exhibition, fair and conference organisation:
activities of exhibition and fair organisers
activities of conference organisers
When considering Tourism Employment we need to restrict our definition to those employed within the previously defined tourism industries (Appendix 3 in this guidance note).
According to international recommendations, there exist three measures of employment within the tourism sector:
a count of the persons employed in the tourism industries in any of their jobs
as a count of the persons employed in tourism industries in their main job
as a count of the jobs in tourism industries
When considering employment within tourism, people working within the sector can be classified in one of the following categories.
Paid employment. This relates to all those persons who, during a specified period, performed some work for wage or salary in cash or in kind, in other words all those who are classed as At Work.
Self-employment. At Work refers to persons who during the reference period performed some work for profit or family gain, in cash or in kind.
With an enterprise but not at work refers to any person with an enterprise, which, for example may be a business enterprise, a farm or a service enterprise, who are temporarily not at work during the reference period for any specific reason.
Self-employment jobs are those jobs where the remuneration is directly dependent on the profits (or the potential of profits) derived from the goods and services produced.
Self-employed can be divided into two groups, those with and those without paid employees. Those with paid employees are classified as employers and those without paid employees are classified as own-account workers.
In addition, self-employed also include contributing family workers and members of producers’ co-operatives.
Employment related to Demand and Supply. With regards to the demand side, the statistical unit of employment is jobs.
With regards to the supply side, the statistical unit is person employed.
Some people may have more than one job, in which case the primary job will be the one in which most time is spent and/or generates the most income. The other(s) will be secondary jobs.
Thus, employment can be expressed in terms of:
number of persons
number of jobs (full time/part time)
number of hours of work
full-time equivalent employment
In order to adequately analyse employment in the tourism industries, it is recommended internationally that at the national level a set of key variables (shown in Box 8) for each of the tourism industries previously identified should be collected (IRTS, 2008).
Box 8 Tourism employment variables
The collection of data on employment in the tourism industries can be a complex process. By its nature, employment in the tourism industries can be undertaken either in paid employment or self-employment.
In order to achieve a better coverage and get more detailed characteristics of persons employed, it is necessary to use the following major sources of data collection:
household-based sample surveys, such as the ONS Labour Force Survey
establishment-based sample surveys, such as the ONS Annual Business Inquiry
administrative records, such as the ONS Inter Departmental Business Register
Guidance Note 5 (237.6 Kb Pdf) in this series considers the measurement of the supply side of tourism in more detail.