tourism as a driver of - jhta · tourism as a driver of jamaica’s economic development . 2 oxford...
TRANSCRIPT
Adam Sacks
President
Tourism Economics
An Oxford Economics Company
Tourism as a Driver of
Jamaica’s Economic
Development
2
Oxford Economics
Oxford Economics is the world leader in
global forecasting and quantitative analysis
for business and government.
The rigor of our analysis, caliber of staff
and affiliation with Oxford University make
us a trusted resource for decision makers.
3
Coverage accounts for 99% of world business
Countries covered
4
Tourism Economics
Travel data and
forecasts for 185
countries
Policy analysis
and
recommendations
Market opportunity
and scenario
analysis
Destination visitor
tracking and
economic impact
5
Selected clients
Corporations
Airbus
American Express
Boeing
Etihad Airways
InterContinental Hotels
Marriott
MasterCard
Theme Park
TUI
Destinations
Arizona Office of Tourism
Baltimore CVB
Bahamas Ministry of Tourism
Visit California
Canadian Tourism Commission
Dubai Tourism
Georgia Tourism
Israel Ministry of Tourism
New York City and Company
New York State
Ontario Ministry of Tourism
Orlando CVB
Philadelphia Tourism Marketing
San Diego CVB
Tourism Ireland
Visit Britain
Visit Denmark
Visit Florida
Visit Switzerland
Associations
Caribbean Tourism
Organization
European Travel Commission
Pacific Asia Travel Association
US Travel Association
Destination and Travel
Foundation
200
Key findings
7
Tourism has led economic growth
In constant
prices, the hotel
and restaurant
sector has
outpaced the
economy -
expanding 36%
since 2001.
In volume terms,
tourism has been
the leader of
economic growth
in Jamaica.
-50% -40% -30% -20% -10% 0% 10% 20% 30% 40%
Mining
Manufacture
Agric. & Fishing
Whole. & Retail Trade
Government
Total Economy
Construction
Transport, Storage & Commun.
Real Estate & Bus.
Electricity & Water Supply
Other Services
Finance & Insurance Services
Hotels & Restaurants
Jamaican Industry Value Added, 2010 vs 2001Cumulative Growth, constant 2007 prices
Source: Statin
8
…and has competed well in the region
In 2011, Jamaica
hosted 9.6% of
all Caribbean
stopover visits,
up from 7.7% in
2001.
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2,200
1995 1997 1999 2001 2003 2005 2007 2009 2011
5.0%
5.5%
6.0%
6.5%
7.0%
7.5%
8.0%
8.5%
9.0%
9.5%
10.0%Jamaica Stopover Visits (left)
Share of Caribbean (right)
Jamaican Tourism Performance'000s
Source: Oxford Economics/STB
share
9
…yet has struggled to prosper
However, tourism has struggled with an ever more competitive operating environment – reducing yield.
In “current prices”, the hotel and restaurant sector has lagged economic growth, expanding 150% compared with total economy growth of 170% since 2001.
-50% 0% 50% 100% 150% 200% 250%
Mining
Manufacture
Agric. & Fishing
Transport, Storage & Commun.
Hotels & Restaurants
Total Economy
Construction
Other Services
Whole. & Retail Trade
Electricity & Water
Finance & Insurance
Government
Real Estate & Bus.
Jamaican Industry Value Added, 2010 vs 2001Cumulative Growth, current prices
Source: Statin
10
…with falling yields
500
600
700
800
900
1,000
1,100
1,200
1996 1998 2000 2002 2004 2006 2008 2010
Average Spending per Visitor$US
Source: JTB
Even as operating costs have risen over the past 15 years, average spending per visitor has remained relatively flat.
11
How important is tourism to Jamaica’s future?
12
ACCOMODATION
CATERING, ENTERTAINMENT
RECREATION, TRANSPORTATION
&OTHER TRAVEL RELATED SERVICES
PRINTING/PUBLISHING, UTILITIES
FINANCIAL SERVICES, SANITATION SERVICES
FURNISHINGS AND EQUIPMENT SUPPLIERS,
SECURITY SERVICES, RENTAL CAR MANUFACTURING,
TRANSPORTATION ADMINISTRATION, TOURISM
PROMOTION, SHIP BUILDING, AIRCRAFT MANUFACTURING,
RESORT DEVELOPMENT, GLASS PRODUCTS, IRON/STEEL
T&
T D
IRE
CT
T&
T IN
DIR
EC
T
T&
T IN
DU
CE
D
OV
ER
ALL T
&T IM
PA
CT
FOOD & BEVERAGE SUPPLY, RETAILERS
BUSINESS SERVICES, WHOLESALERS, COMPUTERS,
UTILITIES, MANUFACTURERS, HOUSING, PERSONAL SERVICES
Travel & Tourism Industry
■ The direct effect of visitor spending
■ Focus of Tourism Satellite Account
Travel & Tourism Economic Impact
The flow-through effect of T&T all demand
across the economy
■ Expands the focus to measure the
overall impact of T&T on all sectors of
the economy
ACCOMMODATION
We must understand the linkages
13
Approach based on government data
JTB visitor surveys
■ Stopover spend by
category
■ Cruise spend by
category
■ Consistent with earlier
STATIN analysis
STATIN
■ 2000 Input-Output table
■ Sector productivity
MOF
■ Taxes by
type by
sector
14
Step 1: quantify the demand side
Accomm.,
107,114 , 47%
F&B, 12,218 ,
5%
Entertainment,
24,240 , 11%
Transportation,
35,287 , 16%
Shopping,
24,135 , 11%
Misc., 22,752 ,
10%
Tourism Expenditures (internal consumption)
2010, mn $J
Source: Oxford Economics
Total: J$ 226 billion
15
Step 2: conduct impact analysis
Indirect,
63,198
Direct, 94,106
Induced,
71,649
Jamaica Tourism GDP Impact
million $J
Source: Oxford Economics
J$ 229 billion
16
Step 3: calculate employment impacts
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
GDP Employment
Induced
Indirect
Direct
Jamaica Tourism Economic ImpactShare of economy, 2010
Source: Oxford Economics
17
Setting impacts into context
- 50 100 150 200 250
Tourism (total impact)
Whole & Retail Trd; Repairs
Government
Real Estate, Renting & Business
Transp, Storage & Comm.
Finance & Insurance
Manufacturing
Construction
Other Services
Agric & Fishing
Hotels & Restaurants
Electricity & Water
Mining & Quarrying
Comparing Tourism Impact to Sectoral GDP2010, billion $J
Source: Statin, Oxford Economics
18
Debunking the leakages myth
Value Added
Local
purchases (net
of their imports)
Imports of
suppliers
Direct imports
0 20 40 60 80 100
Destination of $100 in Hotel and Restaurant
Source: Oxford Economics analysis of 2000 STATIN I-O
33% 38% 6% 23%
71% of each dollar stays in Jamaica
19
How important is tourism to other sectors?
0%
5%
10%
15%
20%
25%
30%
Fin
an
ce
Co
nstr
uctio
n
Wh
ole
. &
Re
tail,
Re
pa
irs
Ma
nu
factu
rin
g
Utilit
ies
Ag
ricu
ltu
re &
Fis
hin
g
Re
al E
sta
te &
Bu
sin
ess
Tra
nsp
ort
&
Co
mm
.
Direct Indirect Induced
Tourism Contribution to Various SectorsShare of industry GDP, 2010
Source: Oxford Economics
Tourism drives…
15% of all construction
10% of the finance and banking sector.
20% of manufacturing. For every tourism dollar, manufacturing receives 26 cents (15 through the supply chain and 11 cents through locally-spent incomes.
21% of both utilities and agriculture/ fishing.
20
Current tourism tax proceeds
CIT, 13.8 Border Taxes,
92.8
GCT Domestic,
43.6
PIT, 2.1 Travel Tax, 2.6
PAYE, 35.2
Total Tourism-Generated Taxes
Billion $J
Source: Oxford Economics
J$ 38 billion
Including direct, indirect, and induced impacts, tourism generated…
J$ 38 billion in taxes in 2010
This comprised 20.4% of all government revenue
21
Should tourism be taxed as an export?
Tourism,
$2,095
All Other
Exports,
$2,077
0 1,000 2,000 3,000 4,000
Composition of Jamaica Total Exports
Source: STATIN
Tourism Contributes 50% of
Jamaica Exports
2010, million $US
22
Should tourism be taxed as an export?
0 500 1,000 1,500 2,000
Tourism
Crude Materials (excl. Fuel)
Food, beverage, tobacco
Mineral Fuels
Chemicals
Manufactured Goods
Machinery and Transp. Equip.
Jamaican Exports2010, $US millions
Source: STATIN
23
Higher CIT risks competitiveness
0% 10% 20% 30% 40% 50%
BahamasHaiti
St. Vincent & Gren.St. Lucia
BarbadosBelize
Dominican Republic
DominicaGrenada
Jamaica
Trinidad and Tobago
SurinameSt. Kitts & Nevis
Antigua & Barbuda
Guyana
Corporate Income Tax Rates
Source: Oxford Economics
24
…and GCT is already at the upper end
0% 5% 10% 15% 20% 25%
DominicaSt. Kitts & Nevis
St. Vincent & Gren.Barbados
GrenadaSt. Lucia
Suriname
Antigua & BarbudaBelize
Guyana
Haiti
Trinidad andJamaica
Bahamas
Dominican Republic
Hotel Accommodation Tax Rates
Source: Oxford Economics
25
Tourism drives the strength of “brand Jamaica”
JTB, $29
Hotels, $118
Jamaica Destination Marketing
Source: JTB, Oxford Economics
$US 147 millionmillion $US
26
…with nearly $6,000 spent annually per room
0
20
40
60
80
100
120
140
All inclusive EP Total
$0
$2,000
$4,000
$6,000
$8,000
Total marketing
Marketing per room
Hotel Sector Marketing in 2011 Total, Million $US
Source: Oxford Economics
per room, $US
27
Summary findings
Tourism is the core driver of the Jamaican economy.
■ Tourism has posted consistent growth, even when the rest of the
region was in decline.
■ Tourism’s linkages to the rest of the economy are strong,
extending its total economic impact to 19.5% of GDP.
■ Tourism is Jamaica’s # 1 industry in absolute size.
■ Tourism is Jamaica’s #1 export sector.
Jamaica has a clear competitive advantage in tourism given
its location, air service, natural beauty, cultural heritage, and
strong international brand.
28
Tax reform implications
The hotel sector has a relatively high tax burden in
comparison to regional comparisons.
The incentives offered to the industry have been an essential
part of maintaining growth while they remain generally less
generous than those offered across the Caribbean.
When factoring in linkages, the tax contribution of tourism is
greater than any other industry and greater than its
contribution to GDP.
Tourism is an export industry and should be treated
accordingly.
29
Marketing implications
JTB funding is essential and should be maintained as an investment into Jamaica’s economic core strength – tourism.
Destination marketing has been shown to generate substantive return on investment.
Jamaica possesses real brand opportunities but also faces perception barriers that marketing can address.
A real opportunity exists for the tourism sector to create a robust platform for EP hotels to jointly market and promote their properties,
Jamaica can more effectively market directly to cruise visitors to return for stopover visit. Envision this as an ongoing consumer trade show at cruise ports with incentives, giveaways, and a showcase of the best of what Jamaica has to offer. This should be financed by JTB/TEF and can be cooperatively funded by the private sector in a “pay to play” format.
30
Investment implications
Future development should focus on higher end product.
An attempt to attract major U.S. brands should be made. It
should be noted that despite incentives, higher-end flags have
been reluctant to invest in Jamaica. This should be explored
further with specific flags to learn what must be done to bring
these operators—and their considerable customer networks—
to Jamaica.
Casino licenses can be used strategically toward these ends.
31
Thank you!
Adam Sacks
President
Tourism Economics
An Oxford Economics Company
+1.610.995.9600