Tourism

Increasing importance of tourism for SIDS’ economies

Over the last 20 years, international tourism has increased notably, both globally and in most regions of the world. Global international tourist arrivals have more than doubled between 2000 and 2019, and almost doubled for SIDS. During the same period, global international tourism expenditure has tripled. For SIDS, the increase was almost the same. These trends represent an average annual growth of 4.2 per cent in international tourist arrivals, and almost 6 per cent in international tourism expenditure. The figures for SIDS are 3.4 per cent and 6 per cent annual growth, respectively.

In 2019, the Caribbean SIDS accounted for over half of international tourism arrivals in SIDS, the Atlantic and Indian Ocean SIDS for one third, and the Pacific SIDS the rest (12 per cent). Jamaica was the top SIDS destination for international tourist arrivals in 2019 with 2.7 million arrivals, followed by Maldives (1.7 million) and the Bahamas (1.6 million, data for 2018). Each of these three economies alone received more international tourists than Pacific SIDS altogether. The number of arrivals also exceeded one million in Mauritius (1.4 million).

Figure 1. International tourist arrivals in SIDS, distribution by region and economy, 2019 Figure 1. International tourist arrivals in SIDS, distribution by region and economy, 2019
(Thousands of US$)
Source: UNCTAD calculations based on -—
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Note: Data refer to 2018 for Antigua and Barbuda, Bahamas, Barbados, Dominica, Kiribati, Marshall Islands, Federated States of Micronesia, Palau, Sao Tome and Principe, Saint Kitts and Nevis, Saint Vincent and the Grenadines, Seychelles and Tonga; 2017 for Tuvalu. No data for Nauru.

Tourism has large multiplier effects on countries’ economies, as it promotes growth and employment across several related sectors, such as transportation, hotels and restaurants, retail trade, financial services, and cultural services. It can also attract domestic and foreign investment and promote the development of the private sector in general.

Figure 2 shows that, on average, tourism contributes to the economy at comparable rates in developing and developed economies. However, for SIDS, tourism is a particularly important sector. Between 2017 and 2019, it accounted for, on average , 11.7 per cent of SIDS’ GDP, compared to 1.9 per cent in LLDCs. The contribution of tourism to the island economies has increased over time.

Figure 2. Direct contribution of tourism to GDP by economy group, average (SDG 8.9.1) Figure 2. Direct contribution of tourism to GDP by economy group, average (SDG 8.9.1)
(Percentage of total GDP, three-year average)
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Note: Averages include only economies with available data. Data cover approximately 40 per cent of SIDS’ total GDP, and about 50 per cent of LLDCs’ total GDP. The coverage is over 90 per cent for developing economies and 100 per cent for developed economies.

The direct contribution of tourism to GDP varies greatly from one island economy to another, ranging from 0.2 per cent in Timor-Leste in 2018 to 13 per cent in Fiji in 2014. Jamaica and Mauritius reached 9 per cent in 2018.

Tourism is a crucial source of income for SIDS

Tourism has enormous potential for promoting sustainable and inclusive economic growth and is a crucial source of employment and livelihood, especially for SIDS. Figure 3 shows economies in which inbound tourism expenditure represents more than a fifth of GDP. Many of those economies are SIDS.

Figure 3. Inbound tourism expenditure to GDP in economies where it exceeds 20 per cent, 2019 Figure 3. Inbound tourism expenditure to GDP in economies where it exceeds 20 per cent, 2019
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Note: Data correspond to balance of payments statistics’ “travel” and “passenger transport” items, which are used as a proxy for international tourism expenditure. Figures not available for the Marshall Islands and Palau.

Almost all economies for which inbound tourism expenditure represents more than a fifth of GDP are SIDS -—
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. The share of inbound tourism expenditure exceeds 60 per cent in the following SIDS: Sint Maarten (78 per cent), Turks and Caicos Islands (78 per cent), Aruba (64 per cent), and Antigua and Barbuda (61 per cent).

Map 1. Tourism inbound expenditure per capita
Source: Calculations based on UNWTO database (inbound tourism expenditure data) and UNPD World Population Prospects (population data).
Note: Data corresponds mostly to balance of payments statistics (the “Travel” and “Passenger Transport” credit items), which are used as a proxy for inbound tourism expenditure. SIDS as in -—
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In absolute terms, tourism inbound expenditure represents a crucial source of income for many SIDS in all regions. Tourism generates over US$5 000 of income per capita a year in economies like Palau, Maldives and Seychelles in the Indian Ocean, as well as in most Caribbean SIDS. In Curacao and Turks and Caicos, for instance, this value exceeds US$20 000 per capita, according to latest available data.

For a more comprehensive understanding of the economic effects of tourism, it is worthwhile to complement monetary indicators with other measures, such as employment.

Tourism is an essential source of jobs and livelihoods for SIDS

Tourism employment has increased substantially over the last twenty years, growing at a much higher rate than the global economy. Data from UNWTO – covering 97 economies – indicate that the number of employees in tourism has shown an average annual increase of more than 2 per cent across roughly 70 per cent of economies. In more than a quarter of economies, tourism employment has grown on average more than 5 per cent each year since 2000.

In SIDS, tourism industries are an important employer (see figure 4). Among SIDS with data, tourism industries’ share of total employment was highest in Barbados and Seychelles in 2019. In these two economies every fifth woman worked in tourism directly. The indirect impact of tourism on employment is also large. For instance, shopping is a usual tourist activity, but is not considered in figure 4 due to lack of reliable information on the share of tourism in retail trade.

The pandemic is likely to have had a disproportionate impact on women, since the bulk of the, mostly low-skilled, workers in the SIDS’ tourism industry are female. For instance, women account for almost 70 per cent of employment in food and beverage sectors in Kiribati and Tonga, while they are more rarely employed in travel agencies, tour operators and reservation services, representing higher-skilled segments of the tourism sector -—
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. In only a few SIDS, namely in Palau, Maldives and Vanuatu, men were more often employed in tourism industries than women. Men were more often employed in transport, accommodation, travel agencies, sports and recreative activities, while women were more often employed in food and beverage service activities.

Figure 4. Share of employment in tourism industries by sex, 2019 Figure 4. Share of employment in tourism industries by sex, 2019
(Percentage of total employment)
Source: UNCTAD calculations based on -—
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Note: These estimates include only part of tourism industries’ employment due to data gaps. Tourism industries are defined based on a list of detailed ISIC 4-digit activities (ISIC Revision 4, see -—
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, while only 2-digit level data on employment are available. Therefore, the figures include some activities not directly linked to tourism and omit some tourism activities. 100 per cent correspondence is achieved for ISIC 55, 68, 79, 90 and 92, while water and air transport (ISIC 50-51), for instance, also include freight. In addition, ISIC 56, 77, 91 and 93 are included. Land transport is not included since international transport to island economies is not possible by road, while this excludes some in-economy tourism transport. Retail trade serving tourism is not included as it cannot be identified separately.

International tourism can be seen as a lifeline for a considerable number of people living in SIDS. While it has positive effects on economic welfare, the high dependence on tourism also makes SIDS vulnerable to crises, such as the COVID-19 pandemic.

SIDS struggled as borders closed and main origin markets were affected by the pandemic

Tourism has turned out to be one of the sectors hardest hit by the COVID-19 pandemic, with unprecedented impact from an economic and social point of view. All economies experienced travel restrictions of some sort during the second quarter of 2020, including total closures of borders. Based on available data as of January 2021, -—
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estimates that international tourist arrivals fell by 74 per cent in 2020 with respect to 2019, from almost 1.5 billion to around 381 million, falling back to levels not experienced in over 30 years.

The fall in international arrivals in 2020 has translated into an estimated loss of US$1.3 trillion in global inbound tourism expenditure with respect to 2019, a loss more than 11 times greater than that experienced during the 2009 global financial crisis. This has not only severe impacts on many economies; in economies that are heavily dependent on international tourism, as many of the SIDS are, it also puts the livelihood of their populations at risk. Preliminary data available show that the vast majority of SIDS experienced a fall of over 60 per cent in international tourist arrivals in 2020 compared with 2019, with some other island States, such as Guam, Samoa and Singapore, showing declines of over 80 per cent -—
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Due to the COVID-19 pandemic, in 2020 the number of international flights from SIDS dropped by half. Several SIDS consist of remote islands, and air cargo service routes are regarded as regional lifelines also domestically -—
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, from 2019 to 2020, domestic departures dropped in Atlantic and Indian Ocean SIDS by 45 per cent, while the drop was 35 per cent in Pacific SIDS and 23 per cent in Caribbean SIDS.

International departures dropped by almost 70 per cent in Pacific SIDS, and by 63 per cent in Atlantic and Indian Ocean SIDS. International flight departures from Caribbean SIDS also reduced notably, by 44 per cent. This had a devastating effect on tourism and SIDS’ overall connectivity in 2020. The number of international departures plummeted in most SIDS (see figure 5).

Figure 5. Evolution of international flight departures in SIDS between 2019 and 2020 Figure 5. Evolution of international flight departures in SIDS between 2019 and 2020
(Number of flights)
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It is expected that it will take between 2.5 to 4 years for international tourism to return to 2019 levels. Economies with developed domestic tourism markets have been able to mitigate the negative impact of the pandemic thanks to partial compensation through domestic tourism, a type of tourism that seems to be recovering faster than international tourism -—
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. As economies closed their borders and established international travel restrictions, tourists have focused more on domestic travel, especially in large global outbound markets such as Europe, the United States of America and China.

One of the main characteristics of SIDS is the fact that the vast majority of their tourism expenditure comes from international tourism, while their domestic tourism markets are smaller and less developed. Table 1 below compares inbound and domestic overnight stays in the five SIDS for which data are available. In 2019, for all five economies, domestic overnight stays represented less than 20 per cent of all overnight stays. In economies like Cabo Verde and the Seychelles, this rate was below 5 per cent.

Table 1. Total inbound and domestic overnight stays in hotels and similar establishments in selected SIDS, 2019
EconomyInbound
(thousands)
Domestic
(thousands)
Domestic
(per cent)
Cabo Verde4 9221964
Cuba19 4864 61419
Fiji3 77388919
Seychelles2 880401
Timor-Leste27413
Source: Calculations based on data from -—
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Note: Data for Timor-Leste refer to 2018.

While a significant proportion of international tourism occurs within the travellers’ region, SIDS rely to a great extent on long-haul travel for their inbound tourism as most of their visitors come from other regions. In particular, African and Indian Ocean SIDS tend to rely on European tourists. The United States of America is the main market for the Caribbean SIDS whereas Pacific SIDS host primarily tourists from Australia and New Zealand, and partly also from China, the United States of America and Europe (see figure 6).

Figure 6. Origins of tourist arrivals in SIDS Figure 6. Origins of tourist arrivals in SIDS
(Percentage)
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Note: Data refer to 2018. 2017 data for American Samoa, Niue, Suriname, Tonga and Tuvalu; 2016 for the Federated States of Micronesia; 2013 for British Virgin Islands; 2010 for Bonaire; and 2007 for Guinea-Bissau. Origin represents the economy of residence of tourists and, if not available, economy of citizenship.

Figure 6 also shows that SIDS often have poorly diversified source markets. This is particularly the case for Caribbean and Pacific Islands SIDS 1. SIDS in Africa and the Indian Ocean, such as Cabo Verde, Maldives, Mauritius or Seychelles, have more diversified source markets, although they nevertheless remain heavily dependent on Europe and, to a lesser extent, China.

The conjunction of all these factors, (a) the high dependence on tourism, (b) underdeveloped domestic tourism markets, (c) the high concentration on source markets, (d) the requirement of long-haul air travel, and (e) the deep impact of the COVID-19 pandemic on the main source markets -—
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, places the inhabitants of SIDS, many of them relying on tourism as the main source of their income, into an extremely vulnerable situation and exerts pressure on governments to react.

Ensuring the sustainability of tourism means safeguarding the sustainable consumption and production patterns in SIDS. Yet, data on the measurement of the sustainability of tourism are scarce and require standardization. The development and implementation of a statistical framework for measuring the sustainability of tourism can help fill the gap in the future -—
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. In this respect, the UNWTO, jointly with the UN Statistical Division, is leading an international effort that involves a number of economies, international organizations and academia, in the development of a Statistical Framework for Measuring the Sustainability of Tourism.

Impact of the COVID-19 pandemic on tourism statistics

Much of the efforts to measure the impact of the pandemic at the national and global levels has focused on the economic dimension, relying on the common UN measurement standard - tourism satellite accounts -—
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. A total of 28 SIDS 2 have reported data on SDG indicator 12.b.1., the ”number of sustainable tourism strategies or policies and implemented action plans with agreed monitoring and evaluation tools”. Among these, seven compiled at least one tourism satellite account table, and one compiled at least one of the related SEEA accounts for 2009. These numbers increased to eight and three respectively for 2016, showing progress in the potential of SIDS to measure sustainable tourism. However, the majority of SIDS have not yet compiled any tourism satellite accounts or SEEA statistics.

The SIDS that compile tourism satellite accounts, produced in 2016 on average 3.7 tables (out of 7), representing a significant increase from 2.7 tables on average in 2009. However, these tables are still not sufficient to produce the key aggregates necessary for efficient monitoring of the impacts of tourism. This represents a major data gap, especially for the SIDS that strongly depend on tourism.

In the face of the COVID-19 pandemic, being able to properly measure sustainability of tourism has become even more relevant than before. Designing and monitoring relevant policies require proper tools for the measurement of all aspects of tourism, including its environmental and social dimensions. The pandemic has also led to numerous challenges in the collection of data for tourism statistics, given the sudden changes in resource allocation and emerging data needs which it provoked (see figure 7).

Figure 7. Early impact of COVID-19 on main sources for tourism data Figure 7. Early impact of COVID-19 on main sources for tourism data
(Percentage of economies)
Source: UNWTO Survey conducted between April and May 2020.
Note: Results based on 68 responding economies.

Based on a UNWTO survey, more than 70 per cent of responding economies had to cancel or postpone border surveys to collect tourism data mainly due to the closure of borders, and tourism-related household and accommodation surveys were also significantly affected 3. By contrast, only about 20 per cent of responding economies reported that the collection of administrative data was significantly affected. Around 60 per cent reported that data collection continued as usual. A remaining 20 per cent reported that administrative data were being explored as a potential source to fill gaps created by challenges in survey data collection. SIDS reported similar impacts mentioning some cancelled or postponed border, accommodation and household surveys, while administrative sources were less affected by the time.

The pandemic has not only challenged traditional data collection, but also brought up new data needs and forced economies to look for opportunities to improve the production of tourism statistics. In addition to the interruption of face-to-face survey data collection, the global health crisis has highlighted the need for more up to date (even real-time) information, as a result of increasing requests from policy makers. When decisions on measures to contain the virus need to be made quickly and affect livelihoods of people, data on the impacts of those decisions are needed faster. To this end, some economies are exploring the use of administrative data, online data collection and big data.

Notes
  1. While the median percentage of arrivals represented by the top-3 source markets for non-SIDS economies is below the 50 per cent mark, the corresponding value for SIDS outside Africa and the Indian Ocean is between 70 and 75 per cent.
  2. These 28 SIDS comprise: Anguilla, Antigua and Barbuda, Bahamas, Bahrain, Belize, Bermuda, British Virgin Islands, Cabo Verde, Cayman Islands, Dominica, Dominican Republic, Fiji, French Polynesia, Guam, Jamaica, Maldives, Martinique, Mauritius, Micronesia (Federated States of), Montserrat, New Caledonia, Palau, Puerto Rico, Samoa, Sao Tome and Principe, Singapore, Sint Maarten and Vanuatu.
  3. For the list of UNWTO member States, see: https://www.unwto.org/member-states.
References
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