Overview Of Tourism (compatible)

CHAPTER V RESULTS AND DISCUSSION

Overview of Tourism in the Philippines Visitor Arrivals Visitor arrival is one of the determinants to assess the performance of the tourism industry since it affects the tourist receipts that can be accumulated by the country. In fact, the interrelationships between income or tourist receipts can be mathematically expressed as ΔY= ΔTr, such that the increments or change in income or tourist receipts(ΔY) is directly proportional to the change in tourist arrivals (ΔTr). Table 5.1 provides the data of the visitor arrival from 1998 to 2007 and illustrated in Figure 5.1.

Table 5.1 Visitor Arrivals to the Philippines from 1998- 2007 Year Volume % 1998 2149357 -3.3 1999 2170514 1 2000 1992169 7.6 2001 1796893 -1.3 2002 1932677 7.6 2003 1907226 -1.3 2004 2291352 20.1 2005 2623084 14.5 2006 2843345 8.4 2007 3091993 8.7 Source: DOT Resource Center

Based on Figure 5.1, visitor arrivals in the Philippines show an increasing trend from

the period of 2003-2007. It was lowest in the 2001 which fall by -1.3 from 2000. As the trend predicts, it was in 2007 when the Philippines experienced the highest influx of visitors at the volume of 3,091,993 visitors. The visitor influx increased at an average rate of 8.7 from 2006 which is the highest growth rate experienced from 1998-2007.

Figure 5.1 Visitor Arrivals to the Philippines from 1998- 2007 3500000 3000000

Volume

2500000 2000000 1500000 1000000 500000

Visitor Receipts Visitor receipt is one of the most important indicators of the performance of tourism industry since it reflects the income received by the country due to tourism activities. It is measured in term of US dollar. Table 5.2 provides the data on the tourist receipts in the Philippines from the year of 1998 to 2007.

Table 5.2 Visitor Receipts (in million USD) in the Philippines from 1998-2007 Year Volume Growth

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

2412.88 2553.66 2133.8 1722.7 1740.06 1522.68 1990.81 2236.05 3465 4885.37

Rate (%) --5.8 -16.4 -19.3 1 -12.5 30.7 12.3 55 41

Source: DOT Resource Center

Figure 5.2 Visitor Receipts (in million USD) in the Philippines from 1998-2007 6000

Volume (US $)

5000 4000 3000 2000 1000 0 1998

1999

2000

2001

2002

2003

2004

2005

Year

Consistent with the trend exhibited by the tourism arrivals data, the data on visitor receipts shows an increasing trend from 2003 to 2007. Generally from 1998 to 2003, there is a steady decline in visitor receipts. However, the country experienced a significant increased in 2004 with a growth rate of 30.7%. Highest increased in tourist receipts was experienced in 2006 followed by 2007 with a rate of 55% and 41%, respectively. Data shows that 2007 has the highest tourist receipts of USD 4885.37 million. Length of Stay

As expected, the longer the visitor preferred to stay in the country, the larger would be their expenditures. Thus, length of stay is also an important indicator. Table 5.3 Average Length of Stay of Visitors in the Philippines from 1999-2007 Year Length of Stay (nights) 1999 8.91 2000 8.79 2001 9.53 2002 9.12 2003 9.17 2004 8.06 2005 8.55 2006 12.06 2007 16.7 Source: DOT Resource Center

Figure 5.3 Average Length of Stay of Visitors in the Philippines (1999-2007)

Average Length of Stay (Nights)

18 16 14 12 10 8 6 4 2

Figure 5.3 shows that the average length of stay is almost the same from 1999 to 2005 ranging from eight to nine days/nights. However, it increased dramatically from 2005 to 2007. In 2006, the average length of stay increased to 12 nights from an average of 8 nights in 2005. It was highest in 2007 with 16 nights which is almost double of the usual eight to nine nights in usual years. Table 5.4 Comparison of the Length of Stay of Foreign Visitors and Overseas Filipinos

(1999-2007) Source: DOT Resource Center

Foreign visitors Overseas Filipinos

1999 8.5

2000 8.3

2001 9.02

2002 8.78

2003 8.01

2004 7.95

2005 8.41

2006 10.98

2007 13.88

18.62

20.25

18.36

17.38

17.74

14.13

21.47

48.02

44.21

The comparison of the length of stay between foreign visitors and overseas Filipinos is also worth-noting. Figure 5.4 provides the comparison in the length of stay of foreign visitors and overseas Filipinos. As the data shows, there is a wide gap in the length of stay of foreign visitors and overseas Filipinos. Overseas Filipinos prefer to stay longer in the country as compared to foreign visitors wherein their average length of stay is almost double of that of the foreigners. The largest gap was experienced in 2006 and 2007 in which overseas Filipinos preferred to stay almost three times longer than the foreigners.

Figure 4.4 Comparison of the Length of Stay of Foreign Visitors and Overseas Filipinos from 1999-2007

2007 2006

Year

2005 2004 2003 2002 2001

Purpose of Visit

Another important data that helps in assessing the structure of tourism in the country is through the purpose of visits. The length of stay of the visitors is said to be affected by the purpose of visits. Thus, the classification of tourist arrivals by purpose of visit is a useful indicator.

Table 5.5 Purpose of Visit in the Philippines from 1999-2007 Holiday Visit friends/relatives Business Official mission Health/medical Convention Others not specified

1999 39.4 4 28.7 9 19.1 2 0.14 1.62 10.8 8

2000 40.0 8 28

2001 41.5

2002 43.7 6 27.1

2003 43.3 4 28.4 27.9 4 8 18.4 17.2 16.2 14.9 6 3 4 8 0.13 0.13 0.13 0.11 1.41 1.24 1.24 1.3 11.92 11.46 11.55 12.2 9

2004 47.5 8 32.2 3 8.77 0.1 0.86 10.4 6

2005 45.3 8 26.8 2 12.8 2 0.1 1.2 12.6 8

2006 46.9 9 26.6 6 13.1 8 0.11 1.2 11.7

2007 47.31 25.59 13.5 0.11 0.21 1.2 12.06

Source: DOT Resource Center

Figure 5.5 shows the percent share of the purposes of tourists for visiting the country from 1999 to 2007. The primary purpose of their visits includes holiday or vacation, visits to friends or relatives, business purposes, official mission, convention, health and medical purposes. Out of the total visitors from 1999 to 2007, 43.93 percent came to the Philippines primarily for holiday or vacation. It is followed by visits to friends and relatives which has an average share of 27.96 percent. Another major reason is for business purposes which has an average share of 14.92. Other purposes cited include conventions and official missions. Meanwhile, the data for medical purposes was taken into account only in 2007.

Figure 5.5 Purpose of Visit in the Philippines from 1999-2007 50 45

holiday visit f riends/relatives business of f icial mission health/medical convention

40

Percentage

35 30 25

others not specif ied

20 15 10 5 0 1999

2000

2001

2002

2003

Year 50 45 40

Percentage

35 30 25 20 15 10 5 0

Tourist Expenditure The impact of tourism in a country depends on the amount of money spend by tourists during their stay in the country. These expenditures reflect the income of tourist-oriented firms and have repercussive effects in the economy. As such, it is an important component in estimating the impact of tourism. Table 5.6 provides the average daily

expenditure in the Philippines from 1999 to 2007.

Table 5.6 Average Daily Expenditure in the Philippines from 1999-2007 Year Average Daily Expenditure (USD) 1999 132.26 2000 117.49 2001 102.89 2002 100.92 2003 88.25 2004 96.03 2005 83.61 2006 83.91 2007 82.96 Source: DOT Resource Center

Figure 5.6 suggests that there is a negative trend in the daily expenditure of the visitors. There is a steady decline in the average expenditure from 1999-2007. It only slightly increased in 2003 but remain low in 2006 and 2007. From 1999-2007, the average daily expenditure is USD 98.71 for each visitor.

Figure 5.6 Average Daily Expenditure in the Philippines from 1999-2007

Average Daily Expenditure (US $)

140 120 100 80 60 40 20

It is also important to provide a comparison of the daily expenditure between foreigners and overseas Filipinos since it determines the source of the expenditure. Table 5.7 provides this comparison and shown in Figure 5.7. Table 5.7 Comparison of the Daily Expenditure of Foreign Visitors and Overseas Filipinos from 1999-2007

Foreign Visitors

1999

2000

2003

2004

2005

2006

2007

47.04

120.37 105.17 102.89 89.45

96.46

84.06

84.7

83.89

50.24

73.64

39.76

55.78

50.36

Overseas 26.74 Filipinos

2001

49.06

2002

52.67

48.49

Source: DOT Resource Center

Comparison of the average daily expenditure of foreign visitors and overseas Filipinos suggests that foreign visitors spend more than the overseas Filipinos. In fact, there is a wide disparity in their daily expenditure such that the average expenditure of the overseas Filipinos for the period of 1999-2007 is USD 49.64 compared to USD 95.87 of the foreigners. Thus, foreigners spend almost twice as the overseas Filipinos per day.

Figure 5.7 Comparison of the Daily Expenditure of Foreign Visitors and Overseas Filipinos from 1999-2007

Average Daily Expenditure (US $)

140 120 100 80 60 40

Breakdown of Tourist Expenditure Table 5.8 shows the breakdown of the daily expenditures on major items. This provides a picture on which item the visitors spends most of their money, and explain which tourist-oriented firms receives most of the income from tourists. The breakdown of the visitor expenditure from 1999 to 2007 were classified into major items including accommodation, food and beverage, guided tour, entertainment and recreation, local transport shopping and miscellaneous.

Table 5.8 Breakdown of the Total Average Daily Expenditure on Major Items from 1999 to 2007(Percentage) Major Items

2007

2006

2005

2004

2003

2002

2001

2000

1999

Accommodation

24.58 25.72

26.94

25.27

33.94

39.71

41.88

41.98

47.04

Food and beverages 23.87 20.39

18.39

19.54

16.82

81

19.44

21.24

26.74

Guided tour

0.13

0.36

0.42

0.07

0.11

0.1

0.27

0.27

0.63

Entertainment/ recreation

7.09

7.02

10.96

12.55

8.95

9.49

12.11

16.61

22.59

Local transport

3.83

4.71

6.73

5.68

6.12

6.04

6.72

3.99

6.51

Shopping

21.59 22.01

18.06

24.65

14.99

14.81

13.25

15.31

19.97

Visit to cultural/ 0.04 historical sites, museums, national parks, others

0.08

0.09

----

----

----

----

----

----

Miscellaneous

2.01

2.03

8.27

7.33

13.54

9.22

18.09

8.78

1.83

Source: DOT Resource Center

Figure 5.8 illustrates the percent share of these major items from the total average daily expenditure of the visitors. On average, data suggest that the major expenditure incurred by the visitors is for accommodation with a percent share of 34.11.

Another major expenditure is allocated for the food and beverages which has an average share of 27.49 percent. Shopping is also another major expenditure with an average share of 18.29 percent. Other major expenditures are on entertainment/recreation, local transport, and guided tour.

Figure 5.8 Breakdown of the Total Average Daily Expenditure on Major Items from1999 to 2007 (Percentage) 90 80 70

Percentage

60 50 40 30 20 10 30

Percentage

25 20 15 10 5 0 2004

2005

2006

Year

Airlines and Scheduled Flights The number of airlines and scheduled flights are supplementary data that are also worth-noting. The influx of visitors depends on the capacity of the airlines to cater the prospective tourists. Thus, the number of airlines, along with the scheduled flights, may affect the number of visitors in the country. Table 5.9 shows the trend in the number of airlines and weekly scheduled flights from 1998 to 2007. It is illustrated in Figure 5.9.

Table 5.9 Trend of the Number of Airlines and Weekly Scheduled Flights from 1998 to 2007 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Total no. of airlines 35

30

32

31

29

29

25

26

27

27

Weekly flights

323

349

387

427

399

262

437

442

507

scheduled 357

Source: DOT Resource Center

Figure 5.9 Trend of the Number of Airlines and Weekly Scheduled Flights from 1998 to 2007 600

500

Volume

400

300

200

100

As the figure shows, there is a steady trend in the total number of airlines with an average of 29 airlines from 1998 to 2007. Meanwhile, there is a fluctuation in the weekly scheduled flights. It is increasing until 2002 but suddenly drop in the weekly scheduled flights in 2004. However, in 2005, the weekly scheduled flights increased significantly and continue to increase in 2006 and 2007. With 357 flights, 2007 has the highest record in terms of the weekly scheduled flights from 1998 to 2007.

Table 5.10 Trend in the Total Seat Capacity per Week from 1998 to 2007 Total seat 1998 1999 2000 2001 2002 2003 2004 capacity 104647 95636 100710 100697 114519 109230 73922 per week

2005

2006

2007

123364 118230 126962

Source: DOT Resource Center

Furthermore, Table 5.10 presents the data on the total seat capacity per week from 1998 to 2007. This provides an overview on the performance of airlines that caters to the visitors bound to the Philippines. This data is also supplemental since this may affect the number of visitors in the country.

Figure 5.10 Trend in the Total Seat Capacity per Week from 1998 to 2007

Total Seat Capacity per Week

140000 120000 100000 80000 60000 40000 20000 0

As shown in Figure 5.10, the total seat capacity per week shows a steady trend in the seat capacity per week in 1998 to 2003 but experienced dramatic fall in 2004. This may be explained by the sudden dropped in weekly scheduled flights in 2004 as shown in Figure 5.9. Fortunately, it managed to increase significantly in the subsequent years. For the period of 1998-2007, the average total seat capacity per week is 106,780. As observed, the total seat capacity data is consistent with the trend of the weekly scheduled flights.

Identification of the Tourism sub-sector in Input-Output Table Since tourism cannot be defined as a single-independent- industry, it requires products from different tourism-oriented firms. It does not have a homogenous product, thus, it is not simple to identify the tourism sub-sector. The input-output (IO) table does not readily offer information on what items should be included as tourism-subsector. The Philippine Tourism Satellite Accounts (PTSA) conducted by the NSCB provides the description of tourism-specific industries, products and services that relates to the tourism consumption expenditure (see Appendix A). This definition was employed to determine the tourism subsector in the input-output table. Based on the PTSA definition, the tourism consumption expenditure has seventeen (17) corresponding industries in the input-output table. This is indicated in Table 5.11. The tourism consumption expenditure is divided into major items namely accommodation, food and beverages, transportation, guided tour, entertainment and recreation, and miscellaneous tourism services.

Table 5.11 Relationship between Tourism Consumption Expenditure and Input-Output industries Tourism Consumption Expenditure Accomodation Food and Beverages Transportation

I-O Industries Hotels and motels Other short-stay accommodation Restaurants, bars, canteens and other eating and drinking places Rail Transport Services

IO sector No. 223 224 225 181

Road Transport Services -Busline operation -Public utility cars and Taxicab operation -Jeepney, tricycles (motorized and non-motorized) and other -road transport -Tourist Buses and cars including chartered and rent-a-car

182 183 184 185

Water Transport Services

Guided Tour Entertainment/ recreation Miscellaneous Tourism Services

-Sea and Coastal water transport -Inland water transport (including renting of ship with operator)

187 188

Air Transport Services

190

Tour and Travel Agencies Motion picture and video production and distribution Motion picture projection Radio and Television activities Other recreational and cultural services Retail trade

191 234 235 236 237 198

Tourism-Related Sectors With the use of transaction table and technical coefficient matrix it is possible to provide perspective about the production and consumption behaviors among sectors in the economy. In the study, the 240-sector provided by the NSCB was aggregated into 50 sectors. The way of aggregation among industries was done to have a tourism sector. For this portion of the analysis, the tourism sector includes accommodation and restaurant facilities since a large portion of industry can attributed to these industries (see Appendix B for aggregation). Tourism-related sectors, in this context, refer to other sectors that have a relationship with the tourism sector either as producer of the inputs needed by the sector or as purchaser of the products of tourism. Reading down a column of the direct coefficient table describes the proportion of purchases made from each of the sector, thus depicting the inter-industry purchases of inputs for production from other sectors. Technical coefficient represents the proportion of inputs required to produce one peso value of output. Table 5.12 depicts the top 20 sectors that have a highest proportion of inputs required by the tourism sector to produce additional one peso value of output. As shown, most of the inputs required by the tourism sector can be categorized as food products. Specifically, twenty-five percent (25 %) of the inputs required come from other food manufactures, followed by the meat, beverage and fishery at 9%, 5% and 3% respectively. Moreover other food products such as dairy, vegetables, fruits, coconut and oils, and poultry products also comprise the major inputs purchase by the tourism sector.

Other purchases of the sector are the commercial services (2.14%), fuel, electricity and water (1.75%), trade (1.63%), chemical products (1.25%) and financial services (0.9%). Aside from these, a certain proportion of inputs also comes from textile, paper and wood, metal, appliances and electrical, and, petroleum industry. Table 4.12 Top 20 Sector- Producer of Tourism Inputs Technical Sector Code Coefficient Food manufactures 019 0.2490141 Meat 016 0.0970578 Beverage 020 0.0577412 Fishery 012 0.0341520 Commercial services 046 0.0214274 Dairy, milk and butter 017 0.0190287 Fuel, electricity and water 037 0.0175273 Trade 040 0.0163083 Vegetables 005 0.0159001 Chemical products 027 0.0125822 Fruits 006 0.0117062 Coconut 003 0.0100588 Financial Activities 041 0.0093897 Coconut and vegetable oil 018 0.0093353 Poultry 011 0.0089469 Textile 022 0.0083981 Paper, wood 024 0.0068468 Metal 031 0.0066559 Appliances/ Electrical 033 0.0045994 Petroleum and asphalt 029 0.0044120 Reading across the table rows provides an alternative interpretation wherein the sales of each sectors to other sectors is depicted. Similarly, using the technical coefficient, it is possible for the tourism sector to track the sectors to whom the sales are being made. Table 4.13 depicts the top 20 sectors that have the highest proportion of purchases from the tourism sector for an additional one peso value of output produced by the sector.

Table 5.13 Top 20 Sector- Purchaser of Tourism Output Technical Sector Code Coefficient Media 049 0.0467677 Other services 050 0.0467677 Financial Activities 041 0.0304784 Commercial services 046 0.0259091 State mgt & defense 045 0.0145206 Education 043 0.0112846 Health and Social Work 044 0.0111500 Textile 022 0.0039318 Chemical products 027 0.0035282 Real Estate 42 0.0023763 Construction 036 0.0019953 Beverage 020 0.0014465 Other food manufactures 019 0.0011835 Other manufactured goods 035 0.0008228 Science and Technology 048 0.0007132 Transport Services 038 0.0005897 Appliances/ Electrical 033 0.0005701 Hotel and tourism 047 0.0002803 Garments and Footwear 023 0.0001589 Tanneries & leather 026 0.0001203

Aside from being a purchaser of products from other sectors, tourism sectors also produces and sells products to other sectors. A certain proportion of the output is sold to media and other services at both 4.68%. It is followed by financial and commercial services at 3.04% and 2.59 % respectively. Other purchaser of tourism products includes state management and defense, education, health and social work, textile, chemical products, real estate and construction industries. Tourism also sold to sectors such as beverage, other food manufactures, other manufactured goods, science and technology, transport services, appliances and electrical, garments and footwear, tanneries and leather industries, and even to hotel and tourism industry itself.