The Tourism Satellite Account (TSA) produced by the Australian Bureau of Statistics (ABS) measures the Total Inbound Economic Value (TIEV) of tourism to gross domestic product (GDP).  This provides the basis for drawing comparisons between tourism and other sectors of the economy in terms of their economic contribution. The TSA estimates only the economic activity which is directly attributable to tourist consumption; but tourism also has indirect effects on those industries which supply commodities and services to enterprises serving visitors directly.

The Tourism Satellite Account suggests a list of industries and commodities which are related to tourism. These are further subdivided into tourism characteristic and tourism connected industries, based on the proportion of the industry output consumed by tourists. The Tourism Satellite Account defines tourism characteristic and tourism connected industries as follows:

• Tourism characteristic are those industries that would either cease to exist in their present form, or would be significantly affected if tourism were to cease. In the Australian TSA, for an industry to be ‘characteristic’, at least 25 per cent of its output must be consumed by visitors.
• Tourism connected are those industries, other than those classified as tourism characteristic, for which a tourism related product is directly identifiable, and where the products are consumed by visitors in volumes which are significant for the visitor and/or the producer.

Taken together, these two groups of industries are referred to as tourism related industries.

Total Inbound Economic Value Methodology

The Total Inbound Economic Value (TIEV) methodology was developed by Tourism Research Australia Forecasting and Analysis Section for the Tourism Forecasting Committee to supply quarterly updates to the Australian Bureau of Statistics Tourism Satellite Account data.

TIEV is calculated from total trip expenditure by inbound tourists to Australia derived from the IVS and benchmarked to the ABS Tourism Satellite Account (ABS Cat. No.5249.0) and ABS Overseas Arrivals and Departure data (ABS Cat. No. 3401.0).

Key assumptions underlying the estimates relate to the treatment of a number of expenditure items derived from the IVS. Deductions from the IVS total trip expenditure include:

• 50 per cent of international airfares. This takes account of ticket revenue associated with airlines that does not flow through to the Australian economy and airfare revenue that is spent by airlines on services in Australia (eg. departure tax, airport taxes, ground handling charges, fuel costs etc);
• 20 per cent of the value of the non-airfare component of packages and other prepaid items. This allows for commissions at the retail and wholesale levels that accrue to foreign markets.
• 33 per cent of the average international airfare component by package visitors. It is assumed that package tourists receive discounts due to bulk purchasing by wholesalers from the airlines so the average class of travel for package travellers is lower than non-package travellers lower share of business visitors.

The TIEV methodology is applied and standardised across all markets and further development will be undertaken in the future to take account of differences between source markets. As a consequence TIEV estimates may be subject to revision as assumptions are refined.

Tourism Research Australia advises that any TIEV estimates released may be subject to revision.  This is due to the benchmarking procedures used to generate the TIEV estimates as well as likely inflationary and exchange factors.