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

2500000

2000000
Volume

1500000

1000000

500000

0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Year

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
 Growth
Year Volume Rate (%)
1998 2412.88 ---
1999 2553.66 5.8
2000 2133.8 -16.4
2001 1722.7 -19.3
2002 1740.06 1
2003 1522.68 -12.5
2004 1990.81 30.7
2005 2236.05 12.3
2006 3465 55
2007 4885.37 41
Source: DOT Resource Center

6000

5000

4000
Volume (US $)

3000

2000

1000

0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Ye a r

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

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)

18

16

14
Average Length of Stay (Nights)

12

10

0
1999 2000 2001 2002 2003 2004 2005 2006 2007

Ye a r

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

The comparison of the length of stay between foreign visitors and overseas Filipinos is

1999 2000 2001 2002 2003 2004 2005 2006 2007

Foreign 8.5 8.3 9.02 8.78 8.01 7.95 8.41 10.98 13.88
visitors
Overseas 18.62 20.25 18.36 17.38 17.74 14.13 21.47 48.02 44.21
Filipinos
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 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

2000

2001
foreign visitors
2002 overseas filipinos
2003

2004
Year

2005

2006

2007

0 10 20 30 40 50 60

Volume

from 1999-2007
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.

1999 2000 2001 2002

2003 2004 2005 2006 2007
Holiday 39.4 40.0 41.5 43.7
43.3 47.5 45.3 46.9 47.3
4 8 6 4 8 8 9 1
Visit 28.7 28 28.4 27.1
27.9 32.2 26.8 26.6 25.5
friends/relatives 9 4 8 3 2 6 9
Business 19.1 18.4 17.2 16.2 14.9 8.77 12.8 13.1 13.5
2 6 3 4 8 2 8
Official mission 0.14 0.13 0.13 0.13 0.11 0.1 0.1 0.11 0.11
Health/medical - - - - - - - - 0.21
Convention 1.62 1.41 1.24 1.24 1.3 0.86 1.2 1.2 1.2
Others not 10.8 11.92 11.46 11.55 12.2 10.4 12.6 11.7 12.0
specified 8 9 6 8 6

Table 5.5 Purpose of Visit in the Philippines from 1999-2007

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
40 visit f riends/relatives
business
35
of f icial mission
30 health/medical
Percentage

convention
25
others not specif ied
20

15

10

0
1999 2000 2001 2002 2003

Year

50

45
holiday
40
visit f riends/relatives
35 business
of f icial mission
30
Percentage

health/medical
25 convention
others not specif ied
20

15

10

0
2004 2005 2006 2007

Year

Tourist Expenditure

The impact of tourism in a country depends on the amount of money spent 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 per Visitor 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

140
Average Daily Expenditure (US $)

120

100

80

60

40

20

0
1999 2000 2001 2002 2003 2004 2005 2006 2007

Year
 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

1999 2000 2001 2002 2003 2004 2005 2006 2007

Foreign 47.04 120.37 105.17 102.89 89.45 96.46 84.06 84.7 83.89
Visitors
Overseas 26.74 50.24 49.06 52.67 48.49 73.64 39.76 55.78 50.36
Filipinos
from 1999-2007
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

140

120
Average Daily Expenditure (US $)

100

80 Foreign Visitors
Overseas Filipinos

60

40

20

0
1999 2000 2001 2002 2003 2004 2005 2006 2007

Year
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

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 17.23 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/ 7.09 7.02 10.96 12.55 8.95 9.49 12.11 16.61 22.59
recreation
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 0.08 0.09 ---- ---- ---- ---- ---- ----
historical sites,
museums, national
parks, others
Miscellaneous 1.83 2.01 2.03 8.27 7.33 13.54 9.22 18.09 8.78
from 1999 to 2007(Percentage)
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 from 1999 to

2007.
 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)

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

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 scheduled 357 323 349 387 427 399 262 437 442 507
flights
from 1998 to 2007
Source: DOT Resource Center

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

600

500

400 total no. of airlines

w eekly scheduled flights
Volume

300

200

100

0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Year
 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.

Total seat 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
capacity
104647 95636 100710 100697 114519 109230 73922 123364 118230 126962
per week
Table 5.10 Trend in the Total Seat Capacity per Week from 1998 to 2007
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
140000

120000

100000
Total Seat Capacity per Week

80000

60000

40000

20000

0
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Year
 As shown in Figure 5.10, the total seat capacity per week shows a fluctuating trend

wherein a dramatic fall was experienced 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.

Total Tourism Expenditure

By using the determinants of tourism discussed in the previous part, the total tourism

expenditure is computed using the following formula:

Total Tourism Expenditure

= No. of Visitors * Daily Expenditure/visitor *Length of Stay

As shown, to get the total tourist expenditure, the number of visitor arrivals is

multiplied by the daily expenditure of each visitor and by the average length of stay of

the visitors.

Table 5.11 Computation of the Total Tourism Expenditure

from 1999 to 2007 (in million USD)
Total
Daily exp. Length Expenditur
Year Visitors per Visitors of Stay e
1999 2170514 132.26 8.91 2557.81
2000 1992169 117.49 8.79 2057.39
2001 1796893 102.89 9.53 1761.93
2002 1932677 100.92 9.12 1778.82
2003 1907226 88.25 9.17 1543.43
2004 2291352 96.03 8.06 1773.51
2005 2623084 83.61 8.55 1875.15
2006 2843345 83.91 12.06 2877.34
2007 3091993 82.96 16.7 4283.75
 Figure 5.11 shows that the total tourist expenditure decline from 1999 to 2003 but it

managed to increase at a low rate from 2003 to 2005. Fortunately, a large boost in total

tourist expenditure happened in 2006 and 2007.

Figure 5.11 Trend of the Total Tourism Expenditure

from 1999 to 2007(in million USD)

Total Tourism Expenditure of Major Items of Tourism

Using the computed total tourism expenditure, the direct impact of expenditure on

the sectors providing the major tourism items was computed. The share on the major

items of tourism on the total expenditure is obtained by multiplying the total expenditure

by the percentage share of each item as shown in table 5.8.

Table 5.12 Total Tourism Expenditure of Major Items of Tourism

from 1999 to 2007 (in million USD)
 As shown in figure 5.12, a large part was recorded as miscellaneous expenditure

because it includes the shopping expenses of the tourist. It has a declining trend from

1999 until 2003 and significantly increased in 2005 to 2007. Accommodation also

Food and Guided Local

Year Accommodation beverages tour Entertainment transport Miscellaneous
1999 1203.20 683.96 16.11 577.81 166.51 2557.81
2000 863.69 436.99 5.55 341.73 82.09 2057.39
2001 737.90 342.52 4.76 213.37 118.40 1761.93
2002 706.37 306.49 1.78 168.81 107.44 1778.82
2003 523.84 259.60 1.70 138.14 94.46 1543.43
2004 448.17 346.54 1.24 222.58 100.74 1773.51
2005 505.17 344.84 7.88 207.20 126.20 1875.15
2006 740.05 586.69 10.36 204.29 135.52 2877.34
2007 1052.94 1022.53 5.57 305.43 164.07 4283.75
receives a large portion of the expenditure, followed by food and beverages sector,

entertainment sector, transport sector and guided tour.

Figure 5.12. Share of the Major Items on Total Tourism Expenditure

from 1999 to 2007 (in million USD)

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 5.13.

The tourism consumption expenditure is divided into major items namely

accommodation, food and beverages, transportation, guided tour, entertainment and

recreation, and miscellaneous tourism services.

Tourism-Related Sectors

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).

Table 5.13 Relationship between Tourism Consumption Expenditure

and Input-Output industries
 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.

Tourism I-O Industries IO

Consumption sector
Expenditure No.
Accomodation Hotels and motels 223
Other short-stay accommodation 224
Food and Restaurants, bars, canteens and other eating and drinking 225
Beverages places
Transportation Rail Transport Services 181

Road Transport Services

-Busline operation
-Public utility cars and Taxicab operation 182
-Jeepney, tricycles (motorized and non-motorized) and other 183
-road transport 184
-Tourist Buses and cars including chartered and rent-a-car
185
Water Transport Services

-Sea and Coastal water transport 187

-Inland water transport (including renting of ship with 188
operator)

Air Transport Services 190

Guided Tour Tour and Travel Agencies 191

Entertainment/ Motion picture and video production and distribution 234
recreation Motion picture projection 235
Radio and Television activities 236
Other recreational and cultural services 237
Miscellaneous Retail trade 198
Tourism
Services
 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 5.14 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.

Table 5.14 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
 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 5.15 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
 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 5.15 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.

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.

Sectoral Impact of the First-round Expenditures Allocation of Tourism Payments

To provide a supplementary view on the sectoral impact of tourism, the input-output

(I-O) table was further aggregated into 13-sector (see Appendix C for aggregation). Using

the 2000 I-O table, the extent in which other industries are influenced directly by tourism

sector can be determined. As shown in the technical coefficient table (see Appendix D for

13-sector coefficient matrix), the amount received from tourism was allocated to these

different sectors in the economy. Then, these receiving industries pay, likewise to other

industries, so that there is a continuous turnover of money.

 Table 5.16 provides the sectoral impact of the first-round spending of tourism

payments. It is known that tourism sector purchase goods and services from other sectors,

thus, it also pays for other sectors. In this case, the distribution of tourism payments is

shown in the transaction table. These payments are multiplied by the ratio of purchases of

each sector to other sectors as shown in the technical coefficient tables. Appendix E

provides an example on how an initial tourism payment affects the agricultural sector.

This was also done to obtain the impact for other sectors (See Appendix F for the detailed

impact for other sectors).

Table 5.16 Sectoral Impact of the First-round Spending of Tourism Payments

(in Thousand Pesos)
DESCRIPTION Intermediat Primary Total
e Inputs Inputs impact per
sector
Agriculture 5,931.44 16,882.22 22,813.66
Mining 2,101.39 14,007.17 16,108.56
Food Manufacture 8,692.59 6,560.33 25,252.93
Manufacturing 4,688.44 9,160.09 13,848.53
Construction and 1,603.01 16,014.92 17,617.93
Real Estate
Fuel, electricity and 1,512.65 13,666.11 15,178.76
water
Transportation 4,445.06 14,433.58 18,878.64
Telecommunications 2,261.21 13,002.49 15,263.70
Trade 5,025.01 14,824.98 19,849.99
Financial Activities 1,300.42 14,026.27 15,326.69
Government 3,011.43 17,577.81 20,589.25
Services
Commercial 2,752.80 12,542.85 15,295.65
services
Hotel and Tourism 35,531.90 7,509.35 43,041.25

Figure 5.13 Sectoral Impact of the First-round Spending of Tourism Payments

(in Thousand Pesos)
 Although, the transaction matrix is for the year 2000, it is still useful to identify which

sector is greatly affected by the initial tourism payment. As shown, a large share of

tourism payments goes to the hotel and tourism sectors itself, followed by the food

manufacture sector. Notably, for these two sectors, large proportion impact is attributed to

the intermediate inputs.

Agriculture is the third affected sector followed by government services which

provides the highest proportion of primary inputs, trade and transportation sector. Other

sectors, which also benefitted from the turn-over of tourism payments includes

construction and real estate, finance, mining, telecommunication, commercial services,

manufacturing, and, fuel, electricity and water.

Impact Results
 The impact of tourism expenditure on output, income, indirect taxes, import and

export of the country is computed by following the equations discussed in the previous

chapter.

For this analysis, it was focus only for the impact on the tourism subsector as

provided by the PTSA. The 17 sector identified was further group into major items

similar to the grouping provided by the DOT data namely (1) accommodation, (2) food

and beverages, (3) transportation, (4) guided tour, (5) entertainment and recreation, (6)

and miscellaneous tourism services (see Table 5.11 for the aggregation).

The coefficients in the inverse matrix is multiplied by a certain ratio specific to

output, income indirect taxes, import and export , and to the vector of tourist expenditure.

It must be noted that inverse matrix captures not only the direct but also indirect sectoral

output requirements which depicts the sum of the long chain of interaction in the

production process.

Table 5.17 Product of Inverse Matrix Coefficient and Specific Coefficients for
Income, Tax Import, Export for Each Group of Tourism Sector
Items Income Tax Import Export
Accommodation 0.7040 0.0778 0.0000 0.0220
Food and beverages 0.1436 0.0308 0.0247 0.0414
Transportation 13.4685 0.1636 0.6213 0.1522
Guided Tour 0.3079 0.0423 0.0011 0.0031
Entertainment/recreation 3.1637 1.5789 0.0159 0.0024
Miscellaneous tourism 0.1902 0.0117 0.0074 0.0241
services

Table 5.17 shows the results of multiplying the inverse matrix by specific ratios. For

income, inverse matrix is multiplied by the ratio of wages or compensation to gross

output of each sector. In terms of tax, the net indirect tax coefficients are used. In

addition, the sectoral imported input coefficients and the sectoral exported input

coefficients are multiplied to the inverse matrix to achieve the ratio for import and export.

The output effect, on the other hand, is reflected in the inverse matrix itself to be

multiplied by the tourist expenditure.

The ratio achieved in table 5.17 was further multiplied to the vector of tourist

expenditure to achieve the complete picture of the impact of tourism on output, income,

indirect taxes, import and export. It should be noted that the values obtained in this

analysis is not only for direct impact but the total of direct and indirect impact of tourism.

Total impact

Table 5.18 Average Total Impact on Output, Income, Tax, Import and Export
of Tourism Expenditure per Year from 2000-2007 (in million USD)
IMPACT Average
Impact
Output 5325.92
Income 1485.07
Tax 288.24
Import 32.98
Export 90.03

The results suggest that tourist expenditure from 2000 to 2007 has a largest

impact on output with an average impact of 5325.92 million USD per year. It is followed

by income/compensation impact with an average of 1485.07 million USD per year and

tax impact of 288.24 million USD. Meanwhile, export is slightly higher than import at

90.03 million compared to 32.98 million impacts on imports.

Figure 5.14 Average Total Impact of Tourism Expenditure on Output, Income, Tax,
 Import and Export from 2000-2007 (in million USD)

Table 5.18 provides the average total tourism impact for output, income, tax, import

and export from 2000 to 2007. Table 5.19 and Figure 5.15 show the trend of the impact

on these five areas.

Figure 5.15 Trend of the Impacts of Tourism Expenditure on Output, Income, Tax,
Import and Export from 2000-2007

Output impact shows a decreasing trend from 2000 to 2003. It increased from 2003 to

2004 and boosted on 2005 to 2007. Income, on the other hand, has a more steady
movement wherein there is a low rate of decline from 2000 to 2003 and similarly low rate

of increase from 2004 to 2007. Moreover, import and export depict an almost constant

trend from 1999 to 2007.

Impact on Output

Table 5.25 Average Output Impact of Tourism Expenditure for Each Group of
Tourism Sector from 2000 to 2007 (in million USD)
Average Output
Items Impact
Accommodation 1471.62
Food and beverages 486.71
Transportation 42.16
Guided Tour 282.84
Entertainment/recreation 586.37
Miscellaneous tourism
services 2456.23
Total output impact 5325.92

Figure 5.16 Trend of the Output Impact in the Philippines for Each Group
of Tourism Sector from 2000 to 2007 (in million USD)

The impact of

tourist expenditure in terms of output from 2000 to 2007 is shown in Table 5.20 and table

5.25. The total impact on tourism output is approximately 5325.92 million USD per year
from 2000 to 2007.As figure 5.16 suggests, the largest impact on output of approximately

2456.23 million USD on the average, is on the miscellaneous tourism services which

includes shopping and retail trade and others. It also has significant impact on

accommodation sector. Both impacts on these sectors follow the trend which decreases

until 2003 and increases until 2007. Next affected sector is the entertainment and

recreation with an average impact of 586.37. It is followed by food and beverages, guided

tour and transportation sector which have relatively more stable trends.

Impact on Income

Table 5.26 Average Income Impact of Tourism Expenditure for Each Group of
Tourism Sector from 2000 to 2007 (in million USD)
Average Income
Items Impact
Accommodation 490.86
food and beverages 65.44
transportation 65.39
Guided Tour 69.34
Entertainment/recreation 367.35
Miscellaneous tourism
services 426.69
Total income impact 1485.07

Income impact, in this analysis, refers to the amount of income generated in terms of

wages due to tourism demand. Based on the results provided in table 5.21 and table 5.26,

three sector groups are the most affected namely the accommodation, entertainment and

recreation, and miscellaneous tourism services with an average impact of 490.86, 367.35,

and 426.69 million USD, respectively.

For these three sectors, the income dramatically increased from 2005 to 2007. The

other three sectors, on the other hand, remains more steady for the period of 2000 to
2007. The total income impact on this tourism sectors is 1485.07 million USD, on the

average, from 2000 to 2007.

Figure 5.17 Trend of the Income Impact in the Philippines for Each Group of
Tourism Sector from 2000 to 2007 (in million USD)

Impact on Taxes

Table 5.27 Average Tax Impact of Tourism Expenditure for Each Group of Tourism
Sector from 2000 to 2007 (in million USD)
Average Tax
Items Impact
accommodation 54.22
food and beverages 14.05
transportation 0.79
Guided Tour 9.51
Entertainment/recreation 183.34
Miscellaneous tourism
services 26.32
Total tax impact 288.24

Figure 5.18 Trend of the Tax Impact in the Philippines for Each Group of Tourism
Sector from 2000 to 2007 (in million USD)
Tourism expenditure also contributed to the taxes of these sector groups that must be

paid to the government. For the period of 2000 to 2007, it has an average total impact of

288.24million USD per year.

As table 5.22 and 5.27, the largest tax-paying sector due to tourism is the

entertainment and recreation which poses a wide gap compared to others with an average

tax impact of 183.34 million USD. Next is accommodation sector with average impact of

54.22 million USD. It is followed by miscellaneous tourism services, food and beverages

and guided. The least affected sector in terms of tax is the transportation sector which has

an almost constant trend from 2000 to 2007.

Impact on Import

Table 5.28 Average Import Impact of Tourism Expenditure for Each Group of
Tourism Sector from 2000 to 2007 (in million USD)
 average import
Items impact
accommodation 0.01
food and beverages 11.27
transportation 3.02
Guided Tour 0.26
Entertainment/recreation 1.85
Miscellaneous 16.57
Total import impact 32.98

Figure 5.19 Trend of the Import Impact in the Philippines for Each Group of
Tourism Sector from 2000 to 2007 (in million USD)

Tourism also contributed to the imports of tourism sectors in order to meet the

demand of the tourists. Based on the results in table 5.23 and table 5.28, miscellaneous

and food and beverages sector has the largest import due to tourism with an average of

16.57 and 11.27 million USD per year from 2000 to 2007. It is followed by the

transportation sector which has a relatively fluctuating trend, with an average 3.02

million USD worth of imports.

The two which has the least import due to tourism are the entertainment or recreation

at 1.85 million USD and the guided tour at 0.26 million USD per year. For the period of
2000 to 2007, the average impact on import per year on these sectors totaled to 32.98

million USD.

Impact on Export

Table 5.29 Average Export Impact of Tourism Expenditure for Each Group of
Tourism Sector from 2000 to 2007 (in million USD)
average
Items export impact
accommodation 15.36
food and beverages 18.85
transportation 0.74
Guided Tour 0.70
Entertainment/recreation 0.27
Miscellaneous tourism
services 54.11
Total export impact 90.03

Figure 5.20 Trend of the Export Impact in the Philippines for Each Group of
Tourism Sector from 2000 to 2007 (in million USD)

On the average, the total export impact contributed by tourism is 90.03 million USD

per year, as depicted in table 5.24 and table 5.29. Miscellaneous tourism services has the

largest export impact and experienced a large increased from 2005 to 2007. Food and
beverages and accommodation sector also have a large export impact with an average of

18.85 and 15.36 million USD per year. Meanwhile, transportation, guided tour, and

entertainment and recreation provide a small proportion of impact on export and almost

constant trend from 2000 to 2007.