Consumption of foreign tourists - ex
Consumption and share of foreign tourists
These experimental statistics include information on the consumption and share of foreign tourists in domestic private consumption in Iceland in 2019 according to the national accounts standards. The classification is based on information obtained from data on credit card turnover and the industry classification of domestic service providers.
With this breakdown of statistics, the aim is to show the division of Iceland’s private consumption more clearly than previously done. Separating the consumption expenditure of tourists should give a clearer image of how the category of “direct purchases in the domestic market by non-resident households” is composed and has evolved over time. This is particularly important in the light of the important role that tourism has played in the Icelandic economy in the recent years, and how the composition of tourists’ consumption differs from the consumption expenditure of resident households.
The publication of these experimental statistics are a part of a project aimed to increase the accuracy of the statistics on private consumption by focusing on the expenditure of tourists travelling to Iceland and breaking down the consumption expenditure by categories of consumption.
For now, only the statistics for 2019 are published but as soon as the revision of time series is completed, Statistics Iceland plans to include such breakdown of statistics into the regular dissemination of statistics on private consumption expenditure. Due to the circumstances created by the Covid-19 pandemic, especially the effect of the pandemic on tourist-related activities, Statistics Iceland has decided to publish a part of the preliminary statistics as experimental statistics which is intended to support official statistics and give users faster access to interesting statistical information on the significance of tourism in the Icelandic economy.
With the dissemination of these information on a more regular basis, concurrent with the dissemination of private consumption expenditure statistics, the intention is to publish a breakdown of consumption expenditures of resident households and non-resident households alike, as a part of the private consumption statistics. One reason for this type of breakdown not being published sooner is that in order to be able to do so information regarding the tourists purchases not made with a credit cards, as for the purchases of illegal goods and services, are missing.
In the current publication, statistics on private consumption within the Icelandic economy has been broken down into categories of consumption as well as whether the consumption expenditure is by Icelandic residents or non-residents (tourists). In the future, the objective is to gather further data on the composition of purchases of Icelandic resident households abroad which could provide users with even more detailed information on the composition of resident household expenditure by categories of consumption, regardless of whether it is expenditure in Iceland or abroad.
Private consumption expenditure of tourists in Iceland 2019
Updated: 18. May 2020
In 2019, the direct purchases in the domestic market by foreign tourists in Iceland amounted to a total of 284 billion ISK. This corresponds to 21.4% of the measured private consumption in Iceland, last year (household final consumption expenditure less the direct purchases abroad by resident households).
As expected, the expenditure on catering and accommodations services is the largest category in the expenditures of tourists in Iceland, accounting for 38.4% of tourists’ total private consumption expenditure last year, or just over 109 billion ISK at current prices.
Recreation and culture is the second largest consumption category of tourists in Iceland, including among other things, the purchases of various types of recreation and entertainment that often is a major part of tourist spending, such as entrance fees to swimming pools, museums, excursions and the purchases of organised package holidays/tours.
The category of transport covers expenditure on transportation including expenditure on rented car, car hires, bus trips and fuel purchases. In total, tourists’ expenses related to these services amounted to 45 billion ISK last year, or 15.8% of tourists’ total private consumption expenditure.
Due to the circumstances created by the Covid-19 pandemic, especially the effect of the pandemic on tourist-related activities, Statistics Iceland has decided to publish a part of the preliminary statistics under experimental statistics which is intended to support official statistics and give users faster access to interesting statistical information on the significance of tourism in the Icelandic economy.
Classification of consumption expenditure
The classification of consumption expenditure is mainly based on information obtained from data on credit card turnover and the classification of the economic activities of the merchant or operator. With this, the share of tourists in private consumption in Iceland, as measured in external trade, has been grouped by COICOP consumption categories. The COICOP classification is an international reference classification of household expenditure, published by the United Nations Statistics Division, and offers a very detailed classification of consumption expenditure. In this dissemination, consumption is classified into step 2, meaning that consumption is classified into sections and sub-sections.
Household final consumption expenditure is defined according to the national concept as all consumption expenditure of resident households, whether the expenditure on goods and services is incurred on the economic territory or abroad. Therefore, household final consumption expenditure according to the Icelandic national accounts refers only to resident households, excluding non-resident household expenditure.
Household final consumption expenditure is also estimated according to the domestic concept, which refers to the expenditure on goods and services incurred by resident and non-resident households on the economic territory, excluding the expenditure of resident households abroad.
In private consumption statistics by Statistics Iceland, the breakdown according to consumption categories has been based on the latter definition, while resident household consumption abroad, as measured in external trade, is added to the aggregates of domestic consumption expenditure and non-resident household expenditure deducted in the same manner.
Comparability with other statistics on tourism and tourists’ consumption expenditure
Tourists’ private consumption as measured by using the expenditure approach of the national accounts differs from the tourist final consumption expenditure according to the tourism satellite accounts. Among other things, it does not include direct expenditure of private enterprises, non-profit institutions serving households or general government on business-related travel, which in national accounts is considered as a producer’s input but not as household consumption. Therefore, the expenses of those who travel to Iceland on business (usually including cost of travel and accommodation) will be defined as expenses in the operation of the company/institution rather than as the tourist’s private consumption. Other expenses of such travels, such as purchases of personal goods and other expenses that are not paid for directly by their employers are considered as private consumption, regardless of whether the employer indirectly pays for these expenses, for example with the payment of fixed daily allowance. Additionally, tourist consumption expenditure in the tourist satellite accounts are classified according to classification of economic activity and not by categories of consumption as done in the national accounts. Furthermore, the share of tourists’ consumption expenditure that is related to their purchases of flights to Iceland with an Icelandic airline is not classified as a part of their consumption expenditure in Iceland but rather in their home country where the purchase is made, unlike what is suggested by the methodology of the tourism satellite accounts.