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

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
 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

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

5000
Volume (US $)

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)

18
Average Length of Stay (Nights)

16

14

12

10

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
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

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

2005

2004
Year

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

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 47.31
4 8 6 4 8 8 9
Visit 28.7 28 28.4 27.1
27.9 32.2 26.8 26.6 25.59
friends/relatives 9 4 8 3 2 6
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 12.06
specified 8 9 6 8
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

40

35
Percentage

30

25

20

15

10

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

140
Average Daily Expenditure (US $)

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
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
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
Average Daily Expenditure (US $)

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/ 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
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

60
Percentage

50

40

30

20

10

30

25

20
Percentage

15

10

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

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

600

500

400
Volume

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 2005 2006 2007
capacity
104647 95636 100710 100697 114519 109230 73922 123364 118230 126962
per week
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
Total Seat Capacity per Week

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 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

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.