Why tourism?

Not a few are asking if it is right that we go full blast into the business of tourism. They say it is not the best way to develop Cebu or the whole country for that matter. The reason? Most businesses involved in tourism, especially those who operate at the informal or underground level, are concentrated in the service sector, which is not known for paying high wages. Low wages do not allow the country to cut down poverty fast. Critics want the Philippines to go into industry, particularly manufacturing, which paid higher wages and grew rapidly for about two decades after the last war before growth stammered in the ensuing years.

True, but tourism is still big business and not a few are known to be happy working in the sector which includes even the lowliest of our brothers and sisters.

Per the United Nations World Tourism Organization report, globally there were 982 million tourists that crossed country boundaries in 2011, higher by 4.6 percent from 939 million in 2010, with a total of $1,030 billion in tourist receipts generated by the receiving countries that was also higher by 3.8 percent from $928 billion in 2010. This even excluded the money paid to the international carriers that ferried the tourists which amounted to $196 billion in 2011.

Tourism’s direct contribution to global gross domestic product in 2011 was estimated at $2 trillion with 98 million jobs being created. If the indirect and induced impact of tourism were added, the total contribution of tourism in 2011 to global GDP was 6.3 trillion with 255 million jobs, $743 billion in investments and $1.3 trillion in service exports. This represented 9 percent of GDP, 8.3 percent of jobs, 5 percent of investments and 5 percent of exports generated.

Global tourists represented about 14 percent of the global population in 2011. In the same year, France and Spain achieved the highest foreign tourist arrivals to population ratio with 1.22. This was equivalent to 122 foreign tourists per 100 residents. On this score, the Philippines lags very much behind with 0.04 in foreign tourist to population ratio, representing four foreign tourists per 100 local residents. Despite the low foreign tourist arrivals to population ratio, according to another report by the World Travel and Tourism Council, Philippine tourists, both foreign and domestic, directly accounted for 2.0 percent of Philippine GDP or 8.5 percent when all the indirect and induced effects were included. In employment it was 2.1 percent and 9.6 percent respectively.

In 16 years from 1995 to 2011, the number of foreign tourist arrivals in the country grew in average by 5.1 percent annually. It took however, 15 years for the number of foreign tourist arrivals in the country to double from 1.76 million in 1995 to 3.52 million in 2010. Total foreign tourist arrivals in 2010 went down by 3.9 percent from 2009 because of the global recession. As the global economy recovered in 2010, Philippine foreign tourist arrivals went up by 16.7 percent. This decelerated last year to 11.3 percent on account of the failure of the 2010 economic recovery to be sustained.

What is the picture of tourism in Cebu?

Total tourist arrivals in Cebu increased in average by 9.0 percent annually from 2006 to 2011 with foreign tourist arrivals growing faster at 11.9 percent and domestic tourist arrivals growing slower at 7.1 percent. Counting foreign tourists alone in 2011, the tourist-population ratio was 0.20 (20 foreign tourists per 100 population) but it is much higher at 0.46 (45 foreign and domestic tourists per 100 population) when domestic tourists were included.

There is no official data on the GDP of Cebu. It is safe to say however that Cebu could account for more than half or up to one third of the Central Visayas GDP. In 2011, the GDP of Central Visayas (at current prices) was placed at P602 billion. At a conservative estimate of 60 percent share in the Central Visayas GDP by Cebu, this would amount to P361 billion in 2011. Using only the 8.5 percent national proportion of the GDP being contributed by tourism, the total contribution of tourism to the Cebu GDP would amount to P30.1 billion. These figures should in reality be much greater given that Cebu has a much higher tourist-population ratio than the nation.

The figures are large by local standards but more importantly they tend to be distributed also to many people, including the poor and unskilled, who are employed in service activities and in the other sectors.

This is not to say that we should now forego industrialization in favor of tourism which, together with business process outsourcing and Overseas Filipino Worker remittances, contributed greatly to the rapid growth of the services sector in the last decade. Industrialization, through the expansion in manufacturing, is still the best option for the country to achieve rapid economic and inclusive growth on account of its ability to generate jobs and pay high wages and its strong forward and backward linkage with the rest of the economy.