Annals ofi’burism Research, Vol. 23, No. 1, pp.

3247, 1996
Pergamon CopyrIght 0 1996 Elsevier Science Ltd
Printed in Great Britain. All rights reservrd
0160-7383/96 $15.00+0.00
0160-7383(95)00041-O

THE ECONOMIC IMPACT OF

TOURISM IN THE SEYCHELLES

Brian Archer
John Fletcher
University of Surrey, UK

Abstract: The paper describes the results of a detailed study to analyze the impact made by
1991 tourism expenditure on incomes, employment, public sector revenue and the balance of
payments in the Seychelles. Details of the methodology and data sources are provided and the
results and policy implications are analyzed. These tourism impacts, found to vary by visitors’
countries of origin, provide useful policy and marketing implications, although this variation
was found to be related almost entirrly to the different magnitudes of expenditure than to
variations in the size of the multiplier by country of residence. Keywords: The Seychelles,
tourism expenditure, multipliers, input-output analysis, employment, impact, government.

R6sum6: L’impact Cconomique du tourisme aux Seychelles. Cet article dCrrit les rtsultats
d’une etude sur I’impact des dCpenses touristiques sur les salaires, l’emploi, le revenu du
secteur publique et la balance des paiements aux Seychelles en 1991. L’auteur explique la
mCthodologie utiliste dans la rechrrche, rCv.?le scs sources d’informations et analyse en
profondeur les rCsultats obtenus ainsi que leurs implications politiques. I1 est apparent que
les impacts des visiteurs sent differents par pays d’origine, ce qui a des implications politiques
et commerciales intCressantes. Toutefois, ces variations sent presque entiPrement dues B la
difft%nce dans le chiffre de leurs dCpenses plutBt qu’8 la difference dans la valeur des multi-
plicateurs dans chaque pays de rCsidrnce. Mot-cl&: Seychelles, d6pense touristique, multi-
plicateurs, analyse input+utput, emploi, impact, governement.

INTRODUCTION
The Republic of Seychelles situated in the Indian Ocean, consists
of two distinct groups of islands: the MahC group of 45 granitic
islands, three of which contain almost all of the population of 70,438
(mid-1991) and the outlying coralline group of 49 islands. The total
land area is 171.4 square miles and its capital, Victoria (population
25,000), is situated on the largest island, MahC, which is 17 miles
long and 7 miles at its widest point. The Republic of Seychelles is
one of the most isolated and scenically attractive groups of islands
in the world, offering high quality beach holidays, based on year-
round sunshine and coral beaches fringed with tropical vegetation
backed by attractive, accessible mountain ranges.
The beginning of modern tourism in the Seychelles dates from the
opening of the international airport on MahC in 197 1. From 3 175
visitor arrivals in the same year the number increased to a peak of

Brian Archer is Professor of Tourism Management at the University of Surrey (Guildford

GU2 5XH, United Kingdom; email mspldb@surrey.ac.uk). From 1987 to 1994, he was Pro-
Vice Chancellor of the University; rat-her he was Head of the Department of Management
Studies for Tourism and Hotel Industries. John Fletcher is Managing Director of Surrey
Research Group and is also Reader in Tourism at the University of Surrey.

32
 ARCHER AND FLETCHER 33

78,852 in 1979. During the 8Os, visitor arrivals fluctuated widely

from a low of 47,280 in 1982 to a new peak of 86,093 in 1989. 1990
was a record year with 103,770 arrivals, after which the total
dropped to 90,050 in 1991, followed by a recovery to 98,547 in 1992.
From 1971 to 1979, visitor arrivals increased by an annual average
rate of over 26%, compared with an equivalent increase of about 6%
in world visitor arrivals over the same period. Average length of stay
increased from 10.5 days in 1973 to 11 .O in 1977, after which it
declined to 9.1 days in 1979, partly due to a shift from two-week to
one-week holidays.
In common with many other long-haul destinations, the world
recession of the early 80s affected tourism to the Seychelles. Visitor
arrivals declined in 1980 (by about 9%) and again in 1981 (by a
further 15.8%). During the early 8Os, tourism to the Seychelles was
slow to recover. An abortive coup caused some uncertainty among
tour operators about the future, but by the second half of the 8Os,
these fears had been dispelled. Arrivals rose by over 7% in 1987, a
further 8% in 1988, 11% in 1989, and over 20% to a peak of 103,770
in 1990.
Europe is the predominant market area for the Seychelles, provid-
ing 63% of all visitors in 198 1 and over 7 1% in 199 1. Within Europe,
the principal generating countries are France,Italy, the United
Kingdom, and Germany. Table 1 shows the actual number of visitors
from each country and region from 1986 to 1991.
Seasonality is much less of a problem in the Seychelles than most
other long-haul destinations, largely because of its equatorial
climate. In consequence, the pattern of visitor arrivals is related
principally to the main holiday periods (spring, summer and late
December/early January) of the principal generating countries in
Europe.
As is consistent with the tourism product, most of the accommo-
dation establishments are situated near beaches and the majority
are dispersed around the principal island of Maht. Hotels account
for approx. 80% of all visitor-nights. The remainder are in self-cater-
ing apartments, private homes, and the houses of friends and
relatives.
The principal aim of this paper is to measure the economic impact
of tourism on the Republic of Seychelles in total and by visitors’
countries of residence and, on the basis of the results, to indicate
those productive sectors in which tourism expenditure yields the
greatest economic returns. The research methodology involves the
use of an input-output model constructed for this specific study.
It is not the purpose of this paper to provide a detailed literature
survey and readers are referred to the principal sources mentioned
here. A major literature survey and critique of existing approaches
up to 1977 was provided by Archer (1977) and this was partially
updated by a later paper (Archer and Fletcher 1990). Between those
dates, a considerable number of input-output and multiplier studies
was undertaken, the majority of which, however, were principally
applications of existing techniques to particular countries and
regions. A small number of studies contained advances in method-
34 ECONOMIC IMPACT OF TOURISM

Table 1. Visitor Arrivals in Seychelles (198691)

Year

Country of Residence 1986 1987 1988 1989 1990 1991

Europe
UK and Eire 13,955 16,856 19,935 19,346 19,207 14,877
France 14,133 13,906 14,304 16,278 21,900 15,193
Germany 5886 5276 5501 7371 9018 932 1
Italy 11,517 14,358 14,604 15,175 19,281 15,238
Switzerland 4353 3346 3126 2882 2771 2520
Other countries 5234 5879 6714 7561 9059 7406
Subtotal 55,078 59,62 1 64,184 68,613 81,236 64,555

Africa
Reunion 1789 1670 1348 2091 2131 3543
Mauritius 571 388 606 885 1072 968
East Africa 1267 1311 1432 1309 1287 1135
South Africa 939 949 2947 5056 9897 11,774
Other countries 1490 1322 1624 1832 1484 1405
Subtotal 6056 5640 7957 11,173 15,871 18.825

Asia
Middle East 2293 1916 1779 1870 1873 1806
Indian Subcontinent 260 202 262 419 339 479
Hong Kong 48 47 36 71 250 237
Japan 371 344 268 371 481 463
Other countries 246 381 388 542 602 775
Subtotal 3218 2890 2733 3273 3545 3760

Oceania 366 1102 330 443 504 504

America 2064 2473 2197 2591 2614 2406

Total overnight visitors 66,782 71,626 77,40 1 86,093 103,770 90,050

Cruiseship visitors 2855 4573 2876 1549 7564 7618
Total visitors 69,637 76,199 80,277 87,642 111,334 97,668

Source: Adapted from Statistics Division, Migration and Tourism Statistics

(annual).

ology and/or critical insights into the technique. Among these are
papers by Sinclair and Sutcliffe (1978, 1982), Milne (1987), and
Wanhill ( 1988).

THE ECONOMIC IMPACT OF TOURISM

The model used for the study described in this paper was a basic
input-output one with a consumption feedback mechanism included
in some runs of the model and excluded in others in order to
measure separately the effects of consumer spending induced by the
increased direct and indirect economic activity. Models of similar
type have been used widely for studies of this nature under a variety
 ARCHER AND FLETCHER 35

of circumstances. Justification for this approach and examples of

applications are provided in the literature (Archer 1977; Archer and
Fletcher 1990).
The model is in essence a Leontief inversion with several adapta-
tions which owe much to the work of Wanhill (Archer and Wanhill
1980) Later adaptations were made by Fletcher (1989):

x=AX+y
P = BX 1:j’

where X is a vector of gross output, A is a matrix of production

coefficients, Y is a vector of final demand, P is a vector of primary
factors, and B is a matrix of factor coefficients.
From equations (1) and (Z), it is possible to predict the change in
gross output and the employment of primary factors for a given
change in final demand. For example, let the change in final demand
be AF, then

AX=AAX+AF (3)
AP=BiU (4)

then

(I-A) LLY = AF

and

B&Y=AP

then

AX = (I -A)-’ AF (5)
and

B (I - A)-‘AF = Al’ (6)

The direct and indirect impact of additional income, imports,
government revenue, etc., can be found by the use of equation (5).
An n X n matrix AT is substituted for AF and the diagonals of this
matrix record the given changes in export earnings with the off-
diagonals zeros. This gives

B, (I - A)-’ AP, (7)

where AP,,, is an n X n matrix in which each row now contains the

effects of the items of export earnings on a particular primary factor.
For the Mth row

B, (I - A)-’ AT = AZ’, (8)

36 ECONOMIC IMPACT OF TOURISM

so that the multipliers for each category of export earnings are:

-s = 1, . . . n
iA\t,,

and the overall multiplier is:

AP,i
i AT,
(10)

where i is the unit vector.

The direct, indirect, and induced multipliers are calculated by
including an additional column and row within the A matrix. This
column is that part of final demand which constitutes consumer
expenditure; the row is income payments to the personal sector. Let
A* be the new (n + 1) X (n + 1) augmented matrix with the n +
lth row the household sector. The system can then be written as:

(I-A; “,** 1 A& (11)

(12)

Substituting AT” for AF” gives

(I - A*)-‘AT = AX* (13)

and the impact on incomes merges in the n + lth row of AX*. The
individual income multiplier is:

W+ IJ 1 . . . n + 1.
s = (14)
At,,
There is also, however, an element of national income which does
not accrue to the personal sector. This consists of the retained
earnings of the corporate sector plus any surplus in the public sector.
These are exogenous to the I -A* matrix, but can be found in the
primary factor matrix in a defined row or rows, say row m. Thus, in
addition to equation (l), it is necessary to calculate the effects of
export earnings on retained earnings from:

B*, (I -A)-’ AT = APEX (15)

In consequence equation (12) now becomes:

AC.1 J + AP*,,
(16)
At,

and the overall multiplier

A/Y*n + I + APEX’
(17)
i AT,
 ARCHER AND FLETCHER 37

The same formulae are then used to calculate the employment

effects by substituting employment coefficients for income in the
household row. This assumes linear employment functions, an
assumption which is consistent with the linear technology of
input-output models

Sources and Methods

The input-output table was constructed specifically for this study
in conjunction with the Management Information Services Division
(MISD) of the government of Seychelles for the base year 1991.
The sources of data used by MISD for the construction of the I/O
table were the national accounts, government accounts, the MISD’s
own annual national accounts inquiry questionnaire, the 1991
household expenditure survey, the external trade statistics, and
others. Details of the procedures used are described in an Annex
to MISD’s annual national income and expenditure reports. The
national accounts questionnaires were sent to 256 private sector
establishment of which a total of 167 responded (a response rate
of 64%), which included all the larger establishments. A large
quantity of additional data relating to imports by establishments
had to be obtained from the records and files of several public and
private sector organizations in order to obtain a detailed break-
down of intermediate consumption into its local and imported
components. Again this work was carried out in cooperation with
MISD.
Originally, it was been intended to attempt very substantial disag-
gregation of the principal tourism sectors. Unfortunately, the data
obtained for some of the intended subsectors were too sparse to
permit the separation of some of these categories and the eventual
version of the model contained only 18 sectors. It did prove possible,
however, to include separate rows and columns for distributive trade,
large hotels; other tourism accommodation; restaurants; car hire;
other land transportation, especially taxis and buses; air trans-
portation and sea transportation (Table 2). This permitted the
tourism expenditure pattern to mesh directly into the relevant
sectors of the economy and so avoided the need to use heavily aggre-
gated sectors as is so often the case when pre-existing input-output
tables are used for tourism impact analysis.
Information about tourism expenditure patterns was obtained
from the results of airport exit surveys undertaken by MISD during
1991, together with additional data provided by the Central Bank of
the Seychelles. Each departing individual or family group was issued
with a questionnaire to complete in the departure lounge at the
airport during three selected one-week periods in January, April, and
August. The processed tourism expenditure data were weighted to
conform with the actual number of arrivals by country of residence
(derived from the immigration cards). Whereas the survey periods
can be criticized as being too short and not extending over the whole
year, the results were generally compatible with the findings of
previous visitor surveys in the Seychelles.
38 ECONOMIC IMPACT OF TOURISM

Table 2. Backward and Forward Linkages

Backward Linkage Forward Linkage

Sector Value Rank Value Rank

Agriculture and forestry 0.97 12= 0.97 8=

Fishing 0.81 17= 0.81 lO=
Food/beverage manufacture 1.14 9= 1.22 6=
Petroleum products 0.89 16 0.81 10=
Other manufacturing 0.81 17= 0.65 12=
Electricity and water 0.97 12= 1.22 6=
Construction 0.97 l2= 0.49 16=
Distributive trade 0.97 12= 1.70 3=
Hotels (large) 1.22 6= 0.65 l2=
Other tourist accommodation 1.14 9= 0.49 16=
Restaurants 1.22 6= 0.65 12=
Car rental I .06 11 0.49 16=
Land transport 1.30 4= 0.65 12=
Air transport 1.54 l= 2.03 1
Sea transport 1.30 4= 0.97 8=
Communications 1.54 I= 1.46 5
Other services 1.46 3 1.70 3=
Government 1.22 6= 1.95 2

The extent of inter-linkage among the various sectors of the

Seychelles’ economy is shown in Table 2 where the backward
linkages shows the amount of purchases made by each sector in
order to produce a unit of output and the forward linkages indicate
the amount of sales made within the Seychelles per unit of
purchases. It is interesting to note that the principal tourism sectors
have strong backward linkages within the economy and most have
strong forward linkages as well.

The Results
During 199 1, visitors spent approximately SEYRs528 million
(about US$98 million) in the Seychelles and, with the addition of
cruise passengers, tourism expenditure was over SEYRs532 million
(about US$99 million). Table 3 shows the amount spent in 1991 by
visitors on each of eleven categories of goods and services from eight
different countries and regions. Perhaps not surprisingly, accommo-
dation (including in-house meals and beverages) accounted for
almost two-thirds of visitor spending, followed by local transporta-
tion (18%), restaurants (8%) and handicrafts (5%).
The highest 1991 spenders, in terms of total volume, were visitors
from Italy, followed by the UK and Eire, Africa, France, and
Germany. In terms of expenditure per capita and per capita per day,
however, the highest spenders were visitors from Germany with
SEYRs7,567, followed by those from Switzerland (SEYRs6,891), Italy
(SEYRs6,414), “Other” European countries (SEYRs6,205) and the
UK and Eire (SEYRs6,093). Visitors from Africa and other non-listed
 Table 3. Expenditure by Category and by Country of Residence (1991)a

Country of Residence

Category of Europe Other

Expenditure UK/Eire France Germany Italy Switzer (other) Africa Countries Total

Accommodation 61,232 49,686 43,710 60,210 11,140 27,313 54,734 22,938 330,963 %
Restaurants 5598 7909 6312 7425 1749 4406 6150 2594 42,143 g
Car rental 4737 5763 4464 7468 919 2987 4570 1870 32,778 g
Land transport 1713 1639 1337 1740 374 914 1651 934 10,302

other
-Excursions 6601 5679 4399 7523 906 3531 7454 1368 37,461 8
Air tickets 1385 1894 1621 1642 605 a44 1782 529 10,302 ;1
Boat tickets 641 877 1169 1522 160 391 1445 351 6556 2
Handicrafts 3466 5192 2706 6123 536 2479 5524 1133 27,159
Sports 1863 2548 2425 1893 466 1041 2198 677 13,111 g
Other shopping 1701 697 1991 1152 319 1425 2323 694 10,302 g
Other items 1712 1262 400 1042 192 625 1155 168 6556
Total 90,649 83,146 70,534 97,740 17,366 45,956 88,986 33,256 527,633

dRs (thousands).
Source: Seychelles Visitor Surveys (1991); Migration and Tourism Statistics (1991).
40 ECONOMIC IMPACT OF TOURISM

Table 4. The Impact of Tourism Expenditure on Income and Government

Revenue (1991)

Tourism Government
Country of Residence Expenditure Income Revenue

UK/Fire 90,649 80,485 25,870

France 83,146 73,164 23,841
Germany 70,534 62,613 20,049
Italy 97,740 86,150 26,883
Switzerland 17,366 15,361 4991
Europe (other) 45,956 40,470 12,845
Africa 88,986 78,579 24,777
Other countries 33,256 29,416 9274
Total 527,633 466,238 148,530

Note: Government revenue excludes airport landing fees, port and marina fees and
sales, and some excise duties attributable to tourism.

countries spent well below average, as did those from France. With
length of stay taken into account, however, the situation changes and
visitors from Africa are the highest spenders.
The amount of income generated by tourism expenditure in
1991 is shown in Table 4. The first column of figures shows the
volume of expenditure by tourists from each country of residence;
the second column shows the amount of income generated in the
Seychelles by these expenditures, and the third column shows the
amount of government revenue created. Overall it can be seen that
in 1991 SEYRs527,633,000 of tourist expenditure generated
SEYRs466,238,000 of income and SEYRs 148,530,OOO of government
revenue. Due to the magnitude of their expenditure, the most
substantial contributions were made by visitors from Italy (19.9% of
the total income created), and UK and Eire together (18.6%). The
contribution of tourism in 1991 to Gross Domestic Product (GDP)
as conventionally measured was 18.4%. With the secondary effects result-
ing from the multiplier action, however, tourism contributes approx.
23.5% to GDP
The government receives revenue directly from tourists in the form
of departure taxes, tourism taxes, etc., and indirectly in the form of
other taxes and licenses (paid by those establishments which trade
directly or indirectly with tourists). To this must be added the
personal taxes, customs duties, and excise duties on goods and
services paid for either to service tourists or to satisfy the secondary
increase in economic activity created by tourism expenditure. The
figure of SEYRs 148.53 million shown in Table 4, however, excludes
items such as airport landing fees and port and marine fees.
In 1991, tourism made a net contribution to the balance of
payments of SEYRs359.3 million (i.e. SEYRs527.6 million minus the
SEYRs168.3 million of direct and indirect imports) (Table 5). In
addition, a further SEYRs149.9 million of imports were required to
provide goods and services to households in Seychelles as a result of
 ARCHER AND FLETCHER 41

Table 5. The Impact of Tourism on the Balance of Payments (1991)a

Tourism Expenditure (+) 527,633

(excluding cruise visitors)

Imports (-)
Direct and indirect (168,314)

Net effect on balance of payments +359,3 19

Imports: induced (-) ( 149,864)

Notes: Direct imports are those goods and services imported directly by the
establishments which receive tourist spending. Indirect imports are the additional
goods and services imported by other establishments as a result of the initial tourist
spending. Induced imports are the additional imports required to provide goods and
services to Seychellois households as a result of their increased incomes from the
direct and indirect effects of tourism.
a This is not the normal method of presenting balance of payments data, but it is
formulated in this manner to illustrate more clearly the impact made by tourism.

the additional income which they received from the direct and
secondary effects of tourism.
As mentioned earlier, the amount of income generated in a
country by a unit of tourism spending is known as the tourism
income multiplier. Although it can be defined in various ways, in this
paper it is taken to be the contribution made by a unit of tourism
spending to all incomes except the government. The total revenue
accruing to the government is measured separately, although the
household income generated by the respending of government
revenue is included within the multiplier.
The direct, indirect, induced and total (direct + indirect + in-
duced) value-added by an average rupee of tourism spending is
shown in Table 6. Thus, for example, an average 62.73 cents of each

Table 6. The Local Value-Added by an Average Rupee Spent by Tourists

(1991)

Pattern of Direct Value-Added Total Value-Added

Category of Expenditure Expenditure (weighted) (weighted)

Accommodation 0.6273 0.2169 0.5573

Restaurants 0.0799 0.0 164 0.0616
Car rental 0.062 1 0.033 1 0.0597
Transportation 0.1225 0.0390 0.0972
Sports 0.0248 0.0056 0.0356
Shopping (other) 0.0195 0.0119 0.0109
Handicrafts 0.05 15 0.0214 0.0434
Other items 0.0124 0.0028 0.0179
Totals 1.oooo 0.347 1 0.8836

Note: Total value-added includes the induced effects of consumer re-spending.

42 ECONOMIC IMPACT OF TOURISM

Table 7. The Amount of Employment Generated in the Seychelles by

Country of Residence (1991)

Amount of Employment Generated

Country of Tourist Income Per 10

Residence Multipliers Direct Total Tourists

UK/Fire 0.8879 665 I447 9.7

France 0.8799 596 1312 8.6
Germany 0.8877 498 1106 11.9
Italy 0.8814 681 1529 10.3
Switzerland 0.8856 121 273 10.8
Europe (other) 0.8806 328 721 9.7
Africa 0.8830 642 1397 7.4
Other countries 0.8845 241 527 7.9
Average (weighted) 0.8836 - - 9.2
Total - 3772 8312 -

Note: In this and subsequent tables, the number of jobs is expressed in full-time
job equivalents.

rupee is spent at the place of accommodation and the total direct

and secondary effects of this expenditure creates 55.7 cents of
income in the Seychelles. The “Total” row shows that the expendi-
ture of an average rupee creates 88.36 cents of income in the
Seychelles. Thus, 0.8836 is an approximation of the average tourism
income multiplier.
Due to these different expenditure patterns, not all visitors create
the same impact per rupee on incomes. The tourism income multi-
pliers by country of residence are shown in Table 7. Largely because
expenditure at the place of accommodation accounts for such a
substantial element of total expenditure, the differences between
the highest and lowest countries is less than 1%.
Employment generation is another major consequence of tourism
expenditure. Of the almost 24,000 workers in employment in 1991,
over 21% were employed in social and community services, almost
11% in public administration, over 11% in manufacturing, and 9%
in agriculture, forestry and fishing. Hotels and restaurants together
employed 3362 people (13% of total employment) and tourism
related transport a further 1056 people (4.4% of total employment).
The direct employment in hotel, restaurant, and tourism related
transport business compared with other industries in each of the
years 1981 and 1990 to 1992 is shown in Table 8. The bottom row
of the table reveals that, whereas such employment comprised 16%
of the total in 1981, in the years 1990-1992 these sectors together
accounted for over 22% of total employment.
The amount of direct employment attributable to tourism in 1991
was 3772. The total (direct and secondary) employment generated
by tourism in Seychelles the same year, however, was 8312 (Table 7).
The same table shows the contributions made to this employment
by tourist by country of residence. The second column of figures
 ARCHER AND FLETCHER 43

Table 8. Formal Employment Compared with Other Industries (1981,

1990-92)

Industry 1981 1990 1991 1992

Hotels 1872 2846 2847 2872

Restaurant? 211 479 515 498
Transport-tourism 618 1018 1056 1109
Subtotal 2701 4343 4418 4479
Other industries 14,216 19,169 19,540 19,977
Tourism subtotal as % of total 16.0 22.7 22.6 22.4

Source: Adapted from MIS Division, Statistical Abstract (annual).

shows the direct impact on employment created by the flow of the

tourism generated rupees through the economy. The third column
shows the total impact. Thus, in 1991, tourism expenditure was
responsible for approximately 3772 full-time equivalent jobs and an
additional 4540 secondary jobs. The ratio, therefore, between the
total employment generated and the direct employment created by
tourism was 2.20 -i.e., an average direct job supported an
additional 1.2 secondary jobs. It should not be assumed, however,
that in the absence of tourism all of the 4540 secondary jobs would
be lost. In reality some would be maintained, especially the 1766 jobs
which catered primarily for household demand, but at a very much
reduced real level of remuneration.
A measurement of the amount of employment created by an
average 100 tourists in 1991 by country of residence is shown in the
final column of the same table. Per 100 tourists, the greatest impact
was made by visitors from Germany (29% above average),
Switzerland (17% above average) and Italy (12% above). The small-
est impact was made per 100 visitors by those from Africa (20%
below average) and “Other Countries” (14% below).
The number of tourists needed to create one job by country of
residence is shown in Table 9. The “average” row at the bottom of

Table 9. The Number of Tourists Needed to Create One Job (1991)

Number of Tourists Needed to Create One Job

Country of Residence Direct Direct and Secondary

UK/Eire 22.37 10.28

France 25.49 11.58
Germany 18.72 8.43
Italy 22.38 9.96
Switzerland 20.83 9.23
Europe (other) 22.58 10.27
Africa 29.32 13.48
Other countries 27.68 12.66
Average weighted 23.87 10.83
44 ECONOMIC IMPACT OF TOURISM

Table 10. The Partial (or Sectoral) Multiplier Coefficients for the Tourism
Related Sectors of the Seychelles Economy

Sectoral Multiplier Coefficients

Sector Income Employment Government Revenue

Large hotels 0.866 0.014 0.268

Small hotels 0.962 0.020 0.306
Restaurants 0.771 0.015 0.32 1
Car rental 0.962 0.012 0.210
Taxis/buses 0.940 0.029 0.243
Shopping 0.929 0.008 0.134
Other services 1.068 0.023 0.850
Air transport 0.911 0.013 0.243
Sea transport 1.045 0.018 0.217

the table shows that, overall, 23.87 tourists created one direct job
but, with secondary jobs taken into account as well, only 10.8 tourists
were needed to support one job. The table stresses again the relative
importance of tourists from Germany. The impact made on employ-
ment by each of these tourists is over 20% greater than average and
26% greater than by tourists from Africa.
Not surprisingly these tables indicate that the greatest overall
impact on employment is made by tourists with the highest spend-
ing. Tourists from Germany, for example, accounted for only 10.35%
of the total, but their expenditure contributed over 13% of the
tourism-related employment, whereas Africa, which yielded 20.9% of
all tourists accounted for only 16.8% of tourism-generated jobs.
The analysis of the “complete” multiplier values demonstrates
that certain types of visitors to the Seychelles are economically more
beneficial than others. It is clear that higher spending tourists are
likely to have a greater economic impact per visitor than others.
However, it need not simply be the volume of expenditure per visitor
that is important in determining impact. The pattern of visitor
expenditure is also important and, because the multiplier values are
calculated per Rupee of tourism expenditure, explains the variation
in multiplier coefficients between visitors from different countries.
Visitor expenditure is distributed over a variety of productive
sectors and each of these sectors has a different set of multiplier
values associated with its output. For example, a Rupee of expendi-
ture on each of the tourism-related sectors will, on average, gener-
ate between 0.77 1 and 1.068 rupees of income depending upon which
sector receives that expenditure (Table 10). The multiplier values
shown in Table 10 show the partial (or sectoral) multiplier values
for each of the tourism-related sectors. Such detailed information
allows the government to determine not only which tourist groups
should be targeted in order to maximize the economic benefits, but
also in which sectors they should encourage visitor spend. For
instance, if the government wishes to maximize income generation
from tourism expenditure, it should encourage tourists to spend
 ARCHER AND FLETCHER 45

more on other services (1.068) and local sea transport (1.045);

encourage car rental (0.968) rather than the use of taxis and buses
(0.940); and to stay in small hotels (0.962) rather than their larger
counterparts (0.866).
On the other hand, if employment creation is the primary objec-
tive it can be seen that the taxi and bus services sector (0.029)
performs much better than the car rental sector (0.012); the other
services (0.023) and small hotels (0.020) are also relatively strong
generators of job opportunities. If the primary objective is to
maximize government revenue then, again, the other services
(0.850), restaurants (0.321), and small hotels (0.306) are the
stronger sectors.
This type of analysis can assist the government in deciding which
sectors should be promoted and encouraged given the priority of
policy objectives. It should not be forgotten, however, that multiplier
analysis is only one part of the issue and that the demand and
market factors must also be taken into account when determining
policy actions on the basis of impact results.

CONCLUSIONS
Although the principal purpose of this study was to analyze in
detail the impacts made by visitors from different countries, the
results do suggest that certain markets are more effective than others
in terms of their contributions to the economy of the Seychelles.
Largely because of its physical isolation and the absence of nearby
large markets, the Seychelles is not dominated to the same extent
as the Caribbean countries by any single market. Even so, in 1991
almost 72% of the tourists (over 77% of the tourist-nights) were
accounted for by Europe. Indeed five countries together (Italy, UK
and Eire, France, and Germany) provided 60.7% of all tourists and
65.7% of tourist-nights. The expenditure of European tourists
contributed almost 77% of total tourism receipts and almost the
same percentage of the amount of income and employment gener-
ated by tourists in the economy of the Seychelles.
The contributions made by visitors from each of eight origin
countries and regions are summarized in Table 11. From this table
it can be seen that the highest spending visitors per capita are those
from Germany, Switzerland, Italy, “Other European”, and UK and
Eire. Perhaps not surprisingly, visitors from these countries are also
the most efficient in generating income and employment.
In order to maximize the impact of tourism on incomes, employ-
ment and public sector revenue, the Seychelles should concentrate
upon increasing the number of high spending visitors from long-haul
countries such as Germany, Switzerland, Italy, UK and Eire, which
the analysis has shown generate the largest impact on employment
per visitor. The extent to which it is financially feasible to woo
relatively small markets such as Switzerland and the Nordic
countries needs to be investigated as a separate study.
Whereas Europe will remain the principal market area for the
Seychelles in the foreseeable future, the South African market offers
 Table 11. The Impact of Tourism by Country of Residence (1991)

Country of Residence

Category of Europe Other

Expenditure UK/hire France Germany Italy Switzer (other) Africa Countries

Tourists (number) 14,877 15,193 9321 15,238 2520 7406 18,825 6670
Tourist nights 168,110 145,245 131,426 170,666 3 1,500 77.022 156,835 56,538
(number)
Expenditure (Rs 90,649 83,146 70,534 97,740 17,366 45,956 88,986 33,256
000s)
Expenditure per 6093 5473 7567 6414 6891 6205 4727 4986
tourist (Rs)
Expenditure per 539 572 537 573 551 597 606 604
tourist-night
(Rs)
Income generated 80,485 73,164 62,613 86.150 15,361 40,470 78,579 29,416
(Rs 000s)
Income generated 5410 4816 6717 5654 6096 5464 4174 4260
per tourist (Rs)
Direct employment 665 596 498 681 121 328 642 241
generated
Total employment 1447 1312 1106 1529 273 721 527
generated
Number of tourists 22.4 25.5 18.7 22.4 20.8 22.6 27.7
needed to create
one direct job
 ARCHER AND FLETCHER 47

considerable potential for growth and yields high spending tourists

who make an above average impact on incomes and employment.
Unfortunately insufficient data were available to isolate these
visitors from the category “Africa” and so it did not prove possible
to quantify their impact accurately.
The study shows that input-output analysis can do more than
merely quantify impacts. It can produce data which is of importance
to policymakers and provide guidance to marketing experts. It also
provides a strong indication to government which sectors of the
economy should be promoted and encouraged to meet particular
policy objects - increased income and/or employment and/or public
sector revenue. Multiplier analysis, however, is only one element in
policymaking and demand and market forces must be taken into
account before decisions are made on the basis of impact analysis.
nr-l

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Submitted 18 August 1994

Resubmitted 24 October 1994
Accepted 21 December 1994
Refereed anonymously
Coordinating Editor: Linda Low