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Tourism spending

Visitors spent 25 percent more in the first quarter of the year, according to the Department of Statistics.

It’s self-evident that good decision making requires reliable facts. Decision-making based on anecdotes and “gut feeling” is almost always doomed.That is why sound statistics are essential, especially to Governments and businesses. Yesterday’s release of the Quarterly Bulletin of Statistics emphasises this point.The Department of Statistics is one of the most professional departments in Government, the Census fiasco excepted. But it, along with the Department of Tourism, has for the second time, released figures on visitor spending which simply do not pass the smell test.These are the same figures that were first released by Tourism Minister Patrice Minors a few months ago. The figures show that the number of air visitors to Bermuda rose in the first three months of the year by 6.8 percent or just under 2,000 people to 31,824.Of that number, about 2,427 or 11 percent more, stayed in paying accommodation than in private homes. That was a substantial increase and a sign that visitors were putting more money into the economy than they did in the dismal first quarter of 2010.But according to the Department of Tourism, spending did not just rise, it soared by 31 percent or $9.5 million to $36 million. That included a 25 percent increase in spending on food and accommodation and a 50 percent increase in spending on shopping, entertainment, transport etc.Not surprisingly, individual spending was reported to have soared by 23.6 percent, from around $1,000 to around $1,250 per person.It is difficult to check the accuracy of the figures for shopping and so on, although the jump did not seem to affect the continued slump in local retail sales.But spending on accommodation and food can be compared against hotel gross receipts, which are recorded in the Quarterly Bulletin of Statistics and rose by 11.7 percent to $25 million compared to the first quarter of 2009, about the same amount as the increase in people staying in paying accommodation, but not a 25 percent increase.It is possible that the reported increase in spending on accommodation was offset by a massive slump in local spending in hotels.It is also possible that spending on accommodation did not increase that much, but spending on food, either in restaurants or supermarkets, was responsible for the increase. But the food segment of the Retail Sales for the first quarter rose by just 1.9 percent, and restaurants say they are reeling. Even allowing for the decrease in the residential population since 2009, this does not seem to add up.The spending figures are taken from the exit surveys of visitors conducted at the Airport. Traditionally, these surveys have been quite accurate as the number of people interviewed is large enough to offset anomalies (the billionaire and the pauper) and reflects the visitor population. But the possibility that they were incorrect, for whatever reason, in the first quarter needs to be examined.The numbers simply do not make sense. They do not reflect the comparable figures in the Government’s other statistics and they do not reflect what the tourism industry’s leaders have been saying.This matters because spending, ultimately, is the most important tourism statistic. Hotels can judge if they are charging too much or too little. Businesses of all kinds determine inventory and staffing decisions as a result. Tourism decides if its marketing is working or not.Tourism spending does seem to be up, but it is hard to believe it is up by 31 percent.