Is tourism really the world’s largest industry?

How to spend it.
How to spend it.
Image: Reuters/Wolfgang Rattay
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When you hear a claim like “tourism is the world’s largest industry,” a natural question follows: Says who?

The claim is made in various forms, from industry influencers like Rafat Ali, the founder of Skift, to the UNWTO, which for years has said (in fairness) that tourism is “one of“  the world’s largest economic sectors. We know the claim has been made for at least a decade, thanks to one embattled tourism professor from Northern Arizona University who penned a blog post in 2008 imploring his students to stop parroting the claim.

In order to get the bottom of where this oft-cited statistic comes from—and determine whether it has any merit—you first have to understand how we decide what constitutes an “industry.” It’s an important, albeit unsexy, question.

Though governments measure the size of many industries, tourism was not always one of them. According to standard classifications, tourism falls into many categories. A tourist goes out for dinner? That’s assigned to the “food services and drinking places” industry. A tourist goes shopping for clothes? That falls under “retail trade.” A trip to a museum? That is part of “Arts, Entertainment, and Recreation.” Basically, spending by tourists is lumped in with the spending of locals when it comes to assessing the size of an industry.

This was quite annoying for people in the tourism and travel industry. After all, it’s hard to argue for the importance of the industry when you don’t have good data.

Fortunately for tourism boosters, a solution was found. Starting in the 1990s, countries began analyzing the size of the tourism industry using a method called a “satellite account.” Satellite accounts measure the size of industries that don’t fit nicely into classic industry classifications developed in the mid-20th century in the US (pdf). The value of unpaid housework and national parks have also been assessed through satellite accounts.

In 2000, the United Nations and several other intergovernmental organizations agreed to a standard satellite accounting method for valuing tourism that all countries could use. At least 60 countries have used this method to gauge the size of their tourism industries (pdf). 

The World Travel and Tourism Council (WTTC) is a trade body that raises awareness of travel and tourism. (Its Twitter bio reminds us that tourism is “one of the world’s largest industries.”) It provides a yearly assessment (pdf) of the tourism and travel industries based on the the standard satellite accounting system. Its 2017 assessment found that travel and tourism accounted for 10.1% of global GDP, which includes direct spending on accommodation, food, entertainment, and transport, as well as investments by travel and tourism companies, and the spending of workers in the industry. The WTTC also claims that 9.9% of all jobs are linked to travel and tourism, and that 20% of all jobs created from 2008 to 2017 are linked to the industry.

Those numbers impressive. But do they show that tourism is the largest industry in the world? It depends on how you measure it, but probably not.

If you compare tourism and travel to the broadest industry categories used by the World Bank, it is smaller than manufacturing and services, but bigger than agriculture and the non-manufacturing industry sector (which includes mining and construction, and confusingly includes the word “industry”). But if you compare tourism with sub-categories of those industries, at some point it becomes the biggest.