Transcript presentation title

ECONOMIC IMPACT OF TOURISM IN KANSAS
Christopher Pike
Director, Impact Studies
Tourism Economics
October 18, 2016
AGENDA
Overview of US consumer
Kansas visitation and spending
Impact of
Tourism in
Kansas
Composition of Spending
Economic Impacts
Tourism in Context
2
Tourism Economics
US CONSUMER SPENDING OUTLOOK
Factors favoring recent travel
growth
3
1
Steady job and income growth
2
Stronger consumer confidence
3
Improved household balance sheets
4
Lower transportation costs
All signs point
up!
Tourism Economics
LABOR MARKET: SLACK TIGHTENS, WAGE GROWTH RECOVERS
Wage growth
for individuals
recently
recovered to
3.5% (Atlanta
Fed tracker)
4
Tourism Economics
LABOR MARKET: QUITS AND LAYOFFS
Rising “quitrate” reflects
firming labor
conditions…
…and layoffs
are low
5
Tourism Economics
CONSUMER CONFIDENCE SURVEY
Favorable view
of “present
situation”…
… future
expectations
are more
cautious
6
Tourism Economics
HOUSEHOLD DEBT
Households
have reduced
debt levels…
…freeing
disposable
income for
future spending
growth
7
Tourism Economics
HOUSEHOLD NET WEALTH
Home prices
and financial
markets have
boosted
household
wealth
Wealth effects
typically support
consumption
with a lag
8
Tourism Economics
GAS PRICES HAVE FALLEN
Gas Prices Are On a Three Year Decline
Gas prices
have fallen from
nearly $4 gallon
to around $2
gallon
Texas gasoline price, all grades, dollars per gallon
5.0
4.5
4.0
3.5
3.0
2.5
Retail price
2.0
12-mo moving avg
1.5
06
07
08
09
10
11
12
13
14
15
16
Source: Energy Information Administration
9
Tourism Economics
RECENT CONSUMER SPENDING ON LODGING
Consumer spending, US
Growth from Dec. 2011
Index (Dec. 2011=100)
140
Lodging (37.6%)
130
F&B (28.4%)
Recreation services (17.7%)
Consumer spending (17.7%)
Air (17.0%)
120
110
100
90
80
70
Motor vehicle fuel (-32.6%)
60
2011
2012
2013
2014
2015
2016
Note: Data is nominal, three-month moving average, seasonally adjusted and extends through July 2016.
Source: Bureau of Economic Analysis; Tourism Economics
10
Tourism Economics
TWO SEPARATE TRAJECTORIES OF TRAVEL PROPENSITY
Business and leisure trip propensity
Leisure travel
continues to
expand…
U.S. Domestic Travel, 1994=100
120
110
100
Leisure trips per employee
90
Business trips per employee
80
…even as
business travel
remains
tempered
70
60
1994
1998
2002
2006
2010
2014
Source: U.S. Travel Association, Tourism Economics
11
Tourism Economics
SECULAR SHIFT OF SPENDING TOWARD LODGING
Consumer spending on lodging
Real, per capita GDP and spending on lodging
Percentage change since 1980
300%
245%
Spending on lodging has increased
245% since 1980 (real, per capita
basis)
250%
200%
150%
78%
100%
GDP has increased 78% since
1980 (real, per capita basis)
50%
0%
-50%
1980
1985
1990
1995
2000
2005
2010
2015
Source: Bureau of Economic Analysis; Oxford Economics
12
Tourism Economics
AGENDA
Overview of US consumer
Kansas visitation and spending
Impact of
Tourism in
Kansas
Composition of Spending
Economic Impacts
Tourism in Context
13
Tourism Economics
WHEN DO VISITORS COME
Steady room
rental growth
y-o-y.
2015 started
off well,
ended up on
par with
2014.
14
Tourism Economics
ROOM GROWTH 2011 ON
Strong
recovery
early in
decade,
pause in late
12/early 13
and picks
back up late
13 into 14.
15
Tourism Economics
VIEW FROM SALES TAX SIDE
Lodging has
led overall
economy
since 2010,
restaurants
showing
some recent
strength.
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Tourism Economics
VIEW FROM SALES TAX SIDE
Retail picture
has been mixed
– clothing led
economy early
in decade,
losing some of
the lead in
2014, while
sporting goods
trailed until
gains seen in
2015.
17
Tourism Economics
VIEW FROM SALES TAX SIDE
LHS
employment
supports
view of
strength in
tourism.
18
Tourism Economics
SIX YEARS OF VOLUME AND SPENDING GROWTH
Visitation
reached 35.4
million and
spending
reached $6.5
billion in
2015.
19
Tourism Economics
VISITOR SPENDING
Visitation grew
4.2% in 2015.
Traveling
spending
growth has
averaged
5.5% per year
since 2009, a
total increase
of $1.8 billion.
20
Tourism Economics
VISITOR SPENDING
Note the
growth in key
categories
early in the
decade as a
share of all
growth
compared to
2015.
21
Tourism Economics
AGENDA
Overview of US consumer
Kansas visitation and spending
Impact of
Tourism in
Kansas
Composition of Spending
Economic Impacts
Tourism in Context
22
Tourism Economics
SPENDING BY CATEGORY
23
Tourism Economics
SPENDING CATEGORIES OVER TIME
Lodging
spending has
increased
from $730
million to
$1.06 Billion.
25
Tourism Economics
SPENDING CATEGORIES OVER TIME
The share of
the traveler
dollar spent
on lodging has
risen to 16.3%
in 2015 from
14.9% in
2010, as both
room demand
and room
rates have
risen.
26
Tourism Economics
SPENDING BY MARKET
Overnight
travelers
comprise
62% of all
visitor
spending in
2015.
75% of all
visitor dollars
are by
overnight
travelers
27
Tourism Economics
MORE THAN JUST TRAVELER SPENDING
Tourism
Satellite
Accounting
also includes
investment
and other
spending
streams in
support of
travelers.
$7.1 billion in
total.
28
Tourism Economics
AGENDA
Overview of US consumer
Kansas visitation and spending
Impact of
Tourism in
Kansas
Composition of Spending
Economic Impacts
Tourism in Context
29
Tourism Economics
DIRECT TOURISM EMPLOYMENT
The tourism
employment
growth of
1.6% was a
point higher
than overall
Kansas
employment
growth.
30
Tourism Economics
DIRECT TOURISM EMPLOYMENT
Direct
tourism
employment
isn’t all of
any one
industry but
a piece of
many
industries.
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Tourism Economics
RANKING DIRECT TOURISM EMPLOYMENT
Tourism
employment
would rank
as the 8th
largest
industry in
Kansas
32
Tourism Economics
ILLUSTRATING THE CONCEPTS
Travel & Tourism Industry
Travel & Tourism Economic Impact
T
T&
The direct effect of visitor spending
EC
ACCOMODATION
ACCOMMODATION
T
CATERING, ENTERTAINMENT
A
ER
OV
DIR
Focus of Tourism Satellite Account
The flow-through effect of T&T all demand
across the economy
RECREATION, TRANSPORTATION
IND
FURNISHINGS AND EQUIPMENT SUPPLIERS,
TRANSPORTATION ADMINISTRATION, TOURISM
IRE
SECURITY SERVICES, RENTAL CAR MANUFACTURING,
CT
PA T
IM
C
FINANCIAL SERVICES, SANITATION SERVICES
&T
T
T&
PRINTING/PUBLISHING, UTILITIES
T
LL
&OTHER TRAVEL RELATED SERVICES
Expands the focus to measure the overall
impact of T&T on all sectors of the
economy
PROMOTION, SHIP BUILDING, AIRCRAFT MANUFACTURING,
RESORT DEVELOPMENT, GLASS PRODUCTS, IRON/STEEL
IND
ED
UTILITIES, MANUFACTURERS, HOUSING, PERSONAL SERVICES
UC
BUSINESS SERVICES, WHOLESALERS, COMPUTERS,
T
T&
FOOD & BEVERAGE SUPPLY, RETAILERS
Tourism Economics
CONTRIBUTION TO KANSAS’ ECONOMY
$1 million in
sales can have
different
impacts to
Kansas
depending on
where those
sales are…
34
Tourism Economics
CONTRIBUTION TO KANSAS’ ECONOMY
$1 million in
sales can have
different
impacts to
Kansas
depending on
where those
sales are…
35
Tourism Economics
CONTRIBUTION TO KANSAS’ ECONOMY
$1 million in
sales can have
different
impacts to
Kansas
depending on
where those
sales are…
36
Tourism Economics
VISITOR SPENDING
Note the
growth in key
categories
early in the
decade as a
share of all
growth
compared to
2015.
37
Tourism Economics
CONTRIBUTION TO KANSAS’ ECONOMY
38
The tourism
industry: $2.7
billion of
Kansas GDP in
2015.
The tourism
economy:
generated
GDP of $4.9
billion.
This is 3.3% of
the state
economy.
Tourism Economics
CONTRIBUTION TO KANSAS’ ECONOMY
The tourism
industry:
63,211 jobs in
Kansas in
2015.
The tourism
economy:
94,126 jobs.
This is 4.9% of
all jobs in the
state.
39
Tourism Economics
ALL SECTORS BENEFIT FROM TOURISM
$7.1 billion
directly in
tourism
economy
supports an
additional $3.3
billion in
business sales
= total of $10.4
billion in sales
to Kansas
businesses
40
Tourism Economics
TOTAL TOURISM EMPLOYMENT
Visitors directly
support 24,000
food & beverage
jobs – over
27,000 in total.
5,560 business
service jobs
supported by
tourism – 50
directly by
visitors
Tourism Economics
LABOR INCOME TO WORKERS IN KANSAS
Significant
employment in
F&B and
recreation drives
high labor
income in those
industries.
Above average
wages support
labor income in
supplier
industries.
42
Tourism Economics
TAX REVENUE
Taxes of $1.0
billion were
generated by
tourism in
2015.
State and
local taxes
alone tallied
$588 million
in 2015.
43
Tourism Economics
TAX REVENUE
$272 million in
state
revenues
Local
governments
received $316
million in tax
receipts from
travelgenerated
activity.
44
Tourism Economics
AGENDA
Overview of US consumer
Kansas visitation and spending
Impact of
Tourism in
Kansas
Composition of Spending
Economic Impacts
Tourism in Context
45
Tourism Economics
TOURISM IN CONTEXT - VISITATION
Kansas’ 35.4
million visitors
would be like
everyone from
Texas,
Nebraska, and
Missouri visiting
Kansas once a
year.
46
Tourism Economics
HOW IMPORTANT IS TOURISM?
Kansas visitation
rose by nearly
900,000 in 2015 –
which is like
having everyone
from Austin, Texas
stop on by during
the year.
Tourism Economics
TOURISM IN CONTEXT – VISITOR SPENDING
Visitors spent
nearly $6.5
billion in
business sales
in Kansas in
2015 - or about
what all
Americans
spent on food
for July 4th.
48
Tourism Economics
TOURISM IN CONTEXT – VISITOR SPENDING
Were the Kansas
tourism industry a
single business, it
would rank #402
on the Fortune
500 list, similar in
size to JetBlue
Airways and
Charles Schwab,
and bigger than
Dr. Pepper
Snapple Group.
49
Tourism Economics
TOURISM IN CONTEXT – VISITOR SPENDING
The 93,126
tourism jobs would
be enough for two
jobs for every
resident of Salina,
Kansas.
50
Tourism Economics
TOURISM IN CONTEXT – STATE AND LOCAL TAX REVENUES
The $588 million
in state and local
tax revenues
represents $525
per household in
Kansas – the
approximate
cost of hosting a
10 person dinner
on Thanksgiving.
51
Tourism Economics
SUMMARY
Summary
52
1
2015 marks six years of spending and visitation growth
2
Recent growth in categories that produce largest
impact in Kansas
3
Impacts are across every industry and are a significant
portion of the state economy
4
State and local tax revenue supports $525 in
government services for each household in Kansas
Tourism Economics
BONUS SECTIONS
Counties!
DMO value
Impact of
Tourism in
Kansas
53
Tourism Economics
COUNTY RESULTS
54
Tourism Economics
COUNTY RESULTS
55
Tourism Economics
COUNTY RESULTS
56
Tourism Economics
WHY PRIORITIZE DESTINATION MARKETING?
 The visitor economy is a catalyst for economic development
57
Tourism Economics
HOW DESTINATION MARKETING DRIVES THE ECONOMY
58
Tourism Economics
#2 – RAISING THE DESTINATION PROFILE
 Destination promotion strongly supports economic development through brand
development, raising awareness, and building familiarity
“Every tourist that comes
“If we do it right, the ideal
through here is a potential
brand will transcend the
business lead.”
visitor market and support
Jeff Malehorn, President & CEO,
all economic
World Business Chicago
development.”
Hank Marshall, Economic Development
Executive Officer, City of Phoenix
Community and Economic Development
Department
59
Tourism Economics
#2 – RAISING THE DESTINATION PROFILE
Familiarity is critical in attracting investment

13% of executives with site selection responsibilities state that their perceptions of an area’s
business climate were influenced by leisure travel and 37% reported influence by business
travel (Development Counsellors International, 2014)
“We are learning a lot from Visit California by how they
brand California and how to take their model and apply
it to economic development.”
Brook Taylor, Deputy Director, Governor’s Office of Business and
Economic Development
60
Tourism Economics
IMPACT OF CAMPAIGN ON ECONOMIC PERCEPTIONS
Missouri 2016 campaign impact effect
A good place to live
+57%
A good place to start a career
+53%
+79%
A good place to start a business
A good place to attend college
+43%
A good place to purchase a vacation
home
+67%
A good place to retire
+50%
0
20
Percent Who Strongly Agree
Aware
61
40
Unaware
Tourism Economics
WHY PRIORITIZE DESTINATION MARKETING?
 The visitor economy is a catalyst for economic development
 It actually works
62
Tourism Economics
SDTMD case study is telling
San Diego TOT Receipts
year-over-year % change
12%
10%
Defunding of
SDTA
8%
6%
4%
2%
2013
2014 JanAug
Source: SD TMD
2012
2011
0%
Tourism Economics
San Diego stark demand slowdown in 2013
Striking lull in SD room demand
Room nights, 12-mo moving sum, % change year ago
6
Surge in
2014
5
Defunding of SDTA
4
3
Top 25
Comp set
San Diego
2
1
0
Jan -12
Jul -12
Jan -13
Jul -13
Jan-14
Jul-14
Sources: STR, Tourism Economics
Tourism Economics
PENNSYLVANIA
PA budget
Graph shows PA tourism budget
before earmarks. After earmarks,
only $2.0 million was available for
statewide marketing in FY2015.
Budget, in millions of
constant 2014 dollars
$55
$50
$45
Average '07-'08 tourism
budget: $36.3 million
$40
$35
$30
$25
$20
$15
Tourism budget FY2015:
$7.3 million
$10
$5
$0
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
Note: PA tourism budget adjusted to real terms (i.e. constant dollars adjusted for inflation).
Source: US Travel Association; Tourism Economics
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Tourism Economics
PENNSYLVANIA
•
Marketing cuts resulted in share losses
PA share of competitive state total
PA share of nine-state total
2009
27.4%
2014
22.9%
19.4%
18.4%
14.7%
6.2%
State tourism budgets
Marketable overnight trips
Marketable day trips
Note: Nine-state competitive state region includes Pennsylvania, New York, New Jersey, Delaware, Maryland, Virginia, Ohio, West
Virginia, Virginia and District of Columbia. Tourism budgets for 2009 are the FY 2008-09 fiscal year, where available.
Source: US Travel Association; Longwoods International; Tourism Economics
66
Tourism Economics
ILLINOIS
State budget impasse limited state and city destination marketing for most
of the past fiscal year
 Dropped to third from first most visited mid-west state.
 Illinois ranked 9th among all 50 states and is now ranked 11th as both
Michigan and Ohio gained share.
 Hotel tax revenue from January–April was down 0.7% , while the US average
was up 4.9%.
 Inquiries about travel to Illinois were down over 70% in FY16.
Tourism Economics
WHY PRIORITIZE DESTINATION MARKETING?
 The visitor economy is a catalyst for economic development
 It actually works
 Destination marketing meets a pronounced need
68
Tourism Economics
THE NEED FOR DESTINATION PROMOTION
1
2
Challenge
Solution:
Destination Promotion
The primary motivator of a trip
is usually the experience of a
destination, beyond the
offerings of one business
Articulates the brand message that is
consistent with consumer motivations
Effective marketing requires
scale to reach potential visitors
Pools sustained resources to provide the
economies of scale and marketing
infrastructure required to generate
impact
69
Tourism Economics
TARGET OPPORTUNITY: 658 MN UNUSED VACATION DAYS
Unused PTO in 2015
Days of PTO per worker
9.9
10
8
5.7
6
5.1
5.7
6.1
4.7
4
2
0
Total
Gov't Private
(Pub/Priv Sector)
<100
100- 500+
499
(Employees)
Sources: GfK and Oxford Economics
70
Tourism Economics
DESTINATION MARKETING MUST REVERSE THIS TREND
Days Away on Vacation
Annual vacation days per worker, trend is the 24-month moving average
22
21
20
19
18
17
Long-term trend
16
Long-term avg 1976-2000
15
75
80
85
90
95
00
05
10
15
Source: Oxford Economics analysis of BLS survey results
71
Tourism Economics
PLENTY OF REASONS WHY…
Obstacles to taking PTO
Multiple answers allowed, share of respondents, %
Would return to backlog of work
I cannot afford a vacation
No one else can do the work
Hard to take PTO with seniority
Can bank/roll over unused PTO
Want to show dedication
Get paid for my unused PTO
Would work anyways
I feel guilty using PTO
Can't appear to be replaceable
Work culture doesn't promote PTO
Concerned about promotion/raise
I would prefer to work
Afraid I would lose my job
Afraid of boss's perceptions
Taking PTO comes with seniority
Symptoms of
a "work
martyr"
Somewhat or very
difficult to take PTO
because...
0
10
20
30
40
50
Sources: GfK and Oxford Economics
72
Tourism Economics
BUT THE BENEFITS ARE REAL
Manger's View
of of
PTO
The Manager’s
View
PTO
%, "By using their PTO, employees..."
Improve their health/out sick less
Return more efficient and
productive
Have better morale and less
turnover
Return focused and more
creative
Agree?
Somewhat
Strongly
Work extra when really needed
0
20
40
60
80
100
Sources: GfK and Oxford Economics
73
Tourism Economics
THANK YOU
Tourism Economics / Oxford Economics
All data shown in tables and charts is Tourism Economics / Oxford Economics’
own data, and is copyright © Oxford Economics Ltd, except where otherwise
stated.
To discuss further please contact:
Christopher Pike, Director of Impact Studies
[email protected]
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Tourism Economics