The Economic Impact of Tourism in Wisconsin April 2012

State Overview

Key themes for 2011  The Wisconsin tourism recovery accelerated in 2011 with a 7.6% rise in visitor spending after a 7.9% increase in 2010. ■ Visitor volumes rose for a second straight year, 95.4 million people visited Wisconsin in 2011. ■ Growth in overnight visitation remains strong. Domestic overnight visitation grew 3.7% buoyed by strong room demand growth of 3.6% in 2011. ■ Per trip spending rose as gas prices rose and other tourism providers start to recoup recessionary price cuts.

 Visitor spending of $10 billion generated $16 billion in total business sales in 2011 as tourism dollars flowed through the Wisconsin economy.

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Key results  The visitor economy represents a significant source of business sales, employment, and taxes in Wisconsin.  Total tourism business sales of $16.0 billion in 2011 sustained 181,000 jobs, both directly and indirectly.

 These jobs represent 7.8% of total employment in Wisconsin; 1 in every 13 jobs in the state is sustained by tourism activity.  Including indirect and induced impacts, tourism in Wisconsin generated $1.3 billion in state and local taxes and $950 million in Federal taxes last year.  In the absence of the state and local taxes generated by tourism, each Wisconsin household would need to pay $565 to maintain the current level of government services. 4

Visitor Spending

A recovery in visitor spending  Wisconsin visitor spending reached $10 billion in 2011, posting 7.6% growth after a 7.9% increase in 2010.  More overnight stays along with higher prices pushed accommodations spending up 7.8% in 2011.

Visitor Spending Sector

2009

(US$ Million) 2010

2011

% Change

Lodging Other Transport Air

$2,147 $834 $384

$2,380 $957 $388

$2,564 $1,057 $405

7.8% 10.4% 4.3%

Food & bev.

$2,146

$2,252

$2,447

8.7%

Retail

$1,850

$2,065

$2,200

6.5%

Recreation

$1,162

$1,155

$1,225

6.1%

TOTAL

$8,522

$9,197

$9,898

7.6%

Visitor Spending US$ Billions $10.5 $9.9

$10.0 $9.5

$9.2

$9.0 $8.5

$8.5 $8.0 $7.5 2009

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2010

2011

Visitor spending by sector

$ Million, 2011 values shown 3,000 2010

2011

2,447

2,500

2,200 1,995

 Visitors spent $2.4 billion on food & beverages and $1.9 billion in the lodging sector last year. The retail sector received $2.2 billion from visitors.

2,000 1,461

1,500

1,184

1,000

569

500

7

Transportation

Recreation

Retail

Food & bev.

2nd Home Rental

Lodging

0

 In 2011, visitor spending increased 8.7% on food and beverage, 6.5% on shopping, and 7.8% on lodging.

Visitor spending by sector  Strong growth in overnight stays along with increasing room rates increased the share of spending on accommodations to 26%.

Visitor Spending by Sector Retail 22% Food & bev. 25%

Recreation 12%

Air 4%

Other Transport 11%

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Lodging 26%

 Food & beverage spending ranks second, capturing a quarter of visitor spending., followed by retail at 22%.  Higher gas prices in 2011 increased the transportation share of tourism spending up to 11%.

Visitor spending by sector  Wisconsin’s robust recovery continued in 2011 across all tourism sub-sectors.

Wisconsin's Visitor Spending by Year, Billions of $ $12

$10

$1.2 $1.2 $8

$1.2

Recreation

$2.2 $2.1

$6

$4

$1.8

$2.1

Food & bev.

$2.3

$2.4

$0.4 $1.0

$0.4 $1.1

$2.1

$2.4

$2.6

2009

2010

2011

$0.4 $0.8 $2

$0

9

Retail

Air Other Transport Lodging

 Lodging sales have increased 18% from the low seen in 2009.

Visitor spending by market segment  Leisure tourism represents 88% of visitor spending in Wisconsin.  Overnight visitors spend $6.9 billion in Wisconsin, 70% of the total.  International visitors to Wisconsin spent $0.6 billion in 2011, 6% of all visitor spending.

Visitor Spending in 2011 (US$ Billion)

Purpose

Market

Business Leisure

$1.2 $8.7

Day Overnight

$3.0 $6.9

Domestic Overseas Canada

$9.3 $0.5 $0.1

Total

$9.9

Total

$9.9

Total

$9.9

Purpose Business Leisure

10

Stay

12.1% 87.9%

Share Stay Day Overnight

30.1% 69.9%

Market Domestic Overseas Canada

94.1% 5.2% 0.7%

Visitor spending by market segment 0.7% Canada 5.2% Overseas

100% 90%

Percentage distribution

80% Overnight

70% 60%

Leisure 87.9%

Domestic 94.1%

50% 40% 30% Day 30.1%

20% 10% 0%

Business 12.1% Purpose

Source : Tourism Economics

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69.9%

Stay

Market

State Tourism Impacts

How visitor spending generates impact •

Travelers create direct economic value within a discreet group of sectors (e.g. recreation, transportation). This supports a relative proportion of jobs, wages, taxes, and GDP within each sector.

•

Each directly affected sector also purchases goods and services as inputs (e.g. food wholesalers, utilities) into production. These impacts are called indirect impacts.

•

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Lastly, the induced impact is generated when employees whose incomes are generated either directly or indirectly by tourism, spend those incomes in the state economy.

Tourism sales by industry Tourism Sales (US$ Million)

Direct Agriculture, Fishing, Mining Construction and Utilities Manufacturing Wholesale Trade Air Transport Other Transport Retail Trade Gasoline Stations Communications Finance, Insurance and Real Estate Business Services Education and Health Care Recreation Businessand Entertainment Day Lodging Food & Beverage Personal Services Government TOTAL

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404.6 367.6 2,200.0 689.3 569.3 61.3 1,004.5 1,995.0 2,447.2 159.3 9,897.8

Indirect Induced 29.6 244.4 419.2 92.5 3.5 133 14.0 1.2 227.6 628.3 666.0 5.3 54.8 2.4 112.6 106.5 128.4 2,869.5

22.6 91.1 222.0 139.2 5.7 54 258.7 17.8 112.1 1,004.3 208.1 643.2 36.1 2.0 211.0 153.3 73.2 3,253.9

Total 52.2 335.5 641.3 231.6 413.7 554.3 2,472.7 708.2 339.7 2,201.8 935.3 648.5 1,095.4 1,999.4 2,770.8 419.1 201.6 16,021.2

Tourism sales by industry  All business sectors of the Wisconsin economy benefit from tourism activity directly and/or indirectly.

Tourism Sales by Industry $ million 3,000 Induced

2,500

Indirect Direct

2,000 1,500

15

1,000 500

Air Transport

Personal Serv.

Other Transp

Manu

Education

Gas

Bus. Services

Recreation

Lodging

FIRE

Retail Trade

0

F&B

 Sectors that serve the tourism industry, like business services, gain as suppliers to a dynamic industry.

Total tourism employment Tourism Employment Direct Agriculture, Fishing, Mining Construction and Utilities Manufacturing Wholesale Trade Air Transport Other Transport Retail Trade Gasoline Stations Communications Finance, Insurance and Real Estate Business Services Education and Health Care Recreation and Entertainment Lodging Food & Beverage Personal Services Government TOTAL



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1,812 2,194 15,473 1,591 3,392 436 23,532 31,865 45,946 2,353 128,594

Indirect Induced 283 921 1,247 592 16 1,485 226 20 1,013 4,135 7,758 82 1,234 43 2,375 1,316 925 23,672

198 311 522 892 26 611 4,249 292 422 4,008 2,511 6,962 881 37 4,423 2,397 366 29,108

Total 481 1,233 1,769 1,484 1,855 4,290 19,947 1,903 1,435 11,536 10,705 7,044 25,648 31,945 52,743 6,066 1,291 181,374

The tourism sector directly and indirectly supported 181,374 jobs, or 7.8% of all employment in Wisconsin last year.

Total tourism employment

17

60

Induced 50

Indirect

40

Direct

30

Significant indirect and induced benefits

20 10

Manu

Air Transport

Gas

Other Transp

Personal Serv.

Education

Bus. Services

FIRE

Retail Trade

Recreation

Day

Lodging

0

F&B

 Secondary benefits are realized across the entire economy through the supply chain and incomes as they are spent.

Tourism Employment by Industry Thousands

 Tourism is an employment intensive industry with particularly high job creation in the restaurant, hotel, and recreation sectors.

Tourism employment intensity 

Tourism is a significant part of several industries – 92% of lodging, 35% of recreation, and 22% of food & beverage employment is supported by tourism spending.

Tourism Employment Intensity by Industry Lodging

92%

Transportation

15%

Recreation

Retail

35%

10%

Business

Day

Food & bev.

22%

4%

Total

0%

18

20%

40%

60%

80%

100%

Tourism personal income Tourism Labor Income (Compensation) (US$ Million)

Direct Agriculture, Fishing, Mining Construction and Utilities Manufacturing Wholesale Trade Air Transport Other Transport Retail Trade Gasoline Stations Communications Finance, Insurance and Real Estate Business Services Education and Health Care Business Recreation and Entertainment Day Lodging Food & Beverage Personal Services Government TOTAL

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91.2 104.8 322.7 38.9 58.2 19.4 400.1 560.8 698.0 74.9 2,369.1

Indirect Induced 3.6 66.1 71.0 39.8 0.8 69.1 6.2 0.5 51.1 138.1 342.5 2.8 22.9 0.6 35.9 55.3 72.0 978.4

3.1 23.7 30.0 59.9 1.3 27.2 112.6 7.2 23.2 137.8 110.8 349.1 14.7 0.5 75.5 68.7 25.7 1,071.1

Total 6.7 89.7 101.0 99.7 93.4 201.1 441.5 46.6 74.2 334.1 472.8 352.0 437.7 562.0 809.4 198.8 97.7 4,418.5

Tourism personal income Tourism Labor Income by Industry $ million 900

Induced

800

Indirect

700

Direct

600 500

20

400 300 200

Gov.

Wholesale Tr.

Manu

Personal Serv.

Other Transp

FIRE

Recreation

Retail Trade

Bus. Services

0Day

Lodging

100

F&B

 Business services and the FIRE (finance, insurance and real estate) sectors depend on tourism activity as suppliers to tourism companies and their employees.

Significant indirect and induced benefits

Education

 The larger employment numbers in F&B and recreations support significant labor income in those industries.

Tourism tax generation  Taxes of $2.2 billion were directly and indirectly generated by tourism in 2011.

Traveler Generated Taxes (US$ Million) Tax Type Federal Taxes Subtotal Corporate Indirect Business Personal Income Social Security State and Local Taxes Subtotal Corporate Personal Income Sales Bed Business Property Excise and Fees State Unemployment TOTAL

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2010

2011

917.6

951.7

81.9 104.8 212.6 518.2

87.4 112.0 218.9 533.5

1,202.1

1,270.9

113.2 101.9 425.3 72.7 370.9Day 108.5 9.6 2,119.6

120.9 104.9 453.1 77.3 391.7 113.1 9.9 2,222.6

 State and local taxes alone tallied $1.3 billion.  Each household in Wisconsin would need to be taxed an additional $565 per year to replace the tourism taxes received by state and local governments.

Methodology and Background

Why quantify the tourism economy?  By monitoring tourism’s economic impact, policy makers can make informed decisions regarding the funding and prioritization of tourism development.  It can also carefully monitor its successes and future needs.  In order to do this, tourism must be measured in the same categories as other economic sectors – i.e. tax generation, employment, wages, and gross domestic product.

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Why is this a challenge?  Most economic sectors such as financial services, insurance, or construction are easily defined within a country’s national accounts statistics.

 Tourism is not so easily measured because it is not a single industry. It is a demand-side activity which affects multiple sectors to various degrees.  Tourism spans nearly a dozen sectors including lodging, recreation, retail, real estate, air passenger transport, food & beverage, car rental, taxi services, travel agents…

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Methods and data sources •

Domestic visitor expenditure estimates are provided by Longwoods International’s representative survey of US travelers. These are broken out by sectors (lodging, transport at destination, food & beverage, retail, and recreation), by purpose (business and leisure), and by length of stay (day and overnight).

•

Tourism Economics then adjusts these levels of spending based on a range of known measures of tourism activity:

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•

Overseas visitor spending (source: OTTI, TE)

•

Canada visitor spending (source: Statistics Canada, TE)

•

Bed tax receipts

•

Spending on air travel which accrues to all airports and locally-based airlines

•

Gasoline purchases by visitors (source: TE calculation)

•

Smith Travel Research data on hotel revenues

•

Construction Value by McGraw-Hill Construction

•

Industry data on employment, wages, GDP, and sales (source: BEA, BLS, Census)

Methods and data sources •

An IMPLAN model was compiled for the State of Wisconsin. This traces the flow of visitor-related expenditures through the local economy and their effects on employment, wages, and taxes. IMPLAN also quantifies the indirect (supplier) and induced (income) impacts of tourism.

•

All results are benchmarked and cross-checked and adjusted based on the following:

•

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•

US Bureau of Labor Statistics and Bureau of Economic Analysis (employment and wages by industry)

•

US Census (business sales by industry)

The source of the employment and wage data is the Regional Economic Information System (REIS), Bureau of Economic Analysis, U.S. Department of Commerce. All employment rankings are based on Bureau of Labor Statistics (ES202/QCEW) data.

Selected recent economic impact clients Associations / Companies Center for Exhibition Industry Research (Economic Impact of Visa Restrictions) DMAI (Event Impact Calculator for 80 CVBs) US Travel Association (Impact of travel promotion) InterContinental Hotels

States California Georgia Maryland New York North Carolina Ohio Pennsylvania Wisconsin

Cities Baltimore, MD Columbus, OH Kansas City, MO London, United Kingdom New York City Omaha, NE Orlando, FL Philadelphia, PA Pittsburgh, PA Rockford, IL Countries / Provinces Bahamas Bermuda Cayman Islands Dubai Ontario Canada St. Lucia United Kingdom

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About Tourism Economics 

Tourism Economics, headquartered in Philadelphia, is an Oxford Economics company dedicated to providing high value, robust, and relevant analyses of the tourism sector that reflects the dynamics of local and global economies. By combining quantitative methods with industry knowledge, Tourism Economics designs custom market strategies, project feasibility analysis, tourism forecasting models, tourism policy analysis, and economic impact studies.



Our staff have worked with over 100 destinations to quantify the economic value of tourism, forecast demand, guide strategy, or evaluate tourism policies.



Oxford Economics is one of the world’s leading providers of economic analysis, forecasts and consulting advice. Founded in 1981 as a joint venture with Oxford University’s business college, Oxford Economics is founded on a reputation for high quality, quantitative analysis and evidence-based advice. For this, it draws on its own staff of 40 highly-experienced professional economists; a dedicated data analysis team; global modeling tools; close links with Oxford University, and a range of partner institutions in Europe, the US and in the United Nations Project Link.



For more information: [email protected].

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For more information: Adam Sacks, President [email protected]

Christopher Pike, Senior Economist [email protected]

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