Smoky Mountain Host Highway 19 Corridor Study Phase I

Transcription

1 Smoky Mountain Host Highway 19 Corridor Study Phase I Submitted by: Inhyuck Steve Ha, Ph.D. Hillary M. Sherman, LL.M. Jessica Hollars, B.S. Western Carolina University

2 Smoky Mountain Host Highway 19 Corridor Study Phase I Submitted to: Smoky Mountain Host of North Carolina 4437 Georgia Road Franklin, NC Prepared by: Inhyuck Steve Ha, Ph.D. Hillary M. Sherman, LL.M Jessica L. Hollars, B.S. Western Carolina University Western Carolina University Western Carolina University Institute for the Economy and the Future March

3 TABLE OF CONTENTS Executive Summary 4 Part A. Great Smoky Mountains Railroad 8 A-I. Introduction 9 A-II. Visitor Profile 13 Demographic Information 13 Marketing and Satisfaction Results 16 Visitor Spending Patterns 28 A-III. Employee Profile 29 Demographic Information 29 Employee Spending Patterns 36 A-IV. Economic and Fiscal Impact 38 A-V. Conclusion and Recommendations 42 Part B. Nantahala River Gorge 44 B-I. Introduction 45 B-II. Visitor Profile 48 Demographic Information 48 Marketing and Satisfaction Results 50 Visitor Spending Patterns 58 B-III. Employee Profile 59 Demographic Information 59 Employee Spending Patterns 65 2

4 B-IV. Economic and Fiscal Impact 67 B-V. Conclusion and Recommendations 72 References 73 Appendix A. GSMR Visitor Survey 74 Appendix B. GSMR Employee Survey 79 Appendix C. NRG Visitor Survey 83 Appendix D. NRG Employee Survey 87 About the Authors 91 Acknowledgments 92 3

5 EXECUTIVE SUMMARY This study was conducted on behalf of Smoky Mountain Host (SMH) to define the geographic boundaries of influence of the SMH Highway 19 Corridor and measure the size of the its impact on this defined region. For the purposes of this study, the Smoky Mountain Host Highway 19 Corridor includes the Great Smoky Mountains Railroad, Nantahala River Revitalization Initiative, Eastern Band of Cherokee Indians heritage attractions (including Unto These Hills, Museum of the Cherokee Indian, and Oconaluftee Indian Village) and Ghost Town in the Sky. Phase I of this study includes economic impact studies for the Great Smoky Mountains Railroad and the Nantahala Revitalization Project. Both parts of Phase I include surveying both visitor and employees of these specific attractions. A number of quantitative data collection methods were used to collect visitor, employee and administrative/financial data. This data, in turn, was used to develop an economic model that provides an accurate portrait of the Tourism Attraction Corridors role in the local economy. These impact studies will also be used to provide estimates of the economic impact of the attractions on the surrounding Carolina Smokies region. For the purposes of this study, the Carolina Smokies were defined as the eight westernmost North Carolina counties of Buncombe, Cherokee, Clay, Graham, Haywood, Jackson, Macon and Swain. Great Smoky Mountains Railroad The Great Smoky Mountains Railroad project had two objectives: (1) to examine the regional economic impact of the Railroad on the surrounding economy and (2) to gather and provide relevant information to the Great Smoky Mountains Railroad Management and Smoky Mountain Host that can guide future planning, development, and marketing strategies for both the organization and regional tourism efforts. Therefore, the visitor survey was designed to gather marketing, spending, and demographic data, in addition to the basic economic information needed to measure the railroad s impact. The Great Smoky Mountains Railroad exerts a positive effect on the local economy. The direct impact of the Great Smoky Mountains Railroad in terms of payroll expenditures, other operating expenditures, and attendee spending was determined to be $46,335,115 in The indirect and induced effects of payroll expenditures, other operating expenditures, and attendee spending were determined to be $7,334,457 and $8,118,244, respectively for As a result, in 2007, the Great Smoky Mountains Railroad contributed a total of $61,787,816 to the local economy. In terms of employment, the Great Smoky Mountains Railroad contributed and maintained 814 additional jobs to the local economy in

6 Visitor survey data revealed that the Great Smoky Mountains Railroad is successful in attracting visitors from outside the local area. In addition, the results of the visitor survey revealed the following major findings: More than four-fifths of visitors who responded to the survey (82.4%) indicated that the value of the services they received from the Great Smoky Mountains Railroad were excellent. Forty-eight percent of visitors who responded to the survey indicated that they would prefer to ride on steam-powered trains. Over 40 percent (42.1%) of those visitors who preferred steam-powered trains indicated that they would be willing to pay more for this amenity. More than four-fifths of visitors who responded to the survey (81.9%) indicated that they had made reservations in advance for their train ride and nearly onefourth of those visitors who made reservations did so at least one to two months in advance. Over 90 percent (92.6%) of visitors who responded to the survey indicated that they parked in Great Smoky Mountains Railroad designated parking during their train ride. Nearly 60 percent of visitors who responded to the survey (59.3%) indicated that their primary purpose in the area on the day surveyed was riding the Great Smoky Mountains Railroad. The internet was found to be the most effective marketing tool for visitors, followed closely by word-of-mouth and brochures. Nearly 70 percent of visitors who completed the survey (68.2%) indicated that this was their first time on the Great Smoky Mountains Railroad. Nearly 60 percent of visitors who completed the survey indicated that based on their experience with the Great Smoky Mountains Railroad they would most likely return within the next year. In addition to the data received from visitors about the Great Smoky Mountains Railroad, this economic impact study also revealed information on the impact that railroad employees have on the region. The results from the employee surveys revealed the followings major findings: The average total household monthly expenditures for Great Smoky Mountains Railroad employees are approximately $1, Great Smoky Mountains Railroad employees each bring an average of nine visitors per year to the Great Smoky Mountains Railroad from within the Carolina Smokies region. Visitors from the Carolina Smokies brought to the Great Smoky Mountains Railroad by employees stayed in commercial lodging an average of 6.47 nights. Great Smoky Mountains Railroad employees each bring an average of eight visitors per year to the Great Smoky Mountains Railroad from outside the region. Visitors from outside the Carolina Smokies brought to the Great Smoky Mountains Railroad by employees stayed in commercial lodging an average of 7.39 nights. 5

7 Nantahala River Revitalization Initiative The two objectives of the Nantahala River Revitalization Initiative project were as follows: (1) to examine the economic effect that both visitors and employees of the Nantahala River Gorge have on the surrounding economy and (2) to provide insightful information to Smoky Mountain Host that can guide future planning, development and marketing strategies for the Nantahala River Gorge to create opportunities for its ongoing growth. In order to estimate the economic impact of the Nantahala River Gorge, surveys were administered to both visitors and employees of the Nantahala Gorge. Data collected included demographic, marketing and spending, in addition to the basic economic information needed to measure the River s impact. In addition to visitor and employee survey data, financial and administrative data was collected from various outfitters along the Gorge. Data collected includes both payroll data and operating expenditures. The Nantahala River Gorge has a substantial and valuable effect on the surrounding Carolina Smokies region. The direct impact of the Nantahala River Gorge in terms of payroll expenditures, other operating expenditures, capital expenditures and attendee spending was determined to be $61,918,474. The indirect and induced effects of payroll expenditures, other operating expenditures, capital expenditures and attendee spending were determined to be $11,415,792 and $12,052,223, respectively. As a result, the Nantahala River Gorge contributed a total of $85,386,489 to the local economy (figure represents 2008 constant dollars). In terms of employment, the Nantahala River Gorge created and maintained 1,061 jobs to the regional economy. Visitor surveys were collected from small, medium and large sized outfitters to ensure representative analysis. Results from these visitor surveys revealed that the Nantahala River Gorge has been remarkably successful at attracting outside tourists. The results of the visitor survey revealed the following major findings: More than 60 percent of visitor respondents (64.6%) came to the Carolina Smokies primarily to visit the Nantahala River Gorge. The most influential advertising medium for attracting visitors to the Nantahala River Gorge was word-of-mouth. Other effective marketing tools include the Internet and brochures. A third of survey respondents indicated that they planned to visit the Great Smoky Mountains National Park during their visit. Other popular regional attractions visited include the Blue Ridge Parkway, the Cherokee attractions, the Great Smoky Mountain Railroad and the Pigeon Forge/Gatlinburg area. Nearly 40 percent of respondents (38.1%) indicated that this was their first time visiting the Nantahala River Gorge. In contrast, almost 18 percent of visitors (17.8%) reported that they come every year. A third of visitors (33.3%) reported they made travel plans one to two weeks in advance of visiting the area. Nearly 70 percent of visitors (66.4%) who completed the survey indicated that the addition of a River Park would increase the likelihood of their return. 6

8 Seventy percent of respondents (69.0%) indicated that the addition of new streambed enhancements would increase the likelihood of their return. Nearly 60 percent of visitors (57.9%) who completed the survey indicated they would definitely return within the next year based on their experience with the Nantahala River Gorge. In addition to the data received from visitors about the Nantahala River Gorge, this economic impact study also revealed information on the impact that outfitter employees have on the region. The results from the employee surveys revealed the following major findings: The average total household monthly expenditure for Nantahala River Gorge employees is $1, Nearly 70 percent of employees who completed the survey (68.09%) indicated that they have a 2-year college degree or higher. Almost half of employee respondents (48.4%) reported that they are full-time, year-round employees. Over one-third of Nantahala River Gorge employees (35.4%) have worked for an outfitter one year or less. In contrast, slightly more than nine percent of employees (9.38%) have worked at the Nantahala River Gorge for more than 20 years. Nearly 80 percent of respondents (79.7%) indicated that they moved to the Carolina Smokies to work at the Nantahala River Gorge. Nantahala River Gorge employees each bring an average of eleven visitors per year to the Nantahala River Gorge from outside the region. These visitors from outside the Carolina Smokies stayed in commercial lodging an average of 3.25 nights. Nantahala River Gorge employees each bring an average of 7.86 visitors per year to the Nantahala River Gorge from within the Carolina Smokies region. These visitors stayed in commercial lodging an average of 3.33 nights This study is specifically designed to quantify the tangible impact of both the Great Smoky Mountains Railroad and the Nantahala River Gorge on the region in terms of dollars and cents. However, this industry also provides intangible benefits to the community that are essential to regional community development, but are not addressed in this report. For example, both attractions contribute to the cultural life and reputation of the region as a tourism destination. These contributions reinforce the attractiveness of the region as a family-friendly tourism locale. Therefore, both economic and non-economic factors are important to the quality of life in the Carolina Smokies and should be considered in future decision making. 7

9 PART A An Economic Impact Study of the Great Smoky Mountains Railroad on the Economy of Western North Carolina 8

10 A-I. Introduction ABOUT THE GREAT SMOKY MOUNTAINS RAILROAD The Murphy Branch of the Western North Carolina Railroad delivered thousands of mountaineers from the wilderness of the region s landlocked hills. A year after iron rails reached Asheville in 1880, workers scattered to the west of the city to dig, fill, and blast an extension of the line that stretched 116 miles to Murphy and provided thousands with a path to the outside world. The iron horse beat riding a wagon, but in many ways the young railroad was still primitive. In 1892, a visitor from Chicago described it as "little more than two streaks of rust and a right-of-way." With tongue in cheek, he told the Chicago Tribune, "When the wind is just right, the fastest train on the line, the 'Asheville Cannon Ball,' can make 10 miles an hour." Rails changed the way of life for western North Carolina residents. Before the railroad, mercantile business provided the bare necessities. Conveniences and luxuries were not even dreamed of, and cash was hard to come by. The iron rails brought a flood of salesmen who peddled oil lamps that superseded tallow candles and New England "factory cloth" to replace scratchy, uncomfortable homespun linen. From door to door they sold books, pump organs, enlarged pictures, jewelry, lightning rods, and baubles and doodads. Passenger business was so good by the turn of the 20th century that six passenger trains ran every day between Asheville and Lake Junaluska and four trains ran daily between Asheville and Murphy. It was not easy to cut this branch line through the mountains. If it had not been for the practical, self-educated engineer Capt. J. W. Wilson, a rigidly honest and industrious man, it might not have been accomplished for years. One of Capt. Wilson's most challenging tasks was tackling the grade on the west side of Balsam that was steep and curvy with gaping ravines. His second obstacle was 9

11 boring the 836-foot Cowee Tunnel through a shaky mountain west of Dillsboro. High iron topped the Balsam Mountains at 3,100 feet, which at the time was the highest elevation of any railroad in the eastern United States. The railroad was built by convicts working under the gun. In one of the most chilling construction accidents, nineteen inmates drowned in the Tuckasegee River at the mouth of a tunnel. While crossing the river to work, the raft carrying the iron-shackled convicts capsized and those aboard, except for guard Fleet Foster and convict Anderson Drake, died in the waters. Foster was rescued by Drake, who stole the guard's wallet while pulling him to shore. When the wallet was found in Drake's duffel, he was whipped and put to work in the tunnel at hard labor, instead of receiving a hero's honor. Those who died were buried in unmarked graves on top of a small hill near the mouth of the tunnel. The Murphy Branch experienced its heaviest business in the early 1940s when the massive Fontana Dam was constructed during World War II. Thousands of carloads of cement, equipment, and other materials reached the construction site by rail on a spur line built from Bushnell to Fontana. Huge shipments of copper ore from mines in the western end of North Carolina and Copperhill, Tennessee increased the line's tonnage. In the 1920s, ribbons of concrete crawled through the mountains and linked towns together. Passenger traffic on the Murphy Branch, then owned by the sprawling Southern Railway System, began to decline as a result of the introduction of automobile and bus travel. Southern discontinued all passenger traffic on the Murphy Branch on July 16th, 1948, ending 64 years of service that opened western North Carolina to the outside world. By 1985, freight traffic had dropped off and the Norfolk Southern closed the Andrews to Murphy leg of the Murphy Branch and the State of North Carolina purchased the Dillsboro to Murphy tracks to keep them from being destroyed. In 1988, a number of entities came together to form the Great Smoky Mountains Railway (GSMR) and began running excursions. Rolling stock for the GSMR was purchased from various railroads around the nation. The Dillsboro to Nantahala route on the Murphy Branch was one of the most scenic and the excursion trains caught on right away. American Heritage Railways purchased the GSMR in December The Great Smoky Mountains Railway operates today as the newly organized Great Smoky Mountains Railroad. In addition to it s daily excursion trains, the Great Smoky Mountains Railroad has built a cadre of specialty trains and services to provide enjoyable experiences for kids of all ages, including: Peanuts, The Great Pumpkin Patch Express, The Polar Express, The Lone Ranger and Day Out with Thomas. The Great Smoky Mountains Railroad also hosts a number of dining experiences, most notably the Mystery Theater Dinner Trains. Although the Great Smoky Mountains Railroad has long played a role in the region, more quantitative data on the impact of Great Smoky Mountains Railroad employees and visitors on the surrounding region is needed for effective future economic planning and marketing efforts. 10

12 This study was designed to examine the economic impact the Great Smoky Mountains Railroad on the Carolina Smokies region. A number of quantitative data collection methods were used to collect visitor, employee, and administrative/financial data. This data, in turn, was used to conduct statistical analyses in order to develop an accurate portrait of the Great Smoky Mountains Railroad s role in the local economy. This research project was undertaken at the request of David Huskins, Smoky Mountain Host Managing Director. This economic impact study was conceived as part of a larger Highway 19 Corridor Study. The first phase of this study includes economic impact studies for the Great Smoky Mountains Railroad and the Nantahala Revitalization Project. The Nantahala Revitalization Project includes the survey and analysis of rafting outfitters to determine the gorge s economic impact on the region. The Nantahala Revitalization Project began in May 2007 and will conclude in January The economic impact study of the Great Smoky Mountains Railroad began in August, 2007 and was finalized in July The findings of these impact studies are designed to provide Smoky Mountain Host with useful information about the impact of Highway 19 Corridor tourist attractions on the region. Upon completion of the first phase, further analysis will be undertaken to determine the economic impact that remaining Highway 19 Corridor tourist attractions have on the region. METHODOLOGY Two questionnaires were developed to gather economic, marketing, and demographic information for the Great Smoky Mountains Railroad one for visitors and one for employees. The visitor questionnaire was comprised of 28 questions and incorporated demographic, economic, marketing, and tourism-related questions. The questionnaire was reviewed by the Great Smoky Mountains Railroad management and Smoky Mountain Host management and modifications were made to the survey instruments based on their recommendations. Data was collected throughout a ten-week period by Great Smoky Mountains Railroad employees. Questionnaires and pencils were provided to all visitors as they boarded selected trains and were collected by train employees after the surveys were completed. Table 1.1 Sites where visitor surveys were conducted Frequency Percent Dinner Train % Nantahala Gorge Train Excursion % Peanuts The Great Pumpkin Patch Express Excursion % The Polar Express Excursion % Tuckasegee River Train Excursion % Total % Source: GSMR Visitor Survey

13 Visitors completed a total of 435 questionnaires (see Appendix A for a copy of the visitor questionnaire). Visitor surveys were conducted on a number of Great Smoky Mountains Railroad excursions between October 5, 2007 and December 19, Surveys were given a code based on the train where they were collected. A total of five distinct train excursion types were surveyed, including: the Dinner train, the Nantahala Gorge train excursion, Peanuts The Great Pumpkin Patch Express excursion, The Polar Express excursion train, and the Tuckasegee River excursion train. Analysis was conducted to determine the breakdown of survey responses. Nearly 40 percent (37.9%) of questionnaires were completed on the Nantahala Gorge excursion train; 40.0 percent of questionnaires were completed on the Tuckasegee River excursion train. The remaining train excursions each contributed less than 10 percent of the total number of questionnaires collected. The employee questionnaire was comprised of 14 questions and incorporated demographic and economic questions. Seventy surveys were completed by Great Smoky Mountains Railroad employees. Similar to the process for creating the visitor questionnaire, the employee questionnaire was reviewed by the Great Smoky Mountains Railroad management and Smoky Mountain Host management and modifications were made to the survey instruments based on their recommendations. Surveys were distributed to all Great Smoky Mountains Railroad employees working in fall/winter of They were collected through a series of locked drop boxes so employee information would remain confidential (see Appendix B for a copy of the employee questionnaire). In addition to collecting visitor and employee data via survey, administrative and financial data were collected from the Great Smoky Mountains Railroad. Financial and administrative data was collected for the period of 2001 through 2007 to provide a more detailed look at the firm s financial trends and its implications on the region. Information regarding Great Smoky Mountains Railroad administrative and financial data was obtained directly from the Vice President and General Manager of Great Smoky Mountains Railroad. 12

14 A-II. Visitor Profile DEMOGRAPHIC INFORMATION Visitor surveys were collected from 435 individuals riding one of the Great Smoky Mountains Railroad excursion trains. Visitors to the Great Smoky Mountains Railroad have considerably higher educational attainment than the American public at large. Based on survey results, nearly 70 percent of visitors (67.1%) who ride the Great Smoky Mountains Railroad hold a 2-year college degree or higher, compared with just 30 percent of the general public who hold such a degree. Table 2.1 illustrates the educational attainment of visitors to the Great Smoky Mountains Railroad. Table 2.1 Level of educational attainment Frequency Percent Valid Percent Less than high school 6 1.4% 1.4% High school grad/ged % 28.5% 2-year college/technical/associates degree % 24.2% 4-year college degree % 28.1% Masters degree % 14.1% Doctoral degree % 3.6% Subtotal % 100.0% Missing % Total % Source: GSMR Visitor Survey 2007 Visitors to the Great Smoky Mountains Railroad also have considerably higher median household incomes than the American public at large. Based on survey results, nearly 20 percent (19.8%) of visitors who ride the Great Smoky Mountains Railroad have an annual household income of more than $100,000. More than 40 percent of visitors (41.50%) have an annual household income between $60,000 and $99,999. These findings are much higher than the national median annual household income of $48,451 (U.S. Census Bureau, 2006). Figure 2.1 illustrates the annual household income of visitors to the Great Smoky Mountains Railroad. 13

15 Figure 2.1 Annual household income of visitors to the Great Smoky Mountains Railroad 25.0% 22.2% 20.0% 20.6% 18.0% 19.3% 15.0% 10.0% 9.5% 10.3% 5.0% 0.0% Less than $40,000 $40,000 - $59,999 $60,000 - $79,000 $80,000-99,999 $100,000 - $149,000 $150,000 or more Source: GSMR Visitor Survey 2007 Women accounted for more than half the visitors (60.1%) to the Great Smoky Mountains Railroad who completed the survey instrument. While survey instruments were distributed to all riders on the selected train excursions, the findings do not necessarily suggest that women dominate Great Smoky Mountains Railroad ridership. Instead, it may simply be an example of the well-documented fact that females are more likely to complete surveys than men. Table 2.2 highlights the gender of those visitors to the Great Smoky Mountains Railroad who completed the survey. Table 2.2 Gender of respondents Frequency Percent Valid Percent Female % 60.1% Male % 39.9% Subtotal % 100.0% Missing % Total % Source: GSMR Visitor Survey 2007 Nearly 30 percent of respondents (27.82%) reported their profession as a service profession (i.e. teacher, waitress, police officer, etc.). Respondents who reported their work as a professional position (i.e. doctor, lawyer, financial analyst, etc.) accounted for over one-fifth of those surveyed (21.15%). Retirees also made up a large percentage of visitors to the Great Smoky Mountains Railroad, nearly 20 percent. Table 2.3 on the following page highlights the aggregate professions of respondents. 14

16 Table 2.3 Profession of respondents Frequency Percent Valid Percent Administrative % 4.4% Armed Forces 2 0.5% 0.5% Construction 5 1.2% 1.3% Homemaker % 2.9% Management % 9.1% Production % 2.6% Professional % 24.0% Retiree % 19.5% Self Employed 7 1.6% 1.8% Service % 31.5% Student 9 2.1% 2.3% Subtotal % 100.0% Missing % Total % Source: GSMR Visitor Survey

17 MARKETING AND SATISFACTION RESULTS Visitors who responded to the survey came from a diverse geographical area. Visitors to the Great Smoky Mountains Railroad represented 4 countries, 31 states, and 314 unique zip codes. Figure 2.2 highlights the geographic distribution of visitors surveyed for this project who traveled from in the eastern and mid-western United States. Figure 2.2 Geographic representation of visitors permanent home address Source: GSMR Visitor Survey 2007 An analysis of home zip codes revealed that the majority of respondents were from North Carolina (34.76%), followed by South Carolina (14.05%), Georgia (12.62%), Tennessee (8.54%), and Florida (8.33%). While most visitors came from the Southeast, visitors to the area represented thirty-one distinct states, as seen in Table

18 Table 2.4 Number of visitors by state Frequency Percent Alabama % Arkansas % California % Delaware % District of Columbia % Florida % Georgia % Illinois % Indiana % Iowa % Kentucky % Louisiana % Maryland % Massachusetts % Michigan % Minnesota % Mississippi % Missouri % Nebraska % New Jersey % New York % North Carolina % Ohio % Oklahoma % Pennsylvania % South Carolina % Tennessee % Texas % Virginia % West Virginia % Wisconsin % Total % Source: GSMR Visitor Survey 2007 Slightly more than 5 percent of respondents (6.03%) indicated their county of residence was in one of the eight counties identified as part of the Carolina Smokies. For the purposes of this analysis, the Carolina Smokies were defined as the western North Carolina counties of Cherokee, Clay, Graham, Swain, Haywood, Jackson, and Macon Counties) as shown in Table

19 Table 2.5 Visitors by North Carolina County FIPS County Frequency Percent Alexander % Alleghany % Buncombe % Burke % Cabarrus % Caldwell % Catawba % Chatham % Chowan % Cleveland % Columbus % Craven % Cumberland % Davidson % Davie % Forsyth % Gaston % Granville % Guilford % Halifax % Haywood % Henderson % Iredell % Jackson % Johnston % Lincoln % Macon % Mecklenburg % New Hanover % Onslow % Orange % Polk % Randolph % Rowan % Rutherford % Sampson % Stanly % Stokes % Transylvania % Union % Wake % Watauga % Wayne % Wilkes % Total % 18

20 Source: GSMR Visitor Survey 2007 As shown in Table 2.6, visitors came to the area primarily to ride the Great Smoky Mountains Railroad; nearly 60 percent (59.3%) of visitors reported that they come to the area primarily to ride the Great Smoky Mountains Railroad. Other and visiting family and friends were also popular reasons respondents indicated they came to the area. For the 30.3 percent of visitors who marked other as their primary purpose for being in the area, the most common explanations were (1) on vacation and (2) local resident. Table 2.6 Geographic representation of visitors permanent residence Purpose for being in the area Frequency Percent Riding the GSMR % Visiting family/friends % Business 4 0.9% Other % Total % Source: GSMR Visitor Survey 2007 Visitors to the Great Smoky Mountains Railroad were asked to report the number of nights they stayed in a variety of lodging situations in the following western North Carolina locales: Bryson City, Cherokee, Maggie Valley/Waynesville, Nantahala Gorge, Robbinsville, Sylva/Dillsboro, and Other. Nearly 60 percent of visitors (59.0%) to the Great Smoky Mountains Railroad reported that they spent at least one night in these areas. Visitors to the Great Smoky Mountains Railroad who stayed overnight in the area spent an average of between 2.0 and 4.5 nights total in the communities identified, as seen in Table 2.7. Table 2.7 Average number of nights spent in area by GSMR visitors Maggie Bryson Nantahala Cherokee Valley/ City Gorge Waynesville Robbinsville Sylva/ Dillsboro Other Family/Friends Hotel or Motel Inn or B&B Condo/Rental Timeshare Campground Other Overall Source: GSMR Visitor Survey 2007 As shown in Table 2.8, visitors to the Great Smoky Mountains Railroad indicated that they most frequently stayed in hotels or motels (45.3%) compared to the other options identified. More than 20 percent of respondents (23.0%) stayed with family or friends in the area, while 12.3 percent of respondents indicated that they spent the night in an inn or bed and breakfast. Bryson City was the most popular location for visitors to spend the night with 26.1 percent of respondents indicating they had spent at least one night in the 19

21 town. Nearly 25 percent (24.8%) of respondents indicated they stayed in Cherokee, and more than 20 percent (21.7%) stayed in the Sylva/Dillsboro area. The high percentage of visitors who stayed in the Bryson City area should be expected given the central role the Great Smoky Mountains Railroad has in the community. Table 2.8 Percent of nights spent in area by GSMR visitors Maggie Bryson City Cherokee Valley/ Waynesville Nantahala Gorge Robbinsville Sylva/ Dillsboro Other Overall Family/Friends 6.6% 1.9% 2.5% 0.9% 0.9% 5.7% 4.4% 23.0% Hotel or Motel 9.1% 18.6% 2.2% 0.9% 0.9% 9.7% 3.8% 45.3% Inn or B&B 4.7% 1.3% 0.6% 0.0% 0.3% 4.4% 0.9% 12.3% Condo/Rental 3.1% 0.9% 0.6% 1.3% 0.0% 0.9% 1.6% 8.5% Timeshare 0.6% 0.0% 0.0% 0.0% 0.0% 0.0% 1.3% 1.9% Campground 1.3% 2.2% 0.6% 0.6% 0.0% 0.3% 0.9% 6.0% Other 0.6% 0.0% 0.3% 0.3% 0.0% 0.6% 1.3% 3.1% Overall 26.1% 24.8% 6.9% 4.1% 2.2% 21.7% 14.2% 100.0% Source: GSMR Visitor Survey 2007 The composition of the average travel group to the Great Smoky Mountains Railroad consisted of 3.44 adults, 2.03 children (age 0-11 years), and 1.29 youth (age years). Table 2.9 illustrates the number, average, and variation of travel groups. Table 2.9 Adults, children and youth by group visiting the GSMR N Mean Minimum Maximum Std. Dev. Number of Adults Number of Children Number of Youth Source: GSMR Visitor Survey 2007 As shown in Figure 2.3, the most influential advertising medium for visitors to the Great Smoky Mountains Railroad was the Internet. In addition, more than one-fourth of respondents (26.9%) indicated that word-of-mouth was the advertising medium that most influenced their decision to visit the area, while 23.2 percent of respondents indicated that brochures were the most influential advertising medium to attract them to the Great Smoky Mountains Railroad. 20

22 Figure 2.3 Advertising medium that most influenced visitors to the GSMR Other 7.3% Word-of-mouth 26.9% Articles or News 2.3% Magazine/Newspaper 4.0% Brochure 23.2% Internet 36.3% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% Source: GSMR Visitor Survey 2007 Visitors to the Great Smoky Mountains Railroad were asked what additional regional attractions they planned to visit during their trip to the area. More than 25 percent (26.2%) of visitors to the Great Smoky Mountains Railroad who participated in this survey indicated that they also planned to visit the Blue Ridge Parkway during their visit. Other regional sites that respondents indicated they planned to visit during their trip to the area included: Biltmore Estate (24.4%), Cherokee Attractions (25.3%), the Great Smoky Mountains National Park (24.1%), Harrah s Cherokee Casino (18.9%), and Pigeon Forge/Gatlinburg (20.2%), as seen in Table Table 2.10 Other regional attractions visitors plan to visit while in the area Attraction Frequency Percent Biltmore Estate % Blue Ridge Parkway % Cherokee attractions % Ghost Town in the Sky 4 9.5% Great Smoky Mountains National Park % Harrah s Cherokee Casino % Joyce Kilmer Memorial Forest 2 4.8% Nantahala River Gorge % North Carolina Arboretum 1 2.4% Pigeon Forge / Gatlinburg % Tail of the Dragon % Total 42 Source: GSMR Visitor Survey

23 Visitors were asked how they arrived in the area. The results are displayed in Table Almost 90 percent of respondents (89.4%) indicated they came to the area by car. Nearly 6 percent (5.9%) of respondents came to the area by motor-coach or bus, while nearly 1.5 percent (1.4%) came to the area by airplane. Table 2.11 Mode of transportation visitors used to arrive in area Frequency Percent Valid Percent Car % 89.4% Motorcoach / Bus % 5.9% Airplane 6 1.4% 1.4% RV 4 0.9% 0.9% Motorcycle 7 1.6% 1.7% Other 3 0.7% 0.7% Subtotal % 100.0% Missing % Total % Source: GSMR Visitor Survey 2007 As shown in Figure 2.4, 32 percent of respondents indicated that they were the primary person of which 60.1% are female respondents from Table 2.2 who influenced their decision to come to the Great Smoky Mountains Railroad. Twenty-seven percent of respondents indicated that friends and relatives were the primary person who influenced their decision to come to the Great Smoky Mountains Railroad, while more than onefourth of respondents (25.7%) indicated that their spouse was the primary person who influenced their decision to ride the Great Smoky Mountains Railroad. Figure 2.4 Person who influenced decision to visit the GSMR 35.0% 30.0% 32.9% 25.0% 25.7% 27.1% 20.0% 15.0% 10.0% 9.7% 5.0% 4.6% 0.0% You Spouse Children Friends or other relatives Other Source: GSMR Visitor Survey

24 Visitors were asked how often they visit the Great Smoky Mountains Railroad. More than two-thirds of those surveyed (68.2%) indicated that this was their first visit to the Great Smoky Mountains Railroad. Nearly 12 percent (11.8%) of respondents indicated that they visit the Great Smoky Mountains Railroad every few years, while 6.0 percent of respondents reported that they come every other year. Less than 1 percent of respondents (0.7%) come to the Great Smoky Mountains Railroad more than five times a year, as shown in Table This finding highlights a unique opportunity and very real challenge for the Great Smoky Mountains Railroad: namely, how to provide an engaging experience that draws repeat customers back to the area while also attracting new customers to support its base. Table 2.12 Frequency visitors come to the GSMR Frequency Percent Valid Percent First time % 68.2% Each year % 8.8% Very few years % 11.8% Several times a year % 4.6% Every other year % 6.0% More than 5 times a year 3 0.7% 0.7% Subtotal % 100.0% Missing 1 0.2% Total % Source: GSMR Visitor Survey 2007 Visitors were asked how they preferred to have their train powered during their trip to the Great Smoky Mountains Railroad. Forty-eight percent of those surveyed indicated that they would prefer steam engines, while 9.8 percent of respondents prefer diesel. Fortytwo percent of respondents indicated that they have no preference regarding what type of engine powers their trip on the Great Smoky Mountains Railroad, as seen in Table Table 2.13 Visitor preference on GSMR engine type Frequency Percent Valid Percent Steam % 48.0% Diesel % 9.8% No preference % 42.2% Subtotal % 100.0% Missing 6 1.4% Total % Source: GSMR Visitor Survey 2007 More than 40 percent of visitors reported that they would be willing to pay more to have their Great Smoky Mountains Railroad train engine powered by steam, as seen in Table

25 Table 2.14 Willingness to pay more for steam power engines Frequency Percent Valid Percent Yes % 60.7% No % 39.3% Subtotal % 100.0% N/A % Missing % Total % Source: GSMR Visitor Survey 2007 As found in Table 2.15, more than 50 percent (54.0%) of respondents reported that they visited the train museum in Bryson City as part of their trip to the Great Smoky Mountains Railroad. Table 2.15 Train Museum Visitation Frequency Percent Valid Percent Yes % 54.0% No % 46.0% Subtotal % 100.0% Missing 5 1.1% Total % Source: GSMR Visitor Survey 2007 Of the respondents who did not visit the train museum, one-third of those individuals (35.9%) indicated that they did not have enough time to visit the museum. Over 9 percent (9.6%) of respondents who did not go to the train museum as part of their trip to the Great Smoky Mountains Railroad indicated they had no interest in visiting the museum, while 5 percent (5.1%) reported that they did not visit the museum because it was too crowded. Of those respondents who indicated other as a reason why they did not visit the train museum, the main reasons were: (1) the museum was closed, (2) the visitors were handicapped, and (3) the visitors got distracted shopping. Figure 2.5 illustrates these findings. 24

26 Figure 2.5 Reason visitors did not visit the Train Museum 50.0% 49.5% 45.0% 40.0% 35.0% 35.9% 30.0% 25.0% 20.0% 15.0% 10.0% 9.6% 5.0% 5.1% 0.0% Not enough time No interest Too crowded Other Source: GSMR Visitor Survey 2007 More than four-fifths of respondents surveyed (81.9%) indicated that they made advance reservations for their Great Smoky Mountains Railroad excursion. Advance reservations are critical to allowing the Great Smoky Mountains Railroad to staff and plan properly. Given this, it is important to note that nearly 20 percent of visitors surveyed reported that they did not make reservations in advance for their train ride on the Great Smoky Mountains Railroad. Table 2.16 on the following page illustrates these findings. Table 2.16 Made reservations in advance for train ride on GSMR Frequency Percent Valid Percent Yes % 81.9% No % 18.1% Subtotal % 100.0% Missing 4 0.9% Total % Source: GSMR Visitor Survey 2007 Most respondents (27.8%) made plans to visit the Great Smoky Mountains Railroad one to two weeks in advance, as shown in Table One-fourth of respondents made plans to come to the Great Smoky Mountains Railroad one to two months in advance, while percent of respondents indicated they made plans to visit the Great Smoky Mountains Railroad three months or more in advance. Despite the fact that a large percentage of visitors made their reservations to ride the Great Smoky Mountains Railroad in advance, more than 10 percent of respondents (11.8%) reported that they did not make advance plans to ride the train. 25

27 Table 2.17 Number of weeks in advance visitors made plans to ride the GSMR Frequency Percent Valid Percent Today % 11.8% 1 2 weeks % 27.8% 2 4 weeks % 16.7% 1 2 months % 25.0% 3 6 months % 15.0% 6 months or more % 3.7% Subtotal % 100.0% Missing 3 0.7% Total % Source: GSMR Visitor Survey 2007 Nearly 20 percent (17.0%) of those who booked a train and hotel package through the Great Smoky Mountains Railroad reservations department did so for convenience. Only 1 percent of visitors who booked train and hotel packages reported that they did so to receive a discounted hotel price. Table 2.18 outlines these findings. Table 2.18 Reasons visitors made train and hotel reservations through the GSMR reservations department Frequency Percent Valid Percent Convenience % 76.1% Discounted hotel price 4 0.9% 4.5% Other % 19.3% Subtotal % 100.0% N/A % Missing % Total % Source: GSMR Visitor Survey 2007 Parking has been an issue among business owners in Bryson City. Interestingly, the results of the visitor survey reveal that more than 90 percent of visitors to the Great Smoky Mountains Railroad parked in designated railroad parking during their visit to ride the train, as seen in Table Table 2.19 Parked in GSMR designated parking during their train ride Frequency Percent Valid Percent Yes % 92.6% No % 7.4% Subtotal % 100.0% Missing 4 0.9% Total % Source: GSMR Visitor Survey

28 Visitors were asked to predict, based on their experience with the Great Smoky Mountains Railroad on the day they were surveyed, the likelihood that they would return in the next twelve months. Nearly 60 percent of respondents (58.30%) indicated that they would most likely return to the Great Smoky Mountains Railroad within the next twelve months. Table 2.20 shows the findings of this analysis. Table 2.20 Likelihood of returning to the GSMR in next twelve months Frequency Percent Valid Percent 1 (= will not return) % 13.0% % 8.4% % 20.2% % 17.8% 5 (= will return) % 40.5% Subtotal % 100.0% Missing % Total % Source: GSMR Visitor Survey 2007 Visitors to the Great Smoky Mountains Railroad were also asked to provide additional feedback on their experience and to provide suggestions on how the train excursion experience might be improved. Respondents provided feedback on the route s natural beauty ( magnificent scenery, beautiful trip ), on the staff ( very friendly employees, all staff were friendly, courteous, pleasant, kind, and professional ), and on the services provided ( narration was excellent and made the trip ). Respondents offered the following recommendations to improve the train excursions: narration was good, but it was difficult to hear the speakers were not working; windows need washing hard to see natural beauty; couldn t hear narration in open cars or when whistle was blowing; don t want to pay for parking; should better advertise Railfest; need more time at train stops; and trains were not powered by Steam Engines as advertised. 27

29 VISITOR SPENDING PATTERNS Visitors to the Great Smoky Mountains Railroad contribute to the economy of the Carolina Smokies. Visitors were asked to report their spending on lodging, transportation, food and beverage, shopping, tickets for the railroad, spending at other local attractions, spending for other, and total spending. Of the 435 visitors surveyed, analysis showed the average total spending per group was $678.48; the average total spending per adult was $ Table 2.21 shows the results of the analysis on visitor spending. iha Table 2.21 Visitor spending per group N Mean Minimum Maximum Std. Dev. Spending on Lodging 330 $ $0 $2, Spending on Transportation 330 $82.47 $0 $3, Spending on Food & Beverage 330 $ $0 $1, Spending on Shopping 330 $86.57 $0 $2, Spending on Tickets for GSMR 330 $ $0 $ Spending on Attraction Admissions 330 $24.88 $0 $ Spending on Other 330 $10.65 $0 $1, Total Spending 330 $ $1 $6, Total Spending per Adult 330 $ $0.5 $1, Source: GSMR Visitor Survey 2007 Note: Missing values are replaced with zeros When asked how they would have spent their time had they not visited the Great Smoky Mountains Railroad, more than 40 percent of visitors (40.6%) indicated that they would have attended another event or attraction in the area. More than 35 percent of visitors (36.1%) reported that had they not visited the Great Smoky Mountains Railroad they would have stayed home. Table 2.22 shows the results of this analysis. Table 2.22 Ways time would have been spent in place of visit to railroad Frequency Percent Valid Percent Attended another event or attraction % 40.6% in the area Attended an event or attraction % 17.6% outside of the Carolina Smokies Stayed home % 36.1% Other % 5.7% Subtotal % 100.0% Missing % Total % Source: GSMR Visitor Survey

30 A-III. Employee Profile DEMOGRAPHIC INFORMATION Surveys were collected from 70 full-time and part-time employees of the Great Smoky Mountains Railroad in order to determine the economic impact that the entire firm has on the surrounding region. Employees of the Great Smoky Mountains Railroad have considerably higher educational attainment than the American public at large. Based on survey results, nearly 40 percent of employees (38.57%) of the Great Smoky Mountains Railroad hold a 2-year college degree or higher, compared with just 30 percent of the general public. 1 Table 3.1 illustrates the educational attainment of employees of the Great Smoky Mountains Railroad. Table 3.1 Level of Educational Attainment Frequency Percent Valid Percent Less than High School 2 2.9% 2.9% High School Graduate % 58.0% 2-year College/Technical/Associates % 18.8% Degree 4-year College Degree % 17.4% Master s Degree 2 2.9% 2.9% Subtotal % 100.0% Missing 1 1.4% Total % Source: GSMR Employee Survey 2007 Based on survey results, more than 60 percent (61.43%) of employees of the Great Smoky Mountains Railroad have an annual household income of less than $40,000. This compares with an average median household income value of $37,545 for North Carolina and $48,451 for the entire United States 2. As expected for this region, less than 5 percent of employees have an annual household income over $100,000. Figure 3.1 outlines the annual household income of employees of the Great Smoky Mountains Railroad. 1 2 National figure based on 2000 US Census data. Figures are based on U.S. Census Bureau Data

31 Figure 3.1 Annual household income of employees of the GSMR 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0.0% less than $40,000 - $60,000 - $80,000 - $100,000 $40,000 $59,999 $79,999 $99,999 and higher 63.2% 14.7% 14.7% 2.9% 4.4% Source: GSMR Employee Survey 2007 More than half of employees who completed the survey (51.43%) were women. While the survey was distributed to all employees and collected through central collection boxes, the findings do not necessarily suggest that women are more frequently employed at the Great Smoky Mountains Railroad. Instead, it may simply be a result of the welldocumented fact that women are more likely to complete surveys than men. Table 3.2 highlights the gender of the employees of the Great Smoky Mountains Railroad who completed the survey. Table 3.2 Gender of employees who responded to survey Frequency Percent Valid Percent Female % 52.2% Male % 47.8% Subtotal % 100.0% Missing 1 1.4% Total % Source: GSMR Employee Survey 2007 More than a quarter of responding employees (26.47%) are young professionals under the age of 30, while nearly 12 percent of respondents reported that they are older than 70 years old (11.76%). Figure 3.2 highlights the age of the Great Smoky Mountains Railroad employees who completed the survey. 30

32 Figure 3.2 Age of GSMR employees surveyed 30.0% 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% and older 11.8% 19.1% 13.2% 20.6% 8.8% 26.5% Source: GSMR Employee Survey 2007 Nearly one-third of respondents (32.86%) indicated that they are full-time, year-round employees, while percent of respondents indicated that they are full-time seasonal employees for the Great Smoky Mountains Railroad. Nearly 45 percent of respondents (44.29%) indicated that they work part-time for the Great Smoky Mountains Railroad, either year-round (22.86%) or seasonally (21.43%). Table 3.3 illustrates the employment status of employees of the Great Smoky Mountains Railroad who completed the survey. Table 3.3 Employment status of employees Frequency Percent Full-Time, Year Around (40/hr/wk) Full-Time, Seasonal (40/hr/wk portion of the year) Part-Time, Year Around (less than 40/hr/wk year around) Part-Time, Seasonal (less than 40/hr/wk for portion of the year) Total Source: GSMR Employee Survey 2007 As evident in Table 3.4, more than 70 percent (72.86%) of employees working at the Great Smoky Mountains Railroad do not have children under the age of 18 currently living with them. 31

33 Table 3.4 Number of GSMR employee children living at home Number of Children Frequency Percent Valid Percent None % 77.27% % 15.15% % 4.55% % 1.52% % 1.52% Subtotal % 100.0% Missing % Total % Source: GSMR Employee Survey 2007 While nearly 15 percent of employees (14.29%) have worked at the Great Smoky Mountains Railroad for less than one year, 20 percent of employees have worked at the railroad for more than nine years. Table 3.5 illustrates the number of years employees have worked for the Great Smoky Mountains Railroad. Table 3.5 Number of years employees have worked at the GSMR Frequency Percent Less than a year % 1 3 years % 4 6 years % 7 9 years % 10 years or more % Total % Source: GSMR Employee Survey 2007 Employees of the Great Smoky Mountains Railroad represent eleven distinct North Carolina counties and 3 distinct states. Figure 3.3 highlights the geographic locations where employees permanently live. 32

34 Figure 3.3 Geographic representation of employees permanent home addresses Predictably, the vast majority of employees reported that their permanent home address was located in North Carolina (92.86%). Nearly 6 percent of respondents (5.71%) reported that their permanent residence was located in Florida, while nearly 2 percent of respondents (1.43%) indicated that their permanent residence was located in Georgia. Table 3.6 illustrates these findings. Table 3.6 States of GSMR employees permanent residence Frequency Percent Florida 4 5.7% Georgia 1 1.4% North Carolina % Total % Source: GSMR Employee Survey 2007 As expected, the majority of all employees reported that their permanent home address was located in the North Carolina counties of Jackson (35.71%) or Swain (42.86%). Table 3.7 illustrates these findings. 33

35 Table 3.7 North Carolina counties of permanent residence of GSMR employees Frequency Percent Charlotte % Cherokee % Fahnin % Graham % Haywood % Jackson % Macon % Marion % Polk % Putnam % Randolph % Swain % Total % Source: GSMR Employee Survey 2007 Employees were asked whether they lived in one of the eight counties identified as part of the area named the Carolina Smokies prior to beginning employment with the Great Smoky Mountains Railroad. Slightly more than three-fourths of respondents (75.71%) indicated that they did live in one of the counties that comprise the Carolina Smokies prior to employment with the r Railroad, as evident in Table 3.8 below. Table 3.8 North Carolina county of permanent residence for GSMR employees Frequency Percent Yes % No % Total % Source: GSMR Employee Survey 2007 Of the seventeen employees who indicated that they did not live in one of the eight counties identified as part of the Carolina Smokies prior to beginning employment with the Great Smoky Mountains Railroad, nearly 60 percent (58.82%) moved to the area specifically to work for the Great Smoky Mountains Railroad. Table 3.9 illustrates these findings below. 34

36 Table 3.9 Moving to region of Carolina Smokies Frequency Percent Valid Percent Yes % 58.8% No % 41.2% Subtotal % 100.0% Missing % Total % Source: GSMR Employee Survey

37 EMPLOYEE SPENDING PATTERNS Employees were asked to report their monthly expenditures on a range of items in order to calculate the economic impact of the Great Smoky Mountains Railroad on the surrounding region. The findings are reported in Table Employees spend an average of $ on housing (mortgage and/or rent) per month. While the mean expenditure for housing per month is relatively low, employees have a wide range of housing expenditures that they pay each month ranging from $100 to $1424. This wide range contributes to the wide margin exhibited in the standard deviation ($283.14). Great Smoky Mountains Railroad employees surveyed reported that they spend between $12 and $600 a month on home/renters insurance. Employees average $ on home/renters insurance per month. Employees also reported a wide range of monthly expenditures for utilities, which were identified as including electric, gas, phone, trash, cable, satellite, Internet, and other related expenses. The average monthly expenditure for these expenses was determined to be $ Employees reported that they spend an average of $ per month on car payments and $96.28 per month on car insurance. As evident in Table 3.10, employees also reported a wide range of monthly expenditures for these categories, varying from $190 to $800 per month for car payments and $14 to $450 per month for car insurance. Employees spend an average of $56.76 a month on car maintenance and an average of $ a month for gas and local transportation. Employees spend between $15 and $500 a month on clothing and retail shopping (for an average of $109.26), between $20 and $750 a month on groceries (for an average of $271.87), and between $10 and $600 a month for restaurants and drinking establishments (average $166.10). Employees also spend an average of $95.03 per month on entertainment expenses. Regarding medical expenses, employees spend an average of $ for medical care and $ for health insurance each month. Employees reported that they also spend an average of $76.83 per month in other types of insurance. Employees of the Great Smoky Mountains Railroad who participated in this survey indicated that they spend an average of $128 a month on education and $ on education loans. Employees also reported they spend approximately $ a month in other expenses. 36

38 In all, employees of the Great Smoky Mountains Railroad spend $ a month on the expenses identified. Total monthly expenditures by employees range from a minimum of $205 a month to a maximum of $5893 a month. Table 3.10 Descriptive statistics of employee monthly expenditures N Mean Minimum Maximum Std. Dev. Monthly Expenditures Housing 47 $ $100 $1, Home/Renters Insurance 24 $ $12 $ Utilities 54 $ $32 $ Car Payments 27 $ $190 $ Car Insurance 58 $96.28 $14 $ Car Maintenance and Repair 38 $56.76 $10 $ Gasoline and Local 63 $ $30 $ Transportation Clothing and Retail Shopping 53 $ $15 $ Groceries 63 $ $20 $ Restaurants, Fast Food and 55 $ $10 $ Drinking Establishments Entertainment and Recreation 37 $95.03 $10 $ Medical Care 31 $ $20 $ Health Insurance 31 $ $11 $ Other Insurance 6 $76.83 $14 $ Education 9 $128 $25 $ Other 6 $ $75 $1, Educational Loans 6 $ $100 $ Estimated Total 66 $ $205 $ Source: GSMR Employee Survey 2007 Note: Missing values are not included in these calculations. 37

39 A-IV. Economic and Fiscal Impact This section discusses the economic and fiscal impact of the Great Smoky Mountains Railroad, which is measured both in terms of dollars and jobs created. As mentioned in previous sections, for the purposes of this analysis the Carolina Smokies region was defined as the following eight western North Carolina counties: Buncombe, Cherokee, Clay, Graham, Haywood, Jackson, Macon, and Swain. The counties included in the geographic area were determined based on the range of economic data from the visitor and employee surveys described in the previous sections and analyzed by the researchers. To determine the total economic impact of the Great Smoky Mountains Railroad on the Carolina Smokies economy, the researchers utilized the IMPLAN (IMpact Analysis for PLANing, Minnesota IMPLAN Group 2001) software modeling system and database. IMPLAN is an economic development tool that applies multipliers and performs an input-output analysis in a general equilibrium framework to estimate the economic impact of spending in a local community or region. Many economic impact studies use IMPLAN as a major analysis tool (Arik and Nsiah 2004; Livingston 2001; Baker et al 2000; Rishe 2000). The basic framework used for this study is built around the eight county region of the Carolina Smokies. This region was selected because it represents the permanent residences of the majority of Great Smoky Mountains Railroad s employees and represents the area of focus of the Smoky Mountain Host Tourism Agency. Dollar figures for goods and services purchased within the Carolina Smokies region were entered into an IMPLAN-generated model constructed of the eight counties. IMPLAN then analyzes these dollars to understand the direct and secondary impacts of the railroad on the region. Direct dollars are those spent on goods and services that are available within the regional or local economy and can be directly traced to the Great Smoky Mountains Railroad. Salaries paid and goods purchased by the railroad are examples of direct effects. Direct dollars are then traced by an input-output analysis to detect secondary impact dollar spending. Secondary impact dollars accumulate as a result of both indirect and induced effects. Indirect effects are secondary impacts that result from businesses that make expenditures in order to replenish goods and improve services that have been purchased by direct (initial) impact expenditures. An example of indirect effects would be pens and photocopier paper purchased by a local stationary store to replace that purchased by the railroad. Induced effects are secondary impacts resulting from an increase in household spending by employees who are hired, or current employees paid to work longer hours, to provide the goods and services being purchased. An example of an induced effect is the extra money earned by the manager of the stationary store due to the extra hours the store remains open to meet the needs of the railroad. 38

40 Estimates of secondary impacts are based on a multiplier effect, a widely used economics principle designed to calculate spending that takes place as a result of the ripple effect. The multiplier concept essentially means that every dollar received by business owners and employees is re-spent within the region, which, therefore, multiplies the initial sales and generates revenues in other sectors of the local economy. IMPLAN estimates the magnitude of both primary and secondary impacts for each industry, which forms the socalled multipliers. It should be noted that a portion of direct and secondary dollar spending goes for goods and services that are not purchased in the local community, as well as to pay state and federal taxes. Money used to purchase items that are not available in the local community and money used to pay state and federal taxes leaves the local economy, and so does not continue to circulate within the local economy. To estimate the total economic impact of the Great Smoky Mountains Railroad, as shown in Table 4.1, the data was categorized by payroll expenditures (wages and salaries), other operating expenditures, and Great Smoky Mountains Railroad visitor spending. The analyses of payroll and other operating expenditures are based on the 2007 fiscal year. Table 4.1 Economic Impacts of the Great Smoky Mountains Railroad Direct Impact Indirect Impact Induced Impact Output Impact Total Impact 1 Wages and Salaries $3,649,000 $287,608 $348,757 $4,285,365 2 Operating Expenditures $1,402,961 $221,322 $306,871 $1,931,154 3 Capital Expenditures $545,233 $99,739 $131,889 $776,861 4 Visitor Spending $40,737,921 $6,725,788 $7,330,727 $54,794,436 Total $46,335,115 $7,334,457 $8,118,244 $61,787,816 Employment Impact* 1 Wages and Salaries Operating Expenditures Capital Expenditures Visitor Spending Total Source: IMPLAN analysis * Employment impact is the estimated number of jobs associated with the output impact. The Great Smoky Mountains Railroad paid nearly $3,650,000 in wages and salaries to its full-time and part-time employees and workers. In addition, $636,365 in payroll expenditures was generated through the secondary effects both indirect and induced of the Great Smoky Mountains Railroad. Thus, the Great Smoky Mountains Railroad 39

41 was responsible for contributing almost $4,300,000 in wages and salaries to the eightcounty Carolina Smokies region in In terms of jobs associated with the secondary payroll expenditures, the Great Smoky Mountains Railroad generated 27.3 jobs in total. In addition to payroll expenditures, the Great Smoky Mountains Railroad is responsible for a number of other expenditures such as contracted services, supplies and maintenance, and miscellaneous payments. In direct terms for these expenditures, the Great Smoky Mountains Railroad paid $1,402,961. It generated an additional $528,193 in secondary effects. When direct, indirect, and induced effects are combined, the Great Smoky Mountains Railroad had a total impact of $1,931,154 in other operating expenditures in In terms of jobs generated by the Great Smoky Mountains Railroad s non-payroll operating expenditures, the Great Smoky Mountains Railroad generated 31.5 jobs in total. As described in the previous section, visitor spending accounted for the majority of the economic impact. The visitors spent $40,335,115 in entertainment, food, shopping, transportation, accommodation, and other expenses. When this data was further examined to understand the secondary impact of visitor spending, an additional $1,063,777 was generated. Thus, visitor spending related to the Great Smoky Mountains Railroad was $54,794,436. Further, looking at the employment impact of visitor spending, a total of jobs were created in the local economy. When combined, the direct impact of the Great Smoky Mountains Railroad in terms of payroll expenditures, other operating expenditures, and visitor spending is $46,335,115. The indirect and induced effects of these same categories are $7,334,457 and $8,118,244, respectively. Thus, in terms of dollars, the Great Smoky Mountains Railroad contributes $61,787,816 to the local economy. In terms of employment, the Great Smoky Mountains Railroad created and maintained 56.6 additional jobs to the local economy. Related to the economic impact analysis, one can estimate the fiscal impact of the Great Smoky Mountains Railroad in terms of federal, state, and local taxes. The results of this analysis were broken out into two categories: federal non-defense related taxes and state and local non-education related taxes as shown in Table 4.2. Four tax categories constitute the federal taxes generated by the Great Smoky Mountains Railroad. They are: corporate profit taxes; indirect business taxes; personal taxes, fees, and fines; and other taxes. Together these categories comprise the majority of federal taxes attributed to the Great Smoky Mountains Railroad. A total of $4,670, was contributed in 2007 to federal taxes. In terms of taxes that remain locally, the Great Smoky Mountains Railroad can be credited with $4,898, in tax payments. In this case, sales taxes of $2,004, are the greatest tax source followed by $1,431,037 in property taxes. 40

42 Thus, in addition to its economic impact, the Great Smoky Mountains Railroad provided $9,569, tax dollars in 2007 to support federal, state, and local initiatives. Table 4.2 Fiscal Impact of the Nantahala River Gorge on the Smoky Mountain Host Region Type of Tax Tax Impact Federal Government $6,430, Non-Defense Corporate Profits Tax $883, State/Local Government Non- Education Indirect Business Taxes $659, Personal Taxes, Fees, and Fines $1,824, Other Federal Taxes $3,063, Corporate Profits Tax $131, Dividends $204, Indirect Business Taxes: Property Taxes $1,790, Indirect Business Taxes: Sales Taxes $2,605, Indirect Business Taxes: Other Taxes $537, Personal Taxes, Fees, and Fines $866, Other State/Local Taxes $53, $6,189, Total $12,620, Source: IMPLAN analysis 41

43 A-V. Conclusion and Recommendations The results of this study demonstrate the importance of the Great Smoky Mountains Railroad to the economy of the eight county area of western North Carolina identified as the Carolina Smokies. A staggering 814 jobs are supported through the primary and secondary impacts of the Great Smoky Mountains Railroad and more than $3 million dollars are contributed annually to the state and local economy through property and sales taxes to support regional initiatives. Results from the visitor survey suggest that the Great Smoky Mountains Railroad attracts a diverse population from a geographically diverse area. The internet and word-of-mouth were primary tools that influenced visitors decisions to come to the area. Typical of many heritage and tourism related sites, demographic data collected from visitor surveys revealed that attendees were well-educated and had higher levels of income than the general population. The overwhelming majority of visitors also indicated that this was their first time visiting the Great Smoky Mountains Railroad. These findings have important implications for the Great Smoky Mountains Railroad. With such a broad-based customer base, it can be difficult to develop effective marketing tools that engage past riders and attract new riders. Given the large percentage of new visitors, efforts should be taken to develop a rapport with customers and identify appropriate tools that will continue to draw visitors back to the area to ride the Great Smoky Mountains Railroad. In order to continue attracting a broad array of visitors, the Great Smoky Mountains Railroad should continue its efforts to co-brand itself with other regional tourism attractions. Marketing efforts like the ride and tube help attract a more diverse customer base than those that would exclusively come to the region to ride on the railroad. However, with this comes the added burden of ensuring that the product that is being sold is actually the product being delivered. As mentioned in the section on visitor survey results, several respondents provided additional feedback that the marketing provided by the Great Smoky Mountains Railroad did not actually represent the service that was delivered. Since word-of-mouth plays such a pivotal role in attracting new customers it is critical for the Great Smoky Mountains Railroad to ensure that customers have a satisfying experience in the region. One other note should be made: the results of this study were based 2007 data and survey responses. Since that time, the Great Smoky Mountains Railroad has shut down its Dillsboro operations and dismissed 40 employees due to difficult business conditions. As the national economic slump continues and possibly worsens it will be more critical than ever that regional tourism attractions collaborate regionally to share costs (like marketing) and collectively define their region as a ideal tourist destination. Because of this economic slump and the closure of the Dillsboro operations, the 2008 economic and fiscal impacts are likely to be lower than those discussed in this report. However, tourist attractions such as the Great Smoky Mountains Railroad frequently experience fluctuations in their bottom line based on the state of the overall economy while this current economic slump is having a negative impact on the Great Smoky 42

44 Mountains Railroad and thus on the region what is important is the trend over a period of time. It will be important for the Great Smoky Mountains Railroad to continue to develop innovative and collaborative business techniques to guarantee the continued success of the Great Smoky Mountains Railroad and the continued important role the railroad on the economy of the eight western counties of North Carolina known as the Carolina Smokies. 43

45 PART B An Economic Impact Study of the Nantahala River Gorge Area Outfitters on the Economy of Western North Carolina 44

46 B-I. Introduction ABOUT THE NANTAHALA RIVER GORGE As adventure tourism grows in popularity, tourists are in search of an all inclusive outdoor recreation spot. In the Great Smoky Mountains, outdoor recreation awaits at every turn. There is hiking, mountain biking, trout fishing, horseback riding and whitewater rafting on the great Nantahala River. Miles of rugged mountain beauty surround the Nantahala River, which is located in Western North Carolina s scenic mountains. The Nantahala River Gorge is a leader of family fun and outdoor adventure. The Nantahala River is one of the oldest rivers in the world. It has taken centuries to carve out a canyon so deep that may parts see limited sun, which explains why the Cherokees named it Nantahala land of the noon day sun (Appalachian Rivers) 3. The history of western North Carolina is as old as the first Native Americans. The Carolina Smokies has a rich history with the Cherokee. Nearby is the Qualla Boundary, which is the homeland of the Eastern Band of Cherokee Indians. Throughout the years, this area has grown from rugged mountain people who lived in loosely knit communities to loggers who moved in and sheared the mountainsides, removing old growth forests (Nantahala Gorge) 4. In an effort to preserve the land, the Great Smoky Mountain National Park was created. The Nantahala River is located in the Great Smoky Mountain s Nantahala National Forest. Although the Nantahala River has a history of attracting adventure seeking tourists, whitewater recreation is only a byproduct of power generation at the Nantahala Hydroelectric Power Plant. The power plant has served the Nantahala community since For the next 40 years Tennessee Valley Authority, by contract, determined when the plant would run, thus resulting in unpredictable water releases. In 1983, Nantahala Power and Light began dispatching the 3 About the Nanny: Appalachian Rivers. Apprivers.com December 2008 < 4 Nantahala Gorge Area History. Nantahalariver.net. 31 December 2008 < 45