The Economic Impact of Travel in Minnesota 2013 Analysis
Overview
2013 Highlights Traveler Spending Traveler spending of $10.3 billion generated $17.6 billion in total business sales in 2013 as travel dollars flowed through the state s economy. Travelers to Minnesota destinations spent 3.8% more in 2013 than in 2012. Traveler Counts Minnesota hosted 68.9 million travelers in 2013. Overnight travel grew in 2013 as improving economic conditions and moderating growth in transportation costs encouraged travel. 3
2013 Highlights Jobs A total of 181,901 jobs, with income of $5.1 billion, were sustained by travelers to Minnesota in 2013. Traveler-supported employment grew 3.1% from 2011 to 2013. Taxes Including indirect and induced impacts, travel in Minnesota generated nearly $1.2 billion in state and local taxes and $1.3 billion in Federal taxes in 2013. In the absence of the state and local taxes generated by travelers, each Minnesota household would need to pay $543 to fill the gap. 4
Comparability with previous report The reader should be cautioned about comparing this 2013 analysis with the 2011 analysis that was released in 2012. Several updates and revisions have been incorporated. As a result, some figures presented in this report are different from those in the previous report. The main difference has been in the measurement of international visitation and spending. More detailed and focused data from the National Travel & Tourism Office (NTTO) along with new data sources reporting on the number and size of the international market have resulted in modifications to the international visitation and spending results in this report. While changes have been made, these improvements have resulted in minimal changes to the figures of most importance like total travel spending in Minnesota and the year-over-year changes between travel segments and spending categories. 5
Traveler Spending
A story of strength Travel volume to Minnesota reached 68.9 million With travel growth in Minnesota led by growth in overnight travel and improving consumer sentiment, traveler spending in 2013 grew nearly 7.8% over 2011 levels. Minnesota Travel Volume and Spending US$ Billions 11.0 10.5 10.0 9.5 9.0 8.5 8.0 7.5 7.0 6.5 6.0 2009 2010 2011 2012 2013 Traveler Spending, bls (L) Person-Stays, mls (R) Sources: Longwoods International, NTTO, Stats Can, Tourism Economics Millions 75 70 65 60 55 50 45 40 7
$ Billions Continued growth in traveler spending Traveler spending continued to grow in both 2012 and 2013 even after the strong growth seen in 2011. Traveler spending grew 3.8% in 2013 to reach $10.3 billion. Traveler spending growth has averaged 4.7% per annum over the past four years. Minnesota Traveler Spending US$ Billions 12 $9.6 $9.9 $10.3 10 $9.0 $8.6 8 6 4 2 0 2009 2010 2011 2012 2013 Spending (L) % Change (R) Sources: Longwoods International, NTTO, Stats Can, Tourism Economics 8% 7% 6% 5% 4% 3% 2% 1% 0% 8
Lodging sector leads Traveler spending performance was particularly supported by spending growth in the lodging sector in 2013 Traveler Spending (US$ Million) Sector 2009 2010 2011 2012 2013 % Change Lodging $1,670 $1,788 $1,904 $1,970 $2,123 7.8% F&B $2,034 $2,106 $2,324 $2,381 $2,422 1.7% Retail $1,523 $1,577 $1,704 $1,738 $1,771 1.9% Rec $1,512 $1,534 $1,514 $1,565 $1,620 3.5% Trans $804 $900 $995 $1,099 $1,149 4.6% 2nd homes $548 $567 $602 $632 $657 4.0% Air $474 $490 $538 $537 $554 3.0% TOTAL $8,566 $8,962 $9,581 $9,922 $10,297 3.8% % Change 4.6% 6.9% 3.6% 3.8% 9
Traveler spending by sector Minnesota Traveler Spending 10 Lodging 20.6% Air 5.4% 2nd homes 6.4% Trans 11.2% F&B 23.5% Rec 15.7% Sources: Longwoods International, NTTO, Stats Can, Tourism Economics F&B: Retail: Lodging: Trans: Rec: 2nd homes: Air: Food & Beverages Retail Shopping Accommodations Sales Non-Air Transportation Recreation & Entertainment 2nd Home Rental Spending Air Transportation Spending Retail 17.2% F&B spending represents nearly a quarter of all traveler spending. With growth in both occupancy and room rates, the share of the traveler dollar spend on lodging has grown to 20.6% in 2013. Retail purchases represent 17.2% of every traveler dollar.
Traveler spending by sector Minnesota Traveler Spending by Year, Share of Total 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 5.5% 5.5% 5.6% 5.4% 5.4% 9.4% 10.0% 10.4% 11.1% 11.2% 17.7% 17.1% 15.8% 15.8% 15.7% 17.8% 17.6% 17.8% 17.5% 17.2% 23.7% 23.5% 24.3% 24.0% 23.5% 19.5% 20.0% 19.9% 19.9% 20.6% 2009 2010 2011 2012 2013 Air Trans Rec Retail F&B Lodging The share of the traveler dollar spent on lodging has grown since 2011 with growth in both rooms rented and ADR. In 2013, growth in transportation costs moderated and the share of the traveler dollar dedicated to transportation remained steady. Sources: Longwoods International, NTTO, Stats Can, Tourism Economics 11
Traveler spending by sector Minnesota Traveler Spending by Year, Billions of $ $12 $10 $8 $6 $4 $0.6 $0.5 $0.5 $1.1 $0.5 $1.0 $1.1 $0.5 $0.9 $0.8 $1.5 $1.6 $1.6 $1.5 $1.5 $1.7 $1.7 $1.8 $1.5 $1.6 $2.0 $2.1 $2.3 $2.4 $2.4 $2 $1.7 $1.8 $1.9 $2.0 $2.1 $0 2009 2010 2011 2012 2013 Sources: Longwoods International, NTTO, Stats Can, Tourism Economics 12 Air Trans Rec Retail F&B Lodging F&B: Retail: Lodging: Trans: Rec: 2nd homes: Air: Food & Beverages Retail Shopping Accommodations Sales Non-Air Transportation Recreation & Entertainment 2nd Home Rental Spending Air Transportation Spending
Percentage Distribution Travelers by market Minnesota hosted 68.9 million travelers in 2013. The vast majority were from domestic markets (98%) and came for leisure (87%). Travelers by Market 100% 80% 60% 40% 20% 0% Both International Business Overnight Domestic Leisure Day Purpose Day/Overnight Market Travelers by Market (Millions) 2011 2012 2013 % Chng Share Purpose 70.36 68.72 68.93 0.3% 100.0% Leisure 60.25 59.22 59.80 1.0% 86.7% Business 7.83 7.19 7.04-2.1% 10.2% Both 2.28 2.31 2.10-9.4% 3.0% Stay 70.36 68.72 68.93 0.3% 100.0% Day 39.69 39.18 38.63-1.4% 56.0% Overnight 30.67 29.55 30.31 2.6% 44.0% Market 70.36 68.72 68.93 0.3% 100.0% Domestic 69.16 67.50 67.68 0.3% 98.2% Canada 0.95 0.97 0.98 1.0% 1.4% Overseas 0.26 0.25 0.27 8.4% 0.4% Note: travelers are counted on a person-trip basis 13
Traveler spending by market Traveler Spending By Market Domestic 91.8% Overseas 5.5% Canada 2.6% Domestic travel accounted for 92% of all traveler spending in the state of Minnesota. Canadian and overseas travelers spend more per trip than domestic travelers. International markets accounted for 1.8% of travelers, but 8.2% of total traveler spending. 14
Overnight and day markets Minnesota hosted 68.9 million travelers in 2013. The majority of travelers were day travelers (56%). While only 44% of all trips, overnight traveler spending accounts for more than 80% of all traveler spending, generating $8.3 billion. Overnight travelers spent $274 in Minnesota during their trip. Trips and Spend 2013, in millions Total Travelers 68.9 Overnight 30.2 Day 38.6 Total Spending $10,297 Overnight $8,286 Day $2,010 Per Traveler Spending $149 Overnight $274 Day $52 Traveler Spending Breakout Share of Total 100% 90% 80% 70% With overnight travelers staying an average of 3.09 days, per person per day spending for the overnight traveler was $89. 60% 50% 40% 30% 20% 10% 0% Trips Spending Day Overnight 15
Traveler spending by market segment Leisure travel s share of traveler spending accounted for 89.5% of all traveler spending in Minnesota in 2013. Overnight travelers spent $8.3 billion in Minnesota in 2013, 80.5% of the total. Domestic travelers represent 92% of all traveler spending. 16 Purpose Business $1.1 Day $2.0 Domestic $9.5 Leisure $9.2 Overnight $8.3 Overseas $0.6 Canada $0.3 Total $10.3 Total $10.3 Total $10.3 Purpose Traveler Spending in 2013 (US$ Billion) Stay Share Stay Market Market Business 10.5% Day 19.5% Domestic 91.8% Leisure 89.5% Overnight 80.5% Overseas 5.5% Canada 2.6%
Percentage distribution Traveler spending by market segment Spending by Market 100% 90% 80% 2.6% 5.5% Canada Overseas 70% 60% 50% 40% Leisure 89.5% Overnight 80.5% Domestic 91.8% 30% 20% 10% 0% Business Day 19.5% 10.5% Purpose Stay Market Sources: Longwoods International, NTTO, Stats Can, Tourism Economics 17
State Travel Impacts
How traveler spending generates impact Travelers create direct economic value within a discrete 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. Lastly, the induced impact is generated when employees whose incomes are generated either directly or indirectly by travel, spend those incomes in the state economy. 19
Travel generated sales Travel Sales (US$ Million) Direct Indirect Induced Total Agriculture, Fishing, Mining - 43.0 35.9 78.8 Construction and Utilities - 262.9 102.9 365.8 Manufacturing - 436.9 285.7 722.6 Wholesale Trade - 103.5 173.7 277.2 Air Transport 553.7 12.8 24.7 591.2 Other Transport 434.9 146.0 64.9 645.8 Retail Trade 1,771.0 12.8 289.9 2,073.6 Gasoline Stations 714.5 1.1 20.6 736.2 Communications - 250.6 142.2 392.8 Finance, Insurance and Real Estate 657.1 846.3 1,326.7 2,830.0 Business Services - 813.3 281.1 1,094.4 Education and Health Care - 7.7 734.2 741.9 Recreation and Entertainment 1,620.0 35.3 53.0 1,708.3 Lodging 2,123.1 2.5 2.2 2,127.8 Food & Beverage 2,422.4 104.3 227.8 2,754.6 Personal Services - 96.7 191.9 288.6 Government - 121.1 71.2 192.3 TOTAL 10,296.8 3,296.6 4,028.6 17,622.0 % Change (2011-13) 7.83% 7.52% 8.57% 7.94% 20 Traveler spending of $10.3 billion generated total travel economic impact of $17.6 billion in 2013 as traveler dollars flowed through the Minnesota economy.
FIRE F&B Lodging Retail Trade Recreation Bus. Services Education Gas Manu Other Transp Air Transport Comm. Travel sales All business sectors of the Minnesota economy benefit from travel activity directly and/or indirectly. Sectors that serve the travel industry, like business services, gain as suppliers to a dynamic industry. Travel Sales by Industry $ million 3,000 2,500 2,000 1,500 1,000 500 0 Induced Indirect Direct F&B: Food and Beverage FIRE: Finance, Insurance, Real Estate Bus. Services: Business Services Gas: Gasoline Stations Other Transp: Other Transportation Manu.: Manufacturing Personal Serv.: Personal Services Comm: Communication Significant indirect and induced benefits 21
Travel GDP (value added) Travel GDP (Value Added) (US$ Million) Direct Indirect Induced Total Agriculture, Fishing, Mining - 13.2 12.1 25.2 Construction and Utilities - 198.1 77.3 275.5 Manufacturing - 118.0 72.1 190.1 Wholesale Trade - 86.0 144.3 230.3 Air Transport 286.2 6.5 12.4 305.1 Other Transport 256.1 83.1 37.8 377.0 Retail Trade 446.7 8.4 190.9 646.0 Gasoline Stations 71.5 0.8 14.2 86.4 Communications - 126.5 80.2 206.7 Finance, Insurance and Real Estate 626.0 600.9 902.7 2,129.5 Business Services - 553.7 194.9 748.6 Education and Health Care - 3.8 409.8 413.6 Recreation and Entertainment 961.2 18.1 28.7 1,008.1 Lodging 1,565.6 1.3 1.1 1,567.9 Food & Beverage 1,248.8 57.3 134.9 1,441.0 Personal Services - 54.0 86.7 140.7 Government - 70.6 24.2 94.7 TOTAL 5,462.0 2,000.3 2,424.2 9,886.6 % Change (2011-13) 7.78% 7.25% 6.77% 7.42% 22 Travel generated $9.9 billion in state GDP in 2013, representing 3.3% of the total Minnesota economy. This excludes all import leakages to arrive at the economic value generated by travel.
FIRE Lodging F&B Recreation Bus. Retail Trade Education Other Transp Air Transport Construction Wholesale Comm. Travel GDP (value added) The industry that has the largest economic contribution from traveler spending is the Finance, Insurance and Real Estate (FIRE) industry. Travel GDP (Value Added) $ million 2,500 2,000 1,500 1,000 500 Direct Indirect Induced 0 23
Travel employment The travel sector supported 181,901 jobs, growing 3.1% in the two years between 2011 and 2013. 5.1% of all jobs in Minnesota one of every 19.7 jobs are supported by traveler spending Travel Employment Direct Indirect Induced Total Agriculture, Fishing, Mining - 162 132 294 Construction and Utilities - 983 362 1,345 Manufacturing - 1,076 536 1,612 Wholesale Trade - 532 892 1,424 Air Transport 5,101 38 74 5,213 Other Transport 6,032 1,268 635 7,935 Retail Trade 13,370 195 4,538 18,102 Gasoline Stations 1,546 17 307 1,870 Communications - 988 471 1,460 Finance, Insurance and Real Estate 4,371 4,037 4,492 12,901 Business Services - 7,538 2,752 10,290 Education and Health Care - 123 7,454 7,576 Recreation and Entertainment 25,724 886 1,064 27,674 Lodging 29,106 28 24 29,159 Food & Beverage 43,869 2,017 4,226 50,112 Personal Services - 1,062 2,633 3,696 Government - 877 362 1,239 TOTAL 129,119 21,826 30,955 181,901 % Change (2011-13) 3.0% 3.0% 3.4% 3.1% Indirect impacts quantify the supply chain to those industries directly providing goods or services to travelers. 24 Induced impacts are generated when employees whose incomes are generated either directly or indirectly by travel, spend those incomes in the state economy.
F&B Lodging Recreation Retail Trade FIRE Bus. Services Other Transp Education Air Transport Personal Serv. Gas Manu Travel employment Travel is an employment intensive industry directly supporting 29,106 lodging jobs, nearly 44,000 jobs in the food & beverage industry and more than 25,700 jobs in recreation and entertainment in 2013. Secondary benefits are realized across the entire economy through the supply chain and incomes as they are spent. Travel Employment by Industry Thousands 60 50 40 30 20 10 0 Induced Indirect Direct Significant indirect and induced benefits 25
Travel employment intensity Direct travel employment is a significant part of employment for several industries 95% of lodging, 31% of recreation, and 23% of food & beverage employment is supported by travel spending. Travel Employment Intensity by Industry Lodging 94.7% Air Trans. 38.2% Recreation 30.8% Food & bev. 22.7% Retail 3.8% 0% 20% 40% 60% 80% 100% 26
Travel personal income Travel Labor Income (Compensation) (US$ Million) Direct Indirect Induced Total Agriculture, Fishing, Mining - 7.1 8.4 15.5 Construction and Utilities - 76.0 28.5 104.5 Manufacturing - 68.9 36.4 105.4 Wholesale Trade - 47.5 79.7 127.3 Air Transport 146.8 3.3 6.4 156.5 Other Transport 199.6 64.2 28.6 292.4 Retail Trade 288.4 5.8 129.5 423.7 Gasoline Stations 40.0 0.4 7.9 48.3 Communications - 55.0 28.6 83.6 Finance, Insurance and Real Estate 93.6 180.0 232.7 506.3 Business Services - 423.9 151.0 574.9 Education and Health Care - 3.9 388.6 392.5 Recreation and Entertainment 539.1 15.9 20.4 575.4 Lodging 554.8 0.7 0.6 556.0 Food & Beverage 805.0 36.6 88.3 929.9 Personal Services - 50.4 86.0 136.4 Government - 75.1 28.0 103.1 TOTAL 2,667.1 1,114.6 1,349.8 5,131.5 % Change (2011-13) 6.7% 7.1% 7.5% 7.0% 27
F&B Recreation Bus. Services Lodging FIRE Retail Trade Education Other Transp Air Transport Personal Serv. Wholesale Tr. Manu Travel personal income Significant employment in F&B and recreation drives high labor income in those industries. Above average wages support labor income in supplier industries. The average salary of workers directly supported by traveler spending was $20,650 in 2013. Travel Labor Income by Industry $ million 1,000 900 800 700 600 500 400 300 200 100 0 Direct Indirect Induced Significant indirect and induced benefits 28
Travel tax generation Traveler Generated Taxes (US$ Million) Tax Type 2011 2012 2013 Federal Taxes Subtotal 1,215.0 1,264.1 1,310.2 Corporate 206.7 218.1 224.2 Indirect Business 147.2 153.9 159.1 Personal Income 314.2 325.6 338.2 Social Security 546.9 566.6 588.6 State and Local Taxes Subtotal 1,081.2 1,114.0 1,155.8 Corporate 34.0 35.9 36.9 Personal Income 129.5 134.1 139.3 Sales 389.6 410.4 433.1 Lodging 51.1 53.0 56.9 Property 326.3 328.2 333.7 Excise and Fees 141.3 142.7 145.7 State Unemployment 9.4 9.7 10.1 TOTAL 2,296.2 2,378.2 2,466.0 Taxes of $2.5 billion were directly and indirectly generated by travel in 2013. State and local taxes alone tallied $1.15 billion, growing more than $40 million in 2013. Each household in Minnesota would need to be taxed an additional $543 per year to replace the traveler taxes received by state and local governments. 29
Travel tax generation Traveler Generated Taxes - State and Local Government Revenues (US$ Million) Tax Type Direct Indirect/ Induced Total State Tax Subtotal 394.8 281.6 676.4 Corporate 17.9 18.9 36.9 Personal Income 71.9 67.4 139.3 Sales 262.4 157.8 420.2 Lodging 0.0 0.0 0.0 Property 22.1 12.1 34.2 Excise and Fees 15.2 20.5 35.7 State Unemployment 5.3 4.8 10.1 Local Tax Subtotal 335.9 143.4 479.3 Corporate 0.0 0.0 0.0 Personal Income 0.0 0.0 0.0 Sales 9.0 3.9 12.9 Lodging 56.9 0.0 56.9 Property 193.2 106.2 299.5 Excise and Fees 76.8 33.2 110.0 State Unemployment 0.0 0.0 0.0 Of the $1.15 billion in state and local taxes traveler receipts, the state received $676 million Of the $676 million in state revenues, nearly $140 million accrues from income tax collections. Local governments received nearly $480 million in tax receipts from travel-generated activity. 30
Methodology and Background
Definitions and terms A visitor includes all overnight and day travelers - traveling outside of their usual environment, defined as beyond 50 miles The analysis measures the economic impact of travelers to the State of Minnesota, including: Day trips and overnight travelers Domestic, Canadian and overseas travelers Leisure and business travel 32
Quantifying the travel and tourism economy Most economic sectors such as financial services, insurance, or construction are easily defined within a country s national accounts statistics. Travel 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. Travel spans nearly a dozen sectors including lodging, retail, real estate, air passenger transport, food & beverage, car rental, taxi services, travel agents, and recreation (including museums, theme parks, sports events and others). 33
Methods and data sources Domestic traveler 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 (TE) then adds and cross-checks several categories of spending: Overseas traveler spending (source: OTTI, TE) Canada traveler spending (source: Statistics Canada, TE) Spending on air travel which accrues to MN airports and locally-based airlines Gasoline purchases by travelers (source: TE calculation) Recreational second home expenditures (source: US Census) Smith Travel Research (lodging performance) Local level lodging tax data Sales tax by industry (MN Department of Revenue) Industry-by-industry employment and personal income (Bureau of Economic Analysis and Bureau of Labor Statistics) 34
Methods and data sources An IMPLAN model was utilized for the state of Minnesota. This traces the flow of travelerrelated expenditures through the local economy and their effects on employment, wages, and taxes. IMPLAN also quantifies the indirect (supplier) and induced (income) impacts of travel. Tourism Economics then cross-checks these findings with employment and wage data for each sector to ensure the findings are within reasonable ranges. The source of the employment and wage data is the Regional Economic Information System (REIS), Bureau of Economic Analysis, U.S. Department of Commerce. This is more comprehensive than Bureau of Labor Statistics (ES202/QCEW) data. The main definitional difference is that sole-proprietors, which do not require unemployment insurance, are not counted in the ES202 data. 35
Description of spending categories Spend Category Lodging Recreation Air transport Other transport Shopping Service stations Second homes Food and beverage Description Includes traveler spending in accommodation sector. This includes food and other services provided by hotels and similar establishments. Includes traveler spending within the arts, entertainment and recreation supersector. Includes the local economic activity generated by travelers within the air transport (airline) and support services (on airport) sectors. Includes all forms of local transport services such as taxis, limos, trains, rental cars, and buses. Includes traveler spending within all retail sectors within the Minnesota economy. Traveler spending on gasoline. Only the margin counts as local economic impact. Spending associated with the operation of seasonal second homes for recreational use as defined by the Census Department. This is based on an imputed rent calculation over an estimated peak season. Includes all traveler spending at restaurants and bars. 36
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