The Economic Impact of Tourism in Walworth County, Wisconsin July 2013
Key themes for 2012 The Walworth County, Wisconsin visitor economy continued its brisk growth in 2012. Visitor spending rose 11% after a 13.8% increase in 2011. Visitor spending of nearly $455 million generated more than $600 million in total business sales in 2012 as tourism dollars flowed through the Walworth County economy. Total tourism business sales sustained 6,566 jobs, both directly and indirectly. With continued strong room demand, visitor spending in the first quarter of 2013 grew 10% over the corresponding period in 2012. 2
Visitor Spending
$ Millions Visitor spending The Walworth County tourism industry continued to grow briskly in 2012, reaching $455 million in business sales. Visitor Spending and Impacts Walworth County Millions Pch County 2010 2011 2012 Change Lodging $134.1 $148.6 $167.1 12.45% Food & Beverages $84.2 $97.5 $107.1 9.87% Retail $75.5 $86.4 $91.6 6.03% Recreation & Entertainment $39.8 $45.2 $51.0 12.79% Local Transportation $26.5 $31.9 $38.1 19.50% Total $360.1 $409.7 $455.0 11.07% Growth Rate 13.75% 11.07% The 11% growth in 2012 follows a very strong 13.8% in 2011. 4 Tourism Industry Sales US$ Millions 500 450 400 350 300 250 200 150 100 50 0 $360.1 $409.7 $455.0 2010 2011 2012 Total Source: Tourism Economics Growth Rate 16% 14% 12% 10% 8% 6% 4% 2% 0%
Lodging Food & Beverages Retail Recreation & Entertainment Local Transportation Visitor spending by sector $ Million, 2012 values shown 180 160 140 120 100 167 107 92 2011 2012 Travelers spent $107 million on food & beverages and $167 million in the lodging sector last year. The retail sector received more than $92 million from visitors. 80 60 40 20 0 51 38 Visitor lodging sales grew more than 12% in 2012, with recreational visitor spending growing nearly 13%. 5
Visitor spending by sector Visitor Spending by Sector Retail 20% Recreation & Entertainment 11% Lodging purchases comprise 37%of the visitor dollar in Walworth County with food and beverages spending following at around 24%. Food & Beverages 24% Local Transportation 8% Twenty cents of every visitor dollar spent in Walworth County in 2012 was spent shopping in retail stores. Lodging 37% Source: Tourism Economics 6
Visitor spending by sector Walworth County's Visitor Spending by Year, Millions of $ $500 $450 $400 $350 $300 $250 $200 $150 $100 $50 $27 $40 $76 $84 $32 $45 $86 $98 $38 $51 $92 $107 $134 $149 $167 Local Transportation Recreation & Entertainment Retail Food & Beverages Lodging Visitor spending has grown an average of 12% annually since 2010. Spending growth on food and beverages and on recreation has outperformed overall spending growth. $0 2010 2011 2012 Source: Longwoods International, Tourism Economics, OTTI 7
Q1 2013 Analysis
Room revenue Room revenue reached nearly $12 million in the 1 st quarter of 2013, growing nearly 17%. Room revenue in 2013 was driven by significant increases in demand. Walworth County Hotel Room Revenue $ millions 14 12 10 8 6 4 2 0 2008 2009 2010 2011 2012 2013 Source: Smith Travel Research 9
1 st quarter lodging performance Walworth County 1st Quarter Hotel Metrics 25% Revenue 20% Demand 15% 10% 5% Growth in 1 st quarter room demand grew more than 14% in 2013. Revenue from rooms grew nearly 17% in 2013. These results are the strongest since 2008. 0% -5% -10% -15% -20% 2007 2008 2009 2010 2011 2012 2013 1 st quarter room demand surpassed 100,000 rooms for the first time in 2013. Source: Smith Travel Research 10
1 st quarter lodging performance Bed Tax Receipts, 2012Q1 and 2013Q1 $160,000 2012QTR1 $140,000 2013QTR1 $120,000 $100,000 $80,000 $60,000 $40,000 $20,000 $- The increases seen in bed tax collections by municipalities in Walworth County are similar to the revenue growth seen in the previous slide. Bed tax collections increased 13% in Q1 of 2013 with lodging revenue growing 17%. The two largest municipalities by bed tax collections, Lyons and the City of Delavan, both grew bed tax receipts by more than 20% in the first quarter of 2013. 11
2013 Q1 growth of visitor spending Visitor spending grew strongly in the first quarter of 2013. As stated, lodging sector revenue grew nearly 17% as both room demand and rates grew. Increased volumes of travelers comprised most of the visitor sales growth as most nonlodging categories saw slower price growth. In total, visitor spending grew 10% in the first quarter of 2013 relative to the same period in 2012. Walworth County 2013 Q1 Tourism Spend % change year ago 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% Lodging F&B Retail Rec Trans 2nd homes Source: Tourism Economics Total 12
2013 Q1 visitor spending Visitor spending grew strongly in the first quarter of 2013. After reaching $77 million in 2012, visitor spending reached $85 million in Q1 of 2013. Walworth County Visitor Spending $ Millions 180 160 140 120 100 80 60 40 20 $84.7 $77.0 $109.8 $160.2 2011 2012 2013 $108.0 0 Q1 Q2 Q3 Q4 Source: Tourism Economics 13
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. 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. 15
Direct impacts of visitor spending Visitor Spending and Impacts Walworth County and Wisconsin Visitor Spending Employment Labor Income Millions Percent Direct Percent Millions - Direct Percent County 2010 2011 2012 Change 2010 2011 2012 Change 2010 2011 2012 Change Walworth County $360.1 $409.7 $455.0 11.07% 4,802 5,159 5,446 5.57% $84.3 $95.0 $101.8 7.16% Wisconsin $9,197.3 $9,899.2 $10,394.7 5.01% 128,324 128,541 130,388 1.44% $2,307.2 $2,376.3 $2,449.1 3.06% Share of State 3.92% 4.14% 4.38% 3.74% 4.01% 4.18% Over the past two years, Walworth County s visitor spending has out-performed that of the state. The $455 million in visitor spending directly supported 5,446 jobs in Walworth County in 2012. Business Day The 5,446 jobs in Kenosha County provided more than $100 million in wages and benefits to those employees. 16
Total impacts of visitor spending Total Tourism Impacts Walworth County and Wisconsin Business Sales Employment Labor Income Total Percent Total Percent Millions - Total Percent County 2010 2011 2012 Change 2010 2011 2012 Change 2010 2011 2012 Change Walworth County $486.5 $547.9 $604.8 10.37% 5,875 6,266 6,566 4.79% $125.0 $136.9 $145.0 5.94% Wisconsin $15,003.2 $16,022.6 $16,793.3 4.81% 180,608 181,320 183,786 1.36% $4,292.2 $4,376.0 $4,512.1 3.11% Share of State 3.24% 3.42% 3.60% 3.25% 3.46% 3.57% 2.91% 3.13% 3.21% Visitor spending supported a total of more than $600 million in business sales in Walworth County. 6,566 Walworth County jobs were supported by visitor spending in 2012. Business Day 17
Tax impacts of visitor spending State and local governments benefitted by collecting $57 million in tax revenue coming from visitor activity in Walworth County. Walworth s share of total state taxation grew as visitor spending growth in the county outpaced the state. Tourism Tax Impacts Walworth County and Wisconsin Taxes State and Local Federal Millions Percent Millions Business Day County 2010 2011 2012 Change 2010 2011 2012 Walworth County $48.4 $52.9 $57.4 8.47% $34.4 $38.0 $41.1 Wisconsin $1,202.1 $1,269.8 $1,312.4 3.35% $917.6 $944.5 $976.9 Share of State 4.03% 4.17% 4.38% 18
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. 20
What 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 21
Methods and data sources Domestic visitor expenditure estimates are provided at the state level 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: Overseas visitor spending (source: OTTI, TE) Canada visitor spending (source: Statistics Canada, TE) Room 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) 22
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: 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. 23
Local data sources County, town, city, and village data were then compiled for all Wisconsin Municipalities. This included premier resort tax receipts, room taxes, property taxes. In certain cases, zip code level data on employment, income, and establishments was analyzed by sector for lodging, food & beverage, retail, recreation, and transportation from the US Census Zip Business Patterns as a further anchor to the Tourism Economics model. Seasonal employment trends were then analyzed to determine tourismdriven peak employment. Multipliers were scaled from the state level to the local level using industry and population data to determine linkages and leakages through the supply chain and consumption patterns. 24
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: info@tourismeconomics.com. 25
For more information: Adam Sacks, President adam@tourismeconomics.com Christopher Pike, Senior Economist cpike@tourismeconomics.com 26