The Strengthening of Tourism in New Jersey 2011 Market Performance and Economic Impact
Knowing the NJ Visitor
2011 market overview Double-digit increase in overnight leisure visits Gains across all regions Gambling participation reverses direction showing first increase in 5 years New Jersey gains market share of US New Jersey posts excellent (and improved) Destination Satisfaction ratings Compared to its competition, New Jersey visitors are older and have higher incomes 3
Domestic visitation a new high New Jersey Domestic Trip Volume millions 90 20% 80 70 60 50 40 30 20 10 0 2.1% 3.4% -4.0% -9.0% 7.2% 14.6% 2006 2007 2008 2009 2010 2011 Person-Stays % Change Source : Tourism Economics 15% 10% 5% 0% -5% -10% -15% 4
Domestic visitation by trip purpose 5 New Jersey Domestic Trip Volume by Year, by trip purpose 90 80 70 32.4 Overnight 60 27.8 30.2 Leisure 28.3 27.6 28.0 Overnight 50 Business 4.5 40 4.9 5.2 54 5.4 42 4.2 Day Leisure 4.5 30 Day Business 29.4 30.2 34.9 29.8 30.5 20 26.3 10 0 9.6 8.5 7.7 6.0 7.2 7.8 2006 2007 2008 2009 2010 2011 Source: Longwoods International, Tourism Economics, OTTI
NJ gains substantial share in 2011 Market Share OVERNIGHT LEISURE PERSON-STAYS 6
Where do NJ visitors go? New Jersey Destination Regions OVERNIGHT LEISURE SHARE OF PERSON-STAYS Greater Atlantic City 39.4% Gateway 18.9% Southern Shore 18.8% Shore 12.9% Delaware River 5.1% Skylands 50% 5.0% 7
Where do NJ visitors come from? Two-thirds of New Jersey visitors come from tri-state area 15.1% Pennsylvania 5.3% Maryland 4.6% North Carolina 3.1% California 30%Florida 3.0% Chart 21 Segment: 2011 Overnight Leisure Person-Stays (%) New Jersey N = 1,110 household count 2.4% Massachusetts 2.2% Ohio 2.1% Georgia 2.0% Connecticut 8
Where do NJ visitors stay? Accommodations New Jersey OVERNIGHT LEISURE PERSON-STAYS 9
Importance of seasonal second homes Comparing Second Home and Hotel Markets County Units $ million Cape May 50,089 $ 1,845 Ocean 44,606 $ 1,174 Atlantic 16,763 $ 442 Monmouth 9,656 $ 254 Sussex 2,695 $ 42 Other 6069 6,069 107 Total NJ second homes 129,878 3,863 Total NJ hotel rooms / revenue 98,451 $ 2,372 Second home data source: US Census Hotel room and revenue data source: Smith Travel Research 10
How satisfied were NJ visitors? Overall Satisfaction OVERNIGHT LEISURE PERSON-STAYS 11
NJ visitors tend to be wealthier DEMOGRAPHICS Average $84,311 $101,748 $107,351 $91,893 $95,798 $88,721 $87,716 $94,000 $90,033 Chart 13 Segment: 2011 Overnight Leisure Person-Stays (%) New Jersey N = 1,112 household count 12
Summer generates half of NJ s tourism business TRIP TIMING Chart 33 Segment: 2009-2011 Overnight Leisure Person-Stays (%) New Jersey N = 1,112 household count 13
NJ is the most romantic of the competition Travel Party Composition TRIP CHARACTERISTICS Average 2.32 2.38 2.42 2.32 2.24 2.39 2.20 2.28 2.40 Chart 39 Segment: 2011 Overnight Leisure Stays (%) New Jersey N = 1,009 household count 14
NJ visitors are also more active than average New Jersey Activity Index 426 NJ Activity Participation vs. US 185 154 U.S. Activity Participation = 100 130 127 125 120 108 93 90 Gamble Beach, Waterfront Night Life Entertainment Dining Concert, Play, Dance Chart 51 Segment: 2011 Overnight Leisure Stays New Jersey N = 1,112 household count Shows (auto, boat, antique, etc.) Golf Shopping Hunt, Fish 15
The value of the visitor economy
Benefits to business Tourism is an integral component of the New Jersey economy. The industry's spending recovery accelerated in 2011 with a 7.1% rise in visitor spending. In 2011, total tourism demand in the State of New Jersey tallied $38 billion. Tourism demand has recovered the losses from the recession and is just shy of the all-time high reached in 2007. 17
Benefits to households and government Tourism spending directly supports 312,000 jobs in New Jersey and 486,000 jobs including indirect and induced impacts. These jobs representing 9.8% of total employment or 1 in 10.2 jobs in New Jersey. Including indirect and induced impacts, tourism in New Jersey generated $4.4 billion in state and local taxes. In the absence of the state and local taxes generated by tourism, each NJ household would need to pay $1,380 to maintain governmental revenues. 18
Industry indicators tell recovery story State bed tax grew 7.4% in 2011. Room demand grew 5.1% and an increasing average daily rate meant room revenue grew 6.9%. Average room rates in New Jersey grew to $106. Tourism-related employment turned upward in 2011, growing 0.6% from the prior year. 19
Every county experienced growth 2011 Growth in Tourism Industry Sales % change 14% 12% 10% 8% 6% 4% 2% 0% Cape Atlantic Monmouth May Gloucester Ocean Camden Hudson Passaic Warren Somerset Mercer Middlesex Burlingtonn Unionn Sussex Bergen Cumberland Morris Essex Hunterdonn Salem 20
Hurricanes hurt end of the shore season State bed tax receipts % change 8.0% Jan-July July Aug-Sept 6.0% Full Year 40% 4.0% 2.0% 0.0% -2.0% Atlantic Cape May Ocean Monmouth -4.0% -6.0% Source: NJ Treasury 21
But the rest of NJ surged State bed tax receipts % change 35% 30% 25% Jan-July Aug-Sept 20% 15% 10% 5% 0% Bergen Burlington Camden Cumberland Essex Gloucester Hudson Hunterdon Mercer Middlesex Morris Passaic Salem Somerset Sussex Union Warren Source: NJ Treasury 22
Structure of Analysis
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. 24
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 25
The Tourism Satellite Account The TSA was conceived by the UN World Tourism Organization and has since been ratified by the UN, Eurostat, t and OECD. The standard has been adopted by over fifty countries around the world and a growing number of US States. The TSA deals with the challenge of measuring tourism in two important ways: Defines the tourism economy Provides methodology for calculating tourism GDP in a way that is consistent with economic accounts 26
Illustrating the concepts Travel & Tourism Industry Travel & Tourism Economic Impact The direct effect of visitor spending Focus of Tourism Satellite Account T&T DIRECT The flow-through effect of T&T all demand across the economy ACCOMMODATION ACCOMODATION CATERING, ENTERTAINMENT RECREATION, TRANSPORTATION &OTHER TRAVEL RELATED SERVICES Expands the focus to measure the overall impact of T&T on all sectors of the economy PRINTING/PUBLISHING, UTILITIES FINANCIAL SERVICES, SANITATION SERVICES FURNISHINGS AND EQUIPMENT SUPPLIERS, SECURITY SERVICES, RENTAL CAR MANUFACTURING, TRANSPORTATION ADMINISTRATION, TOURISM PROMOTION, SHIP BUILDING, AIRCRAFT MANUFACTURING, RESORT DEVELOPMENT, GLASS PRODUCTS, IRON/STEEL T&T INDIRECT T&T INDUCE FOOD & BEVERAGE SUPPLY, RETAILERS BUSINESS SERVICES, WHOLESALERS, COMPUTERS, UTILITIES, MANUFACTURERS, HOUSING, PERSONAL SERVICES ED 27
Detailed State Results
A recovery in tourism spending Tourism Industry Sales US$ Billions $ Billion ns $38 8% $38 $37.3 $37.0 6% $37 $36.6 $37 4% $36 $36 $35.55 2% $35 $35 $34.5 $34.3 $34.6 0% $34-2% $34 $33-4% $33-6% 2005 2006 2007 2008 2009 2010 2011 Tourism Industry Sales % Change Source : Tourism Economics 29
Tourism industry sales by visitor type 100% 90% 0.4% Canada 8.3% Overseas Percentag ge distributi ion 80% 70% Leisure 60% Overnight 84.0% 91.7% Domestic 50% 91.3% 40% 30% 20% Business Day 10% 16.0% 8.3% 0% Purpose Stay Market Source : Tourism Economics 30
Tourism industry sales by sector Tourism Industry Sales By Sector Food & bev. 23% Air 3% Other Transport 13% Source : Tourism Economics Retail 17% Lodging 33% Recreation 11% Transportation expenses represent roughly 15% of tourism industry sales. Lodging including both hotels and second homes is the largest spending category in NJ with 33% of visitor spending. Food & beverage spending ranks second, capturing 23% of the visitor dollar. 31
Tourism industry sales by sector New Jersey's Tourism Industry Sales Recreation and by Year $40 Food & Beverage sectors spending $35 $3.7 $4.2 $3.8 $3.8 $4.0 levels rose to $30 $7.77 $6.1 $6.4 record levels in $5.9 $5.9 Recreation 2011. $25 $20 $15 $10 $5 $0 $8.2 $8.1 $7.7 $7.7 $8.4 $1.1 1 $1.1 1 $1.1 $1.1 $1.3 $4.8 $4.8 $4.4 $4.4 $4.9 $11.9 $11.7 $11.5 $11.5 $11.8 2007 2008 2009 2010 2011 Source: Longwoods International, Tourism Economics, OTTI Retail Food & bev. Air Other Transport Lodging The majority of gaming win is included in the lodging sector based on industry classifications. 32
Tourism employment begins its recovery Tourism Employment 2006 2007 2008 2009 2010 2011 Tourism Employment 310,829 314,692 320,205 310,915 310,561 312,369 Percent Change 1.2% 1.8% -2.9% -0.1% 0.6% While spending has recovered strongly, tourism employment is rebounding more slowly with a 0.6% expansion last year. Tourism Employment Units 322,000 320,000 318,000 316,000 314,000 312,000 310,000000 308,000 306,000 304,000 310,829 314,692 320,205 310,915 310,561 312,369 2006 2007 2008 2009 2010 2011 Tourism Employment Percent Change Source : Tourism Economics 2% 1% 0% -1% -2% -3% -4% 33
Ranking tourism employment The direct employment contribution of the tourism industry was 312,000 in 2011. This narrow measurement of tourism includes only those jobs directly supported by visitor activity and allows for inter-industry ranking. Examining the Tourism industry against other private sector industries, tourism is the 5 th largest employer in the State of New Jersey. Employment Ranking - Private Sector State of New Jersey Rank Industry 2011 34 1 Health care and social assistance 575,082 2 Retail trade 517,712 3 Professional, scientific, and technical services 416,420 4 Finance and insurance 340,177 5 Tourism 312,369 6 Accommodation and food services 308,006 Business 7 Administrative Day and support services 291,307 8 Manufacturing 271,525 9 Real estate and rental and leasing 266,326 10 Other services, except public administration 242,137 11 Wholesale trade 230,928 12 Construction 213,145 13 Transportation and warehousing 191,141141 14 Educational services 121,572 15 Arts, entertainment, and recreation 104,119
Tourism intensity Tourism is a significant part of several industries 100% of all employment in lodging is supported by tourism spending. Tourism Employment Intensity by Industry Air Trans. 23% Lodging 100% Recreation 38% Retail 6% Business Food & bev. Day 36% Total 5% 0% 20% 40% 60% 80% 100% 35
Total Tourism Economy What is the total economic impact of tourism in New Jersey?
Tourism economy sales: $38 billion Tourism Demand by Source Resident In- State 24.9% Non-visitor PCE 0.2% Domestic visitor markets comprise the majority (89%) of tourism sales in New Jersey. International International visitor Visitor 8.9% markets contributed 9% Government Investment 0.3% of tourism sales last 2.2% year. S T i E i Out-of-State Visitor 63.6% Capital investment in tourism-related construction and machinery & equipment represents 2% of tourism economy sales. 37
Tourism impact summary - GDP Tourism industry GDP directly generated $16.5 billion of New Tourism GDP Impact 2011, US$ Billions Jersey GDP in 2011. $35 The tourism economy, including direct, indirect and induced $30 $25 impacts, generated $20 GDP of $33.2 billion. $15 This is 6.8% of the state economy. $10 $5 Induced Indirect Direct $0 Tourism Industry Source: Tourism Economics Tourism Economy 38
Tourism GDP impact total impact All sectors of the New 9,000 Jersey 8,000 economy 7,000 benefit from 6,000 tourism activity 5,000 directly and/or 4,000 indirectly. 3,000 Total Tourism GDP Impact $ million 2,000 1,000 Induced Indirect Direct Significant indirect and induced benefits 0 FIRE LOD F&B BS RET REC ED TRN CON COM PS WHL 39 F&B Food & Beverage ED Education and Health Care RET Retail Trade FIRE Finance, Insurance & Real Estate REC Recreation and Entertainment PS Personal Services LOD Lodging CON Construction and Utilities BS Business Services AIR Air Transport TRN Other Transport GAS Gasoline Stations
Tourism impact summary - Jobs Tourism spending directly supported 312,000 jobs in New Jersey in 2011. The tourism economy, including direct, indirect and induced impacts, supported 486,000 jobs. This is 9.8% of all jobs in the state. Tourism Employment Impact 2011, Thousands 600 500 400 300 200 100 Induced Indirect Direct 0 Tourism Industry Source: Tourism Economics Tourism Economy 40
Tourism economy employment total impact Tourism generated the most employment in the restaurant, lodging, and retail sectors. Secondary benefits are realized ed across the entire economy through the supply chain and incomes as Total Tourism Employment Impact Thousands 140 120 Induced Indirect 100 Direct 80 Significant indirect and induced benefits 60 40 20 0 F&B LOD REC RET FIRE BS ED PS TRN CON GAS GOV 41 they are spent. F&B Food & Beverage ED Education and Health Care RET Retail Trade FIRE Finance, Insurance & Real Estate REC Recreation and Entertainment PS Personal Services LOD Lodging CON Construction and Utilities BS Business Services AIR Air Transport TRN Other Transport GAS Gasoline Stations
Tourism economy income total impact Total Tourism Labor Income Impact (US$ Million) Direct Indirect Induced Total Agriculture, Fishing, Mining - 9.2 10.4 19.6 Construction and Utilities 362.8 218.2 97.5 678.5 Manufacturing 17.4 158.1 118.1 293.6 Wholesale Trade - 138.4 277.4 415.8 Air Transport 354.6 10.2 21.0 385.8 Other Transport 574.9 274.7 122.6 972.2 Retail Trade 1,033.2 25.6 501.1 1,559.9 Gasoline Stations 170.0 1.3 20.0 191.3 Communications - 254.0 134.7 388.8 Finance, Insurance and Real Estate 456.5 665.3 826.4 1,948.2 Business Services 213.8 1,648.8 637.0 2,499.6 Education and Health Care - 7.9 1,447.0 1,455.0 Recreation and Entertainment Business Day1,292.1 82.6 74.6 1,449.3 Lodging 25212 2,521.2 49 4.9 51 5.1 25312 2,531.2 Food & Beverage 2,613.4 111.0 316.5 3,040.8 Personal Services 328.1 187.9 319.4 835.4 Government 95.9 245.9 109.4 451.2 TOTAL 10,033.9 4,044.0 5,038.3 19,116.2 42
Tourism economy income total impact The restaurant, lodging, and retail sectors employed the most persons in the tourism sector. Total Tourism Labor Income Impact $ million 3,500 3,000 Induced d Indirect 2,500 Direct 2,000 Secondary benefits are realized across 1,500 the entire economy 1,000 through the supply chain and incomes 500 as they are spent. 0 Day Significant indirect and induced benefits F&B LOD BS FIRE RET ED REC TRN PS CON GOV WHL 43 F&B Food & Beverage ED Education and Health Care RET Retail Trade FIRE Finance, Insurance & Real Estate REC Recreation and Entertainment PS Personal Services LOD Lodging CON Construction and Utilities BS Business Services AIR Air Transport TRN Other Transport GAS Gasoline Stations
Tourism economy tax generation Traveler Generated (US$ Million) Tax Type 2011 Federal Taxes Subtotal 4,818.8 Corporate 733.4 Indirect Business 444.4 Taxes of $9.2 billion were directly and indirectly generated by tourism in 2011. State and local taxes Personal Income 1,561.6 alone tallied $4.4 4 Personal Income 1,561.6 Social Security 2,079.3 State and Local Taxes Subtotal 4,386.9 Corporate 181.88 Personal Income 401.8 Sales 1,344.8 Lodging 110.2 Business Day Local 110.2 State 0.0 Property 1,978.4 Excise and Fees 344.1 State Unemployment 25.9 Each household in New Jersey would need to be taxed an additional $1,380 per year to replace the tourism taxes received by state and local governments. 44 TOTAL 9,205.7
2012 and beyond Hunker down or forge ahead?
Global economy losing momentum G7 & Emerging Markets: GDP growth % year 10 8 6 Emerging Markets 4 2 0 G7-2 -4-6 1985 1988 1991 1994 1997 2000 2003 2006 2009 Source: Oxford Economics 46
Why is economic growth slowing? Some slowdown inevitable after inventory-driven rebound in 2010 Debt worries driving government policy High oil and commodity prices Household and corporate caution now compounded by financial market volatility 47
Fiscal policy to weigh on growth 48 US: Change in cyclically-adjusted structural balance (sign reversed) % of potential GDP 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0-0.5 05-1.0-1.5 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source : Oxford Economics/Haver Analytics
Commodity prices hurting net importers World: Commodity prices 2007=100 (rebased) 200 December figures are month 180 average to date 160 Oil 140 120 100 CRB foodstuffs 80 60 40 CRB raw industrial materials 20 2000 2002 2004 2006 2008 2010 Source: Haver Analytics 49
Eurozone break-up impact on US 50 US: GDP % year 6 5 4 3 2 1 0-1 -2-3 -4-5 -6 Forecast Baseline Eurozone break-up -7 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Source : Oxford Economics/Haver Analytics
US Outlook: able to push through? Short term indicators do not indicate stall speed Companies are in strong position Housing recovering in parts of the country Monetary policy incredibly expansionary 51
Encouraging US jobs numbers Employment and unemployment % 11 10 9 8 7 6 5 Employment (RHS) Unemployment rate change 600 400 200 0-200 -400-600 -800 4-1000 2006 2007 2008 2009 2010 2011 2012 Source: BLS 52
Unemployment claims continue downward trend 000s 600 550 500 Weekly unemployment claims 4-week moving average 450 400 350 300 31-Jul-10 18-Dec-10 7-May-11 24-Sep-11 11-Feb-12 Source: Employment and Training i Administration i ti 53
Unemployment hits non-travellers hardest Unemployment Rate by Education Q3 Seasonally Adjusted 16 14 2007 2008 2009 2010 12 10 8 6 4 2 0 < HS Diploma HS Grads Some college Bach degree+ Source: BLS 54
Companies are in a strong position World: Corporate sector* financial balance % of GDP, 4-quarter average 5 4 UK 3 2 1 US 0-1 -2 Eurozone -3-4 *Non financial sector -5 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: Oxford Economics 55
Short term indicators do not indicate stall speed ISM indexes Index 65 60 Nonmanufacturing 55 50 45 40 Manufacturing 35 30 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Source: BLS 56
Monetary policy incredibly expansionary Cost of debt service has been falling. Low interest rates are freeing up income. US : Household debt measures % of disposable income 20 Household financial obligations 18 16 14 12 3.0 2.5 20 2.0 1.5 1.0 Interest payments share of disposable income 10 Household debt service ratio 0.5 8 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 Source: FRB 0.0 1986 1988 1991 1993 1996 1998 2001 2003 2006 2008 2011 Source: Datastream, Oxford Economics/Haver Analytics 57
US Outlook remains subdued Europe Gov t spending Housing Caution abounds Consumer confidence 1985=100 140 120 100 80 60 40 20 2001 2003 2005 2007 2009 2011 Source: Conference Board 58
Growth likely to moderate in 2012 Visits to New Jersey mn person stays 90 70.2 71.7 74.1 79.6 81.3 83.5 84.9 20% 80 71.1 70 64.8 69.4 15% 10% 60 50 5% 40 30 20 10 0% -5% -10% - 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014-15% Person-Stays % Change 59
Thank You! Adam Sacks, President +1 610.995.9600, adam@tourismeconomics.com 60