Economic impacts of tourism

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Economic impacts of tourism
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Economic Impact of Travel Tourism - 2001

• Expenditures from domestic and international
  travel - 545.1 billion
• Travel-generated jobs 7.8 million
• Travel Industry Association of America 2002

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Estimated Economic Impact of Recreation in the
U.S. - 2000

• Expenditures from recreation 350 billion
• Expenditures from recreation on federal land
  180 billion
• 10.5 of all consumer spending
• National Recreation Lakes Study 2002

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Economic impacts from tourism

• Employment
• Business revenues
• Tax revenues
• Infrastructure facility development costs
• Government costs for services/maintenance
• Land value changes

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• Investments
• Tourist-related expenditures
• Investments in businesses facilities
• Local spending of taxes

• Leakages
• Employees spending wages outside community
• Taxes
• Imports
• Savings accounts

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Factors affecting leakages

• Supply constraints
• Size of area
• Remoteness of area

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Types of tourist-related expenditures

• Direct impacts
• Indirect impacts
• Induced impacts

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Direct tourism impacts

• The direct payments or expenditures made by
  tourists for services, food, lodging, etc

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Estimating direct impacts Formula 1

• Number of Visitors Total number of people
  entering an attraction.
• Direct impacts
• ( visitors) x (avg. spent per visitor)

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Estimating direct impacts Formula 1

• Number of Visitors Total number of people
  entering an attraction.
• Problems Counting visitors twice.
• Visit lengths may not be consistent.
• Spending differences based on age.
• Need specific entry points.
• Benefit Easy to collect data.

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Estimating direct impactsFormula 2

• Visits Total number of times visitors enter an
  attraction.
• Direct impacts
• ( visits) x (avg. spent per visit)

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Estimating direct impactsFormula 2

• Visits Total number of times visitors enter an
  attraction.
• Problems Visit lengths may not be consistent.
• Double-counting visits.
• Need specific entry points.
• Benefit Easy to collect data.

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Estimating direct impactsFormula 3

• Visitor days Total number of 12-hour days spent
  at an attraction by visitors.

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Estimating direct impactsFormula 3

• Visitor days Total number of 12-hour days spent
  at an attraction by visitors.
• Example
• 1 visitor day (one 6-hour visit)
• (one 4-hour visit)
• (one 2-hour visit)

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Estimating direct impactsFormula 3

• Visitor days Total number of 12-hour days spent
  at an attraction by visitors.
• Direct impacts
• ( visitor days) x (avg. spent per visitor day)

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Estimating direct impactsFormula 3

• Visitor days Total number of 12-hour days spent
  at an attraction by visitors.
• Problem Requires detailed visitor research
• Benefit Comparing between attractions or
  regions

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Estimating direct impactsFormula 4

• Total income to local businesses attractions
  from visitors
• Direct impacts
• ( businesses) x (average annual income per
  business)

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Estimating direct impactsFormula 4

• Total income to local businesses attractions
  from visitors
• Problems
• Business owners may not be willing to share info.
• Excludes attractions that do not collect
  admissions.
• Excludes visitors who do not utilize local
  businesses.
• Separating visitors from residents.
• Benefit Identifies impacts on business sectors

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Which formula do you use?

• A festival where people enter the site only once.

• Number of visitors
• Number of visits
• Number of visitor days
• Income to businesses and attractions

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Which formula do you use?

• A community with no specific entrance point.

• Number of visitors
• Number of visits
• Number of visitor days
• Income to businesses and attractions

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Which formula do you use?

• A region containing several communities and
  multiple facility access points.

• Number of visitors
• Number of visits
• Number of visitor days
• Income to businesses and attractions

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Which formula do you use?

• A park where visitors stay for varying lengths of
  time.

• Number of visitors
• Number of visits
• Number of visitor days
• Income to businesses and attractions

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Which formula do you use?

• To do economic impact comparisons between
  attractions or communities.

• Number of visitors
• Number of visits
• Number of visitor days
• Income to businesses and attractions

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Indirect tourism impacts

• Businesses and attractions use payments received
  from tourists to pay their own expenses.
• The tourist revenue indirectly pays
• the expenses of businesses and attractions.

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Induced tourism impacts

• Employees spend their wages on services and
  merchandise.
• Employees of tourism businesses.
• Employees of tourism-business suppliers.

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What is turnover?

• The number of times the initial tourist
  investment changes hands within an area.
• EXAMPLE
• 1 initial investment by tourist ?
• Local businesses (.80) ?
• Employees (0.40) ?
• Local merchants (0.30) ?
• Local suppliers (0.00)
• Turnover ???

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What is turnover?

• The number of times the initial tourist
  investment changes hands within an area.
• EXAMPLE
• 1 initial investment by tourist ?
• Local businesses (.80) ?
• Employees (0.40) ?
• Local merchants (0.30) ?
• Local suppliers (0.00)
• Turnover 4

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What is a multiplier?

• A number used to estimate the total economic
  impacts resulting from direct tourist
  expenditures.

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Type III Income Multiplier

• Multiplier (Direct Indirect Induced)
• Direct
• Multipliers are usually between 1.0 and 3.0

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Estimating total impacts with multipliers

• Total impacts
• (Direct) x (Multiplier)
• (Direct) x (Direct Indirect Induced)
• Direct

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How are multipliers interpreted?

• A multiplier of 1.55 means
• that for every 1 spent by tourists,
• an additional 0.55 is generated in impacts on
  the economy.

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Some multipliers
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Who calculates multipliers?

• In New York State, tourism multipliers are
  calculated by NYSDED
• IMPLAN computer program