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HomeMy WebLinkAbout060606 TourismThe 2005 Virginia Beach The 2005 Virginia Beach Tourism Impact Study Tourism Impact Study Gilbert Yochum Vinod Agarwal Professors of Economics Old Dominion University June 6, 2006 What is Tourism and The Tourism Industry? U.S. Department of Commerce Tourism Industry Definitions Visitor: “ A visitor is a person who either travels outside of his or her “usual environment”for a period of less than a year orwho stays overnight in a hotel or motel. The person may travel for personal pleasure or on industry or government business.”(Italics added) Usual Environment: “ The usual environment is defined as the area within 50-100 miles of home, depending on available data sources.” What is Tourism and The Tourism Industry? U.S. Department of Commerce Tourism Industry Definitions (Contd.) Tourism: “The activities of visitors while traveling.” Tourism Commodities: “Tourism commodities are the commodities typically purchased by visitors directly from producers.” Tourism Employment: “ All jobs that involve the production of tourism output.” What is Tourism and The Tourism Industry? U.S. Department of Commerce Tourism Industry Definitions (Contd.) Tourism Industries: “Industries that include tourism commodities as a primary product are classified as tourism industries.” Tourism Industry Total Output: “a measure of the value of domestically produced goods and services for tourists and all supporting production.” Previous Regional and Local, Full and Partial Applications of the U.S. Department of Commerce National Tourism Satellite Methodology 1.Federal Reserve Bank (late 2003): Kansas City Region (7 States) Partial. 2.Global Insight (2004): New Jersey Virginia Austin, Texas 3. ODU (2006): Virginia Beach, visitor inflow, Partial, almost there. One Last Technical Piece. Tourism: An Economic Tsunami City Direct Tax & Fee Breakwater Direct Effect Imports Indirect Effect Imports Induced Effect Visitor Spending Visitor Spending Imports Output Output Output Earning Earnings Earnings Employ Employment Employment ment Visitor Spending Imports Visitor Spending Imports Imports Visitor Spending Data Assembly Continental Research Inc. Surveys: Visitor spending surveys are conducted by Continental Research Inc. 1. 1,900 Boardwalk area interviews in 2005. Sandbridge, Campgrounds and North End are surveyed every other year. 2. Household Survey of Friends and Family (800 interviews in 2005). A search for overnight visitors staying in Virginia Beach and visitors staying in other Hampton Roads cities who visit Virginia Beach (non- MSA Day visitors). Visitor Spending Data Assembly (Contd.) U.S. Bureau of the Census: American Community Survey of households City Data: Hotel room nights, Sandbridge room nights Tourism: An Economic Tsunami City Direct Tax & Fee Breakwater Direct Effect Imports Indirect Effect Imports Induced Effect Visitor Spending Visitor Spending Imports Output Output Output Earning Earnings Earnings Employ Employment Employment ment Visitor Spending Imports Visitor Spending Imports Imports City Direct Taxes & Fees: Taxes and Fees on Industries that have Direct Contact with Visitors (Accommodations, Food Service and Drinking Places, Retail and Entertainment) that accrue to the City Taxes & Fees Accruing to the City$70.5M = * Sales&License Visitor Spending Sales,Room Night Special District BPOL $828M *Property Real ? Personal ? Visitor Spending *Other Utilities, CVB, Alcohol and Cigs Direct Effect of Visitor Spending on Output, Employment and Earnings in Virginia Beach’s that have Private Sector Industries Direct Contact with Visitors. City Direct Tax & Fee Breakwater Direct Effect Indirect Imports Effect Output$ 758.1 M Induced Imports Effect Visitor Spending Imports Output Earnings:$ 205.9 M Output Output Earning Earnings Earnings Employ Employment Employment ment Employment:10,672 Jobs Imports Visitor Spending Imports Imports Indirect Effect of Visitor Spending on Output, Earnings and Employment in Virginia Beach that Provide Private Sector Industries Goods and Services to Virginia Beach Businesses that have Direct Contact with Visitors. City Direct Tax & Fee Breakwater Direct Effect Indirect Imports Effect Induced Output:$260.6 M Imports Effect Visitor Spending Imports Output Output Output Earnings:$ 57.6 M Earning Earnings Earnings Employ Employment Employment ment Imports Visitor Spending Employment:1,409 Jobs Imports Imports Indirect Effect of Tourism: Estimated 2005 Output and Jobs Created in the Top Virginia Beach Industries that Private Sector Provide Goods and Services to Virginia Beach Businesses that have Direct Contact with Visitors. IndustrySpendingJobs Top Six Industries $ 50.4M Real Estate, Rental and Leasing:133 Information Services:$ 35.5M80 Professional, Technical & Scientific Services:$ 35.1M187 Finance and Insurance:$ 26.7M92 Administrative and Waste Management $ 22.7M273 Services: Management of Companies$ 20.2M109 ………… Total $260.6M 1,409 (Sum of All Indirect Effects in 2005) Induced Effect on Output, Earnings and Employment of Private Sector Visitor Spending in Virginia Beach. Induced Effects Result from the Increase in Virginia Beach Household Income Created by the Direct and Indirect Effects of Visitor Spending City Direct Tax & Fee Breakwater Direct Effect Indirect Imports Effect Induced Output:$279.7 M Imports Effect Visitor Spending Imports Output Output Output Earnings:$ 65.5 M Earning Earnings Earnings Employ Employment Employment ment Imports Visitor Spending Employment:2,123 Jobs Imports Imports The Induced Effect of Visitor Spending on Output and Employment in the Top Virginia Beach Industries. Induced Effects Result Private Sector from the Increase in Virginia Beach Household Income Created by the Direct and Indirect Effects of Visitor Spending IndustrySpendingJobs Top Six Industries $ 55.8M Real Estate, Rental and Leasing:147 Health Care and Social Assistance$ 36.4M380 Retail Trade:$ 36.3M465 Finance and Insurance:$ 33.5M134 Information Services:$ 19.3M45 Accommodation and Food Services:$ 18.1M300 ………… Total $279.7M 2,123 (Sum of All Induced Effects in 2005) Total Effect of Visitor Spending on Output, Private Sector Employment and Earnings in Virginia Beach in 2005 City Direct Tax & Fee Breakwater Direct Effect Indirect Imports Effect Induced Output:$1,298.4 M Imports Effect Visitor Spending Imports Output Output Output Earnings:$ 329.0 M Earning Earnings Earnings Employ Employment Employment ment Imports Visitor Spending Employment:14,204 Jobs Imports Imports Total Tourism Economic Impact: Summed Effect of Visitor Spending on Output, Earnings Government and Private Sector and Employment in Virginia Beach in 2005 Output:$1,344.6 M Earnings:$ 352.7 M Employment:14,723 Jobs Each $1 Million of Additional Visitor Spending in Virginia Beach Creates an Estimated: •17 new jobs in Virginia Beach •$397,000 in additional earnings for Virginia Beach employees and business owners •$1.57 Million in additional output in industries located in Virginia Beach Average Earnings in Virginia Private Sector Beach in 2005 Industries having Direct Contact $19,293 with Visitors Industries having Indirect Contact $40,880 with Visitors Industries having Induced Effect$30,853 Direct City Taxes and Fees from Businesses that have Direct Contact with Visitors, 2005* 80 $70.5 70 60 Dollars (in millions) $46.7 50 40 30 20 $16.4 $7.4 10 0 TotalSales TaxPropertyOther and LicensesTax * Includes Convention and Visitors Bureau Revenue Direct City Expenditures for Tourism, 2005* 70 65 $60.9 60 55 Dollars (in millions) 50 45 40 $33.8 35 $27.1 30 25 20 15 10 5 0 OperatingImprovement Total Expenses Capital Source: City of Virginia Beach. *See Appendix for a listing ofexpenditure categories. Estimated Rate of Return from City of Virginia Beach 2005 Tourism Expenditures $9.6M Net Direct City Return ___________________________________________________________________ $60.9M Direct City Expenditures = 15.8% Net Return = Revenue –Expenditures Visitors in Virginia Beach, 2005 Overnight Total Visitors = 2.68 million 130,201 Jan 146,303 Feb 168,920 Mar 209,713 Apr 239,592 May 287,867 Jun 364,413 Jul 344,552 Aug 247,656 Sep 183,653 Oct 185,798 Nov 171,370 Dec 0150,000300,000450,000600,000 Visitors Distribution of Visitors Staying in Virginia Overnight Beach by Type of Lodging, 2005 0.7 63.0% 0.6 0.5 0.4 Percent 28.1% 0.3 0.2 0.1 5.0% 3.9% 0 HotelsCampsCottagesFriends Distribution of Visitor Spending by Type of Lodging, 2005 0.8 68.1% 0.7 0.6 0.5 Percent 0.4 0.3 19.3% 0.2 7.0% 0.1 3.3% 2.3% 0 HotelsCampsCottagesFriendsDay Non- MSA Visitors City of Virginia Beach Hotel Rooms, 1981-2005 12000 10000 8000 Rooms 11,397 11,184 6000 11,04811,046 10,866 10,85610,84510,832 10,790 10,77910,779 10,49510,487 10,393 10,31410,323 10,091 9,979 9,890 9,837 8,991 7,984 7,714 4000 7,059 6,950 2000 0 19871997 19811982198319841985198619881989199019911992199319941995199619981999200020012002200320042005 Virginia Beach Hotel Capacity Utilization, 2005 350 57.5 300 Hotel Room Nights (in thousands) 111.8 133.7 155.5 76 159.1 174.9 177.2 250 217.7 193.1 220.4 168.5 200 150 281 232.5 215.7 193.9 100 168.5183 160.3 150.9 128.0 120.8 112.3 100 50 0 JanFebMarAprMayJunJulAugSepOctNovDec OccupiedExcess Capacity Source: Smith Travel Research, City of Virginia Beach and Old Dominion University Bureau of Research. U.S. Department of Commerce Tourism Industry Definitions The strict application of these definitions and the availability of more recent and better data implies that the data estimated in this study can not be strictly compared with earlier studies. The 2005 Virginia Beach The 2005 Virginia Beach Tourism Impact Study Tourism Impact Study Gilbert Yochum Vinod Agarwal Professors of Economics Old Dominion University June 6, 2006 APPENDIX IV: TIME SERIES DATA The availability of more recent and contemporaneous data, as well as incremental methodological improvements in successive years of Virginia Beach economic impact studies, create the opportunity to update past studies relative to a 2005 benchmark in order that inter-year comparisons of visitor spending on latest available data and comparable (apples-to- apples) basis can be undertaken. Accordingly, revisions to previous studies to insure inter-year comparability and uniformity of technique, the outcomes of which are displayed in the accompanying Table IV-1, are detailed as follows: APPENDIX IV: TIME SERIES DATA (Contd.) 1.Census household data, an important component in the estimation of visitor spending through the study years, recently have become available with a one-year lag. Therefore the yearly visitor spending data have been updated to reflect the latest available information from the U.S. Census and the American Community Survey. 2.Estimates of visitors staying in hotels in 2000 and 2001 were originally based on occupancy study (survey data) while those for 2002 to 2004 were based on hotel room nights from the Tourism Indicators Report. More accurate disaggregated tax data are now available and hotel room nights have been revised accordingly. APPENDIX IV: TIME SERIES DATA (Contd.) 3.All data are adjusted to conform to the U. S. Department of Commerce BEA Satellite Account definitions of the tourist industry. 4.House/Condo rentals as well as hotels are adjusted for previously not available or updated property tax data. 5.Hotel visitors have been adjusted to reflect the statistical variance in multiple party room reservations. APPENDIX IV: TIME SERIES DATA (Contd.) 6.Visitor spending data have been adjusted to reflect the effect of potential survey over-estimation of taxable sales or for the potential overlap created by U.S. Department of Commerce NAICS definitions. 7.A new mathematical model has been developed to more closely represent the effect of the Commonwealth’s distribution of sales tax revenue created by visitor spending. Table IV-1: UPDATED ESTIMATES OF VISITOR SPENDING IN VIRGINIA BEACH* YearVisitorCity RevenueCity Expenditures Spending (Millions $) (Millions $)(Millions $) 2000 $647.6$50.5$34.3 2001 $685.0$53.6$32.3 2002 $726.9$62.3$32.8 2003 $756.8$65.6$39.8 2004 $791.6$68.8$48.2 2005 $828.0$70.5$60.9 *Updated to include the most recently available data and method as described previously. Table 1: Taxable Sales based on TIA’s TIEM Estimate of Visitor Spending ($894.8M) and TIA’s Distribution of Spending by Category in Virginia Beach, 2004 CategoryProportion of TotalEstimated Total Visitor Spending byTaxable Spending*CategorySales** ($ Millions)($ Millions) Lodging.289$258.60$229.35 Food Service.298$266.65$241.86 Entertainment.061$ 54.58$ 49.51 Other.352$314.97$300.69 Total1.00$894.80$821.41 *Source: TIA and the Virginia Tourism Corporation. **Taxable sales are the residual of estimated spending in the category exclusive of any sales taxes. Table 2: Estimated City CollectedSales Taxesaccruing to the City of Virginia Beach derived from TIA’s estimate of Visitor Spending, 2004 CategoryTaxableVirginia BeachEstimated SalesTaxCity Taxes ($ Millions)*Rate**(Millions $) Lodging$229.358.0%$18.35 Food Service$241.865.5%$13.30 Entertainment$ 49.518.0%$ 3.96 Other$300.690%0 Room Night$1 per$ 2.10 Tax night Total$821.41 $37.71 *Source: Table 1 **Source: City of Virginia Beach. The entertainment tax is estimated as the weighted mean value of the Amusement and Participatory Sports tax rate. Room night taxes are based on City Tax estimate of 2004 room nights. The projections in Tables 1 and 2 do notinclude real estate taxes, personal property taxes, state sales tax rebates to the City, utility, cigarette and alcohol taxes, BPOL taxes, special district taxes or CVD revenue, all of which additionally accrued to the City ofVirginia Beach as a result of visitor spending in 2004. Visitors On Beach And Boardwalk, Overnight 2005 Selected Demographic Data ** OCT- ** CHARACTERISTICSMAR-APR*MAYSUMMERSEP NOV* Average Nights Stayed3.93.64.64.13.5 Average Party Size3.03.14.13.02.6 Average Age in Years41.940.943.346.444.9 Average Income$79,702$73,477$81,990$80,237$81,050 Average Party Expenditures$906$976$1,707$1,157$800 Married 68.5%62.5%74.2%74.0%72.5% Repeat Visitors72.5%77.0%75.3%86.0%78.5% Staying at Motels83.8%81.0%75.3%78.0%85.8% Advanced ReservationsN/A81.8%87.4%84.7%N/A Education beyond High School78.5%76.0%77.6%76.5%78.0% •These surveys were conducted on Beach, Boardwalk, Atlantic Avenue and at hotels. **Forecasted Virginia Beach Tourism Highlights Presented to Virginia Beach City Council June 6, 2006 Major Findings •Summer Canadian visitation was very strong –9.3% as compared to 4.2% in 2002 –Consistent, aggressive marketing –Appreciation of Canadian dollar –Economic growth in Ontario/Quebec Major Findings •Internet usage continues to increase –80% used Internet to obtain vacation information about Virginia Beach compared to 65.2% in 2000. –39.3% used Internet to purchase some travel service from Virginia Beach businesses compared to just 12.5% in 2000. Visitor Inquiries -Calendar Year 2005 Total Inquiries2,252,027Up 60.79% Web Visits2,067,043Up 71.56% Virginia Beach Weekly Inquiry Report –Thru December 31, 2006 Seasonality Trends Among the 2.68 million overnight visitors to Virginia Beach, 63% of visitation 64% of room nights booked 55% of spending Occurred between September and May. 2006 Off to a Good Start… 2006 –Off to a Good Start •Total inquiries up 14%* •According to Smith Travel Research (January thru April)** –Occupancy up 4.9% –Average Daily Rate up 5.6% –Revenue Per Available Room up 10.8% –Room demand up 7.3% –Room revenue up 13.2% * Virginia Beach Weekly Inquiry Report –Through May 2006 ** Smith Travel Research –April 2006 Virginia Beach Convention Center •Virginia Beach Convention Center (VBCC) is a state-of-the-art convention center that offers sought after amenities to its users •VBCC is a shared resource used by citizens and visitors alike. •VBCC contributes to City Council’s objective to evolve Virginia Beach into a quality year round destination. 86% of meetings and conventions take place between September and May. 2006 –Off to a Good Start Convention Sales/Sports Marketing •In calendar year 2006, 38 conventions & meetings have been booked in the new convention center resulting in 135,505 room nights and $47.9 million in economic impact. •116 Conventions & Meetings have been booked from July 2005 –2012 –Total Room Nights booked for conventions 476,429 –Total Estimated Economic Impact of $175.1 million Convention Bookings Highlights •Assemblies of God Spanish Eastern District Conference for April 2007 with 1400 Room Nights •Student Life Youth Ministries for July 2007 & 2008 with 2850 Room Nights •American Bus Association for February 2008 with 3000 Room Nights •National Association ofWorkforce Development for May 2008 with 2360 Room Nights •USA Track & Field AnnualConvention for December 2010with 3000 RoomNights •Ruritan National Convention for January 2010 with 2000 Room Nights 2006 –Off to a Good Start Convention Sales/Sports Marketing •St. Patrick’s Day Weekend was strong: –Registration for the Shamrock SportsFest doubled. –Many Virginia Beach hotels hosted players and fans for the first round of the NCAA Women’s Championship (which was held in Norfolk) –Boo Williams Basketball Tournament the same weekend 2006 –Off to a Good Start Convention Sales/Sports Marketing •Soccer tournaments are planned for most weekends this spring and summer •Redskins Beach Blitz •AAU Junior Olympic Games this summer •Rock ‘n’Roll Half Marathon on pace to sell out again Advertising •The “Live the Life” brand promise will create more off season opportunities for promoting soft adventure activities such as birding, hiking, biking, and kayaking through increased support from private sector outfitters offering these experiences. These opportunities continue to strengthen the Virginia Beach position as a year round destination. •We will continue to sell the “experience” of vacationing in Virginia Beach. It is the Virginia Beach experience that differentiates us from other east coast beach resort destinations. Possible Impacts/Concerns •Traffic Congestion •Gasoline Prices Questions?