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September 2016

The Economic Impact of Out-of-State Visitor Spending in Florida

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What are we measuring here

Out of State VisitorsFlorida

Destination

$$$$$$$$$$$$$$$$$$$$$$

3

What are we measuring here

Florida Jobs

Yes, even Kylo Ren has to pay taxes

The importance understanding impact

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• Inform decisions regarding the funding and prioritization of tourism marketing

• Compare tourism to other industries

• Track tourism’s role in economic diversification

• Monitor yield per visitor

• Understand how tourism affects specific industries

In order to do this, tourism must be measured in the same categories as other economic sectors – e.g. employment and gross domestic product.

Why quantify the tourism economy?

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• Most economic sectors such as energy and banking are easily defined within national accounts statistics.

• Tourism is not so easily measured because it is not a single industry. It is a demand-side activity, defined by visitors.

• Tourism spans nearly a dozen sectors including lodging, recreation, retail, real estate, air passenger transport, food & beverage, car rental, taxi services, and travel agents.

Why is this a challenge?

8

Full impact, with industry detail

ACCOMODATION

CATERING, ENTERTAINMENT

RECREATION, TRANSPORTATION

&OTHER TRAVEL RELATED SERVICES

PRINTING/PUBLISHING, UTILITIESFINANCIAL SERVICES, SANITATION SERVICESFURNISHINGS AND EQUIPMENT SUPPLIERS,

SECURITY SERVICES, RENTAL CAR MANUFACTURING,TRANSPORTATION ADMINISTRATION, TOURISM

PROMOTION, SHIP BUILDING, AIRCRAFT MANUFACTURING,RESORT DEVELOPMENT, GLASS PRODUCTS, IRON/STEEL

T&T DIRECT

T&T INDIRECTT&T INDUCED

OVERALL T&T IMPACT

FOOD & BEVERAGE SUPPLY, RETAILERS BUSINESS SERVICES, WHOLESALERS, COMPUTERS,

UTILITIES, MANUFACTURERS, HOUSING, PERSONAL SERVICES

Approach and concepts

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Multiple datasets inform measurements

Visitor Spending

Tax

Income

Employment

Survey

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• Syndicated traveler survey projections – D.K. Shifflet

• Bureau of Labor Statistics (employment and income by industry)

• Bureau of Economic Analysis (GDP by industry)

• Census (business sales by industry)

• Smith Travel Research (hotel performance)

• NTTO / US Department of Commerce (international inbound)

• Statistics Canada (visits and spending from Canada)

• Bureau of Transportation Statistics (air arrivals)

• Department of Revenue (tourism taxes)

• Credit Card reports - VisaVue

Data sources

Travel drivers

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The recent past:

1. Domestic consumers improving and confident

2. Fluctuating transportation costs

3. Dollar depreciation in 2013, appreciation in 2015 affecting international travel

14

Household net wealth up 22% from pre-recession peak

14

15

Household balance sheets much improved

16

Healthy employment gains in last three years

Jul 2016

255,000

190,000

204,000

16

17

… & consumers remain optimistic

18

…wage growth picking up

19

Lower fuel prices free up resources

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

06 07 08 09 10 11 12 13 14 15 16

Retail price12-mo moving avg

Gas Prices Are On a Three Year Decline

Source: Energy Information Administration

Texas gasoline price, all grades, dollars per gallon

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Emergers no longer the locomotive of global growth

-2.00

-1.00

0.00

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

World EM-China

World: GDP growth% year

Source: Oxford Economics/Haver Analytics

Forecast

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US Travel is more expensive for Canadians

Canadian dollar has lost 30% of its value in 3 years – half of the loss was in 2015.

0.8

0.9

1

1.1

1.2

1.3

1.4

1.5

1.6

1.7

2000 2002 2004 2006 2008 2010 2012 2014 2016

Canadian US Exchange rateCN$ per US$

Source: Tourism Economics

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Thus, visitation declined

As a result, visitation has declined.

0

5

10

15

20

25

0.8

0.9

1

1.1

1.2

1.3

1.4

1.5

1.6

1.7

2000 2002 2004 2006 2008 2010 2012 2014 2016

Canada/US exchange rate & Canadian departures$/C$

Source: Tourism Economics

Millions

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The US has become much more expensive

23

-7%

-9%

-13%

-15%

-20%

-21%

-22%

-23%

-23%

-40%

-42%

-46%

-52%

-60% -50% -40% -30% -20% -10% 0%

IndiaChina

S KoreaJapan

EuroCanada

ChileAustralia

MexicoColombiaArgentina

BrazilRussia

Exchange rate depreciation, 2016 / 2014

Source: Tourism Economics

local per $US

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Still, air arrivals showing resilience

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-10.0%0.7%0.7%1.1%

2.4%2.7%3.1%

4.8%5.2%

7.8%8.4%

12.2%18.6%

-20% -10% 0% 10% 20% 30%

BrazilFrance

GermanyJapan

Latin AmericaTotal

EuropeUK

OverseasAustralia

AsiaKoreaChina

Annual % change, YTDYTD growth for air arrivals in the US, May-16

Source: Tourism Economics, APIS

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Takeaways

International visitation has declined but not as bad as would be expected.

Spending, however, has been affected.

Domestically, lower gas prices, high consumer confidence, increasing employment and wages is driving tourism demand.

This has been a very recent phenomenon – only in the last 24 months or so.

Prior to that, international visitation and spending dominated growth.

Understanding Out-of-State Visitor Spending

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$108.8 billion in out-of-state visitor spending

$78.7

$87.4$91.5

$98.5

$104.7$108.8

$60.0

$70.0

$80.0

$90.0

$100.0

$110.0

$120.0

2010 2011 2012 2013 2014 2015

Visitor Spending$

$ Billions

Note: This study reports the visitor spending and associated economic impacts for out-of-state visitors to Florida. All spending

and impacts stated in this report occur within the state.

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Visitor spending shares

Lodging captured 28.3% of out-of-state visitor spending in 2015.

Food & beverage spending followed, comprising 20.4% of visitor spending.

14.3 cents of every visitor dollar was spent on recreational activities in 2015. Lodging

28.3%

Transp w/in destination

12.4%

Food & Beverages

20.4%

Retail14.5% Recreation

14.3%

Air10.2%

Out-of-State Visitor Spending

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Visitor spending profiles

Overseas visitors spend a larger share of their vacation dollars in Florida, when compared with their domestic counterparts, on shopping and recreational activities.

Lodging28.3%

FnB20.9%

Retail 11.6%

Rec10.9%

Trans15.6%

Air9.8%

Other2.8%

Domestic spending profileshare

Source: DKS, Tourism Economics

Lodging18.7%

FnB17.4%

Retail 31.4%

Rec13.9%

Trans5.8%

Air10.6% Other

2.2%

Overseas spending profileshare

Source: NTTO, Tourism Economics

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Visitor spending by industry

$24.6 $26.8 $27.8 $30.8

$12.6 $13.2 $13.9 $13.5$18.1 $19.5 $21.2 $22.2$14.3

$15.2$16.5 $15.8$8.7

$9.6$10.4 $11.1$13.1

$14.3$14.9 $15.5

$0.0

$20.0

$40.0

$60.0

$80.0

$100.0

$120.0

2012 2013 2014 2015

Thou

sand

s

Recreation

Air

Retail

Food &Beverages

Transp w/indestination

Lodging

Florida's Out-of-State Visitor Spendingby Year, Billions of $

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Visitor spending by industry

26.9% 27.2% 26.6% 28.3%

13.8% 13.4% 13.3% 12.4%

19.8% 19.7% 20.3% 20.4%

15.7% 15.4% 15.7% 14.5%

14.3% 14.5% 14.2% 14.3%

9.56% 9.78% 9.89% 10.15%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2012 2013 2014 2015

Air

Recreation

Retail

Food/bev

Transp w/indestination

Lodging

Florida's Out-of-State Visitor Spendingby Year, Share of Total

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Visitor spending by travel sector

$58.7 $65.6 $70.3 $73.7 $77.2 $83.1

$20.1$21.8

$21.2$24.8

$27.5$25.7

$0

$20

$40

$60

$80

$100

$120

2010 2011 2012 2013 2014 2015Domestic International

Florida's Out-of-State Visitor Spendingby Year, Billions of $

Understanding the impact on the Florida economy

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ACCOMODATION

CATERING, ENTERTAINMENT

RECREATION, TRANSPORTATION

&OTHER TRAVEL RELATED SERVICES

PRINTING/PUBLISHING, UTILITIESFINANCIAL SERVICES, SANITATION SERVICESFURNISHINGS AND EQUIPMENT SUPPLIERS,

SECURITY SERVICES, RENTAL CAR MANUFACTURING,TRANSPORTATION ADMINISTRATION, TOURISM

PROMOTION, SHIP BUILDING, AIRCRAFT MANUFACTURING,RESORT DEVELOPMENT, GLASS PRODUCTS, IRON/STEEL

T&T DIRECT

T&T INDIRECTT&T INDUCED

OVERALL T&T IMPACT

FOOD & BEVERAGE SUPPLY, RETAILERS BUSINESS SERVICES, WHOLESALERS, COMPUTERS,

UTILITIES, MANUFACTURERS, HOUSING, PERSONAL SERVICES

Illustrating the concepts

Travel & Tourism IndustryThe direct effect of visitor spending

Focus of Tourism Satellite Account

Travel & Tourism Economic Impact

The flow-through effect of T&T all demand across the economy

Expands the focus to measure the overall impact of T&T on all sectors of the economy

ACCOMMODATION

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Visitor spending impacts

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000FI

RE

F&B

Ret

ail T

rade

Bus.

Ser

vice

s

Lodg

ing

Rec

reat

ion

Air T

rans

port

Gas

Oth

er T

rans

p

Educ

atio

n

Com

m.

Con

stru

ctio

n

Induced

Indirect

Direct

Tourism Sales by Industry$ million

F&B: Food and BeverageFIRE: Finance, Insurance, Real EstateBus. Services: Business ServicesGas: Gasoline StationsOther Transp: Other TransportationManu.: ManufacturingPersonal Serv.: Personal ServicesComm: Communication

Significant indirect benefits

Note: Direct sales include cost of goods sold for retail

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Tourism employment surging (direct)

697,396 705,016734,694

762,496787,842

820,353852,495

500,000

550,000

600,000

650,000

700,000

750,000

800,000

850,000

900,000

2009 2010 2011 2012 2013 2014 2015

Direct Supported Employment$

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Tourism employment growth

And not only is the out-of-state tourism employment industry large, it has consistently grown faster than the state economy, driving Florida’s employment growth.

-0.8%

1.1%

2.0%2.5%

3.2%3.4%

1.1%

4.2%3.8%

3.3%

4.1% 3.9%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

2010 2011 2012 2013 2014 2015Florida Economy Out-of-state tourism employment

growth rate

Source: Tourism Economics

Out-of-state tourism employment driving growth

Source: BEA, Tourism Economics

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Business Day

7.6%

7.3%

41.2%

53.2%

81.1%

0% 20% 40% 60% 80% 100%

Total

Retail

Foodservices

Recreation

Lodging

Tourism Employment Intensity by Industry

Tourism share of key industry employment

40

Tourism impacts

12

12

27

0

10

20

30

40

50

60

Labor Income

Induced

Indirect

Direct

Source: Tourism Economics

Tourism Labor Income Impact 2015, Billions of $

Source: Tourism Economics

279

266

852

0

200

400

600

800

1,000

1,200

1,400

1,600

Employment

Induced

Indirect

Direct

Source: Tourism Economics

Tourism Employment Impact 2015, Thousands

Source: Tourism Economics

Total Impacts include 1.4 million jobs earning $50 billion in income – all supported by out-of-state visitor spending.

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Tourism tax generation

Each household in Florida would need to be taxed an additional $1,535 per year to replace the tourism taxes received by state and local governments.

Business Day

Tax Type Direct Indirect/ Induced

Total

Federal 6,879.6 6,185.0 13,064.6 Personal Income 2,298.5 2,063.9 4,362.4 Corporate 674.3 973.5 1,647.8 Indirect business 803.7 440.8 1,244.5 Social Security 3,103.1 2,706.8 5,809.9

State and Local 7,594.5 3,668.0 11,262.5 Sales 3,844.1 1,788.4 5,632.4 Bed Tax 600.4 - 600.4 Personal Income - - - Corporate 90.5 130.7 221.2 Social Security 34.3 29.4 63.7 Excise and Fees 742.1 463.2 1,205.3 Property 2,283.2 1,256.3 3,539.5 TOTAL 14,474.1 9,853.0 24,327.1

Out-of-State Tourism Generated Taxes(US$ Million)

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Tourism tax generation

Business Day

Tax Type Direct Indirect/ Induced

Total

State Tax Subtotal 4,074.3 2,011.4 6,024.6Corporate 90.5 130.7 221.2Personal Income 0.0 0.0 0.0Sales 3,513.9 1,643.2 5,096.0Lodging 0.0 0.0 0.0Property 0.0 0.0 0.1Excise and Fees 435.6 208.1 643.6State Unemployment 34.3 29.4 63.7

Local Tax Subtotal 3,520.3 1,656.6 5,237.9Corporate 0.0 0.0 0.0Personal Income 0.0 0.0 0.0Sales 330.2 145.2 536.5Lodging 600.4 0.0 600.4Property 2,283.2 1,256.3 3,539.4Excise and Fees 306.5 255.1 561.6State Unemployment 0.0 0.0 0.0

Tourism Generated Taxes - State and Local Government Revenues

(US$ Million)

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Visitor spending in Florida grew 3.9% in 2015, reaching $108.8 billion with a total impact on business sales of more than $183.5 billion.

Despite a 25% decline in gasoline prices, visitor spending grew, supported by strong increases in accommodations and food & beverage spending.

1-in-6 non-farm jobs in Florida is supported by out-of-state visitor spending.

Out-of-state visitor supported employment growth has been higher than overall state employment growth.

Total state and local tax revenue supported by tourism activity reached $11.3 billion in 2015.

2015 Wrap-up

Tourism in context

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Tourism in context On average, out-of-state visitors spend

$300 million per DAY in Florida.

The 1.4 million jobs are enough jobs for every resident of Palm Beach County –the 3rd largest county in Florida.

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Tourism in context The $6.0 billion in state revenue is enough to fully fund six state

agencies – including three of the top ten: Economic Opportunity, Environmental Protection, and Health Departments along with Law Enforcement, Executive Office of the Governor and Citrus Departments.

State and local tax revenue supported by out-of-state visitors reached $11.3 billion. The state’s contribution to all levels of education in the 2014-2015 budget was $10.6 billion – a record amount.

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For more information:

Adam Sacks, Presidentadam@tourismeconomics.com

Christopher Pike, Director of Impact Studies

cpike@tourismeconomics.com