Measuring Substitution Effects of Tourist Spending Among Restaurant Sales and Grocery Store Sales: Case Study in Sevier Co. TN Stephen C. Morse, Ph.D. John M. Antun, Ph.D. University of Tennessee Knoxville, TN
Mar 30, 2015
Measuring Substitution Effects of Tourist Spending Among Restaurant Sales and Grocery Store Sales: Case Study in Sevier Co. TN
Stephen C. Morse, Ph.D.John M. Antun, Ph.D.
University of TennesseeKnoxville, TN
Area of Case Study: Sevier Co., Tennessee
Sevier County, TN(Gatlinburg, Pigeon Forge, Sevierville)
Home of:
DollywoodRipley’s AquariumGreat Smoky Mountains National Park (most visited NP in U.S.)Entertainment venues & attractions
Top 10 Tennessee Counties for Tourist
Spending in 20071) Davidson Co. $3,991 million (Nashville)2) Shelby Co. $3,064 million (Memphis)3) Sevier Co. $1,502 million (Gatlinburg, PF)
4) Knox Co. $796 million (Knoxville)5) Hamilton Co. $710 million (Chattanooga)6) Blount Co. $276 million (Maryville,
Townsend)
7) Sullivan Co. $270 million (Kingsport)8) Williamson Co. $251 million (Franklin,
Brentwood)
9) Rutherford Co. $237 million (Murfreesboro)
10)Washington Co. $188 million (Johnson City)
Source: TIA & TN Dept. of Tourist Development 3
U.S. Average Retail Prices of Gasoline, 2004 - 2008
Source: U.S. Dept. of Energy
This Period of Analysis
Top 10 Ways Tourists Reduced Travel Spending in 2008
1) Take shorter trips (miles) 58%2) Look for discounts 38%3) Less on paid attractions35%4) Buy less souvenirs 33%5) Less expensive lodging 27%6) Less nights away home 25%7) More meals in room 18%8) Drive different vehicle 10%9) Split costs with others 9%10) More fast food 8%
Source: Jerry Henry and Associates5
Two Main Questions for Analysis…
1) In a slowing economy, do tourists substitute meals in rooms (grocery store sales) for restaurant meals?
2) Can a substitution rate of grocery store sales vs. restaurant sales me measured?
Creating & Understanding the Food Purchase Ratio Index, (FPR)
Restaurant Sales ($)
Grocery Store Sales ($)
FPR Index =
FPR > 1 (restaurant sales > grocery store salesFPR = 1 (restaurant sales = grocery store salesFPR < 1 (restaurant sales < grocery store sales
FPR Index =Restaurant Sales ($)
Grocery Store Sales ($)
Example:
FPR = 1.35
Means: For every $1 spent in grocery stores, $1.35 is spent in restaurants
Magnitude Interpretation of Food Purchase Ratio Index, (FPR)
2007 Monthly Restaurant & Grocery Store Gross Sales, Sevier Co., TN
10
Grocery Store sales
Source: TN Dept. of Revenue
Restaurant / Grocery Store Sales Ratio, Sevier Co., TN, 2006 – 2008
(June)
R/G sales ratio(FPR Index)
Data indicates that…• During 2006 & 2007: (gas prices below
$3/gal)– tourist had few substitutes of grocery store
sales for restaurant sales (saw increasing FPR from 2006 – 2007)
• For 2008: (gas prices above $3/ gal)– tourists did more substitution of grocery
store sales for restaurant sales (decreasing FPR 2007 – 2008 (June)
Implications• Lower restaurant sales and pressure on
price and discounts to attract customers
• Dollywood & Ripley’s Aquarium significantly increased their budget for point of sale advertising in Grocery Stores in 2008
Additional Research• Linear and non-linear correlations
among FPR and gasoline prices• Linear correlations among restaurant
sales & grocery store sales• Examination of data from other resort
areas such as Myrtle Beach, SC & Branson, MO.
Percent of Sevier Co. Tourist Dollar Spent on…
2006Attractions 17.7%
Lodging 30.4%
Gen. Mdse. 10.6%
Apparel 14.9%
Restaurant 26.2%
TOTAL 100%
Percent of Sevier Co. Tourist Dollar Spent on…
2006 2007Attractions 17.7% 18.2%
Lodging 30.4% 30.4%
Gen. Mdse. 10.6% 10.6%
Apparel 14.9% 14.2%
Restaurant 26.2% 26.4%
TOTAL 100% 100%
Percent of Sevier Co. Tourist Dollar Spent on…
2006 2007 2008Attractions 17.7% 18.2% 13.2%
Lodging 30.4% 30.4% 26.4%
Gen. Mdse. 10.6% 10.6% 14.2%
Apparel 14.9% 14.2% 16.7%
Restaurant 26.2% 26.4% 29.2%
TOTAL 100% 100% 100%
Thank You!
Questions? Comments?
John M. Antun, Ph.D.Stephen C. Morse, Ph.D.
University of TennesseeKnoxville, TN