Presented April 2014 The 2013 Economic Impact of Tourism in Wisconsin.

Presented April 2014

The 2013 Economic Impact of Tourism in Wisconsin

State Overview

3

Key trends in 2013

The Wisconsin visitor economy continued to expand in 2013 with a 4.5% increase in direct visitor spending. This follows a 4.8% increase in 2012.

■ Wisconsin reached 100 million visits in 2013.

■ Visitor growth in 2013 was the fastest since 2010 as U.S. consumers’ pro-travel attitude reached and surpassed pre-recession levels.

■ Day visitation expanded in 2013 as gas prices remained stable.

■ Per trip spending also increased as prices rose in key spending categories and visitors spent more freely.

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Key findings

Visitor spending of $10.8 billion generated $17.5 billion in total business sales in 2013 as tourism dollars flowed through the Wisconsin economy.

Tourism activity sustained 185,500 jobs in 2013, both directly and indirectly.

These jobs represent 7.8% of total employment in Wisconsin; 1 in every 12.8 jobs in the state is sustained by tourism activity.

Including indirect and induced impacts, tourism in Wisconsin generated $1.35 billion in state and local taxes and $1.0 billion in Federal taxes last year.

In the absence of the state and local taxes generated by tourism, each Wisconsin household would need to pay $590 to maintain the current level of government services.

5

Industry indicators

Visits to Wisconsin destinations grew 3.5% between 2012 and 2013.

Hotel room demand grew 2.7% (source: Smith Travel Research).

The average daily rate increased by 3.0% in 2013 helping grow overall hotel room revenue by 5.7% (source: Smith Travel Research).

State sales tax revenue on lodging properties grew 3.2% in 2013 (source: State Revenue Office).

Tourism-related employment grew on par with overall state employment growth.

Visitor Spending

7

Overview

Visitor volume and spending in Wisconsin continued to grow in 2013.

Wisconsin visitor volumes reached 100 million in 2013. Visitors spent a total of $10.8 billion.

Visits grew 3.5% while spending increased 4.5% in 2013.

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2010 2011 2012 2013Visitor Spending, bls (L) Person-Stays, mls (R)

$

Wisconsin Visits and SpendingUS$ Billions

Sources: Longwoods International, OTTI, Stats Can, Tourism Economics

Millions

8

Visitor spending

Wisconsin visitor spending reached $10.8 billion in 2013, posting 4.5% growth.

With transportation costs moderating, other categories supported visitor spending growth including F&B and recreation.

$9.2

$9.9

$10.4

$10.8

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

8

9

9

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10

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2010 2011 2012 2013

$ B

illio

ns

Spending (L) % Change (R)

$

Tourism Industry Sales & Growth RateUS$ Billions

Sources: Longwoods International, OTTI, Stats Can, Tourism Economics

Sector 2010 2011 2012 2013 % ChangeLodging $2,380 $2,565 $2,671 $2,795 4.6%

Other Transport $958 $1,057 $1,195 $1,244 4.1%

Air $388 $405 $408 $407 -0.3%

Food & bev. $2,252 $2,447 $2,569 $2,729 6.2%

Retail $2,066 $2,200 $2,222 $2,272 2.3%

Recreation $1,155 $1,225 $1,311 $1,393 6.3%

TOTAL $9,199 $9,899 $10,376 $10,840 4.5%

% Change 7.9% 7.6% 4.8% 4.5%

Visitor Spending(US$ Million)

9

Visitor spending by sector

Travelers spent more than $2.7 billion on food & beverages and $2.2 billion in the lodging sector last year. The retail sector received nearly $2.3 billion from visitors.

In 2013, visitor spending increased 6.3% on recreation & entertainment, 6.2% on food and beverage, and 4.6% on lodging.

2,729

2,272

2,182

1,650

1,348

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2012 2013

$ Million, 2013 values shown

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Visitor spending distribution

Strong growth in day visits with increased spending on recreation pushed the recreational share of the traveler dollar to nearly 13%.

The share of the traveler dollar spent on lodging, the largest sector, remained level at 26% in 2013.

Food & beverage spending ranks second, capturing a quarter of visitor spending, followed by retail at 21%.

Lodging25.8%

Other Transport11.5%

Air3.8%

Food & bev.25.2%

Retail21.0%

Recreation12.9%

Visitor Spending by Sector

Sources: Longwoods International, OTTI, Stats Can, Tourism Economics

11

Visitor spending trends

$2.4 $2.6 $2.7 $2.8

$1.0 $1.1 $1.2 $1.2 $0.4 $0.4 $0.4 $0.4 $2.3

$2.4 $2.6 $2.7

$2.1 $2.2

$2.2 $2.3 $1.2

$1.2$1.3

$1.4

$0

$2

$4

$6

$8

$10

$12

2010 2011 2012 2013

Recreation

Retail

Food & bev.

Air

Other Transport

Lodging

Sources: Longwoods International, OTTI, Stats Can, Tourism Economics

Wisconsin's Visitor Spending by Year, Billions of $

Visitor spending has grown an average of 5.6% annually since 2010.

Lodging sales have increased 19% from 2010 and are now above their pre-recession peak.

■ Lodging includes second home rental

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Visitor spending by market segment

Leisure tourism represents 88% of visitor spending in Wisconsin.

Overnight visitors spend $7.3 billion in Wisconsin, 67% of the total.

Day visitor spending added $3.6 billion in 2013.

Domestic visitors to Wisconsin spent $10.2 billion in 2013, 94% of all visitor spending.

Business $1.3 Day $3.6 Domestic $10.2

Leisure $9.5 Overnight $7.2 Overseas $0.6

Canada $0.1

Total $10.8 Total $10.8 Total $10.8

Business 12.0% Day 33.2% Domestic 94.0%

Leisure 88.0% Overnight 66.8% Overseas 5.3%

Canada 0.7%

Stay Market

SharePurpose Stay Market

Visitor Spending in 2013(US$ Billion)

Purpose

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Visitor spending by market segment

12.0%

33.2%

94.0%

88.0%

66.8%

5.3%

0.7%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Purpose Stay Market

Per

cent

age

dist

ribut

ion

Leisure

Day

Overnight

Overseas

Domestic

Business

Canada

Sources: Longwoods International, OTTI, Stats Can, Tourism Economics

14

Seasonality of lodging

Tourism is a year-round industry in Wisconsin. Its peak is in the third quarter with nearly a third of all rooms rented and around 35% of hotel room revenue.

In 2013, growth was strongest in the second half of the year with room revenue growing over 5% in Q3 & Q4.

Q1=J,F,M Q2=A,M,J

Q3=J,A,S Q4=O,N,D

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600

Q1 Q2 Q3 Q4

2010

2011

2012

2013

Wisconsin Hotel Room Revenue$ millions

Source: Smith Travel Research

0%

5%

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20%

25%

30%

35%

40%

Q1 Q2 Q3 Q4

Revenue

Rooms

Wisconsin Hotel Rooms and RevenueQuarterly Share, 2013

Source: Smith Travel Research

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Seasonality of visitor spending

Business Day

Total visitor spending also peaks in the 3rd quarter with $3.5 billion in visitor sales.

In 2013, growth was strongest in the second half of the year. Visitor spending in Q3 grew more than 5.0% and 6.1% in Q4.

$2,141

$2,776

$3,457

$2,466

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Q1 Q2 Q3 Q4

2012

2013

Wisconsin Quarterly Visitor Spending$ Millions

Source: Tourism Economics

Q1 Q2 Q3 Q42012 $2,088.1 $2,672.6 $3,291.2 $2,323.7

2013 $2,141.3 $2,776.0 $3,457.2 $2,465.7

% Chn 2.55% 3.87% 5.04% 6.11%

Visitor Spending by Quarter Wisconsin

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Seasonality of visitor spending

Business Day

Tourism spending has grown in every quarter since 2011.

Growth did hit a slow patch in the second half of 2012 and first part of 2013 before rebounding in the 2nd half of 2013. 0%

2%

4%

6%

8%

10%

12%

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4

2011 2012 2013

$

Wisconsin Tourism Spending Growth Y-o-Y Growth Rates by Quarter

Source: Tourism Economics

State Tourism Impacts

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How visitor spending generates impact

• Lastly, the induced impact is generated when employees whose incomes are generated either directly or indirectly by tourism, spend those incomes in the local economy.

• Travelers create direct economic value within a discrete group of sectors (e.g. recreation, transportation). This supports a relative proportion of jobs, wages, and taxes within each sector.

• Each directly affected sector also purchases goods and services as inputs (e.g. food wholesalers, utilities) into production. These impacts are called indirect impacts.

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Tourism sales by industry

Direct Indirect Induced TotalAgriculture, Fishing, Mining - 32.5 25.0 57.5

Construction and Utilities - 283.1 106.2 389.3

Manufacturing - 459.1 242.6 701.7

Wholesale Trade - 97.5 146.7 244.2

Air Transport 406.6 4.4 7.2 418.3

Other Transport 432.7 162.7 66.6 662.1

Retail Trade 2,272.4 15.2 280.1 2,567.7

Gasoline Stations 811.1 1.2 18.5 830.8

Communications - 241.3 118.5 359.8

Finance, Insurance and Real Estate 612.6 698.5 1,126.7 2,437.7

Business Services 66.7 710.5 222.0 999.2

Education and Health Care - 5.6 687.9 693.5

Recreation and Entertainment 1,143.2 57.8 37.8 1,238.9

Lodging 2,182.3 2.6 2.2 2,187.0

Food & Beverage 2,728.9 121.9 226.9 3,077.8

Personal Services 181.2 117.1 168.0 466.3

Government - 117.4 66.3 183.7

TOTAL 10,837.9 3,128.3 3,549.3 17,515.5

Growth Rate 4.5% 4.4% 4.3% 4.4%

* Direct sales include cost of goods sold for retail sectors

Tourism Sales

(US$ Million)

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All business sectors of the Wisconsin economy benefit from tourism activity directly and/or indirectly.

Sectors that serve the tourism industry, like business services, gain as suppliers to a diverse tourism industry.

Tourism sales by industry

0

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Indirect

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Tourism Sales by Industry$ million

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Total tourism employment

The tourism sector directly and indirectly supported 185,495 jobs, or 7.8% of all employment in Wisconsin last year.

Direct Indirect Induced Total

Agriculture, Fishing, Mining - 345 244 589 Construction and Utilities - 965 327 1,292

Manufacturing - 1,283 536 1,820

Wholesale Trade - 614 924 1,538

Air Transport 1,788 16 26 1,830

Other Transport 2,166 1,466 603 4,236

Retail Trade 15,395 228 4,293 19,917

Gasoline Stations 1,609 20 296 1,925

Communications - 1,013 421 1,433

Finance, Insurance and Real Estate 3,484 4,187 4,080 11,750

Business Services 455 8,020 2,613 11,088

Education and Health Care - 83 7,093 7,176

Recreation and Entertainment 23,806 1,247 891 25,944

Lodging 32,563 44 38 32,644

Food & Beverage 47,864 2,472 4,612 54,948

Personal Services 2,353 1,323 2,410 6,086

Government - 917 362 1,279

TOTAL 131,484 24,244 29,767 185,495

Growth Rate 0.8% 1.1% 1.2% 0.9%

Tourism Economy Employment

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Total tourism employment

Tourism is an employment intensive industry with particularly high job creation in the restaurant, hotel, and recreation sectors.

Secondary benefits are realized across the entire economy through the supply chain and incomes as they are spent.

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Direct

Indirect

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Tourism Employment by Industry

Significant indirect and induced benefits

23

Tourism employment intensity

3.7%

4.1%

22.4%

34.4%

92.2%

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

Total

Retail

Food & bev.

Recreation

Lodging

Tourism Employment Intensity by Industry

Tourism is a significant part of several industries – 92% of lodging, 34% of recreation, and 22% of food & beverage employment is directly supported by tourism spending.

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Tourism personal income

Direct Indirect Induced TotalAgriculture, Fishing, Mining - 4.4 3.9 8.3

Construction and Utilities - 76.3 27.3 103.6

Manufacturing - 74.0 31.3 105.2

Wholesale Trade - 42.5 64.0 106.5

Air Transport 84.0 0.7 1.2 85.9

Other Transport 107.7 70.4 27.7 205.8

Retail Trade 332.6 6.3 114.3 453.2

Gasoline Stations 40.4 0.5 7.3 48.2

Communications - 54.4 24.7 79.1

Finance, Insurance and Real Estate 61.9 141.8 142.5 346.2

Business Services 21.6 370.2 120.7 512.5

Education and Health Care - 3.1 377.0 380.0

Recreation and Entertainment 403.8 22.7 14.5 441.0

Lodging 631.8 0.7 0.6 633.1

Food & Beverage 767.7 38.7 81.3 887.7

Personal Services 79.3 57.2 71.0 207.5

Government - 69.2 24.7 93.9

TOTAL 2,530.9 1,032.9 1,133.9 4,697.7

Pch Change 2.6% 4.0% 3.9% 3.2%

Tourism Labor Income (Compensation)

(US$ Million)

25

Tourism personal income

Substantial employment in F&B and recreation supports significant labor income in those industries.

Business services and the FIRE (finance, insurance and real estate) sectors depend on tourism activity as suppliers to tourism companies and their employees.

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Indirect

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Tourism Labor Income by Industry$ million

Significant indirect and induced benefits

26

Tourism tax generation

Taxes of $2.4 billion were directly and indirectly generated by tourism in 2013.

State and local taxes alone tallied $1.35 billion.

Each household in Wisconsin would need to be taxed an additional $590 per year to replace the tourism taxes received by state and local governments.

Tax Type 2010 2011 2012 2013

Federal Taxes Subtotal 917.6 950.9 983.6 1,017.9

Corporate 81.9 87.4 91.5 95.6

Indirect Business 104.8 112.0 117.2 122.4

Personal Income 212.6 218.6 225.4 232.7

Social Security 518.2 532.9 549.5 567.2

State and Local Taxes Subtotal 1,202.1 1,270.8 1,313.3 1,349.5

Corporate 113.2 120.9 126.6 132.2

Personal Income 101.9 104.8 108.1 111.6

Sales 425.3 453.1 473.4 490.4

Bed 72.7 77.3 80.9 84.6

Property 370.9 391.7 397.8 400.4

Excise and Fees 108.5 113.0 116.4 119.9

State Unemployment 9.6 9.9 10.2 10.5

TOTAL 2,119.6 2,221.7 2,296.9 2,367.4

Traveler Generated Taxes

(US$ Million)

27

Tourism tax generation – state & local government

Of the $1.35 billion collected by state and local governments from traveler activity, $733 million (54%) accrued to state government.

Local government revenues from visitor activity grew to $618 million.

Property tax revenue, along with local excise and fees and lodging taxes, comprise the major revenue streams for local governments.

Tax Type 2012 2013

State Tax Subtotal 707.0 732.9

Corporate 126.6 132.2

Personal Income 108.1 111.6

Sales 438.0 453.7

Lodging 0.0 0.0

Property 0.0 0.0

Excise and Fees 24.2 25.0

State Unemployment 10.2 10.5

Local Tax Subtotal 606.3 617.7

Corporate 0.0 0.0

Personal Income 0.0 0.0

Sales 35.4 36.7

Lodging 80.9 85.6

Property 397.8 400.4

Excise and Fees 92.2 95.0

State Unemployment 0.0 0.0

Traveler Generated Taxes - State and

Local Government Revenues

(US$ Million)

Methodology and Background

29

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.

Why quantify the tourism economy?

30

Why 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…

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• Domestic visitor expenditure estimates are provided by Longwoods International’s representative survey of US travelers. These are broken out by sectors (lodging, transport at destination, food & beverage, retail, and recreation), by purpose (business and leisure), and by length of stay (day and overnight).

• Tourism Economics then adjusts these levels of spending based on a range of known measures of tourism activity:

• Overseas visitor spending (source: OTTI, TE)

• Canada visitor spending (source: Statistics Canada, TE)

• Bed tax receipts

• Spending on air travel which accrues to all airports and locally-based airlines

• Gasoline purchases by visitors (source: TE calculation)

• Smith Travel Research data on hotel revenues

• Industry data on employment, wages, GDP, and sales (source: BEA, BLS, Census)

Methods and data sources

32

• An IMPLAN model was compiled for the State of Wisconsin. This traces

the flow of visitor-related expenditures through the local economy and

their effects on employment, wages, and taxes. IMPLAN also quantifies

the indirect (supplier) and induced (income) impacts of tourism.

• All results are benchmarked and cross-checked and adjusted based on

the following:

• US Bureau of Labor Statistics and Bureau of Economic Analysis

(employment and wages by industry)

• US Census (business sales by industry)

• The source of the employment and wage data is the Regional Economic

Information System (REIS), Bureau of Economic Analysis, U.S.

Department of Commerce. All employment rankings are based on Bureau

of Labor Statistics (ES202/QCEW) data.

Methods and data sources

33

Selected recent economic impact clients

Cities

Baltimore, MD

Columbus, OH

Kansas City, MO

London, United Kingdom

New York City

Omaha, NE

Orlando, FL

Philadelphia, PA

Pittsburgh, PA

Rockford, IL

Countries / Provinces

Bahamas

Bermuda

Cayman Islands

Dubai

Ontario Canada

St. Lucia

United Kingdom

Associations / Companies

Center for Exhibition Industry Research (Economic Impact of Visa Restrictions)

DMAI (Event Impact Calculator for 80 CVBs)

US Travel Association (Impact of travel promotion)

InterContinental Hotels

States

California

Georgia

Maryland

New York

North Carolina

Ohio

Pennsylvania

Wisconsin

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About Tourism Economics

Tourism Economics, headquartered in Philadelphia, is an Oxford Economics company dedicated to providing high value, robust, and relevant analyses of the tourism sector that reflects the dynamics of local and global economies. By combining quantitative methods with industry knowledge, Tourism Economics designs custom market strategies, project feasibility analysis, tourism forecasting models, tourism policy analysis, and economic impact studies.

Our staff have worked with over 100 destinations to quantify the economic value of tourism, forecast demand, guide strategy, or evaluate tourism policies.

Oxford Economics is one of the world’s leading providers of economic analysis, forecasts and consulting advice. Founded in 1981 as a joint venture with Oxford University’s business college, Oxford Economics is founded on a reputation for high quality, quantitative analysis and evidence-based advice. For this, it draws on its own staff of 40 highly-experienced professional economists; a dedicated data analysis team; global modeling tools; close links with Oxford University, and a range of partner institutions in Europe, the US and in the United Nations Project Link.

For more information: [email protected].

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For more information:

Adam Sacks, President

[email protected]

Christopher Pike, Senior Economist

[email protected]