TOURISM AND THE ROOMS AND MEALS TAX

LAURENCE E. GOSS, PHDINSTITUTE FOR NEW HAMPSHIRE STUDIES

PLYMOUTH STATE UNIVERSITYJANUARY 10, 2011

TOURISM AND THEROOMS AND MEALS TAX

Rooms and Meals Taxes Collected During Fiscal Year 2010

Meals and Food $179.0 million 80%Lodging 42.5 million 18%Vehicle Rentals 3.5 million 2%Total $225.0 million

Non-resident Tourists $117.5 million 52%NH Resident Tourists 15.9 million 7%NH Resident Non-tourists 91.6 million 41%

Total Tourist and Business Traveler Spending – FY 2010

Meals, Lodging, Vehicle Rentals $1,679 millionRecreation, Attractions, Events 579 millionRetail Trade 1,231 millionOther (transp., services, govt.) 422 millionTotal $3,911 million

38% of total spending is in categoriessubject to the rooms and meals tax

The Importance of Tourist Spending

Tourist spending is 6.7 % of the state’s Gross Domestic Product

New Hampshire ranks 8th in tourism’s share of GDPNew Hampshire ranked 9th in the total number of

alpine skiers during the winter of 2009-10Tourism spending supported an estimated 58,700

jobs during fiscal year 2010, with another 32,600 jobs due to the multiplier effect. This is 10.9 % of all jobs in the state.

The Rooms and Meals Tax is state government’s second largest revenue source.

Tourist Spending and State Government Revenues – Fiscal Year 2010

Rooms and Meals Tax $133 millionState Liquor Stores 50 millionGasoline Tax/Tolls 40 millionBusiness Profits/Ent. Tax 36 millionState Parks, Fish & Game 25 millionState Lottery 8 millionTobacco/Beer Tax 6 million

New Hampshire’s Economic Base During Fiscal Year 2008

Employment by Industry Due to Out-of-state Revenues:

Manufacturing 77,174Tourism 51,709Services 34,683Retail Trade 26,843Government 24,975Colleges/Hospitals 22,448Other* 63,258Total 301,090*includes agriculture, mining, construction, wholesale trade, utilities, information, transportation

Long Term Trends in Rooms and Meals Taxes

and Tourist Spending

New Hampshire’s and New England’s tourism industry is growing more slowly than the United States

New Hampshire’s resident non-tourist spending is growing faster than tourist spending due to the increase in eating meals out

The spending pattern has become less seasonal over time, in contrast with Maine and Vermont

Jobs in the industry are increasingly full time, year round and have fringe benefits

Short Term Trends in Rooms and Meals Taxes and Tourist Spending

New Hampshire did not see as large a drop in the number of visits or visitor spending as most of the rest of the United States during the current recession

Only Connecticut out-performed New Hampshire of the six New England states during the current recession

Tourism is a lagging economic sector in both entering and coming out of a downturn. The spring of 2010 was the first solidly positive seasonal quarter since 2008.

Higher rooms and meals tax receipts during fiscal year 2010 in comparison with 2009 was due to the increase in the tax rate

Factors That Affect Rooms and Meals Tax Receipt Levels

1) The tax rate2) The weather3) National/regional economic cycles4) The level of DTTD promotional

spending5) The cost of gasoline

The Importance of DTTD Promotional Activities

About 8 % of tourist trips and 10 % of tourist spending are a result of DTTD promotional activities

This is 2.7 million out of 34 million trips and $400 million out of $4 billion in tourist spending

About 35 % of all tourists make use of DTTD funded promotional materials and information before and/or during their trip

The DTTD promotional budget during fiscal year 2010 was $5.6 million

Over $72 was spent by tourists in the state as a result of each dollar spent by DTTD on promotional activities

The Impact of DTTDPromotional Activities

State government receives almost $7 directly or indirectly for each DTTD dollar spent

State government receives $2.50 in rooms and meals taxes for each DTTD dollar spent, a profit of $1.50

State government receives a total profit of $2.46 for each DTTD dollar spent from Rooms and Meals, BPT/BET, etc.

State government also receives $4.54 in other revenues for each DTTD dollar and uses these funds to provide goods and services to tourists plus repay the original DTTD dollar

Local governments receive about $1 in revenue for each DTTD promotional dollar

For each $1 million that DTTD spends on promotion, the $72 million in visitor spending results in 1,100 jobs across a range of industries

Institute for New Hampshire Studies Research for DTTD

Along with DTTD and all of its consultant team members, the goal of our research is to maximize rooms and meals tax receipts.

Research products include: visitor surveys, inquirer conversion surveys, seasonal barometers and forecasts, analysis of US regional and international markets, media trends, return on investment reports, and the tourism satellite account report.

While some reports are intended only for the internal use of DTTD, most are intended for use by the industry and the public and are available on the INHS website at Plymouth State.