Tourism Industry in Orange County

Introduction Much attention has been devoted lately to the fact that Florida’s economy is in transition. State and local economic development agencies now focus much of their efforts in attracting high tech industries that would help to diversify the economy and raise wage levels. While these efforts are laudable, based on its economic impact, leisure and entertainment likely would continue to represent the most significant share of the State’s economy. The State of Florida received about 82.5 million visitors in 2008 (Associated Press, 2009), and the Metro Orlando area accounts for about half of this total. Our area receives over 40 million family and convention visitors each year (CVB, 2009). These visitors, in turn, spend money that benefits other sectors of the economy. The local tourism market is made up of two important sectors. The leisure visitors group consists of families that come to visit the area’s theme parks. The second group is convention attendees traveling to our area to attend professional meetings and seminars. Both groups are very important to our industry. This issue of the Economic Research Initiative will address the relationship between the industries that make up the tourism sector using location quotients and business establishment data. Moreover, it will also show areas of concentration of these industries in the County.

Economic Impact of Tourism Industry Staff performed a study of local leisure activity by first using the location quotient method, which expresses the percentage of economic concentration of an industry in the local economy. This information was later correlated with establishment data found in the InfoUSA 2009 database to determine total business establishments and employees in 2009. The data were studied at the five-digit level to remove any establishments that may be used by the local population. Moreover, to facilitate the analysis at the County level, staff divided the establishments into core and supporting tourism industries.

Sources: Info USA 2009, Location Quotient Calculator, 2009

The core tourism establishments include all businesses within the Amusement and Theme Parks (NAICS 71311), Hotels and Motels (72111), and All Other Amusement and Recreation Industries.

Industry

Number of Establishments

Estimated Number of Jobs

Location Quotient

NAICS 71311 Amusement & Theme Parks

20 27,704

51.96

NAICS 72111 Hotels and Motels 352 64,598 4.41

NAICS 71399 All Other Amusement and Recreation Industries

25 479

1.29

ECONOMIC OUTLOOK DECEMBER 2009

The Tourism Sector in Orange County by Luis Nieves-Ruiz, AICP

Issue 4

Exhibit 1: Core Tourism Sector in Orange County

(71399) sectors. The reasoning behind grouping these industries together is that they are the most direct beneficiaries of the tourism trade. Exhibit 1 shows the location quotients and establishment for these core sectors. The Amusement and Theme Parks sector includes all establishments that operate attractions such as Sea World and Disney’s Magic Kingdom. This sector has the highest location quotient in the County. The Hotels and Motels sector includes short term lodging facilities without casinos. Finally, the Other Amusement and Recreation industries include small commercial amusements such as mini golf courses. Orange County has more than 310 core tourism establishments that are responsible for over 60,000 jobs. Because of this situation, a second category call supporting industries was created. These industries are very important because they provide specific services to the core industries. Supporting industry establishments are responsible for another 66,000 jobs. Exhibit 2 shows the information for the supporting industries with the highest location quotients.

Some of these industries cater specifically to visitors. Charter Bus establishments (NAICS 48551) provide buses for hire without specific routes. Other Ground Transportation firms (NAICS 4859) provide shuttle services between specific destinations. Establishments within the Tour Operators (NAICS 56152) and Other Travel Arrangement Services (NAICS 56159) sectors sell services, such as tickets and special vacation packages. The Performing Art Companies (NAICS 7111) sector includes dinner theaters, dance companies, and musical groups.

Industry Number of

Establishments Estimated Number of

Employees Location Quotient

NAICS 56159 Other Travel Arrangement Services

27 2,203 14.96

NAICS 56152 Tour Operators 96 510 9.93

NAICS 56192 Convention and Trade Show Organizers

70 1,305 8.78

NAICS 48551 Charter Bus 28 352 6.08

NAICS 44832 Luggage and Leather Goods Stores

23 229 5.39

NAICS 53249 Other Machinery Rental and Leasing

3 14 4.36

NAICS 424460 Fish and Seafood Merchant Wholesalers

4 229 3.35

NAICS 485999 Other Ground Passenger Transportation

62 294 2.03

NAICS 51821 Data Processing, Hosting and Related Services

4 195 1.53

NAICS 7115 Independent Artists, Writers, and Performers

107 3,099 1.83

NAICS 7111 Performing Arts Companies

93 828 1.29

NAICS 72211 Full-service Restaurants

1,786 43,107 1.21

NAICS 7223 Special Food Services

101 17,195 1.11

Sources: Info USA 2009, Location Quotient Calculator 2009

ECONOMIC OUTLOOK DECEMBER 2009

Exhibit 2: Supporting Tourism Industry Sectors

Establishments within the following sectors probably benefit more from the local convention market: Convention and Trade Show Organizers (NAICS 56192), Independent Artists, Writers, and Performers (NAICS 7115), and Special Food Services (NAICS 7223). The first sector is responsible for organizing business trade shows, conferences, meetings, and other events. Independent artists and performers are individuals engaged in artistic productions or that provide technical expertise for these productions. This sector includes costume designers, recording technicians, and dancers, among others. Finally, the Special Food Services sector includes food service contractors and caterers that prepare food for special events and trade shows. Then there are other sectors that are not directly linked to the tourism industry, but benefit from it. These sectors include Fish and Sea Food Merchants Wholesalers (NAICS 424460), Luggage and Leather Goods Stores (NAICS 44832), and Full Service Restaurants (NAICS 7221). The high location quotients for the seafood wholesalers and luggage stores hint that there are a higher number of establishments within these sectors than what would be warranted by the local demand for their products. For example, most of the luggage stores are located either within discount outlet stores or within commercial tourist corridors in International Drive. In the case of seafood, it is plausible that some of the products are sold to hotels and restaurants that cater mainly to tourists. While most restaurants cater to the local population, this sector benefits from visitor spending and are an important component of the local tourist districts. To study the Data Processing, Hosting, and Related services (NAICS 51821) and Other Machinery Rental and Leasing (NAICS 53249) sectors, staff only selected the establishments that were most directly linked to the tourism industry. This explains the low number of establishments within these two sectors. The four data processing and hosting companies provide multimedia services that help to attract new visitors. The rental and leasing companies help with renting props or designing sets. Even though the retail industry activity is likely affected by visitor spending, its employment numbers were not included, because it is very difficult to separate the impact that tourists have on commercial demand versus that of the local population. According to the BLS, in 2008, Orange County had over 69,000 jobs in this sector, and the location quotient was 0.82. This means that our current retail sector may not meet the current demand from Orange County residents. Besides Luggage and Leather Goods Stores, there were only four retail sectors with a location quotient higher than 1.5. These were Shoe Stores (NAICS 44821), All Other Miscellaneous Store Retailers (NAICS 45399), Family Clothing Stores (NAICS 44814), and Cosmetic and Beauty Supply Stores (NAICS 446120). However, the County does have some significant commercial developments that cater to tourists, such as Prime Outlets, the Florida Mall, and the Mall at Millenia. Concentration of Tourism Activity Identifying tourism activity clusters is challenging because, unlike nurseries and simulation companies, there are accommodation and food service establishments all over Orange County. This is specially true along highly traveled commercial corridors such as Colonial Drive, Semoran Boulevard, and South Orange Blossom Trail. However, three areas within the unincorporated Orange County stand out because of their high concentration of core and supporting tourism establishments (Exhibit 3). The first area follows Interstate 4 from the City of Orlando to Lake Buena Vista and is the biggest of the clusters. This area includes properties along International Drive, Universal Boulevard, and Sand Lake Road. This area is home to the Orange County Convention Center, several convention hotels, and commercial amusements. The area boasts over 130 restaurants, some of them located in “Restaurant Row”, a development of fine dining establishments in Sand Lake Road. This cluster probably serves both convention and leisure visitors.

ECONOMIC OUTLOOK DECEMBER 2009

A second cluster has formed at the intersection of State Road 535/S. Apopka Vineland Road and Palm Parkway, near Lake Buena Vista. This area benefits from its proximity to one of Downtown Disney’s entrances. The area is mainly home to hotels and restaurants, and the predominant customer base in this area is probably leisure visitors who want good access to the Disney theme parks. Most of the parcels in the area have an Activity Center Mixed Use future land use. The third cluster is along S. Orange Blossom Trail, between Oakridge Road and the S.R. 528. This is an interesting area, because it is mainly composed of industrial uses and hotels that serve either the airport or the Florida Mall, a destination in itself. Most of the restaurants in this area are fast food chain restaurants that probably serve a high volume of commuters. The area is home to over 25 supporting establishments that are not restaurants, such as convention and trade show organizers, tour operators, promoters, and transportation providers. Most of them are located in Orlando Central Park, an older

ECONOMIC OUTLOOK DECEMBER 2009

Source: InfoUSA, 2009

Exhibit 3: Clusters of Tourism Activity in Orange County

1

2

3

industrial subdivision. These companies probably locate here because of the area’s location near the Convention Center and lower rental rates. Indeed, south of S.R. 528, there are about 20 additional supporting companies. Conclusion Tourism is and will continue to be Orange County’s most important economic sector. It does not only positively impact core industries, but it also has an effect on a variety of industries within the retail and service sectors. Orange County should continue to support this industry and help it to face the challenges and remain competitive. The biggest current challenge to the local tourism industry is the global recession. After increasing steadily for the past seven years, the number of annual visitors has started to decline. Hotel stays and tourism tax revenues have continued to drop during the past couple of months. The current economic conditions are a worldwide phenomenon that will constrain the tourism industry over the next couple of years. Competition, both national and international, is another concern, but Orange County does have the physical and human infrastructure to compete in the world market. The vitality of the current tourism cluster is very important to our competitiveness. The concept of “theming,” or creation of place identity, is very important to the tourism industry, and both the International Drive and State Road 535 clusters excel in this concept. The Sand Lake Road area could probably benefit from this approach, especially near South Orange Blossom Trail, where the land use pattern transitions to an industrial area. The redevelopment of some of these areas could be achieved by attracting more supporting industries related to the convention and entertainment industries, which would benefit the most from the area’s location. References Associated Press. Visits to Florida Fell in 2008. Florida Trend [online version]. Originally

published on February 17, 2009. Retrieved November 17, 2009 from http://floridatrend.com/article.asp?aid=50576

Bureau of Labor Statistics, U.S. Department of Labor. 2007 Location Quotient Statistics for

Orange County. Retrieved on November 20, 2009 from http://data.bls.gov LOCATION_QUOTIENT/

servlet/ lqc.ControllerServlet

Info USA Database License Group. (May, 2009). Orange County Business Leads Report. Office of Management and Budget. (2207). North American Classification System. Lanham:

Bernan Orlando/Orange County Convention and Visitors Bureau. Travel to Orlando. Retrieved at

http://www.orlandoinfo.com/research/visitors/volume.cfm

Issues Month of Publication

Health Care and Biotechnology January

Conclusions March

Orange County Growth Management Department Planning Division

Research & Intergovernmental Coordination Section Post Office Box 1393

Orlando, FL 32802-1393

Telephone: 407.836.5600 Fax: 407.836.5862

E-Mail: [email protected]

ECONOMIC OUTLOOK DECEMBER 2009