Utah’s Tourism: Challenges & Opportunities R. Thayne Robson, Director Bureau of Economic & Business Research David Eccles School of Business University.

Utah’s Tourism: Challenges & Opportunities

R. Thayne Robson, DirectorBureau of Economic & Business Research

David Eccles School of Business

University of Utah

February 7, 2001

Executive Summary Tourism, Conventions, and Travel are big and

growing activities in the Utah, National and World economies.

Tourism spending in 1999 was over $4 billion in Utah, $523 billion in the USA, and $456 billion in the International World travel.

The Winter Olympic Games of 2002 provides a Aonce in our history@ opportunity for Utah to showcase our statewide tourism offerings.

The Olympic Games alone will not adequately promote Utah=s Tourism potential.

The Games do provide a platform on which Utah can showcase itself to the world.

SLOC, USOC, and IOC along with the various sports federations are interested in staging the best games ever, and the sponsors have their own products and services to promote.

Who will promote Utah=s Travel and Tourism potential?

The Winter Olympic Games will provide state and local governments with $76 million more in tax revenues than the cost of the services governments will be required to provide during the games, according to the economic impact analysis completed in the Governor=s Office of Planning and Budget.

Furthermore, reserves are to be built up to maintain and operate Olympic venues following the games.

Where is the money being invested in promotion programs that will insure that the $4 billion investment in new facilities will actually be utilized after the games?

There are at least two audiences for our promotion.

The first group are those who actually come for the games and visit Utah. I believe this group will at least get some exposure to what Utah

offers and I hope they will be encouraged to come back after the games.

Many within the visiting group are people who make their living by traveling and whose travels are controlled by their employers and world events.

The second group of more than 1 billion and possibly as many as 3 billion people will be exposed to Utah and the Games via TV, radio, magazines, newspapers and the world wide web. What will they know about what Utah has to offer after the

games? Will they learn about Utah=s Spring, Fall and Summer

seasons or about the incredible variety of things we can offer both in Utah and in surrounding states.

We need to commit now to providing at least an additional $20 million above and beyond what is already committed to promote Utah=s tourism during this Aonce in our history@ opportunity.

If we do not invest in promotion, our facilities will remain under utilized, i.e., low occupancy and poor earnings after the Games.

If we make wise, well measured, and prudent investments in a promotion, we can expect great returns for the foreseeable future.

Utah’s Magnificent Opportunity

The World is at Utah’s door.

Will we say:

Please come in.

You are welcome here.

To Promote or Not to Promote

The World is at Utah’s door.

Will we turn on the lights?

Or, will we let our guests sit in the dark?

Utah’s Great Challenge

Can we capitalize on $4 billion of Olympic investments?

Are we willing to sell, promote, show, and tell the world what we have here?

The OlympicsWill this event occur once in a lifetime, or a century,

or once in our history when Utah has a world wide market exposure?

Many of the 6 billion people on earth will hear about or see electronic or printed information about the Winter Games of 2002.

Will they want to come and experience Utah?

They will if they know what we have to offer!

Travel & Tourism Industry

Includes many industries:Airlines, hotels, restaurants, gift shops, retail and service

establishments, auto and bus transportation, automobile repair, health care, etc.

The rule is:Tourists and travelers use

some industries more than others

But all industries are utilized.For example – look at the preparation for the Olympics.

Utah Travel & Tourism

Spending in Utah:$4.20 billion in 1999$4.25 billion in 2000

Employment in 1999:Direct: 67,000Indirect: 52,500Total: 119,500

Employment in 2000: 121,000

Utah Travel & Tourism (Cont.)

Generates about 11% of total non-agricultural employment

Taxes generated:Total: $340 million

State: $252 million

Local: $88 million

Utah Tourism Indicators:Direct and Indirect Travel-Related Employment in Utah

50 52 5458

61 63 65 6771

8286

9196

100

107

113117

120 122

79

0

20

40

60

80

100

120

140

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

(e)

Th

ou

san

ds

Source: Utah Department of Workforce Services, adapted by the Utah Travel Council

Utah Tourism Indicators - Hotel Room RentsMillions of Current Dollars

$113 $125$141

$161 $165 $176$197

$221$241

$261$295

$313

$365

$405

$460

$513

$558$581 $582

$600

$0

$100

$200

$300

$400

$500

$600

$700

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

(e)

Mil

ion

s $

Source: Utah State Tax Commission

Utah Tourism Indicators - Traveler Spending

$0.0

$0.5

$1.0

$1.5

$2.0

$2.5

$3.0

$3.5

$4.0

$4.5

$5.0

19

81

19

82

19

83

19

84

19

85

19

86

19

87

19

88

19

89

19

90

19

91

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

(e)

Bil

lio

ns

Traveler Spending (Billions $)

Sources: Utah Travel Council

Utah Tourism Indicators - Total Number of Visits

0.72 0.76 0.88 0.72 0.64 0.7 0.75

14.5 15.3 16.1 16.7 17.2 17.5 17.1

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

1994

1995

1996

1997

1998

1999

2000

(e)

Mill

ion

s

Foreign US

Source: Utah Travel Council

Utah Tourism Indicators - Taxes Generated by Travel Spending

$198 $210 $225 $237 $243 $249 $252

$70 $74$79

$83 $85 $87 $88

0.0

50.0

100.0

150.0

200.0

250.0

300.0

350.0

400.0

1994

1995

1996

1997

1998

1999

2000

(e)

Mill

ion

s

State Government Local Government

Sources: Utah Tax Commission and Utah Travel Council

Utah Tourism Indicators - Hotel/Motel Occupancy Rates

74% 74% 73% 68% 63% 62% 61%

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

19

94

19

95

19

96

19

97

19

98

19

99

20

00

(e)

Hotel/Motel Occupancy Rates

Sources: Utah Tax Commission and Utah Travel Council

Source: Utah Governor’s Office of Planning & Budget, Nov. 2000

Public and Private Investment Beneficial to the 2002 Olympic Winter Games (Millions $)

Projec t Total Cost Federal SLOC Other

Venues $321.9 $0.0 $151.5 $170.4

Housing $143.8 $14.7 $32.1 $97.0

Transportation $2,253.3 $891.9 $0.0 $1,361.4

Hotels $297.0 $0.0 $0.0 $297.0

Resort* $756.8 $0.0 $57.8 $699.0

Miscellaneous $256.7 $18.7 $6.0 $232.0

Total $4,029.5 $925.3 $247.4 $2,856.8

Partic ipation

Source: Governor’s Office of Planning and Budget

*Resort Additions, Expansions, or Lease Fees

Some QuestionsWill Utah capitalize on this opportunity?

What do Utahns need to do A) to keep up with other states and

B) to improve profitability of our tourism sector?

Will our investment stream come to an end when the Olympics are over?

Trends

Travel and tourism world-wide is growing as it is in the USA and Utah.

USA Tourism TrendsTravel and tourism expenditures (including

domestic and international) were $522.9 billion in 1999.

This is an increase of 5.1% from 1998.Including international

airfare payments, the total was $544 billion.

U.S. Travel & Tourism Industry (1999 Data)

The industry as a whole is the third largest private employer. Only health and business services are larger.

Total jobs: over 7.7 million.

This employment is 24% greater than it was in 1990.

U.S. Travel & Tourism Industry (1999 Data)

Total payroll: $159 billion.An increase of 5.4% over 1998.

Travel spending generated $92.5 billion in tax revenue for federal, state, and local governments.An increase of

4.9% over 1998.

Economic Contribution of the Travel Industry in the US (1999p)

Direct Impact Indirect Impact

Total Travel expenditures in the U.S. (billions) $522.9 $1,229.1

Contributions to indivuduals

Wages and salaries (billions) $159.0 $360.9

Employment (millions) 7.7 18.0

Contributions to governments (billions)

Federal $55.9 N/A

State $22.6 N/A

Local $14.0 N/A

Total tax contribution $92.5 N/A

Source: TIA, TI/ITA

Note: Excludes international airfare payments to the U.S.

U.S. Travel Volume, 1995-99 (in millions)

Source: TIA, TI/ITA

Note: Total domestic travelers include individuals who traveled in the U.S. for pleasure, business, personal and other purposes.

1995 1996 1997 1998 1999

U.S. Resident Domestic Travelers-Total 965.7 967.3 998.5 1,004.1 1,009.1

Business 208.9 202.3 203.4 210.1 212.3

Pleasure 624.4 628.7 655.4 655.5 654.5

International Travelers to the U.S.-Total 43.3 46.5 47.8 46.4 48.5

From Overseas 20.6 22.7 24.2 23.7 24.5

From Canada 14.7 15.3 15.1 13.4 14.1

From Mexico 8.0 8.5 8.4 9.3 9.9

Total Travelers in the U.S. 1,009.0 1,013.8 1,046.3 1,050.5 1,057.6

Travel Expenditures in U.S. Compared to Gross Domestic Product: 1990-2000

Source: TIA, TI/ITA

Note: Total travel spending excludes international airfare payments to the U.S.

Total Travel Nominal Gross Real Gross

Spending in the U.S. Domestic Product Domestic Product

Year ($Billions) ($Billions) ($Billions)

2000f $561.3 $9,968.7 $9,337.3

1999 $522.9 $9,299.2 $8,875.8

1998 $497.4 $8,790.2 $8,515.7

1997 $480.0 $8,318.4 $8,159.5

1996 $455.9 $7,813.2 $7,813.2

1995 $423.8 $7,400.5 $7,543.8

1994 $398.5 $7,054.3 $7,347.7

1993 $381.3 $6,642.3 $7,062.6

1992 $360.7 $6,318.9 $6,880.0

1991 $344.5 $5,986.2 $6,676.4

1990 $333.3 $5,803.2 $6,707.9

Travel Expenditures in U.S. Compared to GDP: Percent Change from Previous Year

Source: TIA, TI/ITA

Note: Total travel spending excludes international airfare payments to the U.S.

Total Travel Nominal Gross Real Gross

Spending in the U.S. Domestic Product Domestic Product

Year

2000f 7.3% 7.2% 5.2%

1999 5.1% 5.8% 4.2%

1998 3.6% 5.7% 4.4%

1997 5.3% 6.5% 4.4%

1996 7.6% 5.6% 3.6%

1995 6.3% 4.9% 2.7%

1994 4.5% 6.2% 4.0%

1993 5.7% 5.1% 2.7%

1992 4.7% 5.6% 3.0%

1991 3.4% 3.2% -0.5%

Travel Generated Payroll in U.S. Compared to Personal Income: 1990-99

Source: TIA, TI/ITA

Note: Travel-generated payroll excludes wages and salaries generated by international airfare payments made outside the U.S.

Travel-Generated Nominal Nominal Disposable

Payroll Personal Income Personal Income

Year ($Billions) ($Billions) ($Billions)

1999 $159.0 $7,789.6 $6,637.7

1998 $150.8 $7,391.0 $6,320.0

1997 $141.9 $6,937.0 $5,968.2

1996 $132.3 $6,547.4 $5,677.7

1995 $125.7 $6,200.9 $5,422.6

1994 $119.3 $5,888.0 $5,165.4

1993 $116.9 $5,610.0 $4,935.3

1992 $106.6 $5,390.4 $4,754.6

1991 $102.7 $5,085.4 $4,474.8

1990 $98.3 $4,903.2 $4,293.6

Travel Generated Employment in U.S. Compared to Non-Agricultural Employment:1990-99

Source: TIA, TI/ITA

Note: Travel-generated employment excludes jobs generated by international airfare payments made outside the U.S.

Travel-Generated Total Non-Ag Total Manufacturing

Employment Employment Industry Employment

Year (Thousands) (Thousands) (Thousands)

1999 7,716 128,786 18,543

1998 7,455 125,865 18,805

1997 7,344 122,690 18,675

1996 7,138 119,608 18,495

1995 6,939 117,191 18,524

1994 6,649 114,163 18,321

1993 6,529 110,713 18,075

1992 6,142 108,601 18,104

1991 6,179 108,249 18,406

1990 6,217 109,403 19,076

Travel Generated Tax Revenue vs. Total U.S. Tax Revenue, 1999

Source: TIA, Bureau of Labor Statistics

Travel-Generated Total U.S. Travel % in

Tax Revenue Tax Revenue Total U.S.

Level of Government ($ billions) ($ billions) Tax Collections

Federal $56.4 $1,949.5 2.9%

State & Local $36.1 $816.2 4.4%

Total $92.5 $2,765.7 3.3%

Travel Generated Tax Revenue Percent % Change

1999 In Total 99/98

Level of Government ($ billions) (Percent) (Percent)

Federal 56.4% 61.0% 5.0%

State 22.6% 24.4% 4.6%

Local 13.5% 14.6% 4.7%

Total 92.5% 100.0% 4.9%

Worldwide Tourism in 1999664 million travelers and tourists

$456 billion in worldwide spending (Excludes air fare)

International travelers spent $74.4 billion in the U.S.

U.S. travelers spent $60.1 billion traveling abroad

(Excludes air fare)

International Tourist Arrivals and Receipts Worldwide, 1990-99

Source: World Tourism Organization (WTO)

Note: Total arrivals exclude same-day visitors. Total receipts exclude international transport.

% Increase Cumulative % Increase Cumulative

Arrivals from % Increase Receipts from % Increase

Year (Millions) previous year from 1990 ($ Billions) previous year from 1990

1999 664 4.5% 45.3% $456 3.1% 72.8%

1998 636 2.9% 39.1% $442 0.5% 67.6%

1997 618 3.5% 35.2% $440 0.7% 66.8%

1996 597 5.7% 30.7% $437 7.6% 65.6%

1995 565 2.7% 23.7% $406 14.4% 53.9%

1994 550 6.7% 20.4% $355 10.3% 34.6%

1993 516 3.0% 12.8% $322 2.1% 22.1%

1992 501 8.3% 9.6% $315 13.9% 19.6%

1991 463 1.2% 1.2% $277 5.0% 5.0%

1990 457 7.3% 0.0% $264 19.4% 0.0%

Utah’s Magnificent Opportunity:A Few Modest Suggestions

We who promote tourism in Utah must recognize that it is our job to promote all of Utah.

The focus of SLOC, USOC and the IOC committees and the various sports federations is to conduct the Olympic Games.

The Olympic sponsors will promote their products and services -- not Utah.

No one will promote Utah if we neglect this great opportunity.

Suggestion: A Concerted Effort Are we satisfied that we have organized a statewide effort to

promote all of Utah’s attractions given the attention focused on Utah during the Games?

Are our efforts being carefully coordinated, and do we have full and complete cooperation from all who should be involved?

Perhaps the Governor might find time to provide leadership in this effort along with the leadership from our State Legislature.

Leadership must provide a statewide, unified effort.

Successful Tourism Promotion Requires a Larger Budget

The budget for promoting Utah before, during, and after the Olympic Winter Games should be increased by at least $20 million in addition to everything already proposed.

This sum will still be less than 5 percent of the advertising spent on the 2001 Super Bowl.

Capitalize on Olympic Investments Should Utah’s Olympic tourism promotion

effort be unsuccessful, Utah can expect its $4 billion investment in the 2002 Olympic Winter Games will be under-utilized following the Games.

Success would multiply returns on investment many times over for years to come.

Corporate Sponsors

Corporate sponsors will spend millions of dollars entertaining their clients and corporate CEO’s in Utah at the Olympic Games.

Their cooperation can be obtained in promoting Utah by providing available information about our state.

Who will ask for their cooperation?

Media

Utah must place TV, radio, and print ads highlighting Utah’s many attractions to be run during the prime time Olympic broadcasts.

The world must be told that they are welcome in Utah.

Special Guests Our most prestigious visitors should be

identified. They should receive greetings before

they come, again while they are here, should be given mementos of their visit to Utah, and should receive an invitation to return after they go home.

Who will do this?

Accountability Our promotion efforts and our advertising must be

tracked carefully, the results measured, and our efforts must be accountable for results.

Our Future Success or failure in Utah’s tourism promotion efforts

during the Olympic Games will mark Utah for good or ill for generations to come.

Olympic Games cannot be held in the United States again until 2012 and possibly for years beyond that date.

The reputation of Utah’s tourism future rests squarely on our shoulders.

Utah’s Magnificent Opportunity

Will we deliver?