April 2016 The Economic Impact of Tourism in Wisconsin

State Overview

3 Headline results The growth streak in the Wisconsin visitor economy reached six years in 2015 with a 4.4% increase in visitor spending following a 5.3% gain in ■Visitor spending increased by $500 million in 2015 to reach $11.9 billion. ■Wisconsin visitor volumes grew nearly 3 million to reach million. ■With continued economic growth and declining gas prices, both day and overnight visitor volumes grew more than 2%. ■Visitor spending growth was led by spending on lodging with strong growth in all non-transportation sectors as lower gas prices meant transportation costs took a smaller share of the travel budget. ■Since 2011, visitor spending growth has averaged 4.8%, boosting tourism sales by $2 billion.

4 Headline results Visitor spending of $11.9 billion generated $19.3 billion in total business sales in 2015 as traveler dollars flowed through the Wisconsin economy. Visitor activity sustained 190,717 jobs in 2015, both directly and indirectly. 1-in-12.5 jobs in the state is sustained by tourism activity – 8.0% of total employment in Wisconsin. Including indirect and induced impacts, tourism in Wisconsin generated $1.5 billion in state and local taxes and $1.1 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 $640 to maintain the current level of government services.

Tourism Indicators

6 Industry indicator summary Key industry indicators continued to point to strong growth in visitor spending and impacts. ■Room demand continued to post solid growth in ■Strong ADR gains supported growing room revenues. ■Sales tax revenues in several key visitor spending industries are at 5-year highs. ■Even retail sales tax revenue accelerated in ■Job and wage growth in several tourism-centric industries outpaced overall state employment growth.

7 Lodging industry The hotel sector expanded robustly in 2015, with room demand growing 2.1%. Hotel occupancy rate increased to 57.3% in 2015 from 56.6% in Higher occupancy boosted average room rates 5.3%. Rising demand and higher prices generated growth in room revenues of 7.5%.

8 Sales taxes Sales tax collections in all tourism-related industries rose in Sales tax growth in the lodging and restaurant industries are at 5-year highs. Sales tax collections in the retail sector accelerated after several years of relatively modest growth.

Visitor Spending

10 Overview Wisconsin visitor volumes reached million in Visitors spent $11.9 billion. Visits grew 2.8% while spending increased 4.4% in saw nearly 3 million more visits than in 2014.

11 Visitor spending With strong ADR growth, lodging spending surged 7.3%, followed by a 5.2% rebound in shopping expenditures by visitors.

12 Visitor spending by sector Visitor spending expanded across all non- transportation sectors in Visitor spending surpassed $3.0 billion on food & beverages in The lodging sector is the second largest spending category with $2.5 billion in sales. Note: In this chart Transportation includes local and air transportation

13 Visitor spending distribution After falling from a share of 22.5% in 2010 to last years 20.4%, shopping’s share of visitor spending rose to 20.5% in The share of the visitor dollar spent on lodging (including 2 nd home values here) grew to 26.6% in With the decline in gas prices, transportation costs fell 0.6 percentage points to 10.7%.

14 Visitor spending trends Visitor spending grew by $500 million in 2015 – an increase of more than $57,000 for every hour of Visitor spending has grown an average of 4.8% per annum since 2011.

15 Visitor spending by market segment Leisure tourism represents 87% of visitor spending in Wisconsin. Overnight visitors spend $7.9 billion in Wisconsin, 66% of the total. Day visitor spending added $4.0 billion in Domestic visitors to Wisconsin spent $11.3 billion in 2015, 95% of all visitor spending.

16 Visitor spending by market segment

17 Seasonality of lodging Tourism is a year-round industry in Wisconsin. Room demand in all four quarters posted at least 20% of all rooms rented in 2015, peaking at nearly 33% in the 3 rd quarter. In 2015, lodging growth was concentrated in Q2 and Q3, each posting room revenue growth of 11%. In Q4, with the lowest revenue growth of the year, revenue still expanded 6.6%.

18 Seasonality of visitor spending BusinessDay Total visitor spending also peaks in the 3 rd quarter with $3.8 billion in visitor sales. In 2015, spending growth was 2.4% or higher in all four quarters with Q2 and Q3 driving overall tourism spending growth.

State Tourism Impacts

20 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, lodging, transportation) supporting 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.

21 Tourism sales by industry

22 All industry sectors of the Wisconsin economy benefit from tourism activity directly and/or indirectly. Sectors that serve the tourism industry, such as business services, gain as suppliers to a diverse tourism industry. Tourism sales by industry

23 Total tourism employment The tourism sector directly and indirectly supported 190,717 jobs, or 8.0% of all employment in Wisconsin last year.

24 Total tourism employment Secondary benefits are realized across the entire economy through the supply chain and incomes as they are spent. The unemployment rate in Wisconsin was 4.6% in December Without the 190,717 tourism supported jobs, the unemployment rate would more than double to 10.1%. Significant indirect and induced benefits

25 Tourism employment intensity Tourism is a significant part of multiple industries; 94% of lodging, 35% of recreation, and 23% of food & beverage employment is directly supported by tourism spending.

26 Tourism labor income

27 Tourism labor income Substantial tourism employment in F&B and recreation support significant labor income in these industries. Business services and the FIRE (finance, insurance and real estate) sectors depend on tourism activity as suppliers to tourism companies and their employees. Significant indirect and induced benefits

28 Tourism tax generation $2.6 billion in taxes were directly or indirectly generated by tourism in State and local taxes alone tallied $1.5 billion. In 2015, each household in Wisconsin would need to be taxed an additional $640 to replace the tourism taxes received by state and local governments.

29 Tourism tax generation – state & local government Of the $1.5 billion collected by state and local governments from traveler activity, $795 million (54%) accrued to state government. Local government revenues from visitor activity grew to $668 million. Property tax revenue, along with local excise and fees and lodging taxes, comprise the major revenue streams for local governments.

Methodology and Background

31 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?

32 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…

33 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: NTTO, TE) Canada visitor spending (source: Statistics Canada, TE) Sales tax receipts Spending on air travel which accrues to all airports and locally-based airlines Gasoline purchases by visitors (source: TE calculation) STR data on hotel demand and revenue Industry data on employment, wages, GDP, and sales (source: BEA, BLS, Census) Methods and data sources

34 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

35 Selected recent economic impact clients Cities Baltimore, MD Columbus, OH Kansas City, MO New York City Omaha, NE Orlando, FL Galveston, TX Seattle, WA Los Angeles, CA Countries / Provinces Bahamas Bermuda Cayman Islands Dubai Ontario Canada St. Lucia United Kingdom Guam Associations / Companies Center for Exhibition Industry Research (Economic Impact of Visa Restrictions) DMAI (Event Impact Calculator for 160 CVBs) US Travel Association (Impact of travel promotion) InterContinental Hotels States South Dakota Kansas Maryland New York North Carolina Ohio Pennsylvania Wisconsin

36 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 300 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 150 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:

37 For more information: Adam Sacks, President Christopher Pike, Director, Impact Studies