The Economic Impact of Tourism in Kansas City July 2017 1

Key highlights for 2016 Traveler spending in Kansas City reached $3.4 billion in 2016, growing 8.9% in two years. Spending has now grown for seven straight years – increasing by more than $1 billion (45%) cumulatively Visitor volumes grew 5% in the past two years With the decline in gas prices, day travel has supported overall visitation growth the past two years The visitor economy sustained employment of 47,936 jobs in 2016. One out of every 19.6 workers in Kansas City is supported by visitor spending.

Key results The Kansas City visitor economy continued to expand in 2016 with 3.2% growth in visitor spending, reaching $3.4 billion. This spending generated nearly $5.5 billion in total business sales in the region, including indirect and induced impacts. Nearly 48,000 jobs, with associated income of $1.7 billion, were sustained by visitors to Kansas City last year. 5.1 percent of all jobs in the county are sustained by visitor spending. Tourism in Kansas City generated $380 million in state and local taxes in 2016.

Visitor trips and spending

The Kansas City story For the purposes of this study, Kansas City is defined as a five county region in Kansas and Missouri – Johnson and Wyandotte in Kansas; Clay, Jackson, and Platte in Missouri. Visitation has grown for seven straight years, cumulatively increasing by more than 20%–4.4 million more visitors than KC attracted in 2009. Spending per visitor increased by 1.0% in 2016 and with the growth in visitation, overall spending grew 3.2%. Traveler spending growth was highest on recreation and food & beverages. Both business and leisure travel spending posted strong growth rates with leisure slightly outpacing overall visitor spending growth.

Domestic visitor summary Kansas City hosted 25.2 million visitors in 2016. Overnight trips represent 47.4% of all visitors with 12.0 million person trips. The share of day travel increased slightly as lower gas prices helped fuel day trips to KC. Kansas City hosted 13.2 million day visitors last year. Source: Longwoods International

The number of trips is growing The number of visitors traveling to Kansas City grew 2.1% in 2016, reaching 25.2 million. 2.1% growth means KC welcomed about 500,000 more visitors than in 2015.

Growth in tourism sales Both the number of visitors and visitor spending have grown, supporting tourism spending growth of 8.9% since 2014. Visitor spending reached $3.4 billion in 2016.

Visitor spending by sector 27.5% of the average visitor dollar is spent on lodging, with food and beverage purchases ranking second in importance. With both strong room demand and ADR growth, the lodging share grew 0.5 percentage points between 2014 and 2016. Recreational spending’s share of the visitor dollar has also increased since 2014.

Visitor spending by sector Visitors to KC spent $926 million at hotels and motels in the region in 2016, $21 million more than in 2015. Retail shops in Kansas City saw $646 million in sales from travelers. In 2016, sales growth on lodging and food & beverage purchases made up nearly 50% of total visitor spending growth.

Visitor spending by category by stay Overnight visitors spent $2.5 billion in Kansas City in 2016, with lodging and food & beverage expenses as the top spending categories. Day visitors spent $844 million with food & beverage and retail spending (shopping) the top spending categories. The average visitor to KC spent $140 in the region, with overnight visitors each contributing about $221 in direct sales.

Visitor spending breakouts Leisure spending is 80% of all visitor spending in Kansas City. Despite the high share of day visitation, overnight visitors still dominate overall visitor spending – 75% of all visitor spending is by overnight visitors.

Tourism Impacts

Tourism sales Visitor spending of $3.4 billion supports a total of $5.5 billion of local business sales in 2016.

Tourism sales * Direct includes cost of retail goods

How visitor spending generates impact Travelers create direct economic value within a discrete group of sectors (e.g. recreation, transportation). This supports a relative proportion of jobs, wages, taxes, and GDP 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. 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. 16

Tourism employment Total tourism employment grew 1.4% in 2016 to 47,936 jobs. Tourism employment has grown by more than 1,300 jobs in two years – which is like adding a company such as H&R Block (1,350 employees in KC) to tourism in just two years.

Tourism employment Nearly 48,000 Kansas City jobs were sustained by tourism in 2016. 5.1% (1 in 19.6 jobs) of total wage and salary employment in KC is sustained by tourism.

Tourism employment

Employment contribution This chart shows the share of employment in selected industries that is supported by visitor spending. As an example: 97.5% of all jobs in the lodging industry are supported by visitor spending.

Tourism wages Visitors generated personal income of $1.7 billion in 2016, growth of 7.8% since 2014.

Tourism tax generation The tourism industry generated $775 million in taxes and fees in 2016. Visitor spending generated $380 million in state and local taxes. State and local tax collections have risen 6.8% since 2014.

County Analysis

Visitor economy sales by county As home of the convention center, central business district, and a significant hotel base, Jackson County attracts nearly half of visitor spending in the Kansas City region. Business Day

Visitor economy sales by county The $5.5 billion in visitor spending-driven sales benefits each county of the Kansas City region, with $2.6 billion accruing to Jackson County. Business Day

Visitor economy sales by state With both the central business district and airport located in Missouri, the Missouri counties see 71.5% of all visitor sales. Much of the Kansas visitor sales happen in Johnson County. More than a quarter of the region’s lodging sales are in Johnson County. Business Day

Visitor economy personal income by county The strong growth in tourism sales in Clay County supported an increasing share of total tourism income in the county. Business Day

Visitor economy personal income by state With both Johnson and Wyandotte County outperforming the region in visitor spending growth, wages in the Kansas counties grew faster than in the Missouri counties. Business Day

Visitor economy employment by county The 47,936 in visitor-driven jobs are distributed across all counties of the Kansas City region, with Jackson County and Johnson County comprising 69%. Business Day

Visitor economy employment by county Jackson County has relatively higher prices and wages than in other counties in the region. As a result, visitor spending generates more employment per dollar spent outside of Jackson County. Business Day

Visitor economy employment by state More than a third of the recreation and lodging jobs supported by visitors are in the Kansas counties, but nearly all of the airline jobs are located in Missouri. Business Day

Key numbers in context

Spending and employment comparisons 2016s 25.2 million visitors would be like everyone from Colorado, Oklahoma and Arkansas visiting KC TWICE during the year. $3.4 billion in visitor spending is about what Americans spend on Valentine’s Day dinners. $5.5 billion in total impact in 2016 is similar to what American’s spend on Easter dinner. The 32,627 jobs directly supported by visitor spending is larger than the entire enrollment at the University of Kansas.

Tax Revenue Comparisons The $380 million in state and local taxes collected from visitor activity would fully fund the Public Safety Department in Kansas City in FY 2017-8. To make up for the $380 million in state and local taxes generated by visitor activity, each household in Kansas City would need to contribute $550 to maintain the current level of government. $550 per household is enough for one months of food for the average American household.

Methodology and Background

Methods and data sources 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 adds several categories of spending to these figures: Overseas visitor spending (source: OTTI, TE) 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 Lodging tax receipts All results are benchmarked and cross-checked against US Bureau of Labor Statistics and the Bureau of Economic Analysis data on wages and employment. 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 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: info@tourismeconomics.com.

Adam Sacks, Managing Director For more information: Adam Sacks, Managing Director adam@tourismeconomics.com Christopher Pike, Director cpike@tourismeconomics.com