April 2015 The Economic Impact of Tourism in Wisconsin

State Overview

3 Headline results The Wisconsin visitor economy strengthened in 2014 with a 5.3% increase in visitor spending. This follows a 4.5% gain in ■Visitor spending tallied $11.4 billion in ■Wisconsin visitor volumes reached million in ■With improvements in the overall economy and moderating gas prices, both day and overnight visitor volumes grew around 2%. ■Per trip spending increased as personal income and consumer confidence strengthened in ■Visitor spending growth was led by spending on recreational activities along with lodging.

4 Headline results Visitor spending of $11.4 billion generated $18.5 billion in total business sales in 2014 as traveler dollars flowed through the Wisconsin economy. Visitor activity sustained 187,650 jobs in 2014, both directly and indirectly. These jobs represent 7.9% of total employment in Wisconsin; 1 in every 12.7 jobs in the state is sustained by tourism activity. Including indirect and induced impacts, tourism in Wisconsin generated $1.4 billion in state and local taxes and $1.05 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 $620 to maintain the current level of government services.

5 Industry indicator summary Visits to Wisconsin destinations grew 2.0% between 2013 and Lodging metrics strengthened in 2014, posting their strongest numbers since State sales tax revenue on lodging properties grew 6.9% in 2014 (source: State Revenue Office). Tourism-related employment grew on par with overall state employment growth, increasing 1.1% from the prior year.

6 Lodging industry The hotel sector expanded robustly in 2014, with room demand growing 3.5%. The occupancy rate increased from 55.1% in 2013 to 56.8% in Tighter occupancy boosted average room rates 3.7%. Rising demand and higher prices generated growth in room revenues of 7.4%. All lodging metrics posted their best results since the post-recession spike.

7 Sales taxes Sales tax collections in tourism-related industries were robust in 2014 with the exception of retail sales. Strength in 2014 is evident across several visitor spending categories with lodging and F&B at 5-year highs.

Visitor Spending

9 Overview Wisconsin visitor volumes reached million in Visitors spent a total of $11.4 billion. Visits grew 2.0% while spending increased 5.3% in 2014.

10 Visitor spending Wisconsin visitor spending reached $11.4 billion in 2014, posting 5.3% growth. Recreational spending surged, followed by lodging and spending on food & beverages.

11 Visitor spending by sector Traveler spending neared $3.0 billion on food & beverages. The lodging sector passed the retail sector to become the second largest spending category with $2.3 billion in sales. In 2014, visitor spending increased 7.8% on recreation & entertainment, 6.4% on food and beverage, and 7.2% on lodging. Note: In this chart Transportation includes local and air transportation

12 Visitor spending distribution With strong growth in leisure visits, the share of spending on recreational activities now exceeds 13% of all visitor spending. The share of the traveler dollar spent on lodging, the largest sector, grew to 26.1% in Food & beverage spending ranks second, capturing a quarter of visitor spending, followed by retail at 20%.

13 Visitor spending trends Visitor spending has grown an average of 5.6% annually since Lodging sales have increased 25% since 2010.

14 Visitor spending by market segment Leisure tourism represents 88% of visitor spending in Wisconsin. Overnight visitors spend $7.7 billion in Wisconsin, 67% of the total. Day visitor spending added $3.8 billion in Domestic visitors to Wisconsin spent $10.8 billion in 2014, 94% of all visitor spending.

15 Visitor spending by market segment

16 Seasonality of lodging Tourism is a year-round industry in Wisconsin. Its peak is in the third quarter with nearly one-third of all rooms rented. In 2014, room demand in each quarter is at least 20% of all rooms rented. In 2014, growth was spread throughout the year, with all but Q2 posting room revenue growth of 7% or higher. And Q2 revenue growth only dipped to 5.4%.

17 Seasonality of visitor spending BusinessDay In 2014, total visitor spending peaked in the 3 rd quarter with $3.6 billion in visitor sales. Spending growth was 3.5% or higher in all four quarters with Q1 posting spending growth of 6.8%.

18 Seasonality of visitor spending BusinessDay Tourism spending has grown in every quarter since Growth did hit a slow patch in the second half of 2012 and first part of 2013 before rebounding in the 2 nd half of The upward trend in quarterly tourism spending growth continued in 2014.

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, transportation). This supports 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 business sectors of the Wisconsin economy benefit from tourism activity directly and/or indirectly. Sectors that serve the tourism industry, like 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 187,643 jobs, or 7.8% 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 5.5% in Without the 187,643 tourism supported jobs, the unemployment rate would nearly double to 10.9%. Significant indirect and induced benefits

25 Tourism employment intensity Tourism is a significant part of several industries – 92% of lodging, 34% of recreation, and 23% of food & beverage employment is directly supported by tourism spending.

26 Tourism personal income

27 Tourism personal income Substantial employment in F&B and recreation supports significant labor income in those 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 Taxes of $2.5 billion were directly and indirectly generated by tourism in State and local taxes alone tallied $1.4 billion. In 2014, each household in Wisconsin would have been taxed an additional $620 to replace the tourism taxes received by state and local governments.

29 Tourism tax generation – state & local government Of the $1.4 billion collected by state and local governments from traveler activity, $767 million (54%) accrued to state government. Local government revenues from visitor activity grew to $647 million. Property tax revenue, along with local excise and fees and lodging taxes, comprise the major revenue streams for local governments.

30 Were the Wisconsin tourism industry a single business, it would rank #242 on the Forbes 500 list, similar in size to Visa, Inc. and CarMax and larger than Norfolk Southern or Office Depot. Visitor spending of $11.4 billion is equal to the total revenue of the Wisconsin Lottery… since Total sales in supported by tourism in Wisconsin reached $18.5 billion in By comparison, worldwide revenue of Wisconsin’s 4 th largest company – Kohl’s – was $19 billion in 2014 How important is tourism?

31 Were the 133,000 direct tourism jobs located all in one county, it would be enough jobs for EVERY resident in Washington County – the 11 th largest county in the state. The total tourism employment of 187,643 is more than the total employment of the Appleton AND Janesville-Beloit MSA’s. How important is tourism?

32 Each household in Wisconsin benefits from tourism, saving $620 in 2014 in taxes as visitor activity supports state and local governmental revenue. ■That is enough for a annual golfing membership at Christmas Mountain Village or ■20-Game Fan's Choice Plan in the outfield for the Milwaukee Brewers or ■About 20 separate admissions to a waterpark in Wisconsin Dells (assuming average price of $30). How important is tourism?

Methodology and Background

34 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?

35 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…

36 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: OTTI, 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) Smith Travel Research data on hotel revenues Industry data on employment, wages, GDP, and sales (source: BEA, BLS, Census) Methods and data sources

37 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

38 Selected recent economic impact clients Cities Baltimore, MD Columbus, OH Kansas City, MO London, United Kingdom New York City Omaha, NE Orlando, FL Philadelphia, PA Pittsburgh, PA Rockford, IL Countries / Provinces Bahamas Bermuda Cayman Islands Dubai Ontario Canada St. Lucia United Kingdom Associations / Companies Center for Exhibition Industry Research (Economic Impact of Visa Restrictions) DMAI (Event Impact Calculator for 80 CVBs) US Travel Association (Impact of travel promotion) InterContinental Hotels States California Georgia Maryland New York North Carolina Ohio Pennsylvania Wisconsin

39 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 90 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:

40 For more information: Adam Sacks, President Christopher Pike, Senior Economist