1 AN ASSESSMENT OF VISITOR EXPENDITURE METHODS AND MODELS Presented to the 37th Annual Conference of the Travel and Tourism Research Association By Douglas C. Frechtling Dept. of Tourism and Hospitality Mgmt. School of Business The George Washington University June 18, 2006

2 Research on Tourism’s Economic Impact... dates back three-quarters of a century: Mathieson and Wall (1982) note F. W. Ogilvie’s 1933 book, The Tourist Movement

3 Role of Tourism Economic Impact Studies Assist consumers, businesses and governments in making efficient and effective marketing and development decisions.

4 Focus of Tourism Economic Impact Studies Up to early 1990s: visitors’ year- round economic contribution to destinations Last 15 years: economic benefits of visitors to specific events

5 Centrality of Visitor Expenditures ”the consumption of tourism is... the foundation of the economic impacts of tourism and, therefore, understanding tourism consumption is essential for understanding tourism’s economic impacts.” (Mihalic 2002)

6 Chain of Tourism’s Economic Impact

7 Paper Assesses Methods to Estimate Visitor Spending in Defined Geographic Areas Three contexts: occasion, venue, time frame Three Principles: Relevance, Coverage, Accuracy Examines eleven methods & models drawn from literature Evaluates methods by Principles Recommends optimum choices

8 Persons Qualifying as Destination Visitors 1.UNWTO “visitors” who would not otherwise visit 2.Operating crews of public transportation conveying visitors to the area (e.g., flight attendants, pilots, motorcoach drivers)

9 Persons Qualifying as Event Visitors 1.UNWTO “visitors” 2.Nonresident producers of the event 3.Nonresident sponsors of the event 4.Nonresident media representatives covering the event 5.Nonresident vendors at the event 6.Future visitors 7.Pseudo visitors

10 Some Researchers Exclude the Following as Violating the Relevance Principle 1.“Casuals” – visitors in the study area for some reason other than the event 2.“Time-switchers” – visitors who had been planning to visit the study area but changed the timing of their visit to attend the event

11 Visitor Expenditure Estimation Methods 1.Direct observation 2.Administrative records 3.Household surveys 4.Tourism establishment surveys 5.Visitor surveys 6.Central bank data

12 Visitor Expenditure Estimation Models 1.Expenditure ratio 2.Residual receipts 3.Supply side judgmental 4.Seasonal difference 5.Cost factor

13 The Problem of Package Tours How can we validly distribute a single package tour purchase among  places visited and  expenditure categories? Afflicts visitor and household survey methods. UNWTO recommends surveys of relevant tour operators to discern these patterns.

14 Conclusions: Destination Visitor Expenditures Relatively straightforward: ascertain  those subjects permanently residing outside the study area,  these visitors purchase/consume products in the study area, and  these visitors do so during the study time period. Area exit surveys and cost factor models can satisfy the Principles.

15 Conclusions: Event Visitor Expenditures “Because of the uniqueness of special events, there is generally no viable substitute for visitor surveys.” (Getz 1994) Interview visitor samples as they leave the venue Exclude those in area for other purposes (“casuals”) Ask about spending over previous 24-hour period and expected length of stay in area Employ best practices of probability sample survey design and conduct.

16 More Conclusions: Event Visitor Expenditures Supplement visitor survey with surveys of –  Nonresident producers of the event  Nonresident sponsors of the event  Nonresident media covering the event  Nonresident vendors, booth holders and players Ignore time switchers, future visitors and pseudo visitors

17 Thank you for your attention!