1. Economic Impact of Tourism in Kansas
Christopher Pike
Director, Impact Studies
Tourism Economics
October 18, 2016

2. Impact of Tourism in Kansas
Agenda
Impact of Tourism in Kansas
Overview of US consumer
Kansas visitation and spending
Composition of Spending
Economic Impacts
Tourism in Context

3. US Consumer spending Outlook
Factors favoring recent travel growth 1
Steady job and income growth 2
Stronger consumer confidence 3
Improved household balance sheets 4
Lower transportation costs
All signs point up!

4. Labor Market: Slack tightens, Wage growth recovers
Wage growth for individuals recently recovered to 3.5% (Atlanta Fed tracker)

5. Labor Market: Quits and Layoffs
Rising “quit- rate” reflects firming labor conditions…
…and layoffs are low

6. Consumer Confidence Survey
Favorable view of “present situation”…
… future expectations are more cautious

7. Households have reduced debt levels…
Household Debt
Households have reduced debt levels…
…freeing disposable income for future spending growth

8. Home prices and financial markets have boosted household wealth
Household Net wealth
Home prices and financial markets have boosted household wealth
Wealth effects typically support consumption with a lag

9. Gas prices have fallen from nearly $4 gallon to around $2 gallon

10. Recent Consumer Spending on Lodging

11. Two separate trajectories of travel propensity
Leisure travel continues to expand…
…even as business travel remains tempered

12. Secular shift of spending toward lodging

13. Impact of Tourism in Kansas
Agenda
Impact of Tourism in Kansas
Overview of US consumer
Kansas visitation and spending
Composition of Spending
Economic Impacts
Tourism in Context

14. Steady room rental growth y-o-y.
When do visitors come
Steady room rental growth y-o-y.
2015 started off well, ended up on par with

15. Room growth 2011 on
Strong recovery early in decade, pause in late 12/early 13 and picks back up late 13 into 14.

16. View from sales tax side
Lodging has led overall economy since 2010, restaurants showing some recent strength.

17. View from sales tax side
Retail picture has been mixed – clothing led economy early in decade, losing some of the lead in 2014, while sporting goods trailed until gains seen in

18. View from sales tax side
LHS employment supports view of strength in tourism.

19. Six years of volume and spending growth
Visitation reached million and spending reached $6.5 billion in

20. Visitor spending
Visitation grew 4.2% in 2015.
Traveling spending growth has averaged 5.5% per year since 2009, a total increase of $1.8 billion.

21. Visitor spending
Note the growth in key categories early in the decade as a share of all growth compared to

22. Impact of Tourism in Kansas
Agenda
Impact of Tourism in Kansas
Overview of US consumer
Kansas visitation and spending
Composition of Spending
Economic Impacts
Tourism in Context

23. Spending by category

24. Spending by category
Local transportation and food and beverage were key categories of traveler expenditures.

25. Spending categories over time
Lodging spending has increased from $730 million to $1.06 Billion.

26. Spending categories over time
The share of the traveler dollar spent on lodging has risen to 16.3% in 2015 from 14.9% in 2010, as both room demand and room rates have risen.

27. Overnight travelers comprise 62% of all visitor spending in 2015.
Spending by market
Overnight travelers comprise 62% of all visitor spending in
75% of all visitor dollars are by overnight travelers

28. More than just traveler spending
Tourism Satellite Accounting also includes investment and other spending streams in support of travelers.
$7.1 billion in total.

29. Impact of Tourism in Kansas
Agenda
Impact of Tourism in Kansas
Overview of US consumer
Kansas visitation and spending
Composition of Spending
Economic Impacts
Tourism in Context

30. Direct Tourism employment
The tourism employment growth of 1.6% was a point higher than overall Kansas employment growth.

31. Direct Tourism employment
Direct tourism employment isn’t all of any one industry but a piece of many industries.

32. Ranking direct tourism employment
Tourism employment would rank as the 8th largest industry in Kansas

33. Illustrating the concepts
Travel & Tourism Industry
The direct effect of visitor spending
Focus of Tourism Satellite Account
Travel & Tourism Economic Impact
The flow-through effect of T&T all demand across the economy
Expands the focus to measure the overall impact of T&T on all sectors of the economy
ACCOMMODATION

34. Contribution to Kansas’ economy
$1 million in sales can have different impacts to Kansas depending on where those sales are…

35. Contribution to Kansas’ economy
$1 million in sales can have different impacts to Kansas depending on where those sales are…

36. Contribution to Kansas’ economy
$1 million in sales can have different impacts to Kansas depending on where those sales are…

37. Visitor spending
Note the growth in key categories early in the decade as a share of all growth compared to

38. Contribution to Kansas’ economy
The tourism industry: $2.7 billion of Kansas GDP in
The tourism economy: generated GDP of $4.9 billion.
This is 3.3% of the state economy.

39. Contribution to Kansas’ economy
The tourism industry: 63,211 jobs in Kansas in
The tourism economy: 94,126 jobs.
This is 4.9% of all jobs in the state.

40. All sectors benefit from tourism
$7.1 billion directly in tourism economy supports an additional $3.3 billion in business sales = total of $10.4 billion in sales to Kansas businesses

41. Total tourism employment
Visitors directly support 24,000 food & beverage jobs – over 27,000 in total.
5,560 business service jobs supported by tourism – 50 directly by visitors

42. Labor income to workers in kansas
Significant employment in F&B and recreation drives high labor income in those industries.
Above average wages support labor income in supplier industries.

43. Taxes of $1.0 billion were generated by tourism in 2015.
Tax revenue
Taxes of $1.0 billion were generated by tourism in
State and local taxes alone tallied $588 million in 2015.

44. $272 million in state revenues
Tax revenue
$272 million in state revenues
Local governments received $316 million in tax receipts from travel- generated activity.

45. Impact of Tourism in Kansas
Agenda
Impact of Tourism in Kansas
Overview of US consumer
Kansas visitation and spending
Composition of Spending
Economic Impacts
Tourism in Context

46. Tourism in context - visitation
Kansas’ million visitors would be like everyone from Texas, Nebraska, and Missouri visiting Kansas once a year.

47. How important is tourism?
Kansas visitation rose by nearly 900,000 in 2015 – which is like having everyone from Austin, Texas stop on by during the year.

48. Tourism in context – visitor spending
Visitors spent nearly $6.5 billion in business sales in Kansas in or about what all Americans spent on food for July 4th.

49. Tourism in context – visitor spending
Were the Kansas tourism industry a single business, it would rank #402 on the Fortune 500 list, similar in size to JetBlue Airways and Charles Schwab, and bigger than Dr. Pepper Snapple Group.

50. Tourism in context – visitor spending
The 93,126 tourism jobs would be enough for two jobs for every resident of Salina, Kansas.

51. Tourism in context – state and local tax revenues
The $588 million in state and local tax revenues represents $525 per household in Kansas – the approximate cost of hosting a 10 person dinner on Thanksgiving.

52. Summary
Summary 1
2015 marks six years of spending and visitation growth 2
Recent growth in categories that produce largest impact in Kansas 3
Impacts are across every industry and are a significant portion of the state economy 4
State and local tax revenue supports $525 in government services for each household in Kansas

53. Impact of Tourism in Kansas
Bonus sections
Impact of Tourism in Kansas
Counties!
DMO value

54. County results

55. County results

56. County results

57. Why prioritize destination marketing?
The visitor economy is a catalyst for economic development

58. How destination marketing drives the economy

59. #2 – Raising the destination profile
Destination promotion strongly supports economic development through brand development, raising awareness, and building familiarity
“Every tourist that comes through here is a potential business lead.”
Jeff Malehorn, President & CEO, World Business Chicago
“If we do it right, the ideal brand will transcend the visitor market and support all economic development.”
Hank Marshall, Economic Development Executive Officer, City of Phoenix Community and Economic Development Department

60. #2 – Raising the destination profile
Familiarity is critical in attracting investment
13% of executives with site selection responsibilities state that their perceptions of an area’s business climate were influenced by leisure travel and 37% reported influence by business travel (Development Counsellors International, 2014)
“We are learning a lot from Visit California by how they brand California and how to take their model and apply it to economic development.”
Brook Taylor, Deputy Director, Governor’s Office of Business and Economic Development

61. Impact of campaign on economic perceptions
Missouri 2016 campaign impact effect
+57%
+53%
+79%
+43%
+67%
+50%

62. Why prioritize destination marketing?
The visitor economy is a catalyst for economic development
It actually works

63. SDTMD case study is telling

64. San Diego stark demand slowdown in 2013
Surge in 2014

65. Pennsylvania

66. Pennsylvania
Marketing cuts resulted in share losses

67. Dropped to third from first most visited mid-west state.
Illinois
State budget impasse limited state and city destination marketing for most of the past fiscal year
Dropped to third from first most visited mid-west state.
Illinois ranked 9th among all 50 states and is now ranked 11th as both Michigan and Ohio gained share.
Hotel tax revenue from January–April was down 0.7% , while the US average was up 4.9%.
Inquiries about travel to Illinois were down over 70% in FY16.

68. Why prioritize destination marketing?
The visitor economy is a catalyst for economic development
It actually works
Destination marketing meets a pronounced need

69. The need for destination promotion
Challenge
Solution: Destination Promotion 1
The primary motivator of a trip is usually the experience of a destination, beyond the offerings of one business
Articulates the brand message that is consistent with consumer motivations 2
Effective marketing requires scale to reach potential visitors
Pools sustained resources to provide the economies of scale and marketing infrastructure required to generate impact
Global&US.PPT
Linked:
D:\DATA\PMI\PMI_Data_Charts ‘Manufacturing US, EZ,JAP,UK’

70. Target opportunity: 658 mn unused vacation days
Global&US.PPT
Linked:
D:\DATA\PMI\PMI_Data_Charts ‘Manufacturing US, EZ,JAP,UK’

71. Destination marketing must reverse this trend
Global&US.PPT
Linked:
D:\DATA\PMI\PMI_Data_Charts ‘Manufacturing US, EZ,JAP,UK’

72. Plenty of reasons why… Global&US.PPT Linked:
D:\DATA\PMI\PMI_Data_Charts ‘Manufacturing US, EZ,JAP,UK’

73. But the benefits are real
The Manager’s View of PTO
Global&US.PPT
Linked:
D:\DATA\PMI\PMI_Data_Charts ‘Manufacturing US, EZ,JAP,UK’

74. Thank you Tourism Economics / Oxford Economics
All data shown in tables and charts is Tourism Economics / Oxford Economics’ own data, and is copyright © Oxford Economics Ltd, except where otherwise stated.
To discuss further please contact:
Christopher Pike, Director of Impact Studies