NJ Tourism Continues to Impress2007 New Jersey Governor’s Conference on Tourism March 29, 2007: NJ Tourism Continues to Impress 2007 New Jersey Governor’s Conference on Tourism March 29, 2007 Kenneth McGill Executive Managing Director Travel & Tourism Consulting ken.mcgill@globalinsight.com


Global Insight: Tourism Economic Impact Project Feasibility Studies Performance Benchmarking Global Insight Premier country intelligence, economic analysis & forecasting, and consulting organization globally Most comprehensive coverage of countries, regions, and industries available from any single source Common analytical framework and a consistent set of assumptions Broad range of capabilities include: Strategic and Tactical Planning Tools Market Risk Assessment Tourism Forecasts Global Insight consistently has the best track record among commercial forecasters. See www.globalinsight.com/accolades


TSA and Tourism Economic Impact Clients: TSA and Tourism Economic Impact Clients Tourism Satellite Account New Jersey Israel Dubai Bahamas Abu Dhabi Guam Kansas North Dakota North Carolina South Carolina Delaware Virginia Utah Rhode Island Economic Impact Idaho Pennsylvania Indiana Maryland City Tourism Impact Dallas Boston Arlington, TX Sacramento Baltimore Philadelphia Orlando Washington, DC NYC Camden & SNJ Tulsa St. Louis Kansas City Battle Creek, MI Durham, NC Savannah Pittsburgh Austin Indianapolis


Tourism Satellite Accounting: Tourism Satellite Accounting The Tourism Satellite Account is the international (UN/WTO, OECD) standard for measuring the contribution of tourism to an economy Measuring tourism is difficult: tourism ‘industry’ is not measured in standard economic accounting systems. Most ‘industries’ are accounted via the supply-side: firms are categorized into NAICS codes and asked about jobs, revenues, costs. But ‘tourism’ is a demand-side activity: the focus is on what the visitor buys before and during a trip. As a result, tourism touches many industries 4 Copyright 2007 © Global Insight, Inc.


Benefits of a TSA: Benefits of a TSA 5 Compares government support of the tourism sector with government revenue generated by tourism. Allows policy-makers to compare the size & growth of tourism to other industrial sectors. Enables analysts to assess long-term health of the tourism sector via capital investment and government support. Provides an accepted international standard for benchmarking. Quantifies how other industry sectors benefit from tourism. Copyright © 2007 Global Insight, Inc


NJ TSA: Definitions: NJ TSA: Definitions Visitor: GT 50 miles, non-commuting Resident Tourism: Only outbound purchases made in advance of a trip are included. No resident usage of NJ tourism assets. Jurisdiction: The Garden State Tourism Spending: A TSA concept, includes all spending by all constituents on travel made in the jurisdiction (NJ) Visitor Spending: Spending in the jurisdiction by visitors (accommodations, food & beverage, shopping, transportation, entertainment, other) Total Economic Impact: “GDP” definition…spending less value of supply chain purchases made elsewhere. The amount truly retained in jurisdiction. Import Leakages: The value of supply chain purchases made outside of the jurisdiction. Direct Spending/Jobs/Wages/Taxes: Industries that “touch” the visitor (e.g. hotels, restaurants, museums,…) Indirect Spending/Jobs/Wages/Taxes: Industries that supply those that touch the visitor Induced Spending/Jobs/Wages/Taxes: Workers of industries that touch or supply will spend wages locally


T&T Industry and Economy: T&T Industry and Economy The TSA provides both a narrow & a broad understanding of the Tourism “Industry” Travel & Tourism Economy The flow-through effect of travel demand across the economy Travel & Tourism Industry The direct effect of travel demand


Slide8: 2006 New Jersey Tourism: Tourism Continues to Impress


Industry Structure: Definitions: $19.4 billion $7.5 billion $27.0 billion $10.6 billion $37.6 billion Economic Value to NJ All visitor-related spending Industry Structure: Definitions Source: Global Insight


Visitors to New Jersey*: Visitors to New Jersey* Overnight visitors grew 4.2% in 2006 vs. a 1.2% decline in day visitors. * Visitation statistics provided by DK Shifflet & Associates, Ltd


Total Tourism Expenditures: Total Tourism Expenditures NJ visitation grew 1.2% (Overnight by 4.2%) Spending per visit rose by 5.7% Business travel increased by 0.8% NJ Inflation rose by 4.7% Tourism expenditures tallied $37.6 billion in 2006 Source: Global Insight


Tourism Continues Strong Growth: Tourism Continues Strong Growth Note: Revisions have been made to the originally reported 2004 and 2005 figures so that they are directly comparable to the new 2006 estimates. The sources of revision include: full year 2005 DK Shifflet & Associates survey results, changes to reported and estimated industry employment and output, other historical revisions. Source: Global Insight


NJ Tourism is on a roll…: Numbers may differ due to rounding 2006 Bottom Line: NJ Tourism is on a roll… Source: Global Insight


2006 NJ Tourism Scorecard: 2006 NJ Tourism Scorecard Source: Global Insight


Total Impact of Tourism: Total Impact of Tourism In 2006, the total impact of travel & tourism (direct and indirect) was $27.0 billion. This represents 5.9% of Gross State Product The ratio of the total impact to total expenditures reveals that 72% of each tourism dollar spent in New Jersey is retained in the state. The remainder represents import leakages. 480,772 jobs – direct and indirect – were created by travel & tourism economic activity. This accounts for 11.8% of total employment in the state Approximately $16.0 billion in wages & salaries was generated by travel & tourism in 2006. Tourism generated $7.5 billion in federal, state, and local government taxes in 2006, a 3.4% increase over 2005.


Sources of Tourism Expenditures: Sources of Tourism Expenditures Resident In-State – In-state travel expenditures of New Jersey residents In-state Business Travel –New Jersey businesses’ spending within the state economy on travel Government Spending –New Jersey Tourism Office Budget, transportation functions related to tourism, publicly funded attractions and funding for security in tourism-intensive areas Investment – Construction of hotels, attractions, tourism infrastructure, operating and transportation equipment Domestic Out-of-State – Spending of all visitors to New Jersey coming from other parts of the country (Key Category) International – Spending of international visitors to New Jersey


Breaking Down Tourism Expenditures – $37.6 Billion: Breaking Down Tourism Expenditures – $37.6 Billion Visitors from other states represent the largest portion of tourism expenditures in New Jersey. Residents’ travel in the state is also important with 19% of the total. Source: Global Insight


Category Distribution of Expenditures: Category Distribution of Expenditures Accommodation accounts for the largest share of tourism expenditure. Combined with food and shopping, these components represent nearly 76% of visitor expenditures. * Direct and Indirect Tourism Expenditures (w/o construction & investment) Source: Global Insight


Core Tourism: Core Tourism Answers the question “How does tourism compare with other industries?” Core Tourism measures the size of the industry directly providing goods & services to the visitor. Indirect effects are excluded – these are part of other supplier industries such as wholesalers. The impact of capital investment is also excluded. Core Tourism generated $19.4 billion in economic value in 2006. This ranks core tourism as the 9th largest private industry in NJ in terms of gross state product.


Core Tourism – Gross State Product: Core Tourism – Gross State Product Core Tourism contributed $19.4 billion in economic value in 2006. Tourism ranked as the 9th largest private industry in the state. Core Travel & Tourism has 4.8% of New Jersey’s GSP Source: Bureau of Economic Analysis and Global Insight


Core Tourism Impact – Composition: Core Tourism Impact – Composition The TSA model measures how spending of visitors touches diverse sectors to create the aggregate Core Tourism. Source: Global Insight


Core Tourism – Employment: Core Tourism – Employment Core Tourism is the 3rd largest private sector employer in the state with 391,646 direct full-time equivalency jobs in 2006. Core Tourism generated 9.6% of non-farm state employment in 2006. Core Tourism jobs provided $11.2 billion in wages & salaries in 2006. Core Tourism’s average annual wage has grown to $34,800/year.


Core Tourism Impact – Employment: Core Tourism Impact – Employment Travel & tourism is NJ’s 3rd largest private sector employer. Core Tourism represented 391,646 jobs in 2006. Tourism’s contribution to NJ employment is 2.3 times that of the US in total 2.3 times Source: Bureau of Labor Statistics and Global Insight


Total Tourism grew 2.9% in 2006: Total Tourism grew 2.9% in 2006 Core Tourism Total Impact Source: Global Insight Core Tourism jobs comprise 82% of total tourism-generated employment and have grown steadily over time.


Non-Core Tourism – Indirect Benefits: Non-Core Tourism – Indirect Benefits Many industries not thought of as “tourism” but that supply goods and services to the tourism industry are beneficiaries of tourism. Source: Global Insight


Non-Core Tourism – Construction Benefits: Non-Core Tourism – Construction Benefits The Construction sector is also a significant beneficiary of tourism. 2000 witnessed a surge in new hotel/motel construction Borgata, Retail Expansions, Xanadu, Showboat, PPE… Sands replacement, expansions at Borgata, Harrah's, & the Trump Taj Mahal Source: FW Dodge


Tourism Generated $7.5 bn in Total Tax Revenue in 2006: Tourism Generated $7.5 bn in Total Tax Revenue in 2006 Tourism activity generated $4.3 billion in state and local government revenue in 2006, a 3.4% increase over 2005. In 2006, $2.4 billion in state tax revenue was generated by the travel & tourism sector in New Jersey. Indirect business tax (sales tax) and personal income tax are the two largest contributors. Tourism contributes disproportionately to state revenue. While tourism is responsible for 5.9% of NJ GSP, it contributed 8.7% of state government revenue in 2006. If tourism didn’t exist, each NJ household would pay $1,368 more in taxes to maintain the current level of state and local tax receipts.


State and Local Government Revenue: State and Local Government Revenue


Regional Distribution of Tourism: Regional Distribution of Tourism Skylands Sussex Warren Hunterdon Gateway Passaic Bergen Essex Delaware River Mercer Camden Burlington New Jersey is divided into six regions in the analysis: Shore Monmouth Ocean Greater Atlantic City Atlantic County Southern Shore Cumberland Cape May Somerset Morris Hudson Union Middlesex Gloucester Salem


Regional Distribution of Tourism: Regional Distribution of Tourism To understand the county breakdown, Global Insight approached industry members and state agencies to develop local level analysis. This research included analysis of: Seasonal second homes Gaming reports Seasonality of employment – compared across counties/regions


Regional Distribution of Tourism: Regional Distribution of Tourism Gateway has the 2nd largest share of statewide tourism spending. The Shore and Southern Shore regions are almost tied. Traveler expenditures related to airport Food & accommodation are key contributors. Hotel casinos drive high spending. Seasonal second homes dominate.


Regional Growth in Expenditure: Regional Growth in Expenditure


Regional Share of Statewide Tourism: Regional Share of Statewide Tourism Greater Atlantic City’s Entertainment share is low because most casino activity is classified in the accommodation category.


Regional Share of Statewide Tourism: Regional Share of Statewide Tourism Greater Atlantic City’s Entertainment share is low because most casino activity is classified in the accommodation category.


Tourism Expenditure by County: Tourism Expenditure by County Tourism is of greatest relative importance to Cape May, Atlantic and Ocean county. These 3 counties are also the leaders in terms of tourism expenditures. Combined these three counties contribute almost two-thirds of New Jersey’s total tourism expenditure. County Share of State Tourism Expenditure (%) * Tourism expenditures except investment


Accommodation – Seasonal 2nd Home: Accommodation – Seasonal 2nd Home Seasonal 2nd homes are an important part of accommodation expenditure for the counties along the coastline. Source: Global Insight and US Bureau of Census


Slide37: Visitor Forecast


NJ Visitor Growth Slows…But Remains Positive: NJ Visitor Growth Slows…But Remains Positive Source: Global Insight


Driven by A Deceleration of Growth in Key Feeder Markets: Driven by A Deceleration of Growth in Key Feeder Markets Real Gross State Product growth, weighted by visitation from key markets (NJ, NY, PA, MD) will decelerate in 2007 limiting growth in visitors to NJ. Source: Global Insight


Forecast Comparison: Forecast Comparison A more pronounced business cycle in NJ’s key feeder markets limits growth in 2007, but growth bounces back in 2008.


Origin of Visitors by State, 2006: Origin of Visitors by State, 2006


Origin of Visitors by DMA, 2006: Origin of Visitors by DMA, 2006


How Important?: Gross State Product: $27.0 billion 5.9% of GSP Total Employment: 480,772 jobs 11.8% of Employment Core GSP: $19.4 billion 4.8% of GSP Core Employment: 391,646 jobs 9.6% of Employment 3rd largest private sector employer How Important? Tourism related spending of $37.6 billion


Slide44: Talking Points: What Do Visitors Mean to NJ? Each NJ visitor/traveler generates about $522 in expenditures, $105 of which goes to NJ businesses that do not directly “touch” that visitor Every 143 visitors creates a new NJ job Each visitor creates about $100 in tax receipts, $56 of which goes to state & local authorities Each NJ visitor generates $222 in wages paid to NJ workers employed across an array of industries Each visitor adds about $375 to NJ Gross State Product Each visitor creates state & local tax receipts equal to $1.27 per NJ Household


Thank You!: Thank You! Ken McGill Executive Managing Director, Travel & Tourism Ken.mcgill@globalinsight.com