communicating the economic value of tourism

The Economic Value of Tourism

in Ontario’s Southwest

March 20, 2014

Aileen Murray

• Economic development consultant

• 25+ years helping businesses and communities grow

• Clients include municipalities, counties, BIAs, workforce development councils, economic development agencies and the private sector

• Specializing in strategic planning, marketing and communication

What’s the ROI?

Source: http://www.mtc.gov.on.ca/en/research/quick_facts/facts.shtml

Goals for today’s presentation

• Review economic development terminology and concepts

• Prepare credible statements on the contribution tourism makes to the community

• Apply economic development goals to tourism programming.

http://www.psdgraphics.com/backgrounds/bulls-eye-target/

Economic Development

“Improving the economic well being of a community through efforts that entail job creation, job retention, tax base enhancements and quality of life.”

The International Economic Development Council

Why Measure Economic Impact?

• Accountability• Sponsorship• Funding Programs• Government support• Community support• Compare event performance

o To previous eventso To similar events in other regionso To other events in the community

The Economic Impact Statement

Tourism brought ______ visitors to the community. These tourists generated $_______ in economic impact, ______ jobs for the community and added $______ to the local coffers.

Photo: http://allareoneplus.blogspot.ca/2012/03/quote-58-pride-megaphone.html

The Leaky Bucket

Photoshttp://www.flickr.com/photos/kelehen/6219220797/sizes/z/in/photostream/

Photoshttp://www.flickr.com/photos/kelehen/6219220797/sizes/z/in/photostream/

Local Economy

The Leaky Bucket

Photoshttp://www.flickr.com/photos/kelehen/6219220797/sizes/z/in/photostream/

Local Economy

Exports of Goods and Services

Tourism Foreign Investment

Goods and services purchased outside region

Payments for Imports

Photoshttp://www.flickr.com/photos/kelehen/6219220797/sizes/z/in/photostream/

Local Economy

Maximize Inputs

Minimize Outputs(Leakage)

Economic Development Goals

The History of Economic Development

Industrial Development

Investment Readiness

Business Retention & Expansion

Economic Gardening

Creative Economy

Knowledge Workers

Free Agent Economy

Net Change in Cdn. Employment2007 - 2012

Manufacturing Service Sector-400,000

-200,000

0

200,000

400,000

600,000

800,000

1,000,000

-245,400

805,800

13Source: Statistics Canada, CANSIM, table 282-0008 and Catalogue no. 71F0004XCB.

Supply & Demand Tourism System

POPULATIONInterest in TravelAbility to Travel

TRANSPORTATION

ATTRACTIONS

INFORMATION &PROMOTION

SERVICES• Hotels/Motels• Restaurant• Retailing

Demand

Supply

Economic Development Definitions

• Basic Industry – industries that produce goods and services sold to consumers outside the region

• Non-basic industry – industries that produce goods and services consumed locally

Photo: http://www.sfl2000.com/wp-content/uploads/2011/03/Export-box.jpg

Tourism Economic Impact

Change in sales, income and jobs because tourists came to the community and spent money there.

Guidelines: Survey Procedures for Tourism Economic Impact assessment of Ungated or Open Access Events and Festivals

The MultiplierThe ripple effect from the contribution of

new money to the community.

Photo: http://beta.images.theglobeandmail.com/b19/migration_catalog/article3966214

The Multiplier Effect

Photos: http://maytermthailand.files.wordpress.com/, http://www.crucell.com http://fourteenip.com

Direct Indirect Induced

Sales of goods & services to tourists ie.

restaurants & accommodation

Increased demand by tourism businesses

ie. Food suppliers

Respending labour income

Ie. Shelter, food, clothing

The Multiplier• Most impact at the centre• Larger communities have larger multipliers• Smaller communities have smaller multipliers• Manufacturing multipliers are typically larger

than service industry multipliers • Manufacturing multipliers ~ 2 to 3 net jobs

for every 1 new job• Service industries <1.2 jobs for every 1 new

job created

Tourism Economic Impact Model

Sector

Transportation

Entertainment

Recreation

Retail

Food & Beverage

Accommodation

Impact

Direct

Indirect

Induced

Effect

Production

Jobs

Wages

Taxes

TouristSpending

What is a tourist?

Photo: http://blog.vegas.com/wp-content/uploads/2010/10/tacky.jpg

Same Day Domestic Tourist

• Out of town trip that takes the traveller at least 40 km. (25 mi.) one way from home

• Not for commuting or a routine trip

Source: Guidelines: Survey Procedures for Assessment of On-Site Spending at Gated Events and Festivals p. 90

Overnight Domestic Tourist

• Out of town trip of at least one night away from home

• Not for commuting or a routine trip

Source: Guidelines: Survey Procedures for Assessment of On-Site Spending at Gated Events and Festivals p. 90Photo: http://www.journeyetc.com/wp-content/uploads/2010/08/bellboy.jpg

Special Event Tourists

Ministry of Tourism does not include:

o Localso Time switcherso Casuals

Source: Guidelines: Survey Procedures for Tourism Economic Impact Assessments of Gated Events and Festivals p. 19

Tourist Spending

≠Tourism Economic

Impact• Remember the leaky bucket• Not all purchases are made

locally• Not all businesses source locally

15.8 Million Visits

RTO 1 in 2011

4.3 million

overnight

11.4 million same

day

Source: Ontario Ministry of Tourism, Culture and Recreation with data from Statistics Canada

Tourism’s Contribution to Ontario’s Southwest

$1.46 BillionSource: Statistics Canada Travel Survey of Residents 2011

Cdn Total Tourism Receipts 2011

Average Visitor Spending

$92per

person

Source: Ministry of Tourism & Culture Regional Tourism Profile RTO 1, Statistics Canada Travel Survey of Residents & International Travel Survey 2011

Average Visitor Spending

$160 per overnight visitor

$ 67 per same day visitor

Source: Ministry of Tourism & Culture Regional Tourism Profile RTO 1, Statistics Canada Travel Survey of Residents & International Travel Survey 2011

TREIMTourism Region Economic Impact Model

• Direct, Indirect & Induced impacts

• Gross Domestic Product

• Labour Income• Employment• Tax Impacts

What does it measure?

Economic Impact of:• Visitor Spending• Operational Expenses• Investment

Expenditures• Convention Centre

Activity

Sample Scenario

• Visitor Spending• 100 Day trip visitors

Economic ImpactFor 100 Same Day Visitors

Source: Ontario Ministry of Tourism and Culture Tourism Region Economic Impact Model

Haldimand-Norfolk

Oxford

Middlesex

Elgin

Chatham-Kent

Lambton

Essex

$0

$500

$1,0

00

$1,5

00

$2,0

00

$2,5

00

$3,0

00

$3,5

00

Labour Income GDP

Economic ImpactFor 100 Same Day Visitors RTO 1

Source: Ontario Ministry of Tourism and Culture Tourism Region Economic Impact Model

$3,400 GDP

$2,100 Labour Income

Hotel Investment Scenario

$10 Million Investment in RTO 1

Source: Ontario Ministry of Tourism and Culture Tourism Region Economic Impact Model

GDP Labour Income0

500,0001,000,0001,500,0002,000,0002,500,0003,000,0003,500,0004,000,000

$2,631,577

1,678,037

$460,555

325,468

$696,520

434,437 InducedIndirectDirect

3,788,653 2,437,942

Jobs in the Tourism Sector

• The largest share of jobs in the tourism sector is in food and beverage services at 46%

Source : http://discovertourism.ca/en/about_tourism/industry_information

EMSI Analyst

Web-based labour market analysis tool• Canadian Business Patterns• Census data• Employment, payroll & hours• Labour Force Surveys• Demographics• Occupation Projections

Census divisions, census subdivisions, census metropolitan areas

Arrange for access from the Ontario Ministry of Agriculture and Food

Traveller Accommodation

RTO 1 NAICS 7211

• $18,835Average earnings per job

• LQ .79Provincial Location Quotient

2009 2013

2,1

10

2,3

19

Employment

Source: EMSI Analyst Employees 2013.3

RV Parks & Recreational Camps

RTO 1 NAICS 7212

• $33,755Average earnings per job

• LQ 1.81Provincial Location Quotient

Employment

2009 2013

46

9

53

3

Employment

Source: EMSI Analyst Employees 2013.3

Tourism Related Businesses

14,000 tourism related businesses in Ontario’s Southwest

Source: Statistics Canada, Canadian Business Patterns, December 2011

Retail

Other Services

Food & Beverage Services

Recreation & Entertainment

Transportation

Accommodation

Travel Services

- 2,000 4,000 6,000 8,000

Other Measurement Tools• Festival and Events Ontario

Economic Impact Study Grants

• Sport Tourism Economic Assessment Model

• Motor Coach Estimates

• DIY

D.I.Y.Case Study:

Elvis Festival Collingwood

Photo: http://0.tqn.com/d/gocanada/1/0/k/F/-/-/Elvis_impersonators.jpg

Common Goals

• More Tourists• Higher spend per tourist• Greater local share

Higher Spend per Tourist

• Greater length of stay• Serve and target high

spending tourists• Tourists need help to spend

money• Increased availability of

goods & services

Greater Local Share

• Create links between food and accommodation sector and retailers

• SME supporto Entrepreneurship trainingo Customer serviceo Tourism education

Boost Local Inputs in the Supply Chain

• Networking events hoteliers, attractions, retailers, restaurants & producers

• Regular communication• Encourage established businesses to mentor

start ups

It’s Your Move

Source: http://www.mtc.gov.on.ca/en/research/quick_facts/facts.shtml

Further information

• Ontario Tourism Research Resources including TREIM http://www.mtc.gov.on.ca/en/tourism/research.shtml

• Ontario Ministry of Agricuture and Food Analyst Toolhttp://www.omaf.gov.on.ca/english/rural/edr/edar/index.html

• Ontario Major Festivals and Events Attraction Research Study, PKF Consulting 2009

• Measuring the Economic Impact of Park and Recreation Services, National Recreation and Park Association

• Guidelines: Survey Procedures for Tourism Economic Impact assessment of Ungated or Open Access Events and Festivals

• Guidelines: Survey Procedures for Tourism Economic Impact Assessment of Gated Events and Festivals

• Sport Tourism Planning Template www.mtc.gov.on.ca/en/publications/sport_tourism_planning_template.pdf

Photo: http://mikeduran.com/2011/02/should-everyone-get-you/

Thank youAileen Murray Ec.D. (F)Mellor Murray Consultingamurray@mellormurray.ca519-784-7944

mellormurray