Tourism Industry in Orange County


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Tourism Industry in Orange County

  1. 1. Issue 4The Tourism Sector in Orange Countyby Luis Nieves-Ruiz, AICPIntroductionMuch attention has been devoted lately to the fact that Florida’s economy is in transition. State andlocal economic development agencies now focus much of their efforts in attracting high techindustries that would help to diversify the economy and raise wage levels. While these efforts arelaudable, based on its economic impact, leisure and entertainment likely would continue torepresent the most significant share of the State’s economy. The State of Florida received about82.5 million visitors in 2008 (Associated Press, 2009), and the Metro Orlando area accounts forabout half of this total. Our area receives over 40 million family and convention visitors each year(CVB, 2009). These visitors, in turn, spend money that benefits other sectors of the economy.The local tourism market is made up of two important sectors. The leisure visitors group consists offamilies that come to visit the area’s theme parks. The second group is convention attendeestraveling to our area to attend professional meetings and seminars. Both groups are very importantto our industry.This issue of the Economic Research Initiative will address the relationship between the industriesthat make up the tourism sector using location quotients and business establishment data.Moreover, it will also show areas of concentration of these industries in the County.Economic Impact of Tourism IndustryStaff performed a study of local leisure activity by first using the location quotient method, whichexpresses the percentage of economic concentration of an industry in the local economy. Thisinformation was later correlated with establishment data found in the InfoUSA 2009 database todetermine total business establishments and employees in 2009. The data were studied at thefive-digit level to remove any establishments that may be used by the local population. Moreover, tofacilitate the analysis at the County level, staff divided the establishments into core and supportingtourism industries. Exhibit 1: Core Tourism Sector in Orange County Industry Number of Estimated Location Establishments Number of Jobs Quotient NAICS 71311 Amusement & Theme 20 27,704 Parks 51.96 NAICS 72111 Hotels and Motels 352 64,598 4.41 NAICS 71399 All Other Amusement and 25 479 Recreation Industries 1.29Sources: Info USA 2009, Location Quotient Calculator, 2009The core tourism establishments include all businesses within the Amusement and Theme Parks(NAICS 71311), Hotels and Motels (72111), and All Other Amusement and Recreation Industries. ECONOMIC OUTLOOK DECEMBER 2009
  2. 2. (71399) sectors. The reasoning behind grouping these industries together is that they are the mostdirect beneficiaries of the tourism trade. Exhibit 1 shows the location quotients and establishment forthese core sectors.The Amusement and Theme Parks sector includes all establishments that operate attractions such asSea World and Disney’s Magic Kingdom. This sector has the highest location quotient in the County.The Hotels and Motels sector includes short term lodging facilities without casinos. Finally, the OtherAmusement and Recreation industries include small commercial amusements such as mini golfcourses. Orange County has more than 310 core tourism establishments that are responsible for over60,000 jobs.Because of this situation, a second category call supporting industries was created. These industriesare very important because they provide specific services to the core industries. Supporting industryestablishments are responsible for another 66,000 jobs. Exhibit 2 shows the information for thesupporting industries with the highest location quotients. Exhibit 2: Supporting Tourism Industry Sectors Number of Estimated Number of Location Industry Establishments Employees Quotient NAICS 56159 Other Travel 27 2,203 Arrangement Services 14.96 NAICS 56152 Tour Operators 96 510 9.93 NAICS 56192 Convention and 70 1,305 Trade Show Organizers 8.78 NAICS 48551 Charter Bus 28 352 6.08 NAICS 44832 Luggage and 23 229 Leather Goods Stores 5.39 NAICS 53249 Other Machinery 3 14 Rental and Leasing 4.36 NAICS 424460 Fish and Seafood 4 229 Merchant Wholesalers 3.35 NAICS 485999 Other Ground 62 294 Passenger Transportation 2.03 NAICS 51821 Data Processing, 4 195 Hosting and Related Services 1.53 NAICS 7115 Independent Artists, 107 3,099 Writers, and Performers 1.83 NAICS 7111 Performing Arts 93 828 Companies 1.29 NAICS 72211 Full-service 1,786 43,107 Restaurants 1.21 NAICS 7223 Special Food 101 17,195 Services 1.11 Sources: Info USA 2009, Location Quotient Calculator 2009Some of these industries cater specifically to visitors. Charter Bus establishments (NAICS 48551)provide buses for hire without specific routes. Other Ground Transportation firms (NAICS 4859)provide shuttle services between specific destinations. Establishments within the Tour Operators(NAICS 56152) and Other Travel Arrangement Services (NAICS 56159) sectors sell services, suchas tickets and special vacation packages. The Performing Art Companies (NAICS 7111) sectorincludes dinner theaters, dance companies, and musical groups. ECONOMIC OUTLOOK DECEMBER 2009
  3. 3. Establishments within the following sectors probably benefit more from the local convention market:Convention and Trade Show Organizers (NAICS 56192), Independent Artists, Writers, and Performers(NAICS 7115), and Special Food Services (NAICS 7223). The first sector is responsible for organizingbusiness trade shows, conferences, meetings, and other events. Independent artists and performers areindividuals engaged in artistic productions or that provide technical expertise for these productions. Thissector includes costume designers, recording technicians, and dancers, among others. Finally, theSpecial Food Services sector includes food service contractors and caterers that prepare food forspecial events and trade shows.Then there are other sectors that are not directly linked to the tourism industry, but benefit from it. Thesesectors include Fish and Sea Food Merchants Wholesalers (NAICS 424460), Luggage and LeatherGoods Stores (NAICS 44832), and Full Service Restaurants (NAICS 7221). The high location quotientsfor the seafood wholesalers and luggage stores hint that there are a higher number of establishmentswithin these sectors than what would be warranted by the local demand for their products. For example,most of the luggage stores are located either within discount outlet stores or within commercial touristcorridors in International Drive. In the case of seafood, it is plausible that some of the products are soldto hotels and restaurants that cater mainly to tourists. While most restaurants cater to the localpopulation, this sector benefits from visitor spending and are an important component of the local touristdistricts.To study the Data Processing, Hosting, and Related services (NAICS 51821) and Other MachineryRental and Leasing (NAICS 53249) sectors, staff only selected the establishments that were mostdirectly linked to the tourism industry. This explains the low number of establishments within these twosectors. The four data processing and hosting companies provide multimedia services that help toattract new visitors. The rental and leasing companies help with renting props or designing sets.Even though the retail industry activity is likely affected by visitor spending, its employment numberswere not included, because it is very difficult to separate the impact that tourists have on commercialdemand versus that of the local population. According to the BLS, in 2008, Orange County had over69,000 jobs in this sector, and the location quotient was 0.82. This means that our current retail sectormay not meet the current demand from Orange County residents. Besides Luggage and Leather GoodsStores, there were only four retail sectors with a location quotient higher than 1.5. These were ShoeStores (NAICS 44821), All Other Miscellaneous Store Retailers (NAICS 45399), Family Clothing Stores(NAICS 44814), and Cosmetic and Beauty Supply Stores (NAICS 446120). However, the County doeshave some significant commercial developments that cater to tourists, such as Prime Outlets, theFlorida Mall, and the Mall at Millenia.Concentration of Tourism ActivityIdentifying tourism activity clusters is challenging because, unlike nurseries and simulation companies,there are accommodation and food service establishments all over Orange County. This is specially truealong highly traveled commercial corridors such as Colonial Drive, Semoran Boulevard, and SouthOrange Blossom Trail. However, three areas within the unincorporated Orange County stand outbecause of their high concentration of core and supporting tourism establishments (Exhibit 3).The first area follows Interstate 4 from the City of Orlando to Lake Buena Vista and is the biggest of theclusters. This area includes properties along International Drive, Universal Boulevard, and Sand LakeRoad. This area is home to the Orange County Convention Center, several convention hotels, andcommercial amusements. The area boasts over 130 restaurants, some of them located in “RestaurantRow”, a development of fine dining establishments in Sand Lake Road. This cluster probably servesboth convention and leisure visitors. ECONOMIC OUTLOOK DECEMBER 2009
  4. 4. A second cluster has formed at the intersection of State Road 535/S. Apopka Vineland Road and PalmParkway, near Lake Buena Vista. This area benefits from its proximity to one of Downtown Disney’sentrances. The area is mainly home to hotels and restaurants, and the predominant customer base inthis area is probably leisure visitors who want good access to the Disney theme parks. Most of theparcels in the area have an Activity Center Mixed Use future land use. Exhibit 3: Clusters of Tourism Activity in Orange County 3 1 2 Source: InfoUSA, 2009The third cluster is along S. Orange Blossom Trail, between Oakridge Road and the S.R. 528. This isan interesting area, because it is mainly composed of industrial uses and hotels that serve either theairport or the Florida Mall, a destination in itself. Most of the restaurants in this area are fast food chainrestaurants that probably serve a high volume of commuters. The area is home to over 25 supportingestablishments that are not restaurants, such as convention and trade show organizers, tour operators,promoters, and transportation providers. Most of them are located in Orlando Central Park, an older ECONOMIC OUTLOOK DECEMBER 2009
  5. 5. industrial subdivision. These companies probably locate here because of the area’s location near theConvention Center and lower rental rates. Indeed, south of S.R. 528, there are about 20 additionalsupporting companies.ConclusionTourism is and will continue to be Orange County’s most important economic sector. It does not onlypositively impact core industries, but it also has an effect on a variety of industries within the retail andservice sectors. Orange County should continue to support this industry and help it to face thechallenges and remain competitive.The biggest current challenge to the local tourism industry is the global recession. After increasingsteadily for the past seven years, the number of annual visitors has started to decline. Hotel stays andtourism tax revenues have continued to drop during the past couple of months. The current economicconditions are a worldwide phenomenon that will constrain the tourism industry over the next couple ofyears. Competition, both national and international, is another concern, but Orange County does havethe physical and human infrastructure to compete in the world market. The vitality of the current tourismcluster is very important to our competitiveness. The concept of “theming,” or creation of place identity,is very important to the tourism industry, and both the International Drive and State Road 535 clustersexcel in this concept. The Sand Lake Road area could probably benefit from this approach, especiallynear South Orange Blossom Trail, where the land use pattern transitions to an industrial area. Theredevelopment of some of these areas could be achieved by attracting more supporting industriesrelated to the convention and entertainment industries, which would benefit the most from the area’slocation.ReferencesAssociated Press. Visits to Florida Fell in 2008. Florida Trend [online version]. Originally published on February 17, 2009. Retrieved November 17, 2009 from aid=50576Bureau of Labor Statistics, U.S. Department of Labor. 2007 Location Quotient Statistics for Orange County. Retrieved on November 20, 2009 from LOCATION_QUOTIENT/ servlet/ lqc.ControllerServletInfo USA Database License Group. (May, 2009). Orange County Business Leads Report.Office of Management and Budget. (2207). North American Classification System. Lanham: BernanOrlando/Orange County Convention and Visitors Bureau. Travel to Orlando. Retrieved at Orange County Growth Management Department Planning Division Issues Month of Publication Research & Intergovernmental Coordination Section Post Office Box 1393 Orlando, FL 32802-1393 Health Care and Biotechnology January Telephone: 407.836.5600 Conclusions March Fax: 407.836.5862 E-Mail: ECONOMIC OUTLOOK DECEMBER 2009