Communicating the Economic Value of Tourism

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Here's a copy of my presentation at the Ontario's Southwest Conference in 2014. Communicating the contribution of tourism to the local economy can be a challenge. This presentation focused on bridging the gap between tourism and economic development including tips and tools to measure and report the value of tourism in Ontario’s Southwest to the decision makers in our communities.

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Communicating the Economic Value of Tourism

  1. 1. The Economic Value of Tourism in Ontario’s Southwest March 20, 2014
  2. 2. 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
  3. 3. What’s the ROI? Source: http://www.mtc.gov.on.ca/en/research/quick_facts/facts.shtml
  4. 4. 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/
  5. 5. 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
  6. 6. Why Measure Economic Impact? • Accountability • Sponsorship • Funding Programs • Government support • Community support • Compare event performance o To previous events o To similar events in other regions o To other events in the community
  7. 7. 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
  8. 8. The Leaky Bucket Photoshttp://www.flickr.com/photos/kelehen/6219220797/sizes/z/in/photostream/
  9. 9. Photoshttp://www.flickr.com/photos/kelehen/6219220797/sizes/z/in/photostream/ Local Economy The Leaky Bucket
  10. 10. Local Economy Exports of Goods and Services Tourism Foreign Investment Goods and services purchased outside region Payments for Imports
  11. 11. Photoshttp://www.flickr.com/photos/kelehen/6219220797/sizes/z/in/photostream/ Local Economy Maximize Inputs Minimize Outputs (Leakage) Economic Development Goals
  12. 12. The History of Economic Development Industrial Development Investment Readiness Business Retention & Expansion Economic Gardening Creative Economy Knowledge Workers Free Agent Economy
  13. 13. Net Change in Cdn. Employment 2007 - 2012 -245,400 805,800 -400,000 -200,000 0 200,000 400,000 600,000 800,000 1,000,000 Manufacturing Service Sector 13 Source: Statistics Canada, CANSIM, table 282-0008 and Catalogue no. 71F0004XCB.
  14. 14. Supply & Demand Tourism System POPULATION Interest in Travel Ability to Travel TRANSPORTATION ATTRACTIONS INFORMATION & PROMOTION SERVICES • Hotels/Motels • Restaurant • Retailing Demand Supply
  15. 15. 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
  16. 16. 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
  17. 17. The Multiplier The ripple effect from the contribution of new money to the community. Photo: http://beta.images.theglobeandmail.com/b19/migration_catalog/article3966214
  18. 18. 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
  19. 19. 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
  20. 20. Tourism Economic Impact Model Sector Transportation Entertainment Recreation Retail Food & Beverage Accommodation Impact Direct Indirect Induced Effect Production Jobs Wages Taxes Tourist Spending
  21. 21. What is a tourist? Photo: http://blog.vegas.com/wp-content/uploads/2010/10/tacky.jpg
  22. 22. 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
  23. 23. 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. 90 Photo: http://www.journeyetc.com/wp-content/uploads/2010/08/bellboy.jpg
  24. 24. Special Event Tourists Ministry of Tourism does not include: o Locals o Time switchers o Casuals Source: Guidelines: Survey Procedures for Tourism Economic Impact Assessments of Gated Events and Festivals p. 19
  25. 25. Tourist Spending ≠ Tourism Economic Impact • Remember the leaky bucket • Not all purchases are made locally • Not all businesses source locally
  26. 26. 15.8 Million VisitsRTO 1 in 2011 4.3million overnight11.4million same day Source: Ontario Ministry of Tourism, Culture and Recreation with data from Statistics Canada
  27. 27. Tourism’s Contribution to Ontario’s Southwest $1.46 Billion Source: Statistics Canada Travel Survey of Residents 2011 Cdn Total Tourism Receipts 2011
  28. 28. 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
  29. 29. 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
  30. 30. TREIM Tourism Region Economic Impact Model • Direct, Indirect & Induced impacts • Gross Domestic Product • Labour Income • Employment • Tax Impacts
  31. 31. What does it measure? Economic Impact of: • Visitor Spending • Operational Expenses • Investment Expenditures • Convention Centre Activity
  32. 32. Sample Scenario • Visitor Spending • 100 Day trip visitors
  33. 33. Economic Impact For 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 Labour Income GDP
  34. 34. Economic Impact For 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
  35. 35. Hotel Investment Scenario $10 Million Investment in RTO 1 Source: Ontario Ministry of Tourism and Culture Tourism Region Economic Impact Model 2,631,577 1,678,037 460,555 325,468 696,520 434,437 0 500,000 1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 3,500,000 4,000,000 GDP Labour Income Induced Indirect Direct 3,788,653 2,437,942
  36. 36. 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
  37. 37. 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
  38. 38. Traveller Accommodation RTO 1  NAICS 7211 • $18,835 Average earnings per job • LQ .79 Provincial Location Quotient 2,110 2,319 2009 2013 Employment Source: EMSI Analyst Employees 2013.3
  39. 39. RV Parks & Recreational Camps RTO 1  NAICS 7212 • $33,755 Average earnings per job • LQ 1.81 Provincial Location Quotient 469 533 2009 2013 Employment Source: EMSI Analyst Employees 2013.3
  40. 40. Tourism Related Businesses 14,000 tourism related businesses in Ontario’s Southwest Source: Statistics Canada, Canadian Business Patterns, December 2011 - 1,000 2,000 3,000 4,000 5,000 6,000 7,000 Retail Other Services Food & Beverage Services Recreation & Entertainment Transportation Accommodation Travel Services
  41. 41. Other Measurement Tools • Festival and Events Ontario Economic Impact Study Grants • Sport Tourism Economic Assessment Model • Motor Coach Estimates • DIY
  42. 42. D.I.Y. Case Study: Elvis Festival Collingwood Photo: http://0.tqn.com/d/gocanada/1/0/k/F/-/-/Elvis_impersonators.jpg
  43. 43. Common Goals • More Tourists • Higher spend per tourist • Greater local share
  44. 44. 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
  45. 45. Greater Local Share • Create links between food and accommodation sector and retailers • SME support o Entrepreneurship training o Customer service o Tourism education
  46. 46. Boost Local Inputs in the Supply Chain • Networking events hoteliers, attractions, retailers, restaurants & producers • Regular communication • Encourage established businesses to mentor start ups
  47. 47. It’s Your Move Source: http://www.mtc.gov.on.ca/en/research/quick_facts/facts.shtml
  48. 48. 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 Tool http://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/
  49. 49. Thank you Aileen Murray Ec.D. (F) Mellor Murray Consulting amurray@mellormurray.ca 519-784-7944 mellormurray

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