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Tacvb Morse Off 03 1 22 09

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Presentation by Dr. Steve morse, economist, to the TN Association of Convention and Visitors Bureaus titled, "How to Pereserve Your tourism Budget in Slow Economic Times." Good destination management ...

Presentation by Dr. Steve morse, economist, to the TN Association of Convention and Visitors Bureaus titled, "How to Pereserve Your tourism Budget in Slow Economic Times." Good destination management tips for telling the economic significance of tourism your your community.

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    Tacvb Morse Off 03 1 22 09 Tacvb Morse Off 03 1 22 09 Presentation Transcript

    • How to Preserve Your Tourism  Budget in Slow Economic Times Tennessee Assoc.  of CVB’s January 22, 2009,   Nashville, TN Stephen C. Morse, Ph.D. Director & Economist  Tourism Institute University of Tennessee Knoxville, TN Ph: (865) 974‐6249:               email: smorse@utk.edu
    • 3 Topics To Discuss Today 1) Economic Health of U.S. &  Tennessee 2) How is tourism different  than other government  spending? 3) Tips for telling how tourism  generates new taxes for  your area
    • Today’s U.S. & Tennessee’s  Economic Health • Slowest  growth since 1986 3rd & 4th Qtr. Negative U.S.  U.S.  Economy  Economic Growth has Slowed •TN sales tax collections Tennessee  •lowest levels in 12 years Sales Tax  Revenues • Decreasing tax revenues for each  Tennessee  Tennessee County County Tax  Revenues 3 Source:  U.S. Dept. of Commerce
    • Special Challenges in 2009 for the  Tennessee Tourism Industry Tourist spending will be down in 2009 Tax revenues from hotel occupancy    taxes will be down in 2009 County “General Fund” tax revenues  will be down in 2009
    • TN County Newspaper Headlines • County Tax Revenues  • Hotel Bed Tax to  Fall Short Cover Economic  Development Projects • Budget Shortfall  Worries  • Tourism Budget Cut to  Commissioners Save Road Paving  Project • County Workers Face  Layoffs • Tourism Promotion &  Marketing Budget  • City Officials Mull  Eyed for County  Spending Cuts Deficit 
    • In this slow economy… Tennessee City & County  governments are searching  for new tax revenues
    • Benefits of Tourism to Your  Community Diversifies the economy • Generates many support businesses • Brings in “new money” creating growth • Generates additional tax revenue helping to  • fund community services and infrastructure • Creates jobs & new business growth • Promotes business development – today’s  visitor may be tomorrows investor • Improves appearance of a community 7
    • During a Normal Economy, Equally  Emphasize Both Private & Public  Economic Benefits of Tourism Private Sector  Public Sector  Benefits of  Benefits of  Tourist Spending Tourist Spending Local Taxes  Profits Generated Job Creation &  State Taxes  Employee  Generated Payroll Econ. Dev.  New Business  Creation Effect
    • During a Slowing Economy, More  Emphasis on Public Sector Benefits of  Tourism as a Tax Generator Private Sector  Public Sector  Benefits of  Benefits of Tourist  Tourist Spending Spending NEW EMPHASIS
    • Tourism is a Net Tax Revenue  Generator for Other Govt. Programs  & Services Additional  Generates  Taxes Fund  Additional  Other Non‐ Local Tax  Tourism  Tourist  Revenues Spending in  Programs &  Your Local  Services Area
    • What Makes Tourism a  Different Program & Investment? • Unlike other government programs  that only take in tax revenues to  operate… • Tourism programs attract tourists to  spend money in an area, and  ultimately generates additional  new tax revenues for an area
    • Tourist  Spending Employ‐ Payroll Impacts of  ment Travel on  Your  County State  Local  Taxes Taxes
    • Example:  Impacts of Tourism on  Wilson County, TN, 2007 Source: TN Dept. of Tourist Dev. & TIA Employment: Payroll: Spending: 880 Jobs $18.64 Million $97.59 Million State Taxes: Local Taxes: $5.75 Million $2.86 Million
    • Many officials in your county may not  have a complete definition of  “Tourism” • Some officials think tourism is just  hotels • Some think it’s restaurants • Some think it’s attractions and events • Some may thin tourism does not exist  at all!
    • Five Blind Men and the Elephant Task: Describe the elephant based on what  part of the elephant you are feeling
    • It’s a big  leaf It’s a horse It’s an  anteater It’s a  snake It’s a  tree  trunk
    • It’s attractions,  It’s restaurants  entertainment &  & food service retail It’s travel  & transp. It’s hotels  & lodging Tourism Industry It’s marketing  destinations &  conventions
    • Reality – tourism is not one sector, but  all sectors combined as a system Hotels & Lodging Restaurants & Food      Service Tourism Industry Attractions,  Entertainment, Retail Travel & Transportation Conventions & Visitor  Bureaus
    • Average Tourist Spending in Tennessee, 2007 Entertainment  Foodservice & Rec. 11.0% 32.5% Retail  11.8% Lodging 17.3% Transportation 27.3% 19 Source: TN Dept. of Tourist Dev. & TIA
    • Tourists Generates Many Taxes  (Example) 5% Hotel  7% TN  2.5% Local  Tourist  Occupancy  State Sales  County Sales  Spending Area Tax Tax Tax Lodging Restaurant &  Food Service Transportation & Fuel Shopping &  Retail Attractions &  Amusements
    • Tax Relief Generated by Tourism:  County Tourism Economic  Fact Sheets • Tax Relief:  Defines how  much tourism benefits  each household in your  county in terms of less  taxes paid per household
    • Tourism Taxes Generated in  Wilson County, TN 2006 Tourism spending in Wilson Co.  generated: • $5.4 million in TN State Taxes • $2.67 million in local Wilson Co.  taxes Source:  TN Dept. of Tourist Development & TIA
    • Taxes & Wilson County, TN On an average day in Wilson County: • Tourist spending generated $7,319  daily in local county taxes • Tourist spending generated $14,793  daily in TN State taxes
    • Tax Relief Example:   Wilson County, TN, 2006 As a result of taxes generated by  tourist activity in Wilson County: Each household pays $201 less in  local and State taxes Each household pays $67 less in  local county taxes Each household pays $134 less in  State taxes
    • Be Dramatic – Present the Big Check Check Payable to:   Each Wilson Co.  Household Amount:  $201 For:  Tax Relief of State & Local  taxes generated by  tourists
    • To Protect Your 2009 Tourism  Budget: Show local officials that tourism  budgets used in promotion &  advertising… Is a good investment that generates  additional and new tax revenues UT Tourism Institute at  www.utk.edu/tourism
    • Your County’s Fact Sheet Available at: • UT Tourism Institute’s Web Page at: www.utk.edu/tourism
    • Spring Meeting &  SE TTRA Symposium Montgomery, Alabama | March 23 – 25, 2009 www.southeasttourism.org/spring “The Heart of the Economic Matter” • Roger Dow, United States Tourism Association • Bob Stewart, former commissioner of Kentucky • David Bohan, BOHAN • Dr. Suzanne Cook, U.S. Tourism Association • Dr. David Bronner, Retirement Systems of Ala.
    • Thank you for inviting me Questions?  Comments? Stephen C. Morse, Ph.D. Director & Economist  Tourism Institute University of Tennessee Knoxville, TN PH: (865) 974‐6249 Email: smorse@utk.edu