Measuring The Tourism Economy

1
Measuring The Tourism Economy

• The States Role Finding More Effective and
  Efficient Solutions
• Lower Costs
• More Comprehensive Measures
• Reliable Information

Contact Joe_Mehrkens_at_dced.state.ak.us
2
Where we have been

• Started in 1985, AVSP I-IV is nationally
  recognized as one of the most sophisticated
  tourism surveys.
• Arrival tallies, random arrival surveys,
  expenditures surveys and opinion surveys
• Economic Impact Assessments, Industry Profiles,
  Visitor Profiles, Tax Studies.
• Primary data is expensive and only reliable at
  highly aggregated levels.

Contact Joe_Mehrkens_at_dced.state.ak.us
3
Why Change is Needed

• Funding is scarce.
• Traditional survey response is in decline.
• Need a better picture of tourism in comparison to
  other industries.
• Lower survey/analysis costs can increase funding
  for marketing.

Contact Joe_Mehrkens_at_dced.state.ak.us
4
Objectives

• Promote lower cost alternatives for surveys.
• Initiate improved economic measures for tourism.
• Develop tourism research partnerships.
• Minimize potential duplication.

Contact Joe_Mehrkens_at_dced.state.ak.us
5
Objectives

• Promote lower cost alternatives for surveys.
• Initiate improved economic measures for tourism.
• Develop tourism research partnerships.
• Minimize potential duplication.

Contact Joe_Mehrkens_at_dced.state.ak.us
6
TIAs Surveys of Travelers for States and Counties

• Measure resident and non-resident travel within
  state and local economies.
• Travel expenditures, business receipts,
  employment, personal income, and tax receipts,
  plus sixteen travel categories, including
  vacation, business, transportation mode, type of
  accommodation, etc.
• Use routine surveys secondary information.
• TIA travel surveys, BLS Survey of Consumer
  Expenditures, Smith Travel Researchs Hotel
  Motel Survey, TIs In-Flight Survey of
  international travelers and Travel Scopes
  monthly National Family Opinion Surveys.
• TIA surveys directly support a more comprehensive
  description of the Travel/Tourism Industry.

Contact Joe_Mehrkens_at_dced.state.ak.us
7
Using a TIA Survey in Alaska

• Advantages
• Compatible with AVSP.
• A more complete picture of Travel/Tourism
  industry.
• Uses existing data sources.
• Well documented and standardized process.
• Lower costs.

• Potential Issues
• Sample size is too small.
• Secondary information.
• Does not deal with Alaskas unique conditions.

Contact Joe_Mehrkens_at_dced.state.ak.us
8
Objectives

• Promote lower cost alternatives for surveys.
• Improved economic measures for tourism.
• Develop tourism research partnerships.
• Minimize potential duplication.

Contact Joe_Mehrkens_at_dced.state.ak.us
9
Why Tourism Satellite Accounts

• More comprehensive includes all elements of the
  travel/tourism industry.
• A more fair comparison of the tourism industry to
  other industries (relative contributions to Gross
  State Product).
• Pedigree developed by World Tourism Organization
  under the oversight of the UN (a new world
  standard).
• Institutional support Global Insights (DRI-WEFA)
  and U.S. Bureau of Economic Analysis (BEA).
• Lower costs for updates (every 3-5 years).

Contact Joe_Mehrkens_at_dced.state.ak.us
10
Advantages of Using Gross State Product

• In Alaska during 2000, wages and salaries were
  36 of GSP.
• Gross State Product is the value added for all
  goods and services produced in Alaska.
• Gross State Product encompasses all economic
  activity, not just a few important components.
• Wages and Salaries
• Corporate Profits
• Taxes
• Capital Investment

Contact Joe_Mehrkens_at_dced.state.ak.us
11
An Alaska Economic Impact Assessment Using a
Tourism Satellite Account
Contact Joe_Mehrkens_at_dced.state.ak.us
12
Key Elements of a Tourism Economic Impact Model

• Three components of supply
• (1) The tourism industry catering to individual
  consumers (blue area).
• (2) the residual tourism supply of capital
  investments and marketing programs, catering to
  tourism in general (green area).
• (3) tourist expenditures captured by non-resident
  vendors, also called imports (orange area).
• The Alaska travel tourism economy is the sum of
  the three components (yellow area).

Contact Joe_Mehrkens_at_dced.state.ak.us
13
An Alaska Tourism Satellite Account
14
Alaska Travel and Tourism Industry(the blue area)

• Focuses on individual consumers expenditures.
• Is more inclusive than past AVSP surveys and
  includes personal, business and government travel
  of residents.
• Includes the value of government services
  specifically oriented towards travelers.

Contact Joe_Mehrkens_at_dced.state.ak.us
15
Government in the Alaska Travel and Tourism
Industry (blue area)

• Government expenditures that are oriented to
  individual tourists.
• Public expenditures to operate National Parks or
  the state ferry interpreter program.
• State and local expenditures to run museums and
  Native cultural centers.
• Customs/Immigration costs associated with
  individual travelers.
• Excludes spending for tourists at large, which is
  captured in the green area.

Contact Joe_Mehrkens_at_dced.state.ak.us
16
An Alaska Tourism Satellite Account
17
Residual Supply of Tourism (the green area)

• Value of public and private marketing programs.
• Value of public and private capital improvements
  -- facilities, equipment and
  infrastructure.
• Expenditures for aviation administration,
  sanitation, security services for travelers.
• Value of exported of goods and services used in
  travel and tourism anywhere,
• Clothing and outdoor equipment. This is a very
  small component in Alaska.
• Should Alaskan art be included as a TT export?

Contact Joe_Mehrkens_at_dced.state.ak.us
18
An Alaska Tourism Satellite Account
19
Imports (the orange area)

• This is the value of goods and services to Alaska
  travelers and tourists by non-resident vendors.
  For example, the cruise industry sales of
  pre-paid package tours.

Contact Joe_Mehrkens_at_dced.state.ak.us
20
An Alaska Tourism Satellite Account
I/O Model 1
I/O Model 2
21
What will we gain, the Bottom Line

• A broader recognition of travel and tourism,
  including residents, non-resident and government
  travel and the value of government expenditures
  for consumers.
• A more direct recognition of the role of
  marketing and new infrastructure.
• A more complete measure of tourism economic
  activity, including employment, personal income,
  business profits, taxes, capital investments,
  etc., which taken together are the industrys
  contribution to GSP.
• Re-spending effects throughout the Alaska
  economy.
• The contribution toward household incomes.
• Improved recognition of new opportunities.

Contact Joe_Mehrkens_at_dced.state.ak.us
22
In Conclusion

• If you agree, please send Money,
• If you agree, but cant send money, then please

Contact Joe_Mehrkens_at_dced.state.ak.us
23
Tourism Satellite Account

• No, it is not tourism turbo tax account held at
  the U.S./Russia space station.
• Improved way to identify the travel/tourism
  industry from within the transportation, trade
  and services sectors.
• Evaluates more than expenditures and connects
  spending with goods and services produced (demand
  supply)
• The best apples to apples comparison of
  industries.
• Called a Satellite Account because it resides as
  a separate set of industry information.

24
The Role of Input/Output Analysis

• Input/Output Analysis is a method of representing
  total economic activity and the inter-dependence
  between industries.
• Total Economic Activity the value-added by each
  industry. Goes beyond the traditional measures
  of employment and income, and includes profits,
  taxes, capital investments, and other values such
  as marketing.
• Inter-industry dependence if the demand for one
  industry increases, how does this ripple through
  the economy, including increases to household
  income.

Contact Joe_Mehrkens_at_dced.state.ak.us
25
Measures of Input/Output Analysis

• Industry Interdependence is measured by
  Multipliers
• Direct impacts, indirect impacts and induced
  impacts.
• In Alaska industry interdependence is normally
  low. Multipliers of 1.3 to 1.6.
• While re-spending is low, Alaska economic health
  relies greatly on outside businesses.

Contact Joe_Mehrkens_at_dced.state.ak.us