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 [email protected]
mellormurray