THE 2000 ECONOMIC IMPACT OF EXPENDITURES
BY TRAVELERS ON WISCONSIN

• Introduction

• 2000 Traveler Expenditures and Economic Impact

• 2000 County Traveler Expenditures and Economic Impact

• Research Procedures

INTRODUCTION

This is the twelfth annual report of the economic impact of traveler expenditures on Wisconsin prepared by Davidson-Peterson Associates. This report covers calendar year 2000.

The purpose of this study is to measure the economic benefits derived by Wisconsin residents and governments from the dollars spent in the area by travelers.

These economic benefits include:

• Total expenditures made by visitors;
• Number of full-time equivalent jobs supported by these expenditures;
• Wages, salaries and proprietary income earned by area residents; and
• State and local government revenues generated.

The basic procedures employed to develop these measures are outlined in the Technical Appendix of the full report.

The estimates of economic impact developed from these procedures and analyzed in this report may be used to document the importance of tourism as a key segment of Wisconsin's economy, to underscore the need to continue to support the expenditure of time, effort and dollars to promote tourism growth, and to track the results of Wisconsin's tourism marketing efforts.

Beginning with the 1996 report, the Wisconsin Department of Tourism altered the definition of the State's tourism seasons for the economic impact study.

This was changed to reflect what has been determined to be a more appropriate distribution of Wisconsin seasons. These seasons are defined as follows:

• Wave 1 -- Winter/Spring: December - April
• Wave 2 -- Summer: May - August
• Wave 3 -- Fall: September - November

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2000 ESTIMATED TRAVELER EXPENDITURES: $9,971,705,647

• December - April $2,900,557,805
• May - August $4,793,915,638
• September - November $2,277,232,204

 2000 ECONOMIC IMPACT (Annual)

• Total jobs created (full-time job equivalents): 282,960
• Total resident income (wages, salaries and proprietary income) generated: $5,565,720,000
• Total government revenues generated: State - $894,986,000 Local - $647,979,000/LI>< /LI>

2000 HIGHLIGHTS

Note: Length of stay as noted throughout this document represents the average number of nights spent in a hotel/motel/resort. It does not necessarily reflect the total number of nights spent in Wisconsin.  Columns of figures may not add to totals shown due to rounding. * Less than 0.5%

WISCONSIN COMPARISON SUMMARY
1999 (Revised) vs. 2000

WISCONSIN TOTAL ESTIMATED TRAVELER EXPENDITURES BY SEASON
1999 (Revised) vs. 2000

THE 2000 ESTIMATES OF TRAVELER EXPENDITURES

By Accommodation Type

More than half of the total estimated traveler expenditures, $5.66 billion (57%), were spent by travelers staying in Wisconsin overnight at hotels/motels/resorts.

Those camping in Wisconsin spent $628 million (6%), and those staying in cabins/cottages/condominiums spent $513 million (5%) while traveling in Wisconsin.

Visitors with no lodging expenses spent 32% of Wisconsin's 2000 traveler expenditures ($3.18 billion). Travelers who stayed at the homes of family and/or friends spent $2.45 billion (25%) while visiting Wisconsin, and those visiting just for the day or passing through Wisconsin spent nearly $722 million (7%).

By Category of Expenditure

More than half of Wisconsin's total estimated travel expenditures came from shopping and food expenditures ($3.0 billion and $2.4 billion, respectively).

Recreation expenditures represent 24% of traveler expenditures ($2.4 billion), and lodging expenses represent 15% of the total estimated traveler expenditures ($1.5 billion). Six percent of Wisconsin traveler expenditures ($583 million) were spent on transportation.

Seasonal Differences in Traveler Expenditures

Half of all traveler expenditures in Wisconsin ($4.8 billion or 48%) were spent in the summer season (May through August). The winter season (December through April) represents 29% of Wisconsin's total traveler expenditures ($2.9 billion), and the fall season (September through November) accounts for 23% of these expenditures ($2.3 billion).

Fall and summer traveler expenditures increased by 10%, compared to 1999 (revised) while the winter season saw a 9% increase. 

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2000 County by County Traveler Expenditures and Economic Impact 

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THE RESEARCH PROCEDURES

Introduction

The basic procedure employed in this project is the T-MAP-I economic impact model. This procedure was first employed by Davidson-Peterson Associates in 1985 for the State of Georgia. Since then, it has been employed on behalf of states and local areas throughout the United States. This Technical Appendix provides a brief outline of the procedure.

A. What is Economic Impact?

Economic impact begins when a visitor to an area spends money in that area -- no matter what the reason. But the benefits to local economy go beyond the basic impact of these dollars spent in the area; these visitor expenditures create a chain effect. The direct effects or impacts of these expenditures are evident as the "direct" recipients of these expenditures in turn pay wages, earn income and pay taxes. Further, these direct recipients spend their income and thereby create indirect impact: more jobs, wages, salaries, proprietary income and tax revenues. These direct and indirect effects together equal the total economic impact of traveler expenditures in the area being visited.

B. What is a Traveler?

For purposes of this study, a traveler is anyone who visits an area traveling outside of their normal routine and spends money. They may be motivated to travel by pleasure, personal, or business reasons or some combination of reasons. If they remain in the area being visited for more than thirty (30) days, they cease being a traveler or if they are staying in accommodations contracted for more than a thirty (30) day period (construction workers or truck drivers, for example), they are also not classified as travelers.

C. What is Being Measured?

It should be underscored that this report and the T-MAP-I procedure are based on the premise that economic impact begins with the expenditures of dollars by travelers (bottom-up measurement) rather than receipts of selected businesses, (top-down measurement).

Because of the problems and errors associated with it, Davidson-Peterson Associates does not use this traditional top-down or industry receipts-based measurement.

• We do not employ sales tax data or industry receipts
• We begin with every dollar travelers spend
• We do not use SIC codes
• We let the travelers define where they spend money

Let's explain a little further.

• Top-down or industry receipts-based measures assume that an industry is composed of a set of firms that are clearly designated by a standard code -- SIC. For most industries this works well. However, when employed for tourism, it tends to understate economic impact by a wide margin.

• Tourism is not a typical industry. Tourism cannot be represented in its entirety by a few SIC-classified businesses. Tourism is the movement of people into an area for a brief period of time and its economic impact begins with the sum of every dollar these visitors spend -- no matter whether they are spent on retail purchases, medical services or any of the other goods or services people buy.

• When travelers spend dollars, they spend them in "traditional industries" identified by SIC codes as well as in other industries. The top-down, industry receipts-based procedure is based only on the receipts of these traditional industries. The bottom-up procedure employed by Davidson-Peterson Associates is based on all traveler expenditures in all industries.

• Davidson-Peterson Associates recognizes the value of the industry concept. However, for a true measure of the economic impact of tourism, we believe a bottom-up procedure that begins with what all travelers spend is necessary; thus, the development of the model we utilize.

Our procedure for assessing economic impact allows us to estimate current numbers as well as measure change from year to year accurately. We are constantly reviewing and revising methods and numbers to generate the most accurate measures of change over time.

D. The Basic Research Steps for the 2000 Wisconsin Effort

What follows is a brief description of the procedures for estimating economic impact as they were completed in 2000.

1. Inventory Update

• At the beginning of 2000, the 1999 inventory was reviewed by comparing it with the latest brochures available from state, county, and regional offices. In addition to this, 38 convention and visitor bureaus throughout the state provided us with updated lodging inventories.
• With any new information learned from these publications and CVBs, appropriate additions, deletions, and size changes were incorporated into the lodging database.
• Properties which we learned were open in 1999 but not surveyed were accounted for in 2000.

2. Seasonal Surveys of lodging business activity (HMR)

• The following seasonal surveys were conducted by phone:

  Season	# Called
  December - April	1,370
  May - August	1,330
  September - November	1,301

• Each property was contacted to complete the questionnaire by phone. Those who did not respond by phone were asked by Davidson-Peterson Associates' field staff to complete the survey by mail or fax.
  
• A small sample of very large and/or high priced properties were asked to provide rates and occupancy for all three seasons. This procedure is employed to prevent skewing the data or understating the values for such important properties by imputing averages based on less expensive, smaller properties.

3. Resident (VFR) Survey

• In order to determine the incidence of visiting friends and relatives in the state, telephone interviews were conducted with a random sample of Wisconsin households. Data from these surveys were projected to the total household population for the state and expenditure ratios were then applied in order to allocate expenditures by visiting friends and relatives to expenditure categories for the economic impact model.
• The 1,003 surveys completed in 2000 were analyzed together with the previous surveys from 1996 through 1999.

4. Visitor Expenditure Survey/Modeling

• Using on-site surveys of visitors, a model is created to represent the proportion of traveler expenditures spent for various types of goods and services. The basis for the expenditure data utilized in this study combines data from surveys completed in the last two years.

5. Economic Impact Data Calculations

• Using room/site rates, occupancy and travel party size, a figure is calculated for expenditures at accommodations facilities to which the visitor expenditure ratios are applied in order to derive the total traveler expenditures.

6. Input/Output (I/O) Modeling

• A special inter-industry model is constructed for Wisconsin by Dr. William Schaffer of the Georgia Institute of Technology. The model utilizes the total tourism expenditures to determine employment, income, and government revenue impacts of those expenditures. This information is used to compile The Economic Impact of Expenditures by Travelers on Wisconsin.

Definition of Economic Impact Terminology

First, the dollars spent by travelers.

Total Estimated Traveler Expenditures

These figures represent the total estimated expenditures made by all travelers to the State, as calculated by the Davidson-Peterson Associates, Inc. proprietary economic impact model, based on survey data.

Next, the two degrees of economic impact

Economic impact begins when a visitor spends money in the state -- no matter what the reason. But the benefits to local economy go beyond the basic impact of these dollars spent in the state; these visitor expenditures create a chain effect.

Direct Impacts

The direct effects or impacts of these expenditures are evident as the "direct" recipients of these expenditures in turn pay wages, earn income and pay taxes. These figures represent the economic impacts that are created by the initial circulation of the total estimated traveler expenditures. For example, a server at a resort frequented by travelers is directly supported by the expenditures made by those travelers.

Indirect Impacts

Further, these direct recipients spend their income and thereby create indirect impact: more jobs, wages, salaries, proprietary income and tax revenues. These figures represent the economic impacts that are created as the total estimated traveler expenditures are re-circulated throughout the economy. For example, the above server's landlord is indirectly supported by the traveler expenditures that paid the waitress's salary.

These direct and indirect effects together equal the total economic impact of traveler expenditures in the area being visited.

Finally, the four categories of economic impact.

Full-time Equivalent Jobs

These figures represent the estimated number of full-time job equivalents that are supported by the total estimated traveler expenditures. A full-time job equivalent could be one full-time employment position, such as a hotel manager.

However, the Davidson-Peterson Associates, Inc. input/output model created specifically for each area by Dr. William Schaffer of the Georgia Institute of Technology also account for part-time employment. Therefore, the input/output model combines all part-time jobs supported by the area's tourism and calculates its estimated equivalent full-time employment. For instance, three part-time waitress positions may be the equivalent of one full-time position.

Resident Wages & Proprietary Income

These figures represent the estimated dollar amount of resident income which is generated by these full-time equivalent jobs that are supported by total estimated traveler expenditures. These income figures include resident wages, resident salaries and resident proprietary income.

State Government Revenues

These figures represent the estimated dollar amount of state government revenues that are collected as a result of the total estimated traveler expenditures. State government revenues collected include lodging, sales and meals taxes as well as any other sources of government income collected as a result of the total estimated traveler expenditures throughout the state.

Local Government Revenues

These figures represent the estimated dollar amount of local government revenues which are collected as a result of the total estimated traveler expenditures. Local government revenues collected include property taxes as well as any additional sources of county or city government income (additional regional sales taxes, lodging taxes, etc. that are collected at or returned to the local level).