MEMPHIS IN MAY INTERNATIONAL FESTIVAL

Transcription

1 MEMPHIS IN MAY INTERNATIONAL FESTIVAL Economic Impact Analysis 2016

2 The Economic Impact of Memphis In May International Festival On the Economy of Memphis/Shelby County 2016 Introduction The Memphis In May International Festival is a month-long event held in Memphis, TN each May for more than 40 years. The festival includes some of the largest events in Memphis including the Beale Street Music Festival, The World Championship Barbeque Cooking Contest, the Great American River Fun and 901 Fest. Each year the festival honors a selected country, which gives the festival an international focus while fostering a more robust business relationship with the honored country. The 2016 festival honored Canada. The purpose of this study is to provide state and local policy makers with an understanding the job, wage and local tax impact generated by the festival and the Memphis In May organization, which operates year-round to develop, produce and promote the festival. This analysis measures the economic impact on the Memphis/Shelby County economy. Younger Associates has used this impact calculation methodology in hundreds of projects across the United States over the past 25 years. The methodology is recognized by the International Economic Development Council and utilized in courses by the Economic Development Institute. Over the years, our approach has proven to be highly accurate although slightly conservative, by design, in projecting tax revenue generation. Methodology The economic impact calculations in this study were generated using an economic model of the local economy based on regional input-output multipliers (RIMS II) from the U.S. Bureau of Economic Analysis. The model also utilizes county and region-specific data such as local tax rates, state tax rates, historical tax collection ratios, annual average wage rates, commute patterns and historical spending patterns. Primary data regarding number of visitors per event, origin of visitors, length of stay and spending patterns by visitors was supplied by Memphis In May. It should be noted that Memphis In May conducted extensive surveys at each major event in the festival. The number of surveys completed per event varied by the size of the event. However, for each event, the sample size was large enough to yield a representative sample and high rate of confidence in the data. For example, 3,247 people participated in the survey at the Beale Street Music Festival.

3 Data from the Memphis In May surveys was used to establish the percentage of visitors from outside Shelby County, the percentage of day visitors, the percentage of overnight visitors, and the length of stay for overnight visitors. Survey data was also used to validate State of Tennessee data on visitor expenditures. Memphis In May also provided information on their annual operational spending, direct employment and capital investments. Memphis In May is meticulous in documenting the dollars spent per vendor and where those vendors are located. There is a concerted effort to spend dollars with local vendors, which maximizes the economic impact of Memphis In May operations and events. Secondary data was collected by Younger Associates for this analysis from the Tennessee Department of Revenue, the Tennessee Department of Labor and Workforce Development, U.S. Bureau of Economic Analysis, and the U.S. Department of Labor - Bureau of Labor Statistics, the Tennessee Department of Tourism and the Memphis Convention and Visitors Bureau.. In addition, proprietary licensed data from Claritas and ESRI was utilized. Memphis in May Statement of Scope In 2016, Memphis in May presented 38 different programs, events and activities as part of the festival s International Salute to Canada. Many of these programs were produced in conjunction with third party venues and local organizations. Due to the nature of these programs and events they were not included in the current economic impact study. However, the added program elements would further increase the economic impact of the Memphis in May International Festival if included in the scope of the study. Impact Definitions Economic Impact the total dollar value of change in output from all industries, within the local economy, that results from $1 of change in output from operations. Direct Jobs the number of jobs directly employed by the Memphis In May organization. Indirect Jobs the number of jobs across all industries in the local economy that are supported by the Memphis In May Festival and the organization s ongoing operations. This could include jobs (or hours of work, which comprise portions of a job) of vendors, business services, retail, personal services, transportation and all other industry sectors. Local Taxes the dollar amount of taxes collected for Memphis and Shelby County from local option sales tax, hotel/motel tax and other smaller local tax revenue sources such as business permits, alcohol and tobacco taxes.

4 Economic Impact The 2016 annual economic impact from Memphis In May on the Memphis Shelby County economy is $88.1 Million. This is the combined impact from the year-round operations to produce and promote the festival, capital expenditures, and visitor spending generated by out-of-county visitors to the major festival events. Memphis In May s focus on utilizing local vendors as much as possible maximizes the local economic impact. Jobs The total jobs supported by Memphis In May operations and out-of-county visitor spending during the festival is estimated to be 1,138. While the Memphis In May organization itself employs only 14 people directly, the organization s spending with local vendors, and the spending infused by visitors during the month-long festival supports the rest of the jobs spread throughout the local economy. Local Tax Revenues Memphis and Shelby County local tax revenues generated by the impact of Memphis in May are projected to be $2.8 Million. Although the Memphis In May organization is itself tax exempt, local taxes are generated by employees spending wages in the local economy, vendor spending and, most significantly, visitor spending. The local tax revenues are especially beneficial to tourism with visitor spending generating $1 Million in hotel motel tax during the festival month. An additional amount of almost $174,000 is estimated to be collected for the newly enacted Tourism Improvement District during the May 2016 events. Impact Summary Jobs Supported (Direct & Indirect) 1,138 Economic Impact $88,080,875 Local Tax Revenues $2,801,431

5 Memphis In May Impact Analysis Operations Impact - City of Memphis/Shelby County Annual Operating Budget $ 8,500,000 Final Demand Output Multiplier 1 $ ,960,450 Total Impact from Operations Capital Expenditures $ 136,327 Final Demand Output Multiplier Total Economic Impact from Capital Expenditures $ 234,237 Total Economic Impact $ 16,194,687 Final Demand Employment Multiplier Direct Jobs 14 Indirect Jobs 193 Total Jobs 207 Direct Wages $ 1,030,000 Indirect Wages 4 $ 10,676,361 Total Direct & Indirect Wages $ 11,706,361 Local Sales Tax Revenue from Wages 5 $ 132,223 Other Local Tax Revenue 6 $ 48,658 Indirect Property Tax Revenue 7 $ 30,185 Total Local Tax Revenue $ 211,067

6 Memphis in May Impact Analysis Visitor Spending Impact - City of Memphis/Shelby County Beale Street Music Festival World Championship Barbeque Cooking Contest 901 Fest Great American River Run Attendance 81,074 66,906 6,288 9, ,536 Percentage of Visitors from Outside Shelby County 65.09% 55.52% 22.55% 18.46% Visitor Days 52,771 37,146 1,418 1,711 93,046 Percentage of Visitors Staying Overnight 41.80% 44.4% 2.0% 11.30% Visitors Staying Overnight 33,889 29, ,047 64,768 Duration Total Visitor Overnights 94,211 78, ,047 Day Visitor Spending Rate 8 $ 88 $ 88 $ 88 $ 88 Overnight Visitor Spending Rate 8 $ 174 $ 174 $ 174 $ 174 Total Visitor Spending $ 20,984,705 $ 16,821,061 $ 146,377 $ 332,028 $ 38,284,171 Final Demand Output Multiplier Economic Impact $ 39,402,981 $ 31,584,906 $ 274,852 $ 623,449 $ 71,886,188 Direct Sales Tax from Visitor Spending 9 $ 424,940 $ 340,626 $ 2,964 $ 6,724 $ 775,254 Hotel Motel Tax 10 $ 588,621 $ 471,831 $ 4,106 $ 9,313 $ 1,073,871 Tourism Improvement District Fees 11 $ 94,211 $ 78,127 $ 126 $ 1,047 $ 173,512 Other Local Tax Revenue from Visitor Spending 6 $ 156,378 $ 125,351 $ 1,091 $ 2,474 $ 285,294 Total Direct Local Tax Revenues $ 1,264,151 $ 1,015,935 $ 8,287 $ 19,559 $ 2,307,931 Final Demand Employment Multiplier Jobs Supported from Visitor Spending Shelby County Annual Average Wage 12 $ 20,657 $ 20,657 $ 20,657 $ 20,657 Wages Paid to Indirect Jobs $ 10,543,126 $ 8,451,230 $ 73,543 $ 166,817 $ 19,234,716 Indirect Sales Tax from Wages 5 $ 119,085 $ 95,457 $ 831 $ 1,884 $ 217,256 Other Local Tax Revenue from Wages 6 $ 35,725 $ 28,637 $ 249 $ 565 $ 65,177 Total Indirect Local Tax Revenues $ 154,810 $ 124,094 $ 1,080 $ 2,449 $ 282,433 Total Direct & Indirect Local Tax Revenues $ 1,418,961 $ 1,140,029 $ 9,366 $ 22,008 $ 2,590,364 Total

7 Notes for Memphis in May Economic Impact Analysis: 1. U.S. Bureau of Economic Analysis RIMS II, final demand output multiplier for Shelby County, Tennessee and the Memphis MSA, for other amusement and recreation industries. This multiplier represents the total dollar change in output that occurs in all industries for each additional dollar of output delivered by the specified industry. 2. U.S. Bureau of Economic Analysis RIMS II, final demand output multiplier for Shelby County, Tennessee and the Memphis MSA for wholesale trade. This multiplier represents the total dollar change in output that occurs in all industries for each additional dollar of output delivered by the specified industry. 3. U.S. Bureau of Economic Analysis, RIMS II aggregate final demand employment multiplier for Shelby County, Tennessee and the Memphis MSA, for other amusement and recreation industries. This multiplier represents the total change in the number of jobs that occurs in all industries for each additional one million dollars of output delivered by the specified industry. 4. This calculation is based upon the number of indirect jobs supported by annual operations and Tennessee Department of Labor and Workforce Development Annual Average Wage for all industries for Shelby County, 2014 with a 3.5% inflation factor applied for 2015 and 2016 to adjust to 2016 constant dollars. 5. U.S. Department of Labor, Consumer Expenditure Survey, Southern US 2014; factor applied to determine the rate of indirect or downstream expenditures on sales taxable goods and services at the Memphis local option tax rate of 2.25%. 6. Based upon the ratio of July June 2016 collections of Business, Alcohol, Motor Vehicle and other local tax revenues, fees and permits compared to local sales tax revenue for Shelby County 7. New property tax revenue for Shelby County and the City of Memphis based on projected property value created by wages paid to the organizations employees. The property value may be single family homes, rental property, or other commercial property. Although commercial property value is included, the residential rate of assessment is used as a conservative measure. The assessment rate of 25% and a combined Shelby County ($4.37) and City of Memphis ($3.40) tax rate of $7.77, per $100 of assessed value is used. 8. Daily and overnight spending averages as reported for the State of Tennessee Tourism Department, 2014 Tennessee Visitor Profile with an inflation adjustment of 3.5% for 2015 and 2016 to adjust to 2016 constant dollars. 9. Calculation assumes 90% of visitor spending is for sales taxable purchases subject to the Memphis local option tax rate of 2.25%. 10. Calculation assumes that 33% of the visitor spending is for hotel room rental (based on Tennessee Visitor Profile data), which is subject to a hotel/motel tax of 5% for the county and 3.5% for the city. 11. A $2.00 Tourism Improvement District fee is assessed for each hotel room rental. Calculation assumes an average of one hotel room rental per every two overnight visitors. 12. This calculation is based upon the number of indirect jobs supported by annual operations and Tennessee Department of Labor and Workforce Development Annual Average Wage the Leisure, Hospitality, Accommodations and Food Service Industries for Shelby County, 2014 with a 3.5% inflation factor applied for 2015 and 2016 to adjust to 2016 constant dollars. Calculations are in constant 2016 dollars. 6

8 2016 Festival Economic Impact analysis