THE ECONOMIC IMPACT OF TOURISM IN VERMONT: SPRING & SUMMER 2001

THE ECONOMIC IMPACT OF TOURISM IN VERMONT: SPRING & SUMMER 2001 Prepared for The Vermont Department of Tourism and Marketing By Department of Community Development & Applied Economics The University of Vermont In association with Vermont Tourism Data Center, School of Natural Resources University of Vermont September 2002

THE ECONOMIC IMPACT OF TOURISM IN VERMONT: SPRING & SUMMER 2001 Report prepared by Department of Community Development & Applied Economics The University of Vermont In Association with Vermont Tourism Data Center, School of Natural Resources University of Vermont September 2002 (802) 828-3230 (VDTM) (802) 656-0623 (VTDC) http://snr.uvm.edu/vtdc This research was funded through a partnership between the Vermont Department of Tourism and Marketing and the University of Vermont

Table of Contents List of Tables... 2 Executive Summary... 3 Introduction... 4 Background... 4 Definitions... 5 Summer Visit Statistics... 6 Summer Tourist Destinations... 7 Primary Purpose of Summer Visits... 8 Summer Activities... 9 Summer Tourist Spending... 10 Economic Impact: Summer 2001... 12 Spring Visit Statistics... 14 Spring Spending 2001... 15 Economic Impact: Spring 2001... 16 Conclusions... 18 Methodology... 19 Glossary... 20 1

LIST OF TABLES Table 1: Summer Visitation 2001 vs. 1999... 6 Table 2: Dominant Destinations During Summer... 7 Table 3: Primary Purpose of Summer Trips... 8 Table 4: Summer Activity Participation... 9 Table 5: Summer Spending per Person per Trip... 10 Table 6: Total Summer Spending... 11 Table 7: Economic Impact of Summer Tourism... 12 Table 8: Total Impact, Summer 2001 vs. 1999... 13 Table 9: Spring Summary Statistics... 14 Table 10: Spring Primary Purposes... 14 Table 11: Spring Spending: Average per Person per Trip & Total... 15 Table 12: Economic Impact of Spring Tourism... 16 Table 13: Total Impact, Spring 2001 vs. 1999... 17 2

EXECUTIVE SUMMARY Despite modest increases in the number of trips to Vermont, the economic impact of summer tourism in 2001 was significantly less than the 1999 summer season two years before. This may suggest a serious dampening effect on travel caused by the 2001 recession. Tourists made 1.49 million trips to Vermont during June, July and August of 2001, an increase of 8.5% over the same months in 1999. They spent an estimated $827.6 million while in Vermont, a decrease of 8.1% (pp. 6 & 11). Only domestic (U.S. residents) pleasure travelers are included in this study so this is not necessarily a reflection of trends in international or business travel. Spring tourism in 2001, on the other hand, showed increases over spring 1999. Tourists made 677,963 visits during April and May 2001, an increase of 52.2% over 1999. There may have been some carry-over of winter ski season to spring because of late winter snowfall and good ski and snow conditions. Spring tourists spent an estimated $270.3 million while in Vermont, an increase of 4.5%. This increase is modest compared to the increase in trips, due to an 18% lower spending per person per trip, and smaller party size (pp. 14 & 15). Summer tourists in 2001 also spent less per person per trip than in 1999. On average they spent $179.65, which is 10% less than the average of $198.96 in 1999. Party size was also smaller, down 6% from 3.3 people to 3.1 people per party (pp. 10 & 6). More than two-thirds of tourist expenditures during both spring and summer affected three industry sectors - lodging, restaurants and retail - which are consistent with prior years. However, spending on shopping during both spring and summer exceeded expenditures on lodging which is a change from prior years. Total spending on shopping in summer 2001 was $195.3 million, an increase of 10% over summer 1999. Summer spending on lodging decreased 23% from $247.1 million in 1999 to $190.1 million in 2001 (p. 11). Spring spending on shopping in 2001 was $68.3 million, an increase of 33% over 1999. Spring spending on lodging in 2001 was $53.9 million, a decrease of 6% from 1999 (p. 15). The total impact on the Vermont economy of summer tourism in 2001 is estimated to be $1.228 billion on industry output, $442.3 million on labor income and $79.9 million on indirect business taxes. Labor income includes $391.5 million of employee compensation (including benefits) and $50.8 million of proprietors income to small business owners and selfemployed persons. The total impact on employment was 22,767 jobs, both full-time and part-time (p. 12). The total economic impact of spring tourism in 2001 is estimated to be $397.3 million on industry output, $144.1 million on labor income and $25.8 million on indirect business taxes. The total impact on employment was 7,523 jobs (p. 16). 3

INTRODUCTION This is the second of three seasonal reports about tourism in Vermont for the year that began on December 1, 2000, and ended November 30, 2001. This report covers the spring (April and May) and summer (June through August) seasons. Other seasonal reports are for winter and fall, which will be followed by a final comprehensive report covering the economic impact of tourism in Vermont during the full year (December 2000 November 2001). These reports are part of a series for the 2001 tourist year that includes the 2001 Geodemographic Analysis of the Vermont Visitor (February 2002) and the 2001 National Visitor Survey (March 2002). This research is funded through the Vermont Department of Tourism and Marketing and conducted through the Vermont Tourism Data Center at the University of Vermont in partnership with the School of Business Administration and the Department of Community Development and Applied Economics. This report summarizes key statistics about summer tourism from the Geodemographic and National Visitor reports, and analyzes the economic impact of summer visitors to the state. At the end of the report there are also summary statistics and economic information about spring tourism, which has a significantly smaller impact on the economy than the other seasons. BACKGROUND A panel of 224,412 consumers managed by Ipsos-NPD was mailed the initial screener survey for this research in October 2001. Ipsos-NPD is a full service international marketing research firm with headquarters in Uniondale, New York. This geodemographically balanced sample of U.S. households was asked, For each month below, please indicate how many pleasure trips any member of your household made, or will make, to Vermont between December 1, 2000, and November 30, 2001. 154,083 panelists responded (68.7%), with 3,957 (2.6%) indicating at least one pleasure trip to Vermont. A longer questionnaire was mailed to 3,671 of the Vermont visitors asking for detailed travel information. A total of 1,473 valid questionnaires were returned (a 40.1% follow-up response rate). An input/output model was used for the economic impact analysis of tourism in Vermont based on the data from this visitor survey. IMPLAN (IMpact analysis for PLANning) software was used for the economic analysis. The Methodology section at the end of this report describes IMPLAN and how input/output modeling is used and the Glossary section defines terms used in this report. 4

DEFINITIONS The study year covers December 1, 2000, through November 30, 2001. Throughout this and related reports the year is identified as 2001. Consistent with studies in 1998-1999 and 1999-2000, the seasons include the following months: o Winter: December, January, February, and March o Spring: April and May o Summer: June, July, and August o Fall: September, October, and November Prior studies covered a different time period: April 1 of one year through March 31 of the next. There is a two year difference between the 2001 seasons covered by this report (spring and summer) and the same seasons in the prior 1999-2000 study. There is a one-year difference between winter seasons in the current 2001 study compared to the prior 1999-2000 study. Prior Study (1999 2000) Current Study (2001) 1999 2000 2001 January January January February February February March March March April April April May May May June June June July July July August August August September September September October October October November November November December December December 5

SUMMER VISIT STATISTICS (June 1 August 31, 2001) Table 1: Summer Visitation 2001 vs. 1999 Summer tourists made 1.49 million visits to Vermont during June, July, and August 2001, an 8.5% increase over 1999. These are trips made by parties of visitors from households in the United States, and do not include international travelers. Summer trips accounted for 31.7% of all trips to Vermont during the study year. Party size during the summer averaged 3.1 people, which was 6.1% lower than during 1999. Parties often included individuals from more than one household. The average number of household members in a party during the summer was 2.4 persons. (2001 National Survey of the Vermont Visitor (March 2002), p.26.) The total number of person trips (number of party trips times the average number of persons in each party) was 4.61 million during the summer of 2001, a small 2.4% increase over 1999. Summer 1999 2001 % Change Trips by visiting parties (millions) 1.37 1.49 8.5% Summer % of all trips 35.7% 31.7% -11.2% Party Size (persons) 3.30 3.10-6.1% Household members in party 2.30 2.40 4.3% Person Trips (millions) 4.50 4.61 2.4% Number of summer trips per party 1.41 1.40-1.0% Source: 1999: The Impact of the Tourism Sector on the Vermont Economy: 1999-2000, CDAE, p. 25. 2001: Current study. Summer tourists made on average 1.4 trips during the season. However, 79.3% made only one summer trip, whereas 9.6% made 3 or more summer trips. Many summer tourists came during other seasons also, averaging 2.8 trips overall for the year: 24% of summer visitors had come in the previous winter, 21% came during the spring, and 29% returned in the fall. 6

SUMMER TOURIST DESTINATIONS Table 2: Dominant Destinations During Summer Burlington was the most popular summer destination for domestic tourists in 2001, identified as the primary destination for 9% of summer trips. This is a decrease from 11.7% of trips in 1999, and less than half of the 20% of trips in 1998. Bennington was again in second place with 6.5% of trips, compared to 6.8% in 1999. Bennington also showed a decrease from 1998 when it was the destination for 12% of summer trips. Stowe moved up to third place rank, with 4.1% of trips, replacing Manchester, which moved to sixth with 3.2% of visits. In general, the trend appears to be towards smaller proportions of the visiting population going to any one destination, with visits spread out throughout the state. In the 1999 study 18% of visits were categorized as drive-through. The 2001 survey data has different destination variables, including unspecified, and none. These two categories represent 7.1% of summer trips. 1999 2001 Rank Dominant Destination % of Summer Trips % of Summer Trips 1 Burlington 11.70% 9.0% 2 Bennington 6.80% 6.5% 3 Stowe 4.50% 4.1% 4 Rutland & West Rutland 3.00% 3.8% 5 Brattleboro 3.20% 3.2% 6 Manchester & Manchester Center 6.00% 3.2% 7 Killington/Sherburne * 2.2% 8 Woodstock * 2.0% 9 Bellows Falls * 1.5% 10 West Dover & Mt. Snow * 1.5% 11 Ludlow * 1.4% 12 Montpelier 4.10% 1.4% Unspecified/None 7.1% * Unranked in 1999. Sources:1999: A National Survey of the Vermont Visitor 1999-2000 (January 2001), p. 29. 2001: Current study, 2001 National Survey data. 7

PRIMARY PURPOSE OF SUMMER VISITS Table 3: Primary Purpose of Summer Trips This table reports the percentage of trips during the summer for each primary purpose for visiting Vermont. For example, visited relatives was the primary purpose of 23.4% of summer trips made by domestic tourists in 2001. This is an increase over 1999 when visited relatives accounted for 20.5% of summer trips, and considerably higher than in winter 2001 when 15.6% of trips were to visit relatives. Family get-away ranks second as primary purpose of summer trips at 10.6%. This is followed by visited friends at 9.3%, a big drop from 19.8% of summer visits in 1999. However, friends were not forgotten: they were visited during 25% of summer visits, comparable to 24% in 1999 (see Table 4). Buying Vermont products was the primary purpose of a smaller percentage of trips (3.6%) than in the prior study (8.8%). However, the more general category shopping accounted for 7.7% of trips in 2001, for a combined shopping total of 11.3%. This is the first year that the survey included shopping as a separate category; in the past it was an activity indicated under other. When combined, outdoor recreational activities represent the primary purpose of only 7.5% of trips. This includes fishing, hiking, water recreation, biking, golf and watchable wildlife (for example, bird or moose watching). Spectator activities are the primary purpose of 9.4% of trips. This includes attending cultural and sporting events, visiting historic sites and attending fairs. Primary Purpose of Summer Trips % of trips 1999 % of trips 2001 Visited relatives 20.5% 23.4% Family get-away 8.1% 10.6% Visited friends 19.8% 9.3% Shopping N/A 7.7% Relaxed in beauty and serenity 5.3% 7.0% Auto-touring 12.2% 4.0% Attended cultural events 4.2% 3.8% Romantic get-away 3.1% 3.7% Bought Vermont made products 8.8% 3.6% Visited historic sites 3.9% 3.4% Fishing 1.5% 2.2% Visited a child in school or visited a school 2.0% 1.8% Hiking 1.7% 1.7% Water recreation 2.4% 1.5% Attended sporting events 0.3% 1.3% Biking 0.2% 0.9% Attended fairs 0.7% 0.9% Watchable wildlife 0.7% 0.8% Fall foliage touring 0.7% 0.5% Golf 0.5% 0.4% Agricultural tourism 1.4% 0.1% Other 0.3% 11.4% Canoeing or kayaking 1.9% 0.0% Total: 100% 100% Source 1999: The Economic Impact of Tourism in Vermont: Summer (CDAE, June 2001) 8

SUMMER ACTIVITIES Table 4: Summer Activity Participation Many visitors participate in multiple activities in addition to the primary purpose of their trip. The Visitor survey does not ask for activities by season, so Table 4 presents data for visitors who came only during the summer months. Summer visitors bought Vermont made products during 46.8% of trips in 2001, lower than during 56% of summer trips in 1999. They also shopped during 31.5% of trips. The Vermont products could have been maple syrup, cheese or other food products at a grocery store, crafts at a craft fair or antiques at an auction; while shopping may have been interpreted as going to stores in a downtown or mall. As during 1999, the second most frequent activity for these summer visitors was relaxed in beauty and serenity. It was indicated as an activity during 42.4% of trips in 2001, compared to 46% in 1999. Outdoor recreation was a popular pastime, with participation in water recreation during 13.2% of trips, wildlife watching during 12%, hiking during 10.9%, biking during 5.1%, fishing during 4.4%, golf during 3.9%, and canoeing or kayaking during 3.2% of trips. Water recreation includes power-boating, sailing and swimming. Even more popular were the spectator activities, especially visiting historic sites (during 29.6% of trips), with cultural events during 12.5%, attending fairs during 5.1% and sporting events during 2.3% of trips. Cultural events could have included music festivals, arts/crafts shows, and theater. Activity Participation by Summer-only Visitors % of trips 1999 % of trips 2001 Bought Vermont made products 56% 46.8% Relaxed in beauty and serenity 46% 42.4% Shopping N/A 31.5% Family get-away 29% 29.6% Visited historic sites 34% 29.6% Visited friends 24% 25.0% Visited relatives 23% 23.8% Auto-touring 31% 15.0% Water recreation 11% 13.2% Attended cultural events 19% 12.5% Watchable wildlife 13% 12.0% Hiking 10% 10.9% Agricultural tourism 8% 10.2% Romantic get-away 10% 8.1% Biking 3% 5.1% Attended fairs 9% 5.1% Fishing 9% 4.4% Golf 2% 3.9% Canoeing or kayaking 5% 3.2% Fall foliage touring 5% 2.3% Attended sporting events 2% 2.3% Visited a child in school or a potential school 2% 2.1% Other 19% 13.4% Source1999: The Economic Impact of Tourism in Vermont: Summer (CDAE, June 2001). 2001: Current study, National survey data. 9

SUMMER TOURIST SPENDING Table 5: Summer Spending per Person per Trip Summer Spending Average per person % of total Average per person % of total per trip 1999 1999 per trip 2001 2001 % Change Shopping $ 39.22 19.7% $ 42.40 23.6% 8% Lodging $ 54.61 27.4% $ 41.26 23.0% -24% Restaurant $ 38.09 19.1% $ 32.94 18.3% -14% Gasoline $ 13.09 6.6% $ 15.69 8.7% 20% Groceries $ 14.74 7.4% $ 14.14 7.9% -4% Other recreation $ 14.57 7.3% $ 13.56 7.5% -7% Other transportation $ 4.70 2.4% $ 7.09 3.9% 51% Camping $ 7.04 3.5% $ 4.16 2.3% -41% Parks $ 1.04 0.5% $ 1.42 0.8% 37% Movies & Theater $ 2.22 1.1% $ 1.30 0.7% -41% Other $ 9.65 4.9% $ 5.69 3.2% -41% Total per person per trip $ 198.96 100.0% $ 179.65 100.0% -10% Source: Current study, based on statistics from 2001 National Survey of the Vermont Visitor (March 2002) for average household spending in summer (p. 37) and 2.4 household members in the summer travel party (p.26). Tourists reported spending $179.65 per person per trip, on average, during summer 2001. This is a surprising decrease of 10% from 1999. Lodging slipped behind shopping as the largest category of spending. Shopping increased from 20% ($39.22) of per person per trip spending in 1999 to 23.6% ($42.40) in 2001, while lodging decreased from 27% ($54.61) to 23% ($41.26). Only four categories of spending showed increases over 1999: shopping (up 8%), gasoline (up 20%), other transportation (up 51%) and parks (up 37%). All other categories showed decreases over the two-year period, with the most significant in terms of impact in lodging, with a 24% decrease in per person per trip spending. This is the average spending for all visitors, including those who did not stay in paid lodging. Prior surveys did not provide seasonal data on lodging so comparisons cannot be made between types of lodging used during the summer only, or number of nights spent in Vermont. 10

SUMMER SPENDING, continued Table 6: Total Summer Spending Table 6 summarizes total spending by domestic tourists during the summer of 2001 compared to summer of 1999. Summer tourists spent $827.6 million in Vermont during June, July and August of 2001. This is an 8% decrease from the summer season two years before. This decrease can be attributed to the 10% reduction in per person per trip spending (Table 5) coupled with the small 2.4% increase in the number of person trips (Table 1). The economic recession in the U.S. economy during 2001 may have been the damper on the tourist industry that caused the reduction in spending and restricted travel. The retail sector showed a 10% increase in 2001 over 1999, with tourist spending of $195.3 million. On the other hand, the lodging industry saw a decrease of 23%, with spending of $190.1 million. Spending for food and beverages in restaurants went down 12%, while spending for food and beverages in grocery stores decreased 2% from 1999. Gasoline showed an increase of 22%, due primarily to increased gasoline prices. According to the U.S. Department of Energy, the price of regular gasoline in New England ranged from $1.376 to 1.629 during the summer of 2001 compared to a range of $1.104 to $1.26 during the summer of 1999. Summer Spending* (millions of dollars) 1999 2001 % Change Shopping 177.5 195.3 10% Lodging 247.1 190.1-23% Restaurant 172.3 151.7-12% Gasoline 59.2 72.3 22% Groceries 66.7 65.1-2% Other recreation 65.9 62.5-5% Other transportation 21.2 32.6 54% Camping 31.9 19.2-40% Parks 4.7 6.5 39% Movies 10.0 6.0-40% Other 43.7 26.2-40% Total 900.2 827.6-8% * Source: 2001: Current study, based on statistics form 2001 Geodemographic Analysis of the Vermont Visitor (February 2002) and 2001 National Survey of the Vermont Visitor (March 2002), and calculated number of person trips (Table 1). 1999: The Economic Impact of Tourism in Vermont: Summer (June 2001), p. 12. 11

ECONOMIC IMPACT: SUMMER 2001 Table 7: Economic Impact of Summer Tourism Table 7 summarizes the impact of tourism on the Vermont economy during the summer of 2001. Of the estimated $827.6 million in spending (see Table 6) a portion was for gasoline and other goods that were sold but not produced in Vermont. The balance of spending was for Vermont goods and services, representing industry output of $781.3 million. The total impact on industry output including indirect and induced effects was $1.2 billion. The output multiplier is 1.57; i.e., for every dollar of direct output to meet tourist demand there is $1.57 of total impact as the tourist dollars flow through the economy. (Please see Glossary on page 20 for definitions of these terms.) Summer Economic Impact (millions of dollars except jobs) Direct Impact* Indirect Impact* Induced Impact* Total Impact* Multiplier Industry Output 781.3 220.2 226.7 1,228.2 1.57 Labor Income 284.1 76.4 81.9 442.3 0.57 Employee Compensation 258.6 62.4 70.6 391.5 0.50 Proprietors Income 25.5 14.0 11.3 50.8 0.06 Indirect Business Taxes 57.5 8.5 13.9 79.9 0.10 Jobs 16,701 2,769 3,297 22,767 29.1 * Millions of dollars, except for jobs. See glossary at end of report for explanation of terms. Source: Current study, IMPLAN impact analysis. The direct impact of summer tourist spending on labor income (previously called personal income in IMPLAN) was $284.1 million, including $258.6 million in employee compensation and $25.5 million of income to proprietors and selfemployed individuals. The total impact on labor income was $442.3 million, including the indirect and induced effects. The income multiplier is 57 cents; i.e., for every dollar of direct industry output that responds to winter tourism demand there is 57 cents of total labor income. The direct impact on indirect business taxes is $57.5 million with a total impact of $79.9 million. Approximately 88% of indirect business taxes are Vermont state sales, excise, rooms and meals, and property taxes, while 12% are federal excise taxes. They do not include personal or corporate income taxes. The multiplier is 10 cents for every dollar of direct output. Summer tourism provided direct support for 16,701 jobs. The total impact was 22,767 jobs, with a multiplier of 29.1 jobs for every one million dollars in direct output of the tourist industry. 12

ECONOMIC IMPACT: SUMMER 2001, continued Table 8: Total Impact, Summer 2001 vs. 1999 The economic impact of domestic tourism during the summer of 2001 was substantially less than the economic impact reported for the summer of 1999 by the University of Vermont Department of Community Development and Applied Economics in The Impact of the Tourism Sector on the Vermont Economy: 1999 2000. Total industry output to meet tourism demand, including indirect and induced effects, decreased 15.1% from $1.447 billion in summer 1999, to $1.228 billion in summer 2001. The total impact on labor income decreased 9.2% from $487.3 million to $442.3 million. The total impact on the number of jobs decreased 10.6% from 25,469 to 22,767. The total impact on indirect business taxes decreased 7.1%, from $86 million to $79.9 million. Summer Economic Impact (millions of dollars except jobs) Total Impact 1 1999 Total Impact 2 2001 % Change Industry Output 1,447.0 1,228.2-15.1% Labor Income 487.3 442.3-9.2% Indirect Business Taxes 86.0 79.9-7.1% Jobs 25,469 22,767-10.6% Sources: 1: The Impact of the Tourism Sector on the Vermont Economy: 1999 2000 pp. 27 30. 2: Current study, IMPLAN impact analysis (see Table 7). 13

SPRING VISIT STATISTICS (April and May 2001) Table 9: Spring Summary Statistics Spring tourists made 677,963 trips to Vermont during April and May 2001, a substantial 52.2% increase over 1999. These are trips made by parties of visitors from households in the United States, and do not include international travelers. Spring trips accounted for 14.5% of all trips to Vermont during the study year. Party size was considerably lower than in 1999, reduced from an average of 3 people to 2.5 people per party. Consequently the number of person trips increased only 26.8%, much less than the increase in party trips, but still substantially higher at 1.69 million than the 1.34 million person trips in 1999. Spring 1999 2001 % Change Trips by visiting parties 445,468 677,963 52.2% Spring % of all trips 11.6% 14.5% 24.6% Party Size (persons) 3.00 2.50-16.7% Household members in party 2.30 2.00-13.0% Person Trips (millions) 1.34 1.69 26.8% Number of spring trips per party 1.37 1.30-5.1% Table 10: Spring Primary Purposes Spring is a transition season. It is interesting to compare the primary purposes of April and May visits. Table 10 is a sampling to demonstrate the similarities and differences: more April visitors (11%) came to ski on at least one spring trip than did May visitors (3%), while more May tourists visited a school (5% May vs. 3% April). Visiting relatives or friends (45% April vs. 43% May) is common to visitors during both months, as is shopping (16% April vs. 15% May). Primary Purpose of Spring trips (partial list) April May Visited relatives or friends 45% 43% Shopping 16% 15% Downhill skiing 11% 3% Visited a child/grandchild in school or visited a potential school or college 3% 5% Source: 2001 National survey data, primary purposes of spring visits for visitors who made at least one April visit vs. visitors who made at least one May visit. For example, 11% of visitors who came in April indicated skiing was the purpose of at least one of their spring trips. 14

SPRING SPENDING 2001 Table 11: Spring Spending: Average per Person per Trip & Total This table presents spending by domestic tourists during the two months of April and May 2001. Similar to summer 2001, shopping is the highest category of spending, with an average of $40.29 per person per trip, and total spending of $68.3 million. This is approximately one quarter of all spending by tourists during spring 2001. Spending for food and beverages in restaurants is the second highest category at $32.78 per person per trip, for a total of $55.6 million. This is 20.6% of total spring spending, compared to 19.7% in 1999. Lodging, which in the past has been the highest category of spending, dropped to third with $31.79 per person per trip, for a total of $53.9 million. This is 19.9% of spending, compared to 22.2% in 1999. Spring tourists reported a total average per person per trip spending of $159.47. This is 45% less than winter average spending of $289.09 per person per tip in 2000 2001, and 11% less than summer average spending of $179.65 in 2001. Compared to the spring season in 1999, it is 18% lower. Total spring spending was $270.3 million, which due to the increased number of trips is 4.5% higher than 1999 when total spring spending was $258.7 million. Spring Spending Average per Person Total Spending per Trip ($) (million dollars) % of Total Shopping $ 40.29 68.3 25.3% Restaurant $ 32.78 55.6 20.6% Lodging $ 31.79 53.9 19.9% Gasoline $ 16.60 28.1 10.4% Other recreation $ 10.04 17.0 6.3% Groceries $ 9.00 15.2 5.6% Other transportation $ 5.14 8.7 3.2% Skiing $ 4.38 7.4 2.7% Camping $ 1.50 2.5 0.9% Movies $ 1.06 1.8 0.7% Parks $ 0.26 0.4 0.2% Other $ 6.66 11.3 4.2% Total $ 159.47 270.3 100.0% 15

ECONOMIC IMPACT: SPRING 2001 Table 12: Economic Impact of Spring Tourism Table 12 summarizes the impact of tourism on the Vermont economy during the spring of 2001. Of the estimated $270.3 million of spending (see Table 11) a portion was for gasoline and other goods that were sold buy not produced in Vermont. The balance of spending was for Vermont goods and services, representing industry output of $252.3 million. The total impact on industry output including indirect and induced effects is $397.3 million. The output multiplier is 1.57, the same as for summer. In other words, for every dollar of direct output by tourism industries to meet tourist demand there is $1.57 of total impact as the tourist dollars flow through the economy. (Please see Glossary on page 20 for definitions of these terms.) Spring 2001 Economic Impact (Millions of dollars except jobs) Direct Impact* Indirect Impact* Induced Impact* Total Impact* Multiplier Industry Output 252.3 71.1 73.9 397.3 1.57 Labor Income 92.8 24.6 26.7 144.1 0.57 Employee Compensation 84.5 20.1 23.0 127.6 0.51 Proprietors Income 8.4 4.5 3.7 16.5 0.07 Indirect Business Taxes 18.5 2.7 4.5 25.8 0.10 Other Property Type Income 40.6 10.4 14.2 65.3 0.26 Jobs 5,556 892 1,075 7,523 29.8 * Millions of dollars, except for jobs. See glossary at end of report for explanation of terms. Source: Current study, IMPLAN impact analysis. The direct impact of spring tourist spending on labor income was $92.8 million, including $84.5 million in employee compensation and $8.4 million of proprietors income. The total impact on labor income was $144.1 million, with a multiplier of.57, the same as for summer. The direct impact on indirect business taxes was $18.5 million with a total impact of $25.8 million. The multiplier is 0.10, the same as for summer. Spring tourism directly supported 5,556 jobs. The total impact was 7,523 jobs with a multiplier of 29.8. In other words, for every one million dollars in direct industry output to meet tourist demand there are 29.8 jobs supported. 16

ECONOMIC IMPACT: SPRING 2001, continued Table 13: Total Impact, Spring 2001 vs. 1999 The economic impact of domestic tourism during the spring of 2001 was comparable to the economic impact reported for the spring of 1999 by University of Vermont Department of Community Development and Applied Economics in The Impact of the Tourism Sector on the Vermont Economy: 1999 2000. Total industry output to meet tourism demand, including indirect and induced effects, decreased 4.7% from $416.8 million to $397.3 million. However, the total impact on labor income increased 2% from $141.3 million to $144.1 million, and the total impact on indirect business taxes increased 6.2% from $24.3 to $25.8 million. The total impact on labor income increased by 2% from $141.3 million to $144.1 million, while the total impact on jobs increased less than 1% from 7,495 to 7,523. The total impact on indirect business taxes increased 6.2% from $24.3 million in 1999 to $25.8 million in 2001. Spring 2001 Economic Impact (millions of dollars except jobs) Total Impact 1 1999 Total Impact 2 2001 % Change Industry Output 416.8 397.3-4.7% Labor Income 141.3 144.1 2.0% Indirect Business Taxes 24.3 25.8 6.2% Jobs 7,495 7,523 0.4% Sources: 1: The Impact of the Tourism Sector on the Vermont Economy: 1999 2000, pp. 27 30. 2: Current study, IMPLAN impact analysis (see Table 12). 17

CONCLUSIONS After a very strong winter season, the spring and summer of 2001 showed signs of the deteriorating U.S. economy. Compared to the 1999 study period, tourists in spring and summer of 2001 spent less per person during each trip to Vermont, and traveled in smaller parties. The number of trips made during the spring continued the winter trend of substantial increases over prior years, but by summer the number of trips started to slide. Based on the analysis in the 2001 Geodemographic Analysis of the Vermont Visitor (February 2002), more visitors came to Vermont during each of the months of these seasons in 2001 compared to 1999. The reduction in total spending and economic impact therefore appears to be a result of cautious spending and fewer trips or shorter duration of trips, not a loss of the visitor base. Of particular note is the reduction in spending on lodging, both as a percentage of per person spending and in total for the seasons. In prior years, in every season, lodging has ranked first as the highest category of spending. In 2001 it dropped to second place (after shopping) in summer and to third place (after shopping and restaurants) during spring. This could be the result of a combination of factors: shorter trips with fewer overnight stays, and choice of lower cost or cost-free lodging. For example, 32.4% of summer tourists stayed overnight during the summer months. Of those, 35.7% indicated that they spent at least one night in the private residence of a friend or relative, 2.7% stayed in their own vacation home and 11.6% stayed in a campground. About 40% stayed in traditional hotel, motel or bed and breakfast type lodging. 1 This is the first year of this research that we captured the length of stay and type of lodging by season, so season to season comparisons will be possible in future years. For this study year we can only note a reduction in the averages over the full year of total nights spent in Vermont (3.82 nights in 2000 2001 vs. 4.67 nights in 1999 2000) and the percentage of visiting households that made at least one overnight trip during the year (75% in 2000 2001 vs. 78.3% in 1999 2000). Another factor that may have influenced the spending of visitors during spring and summer was the high price of gasoline. The majority of visitors travel to Vermont by automobile: 77.7% came in their own auto or truck at least once in 2001 and 6.1% rented an auto or truck while here. 2 The increased cost of fuel may have caused a reduction in the number of trips, the distance traveled, and the amount of money available for other spending. This study only covers pleasure travelers who originate from the United States, and does not include business travelers, or international travelers. The economic impact of these travelers during the summer and other seasons may vary differently from domestic tourism as they are more likely to come by other modes of transportation and may have been affected differently by economic conditions. 1 Lodging and overnight information from 2001 National Survey of the Vermont Visitor, March 2002, pp. 34 36, and A National Survey of the Vermont Visitor 2000, January 2001, pp. 38 and 56. 2 Transportation statistics from 2001 National Survey of the Vermont Visitor, March 2002, p. 32. 18

METHODOLOGY This study uses input-output analysis to estimate the economic impact of the tourism industry on the Vermont economy. An input-output (I/O) analysis uses an economic model that traces the flow of goods and services, income, and employment among related sectors of the economy. "Output" includes the goods or services produced by an industry; "input" includes the labor, material and services used by the industry to produce the output. The amount of input needed by an industry sector depends upon the output. When there is a change in final demand for the output, the industry will purchase more or less inputs from other industry sectors, and increase or decrease the number of jobs to produce that output. The final demand spending is called the "direct impact," and the spending by the producers of those goods for intermediate goods and services is the "indirect impact." Spending for consumer goods by employees of all of the involved industries and their households is the "induced impact." The I/O model is a snapshot of the economy in equilibrium, where the gross output of each industry is equal to the gross input to the industry. The gross output includes both inter-industry sales and sales to final demand. (Note: This is different from Gross State Product, which includes only sales to final demand.) The gross input of an industry includes the purchase of goods and services, labor, investment and profit. The I/O model provides a means of examining relationships within the economy both among the different sectors and between sectors and final consumers such as households and government. Applied to tourism, the model allows us to examine the impact of tourist spending on the industries directly affected, such as lodging, recreation, food and beverage, retail and transportation. It also identifies the linkages among these and other industry sectors, and the impact of the tourist spending as the dollars ripple through the economy. For example, portions of the money spent by a tourist at a hotel are used to pay employees, purchase supplies, pay utilities, etc. The supply companies and utilities make purchases from other industry sectors and pay their employees. The impact of all of this activity is included in the total economic impact on the economy. If most of the purchases and payments take place within the state, the impact of each dollar is greater than if the money is spent for supplies and services from out of state industries. Strong linkages within a region lead to healthier economies, as capital recirculates within the economy rather than flowing out of it. 19

GLOSSARY Direct impact: production changes associated with changes in demand for the good itself: the initial impact on the economy. Employee compensation: wage and salary payments as well as benefits, including health and life insurance, retirement payments and other non-cash compensation. Employment multiplier: the change in employment (jobs) for every million-dollar change in direct industry output. Indirect business taxes: primarily state excise and sales taxes paid by individuals to businesses, also property taxes and some federal taxes. These taxes do not include taxes on profit and income. Indirect business tax multiplier: the change in indirect business taxes for every dollar change in direct industry output. Indirect effect: the secondary impact caused by changing input needs of directly affected industries (e.g., the purchase of labor, goods and services by an industry to produce additional output). Induced effect: changes in household spending due to the additional employment generated by direct and indirect effects. Output multiplier: the total production in all sectors of the economy that is necessary to satisfy a dollar's worth of final demand for a specific sector's output. In other words, every dollar change in industry output to meet final-demand spending changes the total value of output in all sectors. Output: industry output is a measure of the value of goods and services produced in the study area. Labor income: consists of employee compensation and income received by proprietors and self-employed people such as doctors, lawyers, business owners, etc. Labor income multiplier: the change in income received by households for every dollar change in direct industry output. Total impact: the sum of the direct, indirect and induced effects. 20