Tucson International Airport Economic Impact Study 2012

Transcription

1 THE UNIVERISTY OF ARIZONA, ELLER MBA Tucson International Airport Economic Study 2012 May 8, 2012 Greg Keller Christopher Northey Allen Sipe Catherine Weigand would like to thank all who helped in making the 2012 TAA economic impact possible, with special thanks to; Mary Davis & Alex Kovach of the TAA, and Price Fishback & Alberta Charney of the University of Arizona.

2 Tucson International Airport (TIA) plays a vital role in the economic health of Tucson and Pima County. It has been over 10 years since the economic impact of TIA was measured. From January to May of 2012, TIA partnered with the Eller College of Management, MBA Program to produce a current report. Based on the results of the study, TIA contributes over $3.2 billion annually to the economic health of Tucson and Pima County (results are summarized in Table 1). The primary goal of the study was to determine the total annual economic impact of TIA on Tucson and Pima County. Table 1: Summary of the Total Economic of Tucson International Airport Spending Employment Direct $1,732 M 13,000 Indirect $406 M 5,270 Induced $1,111 M 16,300 Total $3,250 M 34,570 The 2012 economic impact study of TIA consisted of three measurable economic categories: direct, indirect, and induced. Direct impact is derived from the annual expenditures of companies located on airport property. These expenditures include the companies payroll, expenses for goods and services inside Pima County, and local tax expense. Indirect impact consists of spending throughout the year by visitors, both vacation and business, traveling to the area through TIA. Induced impact is the recycling of income generated in the direct and indirect impacts into the local economy. For example, an employee at TIA earns a salary and with that salary spends money on goods and services in Pima County. This generates jobs and additional income for the community. Direct The annual direct impact on Pima County is over $1.7 billion and 13,000 jobs. The methodology used to calculate the direct impact is summarized below. In February of 2012, the Team, with the assistance of TIA management, administered a survey to all tenants on airport property. The original distribution of the survey resulted in a 26% response rate. To maintain the integrity of the data being collected, follow-up communication was directed towards specific large tenants who did not respond to the survey. The final response rate was over 30%, however this response accounts for 95% of the total annual direct impact. The survey responses

3 resulted in 11,091 jobs, $1.5 billion in salary, $64.2 million in local expenditures, and $13.2 million in local taxes. To capture the direct impact from companies that did not respond to the survey, the Team utilized data collected from the tenants who responded to the survey to create estimates for the missing tenant data. Companies were divided into three categories: rental car, airline, and other. Information from survey respondents was used to determine industry standards for each type of company. The industry standards and additional information provided by the TIA for tenants who did not respond was used to extrapolate on the number of employees, payroll, local expenditures, and taxes for the tenants that did not respond. Once all estimates were incorporated, the nonrespondents totaled 1,913 employees with $77.7 million in salary, $3 million in local expenditures, and $6.7 million in local taxes. In total, the annual direct impact was $1.7 billion and 13,003 jobs, as displayed in Table 2. Table 2: Direct impact: Survey results and Assumption Based Results. Survey Results Assumption Based Total Employees 11,090 1,913 13,003 Annual Salary $1,566,930,585 $77,716,313 $1,644,646,898 Expenditures in Pima County $64,236,775 $3,084,576 $67,321,350 Taxes to state $13,223,502 $6,780,515 $20,004,017 Total Direct $1,731,972,266 Indirect The total annual indirect impact is $406 million and 5,270 jobs. The methodology used to calculate the indirect impact is summarized below. The Team gathered visitor spending information by conducting surveys in the concourse while passengers waited to depart. A total of 250 responses were required to gain a 95% confidence level, and 289 responses were collected. Respondents to the survey were divided into two categories: vacation and business travelers. The survey data on the total average spending per day, per person by expenditure category is reflected in Table 3. The survey also collected information on the duration of stay for visitors travelling to Pima County.

4 As the Team collected survey data in March 2012, the peak traveling season for visitors to Pima County, an adjustment was made to account for the difference in visitor spending. The survey results were used to compute total spending for eight months (Oct-May) out of the year, referred to as on-peak spending. To compute off-peak spending, adjustments were made to hotel spending to reflect lower rates for the remaining four months of the year. Twelve hotels, varied by price and location, were contacted to find the drop in the average price between the on-peak and off-peak months. The result was a 50% decrease in the price of hotels during the off-peak period. Total enplanement for TIA in 2011 was 1,831,896. Half of this enplanement (915,993) was visitors to the area based on internal TIA passenger monitoring. Of these visitors, the shares of business and vacation travelers were determined to be 40% and 60% respectively. Table 3: Daily spending per person/per day On Peak (Oct - May) Off Peak (June- Sep) Spending Category Vacation Business Spending Category Vacation Business Hotel $26.25 $95.71 Hotel $13.12 $47.85 Food & Beverage $29.74 $44.03 Food & Beverage $29.74 $44.03 Arts, Entertainment & Recreation $5.25 $9.57 Arts, Entertainment & Recreation $5.25 $9.57 Retail $12.25 $11.49 Retail $12.25 $11.49 Total Spending $73.49 $ Total Spending $60.36 $ Total Weighted Average $108 Total Weighted Average $81 *Car Rental data was collected on surveys, but for the purposes of this study, passenger spending on rental cars was not included in the indirect impact, as this figure was already represented in the direct impact. On peak spending was $73 a day for vacation travelers and $160 for business travelers a weighted average of $108. Off peak spending was $60 per day for vacation travelers and $112 per day for business travelers a weighted average of $81 per day. The average number of days visitors spent in the Tucson area was 5.6 days for vacation travelers and 3.6 for business travelers as outlined in Table 4. The resulting indirect impact is $406 million.

5 Table 4: Indirect Summary Type of Traveler On Peak Spending (Oct - May) Off Peak Spending (June- Sep) Average Days in Tucson Total Spending Vacation $73.49 per day $60.36 per day 5.6 days $214,106,490 Business $ per day $ per day 3.6 days $192,172,710 Total Indirect : $406,279,200 Induced The induced impact is the ripple effect of employees wages and salaries recycled back into the community, and the number of jobs produced as a result. As these groups of individuals spend money in the community, a multiplier effect occurs, ultimately bringing greater economic benefit to the Pima County. The IMPLAN economic model software is the industry standard for computing the induced impact reflecting different multipliers to each industry sector of spending in local communities. After the IMPLAN multipliers were considered, the induced impact from the direct spending was $971 million and $140 million from visitor spending. This resulted in a total induced impact of $1.1 billion in Pima County and 16,300 additional jobs. Table 5: Induced Summary Direct impact Indirect Induced Tenant Spending $1,732 M $971 M # Employees 13,000 14,230 Visitor Spending $406 M $140 M # Employees 5,270 2,070 Total Induced : $1,111 M Total Induced Jobs: 16,300

6 Conclusion The gross economic impact of the Tucson International Airport on Tucson and Pima County totals $3.2 billion. This total is the sum of the direct, indirect, and induced impacts described above. This substantial figure underscores the importance of TIA to the city of Tucson as well as greater Pima County.