Tourism in the United States

Transcription

1 Tourism in the United States From IBIS World: Tourism is defined to include visitors whose primary travel purposes are Business Convention or conference travel Government business The more familiar tourism for leisure, vacation or to visit friends and relatives Industries benefiting from Tourism are Domestic and international air transportation Accommodation services Food services Drinking places Automotive rental Travel arrangers Main Activities: Traveler accommodation services Domestic airline operation International airline operation Food services and drinking place services Automotive rental Travel agent and tour arrangement services The major products and services in this industry are: Air transportation Automotive rentals Food and beverage establishments Gasoline Other retail activities Recreation and entertainment Travel arrangement and reservations Traveler accommodations Similar Industries: 48111a International Airlines in the US o This industry provides international air transportation of passengers and cargo over regular routes and schedules 48111b Domestic Airlines in the US o This industry provides domestic air transportation of passengers and cargo over regular routes and schedules

2 56151 Travel Agencies in the US o This industry provides travel, tour and accommodation planning and booking services Tour Operators in the US o Businesses in this industry plan, package, market and sell multiple vacation elements Amusement Parks in the US o Companies in this industry operate various amusement establishments, including theme parks Hotels & Motels in the US o Hotels and motels provide accommodations for travelers Casino Hotels in the US o This industry operates establishments that provide accommodations and house casinos. Additional Resources UN World Tourism Organization US Bureau of Economic Analysis US Census Bureau Industry Size IBIS World Revenue $960.2bn Profit $60.5bn Annual Growth rate (08-13) 4.5% Expected annual growth rate (13-2.2% 18) Businesses 239,388 Key Drivers Domestic trips by US residents Consumer Confidence Index Inbound trips by non-us residents International trips by US residents Consumer spending Market Segmentation 20.5% Traveler accommodations 17.5% Gasoline 16.7% Air transportation 15.9% Food and beverage establishments 12.9% Other retail activities 10.2% Recreation and entertainment 4.2% Travel arrangement and reservations 2.1% Automotive Rentals

3 Industry Structure Life Cycle Stage Capital Intensity Regulation Level Barriers to entry Competition Industry Globalization Mature. The industry s contribution to GDP, expected to grow an annualized 4.6%. Domestic market is growing at a slower rate than international segment. From domestic trips are expected to grow 2.6% annually, whereas inbound international visitor arrivals will grow at a rate of 4.6%. Medium. Light. Low. High. High. The tourism industry is on the road to recovery after a short period of decline due to the recent recession. In 2009, the industry declined 13.1%. Unemployment reached 10.0% in 2009, leading to a decline in consumer spending of 1.9% during the year (p. 5). Tourism will rebound due to increased travel demand, but profit will remain under pressure. 70% of the industry accounts for leisure travelling. Domestic travelling will remain to account for 80% of the demand. An increase of travellers from South and Central America and Asia is anticipated. Over the five-year period to 2019, industry revenue is forecast to increase at an annualized rate of 2.2% to $1.1 trillion (p. 5).

4 Travel Trends Domestic trips suffered from the economic recession. Improving technologies make US air travel more affordable. Domestic travel peaked at million departures in 2007 before falling 4.0% in 2008 and 5.1% in During the five years to 2014, the number of domestic trips is expected to grow an annualized 1.9%, surpassing 2007 numbers for the first time. The number of international travellers visiting the US is expected to increase in the future by 5.6% annually. Developing countries, which experience economic growth, have stronger currencies and increasing consumer income will be responsible in an increase in travel numbers. Competition from other leisure and recreational activities has threatened tourism. This means travelling competes for its share of disposable income. Technological change also affected the travel industry. Travel agents are made obsolete through online booking systems and easy access and zero commission. As unemployment numbers declined, consumer confidence rebounded. Consumer spending is expected to grow 2.2% annually. The industry remains vulnerable to macroeconomic factors and large scales issues

5 (geopolitical instability, terrorism). Increased Competition Domestic tourism faced increased competition. In today s globalized world a consumer has a multitude of options and can easily substitute a domestic vacation with an international trip. This fact has impacted the domestic tourism industry and slowed down long-term growth. Industry Structure and Profit IBISWorld estimates that, on average, 24 people will be employed per industry establishment with an average wage of $28,902 in In the five years to 2014, the number of industry establishments is expected to increase at an annualized rate of 1.6% to 243,936, and the number of industry employees will grow at an annualized rate of 1.8% to 5.8 million. (p. 9). Industry Outlook After the recession, the industry will move full steam ahead. The industry is expected to increase due to increased travel spending and increased travel rates. Over the next five years, consumer spending is projected to grow at an average rate of 3.0% annually. Gas prices affect travel directly. Domestic travel is projected to grow 3.2% annually until Inbound visits to the United States are forecasted to surge 3.2% per year. European economies will remain stagnant and only grow marginally, but emerging economies in East Asia and South America will drive growth (e.g. South Korea, China, Brazil and Argentina). Over the next five years, the US Tourism industry will increasingly rely on travelers from emerging economies (p. 9). Industry Performance Changes: Major players will acquire global, regional and local websites to improve revenue and profit (p. 10). Over the next five years the number of establishments is expected to increase 0.4% per year to 249,109. Industry employment is expected to increase

6 annually 0.9% to 6.1 million until The trend is going to be towards online booking systems that offer low-cost transactions. Mergers and acquisitions are going to dominate the industry as the big players are buying global, regional and local websites to cover a larger share of the market (and improve profits). The progressive aging of the population may lead to increased demand for newer forms of purpose-built, long-stay accommodations, as well as new RV parks, in major tourist regions. Supply Chain Buying Industries 9901 Consumers in the US Private households comprise the main market for travel for non-business related trips. Selling Industries 23 Construction in the US Operators in the construction sector supply building and construction services to Tourism industry operators Fish & Seafood Wholesaling in the US This industry supplies seafood products to Tourism industry operators Beef & Pork Wholesaling in the US Wholesalers in this industry supply meat products to Tourism industry operators Fruit & Vegetable Wholesaling in the US Wholesalers in this industry supply fruit and vegetables to Tourism industry operators Beer Wholesaling in the US Companies in this industry supply beer and malt products to operators in the Tourism industry Wine & Spirits Wholesaling in the US This industry supplies wine and distilled alcoholic beverages to Tourism operators Retail Trade in the US Retail

7 Products and Services traders supply retail goods to travelers, including from duty free stores Advertising Agencies in the US Businesses in this industry supply advertising and promotional services to Tourism industry operators Caterers in the US This industry supplies food services to tourists. Direct tourism spending (according to Bureau of Economic Analysis): Traveler accommodations (20.5%) Transportation (41.2%); Food services and drinking places (15.9%); Recreation, entertainment and shopping (22.5%). Domestic and international air travel accounts for about 16.7% of total Tourism industry output (p. 13). US Travel Association: 75.0% of leisure trips made in the United States are undertaken in an automobile. Airline tickets are considered to be big ticket items. Demand Leisure travel Business travel International tourism Market segmentation 56.3% Domestic leisure travelers 18.5% Business travelers 13.1% International leisure travelers 12.1% Meeting, events and incentive travelers of a total $960.2bn Markets Office of Travel and Tourism Industries (2012): international traveler spending totaled $165.6 billion. The number of international arrivals is forecast to grow 5.6% per year. International trips by US residents is forecast to grow 3.1% per year, with a forecast 2.6% increase to million in 2014.

8 Americans spent $118.1 billion abroad in Market Concentration CA 11.0% TX 7.6% FL 6.4 GA 3.5 NC 3.2 NY 4.1 IL 3.1 WA 2.3 AZ 2.0 CO 2.5 MO 2.2 TN 2.6 SC 2.2 VA 2.9 PA 2.7 WI 2.3 MI 2.6 NJ 2.2 OR 1.9 Tourism attractions are important e.g.: Grand Canyon, Disneyland, Hollywood. Sporting events: Super Bowl. Major commercial center: NY. Key Success Factors Ability to quickly adopt new technology Receiving the benefit of word- of-mouth recommendations Proximity to key markets Access to a multiskilled and flexible workforce Competition High. Internal competition. Large range of available competitors (e.g. Hotels). Hotels compete on the facilities they have, as well as their location. External competition. Other recreational entertainment and leisure activities that consume disposable income. International visitors market it facing very high global competition.

9 Barriers to Entry Globalization Low. Economies of scale are the determining success factors in this industry. However, there are many niche openings for small players. Top 4 players in the industry have less than 10% market share. Low degree of capital intensity allows many competitors to enter the market. Liquor and gaming licenses can be barriers to entry in some states. High. A high number of Americans travel abroad for leisure and business, estimated to be million trips in 2014 (p. 23). World Tourism Organization (UNWTO), international tourism (travel and passenger transport) accounts for 30.0% of the world s exports of services and 6.0% of overall exports of goods and services. Industry leaders operate internationally. The airlines segment in this industry is the most globalized because of the extremely large capital requirements in new aircraft and maintenance facilities (p. 24). Global operators have the financial resources to finance facilities around the world. Tourists from emerging economies are more likely to purchase package deals than people from Canada or Western Europe. Major Companies Delta Airlines - 3.0% market share United Continental Holdings Inc. 2.3%: includes United Air Lines and Continental Airlines. Is the largest airline in the world. Hilton Worldwide 2.1% Marriott International Inc. 2.0% The Walt Disney Company 1.5% Carlson Wagonlit Travel 0.5%: world s largest travel company Expedia Inc. 0.3% Others 88.2% Technology Change Medium.

10 Revenue Volatility Regulation & Policy Industry Assistance The internet has been the most significant technology change in this industry. Electronic ordering systems. Medium. The industry is sensitive to a number of economic, social and geopolitical factors as well as changes in international arrivals. Light, but increasing. Diverse regulations and policies. Some segments are highly regulated (e.g. Airlines, Federal Aviation Administration (FAA),) and others less. Liquor and gambling licenses are also necessary in certain states. There are also occupational health and safety laws and food handling and safety laws Low. No direct assistance, but benefits from federal, state and local advertising by the government. In 2010, the Obama administration decided to collect fees when entering the US to fund new international tourism marketing campaign. Tourist Attractions in VA ( Historic Sites o Williamsburg, James Town o Civil War Sites o Battlefields Dining Outdoors & Sports Biking, Hiking, Parks, Shopping Theme Parks & Zoos

11 Exhibits Museums Tours Wineries & Breweries The Arts Cultural Heritage Caverns State Parks Golf Spas National Parks Industries involved with Tourism: Advertising Agencies Beef & Pork Wholesaling Beer Wholesaling Caterers Construction Dry Cleaners Fish & Seafood Wholesaling International Airlines Domestic Airlines Travel Agencies Tour Operators Amusement Parks Hotels & Motels Casino Hotels Virginia Tourism Corporation Tool to find economic impact of travel for major VA cities: Travel Data and Profiles can be accessed to find profiles for leisure trips, business trips, overnight trips and day trips, for all seasons as well as categorized by region and interest. Profile of Tourists coming to VA: Virginia attracted a record 387,000 visitors from overseas countries in Visitation increased 7% generating 25,000 additional visitors in 2012 over 2011.

12 Overseas visitors to Virginia spent a record $425 million USD. Total direct spending increased by 9% in 2012, with visitors spending $35 million more than in Since 2001 overseas visitor spending has increased 62% or $162 million USD. Regions: Western Europe is the top World region for visitor arrivals. In 2012 visitation to the state grew 5%. By comparison, visitation to the U.S. was down 2%. Asia arrivals contracted in 2012, accounting for 17% of the states overseas visitors, down from 20% in Despite the overall decline, key Asian markets registered solid growth. Britain is the top visitor market for Virginia. British visitation grew 11%, with Virginia growing market share in an overall down turning market (U.S. arrivals decreased 1.9%). German visitation grew 34% with the state attracting 2.1% of the total German visitors. China is still an emerging market for Virginia. Visitation in 2012 set a new record of 22,000 visitors, up 69% over Australia, another emerging market for Virginia, also continues to grow, up 70% registering 17,000 visitors. Brazil is the state s 8th largest overseas visitor market, however, the potential is strong and arrivals continue to grow. In 2012 arrivals increased 44% for Virginia, to register 13,000 visitors. 12Overseasp1.pdf

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14 2012 DOMESTIC TRAVEL INDUSTRY in VIRGINIA: ( (Source: The 2012 Economic Impact of Domestic Travel on Virginia - US Travel Association, 2013) Generated $21.2 billion in domestic visitor spending, Supported 210,000 jobs, Provided $1.36 billion in state and local taxes for Virginia s coffers

15 Lodging 18% ($3.82b) Auto Transportation 24% ($5.09bn) Foodservice 28% ($5.94bn) Entertainment & Recreation 7% ($1.48bn) General Retail Trade 9% ($1.91bn) Public Transportation 14% ($2.97bn) Spending by domestic travelers is $58 million a day in Virginia. On average, each domestic travel dollar produced 3.8 cents in state tax receipts. Each domestic travel dollar produced 2.7 cents for local tax coffers. Domestic travelers spent $5.9 billion on food services Domestic travelers spent $5.1 billion on auto transportation Spending on lodging including hotels/ motels, campgrounds, time share and vacation homes rentals was $3.9 billion in 2012, an increase of 3.1 percent from $1.9 billion on purchases at retail stores $1.5 billion on recreation The travel industry is the fifth largest private employer in Virginia. The 210,000 jobs supported by domestic travel in Virginia comprised 7.0 percent of the state s total private employment during On average, every $101,009 spent by domestic travelers in Virginia during 2012 supported one job. Every dollar spent by domestic travelers produced 22 cents in payroll income for VA residents

16 Tourism Has Exhibited Growth in Virginia ( The fundamental drivers for the tourism industry typically measured by total expenditures, employment, or visitor volume are economic and demographic conditions of both the traveler s destination and origination locations (p. 4). In the next four years, it is projected that statewide tourism expenditures will increase 5.6% per year, reaching $22.8 billion in 2013 and $26.4 billion in 2016.

17 Hampton Roads Economic Impact of Domestic Travel on Virginia Counties, 2011 and 2012, Source: US Travel Association County Expenditures Payroll Employment State Tax Receipts Local Tax Receipts ACCOMACK $163,393,774 $33,302,816 1,892 $7,424,189 $4,783,664 CHESAPEAKE CITY $308,349,880 $55,033,655 3,013 $12,950,919 $10,673,862 GLOUCESTER $42,774,817 $7,902, $1,770,181 $1,211,401 HAMPTON CITY $216,218,303 $39,171,702 2,185 $9,042,754 $7,197,786 ISLE OF WIGHT $36,330,757 $6,828, $1,543,165 $800,941 JAMES CITY $374,568,611 $65,512,452 3,653 $16,330,172 $14,999,600 MATHEWS $30,782,165 $7,099, $1,386,209 $878,264 NEW KENT $30,757,071 $6,768, $1,262,717 $358,163 NEWPORT NEWS CITY $266,523,402 $57,527,100 2,772 $9,815,543 $8,809,690 NORFOLK CITY $727,143,986 $179,988,148 6,894 $25,249,917 $22,101,896 NORTHAMPTON $68,847,296 $12,983, $3,186,769 $1,280,607 POQUOSON CITY $2,792,845 $460, $114,307 $90,809 PORTSMOUTH CITY $77,705,105 $14,387, $3,370,815 $3,000,043 SUFFOLK CITY $65,119,209 $11,468, $3,382,571 $1,926,659 SURRY $9,706,654 $2,126, $390,037 $277,054 VIRGINIA BEACH CITY $1,284,452,543 $226,212,801 12,025 $53,280,503 $48,753,263

18 WILLIAMSBURG CITY $508,328,093 $98,503,428 5,386 $18,544,604 $16,916,136 YORK $203,767,440 $34,773,402 1,864 $8,533,761 $7,496,991 Coastal Virginia $4,417,561,949 $860,050,629 43,571 $117,579,133 $151,556,827 (This is 5.2% of GRP) Expenditures: direct spending by domestic travellers (meals, lodging, public transportation, auto transportation, shopping, admissions and entertainment). Attractions in Hampton Roads: ( Historic Jamestown Colonial National Historical Park James River Plantations Colonial Williamsburg Busch Gardens theme park, Water Country USA Golf courses, Kingsmill Resort & Spa. Tourism Strategy for Hampton Roads: ( adsregionalsectionvtc pdf)