NEW HAMPSHIRE FISCAL YEAR 2006 TOURISM SATELLITE ACCOUNT
Prepared for the New Hampshire
Division of Travel and Tourism Development
by
Laurence E. Goss, Ph.D.
The Institute for New Hampshire Studies
Plymouth State University of the
University System of New Hampshire
June 2007
THE NEW HAMPSHIRE TRAVEL AND TOURISM INDUSTRY IN FY 2006
Executive Summary
Spending in New Hampshire by travelers and tourists during state fiscal year (FY) 2006 increased by 5.8 percent over the FY 2004 level, with direct spending over 4.19 billion dollars and direct and indirect spending of approximately 6.0 billion dollars. The total impact on the state's economy (direct, indirect and induced impacts) of this traveler spending was over 10.7 billion dollars.
Total direct spending by travelers was 7.6 percent of gross state product, down from 7.9 percent in FY 2004 as other sectors of the state’s economy (except for manufacturing) grew at a faster rate than tourism. Long term trends in spending indicate that the travel and tourism industry has grown more slowly than most of the rest of the state's economy between FY 2004 and FY 2006 as the state continues to come out of the national economic recession of 2001 and due to unfavorable weather for tourism during FY 2006.
The annual average spending per visitor day was $81.48, 5.1 percent higher than $77.50 spent in FY 2004. Compared with most other states, travelers to New Hampshire spend a larger share of their money at retail stores. Spending by travelers at retail stores increased between FY 2004 and FY 2006 by 7.6 percent. Due to its nearness to large cities, New Hampshire tourism also has a much larger proportion of day trips included in its total visitor days and about one-third of overnight visitors to New Hampshire stay with friends or relatives or at second homes. As a result, restaurant spending is much larger in comparison to lodging expenses in comparison with tourist spending patterns for most other states. This nearness to large cities has enabled tourism spending to grow slightly faster than for many other states during the 2004 to 2006 time period due to high gasoline prices which have limited long distance driving vacations.
Spending at restaurants, accommodations, recreational attractions and food stores showed small percentage increases between FY 2004 and FY 2006. Spending at specialty retail stores, for services and for ground and air transportation had significant increases between these two years. This report incorporates the most recent available revisions to federal and state agency data for the years 2002 to 2006. This has led to slightly higher spending estimates for the fall and winter seasons and slightly lower spending for the spring season during FY 2006 than was given in the previously published barometers for these seasons. The total spending for the fiscal year ended up about one-quarter percent higher as a result. Also, the share of visitor spending is slightly higher in the Monadnock and Merrimack Valley regions and lower in the other five regions than reported previously.
The 4.19 billion dollars in traveler spending in FY 2006 supported an estimated 64,826 direct full and part-time jobs with payrolls and other earnings of 1,487 million dollars. Revised federal employment data for the hospitality and leisure and retail trade sectors show relatively less employment per million dollars of sales, but higher relative payrolls. The 1.77 billion dollars in indirect spending by traveler-supported businesses sustained an estimated additional 14,503 full and part-time jobs with a total payroll and earnings of 684 million dollars. The direct and indirect jobs were 9.5 percent of all employment in the state, down from 11.4 percent of all jobs in FY 2004. The direct and indirect payroll was 5.8 percent of the total state-wide payroll, down from 6.5 percent in FY 2004.
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Payroll and earnings for employees directly supported by traveler spending was 35.5 percent of total sales to travelers in FY 2006, up from 34.6 percent in FY 2004. This change reflects the increasing proportion of total visitor spending for transportation and other services. Average payroll per employee has grown at a faster rate than inflation since 1991. Between FY 2004 and FY 2006, the pay and earnings per employee (including self-employed proprietors) had a 3.5 percent annual increase, higher than the rate of inflation.
The largest single source of traveler spending which becomes State government revenues is the rooms and meals tax. It is estimated that $114 million resulted from traveler spending. This is up from $109 million in FY 2004 and is 63 percent of all rooms and meals tax revenues collected in FY 2006. Total State government revenues from fees and taxes paid by travelers are estimated at $320 million for FY 2006. Collections from State taxes and fees supported by traveler spending have easily out-distanced the rate of inflation since the bottom of the recession of 1991. About 7.6 cents of every dollar spent by travelers in New Hampshire in FY 2006 ended up in the State treasury.
Travel and tourism spending in New Hampshire in comparison with traveler spending nationally is almost twice as large as the state's share of the national population. New Hampshire ranked eighth nationally in alpine skier and boarder days during the 2005-6 season and third nationally in the proportional importance of skiing as a recreational activity on the state's economy. Travel and tourism is the second most important export industry in terms of employment size for the state's economy, after manufacturing. However, when share of gross state product is used as the measure of an industry’s supporting share of the state’s economy, then travel and tourism ranks as the fourth most important exporting industry, due to its relatively low wages per employee.
The summer season attracts more visitors than any other season and has the greatest total spending by visitors. During FY 2006 the summer season had 36.0 percent of total annual traveler spending, the fall season had 24.4 percent, the winter season had 20.4 percent and the spring season had 19.2 percent of annual spending. In terms of visitor days for FY 2006, the summer season had 40.8 percent of annual visitor days, the fall season had 23.7 percent, the winter season had 17.4 percent and the spring season had 18.1 percent.
The Merrimack Valley Region had 35.9 percent of all traveler spending during FY 2006. The White Mountains Region followed with 17.1 percent of the state's traveler spending. The Seacoast Region had 17.0 percent, the Lakes Region had 15.2 percent, the Monadnock Region had 6.3 percent, the Dartmouth-Lake Sunapee Region had 5.4 percent and the Great North Woods had 3.0 percent of total traveler spending during FY 2006.
The Merrimack Valley had 38.4 percent of all visitor days during FY 2006. The Seacoast followed with 18.5 percent of the state's visitor days. The Lakes Region had 14.7 percent, the White Mountains Region had 14.4 percent, the Monadnock Region had 6.7 percent, the Dartmouth-Lake Sunapee Region had 4.8 percent and the Great North Woods had 2.5 percent of total visitor days state-wide during FY 2006. The major change in ranking was the reversal in positions of the Lakes and White Mountains regions.
The number of visitor trips decreased by 0.5 percent between FY 2004 and FY 2006 due to unfavorable weather and higher gasoline prices. In contrast, the number of overnight visitor trips increased by an estimated 3.4 percent during that two year time period.
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There is sufficient lodging capacity in all of the travel regions during the fall, winter and spring seasons to host additional over-night travelers in New Hampshire. Most lodging establishments reach full capacity only on weekends, even during their busiest season. Thus, mid-week conferences, meetings and training sessions could be held at many resorts and hotels with (or near to) conference facilities at any time of the year. Promotional activities to attract multi-day conferences, meetings and training sessions as well as recreational (including heritage tourism) travelers especially during the fall, winter and spring seasons continue as a high priority activity for the industry, the travel regions and the New Hampshire Division of Travel and Tourism Development. It is estimated that business travel as a proportion of total tourism travel remained near 70 percent of the national average during FY 2006.
Direct spending by travelers spreads to all of the state's economic sectors through the multiplier effect. The direct and indirect multiplier for this initial spending is $1.42 - which means that for each dollar spent, an additional 42 cents will soon also have circulated through the state's economy. The combined direct, indirect and induced sales multiplier is $2.56. This means, for each original dollar spent by the tourist and traveler, an additional $1.56 is generated within the state's economy due to the sales, earnings and purchases of industries and households that grow out of the original purchase. This multiplier (2.56) is higher than for most other industries.
This direct spending by travelers also results in employment multipliers as this spending moves through the economy. The indirect employment multiplier is 1.22 - which means that for each one hundred jobs supported by direct traveler spending, an additional 22 jobs will soon also have been created in the state's economy. The combined direct, indirect and induced employment multiplier is 1.53. This means, for each original one hundred jobs supported by direct traveler spending, an additional 53 jobs are generated within the state's economy due to the sales, earnings and purchases of industries and households that grow out of the original direct spending. This multiplier (1.53) is not as high as for most other industries, for tourism is a very labor-intensive industry in terms of the original direct spending by the tourists.
The major trend that this report presents in comparison with previous Tourism Satellite Reports is that the four northern travel regions currently have a smaller share of all tourism activity and spending within the state than previously, while the three southern travel regions are increasing their share. The three southern regions are growing not only from more day trips, but are also increasing their share of paid overnight lodging within the state.
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THE NEW HAMPSHIRE TRAVEL AND TOURISM INDUSTRY IN FY 2006
Traveler Spending
Spending in New Hampshire by travelers and tourists during state fiscal year (FY) 2006 increased by 5.8 percent over FY 2004 levels, with direct spending reaching 4.19 billion dollars and direct and indirect spending of about 6.0 billion dollars. The total impact on the state's economy (direct, indirect and induced impacts) of this traveler spending was almost 10.8 billion dollars.
Total direct spending by travelers was 7.6 percent of gross state product, down from 7.9 percent in FY 2004. Spending trends indicate that the travel and tourism industry has grown more slowly than the rest of the state's economy between FY 2004 and FY 2006.
Summer had 36.0 percent of total FY 2006 spending; with 24.4 percent during the fall, 20.4 percent during the winter and 19.2 percent during the spring months. Average spending per visitor day was $71.79 for the summer, $83.63 during the fall, $95.32 during the winter and $87.25 during the spring. The annual average spending per visitor day was $81.48, 5.1 percent higher than $77.50 in FY 2004.
Travelers spent money at a wide range of businesses. Compared with most other states, travelers to New Hampshire spend a larger share of their money at retail stores. Due to its nearness to large cities, New Hampshire tourism also has a much larger proportion of day trips included in its total visitor days. About 54 percent of all visitor days during FY 2006 were made by those on day trips, but day trip visitors comprised about 39 percent of all visitor spending. Day trip visitors have a larger proportion of their total spending at restaurants, retail stores, groceries, attractions and amusements than overnight visitors and spend little at lodging establishments. Also, about one-third of overnight visitors to New Hampshire stay with friends or relatives or at second homes. As a result, restaurant spending is much larger in comparison to lodging expenses in comparison with most other states.
Table 1
TRAVELER SPENDING – FY 2006
FY 2006 % Total
Eating & Drinking $ 925 22.1 %
Accommodations 516 12.3
Recreation 704 16.8
Food Stores 308 7.4
Retail Stores 901 21.5
Ground Transportation 409 9.8
Air Transp. & Services 427 10.2
Total $4,190 100.0 %
In millions of dollars
Spending at retail stores and for ground and air transportation had the largest percentage increases between FY 2004 and FY 2006. Spending at restaurants, for accommodations and at recreation facilities had small percentage increases.
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Four of the state's seven travel regions had increases in traveler spending between FY 2004 and FY 2006 as shown in Table 2. The Merrimack Valley, Monadnock and Lakes regions had rates of increase above the statewide average.
Table 2
TRAVELER SPENDING BY TRAVEL REGION
FY 2004 AND FY 2006
FY 2004 FY 2006 % Change
Great North Woods $ 132.7 $ 126.8 (4.4) %
White Mountain 738.9 718.1 (2.8)
Lakes 600.2 636.2 6.0
Dart-Lake Sunapee 232.2 227.8 (1.9)
Monadnock 241.7 262.3 8.5
Merrimack Valley 1,325.2 1,504.4 13.5
Seacoast 693.1 714.3 3.1
Total $3,964.0 $4,189.9 5.7
In millions of dollars
Table 3 shows the changes in estimated rooms and meals sales to travelers that are subject to the rooms and meals tax collected by the state Department of Revenue Administration between FY 2005 and FY 2006. Only six of the ten counties and four of the seven travel regions had increases over this one year period. In general, the northern and western parts of the state were hurt more by wetter weather during FY 2006 than were the central and southern parts of the state. Long term trends in spending indicate that the travel and tourism industry has rebounded from the recession years of 1991 and 2001 and is finally well above the record spending levels of the late 1980's and 2000, even if inflation is taken into account, as shown in Table 4. The number of visitor days is greater in FY 2006 than during the late 1980's, which many thought was a very busy time. Table 4 shows that spending and employment between FY 1988 and FY 2006 has grown for all sectors over this period of time.