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1 Michigan Tourism Outlook 2011 Michigan State University, Department of CARRS 1 The Pure Michigan Governor’s Conference on Tourism March 20-22, Kalamazoo, MI Dr. Sarah Nicholls and Dr. Dan McCole Department of Community, Agriculture, Recreation and Resource Studies Michigan State University Michigan Tourism Outlook 2011 Michigan State University, Department of CARRS 2 OUTLINE Overview of industry global and national 2010 Michigan tourism year-in-review 2011 Michigan tourism forecast Michigan Tourism Outlook 2011 Michigan State University, Department of CARRS 3 Michigan Tourism Outlook 2011 Michigan Tourism Outlook 2011 Michigan State University, Department of CARRS 4 TOURISM INDUSTRY ON THE GLOBAL LEVEL (IA) The Travel & Tourism Economy (TTE) grew by 2% in 2010 Due to a “faster-than-expected rebound in international travel” The TTE is projected to grow by 4.5% in 2011; an average growth rate of 4.2% per annum is projected through 2021 The global contribution of travel and tourism in 2011: direct US$1.8 trillion, 99 million jobs indirect US6 trillion (9.1% of GDP), 258 million jobs (8.8% of global employment) Source: World Travel & Tourism Council http://www.wttc.org/bin/pdf/original_pdf_file/viewpoint_spring_2011final.pdf Michigan Tourism Outlook 2011 Michigan State University, Department of CARRS 5 TOURISM INDUSTRY ON THE GLOBAL LEVEL (IB) “Travel & Tourism creates jobs, generates exports and stimulates investment. At a time of post-crisis global recovery, it is in a unique position to power sustainable growth around the globe ... But it must have the clear support of governments and policy makers if that potential is to be realised.” Source: World Travel & Tourism Council http://www.wttc.org/bin/pdf/original_pdf_file/viewpoint_spring_2011final.pdf Michigan Tourism Outlook 2011 Michigan State University, Department of CARRS 6 Tourism in 2010 “A Multi-Speed Recovery” 935 million international tourism arrivals, up 6.7% over 2009 All world regions saw increases in arrivals, but highest in emerging regions Middle East +14%, Asia & Pacific +13% Americas +7%, Europe +3% Data on international tourism receipts not yet finalized But expected that growth in receipts will lag behind that of arrivals (as is typical in times of recovery) “Tourism’s quick recovery in 2010 confirms the sector’s resilience in the medium and long term, confirming that it is a key driver of growth and much needed employment in a changing economic setting.” TOURISM INDUSTRY ON THE GLOBAL LEVEL (IIA) Source: UNWTO http://unwto.org/facts/eng/pdf/barometer/UNWTO_Barom11_1_key_trends_en.pdf

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Page 1: OUTLINE - MSUTodaynews.msu.edu/media/documents/2011/03/e6eeffdb-6a6b... · MICHIGAN TOURISM INDUSTRY INDICATORS: 2010 VS 2009 MONTHLY MACKINAC BRIDGE CROSSINGS Annual Change: + 1.8%

1

Michigan Tourism Outlook 2011

Michigan State University, Department of CARRS

1

The Pure Michigan Governor’s Conference on Tourism March 20-22, Kalamazoo, MI

Dr. Sarah Nicholls and Dr. Dan McCole

Department of Community, Agriculture, Recreation and Resource Studies

Michigan State University

Michigan Tourism Outlook 2011

Michigan State University, Department of CARRS

2

OUTLINE

• Overview of industry – global and national

• 2010 Michigan tourism year-in-review

• 2011 Michigan tourism forecast

Michigan Tourism Outlook 2011

Michigan State University, Department of CARRS

3

Michigan Tourism Outlook 2011 Michigan Tourism Outlook 2011

Michigan State University, Department of CARRS

4

TOURISM INDUSTRY ON THE GLOBAL LEVEL (IA)

• The Travel & Tourism Economy (TTE) grew by 2% in 2010

• Due to a “faster-than-expected rebound in international travel”

• The TTE is projected to grow by 4.5% in 2011; an average growth rate of 4.2% per annum is projected through 2021

• The global contribution of travel and tourism in 2011:

− direct – US$1.8 trillion, 99 million jobs

− indirect – US6 trillion (9.1% of GDP), 258 million jobs (8.8% of global employment)

Source: World Travel & Tourism Council http://www.wttc.org/bin/pdf/original_pdf_file/viewpoint_spring_2011final.pdf

Michigan Tourism Outlook 2011

Michigan State University, Department of CARRS

5

TOURISM INDUSTRY ON THE GLOBAL LEVEL (IB)

• “Travel & Tourism creates jobs, generates exports and stimulates investment. At a time of post-crisis global recovery, it is in a unique position to power sustainable growth around the globe ... But it must have the clear support of governments and policy makers if that potential is to be realised.”

Source: World Travel & Tourism Council http://www.wttc.org/bin/pdf/original_pdf_file/viewpoint_spring_2011final.pdf

Michigan Tourism Outlook 2011

Michigan State University, Department of CARRS

6

Tourism in 2010 – “A Multi-Speed Recovery”

• 935 million international tourism arrivals, up 6.7% over 2009

− All world regions saw increases in arrivals, but highest in emerging

regions

− Middle East +14%, Asia & Pacific +13%

− Americas +7%, Europe +3%

• Data on international tourism receipts not yet finalized

− But expected that growth in receipts will lag behind that of arrivals

(as is typical in times of recovery)

• “Tourism’s quick recovery in 2010 confirms the sector’s resilience in the

medium and long term, confirming that it is a key driver of growth and

much needed employment in a changing economic setting.”

TOURISM INDUSTRY ON THE GLOBAL LEVEL (IIA)

Source: UNWTO http://unwto.org/facts/eng/pdf/barometer/UNWTO_Barom11_1_key_trends_en.pdf

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2

Michigan Tourism Outlook 2011

Michigan State University, Department of CARRS

7

Forecast for 2011

• International tourism arrivals projected to increase 4-5% in 2011

• Emerging regions will continue to lead growth

• “In the advanced economies, major challenges to the projected

growth are linked to the economic outlook, including high

unemployment and weak consumer confidence.”

TOURISM INDUSTRY ON THE GLOBAL LEVEL (IIB)

Source: UNWTO http://unwto.org/facts/eng/pdf/barometer/UNWTO_Barom11_1_key_trends_en.pdf

Michigan Tourism Outlook 2011

Michigan State University, Department of CARRS

8

TOURISM INDUSTRY ON THE NATIONAL LEVEL (I)

• International visitors up 10% (2010 YTD through Nov)

• International visitor spending up 12% (2010 YTD through Nov)

• Total travel + tourism employment up 2% (through Q3)

• 2010 was the 22nd consecutive year that the travel and tourism

industry generated a balance of trade surplus in the US

(of $28.5 billion through Nov 2010, up 48% YTD)

Source: U.S. Office of Travel and Tourism Industries (OTTI) http://tinet.ita.doc.gov/pdf/state-of-travel-and-tourism-Nov-2010.pdf

Michigan Tourism Outlook 2011

Michigan State University, Department of CARRS

9

TOURISM INDUSTRY ON THE NATIONAL LEVEL (II)

• WTTC has described the past ten years as “a lost decade” for the

US travel and tourism industry

• For 2011

− a projected 3.3% increase in international arrivals

− a projected 6.4% in visitor spending

− US$1.6 billion contribution to GDP (9% of total)

− 15.1 million jobs (1 in 9 of total)

Source: WTTC http://www.wttc.org/bin/pdf/original_pdf_file/viewpoint_spring_2011final.pdf

Michigan Tourism Outlook 2011

Michigan State University, Department of CARRS

10

Michigan Tourism Outlook 2011

Michigan State University, Department of CARRS

11

MICHIGAN TOURISM: A LOOK BACK AT THE YEAR 2010

• Weather

• Traffic counts, bridge crossings and gas prices

• Sales and use tax

• Visits to attractions

• Hotel occupancy

• CVB taxes and assessments

• Consumer confidence

• Comerica Bank MI Tourism Index

Michigan Tourism Outlook 2011

Michigan State University, Department of CARRS

12

THE WEATHER

"Everybody talks about the weather but

nobody does anything about it."

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3

Michigan Tourism Outlook 2011

Michigan State University, Department of CARRS

13

MICHIGAN TOURISM INDUSTRY INDICATORS:

TOTAL PRECIPITATION BY SEASON

Source: Midwestern Regional Climate Center.

-37.2%

13.2%

-5.5%

-20.7%

-32.3%

9.7%

-21.4%

18.5%

-2.1%

-25.0%

-50%

-25%

0%

25%

50%

Winter '09-'10 Spring '10 Summer '10 Fall '10 Winter '10-'11

Pe

rce

nta

ge

ch

an

ge

2010 vs. 2009

2010 vs. Normal

Spring: March, April, May

Summer: June, July, August

Fall: September, October, November

Winter: December, January, February

Michigan Tourism Outlook 2011

Michigan State University, Department of CARRS

14

MICHIGAN TOURISM INDUSTRY INDICATORS:

AVERAGE MAXIMUM TEMPERATURES BY SEASON

21.6%

8.6%

-10.3%

5.9%

-0.2%

13.3%

-5.1%

2.9%4.1%

13.0%

-25%

0%

25%

Winter '09-'10 Spring '10 Summer '10 Fall '10 Winter '10-'11

Pe

rce

nta

ge

ch

an

ge

2010 vs. 2009 2010 vs. Normal

Source: Midwestern Regional Climate Center.

Spring: March, April, May

Summer: June, July, August

Fall: September, October, November

Winter: December, January, February

Michigan Tourism Outlook 2011

Michigan State University, Department of CARRS

15

MICHIGAN TOURISM INDUSTRY INDICATORS:

2010 VS 2009 WEATHER BY MONTH

-75%

-50%

-25%

0%

25%

50%

75%

100%

125%

150%

175%

200%

Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec

Pe

rce

nta

ge

ch

an

ge

Precipitation

Temperature

Source: Midwestern Regional Climate Center. Annual Changes:

Precip. - 11.5% Temp. 7.8%

Michigan Tourism Outlook 2011

Michigan State University, Department of CARRS

16

TRAFFIC, BRIDGE CROSSINGS & GAS

Michigan Tourism Outlook 2011

Michigan State University, Department of CARRS

17

MICHIGAN TOURISM INDUSTRY INDICATORS: 2010 VS 2009

HIGHWAY TRAFFIC AND WELCOME CENTER VISITOR COUNTS

Source: MI Department of Transportation, MEDC.

Annual Change:

Traffic 1.2% Welcome Centers – 0.5%

Tourism Traffic 3.9%

-15%

-10%

-5%

0%

5%

10%

Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec

Pe

rce

nta

ge

ch

an

ge

Tourism Traffic Counts

Welcome Center Visitor Counts

Traffic Counts

Michigan Tourism Outlook 2011

Michigan State University, Department of CARRS

18

MICHIGAN TOURISM INDUSTRY INDICATORS: 2010 VS 2009

WEATHER AND TRAFFIC

-100%

-75%

-50%

-25%

0%

25%

50%

75%

100%

125%

150%

175%

200%

Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec

Pe

rce

nta

ge

ch

an

ge

Precipitation

Temperature

Traffic Counts

Source: Midwestern Regional Climate Center;

Michigan Department of Transportation.

Annual Changes:

Precip. - 11.5% Temp. 7.8% Traffic 1.2%

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Michigan Tourism Outlook 2011

Michigan State University, Department of CARRS

19

MICHIGAN HIGHWAY TRAFFIC COUNTS

YEAR-TO-YEAR CHANGE

Source: Michigan Department of Transportation.

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2009

2002

2003

2004

2005 No

change

2006

2007

2008

2010

Michigan Tourism Outlook 2011

Michigan State University, Department of CARRS

20

MICHIGAN TOURISM INDUSTRY INDICATORS: 2010 VS 2009

MONTHLY MACKINAC BRIDGE CROSSINGS

Source: Mackinac Bridge Authority.

Annual Change:

+ 1.8%

-5%

0%

5%

10%

Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec

Perc

en

tag

e c

han

ge

2010 vs. 2009

Michigan Tourism Outlook 2011

Michigan State University, Department of CARRS

21

MICHIGAN TOURISM INDUSTRY INDICATORS: 2010 VS 2009

WEATHER & MACKINAC BRIDGE CROSSINGS

Source: Mackinac Bridge Authority;

Midwestern Regional Climate Center.

Annual Change:

Bridge + 1.8% Precip. -11.5% Temp. 7.8%

-80%

-55%

-30%

-5%

20%

45%

70%

95%

120%

145%

170%

195%

Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec

Pe

rce

nta

ge

ch

an

ge

Precipitation

Temperature

Bridge Crossings

Michigan Tourism Outlook 2011

Michigan State University, Department of CARRS

22

MACKINAC BRIDGE TRAFFIC COUNTS

YEAR-TO-YEAR CHANGE

Source: Mackinac Bridge Authority.

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

2002

2003

2004

2005

2006

2007

2008

2009

2010

Michigan Tourism Outlook 2011

Michigan State University, Department of CARRS

23

MACKINAC BRIDGE TRAFFIC COUNTS

YEAR-TO-YEAR CHANGE

Year Count

(million)

% from

prev. year Year

Count

(million)

% from

prev. year

1991 3.535 + 4.3% 2001 4.676 - 1.7%

1992 3.678 + 4.0% 2002 4.733 + 1.2%

1993 3.993 + 8.6% 2003 4.529 - 4.3%

1994 4.333 + 8.5% 2004 4.427 - 2.2%

1995 4.557 + 5.2% 2005 4.236 - 4.3%

1996 4.625 + 1.5% 2006 4.133 - 2.4%

1997 4.626 0.0% 2007 4.054 - 1.9%

1998 4.891 + 5.7% 2008 3.696 - 8.9%

1999 4.836 - 1.1% 2009 3.877 + 4.9%

2000 4.756 - 1.7% 2010 3.948 + 1.8%

Source: Mackinac Bridge Authority.

Michigan Tourism Outlook 2011

Michigan State University, Department of CARRS

24

TRENDS IN TRAFFIC COUNTS

ON SELECTED MICHIGAN BRIDGES

0

1

2

3

4

5

6

7

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

Millio

ns

Mackinac Bridge

Blue Water Bridge

Source: Mackinac Bridge Authority; Blue Water Bridge Authority.

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5

Michigan Tourism Outlook 2011

Michigan State University, Department of CARRS

25

MICHIGAN TOURISM INDUSTRY INDICATORS:

2010 VS 2009 GAS PRICES

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec

Pe

rce

nta

ge

ch

an

ge

Gas Prices

Source: AAA Michigan.

Annual Change:

18.9 %

Michigan Tourism Outlook 2011

Michigan State University, Department of CARRS

26

MICHIGAN TOURISM INDUSTRY INDICATORS: 2010 VS 2009

TRAFFIC, BRIDGE CROSSINGS & GAS PRICES

Source: Michigan Department of Transportation; AAA Michigan; Mackinac Bridge Authority.

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sep. Oct. Nov. Dec.

Perc

en

tag

e c

han

ge

Traffic Counts

Gas

Bridge Crossings

Annual Changes:

Traffic 1.2% Gas 18.9% Bridge 1.8%

Michigan Tourism Outlook 2011

Michigan State University, Department of CARRS

27

SALES & USE TAX

Michigan Tourism Outlook 2011

Michigan State University, Department of CARRS

28

MICHIGAN TOURISM INDUSTRY INDICATORS: 2010 VS 2009

MONTHLY CHANGES IN HOSPITALITY TAXES (SIC 701)

Source: Michigan Department of Treasury,

Office of Revenue and Tax Analysis.

Annual Changes:

Sales - 1.8% Use 6.1 %

Sales & Use 3.4%

-50%

-30%

-10%

10%

30%

Jan. Feb. Mar. Apr. May Jun. Jul. Aug. Sept. Oct. Nov. Dec.

Pe

rce

nta

ge

ch

an

ge

Sales Taxes

Use Taxes

Sales & Use Taxes

Michigan Tourism Outlook 2011

Michigan State University, Department of CARRS

29

MICHIGAN TOURISM INDUSTRY INDICATORS: 2010 VS 2009

QUARTERLY CHANGES IN HOSPITALITY TAXES (SIC 701)

-20%

-15%

-10%

-5%

0%

5%

10%

15%

1st Qtr 2nd Qtr 3rd Qtr 4th Qtr

Sales

Use

Sales & Use

Source: Michigan Department of Treasury,

Office of Revenue and Tax Analysis.

Annual Changes:

Sales - 1.8% Use 6.1 %

Sales & Use 3.4%

Pe

rce

nta

ge

Ch

an

ge

Michigan Tourism Outlook 2011

Michigan State University, Department of CARRS

30

VISITS TO ATTRACTIONS

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Michigan Tourism Outlook 2011

Michigan State University, Department of CARRS

31

MICHIGAN TOURISM INDUSTRY INDICATORS:

2010 vs. 2009 TOURISM ACTIVITY INDICATORS

Sources: The Henry Ford; MI DNRE; US National Park Service.

11.39%

9.87%

2.18%

1.80%

-1.50%

-0.50%

0.98%

-3.87%

-6.0%

-13.95%

-15% -5% 5% 15%

Percentage change

Pictured Rocks National Lakeshore

Sleeping Bear Dunes National

Lakeshore

MI State Parks (day use)

Mackinac Bridge

MI State Parks (overall use)

MI Welcome Centers

All U.S. National Parks

MI State Parks (camping)

The Henry Ford

Thunder Bay National Maritime

Sanctuary

Frederick Meijer

Gardens + 34%

Michigan Tourism Outlook 2011

Michigan State University, Department of CARRS

32

HOTEL OCCUPANCY

Michigan Tourism Outlook 2011

Michigan State University, Department of CARRS

33

45%

50%

55%

60%

65%

70%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

Detroit

Michigan

US

Source: Smith Travel Research.

HOTEL OCCUPANCY: US/MICHIGAN/DETROIT

2000-2010

66.6%

60.3%

63.7%

47.5%

55.1%

48.0%

Occu

pan

cy R

ate

(%

)

57.6%

54.3%

51.8%

Michigan Tourism Outlook 2011

Michigan State University, Department of CARRS

34

MICHIGAN TOURISM INDUSTRY INDICATORS

2010 VS 2009 HOTEL DATA

Occupancy ADR RevPAR

USA +5.7% -0.1% +5.5%

Michigan +10.2% -1.5% +8.5%

Detroit +14.2% -5.2% +8.2%

Source: Smith Travel Research.

Michigan exhibited the

second biggest improvement

in end-of-year occupancy of

any US state in 2010

Detroit exhibited the biggest

improvement in end-of-year

occupancy of the 25 largest

US markets in 2010

Michigan Tourism Outlook 2011

Michigan State University, Department of CARRS

35

CVB TAXES & ASSESSMENTS

Michigan Tourism Outlook 2011

Michigan State University, Department of CARRS

36

MICHIGAN TOURISM INDUSTRY INDICATORS: 2010 VS 2009

PERCENT CHANGE IN ASSESSMENTS AND PROPERTIES

Source: 2011 Dept. of CARRS Survey of Assessments.

10.6%

8.1%

-2.6%

0.3%

-0.7%

9.4%8.4%

-0.9%

-10%

-5%

0%

5%

10%

15%

20%

U.P. N.L.P. S.L.P. Statewide

Pe

rce

nta

ge

ch

an

ge

Assessments

# of Properties

CVBs (Properties) Responding:

UP: 1 (302), NLP: 13 (382),

SLP: 13 (678).

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Michigan Tourism Outlook 2011

Michigan State University, Department of CARRS

37

CONSUMER CONFIDENCE

Michigan Tourism Outlook 2011

Michigan State University, Department of CARRS

38

MICHIGAN TOURISM INDUSTRY INDICATORS:

2010 VS 2009 CONSUMER CONFIDENCE INDEX

-70%

-60%

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec

Pe

rce

nta

ge

ch

an

ge

CCI

Source: The Conference Board

Annual Change:

+ 18.0%

Michigan Tourism Outlook 2011

Michigan State University, Department of CARRS

39

SUMMARY OF MICHIGAN TOURISM INDUSTRY

2010 VS 2009 INDICATORS

• Weather: 2010 was drier (–11.5%) and warmer (+7.8%) than

2009

• Travel activity: up

− statewide traffic counts up 1.2% (tourism traffic up 3.9%)

− Mackinac Bridge crossings up 1.8%

• Gas prices: up 18.9%

• Sales and use tax: up 3.4%

• Visits to attractions: mixed

• Hotel occupancy: up 10.2% (up 14.2% in Detroit)

• Assessments: up 8.4%

• Consumer confidence: up 18.0%

Michigan Tourism Outlook 2011

Michigan State University, Department of CARRS

40

COMERICA BANK MICHIGAN TOURISM INDEX,

Q1 2000 – Q4 2010

“Our Index provided mixed

results in the fourth quarter, with

gains in hotel occupancy and

casino revenues offset by

weaker passenger air traffic.”

Michigan Tourism Outlook 2011

Michigan State University, Department of CARRS

41

Comerica Bank’s Michigan Tourism Index

- Dana Johnson, Chief Economist at Comerica Bank

"Households and businesses are gradually become

more willing to increase their discretionary spending as

they sense the economy is experiencing a sustained,

moderate expansion. Looking ahead, our Index should

perform modestly better over the next several quarters,

particularly if the state starts growing fast enough to begin generating increases in jobs."

Michigan Tourism Outlook 2011

Michigan State University, Department of CARRS

42

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Michigan Tourism Outlook 2011

Michigan State University, Department of CARRS

43

Agenda

• Last year’s projections

• U.S. economy

• Michigan economy

• Tourism trends

• Gas prices

• Michigan tourism forecast

• What to make of all this?

Michigan Tourism Outlook 2011

Michigan State University, Department of CARRS

44

Every Great Presentation Needs a Theme

Michigan Tourism Outlook 2011

Michigan State University, Department of CARRS

45

The “Brain Trust”

Participants in 2010 “Brain Trust” meeting:

• Dr. Don Holecek

• Lori Langone

• Dave Lorenz

• Dr. Dan McCole

• Dr. George Moroz

• Dave Morris

• Dr. Sarah Nicholls

• Michael O’Callaghan

• Tracy Padot

• Dr. Annie Rummel

• Bill Sheffer

• Dr. Christine Vogt

Michigan Tourism Outlook 2011

Michigan State University, Department of CARRS

46

HOW ACCURATE WERE MSU’S PROJECTIONS

FOR MICHIGAN TOURISM IN 2009 & 2010?

Travel volume

Travel spending

Travel prices

2009 2010

Projected

by MSU

Actual

data

Projected

by MSU

Actual

data

- 3-4% - 0.9% + 2-3% 1.2%

- 3-4% - 13.6% + 3-4% 3.4%

- 1-2% -1.4% + 2-3% +2%

Source: MSU Department of CARRS; Michigan Department of Transportation;

Michigan Department of Treasury; Bureau of Labor Statistics.

Michigan Tourism Outlook 2011

Michigan State University, Department of CARRS

47

HOW ACCURATE WERE MSU’S PROJECTIONS

FOR MICHIGAN TOURISM OVER THE YEARS?

-15%

-11%

-7%

-3%

1%

5%

9%

2000 2001 2002 2003 2004 2005 2006 2007 2006 2007 2008 2009 2010

Pe

rce

nta

ge

ch

an

ge

Projected travel spending

Recorded travel spending

Source: MSU Department of CARRS; Michigan Department of Treasury.

9/11 “Great

Recession”

Michigan Tourism Outlook 2011

Michigan State University, Department of CARRS

48

U.S. Economy

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Michigan Tourism Outlook 2011

Michigan State University, Department of CARRS

49

0.3

2.2

3.0

4.2

3.2 2.9

2.2

0.4

-2.6

2.7 2.1

2.9

-4

-3

-2

-1

0

1

2

3

4

5

6

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011p 2012pPe

rce

nta

ge

GROWTH OF REAL GDP - UNITED STATES

Source: RSQE - University of Michigan.

p = projected

Michigan Tourism Outlook 2011

Michigan State University, Department of CARRS

50

Stock Market Dow Jones

Industrial

Average

Nasdaq

Composite S&P 500

March 21, 2009 7,278 1,457 768

March 21, 2010 10,742 2,374 1,166

March 21, 2011 11,859 2,644 1,279

% change (from 2010) 10.4% 11.4% 9.7%

Record Highs 14,164

Nov ‘07

5,048

Mar ‘00

1,565

Oct ‘07

Source: Yahoo Finance

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2011

March 21

2010

%

change

US $ is… Value in

2000

Canada .98 1.02 -4% Weaker 1.46

Euro .71 0.74 -4% Weaker n.a.

Pound .62 0.66 -6% Weaker 0.64

Peso 12.05 12.57 -4% Weaker 9.36

Yen 81.03 90.51 -10.4% Weaker 109.09

FRB Broad

Index (Mar.)

97.09 102.10 -5% Weaker 101.47

Source: Currencies - www.oanda.com; Federal Reserve Bank.

Currency Exchange Rates Per $1 U.S.

Mar 18

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U.S. Unemployment

Source: The Bureau of Labor Statistics; TradingEconomics.com

Current

Reading:

8.9

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CONSUMER CONFIDENCE

INDEX

Source: The Conference Board; TradingEconomics.com

Current

Reading:

70.4

March

2010:

52.3

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Not your father’s (or grandfather’s) recession…

• Banks not lending & corporations not spending

• Real GDP finally reached pre-recession levels in Q4 2010…

− …but it took 6 quarters from the time recession ended

− No other post-war recession has taken more than 3 quarters

Source: Comerica Bank

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Housing

Source: Comerica Bank

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Housing

Source: Comerica Bank

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Housing

• January 2011 (US Census; HUD; NAR)

− 2.7% increase in existing home sales

(1.8% in Midwest)

− 12.6% decline in US new home sales

• 17.1% increase in new home sales in

Midwest (but down 25.5% from 2010)

− Pending home sales index down 2.8%

(down 7.3% for Midwest)

− Median home prices down 3.7%

(from Jan 2010)

• Fewer people in Jan 2011 (than Jan 2010) believe housing prices

will increase over next 12 months (Fannie Mae)

• Concerns about shadow foreclosures

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Summary – US Economy

Positive Factors

• GDP continues to grow

• Stocks continue to rebound

• Corporate profits are up

• Dollar is a little weaker

• Recovery at the higher end

Negative Factors

• Unemployment

• Housing

• Gas Prices

• Lingering uncertainty

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Michigan

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GROWTH OF REAL DISPOSABLE INCOME

UNITED STATES VERSUS MICHIGAN

2.3

3.4

1.2

3.1 3.0

0.5 0.6 1.1

1.5 1.7

3.3

0.4

-0.4 -0.3

0.2

1.4

-0.1

1.1 0.6

1.9

-2

0

2

4

6

8

10

2003 2004 2005 2006 2007 2008 2009 2010 2011p 2012p

Pe

rce

nta

ge

U.S.

Michigan - basedollars (1982-84)

Source: RSQE - University of Michigan.

p = projected

as of November 2010

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Unemployment 2011 2010 %

Change

U.S. 8.9% (Feb) 9.7% (Mar) +7%

Michigan* 10.7% (Jan) 14.1% (Mar) +24%

Source: Bureau of Labor Statistics; Michigan Department of Labor & Economic Growth.

* Lowest unemployment rate in Michigan was 3.2% in March 2000

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UNEMPLOYMENT RATES

Source: Michigan Department of Labor & Economic Growth

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Michigan Unemployment

• 2010 Job Situation

− Manufacturing Jobs: +16,000

− Other Jobs: - 22,000

• Projected Net New Jobs

− 2011: 6,300

− 2012: 48,000

• Unemployment Forecast

− 2011: 12.4%

− 2012: 11.5%

To give perspective on job forecast:

Michigan lost almost 850,000 from 2001 to 2010

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The Recession’s Damage in Michigan?

• Loss of 850,000 jobs since 2001 (almost 1/5 of all jobs)

− Loss of high paying blue-collar jobs

− 2010 was a better year, but MI still lost over 34,000 jobs

− Forecast for job growth:

• 2011: 6,300

• 2012: 48,000

• Lost population since 2000 (only state to lose

population)

• Lower household incomes

• Flooded housing market

• Loss of tax revenues (local and state)

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Hopeful signs

• Worst is behind us

• Auto industry is doing better than expected

• New industries (e.g., green energy)

• New tourism markets

Michigan Tourism Outlook 2011

Michigan State University, Department of CARRS

66

GASOLINE PRICES

(Unleaded regular)

Current: $3.58 (3/20/11)

Last Year: $2.82 (3/20/10)

Projected Peak: $3.70 (Summer 2011)

Source: AAA Michigan; GasBuddy.com; U.S. Energy Information Administration

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Evolving Tourism Markets

• Value seekers

• Older tourists (and multi-generational

families)

• New out-of-state visitors

• Internationals

• Luxury tourists

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Michigan Summary

• Worst seems to be behind us

• Michigan is a changed state

• Job growth (but slow)

• MI economy in recovery, but sluggish

• Recovery is different from others

• Recovery is segmented

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Tourism Trends

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USTA’s Travel Dashboard

Source:

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USTA’s Travel Dashboard

Source:

Traveller Sentiment Index

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USTA’s Travel Dashboard

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USTA’s Travel Dashboard

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USTA’s Travel Dashboard

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USTA’s Travel Dashboard

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8 Tourism Trends

• Tourism recovery is outpacing the rest of the economy

• Business travel is rebounding nicely

• “Haves” and “Have-nots”

• Recovery led at the higher end

• It’s now less distasteful to spend

• The “New Frugality” has taken hold (people are still seeking value)

• Demand is back –pricing is not (volume/occupancy rebounding

faster than prices)

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A Few Tourism Opportunities

• 40 million Americans are undecided

whether to take leisure trip in next 6

months (room to convince them)

• Expected growth in international visits

• Let’s not just focus on promotion

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Gas Prices

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Event

Effect on This

Summer’s Gas

Prices

Economic recovery

Events in Middle East

Disasters in Japan

Fuel Prices difficult to predict for this summer

If unrest spreads to Saudi Arabia,

all bets are off

Michigan Tourism Outlook 2011

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If prices are higher, will people travel less in Michigan?

• Substitution effect

− “Let’s put off our driving

trip to Grand Canyon

this year”

− Airline prices are higher too

• How much more expensive will it be to drive

this year?

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How much more expensive will it be to drive this year?

Added expense (over last year) of travel to and from

Mackinac Bridge in a vehicle that gets 20 mpg…

At $3.50/gal. At $4.00/gal.

Grand Rapids, MI $20 $32

Detroit, MI $25 $40

Chicago, MI $35 $56

Columbus, OH $40 $63

Indianapolis, IN $42 $66

Last summer’s average price: $2.63/gal.

Is this added cost enough to keep

people from taking a trip?

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Is this added cost enough to keep people from taking a trip?

Probably not

• Vacations are increasingly considered to be a right

• Most of the tourism recovery is toward the higher end anyway

• Gas prices will cause some people to drop out, but substitution

will likely make up for it

• If the weather’s good, they’ll come

• If the weather is not good, take away gas prices as an excuse

(incentives)

The bigger concern with higher gas prices is that

they slow the recovery

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But perception is reality

• The media tends to emphasize the negative parts of high gas

prices.

• Can the industry change the story so gas prices aren’t an excuse

not to travel?

− Communicate the actual additional cost

− Gas related incentives

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Forecast

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FORECAST FOR U.S. TRAVEL IN 2011

Source: United States Travel Association (Annual Travel Forecast)

Domestic

Leisure

Volume

Domestic

Business

Volume

International

Visitors Domestic

Spending

International

Spending*

1.6% (2.8%)

2011 (2010)

2.6% (4.2%) 3.7%

(8.0%) 4.5% (7.2%)

10.0% (7.9%)

*Excluding International Airfares

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Michigan State University, Department of CARRS

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MSU GROWTH PROJECTIONS

FOR MICHIGAN TOURISM IN 2011

Travel volume Traffic counts

Travel spending Lodging sales and use tax collections

Travel prices Lodging and restaurant price changes / 2

+3%

+4%

+3%

Michigan Tourism Outlook 2011

Michigan State University, Department of CARRS

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Regional Revenue Projections and

Actual Assessments – (CVB Survey Results)*

Southern Lower P.

Northern Lower P.

Upper Peninsula

* Not all CVBs reported and results weighted by CVB scale

2010

Projections

2010

Actual

2011

Projections

-3.5% +10.6% +4.8%

-4.3% +9.1% +5.0%

+1.5% +8.1% +2.3

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THE WILD CARDS

• Gas prices & unrest in N. Africa and Middle East

• Too many events that cause uncertainty, lead to downturn in

stock markets market

• The Economy

− Housing (and continued foreclosures)

− Energy prices

− Inflation/deflation

• Terrorism

• Weather variability

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Dr. Sarah Nicholls ([email protected])

Dr. Dan McCole ([email protected])

Department of Community, Agriculture, Recreation and Resource

Studies (CARRS)

Michigan State University

131 Natural Resources Bldg.

East Lansing, MI 48824-1222

Phone: 517-353-5190

Fax: 517-353-8994

www.carrs.msu.edu

CONTACT INFORMATION