Hotel & Tourism Trends in Pigeon Forge & Sevier County

Stephen C. Morse, Ph.D.

Director & Economist Tourism Institute

University of TennesseeKnoxville, TN

Ph: (865) 974-6249smorse@utk.edu

May 14, 2009

Riverstone Resort & Spa

Agenda1. Tourism trends in Sevier County

2. Theme park & amusement trends in Pigeon Forge

3. Hotel demand trends (ADR, Occ. Rates, RevPAR)

4. Outlook for 2009

Top 10 Tennessee Counties for Tourist Spending in 2007

1) Davidson Co. $3,991 million (Nashville)2) Shelby Co. $3,064 million (Memphis)3) Sevier Co. $1,502 million 4) Knox Co. $796 million (Knoxville)5) Hamilton Co. $710 million (Chattanooga)6) Blount Co. $276 million (Maryville,

Townsend)

7) Sullivan Co. $270 million (Kingsport, Bristol)

8) Williamson Co. $251 million (Franklin, Brentwood)

9) Rutherford Co. $237 million (Murfreesboro)

10)Washington Co. $188 million (Johnson City)

Source: TIA & TN Dept. of Tourist Development 3

Pigeon Forge Business Sector (2007)

Percent of Gross Sales

Lodging 16%Amusements 15%Restaurants 14%Retail & Services 12%Outlets 11%Gas & Grocery 10%Theaters (Source: City of Pigeon Forge) 7%Craft, Gift & Specialty 6%

2008 Tourism Related Tax Revenues for Pigeon Forge

• 1% Gross Business Receipts Tax $7.1 million

• 2% Amusement Tax $2.5 million

• 2.25% Lodging Tax $3.1 million

TOTAL Tourism Related Taxes

$12.7 Million

Source: City of Pigeon Forge

Tourism Tax Relief per Pigeon Forge Household

• Each permanent resident household in Pigeon Forge pays $4,775 less in local city taxes as a result of taxes generated by tourist activity

Source: City of Pigeon Forge; U.S. Census Bureau; Dr. Steve Morse, University of Tennessee (based on 2,648 resident households)

Tourism Tax Relief per Pigeon Forge Household

$4,775Tax relieffor each

Pigeon Forge household

Source: City of Pigeon Forge; U.S. Census Bureau; Dr. Steve Morse, University of Tennessee (based on 2,648 resident households)

Sevier Co. ranks lowest in TN for effective property tax rates

Property Tax / Housing Value

• Shelby Co. 1.29%• Davidson Co. 0.95%• Anderson Co. 0.87%• Knox Co. 0.73%• Blount Co. 0.54%• Sevier Co. 0.35%

Source: Local Tax Burdens on TN Households; TN Advisory Commission on Intergovernmental Relations; Staff Report Volume V – August 2007

2008 Amusement & Theme Park Gross Sales, Pigeon Forge

$0

$5,000,000

$10,000,000

$15,000,000

$20,000,000

$25,000,000

Source: City of Pigeon Forge

Millions $

How was 2008 vs. 2007 for Amusement & Theme Park Gross Sales? Percent Change 2008 vs. 2007 Pigeon Forge

-40%

-20%

0%

20%

40%

60%

-6.0%

41.0%

6.0%

-19.0%-11.0%

2.0% 2.0% 0.0%

-10.0%-18.3%

11.5%

-14.2%

Flat Summer of 2008

Source: City of Pigeon Forge

How is 2009 so far for Amusements & Theme Park Gross Sales? Percent Change

2009 vs. 2008, Pigeon Forge

Jan Feb Mar-40%

-20%

0%

20%

40%

60%

80%62.4%

1.7%

-19.2%

Dollywood open Jan 1-3

Source: City of Pigeon Forge

How was 2008 vs. 2007 for Hotel Gross Sales? Percent Change 2008 vs. 2007, Pigeon Forge

-40%

-20%

0%

20%12.0%13.0%

6.0%

-16.0%

-6.0%-8.0% -6.0%

2.0%

-18.0%-13.4%

2.2%

-16.1%

Source: City of Pigeon Forge

How is 2009 so far for Hotel Gross Sales? Percent Change 2009 vs. 2008, Pigeon Forge

Jan Feb Mar-40%

-20%

0%

-11.3%

-2.8%

-23.0%

Source: City of Pigeon Forge

Feb. 2009 vs. Feb. 2008, Hotel Occupancy Rate – Percent Change

Nashvil

le

U.S. SE Regio

n

Kingsport

Sevie

r Co.

-14%

-12%

-10%

-8%

-6%

-4%

-2%

0%

2%

-13.1%-11.1%

-10.1%-9.2%

-6.7%-5.3% -5.0%

-3.5%

1.1%

Source: Smith Travel Research

March 2009 vs. March 2008 Hotel Occupancy Rate – Percent Change

-14%

-12%

-10%

-8%

-6%

-4%

-2%

0%

-12.9%-11.6%-11.4%-11.1%-10.7%-10.0% -9.6%

-6.0%-4.8%

Source: Smith Travel Research

U.S. Lodging industry begins 2009 on a sour note (% change YTD Feb. 09 vs. Feb. 08)

-20%

-15%

-10%

-5%

0%

5% + 3.4%

- 7.5%

- 10.5%

- 6.5%

- 16.3%

Supply(new rooms)

Demand Occupancy ADR RevPar

Source: Smith Travel Research

The Perfect Storm to slow the hotel industry

Let’s Compare Sevier Co. Hotel Performance to These Resort Areas in the U.S.

Branson, MO

Myrtle Beach, SCCharleston, SCDaytona Beach, FLOrlando, FL

Panama City, FL

Myrtle Beach, SC vs. Sevier Co. – Percent Change Hotel Occupancy Rates,

2008 over 2007

Jan Feb

Mar

AprM

ayJu

nJu

lAug

Sep

Oct NovDec

-30%

-25%

-20%

-15%

-10%

-5%

0%

BLACK = Myrtle Beach, SCRED = Sevier Co.

= Sevier Co. Occ Rate changed lessSource: Smith Travel Research

Branson, MO vs. Sevier Co. – Percent Change Hotel Occupancy Rates,

2008 over 2007

Jan Feb

Mar

AprM

ayJu

nJu

lAug

Sep

Oct NovDec

-60%

-50%

-40%

-30%

-20%

-10%

0%

10%

BLACK = Branson, MORED = Sevier Co. = Sevier Co. Occ. Rate changed less Source: Smith Travel Research

Orlando, FL vs. Sevier Co. – Percent Change Hotel Occupancy Rates, 2008 over 2007

Jan Feb

Mar

AprM

ayJu

nJu

lAug

Sep

Oct NovDec

-20%

-15%

-10%

-5%

0%

5%

BLACK = Orlando, FLRED = Sevier Co.

= Sevier Co. Occ Rate changed lessSource: Smith Travel Research

Panama City, FL vs. Sevier Co. – Percent Change Hotel Occupancy Rates,

2008 over 2007

Jan Feb

Mar

AprM

ayJu

nJu

lAug

Sep

Oct NovDec

-20%-15%-10%

-5%0%5%

10%15%20%25%30%

BLACK = Panama City, FLRED = Sevier Co.

= better Sevier Co. Occ Rate changed less

Source: Smith Travel Research

Daytona Beach, FL vs. Sevier Co. – Percent Change Hotel Occupancy Rates,

2008 over 2007

Jan Feb

Mar

AprM

ayJu

nJu

lAug

Sep

Oct NovDec

-25%

-20%

-15%

-10%

-5%

0%

5%

BLACK = Daytona Beach, FLRED = Sevier Co.

= Sevier Co. Occ Rate changed lessSource: Smith Travel Research

Charleston, SC vs. Sevier Co. – Percent Change Hotel Occupancy Rates,

2008 over 2007

Jan Feb

Mar

AprM

ayJu

nJu

lAug

Sep

Oct NovDec

-20%-18%-16%-14%-12%-10%

-8%-6%-4%-2%0%

BLACK = Charleston, SCRED = Sevier Co.

= Sevier Co. Occ Rate changed lessSource: Smith Travel Research

Sevier Co. – Percent Change Avg. Daily Rates (ADR), 2008 over 2007

Jan Feb

Mar

AprM

ayJu

nJu

lAug

Sep

Oct NovDec

-8%

-6%

-4%

-2%

0%

2%

4%

6%

1.2%

4.2%3.1%

0.8%0.9%

-1.3%-1.5%

3.6%

-5.9%

-3.8%-3.7%-3.9%

Source: Smith Travel Research

Sevier Co. – Percent Change RevPAR, 2008 over 2007

Jan Feb

Mar

AprM

ayJu

nJu

lAug

Sep

Oct NovDec

-25%

-20%

-15%

-10%

-5%

0%

5%

-6.5%

1.5%0.3%

-14.4%

-1.6%

-10.1%-11.9%

1.5%

-19.4%

-10.2%-12.3%

-6.0%

Source: Smith Travel Research

Outlook for 2009(Swimming or treading water?)

2009 Economic Stimulus PackageNot much help – Why?

• 2008 stimulus package provided lump sum checks of $2,400 for family of five

• 2009 stimulus package spreads same amount over full year to equal $13 more per week

Gas prices fall from $4.00+, but are beginning to rise

20-Mar-08 Record High - 7/14/08

11-May-09$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

$3.50

$4.00

$4.50

$3.28

$4.11

$2.18

Source: AAA Daily Fuel Gauge Report

What will be the shape of our recovery?

V-Shaped?

2007 2008 2009 2010 2011 20120

2

4

6

8

10

12Economic Growth

What will be the shape of our recovery?

U-Shaped?

2007 2008 2009 2010 2011 20120

2

4

6

8

10

12Economic Growth

What will be the shape of our recovery?Horizontal L-Shaped?

2007 2008 2009 2010 2011 20120

2

4

6

8

10

12Economic Growth

What is today’s consensus for recovery?

• V-shaped recovery: 10% –(getting weaker)

• U-shaped recovery: 85% –(getting weaker)

• Horizontal L-shaped: 5% –(getting stronger)

Smith Travel Research Hotel Data Conference

• August 4-5, 2009

• Nashville, TN

• More information at:

www.strglobal.com

Thank you for inviting meQuestions? Comments?

Stephen C. Morse, Ph.D.

Director & Economist Tourism Institute

University of TennesseeKnoxville, TN

PH: (865) 974-6249Email: smorse@utk.edu