Michigan Tourism Year-In-Review • 2016 Michigan Tourism Forecast

OUTLINE

• Overview of industry – global and national – 2015-16 • 2015 Michigan tourism year-in-review • 2016 Michigan tourism forecast

The Pure Michigan Governor’s Conference on Tourism April 17-19, Lansing, MI

Dr. Sarah Nicholls and Dr. Dan McCole Department of Community Sustainability Michigan State University 1 2

Michigan Tourism Outlook 2016 Michigan State University, Department of CSUS Michigan Tourism Outlook 2016 Michigan State University, Department of CSUS

TOURISM INDUSTRY ON THE GLOBAL LEVEL (UNWTO)

• International arrivals up 4.4% in 2015 (to 1.18 billion) • Compared to projected increase of 3-4%

Increases By Region:

• Americas +5% • Asia & Pacific +5% • Europe +5% • Middle East +3% • Africa - 3%

3 Source: UNWTO 4

Michigan Tourism Outlook 20162011 Michigan State University, Department of CSUS Michigan Tourism Outlook 2015 Michigan State University, Department of CSUS

TOURISM INDUSTRY ON THE GLOBAL LEVEL (UNWTO) TOURISM INDUSTRY ON THE GLOBAL LEVEL (UNWTO)

• 6th consecutive year of above-average growth Forecast for 2016 • “Demand was robust overall, although results were • International tourism arrivals projected to increase by more mixed than usual across destinations. Three 3.5% to 4.5% major factors directed tourism flows in 2015: the unusually strong exchange rate fluctuations, the • “The projection reflects sustained growth in an decline in the price of oil and other commodities, which increasingly dynamic global tourism market, though at increased disposable income in importing countries but a somewhat more moderate pace of growth than in the weakened tourism demand in exporters, as well as past six years.” increased concern about safety and security.” • Detailed receipts data will be published in April 2016

Source: UNWTO 5 Source: UNWTO 6

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1 CHANGE IN TOP 10 INBOUND INTERNATIONAL MARKETS TOURISM INDUSTRY ON THE NATIONAL LEVEL 2015 vs. 2014 (through June)

• International visits to the US in 2015 up 4% over 2014 (thru June) Country % Change in Visitors • Outbound international travel from US up 7% (full yr) CANADA (10.3 million) -6 ~ 55% of visitors − Reflects strength of the US dollar MEXICO +8 • 2015 was the 27th consecutive year that the travel and tourism UNITED KINGDOM (2.1 million) +14 industry generated a balance of trade surplus in the US JAPAN +2 PR CHINA (EXCL. HK) +18 BRAZIL +5 GERMANY +14 SOUTH KOREA +20 FRANCE +4 AUSTRALIA +11 Sources: US Dept. of Commerce 7 Source: U.S. Dept. of Commerce 8

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TOURISM INDUSTRY ON THE NATIONAL LEVEL THEMES AT USTA’S 2016 DESTINATION CAPITOL HILL

• “Attendees will urge Congress to embrace policies that are pro- growth, pro-competition and pro-traveler. Top-of-mind issues include: restoring choices to the over-consolidated U.S. airline sector; modernizing air and surface transportation infrastructure to keep pace with demand; and ensuring the U.S. remains a welcoming destination for overseas visitors while maintaining strong national security.”

“At no cost to taxpayers, Brand USA continues to successfully operate as a public-private partnership to promote travel to America from around the world. Through its efforts, we bring nearly $200 billion in spending by travelers from other countries, which strengthens our balance of trade and helps reduce our deficit. It's a policy that works, and must be maintained for years to come.” 9 Source: U.S. Travel Association (USTA) 10

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MICHIGAN TOURISM: A LOOK BACK AT THE YEAR 2015

• Weather • Consumer confidence • Hotel data • CVB taxes and assessments • Visits to attractions • Transportation measures − Gas prices, traffic counts, bridge crossings, airplane passengers

11 12

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2 MICHIGAN TOURISM INDUSTRY INDICATORS: MICHIGAN TOURISM INDUSTRY INDICATORS: AVERAGE TEMPERATURES BY SEASON TOTAL PRECIPITATION BY SEASON

57.2% 85.0%

2015 vs. 2014 45% 2015 vs. 2014 2015 vs. Normal 75%

2015 vs. normal

50% 24.9% 32.7% 19.4% 20% 13.3% 10.4% 25% 8.4% 0.5% 0% -0.1% Percentage Percentage change -5% -1.3% -0.5% Percentage change Percentage -5.6% -9.0% -14.6% -11.8% -25% -28.2% -26.1% -20.5% -33.3% -30% -50% Winter '14-'15 Spring '15 Summer '15 Fall '15 Winter '15-'16 Winter '14-'15 Spring '15 Summer '15 Fall '15 Winter '15-'16

Spring: March, April, May Fall: September, October, November Spring: March, April, May Fall: September, October, November Summer: June, July, August Winter: December, January, February Summer: June, July, August Winter: December, January, February

Source: Midwestern Regional Climate Center. 13 Source: Midwestern Regional Climate Center. 14

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MICHIGAN TOURISM INDUSTRY INDICATORS: MICHIGAN TOURISM INDUSTRY INDICATORS: 2015 v. 2014 WEATHER BY MONTH 2015 v. NORMAL WEATHER BY MONTH

115% Precipitation 75% Precipitation 90%

Temperature 50% Temperature

65% 25% 40% 0% 15%

-25%

-10%

Percentage change Percentage change Percentage

-35% -50%

-60% -75% Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec

Annual Changes: Annual Changes: Temp. + 0.7% Source: Midwestern Regional Climate Center. Source: Midwestern Regional Climate Center. Precip. – 13.1% Temp. + 7.6% Precip. – 3.6% 15 16

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MICHIGAN TOURISM INDUSTRY INDICATORS: HOTEL OCCUPANCY: US/MICHIGAN/DETROIT 2015 v. 2014 CONSUMER CONFIDENCE INDEX 2000-2015

70% Detroit 66.6% Michigan 65.8% 30% US 65% 63.7%

65.6%

60.3%

20% 60% 60.1%

55%

Percentage change Percentage 10% Occupancy Rate Rate (%) Occupancy

50% 0% th Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Michigan 34 (↔) Detroit 23rd of top 25 (↔) 45% Average Annual Score: 2014 – 87, 2015 – 98 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Source: The Conference Board Annual Change: + 12.73% 17 Source: Smith Travel Research. 18

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3 HOTEL OCCUPANCY IN THE US AND MIDWEST: MICHIGAN TOURISM INDUSTRY INDICATORS 2015 AND CHANGE IN 2015 v. 2014 2015 v. 2014 HOTEL DATA

65.6% Occupancy ADR RevPAR 1.7% 65.6% $120.01 $78.67 USA (+1.7%) (+4.4%) (+6.3%) 60.1% $97.09 $58.32 57.3% Michigan 1.3% (+2.3%) (+5.8%) (+8.2%) 60.1% 2.3% 65.8% $94.14 $61.91 Detroit (+1.0%) (+5.5%) (+6.6%)

Michigan exhibited the 19th Detroit exhibited the 17th 65.9% 60.4% 60.5% 1.2% 2.3% 1.0% Source: largest improvement in year- largest improvement in year- Smith end occupancy of all US end occupancy of the 25 Travel Research. states in 2015 largest US markets in 2015

19 Source: Smith Travel Research. 20

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MICHIGAN TOURISM INDUSTRY INDICATORS 2009–2015 HOTEL DATA HOTEL AVERAGE DAILY RATE IN THE US AND MIDWEST: 2015 AND CHANGE IN 2015 v. 2014 Occupancy ADR RevPAR 2009 -8.0% -5.2% -12.8% 2010 +10.2% -1.5% +8.5% $120.01 4.4% Michigan 2011 +6.9% +3.0% +10.0% 2012 +3.0% +3.9% +7.1%

2013 +1.7% +4.5% +6.3% $99.39 2014 +2.3% +5.1% +7.5% 5.3% $97.09 2015 +2.3 % +5.8% +8.2% 5.8% 2009 -12.8% -9.8% -21.4% 2010 +14.2% -5.2% +8.2%

$93.58 Detroit $126.36 $91.39 2011 +10.2% +2.9% +13.4% 5.2% 3.6% Source: 5.6% Smith Travel 2012 +3.3% +3.7% +7.1% Research. 2013 +1.2% +5.8% +7.0%

21 2014 +4.0% +5.9% +10.0% 22

Michigan Tourism Outlook 2016 Michigan State University, Department of CSUS Michigan Tourism Outlook2015 2016 +1.0% +5.5% Michigan State University,+6.6% Department of CSUS

MICHIGAN TOURISM INDUSTRY INDICATORS: 2015 v. 2014 MICHIGAN TOURISM INDUSTRY INDICATORS: PERCENT CHANGE IN ASSESSMENTS AND PROPERTIES 2015 v. 2014 VISITS River Raisin National 0% 10% 20% 30% 40% 50% Battlefield Park + 97.4%

10% 37.0% Pictured Rocks National Lakeshore 8.4% 8.5% 8.2% 7.2% 28.3% Isle Royale National Park 19.7%

All MI National Parks 5% 18.5% Great Lakes Maritime Heritage Center

1.9% 13.3% MI State Parks Lodging Reservation Nights 0.9% 0.5% 12.2% Belle Isle Visits (Q4 Only) 0% CVBs (Properties) Responding: -0.1% 10.1% Sleeping Bear Dunes National Lakeshore

Assessments Percentagechange Mackinac Historic State Parks UP: 4 (302), NLP: 12 (382), # of Properties 9.1% SLP: 17 (678). -5% 7.9% Michigan State Parks Harbor Reservation Nights U.P. N.L.P. S.L.P. Statewide 5.9% The Henry Ford 4.9% All U.S. National Park Service Sites * EXCLUDES effects of increases in assessment rates * Percentage change

Sources: MI DNR; MI DNR State Historic Parks; US Source: 2016 Dept. of CSUS Survey of Assessments n = 33 23 National Park Service, The Henry Ford, NOAA. * new listings always welcome! * 24

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4 MICHIGAN TOURISM INDUSTRY INDICATORS: MICHIGAN HIGHWAY TRAFFIC COUNTS 2015 v. 2014 GAS PRICES YEAR-TO-YEAR CHANGE

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

20% 2006

10% 2007

0% 2008

-10% 2009 -20% 2010

Percentage change Percentage -30% 2011

-40% 2012

-50% 2013 Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec

2014 Average PPG in MI: 2014 $3.42, 2015 $2.48 2015 Source: AAA Michigan. Annual Change: – 27.4% 25 Source: Michigan Department of Transportation. 26

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MICHIGAN TOURISM INDUSTRY INDICATORS: MICHIGAN TOURISM INDUSTRY INDICATORS: 2015 v. 2014 TRAFFIC 2015 v. 2014 STATEWIDE AND TOURISM TRAFFIC

15% 15% Statewide Traffic Counts

Tourism Traffic Counts

10% 10%

5% 5%

Percentage change Percentage change

0% 0% Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec

Annual Change: Annual Change: + 3.3% Statewide + 3.3%, Tourism + 6.2% Source: Michigan Department of Transportation. 27 Source: Michigan Department of Transportation. 28

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MICHIGAN TOURISM INDUSTRY INDICATORS: MACKINAC BRIDGE TRAFFIC COUNTS 2015 v. 2014 WELCOME CENTERS YEAR-TO-YEAR CHANGE

Year Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 30% 2006

25% 2007

20%

2008

15% 2009

10% 2010

Percentage change 5% 2011

0% 2012

-5% 2013 Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec 2014

Annual Change: + 4.6% 2015

Source: Michigan Department of Transportation. 29 30 Source: Mackinac Bridge Authority.

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5 MICHIGAN TOURISM INDUSTRY INDICATORS: 2015 v. 2014 MACKINAC BRIDGE TRAFFIC COUNTS MONTHLY MACKINAC BRIDGE CROSSINGS YEAR-TO-YEAR CHANGE

20% Count % from Count % from Year Year (million) prev. year (million) prev. year 15% 1996 4.625 + 1.5% 2006 4.133 - 2.4% 1997 4.626 0.0% 2007 4.054 - 1.9% 10% 1998 4.891 + 5.7% 2008 3.696 - 8.9%

5% 1999 4.836 - 1.1% 2009 3.877 + 4.9%

2000 4.756 - 1.7% 2010 3.948 + 1.8% Percentage Percentage change 0% 2001 4.676 - 1.7% 2011 3.728 - 5.6% 2002 4.733 + 1.2% 2012 3.737 + 0.2% -5% 2003 4.529 - 4.3% 2013 3.696 - 1.1% Jan Feb Mar Apr May Jun Jul Aug Sept Oct Nov Dec 2004 4.427 - 2.2% 2014 3.645 - 1.4% Annual Change: 2005 4.236 - 4.3% 2015 3.914 + 7.4% + 7.4% Source: Mackinac Bridge Authority. 31 Source: Mackinac Bridge Authority. 32

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TRENDS IN TRAFFIC COUNTS TRENDS IN TRAFFIC COUNTS ON MICHIGAN BRIDGES ON SELECTED MICHIGAN BRIDGES 2015 v. 2014 TRAFFIC

7 Effect of exchange rate:

10% 1/1/15 CAN$1 = US86c 7.4% 7.1% 6 7.0% 1/1/16 CAN$1 = US72c 5% 5 Decline of 16.3%

4 -5% -3.3% -4.8% -10% 3Millions -10.5% Cars Only Mackinac Bridge -15%

2 change Percentage Blue Water Bridge All Traffic -15.4% Ambassador Bridge -20% -20.6% 1 Detroit-Windsor Tunnel -21.9% International Bridge -25% Mackinac Bridge Ambassador Bridge Detroit-Windsor Blue Water Bridge International Bridge

0 Tunnel

1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 1988 Despite strong numbers overall, need to Source: Mackinac Bridge Authority; Blue Water Bridge Authority, MDOT, Public Border Operators Association (PBOA). Source: Public Border Operators Association (PBOA) http://www.bwba.org/trafficstats_e.html 33 recognise regional and seasonal variations 34

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MICHIGAN TOURISM INDUSTRY INDICATORS: 2015 v. 2014 SUMMARY OF MICHIGAN TOURISM INDUSTRY PERCENT CHANGE IN TOTAL AIRPLANE PASSENGERS 2015 v. 2014 INDICATORS • Weather: 2015 was drier (-13.1%) and warmer (+7.6%) than 10% 2014 – but winters poor and summer average, Sept. good

• Consumer confidence: up 12.7%

5.8% • Hotel indicators: occupancy up 2.3%, ADR up 5.8%

5% 4.5% • Sales and use tax: no data

2.8% 2.8% 2.9% • Assessments: up 8.2% Percentagechange • Visits to attractions: up, most in double digits • Gas prices: down 27% 0% U.P. N.L.P. S.L.P. Metro Detroit Statewide • Travel activity (as measured by traffic): − statewide traffic counts up 3.3% − Mack. Bridge up 7.4%, int’nal bridges down Source: Michigan Department of Transportation 35 − DTW traffic up 2.8% 36

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6 Factors That Impact Our Forecast

• Last year’s results • Economic indicators • Tourism trends • Pure Michigan activity • CVB projections • National forecasts • Misc. issues • Forecast Advisory Team discussion

37 38

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The Forecast Advisory Team HOW ACCURATE WERE MSU’S PROJECTIONS FOR MICHIGAN TOURISM IN 2015?

2015 Participants in 2016 Meeting: Projected Actual by MSU data • Dr. Don Holecek • Dr. Sarah Nicholls Travel prices + 3% +2.3 % • Brian Lawson • Michael O’Callaghan • Dave Lorenz • Tracy Padot Travel volume + 1.5% + 3.3% • Dr. Dan McCole • Dr. Annie Rummel Travel spending • Dr. George Moroz • Bill Sheffer + 2.5% ?*

*The Michigan Department of Treasury data is our most important indicator of tourism spending. In 2015, the department changed its classification system from SIC to NAICS. This is the only year that will be impacted.

39 Source: MSU Department of CSUS; Michigan Department of Transportation; 40 Michigan Department of Treasury; Bureau of Labor Statistics.

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GROWTH OF REAL GDP - UNITED STATES

6 5 4 2.9 3.0 2.2 2.8 3 2.1 2.2 2.1 2.2 2.3 1.8 2 0.4 1 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016p 2017p Percentage -1 -2 -3 Economic Indicators -2.6 -4 p = projected Ability to spend on travel

Willingness to spend on travel 41 Source: RSQE - University of Michigan. 42 Michigan Tourism Outlook 2016 Michigan State University, Department of CSUS Michigan Tourism Outlook 2016 Michigan State University, Department of CSUS

7 Stock Markets Currency Exchange Rates Per $1 U.S.

April 16 April 16 % change 2015 2016 from 2015 Recent % Change Record Canadian $ 1.25 1.28 2.4% Low 2015 2016 From High Mar 2009 2015 Euro .94 .89 -5.3% Dow Pound (UK) .68 .71 4.4% 18,312 6,547 18,105 17,897 -1.2% Jones (May ’15) Peso (Mexico) 15.29 17.47 14.3% Nasdaq 5,218 1,267 5,007 4,938 -1.4% Yen (Japan) 119.40 109.16 -8.6% (July ’15) Yuan (China) 6.10 6.48 6.2% S&P 500 2,130 677 2,104 2,080 -1.2% Real (Brazil) 3.06 3.49 14.1% (May ‘15)

FRB Broad Index 115.98 119.97 3.4% (April 15, 2015) (April, 6 2016)

Source: http://finance.yahoo.com/ 43 Source: Currencies - www.oanda.com; Federal Reserve Bank. 44

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Exchange rate could dampen international travel from some countries Oh, Canada…

Respondents: Int’l travelers likely to take an int’l trip in next 12 months But … Indicated they were unlikely to choose the USA as a destination

Q: Why is the U.S. not a likely destination for you in the the next 12 months? A: The currency exchange rate is unfavorable

Source: Brand USA 45 46

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National Transportation and Tourism Office 2016 Forecast U.S. Unemployment Current Reading: China: 17% increase in visitation 5.0%

However…

Canada: 8% decrease

Which is more Mar 2011 Mar 2016 important to you? Source: NTTO, 2015 47 Source: The Bureau of Labor Statistics; TradingEconomics.com 48

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8 Michigan Unemployment People quitting their jobs is a good sign…

Source: Michigan Department of Labor & Economic Growth 49 50

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Comerica Banks U.S. Consumer Sentiment Michigan Economic Activity Index

Apr Current 2015: Reading: 95.9 90.7

Jan/09 Jan/16

Source: University of Michigan; TradingEconomics.com 51 Source: Comerica Banks 52

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Home prices have increased since recession lows (but not to pre-recession bubble levels)

Housing

53 Source: Trading Economics; Standard & Poor’s 54

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9 Home Ownership Decreasing Michigan Housing Prices (currently below historic average)

Historic Average

Source: Zillow 55 Source: Trading Economics; US Census Bureau 56

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Especially among young adults… One reason…

57 58

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A slide from the 2014 Tourism Outlook…

Gas Prices

59 60

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10 Gasoline Prices

Tourism Indicators Source: GasBuddy.com 61 62

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Tourism Still Outperforming Overall Economy This is not typical…

63 64

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Air travel especially… Traveller Sentiment Index Feb 2016: 120

65 Source: MMGY Global 66

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11 Summary of the Economy (Changes from 2015) Summary of Economy

GDP • Slightly weaker than last year, but not by much Stock Markets (essentially unchanged)

Unemployment • As it relates to tourism, nothing in the economy points to a downturn in ability and willingness to Consumer Confidence spend Strength of Dollar Green = good for tourism • Demand for travel remains high Housing Red = Bad for tourism Michigan Economic Activity 67 68

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2012: They’re coming!

Millennials Trends Impacting Tourism 69 70

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They’re Here….

71 Source: Pew Research Center, 2015 72

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12 Older Travelers Spending Less at the High End Spending among travelers over age 55

A 30.7% Decrease [VAL UE] [VAL UE]

2014 2015 73 Source: Travel Weekly - Consumer Trends Study, 2015 74

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Increase in Older Travelers Spending Less (This group typically spends the most on travel) …Millennials plan to spend % of travelers 55+ who spent less 10% more on travel in 2015 than $1,000 for travel

2014: 6% While Baby Boomers and Matures each 2015: 23% only plan to spend 1% more

However...

Source: Travel Weekly - Consumer Trends Study, 2015 75 Source: MMGY Portrait of American Travelers , 2015 76

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Millennials Travel More Than Any Other What motivates Millennials to Generation travel? 86% • 4.7 Business trips per year 67% 66% • 4.3 Leisure trips per year • Spend $200 billion on travel… 44% 24% …but haven’t yet reached their

peak earning years Experiencing Local Meeting Partying Shopping New Cultures Foods New People

Source: Travel Weekly - Consumer Trends Study, 2015 77 Source: Topdeck Travel, 2015 78 Michigan Tourism Outlook 2016 Michigan State University, Department of CSUS Michigan Tourism Outlook 2016 Michigan State University, Department of CSUS

13 Millennials want a good value, but 66% of Millennials value that doesn’t mean they’re cheap. unique experiences when Coming of age during the “Great Recession,” they learned to look for deals, traveling (compared to 50% but… from other generations) They have expensive tastes

Source: Deloitte Traveler Loyalty Study, 2014 79 80

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Shared economy (peer-to-peer) travel Raise your hand if… by Generation … in the last day, you… − used Facebook? − used Instagram? − used Twitter? − used Snapchat? − sent or received more than 10 texts? − used an emoji or emoticon? … in the last year, you… − used Uber? − took a selfie? … you no longer have a landline phone at your home? … you have a tattoo? Source: Destination Analysts, 2015 81 82

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You might be a Millennial… Millennials sometimes get a bad rap…

but the rest of us seem to have willingly adopted parts of their lifestyle…

83 84

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14 Though it hasn’t always been easy…

Speaking of Smartphones…

85 86

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How widely used are smartphones? How widely used are smartphones?

Usage is even higher among demographics that tend to travel the most (e.g., higher educational attainment and income). 64% 64% 54% 54% 35% 27% 35% 27%

All Adults All Adults Ages 50-64 Ages 65+ All Adults All Adults Ages 50-64 Ages 65+ 2011 2015 2011 2015 Source: BrightLocal Consumer Review Survey, 2015 87 Source: BrightLocal Consumer Review Survey, 2015 88

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Smartphone owners feelings about Where smartphones are used? their smartphones

% for each choice At home Leash Freedom In a car or public transit

Distracting Connecting At work Waiting in line Annoying Helpful At a community place

Financial burden Worth the cost Walking from place to place Exercising

Source: Pew Research Center, 2015 89 Source: Pew Research Center, 2015 90

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15 Primary Reasons Travelers Use Devices Used to Plan Trip Before Travel Smartphones 3 2.7 2.5 2.5

2 1.8 1.4 1.5 1.2

0.5

0 Desktop/Laptop Smart Phone Tablet Telephone Calls Other Average Mean (4 point importance scale) 92

Source: USTA, 2015 91 Source: McCole & McRoberts, 2015 92

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Devices Used to Book or Reserve What does your website look Travel like on a smartphone? 2.5

2 1.9 1.8 1.5 1.5 1.5 1.1

0.5

0 Desktop/Laptop Smart Phone Telephone Calls Tablet Other Average Mean (4 point importance scale) 93

Source: McCole & McRoberts, 2015 93 94

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75% of American adults use 97% of American adults use smartphones for social smartphones to text networking Yeah, but that’s mostly millennials, right? Yeah, but that’s mostly millennials, right?

55% of Americans 50+ use smartphones 92% of Americans 50+ use smartphones to text for social networking 95 96

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16 What is the # 1 thing Americans have trouble doing without their smartphones? Can visitors find you?

Getting If not, get listed (for free) on directions/finding an visitors’ GPS maps:

address https://mapsconnect.apple.com/

http://www.google.com/+/business/

97 98

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Online Review Sites

99 10 0 Michigan Tourism Outlook 2016 Michigan State University, Department of CSUS Michigan Tourism Outlook 2016 Michigan State University, Department of CSUS

Do you read online reviews to determine Online reviews have become a major whether a local business is a good business? part of consumer decisions

29% % who answered “NO” 24%

15% 12% 8% 88% have read online reviews to determine the 2011 2012 2013 2014 2015 quality of a business

Source: BrightLocal Consumer Review Survey, 2015 10 Source: Nielsen Global Study, 2014 10 1 2 Michigan Tourism Outlook 2016 Michigan State University, Department of CSUS Michigan Tourism Outlook 2016 Michigan State University, Department of CSUS

17 Most Trusted Sources of Information When Making Purchase Decisions 71% of Millennials typically share their opinion of a product because they think other consumers will value the input

Source: International Data Corporation - Consumer Trust Survey, 2015 10 10 3 4 Michigan Tourism Outlook 2016 Michigan State University, Department of CSUS Michigan Tourism Outlook 2016 Michigan State University, Department of CSUS

U.S. Consumers… But negative reviews matter too…

88% trust online reviews as 68% trust much as opinions personal posted recommendatio ns online 72% say positive reviews make them trust businesses more Source: Nielsen Global Study, 2014 10 Source: Nielsen Global Study, 2014 10 5 6 Michigan Tourism Outlook 2016 Michigan State University, Department of CSUS Michigan Tourism Outlook 2016 Michigan State University, Department of CSUS

Increasing Influence of Review Websites Most Influential Resources When Booking a on Travelers’ Choices Vacation

Review websites, online forums, etc.

Travel Operator Website

Recommendations from Friends and families

Travel agent website

Newspaper articles and advertising

Visit to a Travel Agent Shop

Visit to a tour operator shop

Content on social media

None of these

Don’t know/not applicable 10 Source: Deloitte, 2014 10 7 8 Michigan Tourism Outlook 2016 Michigan State University, Department of CSUS Michigan Tourism Outlook 2016 Michigan State University, Department of CSUS

18 Why access social media while traveling? Dan’s Hotel

(148 reviews)

“Incredible service, great rooms and friendly owner.”

Book Now?

72% will take action after reading a positive review

Source: Nielsen Global Study, 2014 10 Source: USTA, TNS, 2014 11 9 0 Michigan Tourism Outlook 2016 Michigan State University, Department of CSUS Michigan Tourism Outlook 2016 Michigan State University, Department of CSUS

Primary Motivation for Sharing Travel Experience on Social Media

Forecasts

Source: USTA, TNS, 2014 111 11 2 Michigan Tourism Outlook 2016 Michigan State University, Department of CSUS Michigan Tourism Outlook 2016 Michigan State University, Department of CSUS

STR U.S. Hotel/Motel Forecast What do CVBs Think Will Happen to Room Assessments? (CVB Survey Results)

2015 2015 2016 Projections Actual Projections

Upper Peninsula +3.0% +8.4% +3.5%

Northern Lower P. +2.9% +7.2% +3.2%

Southern Lower P. +3.0 +8.5% +5.0

Source: Smith Travel Research 11 11 3 4 Michigan Tourism Outlook 2016 Michigan State University, Department of CSUS Michigan Tourism Outlook 2016 Michigan State University, Department of CSUS

19 USTA FORECAST FOR U.S. TRAVEL IN 2016

Domestic Domestic International Domestic International Leisure Business Visitors Spending Spending* Volume Volume

1.4% 2.1% 3.3%

4.1% 4.5%

*Excluding International Airfares MSU’s 2016 Forecast

Source: United States Travel Association (Annual Travel Forecast) 11 11 5 6 Michigan Tourism Outlook 2016 Michigan State University, Department of CSUS Michigan Tourism Outlook 2016 Michigan State University, Department of CSUS

MSU GROWTH PROJECTIONS FOR MICHIGAN TOURISM IN 2016 THE WILD CARDS

• Weather! • Sharp spike in gas prices • U.S. markets/economy Travel prices +3% Lodging and restaurant price changes / 2 • War / terrorism

Travel volume +3% Traffic counts

Travel spending +5% Lodging sales and use tax collections

11 11 7 8 Michigan Tourism Outlook 2016 Michigan State University, Department of CSUS Michigan Tourism Outlook 2016 Michigan State University, Department of CSUS

CONTACT INFORMATION

Dr. Sarah Nicholls ([email protected])

Dr. Dan McCole ([email protected])

Department of Community Sustainability Michigan State University 480 Wilson Road Rm. 131 East Lansing, MI 48824-1222 Phone: 517-353-5190 Fax: 517-353-8994 www.csus.msu.edu

11 9 Michigan Tourism Outlook 2016 Michigan State University, Department of CSUS