The Economic Impact of the 2019 Memphis in May International Festival on the Memphis/Shelby County Economy

MEMPHIS IN MAY

INTERNATIONAL FESTIVAL 2019 ECONOMIC IMPACT ANALYSIS

MEMPHIS TN The Economic Impact of the 2019 Memphis in May International Festival On the Memphis/Shelby County Economy

INTRODUCTION AND SCOPE Memphis in May International Festival, Inc. operates year-round to develop, produce and promote the Memphis in May International Festival. The festival includes the Beale Street Music Festival, the World Championship Barbecue Cooking Contest, and the Great American River Run. In 2019, a new event, Celebrate Memphis, was added to the festival line-up to coincide with Memphis Bicentennial celebrations. This study analyzes the impact of these major events on the Memphis/Shelby County economy.

Each year in the past, the festival has saluted a selected foreign country by featuring the culture and art of that country. This extends the festival’s international appeal and fosters more robust business relationships with the honored country. However, since 2019 marks 200 years since its founding, the City of Memphis was the honoree. Memphis was showcased to the world as opposed to Memphis showcasing another country.

As in past years, Memphis in May International Festival included exhibits, performances, educational programs and other cultural and entertainment activities. Many of these programs were produced in conjunction with third party organizations such as local museums, galleries, performing arts centers and schools. Due to the nature of these programs and events, the audience was comprised primarily of Shelby County residents. Spending by local residents is not included in this economic impact analysis. However, these added program elements would increase the projected economic impact of the Memphis in May International Festival if they were included in the scope of the study.

METHODOLOGY Primary data regarding the number of visitors per event, origin of visitors, length of stay and spending patterns during the festival was supplied by Memphis in May International Festival. All of the major festival events were ticketed except Celebrate Memphis. Tickets (and in the case of The Great River Run, registrations) provide a more accurate count of attendees as well as zip-code level geographic information about where visitors to the Festival reside.

Only those visitors coming from 50 miles or more outside of Memphis are included in the analysis. This assumes that the spending from visitors to the Festival from within A 50-mile radius would have occurred in Memphis without the Festival. This is a financially conservative assumption because residents of nearby counties might not have visited Memphis during the time frame of the festival.

Attendance and spending by people residing in Shelby County was also not considered in this analysis. Only new dollars flowing into the economy from visitors to the county was considered. This analysis is narrowly focused on the impact from outside dollars flowing into Memphis/Shelby County.

For the non-ticketed Celebrate Memphis event a conservative estimate was used based on attendance from the Great River Run that was held on the same day. Also, it was assumed that a high percentage of the attendees for Celebrate Memphis were from within a 50-mile radius.

The Memphis in May International Festival organization conducts extensive surveys among attendees. Emails were collected during the ticket purchase process and an online survey was sent to each ticket holder or registrant. The number of surveys for each was large enough to provide a representative sample, with a high confidence factor for the data obtained. Data was collected on length of stay, type of lodging for overnight stays, and spending by key categories.

Memphis in May International Festival also provided the organization’s annual operational spending, direct employment and capital investments.

The economic impact calculations in this analysis were generated using an economic model of the Shelby County economy based on regional input-output multipliers (RIMS II) from the U.S. Bureau of Economic Analysis. The model also utilizes county and region- specific data such as local tax rates, historical tax collection ratios, annual average wage rates, commute patterns and historical spending patterns.

Secondary data was collected by Younger Associates for this analysis from the Tennessee Department of Revenue, the Tennessee Department of Labor and Workforce Development, U.S. Bureau of Economic Analysis, the U.S. Department of Labor - Bureau of Labor Statistics, the Tennessee Department of Tourism and the Memphis Convention and Visitors Bureau. In addition, proprietary licensed data from Neilson/Environics and ESRI was utilized. ECONOMIC IMPACT The economic impact of the 2019 Memphis in May International Festival on the Memphis/Shelby County economy is calculated to be $149.1 million. This is the combined impact from the year-round operations to produce and promote the festival, capital expenditures, and spending from visitors outside a 50-mile radius.

JOBS The total number of jobs supported by Memphis in May International Festival operations and major events is calculated to be 1,409 full-time-equivalent. The Memphis in May organization directly employs 14 full-time workers. The organization’s spending with local vendors supports jobs in Shelby County, and the spending by visitors from outside a 50-mile radius during festival supports the largest number of jobs. These jobs are spread throughout the Shelby County economy in almost every business sector. (agriculture and mining are examples of the few sectors that do not have a jobs impact from the festival visitor spending.)

The amount of wages paid directly by Memphis In May International Festival were supplied for this study. Wages paid to the 1,395 indirect jobs supported by the Memphis in May International Festival and the 14 jobs employed directly by the festival organization are projected to be $53 million. The indirect wage rate was calculated using a weighted annual average wage from the local government, retail trade, accommodation and eating and drinking establishment sectors for Shelby County as reported by the State of Tennessee Department of Labor and Workforce Development.

In this 2019 analysis, we used input-output business sector employment relationships to determine how many of the indirect jobs are supported in each business sector. The wage rate determined using this distribution of employment is significantly higher than the weighted average of the four sectors with the largest jobs impact listed above. Therefore, we know that the projected wage impact of $52 million is lower than it is in reality. We used the weighted average of four sectors to provide a projection comparable to impact studies from previous years.

LOCAL TAX AND FEE REVENUES Memphis and Shelby County local tax revenues generated by the impact of Memphis in May International Festival are projected to be $4.6 million. Although the Memphis in May International Festival organization is itself tax exempt, local taxes are generated by employee spending, vendor spending and, most significantly, visitor spending.

Of note, visitor spending on lodging generated a projected $1.95 million in hotel/motel tax. Additionally, $253,177 is estimated to have been collected for the Tourism Improvement District during the 2019 festival.

IMPACT SUMMARY AND COMPARISON

Impact Measure 2016 2017 2018 2019

Jobs Supported (Direct & Indirect) 1,138 1,079 1,300 1,409

Economic Impact* $88,080,875 $111,981,683 $137,705,373 $149,112,480 (Total Wages) Local Tax $2,801,431 $3,049,816 $3,589,638 $4,613,983 Revenues

*Not adjusted for inflation

While the average spending per visitor, per day, was down slightly from the 2018 festival, the overall economic impact of Memphis in May International Festival increased by $11.4 million. The increase can be attributed to an increased number of visitors to this year’s events and a higher percentage of visitors who stayed at least one night, increasing the average length of stay.

Each year, we have used the spending per visitor from the large survey sample collected by Memphis In May. The spending captured in the survey is always lower than the spending rate published by the Tennessee Department of Tourism for leisure travelers.

The Memphis In May International Festival is successful in attracting young visitors to Memphis. However, the daily spending rate for a young audience may be lower than the overall average in the state data because many of the visitors the state attracts are older. IMPACT DEFINITIONS Economic Impact – the total dollar value of change in output from all industries, within the local economy, that results from $1 of change in output from operations.

Direct Jobs – the number of jobs directly employed by the Memphis in May organization.

Indirect Jobs – the number of jobs across all industries in the local economy that are supported by the Memphis in May International Festival and the organization’s ongoing operations. This includes jobs (or hours of work, which comprise portions of a job) of vendors, business services, retail stores, restaurants, personal services, transportation and all other industry sectors.

Local Taxes – the dollar amount of taxes collected for Memphis and Shelby County from local option sales tax, hotel/motel tax and other smaller local tax revenue sources such as business permits, alcohol and tobacco taxes. The state portion of sales tax, and other state and federal taxes that are re-apportioned to the city and county are not included.

MEMPHIS IN MAY INTERNATIONAL FESTIVAL Memph2019is in M aECONOMICy International Fes IMPACTtival 2019 Ec oANALYSISnomic Impact Analysis City of Memphis/Shelby County CITY OF MEMPHIS/SHELBYSummary COUNTY SUMMARY

World Championship Great American Beale Street Music MIMIF Operations Barbecue Cooking River Run C e l e b r ate Memphis Total Festival Contest Half Marathon & 5K

Economic Impact $ 20,994,841 $ 75,965,337 $ 50,574,015 $ 593,976 $ 984,311 $ 149,112,480

Direct Jobs 14 - - - - 14 Indirect Jobs 204 706 470 6 9 1,395 Total Jobs (direct & indirect) 218 706 470 6 9 1,409

Direct Wages $ 1,129,000 $ - $ - $ - $ - $ 1,129,000 Indirect Wages $ 11,654,724 $ 23,955,286 $ 15,947,570 $ 203,586 $ 305,379 $ 52,066,545 Total Wages (direct & indirect) 12,783,724 23,955,286 15,947,570 203,586 305,379 53,195,545

Tourism Development District Fees $ - $ 165,657 $ 86,083 $ 1,077 $ 360 $ 253,177 Hotel/Motel Tax Revenue $ - $ 1,157,492 $ 770,602 $ 9,050 $ 14,998 $ 1,952,142 Local Sales Tax Revenue (Direct & Indirect) $ 145,830 $ 1,016,046 $ 676,426 $ 8,130 $ 13,540 $ 1,859,972 Other Local Tax Revenue $ 43,020 $ 299,734 $ 199,546 $ 2,398 $ 3,994 $ 548,692 Total Local Tax Revenue $ 188,850 $ 2,638,929 $ 1,732,657 $ 20,655 $ 32,892 $ 4,613,983

MEMPHIS IN MAY INTERNATIONAL FESTIVAL 2019 ECONOMIC IMPACT ANALYSIS

Operations Impact

Annual Operating Budget* $ 11,094,880 Final Demand Output Multiplier1 1.8923 Total Economic Impact $ 20,994,841

Direct Jobs (FTE) 14

Final Demand Employment Multiplier2 19.6863 Indirect Jobs 204 Total Jobs (direct & indirect) 218

Direct Wages $ 1,129,000

Shelby County Annual Average Wage3 $ 57,131 Indirect Wages $ 11,654,724 Total Wages (direct & indirect) 12,783,724

Local Sales Tax Revenue from Wages4 $ 145,830 Other Local Tax Revenue 5 $ 43,020 Total Local Tax Revenue $ 188,850

*Data provided from Memphis In May International Festival.

MEMPHISMem INph MAYis in M INTERNATIONALay International Fest iFESTIVALval 2019 2019 ECONOMICEconomic IMPACT Impact A nANALYSISalysis VisitorVisitor SpendingSpending IImpactmpact

Beale Street Music Festival

Total Attendance* 107,153

Percentage of Visitors Staying Overnight (rental)** 64.3%

Visitors Staying Overnight 63,228 Duration** 2.62 Total Visitor Overnights 165,657

Percentage of Visitors from Outside 50 Miles** 49.0% Total Day Visitors from Outside 50 Miles*** 17,737

Overnight Visitor Spending Rate** $ 240 Day Visitor Spending Rate** $ 85

Total Visitor Spending $ 41,265,325

Final Demand Output Multiplier6 1.8409

Economic Impact $ 75,965,337

Direct Sales Tax from Visitor Spending7 $ 742,776 Hotel Motel Tax (5% County, 3.5% City)8 $ 1,157,492 Tourism Improvement District Fees9 $ 165,657 Other Local Tax Revenue from Visitor Spending5 $ 219,119 Total Direct Local Tax Revenues $ 2,285,044

Final Demand Employment Multiplier10 17.1160 Jobs Supported from Visitor Spending 706

Shelby County Annual Average Wage11 $ 33,931 Wages Paid to Indirect Jobs $ 23,955,286

Indirect Local Sales Tax from Wages4 $ 273,270 Other Local Tax Revenue from Wages5 $ 80,615 Total Indirect Local Tax Revenues $ 353,885

Total Direct & Indirect Local Tax Revenues $ 2,638,929

*Total includes paid and complimentary ticket holders. **Data provided from Memphis In May International Festival and/or based on survey results conducted during the 2019 event. ***Complimentary ticket holders from outside Shelby County included.

MEMPHIS IN MAY INTERNATIONAL FESTIVAL 2019 Memphis in May International Festival 2019 ECONOMIC IMPACT ANALYSIS Economic Impact Analysis Visitor Spending Impact Visitor Spending Impact

World Championship Barbecue Cooking Contest

Attendance* 68,177

Percentage of Visitors Staying Overnight (rentals)** 48.7% Visitors Staying Overnight 29,280 Duration* 2.94 Total Visitor Overnights 86,083

Percentage of Visitors from Outside 50 Miles** 47.1% Total Day Visitors from Outside 50 Miles*** 15,255

Overnight Visitor Spending Rate** $ 300 Day Visitor Spending Rate** $ 108

Total Visitor Spending $ 27,472,440

Final Demand Output Multiplier6 1.8409

Economic Impact $ 50,574,015

Direct Sales Tax from Visitor Spending7 $ 494,504 Hotel Motel Tax (5% County, 3.5% City)8 $ 770,602 Tourism Improvement District Fees9 $ 86,083 Other Local Tax Revenue from Visitor Spending5 $ 145,879 Total Direct Local Tax Revenues $ 1,497,068

Final Demand Employment Multiplier10 17.1160 Jobs Supported from Visitor Spending 470

Shelby County Annual Average Wage11 $ 33,931 Wages Paid to Indirect Jobs $ 15,947,570

Indirect Local Sales Tax from Wages4 $ 181,922 Other Local Tax Revenue from Wages5 $ 53,667 Total Indirect Local Tax Revenues $ 235,589

Total Direct & Indirect Local Tax Revenues $ 1,732,657

MEMPHISMem INph iMAYs in M INTERNATIONALay International Fes tFESTIVALival 2019 2019 ECONOMICEconomic IMPACT Impact A nANALYSISalysis VisitorVisitor SpendingSpending IImpactmpact

Great American River Run Half Marathon & 5K

Attendance* 3,603

Percentage of Visitors from Outside 50 Miles* 29.9%

Percentage of Visitors Staying Overnight* 14.3% Visitors Staying Overnight 1,077 Duration 1.00 Total Visitor Overnights 1,077

Total Day Visitors from Outside 50 Miles 755

Overnight Visitor Spending Rate* $ 240 Day Visitor Spending Rate* $ 85

Total Visitor Spending $ 322,655

Final Demand Output Multiplier6 1.8409

Economic Impact $ 593,976

Direct Sales Tax from Visitor Spending7 $ 5,808 Hotel Motel Tax (5% County, 3.5% City)8 $ 9,050 Tourism Improvement District Fees9 $ 1,077 Other Local Tax Revenue from Visitor Spending5 $ 1,713 Total Direct Local Tax Revenues $ 17,648

Final Demand Employment Multiplier10 17.1160 Jobs Supported from Visitor Spending 6

Shelby County Annual Average Wage11 $ 33,931 Wages Paid to Indirect Jobs $ 203,586

Indirect Local Sales Tax from Wages4 $ 2,322 Other Local Tax Revenue from Wages5 $ 685 Total Indirect Local Tax Revenues $ 3,007

Total Direct & Indirect Local Tax Revenues $ 20,655

*Data provided from Memphis In May International Festival and/or based on survey results conducted during the 2019 event.

MEMPHISM eINmp MAYhis in INTERNATIONALMay International Fes FESTIVALtival 2019 2019 ECONOMIC IMPACT ANALYSIS Economic Impact Analysis Visitor Spending Impact Visitor Spending Impact

Celebrate Memphis

Attendance* 18,000

Percentage of Visitors from Outside 50 Miles* 29.9%

Percentage of Visitors Staying Overnight* 2.0% Visitors Staying Overnight 360 Duration 1 Total Visitor Overnights 360

Total Day Visitors from Outside 50 Miles 5,274

Overnight Visitor Spending Rate* $ 240 Day Visitor Spending Rate* $ 85

Total Visitor Spending $ 534,690

Final Demand Output Multiplier6 1.8409

Economic Impact $ 984,311

Direct Sales Tax from Visitor Spending7 $ 9,624 Hotel Motel Tax (5% County, 3.5% City)8 $ 14,998 Tourism Improvement District Fees9 $ 360 Other Local Tax Revenue from Visitor Spending5 $ 2,839 Total Direct Local Tax Revenues $ 27,821

Final Demand Employment Multiplier10 17.1160 Jobs Supported from Visitor Spending 9

Shelby County Annual Average Wage11 $ 33,931 Wages Paid to Indirect Jobs $ 305,379

Indirect Local Sales Tax from Wages4 $ 3,916 Other Local Tax Revenue from Wages5 $ 1,155 Total Indirect Local Tax Revenues $ 5,071

Total Direct & Indirect Local Tax Revenues $ 32,892

*Data provided from Memphis In May International Festival and/or based on survey results for other events conducted during the 2019 Festival.

MEMPHIS IN MAY INTERNATIONAL FESTIVAL 2019 ECONOMIC IMPACT ANALYSIS DistributionDistribution of Indirect JobsJobs Supported Supported by by Memphis InIn May May International International Festival Festival 70724110.0 Amusement & Recreation 2019 Annual Industries Indirect Jobs Industry Sector Final Demand Average Supported Employment Wage Multiplier by Industry

Agriculture, forestry, fishing, and hunting 0.0014 0.1 $ 37,366 Mining 0.0001 0.0 $ 52,114 Utilities 0.0311 2.2 $ 60,836 Construction 0.0534 3.8 $ 63,812 Manufacturing 0.2195 15.5 $ 76,371 Wholesale trade 0.1746 12.3 $ 73,751 Retail trade 0.5616 39.7 $ 37,103 Transportation and warehousing 0.1896 13.4 $ 70,934 Information 0.1319 9.3 $ 67,845 Finance and insurance 0.4219 29.8 $ 100,777 Real estate and rental and leasing 1.0445 73.9 $ 56,786 Professional, scientific, and technical services 0.281 19.9 $ 56,130 Management of companies and enterprises 0.1266 9.0 $ 144,314 Administrative and waste management services 0.6072 42.9 $ 37,977 Educational services 0.1452 10.3 $ 45,786 Health care and social assistance 0.4383 31.0 $ 56,190 Arts, entertainment, and recreation 13.954 986.9 $ 59,917 Accommodation 0.6025 42.6 $ 20,570 Food services and drinking places 0.4417 31.2 $ 18,283 Other services 0.3057 21.6 $ 40,446

NOTES FOR MEMPHIS IN MAY INTERNATIONAL FESTIVAL ECONOMIC IMPACT ANALYSIS:

1. U.S. Bureau of Economic Analysis RIMS II, final demand aggregate output multiplier for Shelby County, Tennessee, for performing arts/spectator sports/museums/related amusement activities. This multiplier represents the total dollar change in output that occurs in all industries for each additional dollar of output delivered by the specified industry.

2. U.S. Bureau of Economic Analysis, RIMS II final demand aggregate employment multiplier for performing arts/spectator sports/museums/related amusement activities for Shelby County, Tennessee. This multiplier represents the total number of indirect jobs supported per each one million dollars of output delivered by the specified industry.

3. This calculation is based upon the Tennessee Department of Labor and Workforce Development Annual Average Wage for all industries for Shelby County, 2085 with a 1.5% inflation factor applied for 2019. .

4. U.S. Department of Labor, “2017 Consumer Expenditure Survey, Southern US” factor applied to determine the rate of indirect or “downstream” expenditures on sales taxable goods and services at the City of Memphis local option tax rate of 2.25%.

5. Based upon the ratio of July 2018 - June 2019 collections of Business, Alcohol, Motor Vehicle and other local tax revenues, fees and permits compared to local sales tax revenue for Shelby County.

6. U.S. Bureau of Economic Analysis RIMS II, final demand aggregate output multiplier for Shelby County, Tennessee, for accommodation, food service and drinking places, all retail trade as well as amusement and other recreation services.

7. Calculation assumes 80% of visitor spending is for sales taxable purchases subject to the City of Memphis local option tax rate of 2.25%.

8. Calculation assumes that 33% of the visitor spending is for hotel room rental, which is subject to a City of Memphis 3.5% hotel/motel tax and a Shelby County 5% hotel/motel tax.

9. Based on the City of Memphis Tourism Improvement District fee $2.00 per occupied hotel/motel room per night.

10. U.S. Bureau of Economic Analysis, RIMS II final demand aggregate employment multiplier for accommodation, food service and drinking places, all retail trade as well as amusement and other recreation services for Shelby County, Tennessee.

11. This calculation is based upon the Tennessee Department of Labor and Workforce Development Annual Average Wage for the retail trade, food service, hospitality and leisure, accommodation and local government industry sectors for Shelby County, 2018 with a 1.5% inflation factor applied for 2019. James L. Holt - President & CEO Charles Ewing - 2020 Board Chair

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