The Economic Impact of Tourism in Orange County, California
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The Economic Impact of Tourism in Orange County, California 2017 Analysis October 2018 Prepared for: Participants and sponsors: • Visit Anaheim • Visit Dana Point • Visit Huntington Beach • Visit Newport Beach • Travel Costa Mesa • Orange County Visitors Association • Mission San Juan Capistrano • Disneyland | Tourism Economics 2 1. Introduction Introduction and definitions How visitor spending generates employment and income This study measures the economic impact of tourism in Visitor spending flows through the Orange County regional Orange County, California in 2017, updating a previous economy and generates indirect benefits through supply analysis covering 2016. Orange County has a population of 3.2 chain and income effects. million, with key urban centers Anaheim, Santa Ana, Irvine, and Huntington Beach. In 2017, Orange County had a total of just over 500 lodging establishments offering nearly 58,000 rooms. Key attractions in Orange County include Disneyland Park, Irvine Spectrum Center, South Coast Plaza, Fashion Island, and a variety of beaches and resort options. The economic impact of visitors and visitor spending in Orange County is estimated based on survey research conducted by CIC Research throughout 2017. Visitors to Orange County include those who came to the County, were not residents or regular commuters, and include both overnight and day visitors. Impacts were measured in terms of business sales, employment, income, and tax revenues generated. The total impact of tourism includes direct visitor spending, indirect impacts, and induced impacts. Direct visitor spending creates economic value within specific visitor-related sectors such as lodging, recreation, and transportation. This supports a relative proportion of jobs, wages, taxes, and GDP within each sector. Indirect benefits accrue to those sectors that provide goods and services as inputs into production, such as food wholesalers, utilities, and financial or legal services. Induced benefits are generated when employees whose incomes are driven directly or indirectly by tourism, spend a portion of that income in the local regional economy. | Tourism Economics 4 2. Key Findings Key findings in 2017 Tourism drives jobs and income growth in Orange County Orange County visitor volume and spending expanded 2.3% and 4.1% respectively, in 2017. On average, visitor spending growth in the County continues to exceed that of California since 2010. Visitors to Orange County spent $13.5 billion in 2017, which generated a total of $21.3 billion in total business sales, including indirect and induced impacts. Tourism in Orange County generated $2.5 billion in tax revenues, including nearly $1.2 billion in state and local revenues. Including direct, indirect, and induced impacts, 179,100 jobs were sustained by visitors to Orange County in 2017, with total income of $7.4 billion. Approximately 7.9% (1 in 13) of all jobs in Orange County were sustained by tourism. International visitor volume grew 2.2% in 2017. China is an increasingly important source market and ranked second in terms of volume and first in terms of spending in 2017. | Tourism Economics 6 Key findings in 2017 To make up for the $1.2 billion in The $13.5 billion in tourism state and local tax revenues Tourism spending means that $37 million generated by tourism, each was spent EVERY DAY on Taxes household in Orange County spending average in Orange County in would need to contribute an 2017. additional $849 annually to maintain the current level of public services. The number of jobs sustained by The $7.4 billion in total wages tourism in Orange County at generated by tourism is equivalent Employment 131,190 is almost as much as the Income $7,300 for every household in entire population of the City of Orange County. Orange (142,000). | Tourism Economics 7 3. 2017 Trends 2017 Trends Orange County visitation and visitor spending have expanded since 2010. Orange County Visitor Volume and Spending 50 14 Visitor volume, mils (L) Visitor spending, $bils (R) 48 13 Visitor volume and spending 46 12 continue to expand in 2017, driven primarily by employment and income growth in Orange 44 11 County’s key source markets, such as Arizona, Nevada, 42 10 Washington State, and broader California. 40 9 An estimated 49.4 million visitors 2010 2011 2012 2013 2014 2015 2016 2017 spent $13.5 billion in 2017, increases of 2.3% and 4.1%, Source: CIC Research, Tourism Economics respectively, from 2016 More than 4.5 million Orange County Visitor Volume and Spending international visitors accounted for 9.2% of the total in 2017. 2012 2013 2014 2015 2016 2017 International visitation grew by Visitor volume (mils) 43.80 44.40 46.20 47.35 48.24 49.36 2.2% or 100,000 in 2017. % change 2.1 1.4 4.1 2.5 1.9 2.3 Visitor spending ($mils) 10,643.6 10,931.4 11,695.0 12,212.9 13,016.9 13,551.7 % change 5.2 2.7 7.0 4.4 6.6 4.1 | Tourism Economics 9 2017 Trends Higher room rates account for an increasing share of room revenue growth Since 2012, growth in Orange County room demand has outpaced that In recent years, room revenue growth has been boosted by both expanding demand and rising prices. However, higher prices continue of supply. On average, demand has expanded 2.5% per year since to be the key driver of room revenues. Rising prices accounted for more 2012, compared with 1.2% per year in supply growth. than 80% of revenue growth in 2017. After several years of faster demand growth, supply is responding and catching up. In 2017, the supply of room-nights rose 1.3%, faster than In 2017, the average daily rate was nearly $157, up 3.9% from 2016, demand at 0.8%. With more supply coming online, the occupancy rate helping to drive total room revenue growth of 4.7% ticked down to 77.8% in 2017, from 78.2% a year earlier. Occupancy has ticked down two years in a row. Demand has Outpaced Supply since 2012 Room Revenue Growth Slowed in 2017 Orange County room demand and supply, indexed, Jan 2012=100 Contribution to revenue growth, % ch year ago 120 14 Supply ADR Demand 12 Demand 115 Total Revenues 10 110 8 105 6 4 100 2 95 0 2012 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 Sources: STR, Tourism Economics Sources: STR, Tourism Economics Note: the above index measures change since January 2012 Note: ADR is Average Daily Rate | Tourism Economics 10 2017 Trends Visitor spending in Orange County is outpacing that of California. The industry is expanding in Visitor Spending Growth Trends Orange County faster than at the Visitor spending indexed to 2010 = 100 state level. 140 Orange County Since 2010, direct visitor 135 California spending in Orange County has 130 expanded at an average annual rate of 4.8%, compared with 125 4.0% for California overall. 120 In cumulative terms, visitor 115 spending is 39.2% higher in 2017 110 than it was in 2010, compared Cumulative change: with 31.9% for the state. 105 Orange County: 39.2% 100 California: 31.9% 95 2010 2011 2012 2013 2014 2015 2016 2017 Sources: Visit California, Tourism Economics | Tourism Economics 11 2017 Trends Tourism employment growth in Orange County has outpaced that of overall job growth in the County and that of California in recent years. Since 2010, tourism employment Orange County Tourism Jobs Expansion has expanded faster than total Employment, indexed 2010=100 jobs in Orange County and 125 California overall. US - total jobs 120 CA - total jobs Employment in the industry is OC - total jobs 22.2% higher than it was in 2010, OC - tourism jobs compared with 20.3% more jobs 115 overall in the County. 110 The tourism industry added more than 3,400 jobs per year, 105 averaging annual growth of 2.9% since 2010 (see the light red line 100 in the chart to the right). 95 This is faster growth than the 2005 2007 2009 2011 2013 2015 2017 2.7% for the County overall (see the dark red line), and California’s Sources: BEA, BLS, U.S. Census, Tourism Economics 2.7% annual growth (see the dark Note: the index measures changes since 2010 blue line). | Tourism Economics 12 4. Visitors and Spending Visitor segmentation - volume Most visitors to Orange County come for the day, and come for leisure. A total of 49.4 million visitors Orange County Visitor Characteristics came to Orange County in 2017. 2017 100% Just under 28.0 million visitors, 90% Overnight Int'l Bus. (9.2%) (10.1%) 56.6% of the total, came to 80% (43.4%) Orange County for the day. 70% International visitors amounted to 60% 4.5 million in 2017, accounting for 50% 9.2% of total volume, a share that 40% Day Domestic Leis. held steady from a year ago. (56.6%) 30% (90.8%) (89.9%) Most visitors to Orange County 20% came for leisure (89.9%), and 10% 10.1% came for business. 0% Day/Overnight Domestic/Int'l Leisure/Business Source: CIC Research, Tourism Economics | Tourism Economics 14 Visitor segmentation - spending Overnight visitors account for the vast majority of visitor spending in Orange County. Overnight visitors spent a total of Orange County Shares of Visitor Spending $12.0 billion, or nearly 91% of 2017 total visitor spending in 2017. 100% 90% Int'l Overnight Overnight visitors spent an 80% (19.8%) average of $560 per person per (90.6%) trip, staying an average of 3.9 70% nights, while day visitors spent 60% $45 per person per trip on 50% average. 40% Day Domestic International visitors spent $579 30% (9.4%) (80.2%) per person per trip, more than 20% domestic visitors’ average 10% spending of $237 per person per trip (including day).