Contents Preface, 1 Summary, 2

Background, 2

Approach, 2

Direct Economic Impacts of the Biltmore Companies, 5 1 Jobs, 5 Income, 5 Expenditures, 6 Taxes, 7 Strategic Philanthropy, 8

Direct Economic Impacts of Biltmore - Related Tourism, 8 Total Visitors to the Estate, 8 Visitor Motivations, 8 Visitor Spending Patterns, 10

Overall Impacts on the Local Economy, 14 2 IMPLAN Methodology, 14 Asheville Area Economy, 14 Impact of Tourist Spending, 14 Impact of Bi ltmore Companies, 16

ii Preface

We are pleased to present The Biltmore Companies 2012 Economic Study: Measuring Local Impacts. The study was conducted during the spring and summer of 2013 and the findings herein are the result of extensive data collection and transparent reporting provided by the Biltmore companies. Independent impact analysis was conducted by Michael H. Shuman, a leading expert on community economics. The final report was edited and produced by Burns & Hammond. The success of this project would not have been possible without the efforts of Peggy Dalman, Biltmore Market Research Manager, who attentively and diligently gathered data and shepherded the process from start to finish.

The study provides both summarized and detailed reporting utilizing the most current available local, state and regional external economic data from third party sources. Whenever necessary, all assumptions that are integrated into the findings are documented and explained. Further data analysis was generated through the use of IMPLAN – a widely used economic impact modeling system.

The report provides three primary areas of focus. The first is the direct economic impacts of the Biltmore companies. The second section examines the direct economic impacts of Biltmore via related tourism. The final section details Biltmore’s overall impact on the local economy, including indirect and induced multiplier effects.

The Biltmore Company leadership is to be commended for pursuing this level of self-examination and disclosure to determine its economic, enviromental and social contribution to the greater Asheville region. The positive impacts of the companies and its employees are consistent with the legacy of community engagement that the Biltmore and its respective generations have thoughtfully demonstrated for more than 100 years.

Heather Burns & Doug Hammond

August 1, 2013

1 Summary

The Biltmore companies have had a significant and measurable economic impact on the four counties surrounding Asheville, : Buncombe, Haywood, Henderson, and Madison. This study quantifies the most important of these impacts during the period of July 1, 2011, through June 30, 2012, and includes the following highlights:

The Biltmore companies:

• Attracted 1,089,386 visitors to the Biltmore estate. Together, these individuals annually spent an estimated $140 million in the local economy.

• With annual sales of $134 million, re-circulated $64 million into the Asheville-area economy.

• Employed 1,854 people – or 1,265 full-time equivalents – and distributed $48 million in associated payroll.

• Generated an additional 2,400 local jobs, $87 million in wages, $150 million in value added (the local equivalent of GDP), and $27 million in state and local taxes when the indirect and induced effects of local spending are considered.

• Generated approximately 2,040 jobs, $52 million in wages, $88 million in value added and $11 million in state and local taxes when indirect and induced effects of Biltmore tourists and Inn guests are included.

• Infused a total of $3.4 million in sales, property and occupancy taxes directly into the greater Asheville public sector.

• Contributed nearly $60,000 directly to charities in Asheville and the surrounding area and $188,000 indirectly through in-kind donations.

• Overall are responsible for the presence of 4,440 jobs in the Asheville area, paying $139 million in wages, generating $238 million in value added, and remitting $27 million in state and local taxes.

Background

The creation of Biltmore in Asheville, North Carolina, dates back to 1887, when Vanderbilt commissioned and Frederick Law Olmsted to create a magnificent estate modeled on the Chateaux of the Loire Valley in France. After enjoying their home for several decades with family and friends, and at the urging of the Asheville Chamber of Commerce to stimulate the

2 local economy during the , the Vanderbilts opened the to the public in 1930. In 1960, Vanderbilt’s grandson, William Amherst Vanderbilt Cecil, began restoring the estate and transforming the Biltmore Company into a diversified set of self-sustaining enterprises.

Today, Biltmore annually attracts more than one million visitors. Overseeing these tours and related events is The Biltmore Company (TBC). Additional Biltmore businesses have been strategically added over the past thirty years, including:

• The Biltmore Building (TBB), a management company for the Estate’s building in downtown Asheville;

• Biltmore Estate Wine Company (BEWC), a winery and wine distribution company;

• Biltmore Estate Reproductions Inc. (BERI), a licensing company working with partner businesses to develop, manufacture, and distribute Biltmore-branded products;

• Inn on Biltmore Estate (IOBE), a four-star, 210-room hotel complete with a restaurant and events service;

• Biltmore Inspired Designs (BIDS), an in-home party business selling Biltmore branded home accessories and gourmet foods.

Each of the six businesses was developed to support the overall company mission while designed to operate self-sufficiently on its respective income streams. Most recently, the Biltmore Coffee Company* was launched in the fall of 2012, with careful consideration to local sourcing and community impacts. Subsequent business development opportunities are under consideration that will further enhance the region’s economic, environmental and social performance.

*Was not operational during FY 2012 reporting period. Approach

Owing to its long-standing commitment to maximize and measure the economic benefits of its businesses on the Greater Asheville area, the Biltmore Company has periodically commissioned an economic impact study. The most recent study was performed in 2004.1 This report updates and expands that analysis.

Specifically, the report addresses three questions:

• What are the Biltmore companies’ direct economic impacts on the region?

• What is the direct economic impact of tourists coming to visit Biltmore or staying at the Inn on Biltmore Estate?

1 Tammy Ross Huffman, “The Impact of the Biltmore Company on Asheville/Buncombe County and the Region” (monograph) (Asheville, NC: University of North Carolina, Department of Management and Accountancy, 2004). 3 • What is the total impact, including so-called “multiplier effects,” of the above factors on the regional economy?

For the purposes of this study, the four counties most associated with the greater Asheville area: Buncombe, Haywood, Henderson and Madison were studied.

All the data in this study, unless noted otherwise, is from fiscal year (FY) 2012 and is expressed in U.S. dollars. FY2012 for the Biltmore companies begins July 1, 2011, and ends June 30, 2012. Raw data for this report came from the accounting offices of the six Biltmore companies.

4 Direct Economic Impacts of the Biltmore Companies

This section examines the Biltmore companies’ local contributions in terms of jobs, income, expenditures, taxes, and charitable donations. It is worth noting that for some of the calculations, such as calculating income, the examination of all six companies as a group is more accurate than considering each individually. This is due to the fact that there are shared services and inter-company transfers.

Jobs The six Biltmore companies collectively employed 1,854 people and are classified as follows:

• 789 Full Time Employees

• 301 Flex Time Employees (1,000 to 1,559 annual hours)

• 733 Reserve Status Employees (40 to 999 annual hours)

The estimated total full-time equivalent (FTE) of these positions is 1,265 jobs.

When comparing the zip code of each employee’s residence with the zip codes within the four county region, it was determined that 1,753 – or nearly 95 percent - of these employees reside locally.

Income Revenues for the six Biltmore companies during FY2012 totaled more than $134 million. This amount has grown steadily, despite the nationwide economic downturn that began in 2008. By far, the most significant revenue driver is the estate, which grossed more than $70 million of revenue. The next largest revenue driver is the Inn on Biltmore Estate, which had nearly $29 million in gross revenue in FY2012. The Biltmore Estate Wine Company was nearly as large with $28 million. Biltmore Inspired Designs had more than $4 million in revenue. Significantly smaller are Biltmore Estate Reproductions ($1.8 million) and the Biltmore Building Administration ($1.5 million).

Each company is held by different shareholders and operates independently and net gains are generally retained by the company for the following year’s operations. As a result, much of the net income of the companies is typically reinvested in the Asheville economy.

Chart 1 Revenue for the Biltmore Companies

FY10 FY11 FY12 The Biltmore Estate Wine Company $68,316,255 $69,032,160 $70,200,047 Biltmore Estate Wine Company $22,164,897 $27,173,492 $27,834,581 Inn on Biltmore Estate $26,279,344 $27,611,179 $28,742,729 Biltmore Estate Reproductions $1,601,615 $1,719,362 $1,806,568 Biltmore Building Administrator $1,459,637 $1,256,815 $1,415,364 Consolidated BI & BIDS $0 $112,522 $4,178,748 Total $119,821,748 $126,905,529 $134,178,038

5 Expenditures

The total expenditures for all six Biltmore companies were just over $128 million. For simplicity, and to respect confidential personnel information, Chart 2 presents four top-level line items: salaries and benefits; accounts payable (AP) expenses (i.e. expenses to outside vendors, excluding taxes); other expenses (most of which are internal); and taxes, detailed in Charts 4 and 5.

Note: The Biltmore Company has a negative non-AP expense, which is reflected by the internal practice that it charges other Biltmore companies for its management services.

Since local expenditures multiply as they flow through other local businesses, they have a multiplying effect and an increasing level of positive impact on the area’s income, wealth, and jobs. Expenditures made elsewhere have little or no effect locally, and are commonly called “leakages.”

With just over 5 percent of employees residing outside of the Asheville region, an estimated 95 percent of salaries and benefits are injected into the local economy – or about $46 million.

To calculate the impact of other expenses, the accounting department of the Biltmore Company carefully reviewed the receipts for both internal and non-internal expenses. Total local expenditures in the Asheville region, including salaries and benefits, are just over $64 million – roughly half of all the expenditures made.

Chart 2 Expenditures for the Biltmore Companies (FY 2012)

BEWC TBC BERI BIDS TBB IOBE Total Salaries & Benefits $5,961,350 $32,773,733 $362,887 $1,459,482 $222,588 $7,505,275 $48,285,315 AP Expenses $10,090,697 $36,540,172 $440,272 $2,696,935 $574,303 $5,627,325 $55,969,704 Other Expenses $8,065,307 ($3,490,347) $642,849 $3,037,740 $260,523 $7,940,447 $16,456,519 Taxes $1,467,249 $2,853,668 $2,444 $270,454 $92,972 $2,823,614 $7,510,400 Total $25,584,602 $68,677,226 $1,448,451 $7,464,612 $1,150,386 $23,896,661 $128,221,938

Chart 3 Local Expenditures for the Biltmore Companies (FY-2012)

BEWC TBC BERI BIDS TBB IOBE Total Salaries & Benefits $5,663,283 $31,135,046 $344,742 $1,386,508 $211,459 $7,130,011 $45,871,049 AP Expenses $793,907 $9,454,522 $41,282 $207,717 $273,583 $3,718,413 $14,489,424 Other Expenses $67,360 $0 $0 $546,331 $16,149 $0 $629,840 Taxes $393,397 $1,270,369 $57 $80,135 $92,972 $1,529,754 $3,366,684 Total $6,917,947 $41,859,937 $386,082 $2,220,691 $594,162 $12,378,178 $64,356,997

6 Taxes

As a result of operating under a for-profit corporate structure, the Biltmore companies pay extensive taxes to federal, state, and local governments. Most federal and state taxes do not directly benefit the Asheville area community, and are not considered when determining local economic impact. Nevertheless, they are worth noting. In addition to payroll taxes, the Biltmore companies paid excise taxes of $216,421 to the federal government and $132,569 to the state government. They also paid $180,244 in business taxes to North Carolina.

One state tax that directly benefits the Asheville area is sales tax, which is split between the state and county governments. Chart 4 below shows the total sales taxes paid in FY2010 through FY2012.

Mid-way through FY2012, North Carolina reduced its share of sales taxes from 5.75 percent to 4.75 percent, yielding an average rate of 5.25 percent. Three of the four counties in the Asheville region – Buncombe, Henderson, and Madison – added an additional 2 percent for local purposes, while Haywood added 2.25 percent. Assuming that an average of 2 percent benefits the four-county region, the total sales tax contribution to the area was $1,521,887.

Additionally, property tax and occupancy tax reach local government. Summarized in Chart 5, the total paid of these taxes was approximately $2 million. Together, the total amount of taxes – sales, property, and occupancy combined - paid to local government was approximately $3.4 million.

Note: Other taxes such as payrolls taxes (included in the “salaries and benefits” line item) and excise taxes are not included here because they are paid to state or federal governments. Chart 4 Sales Taxes Paid FY10 FY11 FY12 The Biltmore Company $2,275,049 $2,263,345 $2,089,908 Biltmore Estate Wine Company $793,295 $1,052,546 $986,338 Inn on Biltmore Estate $1,848,809 $1,976,145 $1,789,475 Biltmore Estate Reproductions $440 $315 $194 Biltmore Building Administration n/a n/a n/a Consolidated BI & BIDS $0 $1,657 $270,454 Total $4,917,594 $5,294,008 $5,136,369

Chart 5 Other Local Taxes Paid by the Biltmore Companies Property Taxes Occupancy Tax The Biltmore Company $651,137 Biltmore Estate Wine Company $101,149 Inn on Biltmore Estate $254,865 $744,674 Biltmore Estate Reproductions Biltmore Building Administration $92,972 Consolidated BI & BIDS Total $1,100,123 $744,674 7 Strategic Philanthropy

A final area where the Biltmore companies are supporting the community is through charitable giving. Chart 6 shows that in FY2012, the companies contributed $59,674. The companies provided $187,950 of in-kind donations and facilitated the additional flow of more than $100,000 in external contributions through its annually hosted Gala to a local community based organization.

Chart 6 Charitable Giving

FY10 FY11 FY12 The Biltmore Company $48,905 $42,105 $49,674 Biltmore Estate Wine Company $0 $0 $0 Inn on Biltmore Estate $258 $0 $0 Biltmore Estate Reproductions $200 $1,379 $0 Biltmore Building Administration $0 $0 $0 Consolidated BI & BIDS $0 $0 $10,000 Total $49,363 $43,484 $59,674

Direct Economic Impacts of Biltmore - Related Tourism

The impacts from tourists who come to visit Biltmore and stay at the Inn are equally important as the direct economic benefits from the Biltmore companies. These tourists spend money not only at Biltmore companies (with their expenditures already accounted for in the revenues of the Biltmore companies) but also at a broad array of businesses in the Asheville area. This section provides analysis of how many visitors came to Asheville in FY2012, how many tourists came to Asheville primarily to visit Biltmore, and how much money they spent in the region.

Total Visitors to the Estate The total number of guests passing through the gates of the Biltmore was 1,107,624. Of these people, 18,238 returned for a second day, resulting in 1,089,386 unique visits. Not all of these visitors necessarily bought a full-price ticket, and some were part of a group. Some individuals were provided complementary or discounted tickets, and some used a twelve-month pass that allows purchasers to enjoy an unlimited number of daytime visits.

Visitor Motivations Not all of the visitors to the estate came exclusively because of Biltmore, and therefore not all their local spending would be lost if Biltmore did not exist. In 2012, TNS Global performed a “Biltmore Market Segmentation Study,” which surveyed visitors and analyzed their reasons for coming to Asheville.

8 Chart 7 Role of the Biltmore Estate in Drawing Visitors to Asheville

Guest Segment Not a Deciding Factor 21.8% Minor Consideration 4.0% Among Several Reasons 18.8% One of Main Reasons 17.84% Main Reason 37.6% 100.0%

For more than half the guests surveyed, the estate was the “main” reason or “one of the main” reasons. For a quarter of the guests, it was “not a deciding factor” or a “minor consideration.” The remainder indicated it was “among several reasons” for coming to Asheville.

To analyze the economic impact of Biltmore on the greater Asheville region, it is important to consider how many Asheville visits would not have occurred if the estate or the Inn on Biltmore Estate did not exist. This question is answered by providing weightings to each segment, as shown in Chart 8.

Chart 8 Estimate of Asheville Visitors Lost if Biltmore Did Not Exist

Biltmore Visitors Guest Segment Total Visitors %Lost Potentially Lost Not a Deciding Factor 237,292 0% 0 Minor Consideration 43,144 25% 10,786 Among Several Reasons 204,934 50% 102,467 One of Main Reasons 194,148 75% 145,611 Main Reason 409,868 100% 409,868 1,089,386 668,732

The chart breaks down the 1,089,386 unique visitors in FY2012, and then weights the likelihood that they would no longer visit Asheville if the estate did not exist. For example, when considering the 237,292 visitors who said the estate was not a deciding factor for their traveling to Asheville – perhaps they came for a wedding or for another arts attraction – the assumption is that all of them (100 percent) would still visit the area, even if the estate did not exist. For those who said the estate was the main factor, the assumption is that none of them would had visited without the presence of the estate. The other segments fall in between. The conclusion is that a total of 668,732 visitors to Asheville, and their combined economic impact, would have been lost if the estate or the Inn on Biltmore Estate did not exist.

9 Visitor Spending Patterns When calculating how much money 668,732 Biltmore-linked visitors spent in the local economy, two publications by The Division of Tourism, Film, and Sport Development in the North Carolina Department of Commerce were helpful, including “2012 North Carolina Visitor Profile” (published April 2013), and “2012 North Carolina Regional Travel Summary” (published May 2013). Only the latter contains regionally specific data.

Chart 9 depicts the types and amounts of expenditures for overnight guests in the “Mountain Region,” where Asheville is located.

Chart 9 Spending Patterns for Overnight Guests to the Mountain Region

Expenses Per Party Per Person Amenities (golf fees, spa) $9.00 $4.50 Shopping (gifts, souvenirs) $57.00 $28.50 Gaming $65.00 $32.50 Entertainment/Admissions $45.00 $22.50 Gasoline $100.00 $50.00 Groceries $27.00 $13.50 Food/Beverage/Dining $115.00 $57.50 Lodging $197.00 $98.50 Parking/Tolls $7.00 $3.50 Transportation $33.00 $16.50 Other $9.00 $4.50 TOTAL $664.00 $332.00

It breaks down the total trip expenditures by traveling party, and per person. A typical trip to the region lasts 2.8 days. According to the “Visitor Profile”, the average size of a visiting party to the region, was 2.0 people, so the chart adjusts the expenditures per party to those per person.

The “Regional Travel Summary” does not contain data about “day-trippers.” Therefore, it is necessary to reference the statewide “Visitor Profile.” Chart 10 reflects North Carolina’s estimate of the expenditure pattern for day-trippers in the state.

To calculate the spending patterns of the 668,732 Biltmore-linked visitors in FY2012, it is necessary to further dissect the character of their trips. Another survey conducted by CSM for Biltmore in 2012 examined specifically where a party stayed before or after visiting the estate. Chart 11 presents the

10 findings and shows that more than half of all visitors stayed at paid accommodations in Asheville.

Chart 10 Spending Patterns for Day-Trippers in North Carolina

Expenses Per Party Per Person Amenities (golf fees, spa) $3.00 $1.58 Shopping (gifts, souvenirs) $22.00 $11.58 Gaming $6.00 $3.16 Entertainment/Admissions $12.00 $6.32 Gasoline $52.00 $27.37 Groceries $22.00 $11.58 Food/Beverage/Dining $46.00 $24.21 Lodging $0.00 $0.00 Parking/Tolls $2.00 $1.05 Transportation $16.00 $8.42 Other $5.00 $2.63 TOTAL $186.00 $97.89

Chart 11 Potentially Local Visitors, By Trip Character

Trip Character Breakdown Potentially Lost Visitors Stayed at the Inn 2% 13,375 Paid Accommodations in Asheville 59% 394,552 Day Trip 15% 100,310 Overnight Outside Asheville 16% 106,997 Stayed with Friends & Family 5% 33,437 Other (Camp, RV, Cabin) 3% 20,062 100% 668,732

The spending patterns of each segment differ slightly. The following assumptions are made in calculating the spending by visitors in each segment:

• Those who stayed overnight at the Inn comport with the Overnight Guest profile,2 except for their lodging expenditures at the Inn itself, which are already captured in revenues presented in the first

2 Guests at the Inn typically stay two nights, whereas the average overnight party reported by the “Regional Travel Summary” stayed 2.8 nights. We note, however, that the price of lodging at the Inn is relatively high for the region, which means that guests probably spent more than average in all categories. We assume that these two factors balance each other out, and consequently we apply North Carolina’s Overnight Guest profile for every person staying at the Inn. 11 section of this report. Therefore, to prevent double counting, these expenditures are zeroed-out.

• Those who had overnight accommodations in Asheville comport with the Overnight Guest profile. Their expenditures, in this case, were made in the Asheville region.

• Day-tripper expenditures comport fully with the Day-Tripper profile, and all of their expenditures have been made in the Asheville region.

• Those who stayed overnight but fell into the final three categories – staying overnight outside Asheville; with friends or family; or in campgrounds or RV parks – comport with the Day-Tripper profile.

• Zero dollars were spent on “gaming,” since there are no casinos in the four-county area.

• Finally, three-quarters of all “entertainment/admissions” revenues are for Biltmore. The remaining expenditures might have been to pay for movies, theater, events, or other attractions in the Asheville area.

The resulting spending patterns – that is, tourist dollars that might be lost if Biltmore did not exist – are shown in Chart 12. The contribution of Biltmore to tourism in the Asheville area is $137 million. The two largest categories of local tourist spending are lodging ($39 million) and “food/beverage/dining” ($30 million).

Chart 12 Potentially Lost Visitor Spending (2012)

Paid Hotels Outside Friends& Total Expenditures Inn Stayers Accommodations Daytrippers Asheville Family Camping Spending Amenities (golf fees, spa) $60,186 $1,775,483 $158,384 $168,943 $52,795 $31,677 $2,247,467 Shopping (gift souvenirs) $381,177 $11,244,729 $1,161,482 $1,238,914 $387,161 $232,296 $14,645,759 Gaming $0 $0 $0 $0 $0 $0 $0 Entertainment/Admissions* $75,232 $2,219,354 $158,384 $168,943 $52,795 $31,677 $2,706,385 Gasoline $668,732 $19,727,594 $2,745,321 $2,928,342 $915,107 $549,064 $27,534,160 Groceries $180,558 $5,326,450 $1,161,482 $1,238,914 $387,161 $232,296 $8,526,861 Food/Beverage/Dining $769,042 $22,686,733 $2,428,553 $2,590,457 $809,518 $485,711 $29,770,013 Lodging $0 $38,863,360 $0 $0 $0 $0 $38,863,360 Parking/Tolls $46,811 $1,380,932 $105,589 $112,629 $35,196 $21,118 $1,702,275 Transportation $220,682 $6,510,106 $844,714 $901,028 $281,571 $168,943 $8,927,014 Other $60,186 $1,775,483 $263,973 $281,571 $87,991 $52,795 $2,522,000 $2,462,606 $111,510,225 $9,027,882 $9,629,741 $3,009,294 $1,805,576 $137,445,324

12 However, if the Inn on Biltmore Estate did not exist, some of the people staying at the Inn who came for some other reason also might not be spending money in Asheville. Recall the estimate of the number of Inn guests who came primarily to the estate – and whose tourist dollars would be lost if Biltmore did not exist – was 13,375. In fact, the total number of Inn guests, including those coming for group functions, was 36,109. What would happen to the other 22,734 guests if the Inn did not operate? The assumption is that half of these guests, 11,367, and their tourist dollars would be lost.

Indicated here are the Inn on Biltmore Estate guests who would no longer come to Asheville if the Inn on Biltmore Estate were not operating. This absence would take another $2.3 million out of the local economy.

Chart 13 Adjusting Visitor Spending to Include Inn on Biltmore Estate Guests Who Do Not Visit Biltmore Estate (2012)

Estate Tourists Other Inn Guests Adjusted Total Amenities (golf fees, spa) $2,247,467 $51,152 $2,298,619 Shopping (gift souvenirs) $14,645,759 $323,960 $14,969,718 Gaming $0 $0 $0 Entertainment/Admissions $2,706,385 $255,758 $2,962,142 Gasoline $27,534,160 $568,350 $28,102,510 Groceries $8,526,861 $153,455 $8,680,315 Food/Beverage/Dining $29,770,013 $653,603 $30,423,615 Lodging $38,863,360 $0 $38,863,360 Parking/Tolls $1,702,275 $39,785 $1,742,059 Transportation $8,927,044 $187,556 $9,114,600 Other $2,522,000 $51,152 $2,573,151 $137,445,324 $2,284,767 $139,730,091

13 Overall Impacts on the Local Economy

The calculations thus far have captured the direct impacts of the Biltmore companies. To summarize:

• The Biltmore companies employ 1,753 people locally (1,265 FTE), generate $134 million in income, pump $64 million back into the local economy, and pay $3.4 million in local taxes.

• If Biltmore did not exist, the area would lose 668,000 tourists per year. And if the Inn on Biltmore Estate did not exist, Asheville would lose another 11,367 visitors. Together, these visitors spent an estimated $140 million in the local economy.

In the following section, the full impacts the Biltmore companies are calculated – not just the direct effects but their local multiplier effects throughout the Asheville economy.

IMPLAN Methodology The tool used to measure the multiplier effects was IMPLAN, an input-output model relied upon by economic developers across the United States. IMPLAN draws from state and national economic patterns to model where every dollar of spending goes, and how every dollar is in turn re-spent. IMPLAN can model how a change in demand can lead to direct new jobs, as well as indicate how the new spending by business expansion creates new jobs (indirect effects from businesses’ supply chains). It also demonstrates how the new spending by new employees in all of these businesses (both expanding businesses and supply-chain businesses) create even more new jobs (induced effects).

The following methodology “shocks” the existing economic system of the Asheville area and measures the loss of the direct effects of the Biltmore companies and Biltmore visitors.

• First, a region within IMPLAN reflective of the four counties in the Asheville area is created.

• Next, to measure the local impact of Biltmore tourists in the region, a scenario was created in which spending was removed that was associated with all those people who would not have come to the Asheville region if Biltmore did not exist.

• Then, to measure the local impact of the Biltmore companies, a scenario was created in which all of the companies’ employment was removed from the model.

• Finally, all of these various effects were then aggragated. Asheville Area Economy The first step of the analysis was to put together the four counties of the Asheville area into a unified model. Chart 14 shows the top page of the model. The four-county area has 232,570 employees and a gross regional product of $14.7 billion. The average household income is nearly $80,000. The largest sector is “food services,” which illustrates the degree to which the area is tourist-dependent.

Impact of Tourist Spending To analyze the full economic impact of tourism spending, the Asheville area is then “shocked” by

14 Chart 14 The Asheville Area Economy in IMPLAN

Chart 15 Inputs into IMPLAN

Spending Category Change Modeled IMPLAN Category Amenities (golf fees, Spa) $2,298,619 Other Amusements and Recreation Shopping( gifts, souvenirs) $14,969,718 Retail-General Merchandise Gaming $0 Entertainment/Admissions $2,969,142 Museum, Heritage, Zoo, and Recreational Services Gasoline $28,102,510 Retail - Gasoline Stations Groceries $8,680,315 Retail - Food and Beverage Food/Beverage/Dining $30,423,615 Restaurant,Bar, and Drinking Places Lodging $38,863,360 Hotels and Motels Services Parking/Tolls $1,742,059 Products and Services of Sate & Local Enterprises Transportation $9,114,600 Scenic and Sightseeing Transportation Services Other $2,573,151 Other Personal Services $139,730,091

15 removing the totals of tourism spending (Chart 13) from local demand. Chart 15 outlines the inputs made into the model. Since the IMPLAN categories do not map exactly to North Carolina’s categories for tourist spending, judgments were provided as to which model categories made best sense.

The results of removing $140 million of tourist spending from the Asheville economy are summarized below.

An estimated 2,039 jobs would be lost from the economy. Additionally, Asheville would lose $52 million each year in labor income and $88 million in value added (local equivalent of Gross Domestic Product).

In addition, North Carolina and local governments in the Asheville area would lose $11 million in taxes.3

Impact of Biltmore Companies The direct impact of the companies – how many people they employ, how much income they earn, how much they spend locally – is already known. To see the multiplier impacts of the companies, however, only the indirect and induced effects of removing Biltmore company jobs from the Asheville economy are traced. Chart 16 Local Impacts of Asheville Losing Biltmore Tourists

Impact Type Employment Labor Income Total Value Added Output Direct Effect (1,376) ($31,286,138) ($49,116,425) ($101,229,971) Indirect Effect (371) ($11,231,425) ($19,629,884) ($36,613,695) Induced Effect (293) ($9,935,782) ($18,952,434) ($31,781,553) Total Effect (2,039) ($52,453,344) ($87,698,743) ($169,625,219) Chart 17 State and Local Tax Impacts of Asheville Losing Biltmore Tourists

Taxes on Production & Imports ($9,630,664) Taxes on Households ($1,377,809) Taxes on Businesses ($189,006) ($11,197,479)

Chart 18 converts the 1,854 employees into 1,265 full-time equivalents (FTEs), and shows which IMPLAN categories are adjusted to remove Biltmore from the Asheville economy. The IMPLAN categories are derived from the NAICS codes that the Biltmore Company uses to file taxes for each company.

Chart 19 presents the impacts on the Asheville economy if the Biltmore companies no longer existed. All the effects come directly from the model, except wages, which are a known quantity. The analysis shows that the Biltmore companies are directly and indirectly responsible in the area for 2,400 jobs, $87 million in wages, and $150 million in value added.

3 Taxes on Production and Imports include most property and sales taxes. Taxes on Households include personal income, sales, and motor vehicle taxes. Taxes on Businesses include most profit taxes.

16 Chart 20 shows that state and local governments would lose $15 million per year as a result.

Chart 21 presents an overall picture by combining the direct and indirect effects of the companies themselves as well as that of the tourists of the estate and Inn on Biltmore Estate. Therefore, Biltmore companies are responsible for approximately 4,400 jobs in the Asheville economy, $139 million in wages, $238 in value added, and nearly $27 million in state and local taxes (excluding employee tax payments).4 Chart 18 IMPLAN Scenario to Remove Biltmore from Asheville Economy Company FTE Removed IMPLAN Category The Biltmore Company (830) Museums Biltmore Estate Wine Company (190) Wineries Inn on Biltmore Estate (223) Hotels and Motel Services Biltmore Estate Reproductions (5) Advertising and Related Services Biltmore Building Administration (14) Management of Companies Consolidated BI&BIDS (3) Business Support Services Total (1,266)

Chart 19 Local Impacts from Asheville Losing the Biltmore Companies Impact Type Employment Labor Income Total Value Added Direct Effect (1,265) ($48,285,315) ($80,584,101) Indirect Effect (689) ($23,470,261) ($40,993,053) Induced Effect (447) ($15,162,742) ($28,921,364) Total Effect (2,400) ($86,918,318) ($150,498,517)

Chart 20 State & Local Tax Effects from Asheville Losing Biltmore Companies Taxes on Production & Imports ($12,887,863) Taxes on Households ($2,095,377) Taxes on Businesses ($436,004) ($15,419,244) Chart 21 All Economic Impacts of the Biltmore Companies on Asheville Economy

Jobs(FTE) Wages Value Added State & Local Taxes Tourism - Direct & Indirect 2039 $52,453,344 $87,698,743 $11,197,479 Biltmore Companies-Direct 2,400 $86,918,318 $150,498,517 $15,419,244 4,439 $139,371,662 $238,197,260 $26,616,723

4 Note that this total includes state and local business taxes, but not payroll taxes. The numbers for the direct effects of the Biltmore companies and all effects of Biltmore tourism come from IMPLAN runs discussed above. The number for the indirect effects of the Biltmore companies is an estimate, based on interpolation of the other results. An estimate is necessary, because the IMPLAN data runs on the indirect effects only yielded a tax result of both direct and indirect effects. 17 The findings represented in this report confirm the continuing and significant economic impacts, and in turn, the contributing influence that the Biltmore companies have on the long-term vitality and sustainability of the greater Asheville region. The study also surfaces the important interrelationships that exist between the Biltmore companies, local business, government and the community. It is this array of stakeholders that in demonstrated partnership are collectively responsible for ensuring the region’s future economic, environmental and social wellbeing.

About the analyst

Michael H. Shuman is an economist, attorney, author, and entrepreneur, and one of the world’s leading experts on community economics. He has authored, co-authored, or edited eight books. His most recent book, published by Chelsea Green, Local Dollars, Local Sense: How to Move Your Money from Wall Street to Main Street and Achieve Real Prosperity. His previous book, The Small Mart Revolution: How Local Businesses Are Beating the Global Competition (Berrett-Koehler, 2006), received a bronze prize from the Independent Publishers Association for best business book of 2006.

About Burns & Hammond

Burns & Hammond is an integrative sustainability consultancy with 30 years’ experience providing customized sustainability intelligence, business evolution strategies and market positioning for companies, organizations and associations seeking to maximize the return on their sustainability commitment and investments. The company is particularly adept at working with companies and organizations seeking to design, develop and implement new business models that leverage core competencies and resources into successful and sustainable enterprises.

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