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The Economics of Tourist Destination Spending in Clinton County - Part I
by Colin Read, June 23, 2010
Clinton County has always been regarded based on its proximity to the world class cosmopolitan city of Montreal, just an hour's drive north. An hour west can bring a visitor to the Adirondacks and Lake Placid, home of two winter Olympics. Just an hour's drive and ferry east is Burlington, Vermont, with its pleasant shopping district, Church Street, and its celebration of Lake Champlain. And, an hour south are quaint villages, palatial homes, and upscale restaurants and recreation.
However, Plattsburgh, at the heart of Clinton County, is more than just an hour's drive away from something else. It sits in the middle of a region that celebrates beautiful mountains, a great lake, a rich history, and a world class bass fishery.
Visitors are beginning to take notice. This series of articles will explore the effects of the tourism and event industry on our region.
Most obviously, the visitor and events industry creates demand for local hotels. Obviously, the modeling of the hotel industry must take into account job and economic value creation arising from construction and from operations. However, tourists and conference attendees also provide additional spending of tourist dollars in the community.
We will measure directly the effects of spending in the food and beverage industry, the retail industry, and the amusements and entertainment industry. We can use IMPLAN to model spending patterns in these three sectors, in addition to the net effects of the hotel industry itself.
First, however, we must establish a relationship between hotel accommodations spending and spending in these tourism-related sectors. To establish this relationship, I use Bureau of Economic Analysis data that describes national averages of food and drink, recreation, and retail spending associated with accommodations spending.
The Bureau of Economic Analysis presents data spanning the past five years that demonstrates direct accommodations spending by tourists is but a small part of their regional spending. For the purposes of this study, I do not include spending on the actual travel portion of their trips because these benefits accrue to other areas beyond Clinton County.
The data shows that, for every dollar of direct hotel spending, there is, on average nationally, ninety seven cents spent on food and drink, sixty seven cents spent on recreation and entertainment, and ninety one cents spent on shopping. In other words, associated spending in related industries sums to $3.55 for every $1.00 spent in accommodations.
These relationships are remarkably steady over time, as demonstrated in the following graph I prepared from the national data:
In next month's report, we will benchmark the rate of spending in the accommodations industry in Clinton County. From this spending rate, we can estimate, based on national norms, the direct spending in food and drink establishments, recreation and entertainment, and retail shopping.
We can also measure the indirect effects on local jobs that service these four industries, and the induced jobs that flow from the spending of those directly and indirectly employed in these industries.
We will find that the multiplier is very large for the tourism and events industry. For every dollar spent in accommodations alone, we can typically expect between four and six dollars spent locally, with a commensurate rate of job creation as well.