Georgia Tourism Forecast Scenarios

PREPARED FOR:

Georgia Tourism Forecast ScenariosSeptember 2020

W W W . T O U R I S M E C O N O M I C S . C O M

Pictures courtesy of Travel Alberta

2

STUDY OVERVIEW

Georgia’s Department of Economic Development engaged

Tourism Economics to provide forecast scenarios for the tourism

sector’s recovery during and after the COVID-19 pandemic.

The analysis is organized into ten parts:

1. Report Highlights – reviews major findings;

2. The COVID-19 Pandemic– examines the current state of the

crisis;

3. Scenario Overview– provides an overview of three possible

scenarios;

4. The Upside Scenario – reviews key metrics in the Upside

Scenario;

5. The Baseline Scenario – reviews key metrics in the Baseline

Scenario; and

6. The Downside Scenario – reviews key metrics in the

Downside Scenario.

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TABLE OF CONTENTS

• REPORT HIGHLIGHTS 4

• THE COVID-19 PANDEMIC 9

• SCENARIO OVERVIEW 19

• THE UPSIDE SCENARIO 24

• THE BASELINE SCENARIO 29

• THE DOWNSIDE SCENARIO 34

REPORT HIGHLIGHTS

5

REPORT HIGHLIGHTSWe developed three scenarios to determine a range of possible impacts

Summary of COVID-19 related tourism losses in three scenariosDollar figures in millions

Baseline Scenario

Total tourism spending losses reach $10.9 billion in

2020, a 33% drop compared to 2019. 67,000 jobs

supported by tourism spending are lost.

Downside Scenario

Total tourism spending losses reach $11.6 billion in

2020, a 35% drop compared to 2019. 71,200 jobs

supported by tourism spending are lost.

Sources: Tourism Economics; STR; US Travel

Upside Scenario

Total tourism spending losses reach $10.1 billion

in 2020, a 31% drop compared to 2019. 62,500

jobs supported by tourism spending are lost.

2020 2021 2022

Upside

Lost visitor spending, $ $10,144 $4,231 $2,116

Lost visitors spending, % 31% 13% 6%

Lost jobs 62,537 26,085 13,042

Room revenue $1,859 $744 $373

Baseline



Lost jobs 66,974 33,359 19,899

Room revenue $1,921 $952 $567

Downside



Lost jobs 71,245 50,523 32,811

Room revenue $1,975 $1,440 $934

6

REPORT HIGHLIGHTSScenario overview

Georgia’s COVID-19 related traveler spending in three scenariosDollars, billions


$0

$5

$10

$15

$20

$25

$30

$35

2016 2017 2018 2019 2020 2021 2022

Historical

Upside

Baseline

Downside

The recovery will be a

multi-year process, and

visitor spending will

not fully recover until

2023 or 2024.

7

REPORT HIGHLIGHTSLost spending by month

Georgia’s COVID-19 related traveler spending losses in three scenariosPercent losses compared to 2019


-80%

-70%

-60%

-50%

-40%

-30%

-20%

-10%

0%

J F M A M J J A S O N D J F M A M J J A S O N D

Upside

Baseline

Downside

2020 2021

Losses peaked in

April but remained

at around 30% in

August.

8

REPORT HIGHLIGHTSLost room revenue by month

Georgia’s forecasted room revenue in three scenariosDollars, billions - losses compared to 2019


2019 2020 2021 2022 2023 2024

Forecast

Upside $4.8 $3.0 $4.1 $4.4 $4.9 $5.4

Baseline $4.8 $2.9 $3.9 $4.2 $4.7 $5.2

Downside $4.8 $2.8 $3.4 $3.9 $4.3 $4.8

Losses, $

Upside -- $1.9 $0.7 $0.4 -- --

Baseline -- $1.9 $1.0 $0.6 $0.1 --

Downside -- $2.0 $1.4 $0.9 $0.5 --

Losses, %

Upside -- 39% 15% 8% -- --

Baseline -- 40% 20% 12% 2% --

Downside -- 41% 30% 19% 10% --

THE COVID-19 PANDEMIC

10

This section will briefly review the COVID-19

pandemic.

This pandemic will continue to be the

dominate force in shifting the world’s

economic prospects for the foreseeable

future. In the US, cases and deaths increased

in June and July, before beginning to decline

again in August.

Georgia has seen a significant increase in

cases and death through July and August.

COVID-19 deaths per capitaDaily deaths per million residents

Source: IHME

State of the pandemic

0

1

2

3

4

5

6

7

8

Mar Apr May Jun Jul Aug

Georgia

USA

Countries have had different levels of

success combating the spread of

COVID-19.


11


Georgia’s GDP will recover slightly

faster than the US.

GDP growth in Georgia and the USIndex (2019 q4 = 100)


The pandemic created an acute recession,

but growth has already resumed. We

forecast that Georgia will reach its 2019q4

GDP level in 2021q3 while the US will

recover by 2021q4.

Employment will recover more slowly,

causing the unemployment rate to remain

above 5% until 2023.

Economic impact

85

90

95

100

105

110US

Georgia

12

The pandemic creates three broad areas of

uncertainty in the outlook.

The underlying issues for travel


Decrease in travel

Actual limits on travel are only part of the

problem. Fear of the virus, economic

uncertainty, and loss of income will linger

after travel restrictions are eased and

hamper the travel sector’s recovery.

13

Return to “normal” levels of travel will be a

multi-year effort, with domestic travel

leading followed by regional international

and finally long-haul international.

Anatomy of a recovery


Initial recovery

• Leisure

• Drive

Secondary recovery

• Essential business

• Small- and medium-size groups

• Regional international (intra-Americas, intra-Europe)

Final recovery

• Long-haul international

• Large events

14


Rural and outdoor destinations are

outperforming urban destinations.

Weekly travel spending (week ending July 25th)Percent year-over-year change

Sources: Tourism Economics; US Travel

Impacts by state

15

Atlanta

Boston

Chicago

Dallas

Denver

Detroit

Oahu

Houston

Los Angeles

Miami

Minneapolis

Nashville

New Orleans

New York

Anaheim/Santa Ana

Orlando

Philadelphia

Phoenix

San Diego

San Francisco

St Louis

Seattle

Tampa

Norfolk/Virginia Beach

Washington, DC

Montreal

Toronto

Vancouver

40%

50%

60%

70%

80%

90%

100%

55% 60% 65% 70% 75% 80% 85% 90%

Do

mes

tic

Shar

e

Transient Share


Recovery rates will largely depend on a

destination’s market mix.

Hotel room demand by customer typeShare of 2019 room nights sold

Sources: Tourism Economics; US Travel

Impacts by destination

Most resilient mix

Least resilient mix

Destinations with high share of domestic and

transient visitors will recover faster, along

with destinations with recreation

opportunities that allow for social distancing.

16


Mobility data shows the impact the

pandemic has had on consumer

behavior.

Google mobility data for retail and recreation areasPercent change compared to a five-week period in January and February

Sources: Google Community Mobility Report

Mobility impacts

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

Mar Apr May Jun Jul Aug

GA

USAGoogle mobility data shows the impact the

pandemic has had on consumer behavior.

Visits to retail and recreation venues remain

well below their pre-pandemic levels*, and

while Georgians were more mobile than the

average US resident for much of the year,

they have fallen slightly behind recently.

*note that this comparison is to a five-week period in January and February, so in a typical year visits to retail and recreation would be much higher than 0%.

17


Room revenue has fallen sharply, but

Georgia is doing better than the US.

Room revenue in Georgia and the USPercent change compared 2019


Hotel impacts

-100%

-80%

-60%

-40%

-20%

0%

20%

Feb Mar Apr May Jun Jul Aug

Georgia

United States

18


Room revenue will not recover until

2023 or 2024, a much slower recovery

than the prior recession.

Room revenue recovery comparison – 2008 vs 2020Quarters relative to trough, level relative to prior peak


Hotel impacts

SCENARIO OVERVIEW

20

THE SCENARIO OVERVIEW

The scenarios vary in the degree of virus

containment and the rate of economic

recovery.

We developed three scenarios to determine a range of possible impacts

Scenario Virus-related inhibitions on travel Key economic indicators(forecast current as of August 27th, 2020)

Economic

dragVirus drag

Upside• Virus moderately contained, travel restrictions continue to ease • Peak national unemployment rate 13.0% - 2020 Q2

• Traveler risk aversion remains moderate to high through 2020 • National GDP declines 3.2% in 2020

• GDP returns to 2019 Q4 level in 2021 Q1

• Virus contained in some regions, however many restrictions and containment measures remain through 2020

• Peak national unemployment rate 13.0% - 2020 Q2

Baseline • In some areas, groups permitted to meet with modifications, but risk

aversion reduces attendance• National GDP declines 4.0% in 2020


• Virus not well contained, many restrictions and containment measures remain in place in 2021

• Peak national unemployment rate 17.0% - 2021 Q1

Downside • Very limited group travel, greater risk aversion, many public places

closed/limited, restaurants more limited• National GDP declines 4.6% in 2020


• All scenarios assume that a vaccine will be widely available in 2021.

• Downside risks are greater than upside possibilities, so the Upside

scenario is closer to the Baseline than the Downside.

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Key guideposts for the next 18 months

• Recovery has begun (notwithstanding the risks).

• Economic recovery has plateaued but will accelerate as virus is contained.

• Performance by destination will be incredibly disparate for the next nine months.

• Georgia will approach normalcy in the second half of 2021 with full recovery in 2024.

• Recovery timeline in individual regions will be largely a function of:

1. Pandemic exposure;

2. Travel market exposure (drive, leisure); and

3. Ability to pivot to recovering market segments.

22


In all scenarios, recovery will be a multi-

year process, spending will not reach

2019 levels until 2023 at the earliest.



Spending overview

$0

$5

$10

$15

$20

$25

$30

$35

2016 2017 2018 2019 2020 2021 2022

Historical

Upside

Baseline

Downside

23


In the Upside and Baseline Scenarios,

recovery continues, albeit at a slower

pace than the summer months. In the

Downside Scenario, the recovery

stagnates.



Monthly losses

-80%

-70%

-60%

-50%

-40%

-30%

-20%

-10%

0%

J F M A M J J A S O N D J F M A M J J A S O N D

Upside

Baseline

Downside

2020 2021

THE UPSIDE SCENARIO

25

THE UPSIDE SCENARIO

Losses in 2020 amount to 31% of all

spending or $10.1 billion.

Upside Scenario COVID-19 related losses in GeorgiaDollar figures in millions, comparison to 2019 figures


Summary data

2020 2021 2022

Economic impacts



Lost jobs 62,537 26,085 13,042

Lost wages $2,848 $1,188 $594

Lost state and local taxes $653 $272 $136

Hotel impacts

Lost room demand (000's) 11,303 2,120 905

Lost room demand, % 25% 5% 2%

Lost room revenue,$ $1,859 $744 $373

Lost room revenue, % 39% 15% 8%

26

THE UPSIDE SCENARIO

Visitor spending losses peak in April at

63% of their 2019 level.

Upside Scenario COVID-19 related visitor spending losses in Georgia, 2020Losses compared to 2019


Monthly impacts

-4%

-10%

-38%

-63%

-52%

-41%

-33%-29%

-26% -24% -23% -21%

-70%

-60%

-50%

-40%

-30%

-20%

-10%

0%

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

Losses peak at 63% in April

27

THE UPSIDE SCENARIO

Room demand and room revenue

recover in 2023.

Georgia room demand and revenue in the Upside ScenarioRooms, millions Dollars, billions

Sources: Tourism Economics; STR

Monthly impacts

44.8

33.5

42.7 43.946.2

48.6

$4.8

$3.0

$4.1$4.4

$4.9

$5.4

$0

$1

$2

$3

$4

$5

$6

0

10

20

30

40

50

60

70

80

2019 2020 2021 2022 2023 2024

Th

ou

san

ds

Th

ou

san

ds

Room demand (000's) (left axis)

Room revenue (right axis)

28

THE UPSIDE SCENARIO

ADR recovers in 2023, while occupancy

rate and RevPAR recover in 2024.

Georgia hotel sector KPIs in the Upside ScenarioDollars Occupancy rate


Monthly impacts

65%

48%

59% 60%62%

65%

$107

$88$95

$101$109

$116

$70

$43

$56 $61$66

$72

0%

10%

20%

30%

40%

50%

60%

70%

80%

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

2019 2020 2021 2022 2023 2024

ADR (left axis)RevPAR (left axis)Occupancy rate (right axis)

THE BASELINE SCENARIO

30




Baseline Scenario COVID-19 related losses in GeorgiaDollar figures in millions, comparison to 2019 figures


Summary data

2020 2021 2022

Economic impacts



Lost jobs 66,974 33,359 19,899

Lost wages $3,050 $1,519 $906


Hotel impacts

Lost room demand (000's) 11,733 3,717 1,704


Lost room revenue,$ $1,921 $952 $567


31






Monthly impacts

-5%

-11%

-40%

-67%

-55%

-43%

-35%-30% -29% -27% -26% -25%

-70%

-60%

-50%

-40%

-30%

-20%

-10%

0%



32


Room demand recovers in 2023 while

room revenue recovers in 2024.



Monthly impacts

44.8

33.0

41.1 43.145.5

48.0

$4.8

$2.9

$3.9$4.2

$4.7

$5.2

$0

$1

$2

$3

$4

$5

$6

0

10

20

30

40

50

60

70

80

2019 2020 2021 2022 2023 2024

Th

ou

san

ds

Th

ou

san

ds

Room demand (000's) (right axis)

Room revenue (left axis)

33


ADR recovers in 2023; RevPAR and

occupancy rate do not recover by 2024.



Monthly impacts

$107

$87$94 $99

$107$114

$70

$42

$53 $58$64

$69

65%

48%

57% 59%61%

64%

0%

10%

20%

30%

40%

50%

60%

70%

80%

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

2019 2020 2021 2022 2023 2024


THE DOWNSIDE SCENARIO

35




Baseline Scenario COVID-19 related losses in GeorgiaDollar figures in millions, comparison to 2019 figures


Summary data

2020 2021 2022

Economic impacts



Lost jobs 71,245 50,523 32,811

Lost wages $3,244 $2,301 $1,494


Hotel impacts

Lost room demand (000's) 12,221 8,651 5,242


Lost room revenue,$ $1,975 $1,440 $934


36






Monthly impacts

-5%

-12%

-42%

-70%

-57%

-45%

-36%-32% -30% -30% -29% -29%

-80%

-70%

-60%

-50%

-40%

-30%

-20%

-10%

0%



37


Room revenue recovers in 2024; room

demand recovers in 2025.



Monthly impacts

44.8

32.636.1

39.542.0

44.5

$4.8

$2.8

$3.4

$3.9

$4.3

$4.8

$0

$1

$2

$3

$4

$5

$6

0

10

20

30

40

50

60

70

80

2019 2020 2021 2022 2023 2024

Th

ou

san

ds

Th

ou

san

ds

Room demand (000's) (right axis)

Room revenue (left axis)

38


ADR recovers in 2024, while RevPAR

and occupancy rate recover in the later

half of the decade.



Monthly impacts

$107

$87$93

$98$107

$115

$70

$41$47

$53$58

$64

65%

47%50%

54%57%

59%

0%

10%

20%

30%

40%

50%

60%

70%

80%

$0

$20

$40

$60

$80

$100

$120

$140

$160

$180

2019 2020 2021 2022 2023 2024


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Georgia Tourism Forecast Scenarios

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