Measuring Substitution Effects of Tourist Spending Among Restaurant Sales and Grocery Store Sales:...
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Transcript of Measuring Substitution Effects of Tourist Spending Among Restaurant Sales and Grocery Store Sales:...
Measuring Substitution Effects of Tourist Spending Among Restaurant Sales and Grocery Store Sales: Case Study in Sevier Co. TN
Stephen C. Morse, Ph.D.John M. Antun, Ph.D.
University of TennesseeKnoxville, TN
Area of Case Study: Sevier Co., Tennessee
Sevier County, TN(Gatlinburg, Pigeon Forge, Sevierville)
Home of:
DollywoodRipley’s AquariumGreat Smoky Mountains National Park (most visited NP in U.S.)Entertainment venues & attractions
Top 10 Tennessee Counties for Tourist
Spending in 20071) Davidson Co. $3,991 million (Nashville)2) Shelby Co. $3,064 million (Memphis)3) Sevier Co. $1,502 million (Gatlinburg, PF)
4) Knox Co. $796 million (Knoxville)5) Hamilton Co. $710 million (Chattanooga)6) Blount Co. $276 million (Maryville,
Townsend)
7) Sullivan Co. $270 million (Kingsport)8) Williamson Co. $251 million (Franklin,
Brentwood)
9) Rutherford Co. $237 million (Murfreesboro)
10)Washington Co. $188 million (Johnson City)
Source: TIA & TN Dept. of Tourist Development 3
U.S. Average Retail Prices of Gasoline, 2004 - 2008
Source: U.S. Dept. of Energy
This Period of Analysis
Top 10 Ways Tourists Reduced Travel Spending in 2008
1) Take shorter trips (miles) 58%2) Look for discounts 38%3) Less on paid attractions35%4) Buy less souvenirs 33%5) Less expensive lodging 27%6) Less nights away home 25%7) More meals in room 18%8) Drive different vehicle 10%9) Split costs with others 9%10) More fast food 8%
Source: Jerry Henry and Associates5
Two Main Questions for Analysis…
1) In a slowing economy, do tourists substitute meals in rooms (grocery store sales) for restaurant meals?
2) Can a substitution rate of grocery store sales vs. restaurant sales me measured?
Creating & Understanding the Food Purchase Ratio Index, (FPR)
Restaurant Sales ($)
Grocery Store Sales ($)
FPR Index =
FPR > 1 (restaurant sales > grocery store salesFPR = 1 (restaurant sales = grocery store salesFPR < 1 (restaurant sales < grocery store sales
FPR Index =Restaurant Sales ($)
Grocery Store Sales ($)
Example:
FPR = 1.35
Means: For every $1 spent in grocery stores, $1.35 is spent in restaurants
Magnitude Interpretation of Food Purchase Ratio Index, (FPR)
2007 Monthly Restaurant & Grocery Store Gross Sales, Sevier Co., TN
10
Grocery Store sales
Source: TN Dept. of Revenue
Restaurant / Grocery Store Sales Ratio, Sevier Co., TN, 2006 – 2008
(June)
R/G sales ratio(FPR Index)
Data indicates that…• During 2006 & 2007: (gas prices below
$3/gal)– tourist had few substitutes of grocery store
sales for restaurant sales (saw increasing FPR from 2006 – 2007)
• For 2008: (gas prices above $3/ gal)– tourists did more substitution of grocery
store sales for restaurant sales (decreasing FPR 2007 – 2008 (June)
Implications• Lower restaurant sales and pressure on
price and discounts to attract customers
• Dollywood & Ripley’s Aquarium significantly increased their budget for point of sale advertising in Grocery Stores in 2008
Additional Research• Linear and non-linear correlations
among FPR and gasoline prices• Linear correlations among restaurant
sales & grocery store sales• Examination of data from other resort
areas such as Myrtle Beach, SC & Branson, MO.
Percent of Sevier Co. Tourist Dollar Spent on…
2006Attractions 17.7%
Lodging 30.4%
Gen. Mdse. 10.6%
Apparel 14.9%
Restaurant 26.2%
TOTAL 100%
Percent of Sevier Co. Tourist Dollar Spent on…
2006 2007Attractions 17.7% 18.2%
Lodging 30.4% 30.4%
Gen. Mdse. 10.6% 10.6%
Apparel 14.9% 14.2%
Restaurant 26.2% 26.4%
TOTAL 100% 100%
Percent of Sevier Co. Tourist Dollar Spent on…
2006 2007 2008Attractions 17.7% 18.2% 13.2%
Lodging 30.4% 30.4% 26.4%
Gen. Mdse. 10.6% 10.6% 14.2%
Apparel 14.9% 14.2% 16.7%
Restaurant 26.2% 26.4% 29.2%
TOTAL 100% 100% 100%
Thank You!
Questions? Comments?
John M. Antun, Ph.D.Stephen C. Morse, Ph.D.
University of TennesseeKnoxville, TN