Tourism Satellite Account Calendar Year 2012

The Economic Impact of Tourism in Georgia

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Key results

The Georgia visitor economy continued to prosper in 2012, growing 5.0%.

Total tourism demand of $32.3 billion in 2012 stands 12% higher than its pre-recession level.

This economic activity sustained 405,000 jobs in 2012, including direct, indirect, and induced impacts.

10.2% of all jobs* in the state are directly and indirectly sustained by tourism activities.

Including indirect and induced impacts, tourism in Georgia generated $2.8 billion in state and local taxes and $3.6 billion in Federal taxes in 2012.

* BLS SAE total non-farm payroll employment, 2012

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Important definitions

1. Total Tourism Demand: Includes visitor spending plus other spending streams in support of the traveler industry. This includes government spending and capital investment in support of tourism.

2. Tourism Industry GDP: Measures the value of production of “tourism characteristic industries” on behalf of travelers. This concept measures only the direct impact of the travel industry.

3. Tourism Economic Impact: Measures the full economic impacts of tourism demand, including indirect and induced impacts.

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Illustrating the concepts

Travel & Tourism Industry

■ The direct effect of visitor spending

■ Focus of Tourism Satellite Account

■ Allows for industry rankings and comparisons

Travel & Tourism Economic Impact

The flow-through effect of total T&T demand across the economy

■ Expands the focus to measure the overall impact of T&T on all sectors of the economy

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By monitoring tourism’s economic impact, policy makers can make informed decisions regarding the funding and prioritization of tourism development.

It can also carefully monitor its successes and future needs.

In order to do this, tourism must be measured in the same categories as other economic sectors – i.e. tax generation, employment, wages, and gross domestic product.

Why quantify the tourism economy?

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What is this a challenge?

Most economic sectors such as financial services, insurance, or construction are easily defined within a country’s national accounts statistics.

Tourism is not so easily measured because it is not a single industry. It is a demand-side activity which affects multiple sectors to various degrees.

Tourism spans nearly a dozen sectors including lodging, recreation, retail, real estate, air passenger transport, food & beverage, car rental, taxi services, travel agents…

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• The TSA was conceived by the UN World Tourism Organization and has since been ratified by the UN, Eurostat, and OECD.

• The standard has been adopted by over fifty countries around the world.

• The TSA deals with the challenge of measuring tourism in two important ways:

1. Defines the tourism economy

2. Provides methodology for calculating tourism GDP in a way that is consistent with economic accounts

The Tourism Satellite Account

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• Enables comparisons of the importance of tourism to other sectors of the economy in terms of GDP, employment, and income

• Allows for benchmarking to other destinations

• Tracks the economic contribution of tourism over time

• Monitors strength by tracking capital investment

• Allows for extension analysis for of the full impact of tourism

Benefits of a TSA

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Detailed Results

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Tourism demand (spending)

Domestic visitor spending expanded 4.6% while international grew a modest 2.9% in 2012.

Non-visitor private consumption expenditures (PCE) represent tourism consumer durables such as an RV, boat, or furniture for a vacation home. These rose 5.4% last year.

Government support for tourism, including the budgets for the Division of Tourism, tourism attractions, security, and other budget items in broad support of tourism tallied $61 million. This includes a new category of federal airport grants in Georgia.

Capital investment, including construction of hotels and attractions, as well as tourism infrastructure, grew strongly in 2012 at a rate of 9.2%.

Year Domestic Visitor

Internat'l Visitor

Non-visitor PCE

Gov't Support

CAPEX Total % change

2006 21,537$ 1,613$ 179$ 33$ 3,532$ 26,895$ 2007 22,781$ 1,706$ 189$ 35$ 3,737$ 28,449$ 5.8%2008 23,285$ 1,950$ 189$ 38$ 3,309$ 28,771$ 1.1%2009 21,353$ 2,039$ 165$ 36$ 2,394$ 25,987$ -9.7%2010 23,072$ 2,357$ 171$ 35$ 2,418$ 28,054$ 8.0%2011 25,216$ 2,425$ 176$ 34$ 2,932$ 30,783$ 9.7%2012 26,371$ 2,495$ 186$ 61$ 3,202$ 32,315$ 5.0%

% change 2012/11 4.6% 2.9% 5.4% 78.4% 9.2% 5.0%

Tourism Demand by Category, $ million

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Tourism demand by source

Domestic visitor markets comprise the majority (82%) of tourism demand.

Capital investment in tourism-related construction and machinery & equipment is second in importance even as it recovers from a steep decline during the past recession.

International visitor markets contributed 8% of tourism demand in Georgia last year.

Domestic Visitor82%

Internat'l Visitor8%

Gov't Support0.2%

CAPEX10%

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Tourism demand reaches a new peak in 2012

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Domestic Visitor Internat'l Visitor CAPEX

Tourism Demand Trendbillions

Source: Tourism Economics

$32.3 bn

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Translating spending into impact

The direct impacts are quantified within travel-related sectors.

The indirect impacts include the benefits realized by the supply chain.

The induced impacts are generated as wages are spend within the state’s economy.

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Tourism business sales by sector

Tourism demand of $32.3 billion generated $51.2 billion in business sales, including indirect and induced impacts. Total tourism-generated business sales expanded 4.6% in 2012.

Direct* Indirect Induced TotalAgriculture, Fishing, Mining 105 82 187 3.8%Construction and Utilities 797 406 305 1,508 12.8%Manufacturing 1,383 873 2,256 3.8%Wholesale Trade 2,405 568 587 3,560 5.0%Air Transport 9,562 28 33 9,623 4.4%Other Transport 695 839 262 1,796 4.2%Retail Trade 5,245 227 1,142 6,614 4.6%Gasoline Stations 1,895 16 73 1,984 3.1%Communications 557 350 907 3.8%Finance, Insurance and Real Estate 765 1,436 1,368 3,569 3.7%Business Services 586 2,940 758 4,284 10.1%Education and Health Care 90 1,346 1,437 4.0%Recreation and Entertainment 1,635 56 121 1,812 4.4%Lodging 3,469 82 89 3,641 4.8%Food & Beverage 4,346 334 456 5,135 4.9%Personal Services 853 141 397 1,392 -12.7%Government 61 168 1,330 1,559 5.7%TOTAL (2012) 32,315 9,376 9,572 51,263 4.6%TOTAL (2011) 30,783 9,039 9,206 49,027 8.9%TOTAL (2010) 28,054 8,424 8,541 45,019 7.3%

Tourism Sales (Output) % change from year

earlierUS$ Million, 2012

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Tourism sales

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Tourism Business Sales

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Tourism industry GDP

Tourism GDP is the value added of those sectors directly interacting with travelers.

The narrow definition of the tourism industry counts only tourism consumption, which excludes capital investment and general government support of tourism. This definition is consistent with economic accounts.

On this basis, tourism industry GDP reached $11.3 billion in 2012, accounting for 2.5% of total Georgia GDP.

Industry Composition 2011 2012 % Agriculture, Fishing, MiningConstruction and UtilitiesManufacturingWholesale TradeAir Transport 3,215 3,358 4.4%Other Transport 322 337 4.9%Retail Trade 824 863 4.7%Gasoline Stations 221 232 5.0%CommunicationsFinance, Insurance and Real Estate 446 460 3.1%Business Services 138 248 79.6%Education and Health CareRecreation and Entertainment 799 834 4.4%Lodging 2,378 2,495 4.9%Food & Beverage 1,972 2,073 5.1%Personal Services 507 402 -20.7%GovernmentTOTAL 10,822 11,302 4.4%

Tourism Industry GDP(US$ Million)

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Tourism GDP Impact

The complete definition of the tourism demand includes capital investment and general government support of tourism.

The total tourism GDP impact in Georgia rose 4.6% in 2012.

Including the direct, indirect and induced impacts of total tourism demand, the tourism sector generated $22.9 billion of state GDP. This is 5.3% of the state economy.

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Tourism GDP Impact

Direct* Indirect Induced TotalAgriculture, Fishing, Mining 29 33 62 3.9%Construction and Utilities 533 271 217 1,021 12.7%Manufacturing 337 246 582 3.8%Wholesale Trade 194 383 396 973 4.2%Air Transport 3,358 10 12 3,380 4.4%Other Transport 337 584 145 1,066 4.1%Retail Trade 863 149 746 1,757 4.3%Gasoline Stations 232 11 50 292 4.8%Communications 280 173 453 3.8%Finance, Insurance and Real Estate 460 945 823 2,229 3.7%Business Services 248 1,636 434 2,318 8.7%Education and Health Care 54 837 891 4.0%Recreation and Entertainment 834 32 71 937 4.4%Lodging 2,495 53 56 2,603 4.8%Food & Beverage 2,073 159 217 2,450 4.9%Personal Services 402 74 208 684 -12.1%Government 39 61 1,129 1,229 5.4%TOTAL (2012) 12,069 5,066 5,792 22,928 4.6%TOTAL (2011) 11,464 4,884 5,571 21,919 7.7%TOTAL (2010) 10,626 4,552 5,168 20,346 7.1%

Tourism GDP (Value Added) % change from year

earlierUS$ Million, 2012

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Tourism GDP impact

All sectors of the Georgia economy benefit from tourism activity directly and/or indirectly.

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Ranking tourism industry employment

The tourism industry directly employed 244,202 Georgians in 2011 and 245,988 in 2012. This narrow measurement of tourism includes only those jobs directly supported by visitor activity and enables inter-industry ranking.

On this basis, tourism was the 5th largest private employer in the state of Georgia in 2011. Rankings for 2012 will be updated once BLS data for 2012 are available.

Rank Industry Value*1 Retail trade 440,062

2 Health care 403,637

3 Manufacturing 349,046

4 Administration and waste management 265,093 5 Tourism 244,202

6 Accommodation and food services (minus tourism) 225,880

7 Professional, Scientific, and Technical Services 222,942

8 Wholesale Trade 197,367

9 Construction 145,448

10 Finance and insurance 149,517

* Comparative data is BLS QCEW employment

Ranking of Employment2011

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Total tourism employment

■ The tourism sector directly and indirectly supported more than 400,000 jobs, or 10.2% of all payroll employment* in Georgia.

■ Tourism-related employment grew 1.3% in 2012 as continued business growth drove hiring across most tourism-related sectors.

* BLS SAE total non-farm payroll employment, 2012

Direct Indirect Induced TotalAgriculture, Fishing, Mining 1,557 1,280 2,837 2.0%Construction and Utilities 11,479 980 357 12,815 5.9%Manufacturing 3,840 2,209 6,049 2.0%Wholesale Trade 1,369 2,686 2,769 6,823 2.1%Air Transport 41,043 111 132 41,286 -0.7%Other Transport 10,140 8,356 2,563 21,059 2.0%Retail Trade 27,020 3,103 18,742 48,865 2.2%Gasoline Stations 4,713 183 899 5,795 1.4%Communications 1,575 800 2,375 2.0%Finance, Insurance and Real Estate 7,103 6,336 13,439 2.0%Business Services 1,123 23,064 8,167 32,354 2.0%Education and Health Care 1,383 15,249 16,632 2.1%Recreation and Entertainment 29,591 1,092 2,681 33,364 2.2%Lodging 42,805 914 985 44,704 -0.6%Food & Beverage 75,296 6,015 8,201 89,511 2.4%Personal Services 14,185 2,056 8,919 25,160 -2.9%Government 71 959 827 1,857 2.0%TOTAL (2012) 258,836 64,975 81,116 404,927 1.3%TOTAL (2011) 256,326 63,776 79,435 399,537 2.2%TOTAL (2010) 250,438 62,599 77,790 390,827

Tourism Employment % change from year

earlier2012

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The restaurant, lodging, and retail sectors employed the most persons in the tourism sector.

Secondary benefits are realized across the entire economy through the supply chain and incomes as they are spent.

For example, 13,439 people are employed in the finance, insurance, and real estate sector as a result of tourism activity.

Total tourism employment

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Tourism Generated Employment

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Tourism personal income

$14.7 billion in compensation was generated by tourism demand in 2012, an increase of 2.8%

Direct Indirect Induced TotalAgriculture, Fishing, Mining 19 23 41 2.3%Construction and Utilities 652 105 70 827 7.5%Manufacturing 217 132 349 2.3%Wholesale Trade 103 206 212 522 2.5%Air Transport 2,752 8 10 2,770 3.1%Other Transport 215 471 105 792 2.5%Retail Trade 580 90 449 1,119 2.8%Gasoline Stations 102 5 22 129 2.2%Communications 142 73 216 2.3%Finance, Insurance and Real Estate 324 341 348 1,013 2.4%Business Services 57 1,220 335 1,612 2.4%Education and Health Care 38 691 729 2.4%Recreation and Entertainment 928 25 47 1,000 3.0%Lodging 1,299 29 30 1,358 3.3%Food & Beverage 1,384 108 147 1,638 3.3%Personal Services 334 57 161 552 -4.8%Government 41 28 70 2.3%TOTAL (2012) 8,732 3,120 2,883 14,735 2.8%TOTAL (2011) 8,470 3,052 2,816 14,338 5.0%TOTAL (2010) 8,035 2,924 2,690 13,650 5.7%

Tourism Income (Compensation) % change

from

US$ Million, 2012

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Tourism personal income

Tourism generated the most personal income in the air transport, business services and food & beverage sectors.

The business services sector benefits strongly as a supplier to other tourism sectors.

On average, the tourism economy generated $36,390 in income per employee (including part-time).

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Tourism tax generation

Taxes of $6.3 billion were directly and indirectly generated by tourism in 2012.

State and local taxes alone tallied $2.8 billion.

Each household in Georgia would need to be taxed an additional $767 per year to replace the tourism taxes received by state and local governments in 2012.

2008 2009 2010 2011 2012Federal Taxes 3,254 3,000 3,183 3,373 3,574 Corporate 443 404 433 471 513 Indirect Business 330 301 323 352 383 Personal Income 1,102 1,020 1,079 1,133 1,190 Social Security 1,378 1,276 1,349 1,417 1,488

State and Local Taxes 2,457 2,277 2,412 2,580 2,760 Corporate 184 168 180 196 214 Personal Income 350 323 342 359 377 Sales 1,027 936 1,004 1,093 1,190 Property 745 712 738 771 805 Excise and Fees 131 119 128 139 151 State Unemployment 21 19 20 21 23

TOTAL 5,710 5,278 5,595 5,952 6,335 % change year ago 1.1% -7.6% 6.0% 6.4% 6.4%

Tourism-Generated Taxes(US$ Million)

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Tourism tax generation: State vs. Local

Tourism generated $1.36 billion in state taxes in 2012.

Tourism generated $1.4 billion in local taxes in 2012.

Tax Type 2008 2009 2010 2011 2012State Tax Subtotal 1,199.5 1,098.5 1,173.1 1,263.5 1,361.3

Corporate 184.3 167.9 180.2 196.2 213.7Personal Income 349.5 323.5 342.0 359.2 377.3Sales 599.1 546.0 585.8 637.9 694.7Property 0.0 0.0 0.0 0.0 0.0Excise and Fees 45.8 41.7 44.7 48.7 53.1State Unemployment 20.9 19.3 20.4 21.4 22.5

Local Tax Subtotal 1,257.2 1,178.9 1,238.7 1,316.1 1,399.0Corporate 0.0 0.0 0.0 0.0 0.0Personal Income 0.0 0.0 0.0 0.0 0.0Sales 427.5 389.7 418.0 455.2 495.7Property 744.8 711.8 737.7 770.6 804.9Excise and Fees 84.9 77.4 83.0 90.4 98.4State Unemployment 0.0 0.0 0.0 0.0 0.0

Tourism-Generated Taxes - State and Local (US$ Million)

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Government’s role

Government support of tourism is divided between collective (general support) and individual (specific support) spending.

Government support for tourism tallied $61 million. This includes a new category of federal airport grants in Georgia.

Capital expenditures are also considered in proportion to tourists’ usage.

Capital expenditures in support of tourism declined 14% in 2012.

FY 2013 CapitalGeneral Specific

Economic Development Film, Video, and Music 490,083$ GA Council for the Arts 619,045$ Tourism 9,060,095$

Natural Resources Historic Preservation 1,108,233$ Parks, Recreation and Historic Sites 14,153,748$ Coastal Resources 3,347,741$

Public SafetyAviation 2,616,659$ Department of TransportationAirport Aid 28,530,148$ Georgia Aviation Authority 1,155,188$ Capital construction projects 93,690,818$ Capital maintenance projects 18,877,854$ Construction administration 8,941,563$ Total 10,169,222$ 50,911,716$ 121,510,235$

Government Expenditures on TourismTOURISM ATTRIBUTION

Current

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Tourism capital investment

More than $3.2 billion was invested by the tourism sector last year, including hotels, recreational facilities, and related government capital outlays.

This marks the third year of recovery in tourism capital investment, with a 9.2% gain in 2012.

2008 2009 2010 2011 20122012

% changeConstruction 1,093,385,055$ 440,076,674$ 438,948,080$ 510,569,427$ 675,166,764$ 32%

Machinery and Equipment 2,059,535,755$ 1,850,605,775$ 2,052,996,640$ 2,279,919,623$ 2,405,443,535$ 6%

Government Capital Outlays 155,870,608$ 107,474,569$ 109,061,426$ 141,327,432$ 121,510,235$ -14%

Total 3,308,793,425$ 2,398,159,027$ 2,601,008,156$ 2,931,818,493$ 3,202,122,546$ 9%

% change -27.5% 8.5% 12.7% 9.2%

Tourism Capital Investment

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Tourism Economics, headquartered in Philadelphia, is an Oxford Economics company dedicated to providing high value, robust, and relevant analyses of the tourism sector that reflects the dynamics of local and global economies. By combining quantitative methods with industry knowledge, Tourism Economics designs custom market strategies, project feasibility analysis, tourism forecasting models, tourism policy analysis, and economic impact studies.

Our staff have worked with over 200 destinations to quantify the economic value of tourism, forecast demand, guide strategy, or evaluate tourism policies.

Oxford Economics is one of the world’s leading providers of economic analysis, forecasts and consulting advice. Founded in 1981 as a joint venture with Oxford University’s business college, Oxford Economics is founded on a reputation for high quality, quantitative analysis and evidence-based advice. For this, it draws on its own staff of 40 highly-experienced professional economists; a dedicated data analysis team; global modeling tools; close links with Oxford University, and a range of partner institutions in Europe, the US and in the United Nations Project Link.

For more information: info@tourismeconomics.com / +1 610 995 9600.

About Tourism Economics

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For more information:

Adam Sacks, Managing Director adam@tourismeconomics.com

Christopher Pike, Senior Economist

cpike@tourismeconomics.com