Kingsport, TN and Sullivan Co. impcts of tourism on the local economy, jobs, taxes

1. Tourism’s Economic Significance to
the Sullivan County Economy
Tourism Works for Sullivan County
Stephen C. Morse, Ph.D.
Director & Economist
Tourism Institute
University of Tennessee
Knoxville, TN

2. 3 Topics Today
1. Trends in Sullivan Co. tourists
spending
2. On an average day in Sullivan Co.
3. Tourism’s great investment in
Sullivan Co. 2

3. Top 10 Tennessee Counties for Tourist
Spending in 2007
1) 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, Bristol)
8) Williamson Co. $251 million (Franklin, Brentwood)
9) Rutherford Co. $237 million (Murfreesboro)
10)Washington Co. $188 million (Johnson City)
3
Source: TIA & TN Dept. of Tourist Development

4. Sullivan Co. Tourist Spending
Continues to Grow, 2002 ‐ 2007
$300.0
$258.52$270.23
$ Millions $239.10
$250.0
$208.72$219.03
$201.01
$200.0
$150.0
$100.0
$50.0
$0.0
2002 2003 2004 2005 2006 2007 4
Source: TN Dept. of Tourist Development & TIA

5. Impacts of Tourism on the
Sullivan County Economy, 2007
Worker
Tourist
Payroll:
Spending:
$79.45 Million
$270.2 Million
Employment: State Taxes: Local Taxes:
2,910 Jobs $14.8 Million $7.32 Million
Source: TN Dept. of Tourist Development & U.S. Travel Association

6. Sullivan Co. Rank of Industries by
Employment Percent, 2007
(nearly 1 out of 10 job are in tourism!)
1. Manufacturing 23.1%
2. Retail – Wholesale Trade
Transportation, Utilities 21.48%
3. Education & Health Services 18.8%
4. Hotel, Restaurant, Tourism 9.6%
5. Construction 9.0%
6. Prof & Business Services 8.5%
7. Financial Activities 3.7%

7. Q: How much do tourists spend
on an average day in
Sullivan County?
$740,360
7

8. Also on an Average Day in Sullivan
County, tourist spending generates…
Paychecks worth $217,671 daily
State taxes worth $40,547 daily
Sullivan Co. taxes worth $20,054
daily
8

9. How much in TN State and Sullivan Co.
taxes did Tourism Generate in 2007?
• TN State sales taxes $14.8 million
+ $7.3 million
• Sullivan Co. local taxes
• Total State & Local Taxes $22.1 million
Source: TN Dept. of Tourist Dev. 9

10. Tourism Tax Relief – Sullivan Co.
• Each household in Sullivan Co. pays $301
less in State and local taxes as a result of
tourism economic activity
$301
Tax relief
for each
Sullivan Co.
household

11. Restaurant Sales for Sullivan Co.,
by month 2006 – 2008 (June)
$27
$25
2007
$23
2008
$21
$19
$17
2006
$15
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

12. Airline Survival in 2009
1) Decrease Costs &
eliminate empty seats:
Less flights per destination
Smaller airplanes – less
seats
2) Increase Revenues
Higher airfares for less seats
available
Other non‐seat revenue
(bag & meal charges)
12

13. Tennessee – Percent Changes in Airline Seat
Capacity,
March 2008 vs. March 2009
Chattanooga + 2.9% ( + 1,069 seats)
Knoxville ‐ 2.9% ( ‐ 3,023 seats)
Memphis ‐ 7.0% ( ‐ 18,442 seats)
Nashville ‐ 9.5% ( ‐ 17,338 seats)
Tri‐City ‐11.4% (‐ 837 seats)
Source: Official Airline Guide, Federal Aviation Adm., U.S. Dept. of Transportation,
March 2007 ‐ March 2008 13

14. Today’s U.S. & Tennessee’s
Economic Health
• Slowest growth since 1986
3rd & 4th Qtr. Negative U.S.
U.S.
Economy
Economic Growth
has Slowed
•TN sales tax collections
Tennessee
•lowest levels in 12 years
Sales Tax
Revenues
• Decreasing tax revenues for each
Tennessee
Tennessee County
County Tax
Revenues
14
Source: U.S. Dept. of Commerce

15. TN County Newspaper
Headlines
• County Tax Revenues • Hotel Bed Tax to
Cover Economic
Fall Short
Development Projects
• Budget Shortfall
• Tourism Budget Cut to
Worries
Save Road Paving
Commissioners
Project
• County Workers Face
• Tourism Promotion &
Layoffs
Marketing Budget
• City Officials Mull
Eyed for County
Spending Cuts
Deficit

16. In this slow economy…
Tennessee City & County
governments are searching
for new tax revenues

17. During a Slowing Economy, More
Emphasis on Public Sector Benefits of
Tourism as a Tax Generator
Private Sector Public Sector
Benefits of Benefits of Tourist
Tourist Spending Spending
NEW
EMPHASIS

18. Tourism is a Net Tax Revenue
Generator for Other Govt. Programs
& Services in Sullivan Co.
Additional
Generates Taxes Fund
Additional
Other Non‐
Local Tax
Tourism
Tourist
Revenues
Spending in Programs &
Your Local
Services
Area

19. Great Return on Investment
• Every $1 invested by the Kingsport
CVB…
• Returns $20.10 in State and local
tax revenues

20. Thank you for inviting me
Questions? Comments?
Stephen C. Morse, Ph.D.
Director & Economist
Tourism Institute
University of Tennessee
Knoxville, TN
PH: (865) 974‐6249
Email: smorse@utk.edu