Pigeon Forge and Tennessee tourism trends including hotel and lodging trends compared to other U.S. resort areas

1. Hotel & Tourism Trends in
Pigeon Forge & Sevier County
May 14, 2009
Stephen C. Morse, Ph.D.
Director & Economist
Tourism Institute
University of Tennessee
Knoxville, TN
Riverstone
Ph: (865) 974-6249 Resort & Spa
smorse@utk.edu

2. Agenda
1. Tourism trends in Sevier County
2. Theme park & amusement trends in
Pigeon Forge
3. Hotel demand trends (ADR, Occ.
Rates, RevPAR)
4. Outlook for 2009

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
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. Pigeon Forge Business Percent of
Sector (2007) Gross Sales
Lodging 16%
Amusements 15%
Restaurants 14%
Retail & Services 12%
Outlets 11%
Gas & Grocery 10%
Theaters (Source: City of Pigeon Forge) 7%
Craft, Gift & Specialty 6%

5. 2008 Tourism Related Tax Revenues
for Pigeon Forge
• 1% Gross Business Receipts Tax $7.1 million
• 2% Amusement Tax $2.5 million
• 2.25% Lodging Tax $3.1 million
TOTAL Tourism $12.7 Million
Related Taxes
Source: City of Pigeon Forge

6. Tourism Tax Relief per
Pigeon Forge Household
• Each permanent resident household
in Pigeon Forge pays $4,775 less in
local city taxes as a result of taxes
generated by tourist activity
Source: City of Pigeon Forge; U.S.
Census Bureau; Dr. Steve
Morse, University of Tennessee
(based on 2,648 resident
households)

7. Tourism Tax Relief per
Pigeon Forge Household
$4,775
Tax relief
for each
Pigeon Forge
household
Source: City of Pigeon Forge; U.S.
Census Bureau; Dr. Steve
Morse, University of Tennessee
(based on 2,648 resident

8. Sevier Co. ranks lowest in TN for
effective property tax rates
Property Tax / Housing Value
• Shelby Co. 1.29%
• Davidson Co. 0.95%
• Anderson Co. 0.87%
• Knox Co. 0.73%
• Blount Co. 0.54%
• Sevier Co. 0.35%
Source: Local Tax Burdens on TN Households; TN Advisory Commission on Intergovernmental Relations;
Staff Report Volume V – August 2007

9. 2008 Amusement & Theme Park
$25
Gross Sales, Pigeon Forge
Millions $
$20
$15
$10
$5
Source: City of Pigeon Forge
$0

10. How was 2008 vs. 2007 for Amusement
& Theme Park Gross Sales? Percent Change
60% 2008 vs. 2007 Pigeon Forge
41.0%
40% Flat Summer
of 2008
20% 11.5%
6.0%
2.0% 2.0% 0.0%
0%
-6.0%
-20% -11.0% -10.0%
-14.2%
-19.0% -18.3%
Source: City of Pigeon Forge
-40%

11. How is 2009 so far for Amusements &
Theme Park Gross Sales? Percent Change
2009 vs. 2008, Pigeon Forge
80%
62.4% Dollywood
60%
open Jan
40% 1-3
20%
1.7%
0%
-20%
Source: City of Pigeon Forge -19.2%
-40%
Jan Feb Mar

12. How was 2008 vs. 2007 for Hotel
Gross Sales? Percent Change 2008 vs.
2007, Pigeon Forge
20%
12.0%13.0%
6.0%
2.0% 2.2%
0%
-6.0% -6.0%
-8.0%
-20% -16.0% -13.4% -16.1%
-18.0%
Source: City of Pigeon Forge
-40%

13. How is 2009 so far for Hotel Gross
Sales? Percent Change 2009 vs.
2008, Pigeon Forge
0%
-2.8%
-11.3%
-20%
-23.0%
Source: City of Pigeon Forge
-40%
Jan Feb Mar

14. Feb. 2009 vs. Feb. 2008, Hotel
Occupancy Rate – Percent Change
2% 1.1%
0%
-2%
-4%
-3.5%
-6% -5.3% -5.0%
-8% -6.7%
-10% -9.2%
-10.1%
-12% -11.1%
-14% -13.1% Source: Smith Travel Research

15. March 2009 vs. March 2008 Hotel
Occupancy Rate – Percent Change
0%
-2%
-4%
-6% -4.8%
-6.0%
-8%
-10%
-10.0% -9.6%
-12%
-11.6%-11.4%-11.1%-10.7%
Source: Smith Travel Research
-14% -12.9%

16. U.S. Lodging industry begins 2009 on a
sour note (% change YTD Feb. 09 vs. Feb. 08)
5% + 3.4%
Demand Occupancy ADR RevPar
0%
Supply
(new
-5%
rooms)
- 6.5%
- 7.5%
-10%
- 10.5%
-15% The Perfect Storm
to slow the hotel - 16.3%
-20% industry Source: Smith Travel Research

17. Let’s Compare Sevier Co. Hotel Performance
to These Resort Areas in the U.S.
Myrtle Beach, SC
Charleston, SC
Daytona Beach, FL
Orlando, FL
Branson, MO
Panama City, FL

18. Myrtle Beach, SC vs. Sevier Co. –
Percent Change Hotel Occupancy Rates,
2008 over 2007
0%
-5%
-10%
-15%
-20% BLACK = Myrtle Beach, SC
RED = Sevier Co.
-25%
-30%
= Sevier Co. Occ Rate changed less
Source: Smith Travel Research

19. Branson, MO vs. Sevier Co. – Percent
Change Hotel Occupancy Rates,
2008 over 2007
10%
0%
-10%
-20%
-30% BLACK = Branson, MO
-40% RED = Sevier Co.
-50%
= Sevier Co. Occ. Rate changed
-60% Source: Smith Travel Research
less

20. Orlando, FL vs. Sevier Co. – Percent
Change Hotel Occupancy Rates,
2008 over 2007
5%
0%
-5%
-10%
BLACK = Orlando, FL
-15% RED = Sevier Co.
-20% = Sevier Co. OccSmith Travel Research less
Source:
Rate changed

21. Panama City, FL vs. Sevier Co. – Percent
Change Hotel Occupancy Rates,
2008 over 2007
30%
25% BLACK = Panama City, FL
20% RED = Sevier Co.
15%
10% = better Sevier Co. Occ Rate
5% changed less
0%
-5%
-10%
-15%
-20% Source: Smith Travel Research

22. Daytona Beach, FL vs. Sevier Co. –
Percent Change Hotel Occupancy Rates,
2008 over 2007
5%
0%
-5%
-10%
-15% BLACK = Daytona Beach, FL
RED = Sevier Co.
-20%
-25%
= Sevier Co. Occ Rate changed less
Source: Smith Travel Research

23. Charleston, SC vs. Sevier Co. – Percent
Change Hotel Occupancy Rates,
2008 over 2007
0%
-5%
-10%
BLACK = Charleston, SC
-15% RED = Sevier Co.
-20%
= Sevier Co. Occ Rate changed less
Source: Smith Travel Research

24. Sevier Co. – Percent Change Avg. Daily
Rates (ADR), 2008 over 2007
6%
4.2%
4% 3.6%
3.1%
2% 1.2% 0.8% 0.9%
0%
-2% -1.3%-1.5%
-4%
-3.8%-3.7%-3.9%
-6%
Source: Smith Travel Research -5.9%
-8%

25. Sevier Co. – Percent Change
RevPAR, 2008 over 2007
5%
1.5% 1.5%
0.3%
0%
-1.6%
-5%
-6.5% -6.0%
-10%
-10.1% -10.2%
-11.9% -12.3%
-15%
-14.4%
-20%
Source: Smith Travel Research
-19.4%
-25%

26. Outlook for 2009
(Swimming or treading water?)

27. 2009 Economic Stimulus Package
Not much help – Why?
• 2008 stimulus package provided lump
sum checks of $2,400 for family of five
• 2009 stimulus package spreads same
amount over full year to equal $13
more per week

28. Gas prices fall from $4.00+, but are
beginning to rise
$4.50
$4.11
$4.00
$3.50 $3.28
$3.00
$2.50 $2.18
$2.00
$1.50
$1.00
$0.50
$0.00
20-Mar-08 Record High - 11-May-09
7/14/08
Source: AAA Daily Fuel Gauge Report

29. What will be the shape of our recovery?
Economic Growth V-Shaped?
1.2
1
0.8
0.6
0.4
0.2
0
2007 2008 2009 2010 2011 2012

30. What will be the shape of our recovery?
Economic Growth U-Shaped?
1.2
1
0.8
0.6
0.4
0.2
0
2007 2008 2009 2010 2011 2012

31. What will be the shape of our recovery?
Horizontal L-Shaped?
Economic Growth
1.2
1
0.8
0.6
0.4
0.2
0
2007 2008 2009 2010 2011 2012

32. What is today’s consensus for
recovery?
• V-shaped recovery: 10%
–(getting weaker)
• U-shaped recovery: 85%
–(getting weaker)
• Horizontal L-shaped: 5%
–(getting stronger)

33. Smith Travel Research
Hotel Data Conference
• August 4-5, 2009
• Nashville, TN
• More information at:
www.strglobal.com

34. 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