Tourism Satellite AccountCalendar Year 2011

The Economic Impact of Tourism in Georgia

2

Key results

After a strong rebound in 2010, the Georgia visitor economy surged ahead in 2011, growing 9.7%.

Total tourism demand reached a new high of $31 billion in 2011.

This economic activity sustained 400,000 jobs in 2011, including direct, indirect, and induced impacts.

10.3% of all jobs* in the state are directly and indirectly sustained by tourism activities.

Including indirect and induced impacts, tourism in Georgia generated $2.6 billion in state and local taxes and $3.4 billion in Federal taxes in 2011.

* BLS SAE total payroll employment

3

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.

4

ACCOMODATION

CATERING, ENTERTAINMENT

RECREATION, TRANSPORTATION

&OTHER TRAVEL RELATED SERVICES

PRINTING/PUBLISHING, UTILITIES

FINANCIAL SERVICES, SANITATION SERVICES

FURNISHINGS AND EQUIPMENT SUPPLIERS,

SECURITY SERVICES, RENTAL CAR MANUFACTURING,

TRANSPORTATION ADMINISTRATION, TOURISM

PROMOTION, SHIP BUILDING, AIRCRAFT MANUFACTURING,

RESORT DEVELOPMENT, GLASS PRODUCTS, IRON/STEELT&

T DIR

EC

T

T&T IN

DIR

EC

T

T&T IN

DU

CE

D

OV

ER

ALL T&

T IMP

AC

T

FOOD & BEVERAGE SUPPLY, RETAILERS

BUSINESS SERVICES, WHOLESALERS, COMPUTERS,

UTILITIES, MANUFACTURERS, HOUSING, PERSONAL SERVICES

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

5

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?

6

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…

7

• 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

8

• 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

9

Detailed Results

10

Tourism demand (spending)

Non-visitor private consumption expenditures (PCE) represent tourism consumer durables such as an RV, boat, or furniture for a vacation home. These rose 2.9% 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, declined slightly by -3.3%.

Capital investment, including construction of hotels and attractions, as well as tourism infrastructure, grew strongly in 2011 at a rate of 21%.

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%

% change 2011/10 9.3% 2.9% 2.9% -3.3% 21.3% 9.7%

Tourism Demand by Category, $ million

11

Tourism demand by source

Domestic visitor markets comprise the majority (81%) 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.

Non-visitor PCE1% CAPEX

10%Internat'l Visitor8%

Domestic Visitor81%

Gov't Support0.1%

12

Tourism demand growth

$-

$5

$10

$15

$20

$25

$30

$35

2006 2007 2008 2009 2010 2011

Domestic Visitor Internat'l Visitor CAPEX

Tourism Demand Trendbillions

Source: Tourism Economics

13

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.

14

Tourism business sales by sector

Tourism demand of $31 billion generated $49 billion in business sales, including indirect and induced impacts. Total tourism-generated business sales expanded 8.9% in 2011.

Direct* Indirect Induced TotalAgriculture, Fishing, Mining 101 79 180 7.5%Construction and Utilities 652 392 294 1,337 11.0%Manufacturing 1,333 839 2,173 7.5%Wholesale Trade 2,280 547 564 3,391 17.6%Air Transport 9,156 27 32 9,215 12.5%Other Transport 663 808 252 1,723 7.3%Retail Trade 5,008 219 1,098 6,325 5.3%Gasoline Stations 1,840 15 70 1,925 23.5%Communications 537 337 874 7.5%Finance, Insurance and Real Estate 742 1,384 1,316 3,442 6.7%Business Services 326 2,834 729 3,890 7.4%Education and Health Care 87 1,295 1,382 7.8%Recreation and Entertainment 1,566 54 116 1,736 6.1%Lodging 3,308 79 86 3,472 6.0%Food & Beverage 4,133 322 438 4,893 5.9%Personal Services 1,076 136 382 1,594 4.4%Government 34 162 1,279 1,476 7.4%TOTAL (2011) 30,783 9,039 9,206 49,027 8.9%TOTAL (2010) 28,054 8,424 8,541 45,019 7.3%TOTAL (2009) 25,987 7,950 8,030 41,967 -8.9%* Direct sales include cost of goods for retail sectors

Tourism Sales (Output) % change from year

earlierUS$ Million, 2011

15

Tourism sales

Tourism Business Sales

0123456789

10A

ir T

rans

port

Ret

ail T

rade

F&

Bev

Bus

. S

vcs.

Lodg

ing

Fin

., I

nsur

.

Who

le.

Tra

de

Man

ufac

turin

g

Gas

Sta

tions

Rec

reat

ion

Oth

. T

rans

p.

Per

s. S

vcs.

Gov

ernm

ent

Induced

Indirect

Direct*

$ billion

16

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 $10.8 billion in 2011, accounting for 2.4% of total Georgia GDP.

Industry Composition 2010 2011 %

Agriculture, Fishing, MiningConstruction and Utilities

Manufacturing

Wholesale Trade

Air Transport 2,858 3,215 12.5%Other Transport 301 322 7.0%Retail Trade 787 824 4.7%Gasoline Stations 210 221 5.0%Communications

Finance, Insurance and Real Estate 430 446 3.8%Business Services 128 138 7.3%Education and Health Care

Recreation and Entertainment 754 799 6.0%Lodging 2,246 2,378 5.9%Food & Beverage 1,867 1,972 5.6%Personal Services 492 507 3.0%Government

TOTAL 10,074 10,822 7.4%

Tourism Industry GDP(US$ Million)

17

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 7.7% in 2011.

Including the direct, indirect and induced impacts of total tourism demand, the tourism sector generated $21.9 billion of state GDP. This is 5.2% of the state economy.

18

Tourism GDP Impact

Direct* Indirect Induced Total

Agriculture, Fishing, Mining 28 32 60 7.6%Construction and Utilities 436 261 208 906 11.0%Manufacturing 325 236 561 7.5%Wholesale Trade 184 369 380 934 10.3%Air Transport 3,215 9 11 3,236 12.5%Other Transport 322 563 139 1,024 7.3%Retail Trade 824 143 717 1,685 6.2%Gasoline Stations 221 10 48 279 5.5%Communications 270 167 436 7.5%Finance, Insurance and Real Estate 446 911 792 2,149 6.7%Business Services 138 1,577 418 2,133 7.4%Education and Health Care 52 805 857 7.8%Recreation and Entertainment 799 31 68 898 6.2%Lodging 2,378 51 54 2,483 5.9%Food & Beverage 1,972 153 209 2,334 5.9%Personal Services 507 71 200 779 4.6%Government 22 59 1,086 1,167 7.5%TOTAL (2011) 11,464 4,884 5,571 21,919 7.7%TOTAL (2010) 10,626 4,552 5,168 20,346 7.1%TOTAL (2009) 9,843 4,296 4,859 18,999 -9.1%

Tourism GDP (Value Added) % change from year

earlier(US$ Million)

19

Tourism GDP impact

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

Tourism GDP Impact

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Air

Tra

nspo

rt

Lodg

ing

F&

B

Fin

, In

sura

nce

Bus

. S

vcs.

Ret

ail T

rade

Gov

ernm

ent

Oth

er T

rans

port

Who

lesa

le T

rade

Con

str,

Util

ities

Rec

reat

ion

Edu

, H

ealth

Per

sona

l Ser

vice

s

Induced

Indirect

Direct

$ billion

20

Ranking tourism industry employment

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

On this basis, tourism is the 5th largest private employer in the state of Georgia.

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

21

Total tourism employment

The tourism sector directly and indirectly supported more than 400,000 jobs, or 10.4% of all payroll employment* in Georgia last year.

Tourism-related employment grew 2.2 in 2011 as visitor spending recovered.

* BLS SAE total payroll employment

Direct Indirect Induced Total

Agriculture, Fishing, Mining 1,528 1,254 2,782 2.0%Construction and Utilities 10,789 962 349 12,100 5.1%Manufacturing 3,769 2,163 5,932 2.0%Wholesale Trade 1,335 2,636 2,711 6,683 3.3%Air Transport 41,353 109 129 41,591 2.2%Other Transport 9,931 8,201 2,510 20,643 2.7%Retail Trade 26,416 3,046 18,354 47,816 2.4%Gasoline Stations 4,654 180 880 5,714 1.4%Communications 1,546 783 2,330 2.0%Finance, Insurance and Real Estate 6,972 6,205 13,177 2.0%Business Services 1,069 22,638 7,998 31,705 2.0%Education and Health Care 1,357 14,933 16,290 2.1%Recreation and Entertainment 28,957 1,072 2,625 32,654 2.9%Lodging 43,127 897 964 44,989 -0.1%Food & Beverage 73,478 5,904 8,031 87,413 2.8%Personal Services 15,147 2,018 8,734 25,899 2.2%Government 69 941 810 1,821 2.1%TOTAL (2011) 256,326 63,776 79,435 399,537 2.2%TOTAL (2010) 250,438 62,599 77,790 390,827 2.0%TOTAL (2009) 245,238 61,619 76,492 383,348

Tourism Employment % change from year

earlier2011

22

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, 13,200 people are employed in the finance, insurance, and real estate sector as a result of tourism activity.

Tourism Generated Employment

-10

10

30

50

70

90

F&

B

Ret

ail T

rade

Lodg

ing

Air

Tra

nspo

rt

Rec

reat

ion

Bus

Svc

s

Per

sona

l Ser

v

Oth

er T

rans

p

Edu

, H

ealth

Fin

, In

sur

Con

stru

ctio

n

Who

le.T

rade

Man

ufac

turin

g

Gas

olin

e

Th

ou

san

ds

Induced

Indirect

Direct

Total tourism employment

23

Tourism personal income

$14.3 billion in compensation was generated by tourism demand in 2011, an increase of 5.0%

Direct Indirect Induced TotalAgriculture, Fishing, Mining 18 22 40 4.5%Construction and Utilities 598 103 69 770 7.0%Manufacturing 212 129 341 4.5%Wholesale Trade 100 202 207 509 6.0%Air Transport 2,669 8 9 2,686 8.7%Other Transport 209 461 103 773 4.6%Retail Trade 562 88 439 1,089 4.1%Gasoline Stations 100 5 21 126 2.0%Communications 139 72 211 4.5%Finance, Insurance and Real Estate 316 333 340 989 4.6%Business Services 53 1,193 328 1,574 4.5%Education and Health Care 37 675 712 4.7%Recreation and Entertainment 901 24 46 971 4.3%Lodging 1,257 28 30 1,314 1.5%Food & Beverage 1,338 105 143 1,586 4.2%Personal Services 366 56 157 579 3.6%Government 40 27 68 4.5%TOTAL (2011) 8,470 3,052 2,816 14,338 5.0%TOTAL (2010) 8,035 2,924 2,690 13,650 5.7%TOTAL (2009) 7,622 2,759 2,529 12,911 -7.4%

Tourism Income (Compensation) % change from year

earlier(2011, US$ Million)

24

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 $35,885 in income per employee (including part-time).

Tourism Generated Income

0.0

0.5

1.0

1.5

2.0

2.5

3.0

Air

Tra

nspo

rt

F&

B

Bus

ines

s S

vcs.

Lodg

ing

Ret

ail T

rade

Fin

, In

sura

nce

Rec

reat

ion

Oth

er T

rans

port

Con

str,

Util

ities

Edu

, H

ealth

Per

sona

l Svc

s.

Who

lesa

le T

rade

Induced

Indirect

Direct

$ billion

25

Tourism tax generation Taxes of $5.9 billion were directly

and indirectly generated by tourism in 2011.

State and local taxes alone tallied $2.6 billion.

Each household in Georgia would need to be taxed an additional $744 per year to replace the tourism taxes received by state and local governments.

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

State and Local Taxes 2,457 2,277 2,412 2,580

Corporate 184 168 180 196 Personal Income 350 323 342 359 Sales 1,027 936 1,004 1,093 Property 745 712 738 771 Excise and Fees 131 119 128 139 State Unemployment 21 19 20 21

TOTAL 5,710 5,278 5,595 5,952

% change year ago 1.1% -7.6% 6.0% 6.4%

Tourism-Generated Taxes(US$ Million)

26

State government’s role

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

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

Current (operating) support of tourism contracted 3.3% in 2011.

Capital expenditures in support of tourism increased 30% on account of transport infrastructure.

FY 2012 Capital

General SpecificEconomic Development Aviation Hall of Fame -$ Civil War Commission -$ Music Hall of Fame -$ Sports Hall of Fame -$

Tourism 9,434,970$ Film, Video, and Music 485,333$

Natural Resources Historic Preservation 1,189,537$ Parks, Recreation and Historic Sites 14,093,738$ Coastal Resources 3,332,018$

Office of the GovenorGeorgia Council for the Arts 309,900$

Public SafetyAviation 2,192,030$ Department of TransportationGeorgia Aviation Authority 3,206,501$ Capital construction projects 101,788,885$ Capital maintenance projects 28,596,984$ Construction administration 10,941,563$ Total 9,920,303$ 24,323,724$ 141,327,432$ % change -1.4% -4.0% 29.6%

State Expenditures on TourismTOURISM ATTRIBUTION

Current

27

Tourism capital investment

More than $2.9 billion was invested by the tourism sector last year, including hotels, recreational facilities, and related government capital outlays.

This marks the second year of recovery in tourism capital investment, with a 13% gain in 2011.

2007 2008 2009 2010 2011 2011 % change

Construction 1,110,340,200$ 1,093,385,055$ 440,076,674$ 438,948,080$ 510,569,427$ 16%

Machinery and Equipment 2,478,577,839$ 2,059,535,755$ 1,850,605,775$ 2,052,996,640$ 2,279,919,623$ 11%

Government Capital Outlays 147,650,000$ 155,870,608$ 107,474,569$ 109,061,426$ 141,327,432$ 30%

Total 3,736,570,046$ 3,308,793,425$ 2,398,159,027$ 2,601,008,156$ 2,931,818,493$ 13%

Tourism Capital Investment

28

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 100 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

29

For more information:

Adam Sacks, Managing Director

adam@tourismeconomics.com

Christopher Pike, Senior Economist

cpike@tourismeconomics.com