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Terrorist Attacks in New York City and Washington, DC: Implications for the Florida Tourism Industry
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 Material Information
Title: Terrorist Attacks in New York City and Washington, DC: Implications for the Florida Tourism Industry
Physical Description: Fact Sheet
Creator: Hodges, Alan
Publisher: University of Florida Cooperative Extension Service, Institute of Food and Agriculture Sciences, EDIS
Place of Publication: Gainesville, Fla.
Publication Date: 2001
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Acquisition: Collected for University of Florida's Institutional Repository by the UFIR Self-Submittal tool. Submitted by Melanie Mercer.
Publication Status: Published
General Note: "Published October 2001."
General Note: "FE 316"
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Source Institution: University of Florida Institutional Repository
Holding Location: University of Florida
Rights Management: All rights reserved by the submitter.
System ID: IR00001927:00001

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Terrorist Attacks in New York City and Washington, D.C.: Implications for the Florida Tourism Industry1 Alan Hodges and David Mulkey2 1. This is EDIS document FE 316 (one in a series), a publication of the Department of Food and Resource Economics, Florida Cooperative Extension Service, Institute of Food and Agricultural Sciences, University of Florida, Gainesville, FL. Published October 2001. Please visit the EDIS website at http://edis.ifas.ufl.edu. 2. Alan Hodges, assistant-in, and David Mulkey, professor, Department of Food and Resource Economics, Florida Cooperative Extension Service, Institute of Food and Agricultural Sciences, University of Florida, Gainesville, FL. The Institute of Food and Agricultural Sciences is an equal opportunity/affirmative action employer authorized to provide research, educational information and other services only to individuals and institutions that function without regard to race, color, sex, age, handicap, or national origin. For information on obtaining other extension publications, contact your county Cooperative Extension Service office. Florida Cooperative Extension Service/Institute of Food and Agricultural Sciences/University of Florida/Christine Taylor Waddill, Dean. This paper is one in a series prepared by faculty in the Department of Food and Resource Economics at the University of Florida. Other papers in the series address implications for the U.S. economic outlook (FE 311); U.S. trade policy (FE 312); state government revenues in Florida (FE 317); and the Florida citrus (FE 313), and vegetable (FE 314), and agronomic crops (FE 315) industries. Tourism is the largest industry group in Florida. The state's moderate climate, beaches, and many entertainment attractions draw visitors from across the United States and many foreign countries. In this paper, we attempt to evaluate the total economic impact of visitor spending in Florida, including the secondary impacts of other industries and consumer spending by industry employees as an indication of the risk to the state's economy from a downturn in visitation. The Florida Tourism Industry Florida's 4,700 hotels and motels have a total of 370,000 rooms, at an average daily room rate of $91, and they have an average annual occupancy rate of 70 percent. Surveys by Visit Florida USA indicate that over 71 million people visited Florida in year 2000, and visitors stayed an average of 5.3 days, representing a total of 379 million visitor-days (Table 1). About 55 percent of Florida visitors arrive by air travel. Visitor expenditures averaged $125 per day in 2000, giving estimated total expenditures of $47.37 billion in year 2000. These values do not include the tourism spending by Florida residents traveling within the state. It is interesting that although the total number of visitors has steadily increased since 1998, the average length of stay has decreased commensurately, resulting in total expenditures remaining rather stable. Florida visitor expenditures were distributed across transportation (28 percent), food (20 percent), lodging (21 percent), shopping (13 percent), entertainment (14 percent), and miscellaneous other expenses (five percent), according to 1998 surveys. Multiplying the total visitor expenditures by these percentages gives the estimated total expenditures by category (Table 2).

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Terrorist Attacks in New York City and Washington, D.C.: Implications for the Florida.... 2 Economic Impacts of Tourism in Florida The total economic impact of Florida visitor expenditures was evaluated with the Implan Professional (Implan) impact analysis and social accounting system software, and associated database for Florida (MIG, Inc.). A regional model for the Florida economy was constructed using Implan to reflect the linkages between industries, employees, institutions, and consumers. The logic of these types of models is that a change in activity of any given industry will have consequences for all other businesses that supply inputs to this industry and for the earnings and consumer spending of their employees, known as indirect and induced economic impacts, respectively. Florida visitor expenditures were assigned to various industry sectors in the Implan system, with some judgment about their relative magnitude within the expense groups. For example, transportation expenses were subdivided into air transportation (45 percent), transportation services (25 percent), automotive dealers and service stations (25 percent) and travel agents (five percent), while entertainment expenses were subdivided into amusement and recreation services (30 percent), theatrical producers, bands, etc. (40 percent), commercial sports (10 percent), racing and track operations (10 percent), and membership sports and recreation clubs (10 percent). The estimated total economic impacts of visitor spending in Florida in 2000 are summarized in Table 3. Total output (sales) impacts amounted to $117.2 billion (B), including $48.4B in direct effects in the tourism and travel industries, $13.3B in indirect effects in other linked industries, and $55.4B in induced effects of consumer expenditures by industry employees. Total employment impacts were estimated at 1.75 million jobs, including both full-time and part-time positions. Total value added impacts amounted to $77.5B, including $50.6B in labor income and $7.8B in indirect business taxes. Impacts on industries are summarized in Table 4. The largest industry group impacted was the services industry, at $36.4 billion (B) in output, $22.7B in value added, and 576,000 jobs. Also heavily impacted was the trade sector, including retail stores and wholesale distributing businesses, with $31.8B in output, $23.0B in value added, and 693,000 jobs. In addition, there were major impacts to the transportation/communication/utilities industries and finance/insurance/real estate. Impacts of Decreased Tourism The recent terrorist attacks in New York City and Washington, D.C. have shattered consumer confidence and have disrupted travel plans for many people. Already there has been a notable decline in the number of visitors to Florida. Hotel occupancy rates in the Orlando and Miami areas have been reported as low as 10 to 20 percent, compared to an average of 60 percent for September. Fishkind & Associates (Orlando, FL) reported that total tourism activity in Florida has been reduced by one-third, or about $20 million per day (The Wall Street Journal, September 24, 2001). Assuming that this level of decrease in tourism persists throughout the remainder of 2001, a 10 percent decrease in overall annual visitor expenditures may be anticipated. For this annual decrease in visitor spending, the estimated total annual economic impact to Florida would be $11.7 billion (B) in output, including indirect effects of $1.3 billion and induced impacts of $5.5B (Table 5). Also, there would be a loss of 175,000 jobs. Total value added impacts would be $7.7B, including personal income impacts of $5.0B, and indirect business tax impacts of $777 million. The economic impacts of a 10 percent decrease in Florida tourism are shown for major industry groups in Table 6. The hardest hit industry groups would be services and trade, each suffering over $3B in lost output and over 50,000 jobs. Conclusion Clearly, the tourism industry makes a very large contribution to the Florida economy. Visitor spending of around $47 billion annually supports total economic activity in excess of $100 billion, and nearly 1.75 million jobs. The total economic impacts of tourism are substantially greater than the direct value of visitor spending, due to the multiplier effect of new money introduced to the state's economy and the extensive linkages to many other sectors of the economy. In addition, travel and tourism spending by

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Terrorist Attacks in New York City and Washington, D.C.: Implications for the Florida.... 3 Florida residents within the state represent further direct economic impacts. Even a modest change of 10 percent in visitor spending can have enormous implications for economic activity because state government in Florida is largely funded by sales tax revenues, so any change in retail expenditures can dramatically affect state government fiscal balances.

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Terrorist Attacks in New York City and Washington, D.C.: Implications for the Florida.... 4 Table 1. Characteristics of Florida Visitors, 1998-2000. Measure 1998 1999 2000 Number of visitors (millions) 48.7M 58.9M 71.5M Average length of stay (days) 8.2 6.8 5.3 Total number of visitor-days (millions) 399.3M 397.6M 379.0M Average expenditure per person-day (dollars) $117.80 $123.40 $125.00 Total annual expenditures (billion dollars) $47.04B $49.06B $47.37B Source: Visit Florida USA, Florida Visitor Study, 1998, 2000, Tallahassee, Florida. M = millions B = billion dollars Table 2. Florida Visitor Expenditures, by Category. Expense Category Percent of Expenditures (1998) Total Annual Expenditures, 2000 (billion dollars) Transportation 28% $13.07B Food 20% $9.29B Lodging 21% $9.97B Shopping 13% $6.15B Entertainment 14% $6.63B Miscellaneous 5% $2.25B Total 100% $47.37B Source: Visit Florida, 1998 Florida Visitor Study, Tallahassee, Florida. B = billion dollars Table 3. Total Economic Impacts of Florida Visitors, by Impact Type, 2000.* Impact Measure Direct Indirect Induced Total Output (billion dollars) $48.44B$13.29B$55.44B$117.17B Total value added (billion dollars) $32.33B$8.37B$36.79B$77.48B Labor income (billion dollars) $21.04B$5.45B$24.10B$50.59B Indirect business taxes (billion dollars) $4.38B$0.60B$2.79B$7.77B Employment (jobs) 882,447 155,723 710,547 1,748,716 All amounts in billion dollars (2001), except employment (jobs). B = billion dollars

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Terrorist Attacks in New York City and Washington, D.C.: Implications for the Florida.... 5 Table 4. Total Economic Impacts of Florida Visitors, by Major Industry Group, 2000.* Industry Group Output Total Value Added Labor Income Indirect Business Taxes Employment (jobs) Services $36,413M$22,743M$17,157M$1,535M 575,868 Trade $31,816M$22,995M$14,303M$4,201M 693,106 Transportation, Communications, Utilities $15,663M$10,113M$6,349M $851M 161,416 Finance, Insurance, Real Estate $11,864M$8,651M$2,338M$1,060M 57,065 Government $9,015M$8,335M$6,752M N/A 151,849 Construction $6,965M$2,495M$2,218M $49M 62,111 Manufacturing $4,760M$1,721M$1,160M $57M 28,196 Agriculture $522M $298M $198M $10M 10,429 Other $103M $103M $103M $<1M 8,228 Mining $51M $30M $9M $3M 450 Total $117,172M $77,483M $50,587 $7,766M 1,748,716 All amounts in million dollars (2001), except employment (jobs.) M = million dollars N/A = Not Applicable Table 5. Total Annual Economic Impacts of a 10 Percent Decrease in Florida Tourism, by Impact Type.* Impact Measure Direct Indirect Induced Total Output (million dollars) $4,844M$1,329M$5,544M$11,717M Total Value Added (million dollars) $3,233M $837M$3,679M$7,748M Labor Income (million dollars) $2,104M $545M$2,409M$5,059M Indirect Business Taxes (million dollars) $438M $60M $279M$777M Employment (jobs) 88,245 15,572 71,055 174,872 All amounts in million dollars (2001), except employment (jobs). M = million dollars.

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Terrorist Attacks in New York City and Washington, D.C.: Implications for the Florida.... 6 Table 6. Total Annual Economic Impacts of a 10 Percent Decrease in Florida Tourism, by Major Industry Group.* Industry Group Output Total Value Added Labor Income Indirect Business Taxes Employment (jobs) Services $3,641M$2,274M $1,716M $154M 57,587 Trade $3,182M$2,300M $1,430M $420M 69,311 Transportation, Communications $1,566M$1,011M $635M $85M 16,142 Finance, Insurance, Real Estate $1,186M$865M $234M $106M 5,706 Government $902M $833M $675M $0M 15,185 Construction $697M $249M $222M $5M 6,211 Manufacturing $476M $172M $116M $6M 2,820 Agriculture $52M $30M $20M $1M 1,043 Other $10M $10M $10M $0M 45 Mining $5M $3M $1M $0M 45 Total $11,717M $7,748M $5,059M $777M 174,872 All amounts in million dollars (2001), except employment (jobs). M = million dollars