Editor’s note: This is the third of three articles about defining and measuring visitors to your community. Read article No. 1, “Segmenting first step to measure impact.” Read article No. 2, “Estimating total visitors to your community.”
BOULDER, Colorado—One of the most important outcomes of measuring visitors to your community is estimating the economic impact of tourism in your area. At its most basic level, visitor spending is a critical piece of information for many reasons, including lobbying for state funding, talking to local officials or explaining the importance of tourism to stakeholders.
Other important economic impacts of tourism include taxes paid by visitors, jobs created by tourism, secondary spending, improved quality of life, and others. This article focuses on how to calculate direct visitor spending.
Like some of the other tourism metrics discussed previously, the timeframe of interest is one of the most important parameters of measuring economic impact. Visitor spending can be calculated over a duration as short as a single-day special event or as long as over the course of a year. Either way, the best methodology for determining visitor spending is to ask visitors how much they spent while visiting your community.
A survey of visitors that includes a section on how much they spent on their trip is the standard way to determine visitor spending. The survey can be done as an intercept survey during their visit or online as a follow-up survey after they have returned home. When asking a survey respondent how much money they spent, clear wording of the question is critical to collecting accurate information. Be unambiguous regarding whether you are asking about individual spending only or spending for the family/travel party, and also be clear about whether you are asking about spending for the entire trip or for a single day. Depending on when the visitor is surveyed (either during or after the trip) will help to determine how you should word the question.
The survey also should ask some detail regarding the category of spending—for example, hotels, shopping, food-and-beverage/dining, entertainment, attractions/activities and other spending. Different categories can be added or deleted, but having approximately five to seven spending groupings not only makes the question easier for the respondent to answer but also allows some detail in the analysis of the responses. Knowing the breakdown of visitor spending by type of spending can be useful for a variety of reasons.
The expenditure figures from your visitor survey need to be expressed in a per-person, per-day average amount. This figure is the “least common denominator” that can be applied to all visitors, regardless of visitor type, size of travel party or length of stay. This figure allows you to compare your results historically and to other communities. While spending per party, spending per trip and other spending metrics are useful, the per-person, per-day figure is most important.
Typically, the per-person, per-day average spending is segmented into overnight visitors and day visitors. Overnight visitors exhibit higher average spending amounts because of hotel expenditures, but they also typically spend more on shopping, dining and other categories than do day visitors.
Once you have the total per-person, per-day average spending amount, broken out by overnight visitors and day visitors, you apply that figure to the total number of overnight visitor and day visitors in your community. (How do you know how many people visit your community? See Part 2 of this series.) The product of the average spending and the total number of people will yield a total direct visitor spending figure.
Measuring other impacts
Direct visitor spending is one part of the overall economic impact of tourism, but it is the first step in quantifying that impact. Other impacts include secondary spending (indirect and induced), jobs created, taxes paid, quality of life and other impacts. Those figures are important too, but are beyond the scope of this article.
Conducting your research in a statistically reliable way will lead to results you can stand behind, especially if someone questions how you arrived at your total visitor spending number. Research that is done in a methodologically sound manner is representative, accurate, actionable and defensible. Be sure to have a plan to conduct your visitor research in a way that will result in information that is reliable and you will be able to use the results in a variety of ways to show how important tourism is to your community.