Prepared for The Vermont Department of Tourism and Marketing

Prepared by Community Development and Applied Economics

University of Vermont

In Association with the

Vermont Tourism Data Center, University of Vermont

March 2002

The Impact of Tourism on the Retail Economy in Vermont:

April 1999 – March 2000

Report prepared

By

Nancy E. Wood and Dr. Kathleen Liang

Department of Community Development & Applied Economics University of Vermont

In Association with Vermont Tourism Data Center

School of Natural Resources, University of Vermont

March 2002

Research Available through a partnership between the Vermont Department of Tourism and Marketing (VDTM) and Vermont Tourism Data Center (VTDC), School

of Natural Resources, University of Vermont

(802) 828-3230 (VDTM) (802) 656-0623(VTDC) http://snr.uvm.edu/vtdc

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Executive Summary

An analysis of the impact of tourism on the retail sector of the economy was

undertaken during the summer of 2001 by the Nancy E.Wood and Dr. Kathleen Liang at

the Community Development and Applied Economic Department in conjunction with the

Vermont Tourism Data Center at the School of Natural Resources at the University of

Vermont. This is a part of the ongoing partnership between the University of Vermont

and the Vermont Department of Tourism and Marketing.

Tourism plays a significant role in the Vermont economy, representing an

estimated 14% of the state's industrial output. Tourists spend $2.5 billion each year

during close to four million trips to the state. A large share of that spending - 31% - is in

the retail sector, accounting for an estimated 12% of all retail sales in the state. This

report provides an analysis of the impact of tourism on the Vermont retail industry during

the year April 1999 – March 2000. In summary:

• During the year April 1999 - March 2000 domestic tourists made 3.8 million

trips to Vermont, spending $2.58 billion in the state (p.1)

• An estimated $810 million - about 31% of total tourist spending - was in the

retail sector, including $480 million shopping for merchandise, $171 million

for food and beverages, and $159 million for gasoline (p.1)

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• This $810 million of retail spending represents about 12% of Vermont's total

retail sales of $6.8 billion (p.6).

• The total impact of this spending on the Vermont economy overall is

approximately $1.1 billion dollars of industry output, which includes direct

impact of $709 million of output, and indirect and induced impacts of $405

million of output (p.9).

• The total impact in terms of employee compensation is $343 million,

supporting over 16,000 jobs (p.10).

• The total impact on indirect business taxes (transaction taxes such as sales,

gasoline and rooms and meals taxes) is $81 million (p.11). Based on the

IMPLAN impact analysis used for this report, the federal portion of the tax is

$9.5 million and the state and local share is $71.4 million (p.12).

• Of the state indirect business taxes, $18.8 million is sales and use tax, the

primary transaction tax assessed on retail purchases. This is approximately 9%

of the total sales and use taxes collected in fiscal year 2000 (July 31, 1999 to

June 30, 2000), which were $210.8 million on taxable receipts of $4.2 billion.1

The general sales tax rate is 5%, and it is imposed on sales of tangible

personal property, certain public utility services, printing and fabrication

services, amusement charges (including ski tickets), telephone calling cards.

1 Vermont Department of Taxes, "Sales and Use Statistics Report - Period Summary by County/Town," Fiscal Year 2000.

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Table of Contents

Executive Summary i

Introduction 1

Vermont's Retail Sector 2

Tourism Share of Retail Sales 6

Economic Impact of Tourist Retail Spending 8

Summary and Conclusions 13

Appendix A: Tourists' Purchase Choices 15

Appendix B: Estimating 1999 Vermont Retail Sales 18

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List of Tables

Table 1. Employer operated retail establishments in Vermont (1997). ................................... 2

Table 2. Non-employer operated retail establishments in Vermont (1997). ............................ 3

Table 3. All retail establishments in Vermont (1997)................................................................. 4

Table 4. Summary of retail sales in Vermont (1997 & Estimated 1999 ). ................................ 5

Table 5. Employer Operated retail businesses employment information 1999. ...................... 6

Table 6. Retail spending by tourists in Vermont ( April 1999 - March 2000).......................... 7

Table 7. Comparison of all Vermont retail Spending and tourism retail spending. ............... 7

Table 8. Impact of tourist retail spending on industry output in Vermont............................ 10

Table 9. Impact of tourist spending on employee compensation in Vermont........................ 11

Table 10. Impact of tourist spending on employment in Vermont (number of jobs)............ 12

Table 11. Impact of tourist spending on Indirect Business Taxes in Vermont (1999 - 2000)................................................................................................................................................. 12

Table A-1. Visitor spending on food by product category....................................................... 15

Table A -2. Visitor spending on merchandise by product category........................................ 17

Table B-1. Calculations of increases in Vermont retail Sales, 1997 to 1999........................... 19

Table B-2. Estimated 1999 Retail Sales by Employer Operated Businesses. ......................... 20

Table B-3: Calculations for estimated 1999 Sales by All Vermont Retail Businesses. .......... 20

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The Impact of Tourism on the Retail Economy in Vermont: April 1999 – March 2000

Introduction

Vermont's tourist industry has a significant impact on the Vermont economy,

representing over 14% of industry output. In the year ending March 2000 domestic tourists

made over 3.8 million trips to Vermont, spending $2.58 billion during their visits. An estimated

$810 million of this spending - about 31% - was for merchandise, groceries and gasoline. An

additional $676.7 million (26%) was spent on lodging, and $502.6 million (20%) on food and

beverages in restaurants.2 This report examines the impact on Vermont's retail sector of the

merchandise, grocery and gasoline expenditures.

The first section of the report describes the Vermont retail sector in 1997, which is the

most recent complete information available from the Economic Census of the U.S. Census

Bureau3. This detailed information is supplemented with and compared to 1999 data on

employment in the retail sector from the Vermont Department of Employment and Training4.

Retail sales are estimated for the year 1999 by applying inflation factors averaging

approximately 12% to the 1997 sales data (explained in Appendix B, p.18).

In the second section of the report, tourism’s share of retail sales is calculated. Tourist

spending for the year April 1999 through March 2000 is compared to the estimated 1999 retail

2 Department of Community Development and Applied Economics and the Vermont Tourism Data Center, University of Vermont, "The Impact of the Tourism Sector on the Vermont Economy 1999-2000," report prepared for the Vermont Department of Tourism and Marketing, September 2001. 3 1997 Economic Census: Retail Trade in Vermont, US Census Bureau. 4 Vermont Department of Employment and Training, Labor Market Report for 1999.

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sales. The year 1999 was chosen because it is the closest match to the year covered by our

survey data which includes nine months during 1999.

The third section of the report analyzes the economic impact of tourist retail spending on

the Vermont economy, specifically on industry output, employee compensation, jobs and indirect

business taxes. The fourth section is a discussion about tourists’ purchase choices and estimates

of the percentage of spending that is on Vermont made products. The final section presents a

summary of the report and conclusions.

Vermont's Retail Sector

In 1997 the retail sector in Vermont posted sales of over $6 billion with an annual

payroll of $603 million supporting over 36,000 employees. There were a total of 9,206

TABLE 1. EMPLOYER OPERATED RETAIL ESTABLISHMENTS IN VERMONT (1997). NAICS

Description

# Establishments

Sales ($1,000)

Annual Payroll

($1,000)

Paid Employees Total 4,093 5,898,646 603,345 36,306 441 Motor vehicle & parts dealers 434 1,484,722 115,553 4,453 445 Food & beverage stores 647 1,110,284 110,458 9,342 444 Building material & garden equipment &

supplies dealers 405 668,805 78,511 3,221

454 Non-store retailers 270 583,357 69,999 2,811 447 Gasoline stations 489 512,552 39,787 3,298 452 General merchandise stores 146 440,544 41,433 3,420 448 Clothing & clothing accessories stores 416 285,499 33,887 2,727 446 Health & personal care stores 220 267,034 37,211 1,855 453 Miscellaneous store retailers 460 176,663 24,079 1,858 451 Sporting goods, hobby, book & music

stores 289 156,459 21,811 1,724

443 Electronics & appliance stores 146 110,744 14,764 748 442 Furniture & home furnishings stores 171 101,983 15,752 849 Source: 1997 Economic Census: Retail Trade in Vermont, US Census Bureau.

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establishments of which 4,903 were employer-owned and 5,116 filed income tax but had no

employees (Tables 1, 2 and 3).5

The employer-owned establishments conducted most of the business, with retail sales of

$5.9 billion. Motor vehicle & parts dealers had the highest volume of sales at $1.5 billion,

followed by food & beverage stores at $1.1 billion, and building material & garden equipment &

supplies dealers at $668 million. The food & beverage stores provided one fourth of the jobs,

with 9,342 employees (Table 1). Non-store retailers had sales of close to $70 million. Non-store

retailers which would include direct marketers who sell products from the home, at outlets such

as craft fairs, door-to-door and by mail, telephone and Internet. (Table 2).

TABLE 2. NON-EMPLOYER OPERATED RETAIL ESTABLISHMENTS IN VERMONT (1997). NAICS

Description

#

Establishments

Sales

($1,000) Total 5,116 175,655 453 Miscellaneous store retailers 1,431 45,044 454 Non-store retailers 2,046 37,465 441 Motor vehicle & parts dealers 312 26,727 445 Food & beverage stores 222 19,024 451 Sporting goods, hobby, book & music stores 440 14,893 444 Building material & garden equipment & supplies dealers 106 8,067 448 Clothing & clothing accessories stores 183 6,031 442 Furniture & home furnishings stores 111 5,772 447 Gasoline stations 22 3,701 446 Health & personal care stores 123 3,664 452 General merchandise stores 54 2,738 443 Electronics & appliance stores 66 2,529 Source: 1997 Economic Census: Retail Trade in Vermont, US Census Bureau.

The 5,000 non-employer retailers are very small businesses, mostly sole proprietorships and

“mom & pop” stores. The total sales in 1997 for these businesses was $175 million, an average

5 1997 Economic Census: Retail Trade in Vermont, US Census Bureau.

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$34,000 per business. The 1,431 miscellaneous retail stores did the largest volume of business

with sales of $45 million, followed by non-store retailers at $37 million and the motor vehicle &

parts dealers with sales of almost $27 million. There were over 2,000 non-store, non-employer

retailers (Table 2).

Table 3 presents the combined number of establishments and sales of the employer and

non-employer retail establishments in Vermont in 1997.

TABLE 3. ALL RETAIL ESTABLISHMENTS IN VERMONT (1997).

NAICS Description #

Establishments Sales

($1,000)

Retail Trade Totals 9,209 6,074,301 441 Motor vehicle & parts dealers 746 1,511,449 442 Furniture & home furnishings stores 282 107,755 443 Electronics & appliance stores 212 113,273 444 Building material & garden equipment & supplies dealers 511 676,872 446 Health & personal care stores 343 270,698 448 Clothing & clothing accessories stores 599 291,530 451 Sporting goods, hobby, book & music stores 729 171,352 452 General merchandise stores 200 443,282 453 Miscellaneous store retailers 1,891 221,707 454 Non-store retailers 2,316 620,822 445 Food & beverage stores 869 1,129,308 447 Gasoline stations 511 516,253 Source: 1997 Economic Census: Retail Trade in Vermont, US Census Bureau.

A total of 9,209 establishments had sales of $6.07 billion, led by the 746 motor vehicle

and parts dealers with sales of $1.5 billion and food and beverage stores with sales of $1.1

billion.

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The tourism survey data that is used in this report was gathered through a national survey

of Vermont visitors, and includes questions about spending during trips to the state. Retail

categories included in the survey are "shopping," "food and beverages purchased in stores," and

"gasoline." Table 4 summarizes the 1997 retail sales data in Table 3 and an estimate of 1999

retail sales data in the same categories for comparison. Vermont 1997 retail sales included $4.43

billion by merchandise stores of all types ("shopping"); retail sales of $1.13 billion by food and

beverage stores; and $516 million in sales by gasoline stations.

TABLE 4. SUMMARY OF RETAIL SALES IN VERMONT (1997 & ESTIMATED 1999 ).

Vermont Retail Summary (1997) 1997 Sales

$1,000's Estimated 1999 Sales

$1,000's Estimated Increase

1997 to 1999 Merchandise (Shopping) 4,428,740 5,019,312 13.3% Food & Beverages 1,129,308 1,219,038 7.9% Gasoline 516,253 530,389 2.7% Total 6,074,301 6,768,739 11.4% Source: 1997 Sales: U.S. Economic Census. Estimated 1999 Sales: See Appendix.

The 1997 sales are the most current figures available from the U.S. Economic Census for

employer owned retail businesses. The estimated sales figures for 1999 in Table 4 have been

calculated using 1999 non-employer information from the U.S. Economic Census, and inflation

factors from several other sources6 applied to the 1997 employer owned businesses. Based on

these estimates retail sales totalled $6.8 billion in 1999. This included merchandise sales of $5

billion; food and beverages sales of $1.2 billion; and gasoline sales of $530 million.

The Vermont Department of Employment and Training (VTDET) publishes up-to-date

information on employee compensation and employment for employer operated businesses. The

number of employees (36,890) in 1999 is comparable to 1997, while the employee compensation

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in 1999 ($669 million) is approximately 10% higher. There are some differences in the base from

the Economic Censusus for 1997, as the retail sector for Vermont is based on the older Standard

Industrial Classification (SIC) system, while the economic census data is based on the new North

American Industry Classification System (NAICS). One significant difference between the two

classification systems is the eating and drinking sector, which is included as part of the retail

sector under the SIC codes, but is separately listed for NAICS in the economic census. Table 5

presents the Vermont retail employement data for 1999 from VTDET, excluding the eating and

drinking sector.

TABLE 5. EMPLOYER OPERATED RETAIL BUSINESSES EMPLOYMENT INFORMATION 1999.

# Establishments Average Annual

Employment Employee

Compensation

Average Wage

Building & Garden Supplies 285 2,643 63,069,724 23,861 General Merchandise Stores 139 3,360 44,424,278 13,221 Food Stores 705 10,680 141,137,647 13,215 Auto Dealers & Service Stations 664 6,366 158,378,530 24,878 Apparel & Accessory Stores 310 2,332 30,925,916 13,262 Furniture & Home Furnishings 322 1,988 45,590,437 22,938 Miscellaneous Retail 1,231 9,521 186,124,537 19,549 Total 3,656 36,890 669,651,069 18,153 Source: Vermont Department of Employment and Training, Labor Market Report for 1999.

Tourism Share of Retail Sales

Vermont tourists spent approximately $810 million for merchandise ("shopping"), food

and beverages and gasoline when in Vermont during April 1, 1999, through March 31, 2000.

This is about 31% of total tourist expenditures during that time. The largest amount was $479.95

million for merchandise (59.2%), followed by $171.19 million for food and beverages (21.1%)

6 See the Appendix for sources of information and the calculations for the 1999 estimates of retail sales in Vermont.

7

and nearly as much - $159.21 million - for gasoline (19.6%). Table 6 summarizes the data on

retail spending by tourists in Vermont during the year April 1999 through March 2000, and

compares it to total tourist spending during that time.

TABLE 6. RETAIL SPENDING BY TOURISTS IN VERMONT ( APRIL 1999 - MARCH 2000).

Tourist Spending Summary Retail Spending by Tourists (Million$)

% of Total Tourist Retail

Spending

Total Tourism Spending (Million$)

Retail % of Total Tourist

Spending Merchandise (“Shopping”) 479.95 59.2% 18.6% Food and Beverages 171.19 21.1% 6.6% Gasoline 159.21 19.6% 6.2% Total 810.36 100.0% 2,579.83 31.4% Source: “The Impact of the Tourism Sector on the Vermont Economy 1999-2000,” report prepared for the Vermont Department of Tourism and Marketing by CDAE and VTDC, September 2001.

The total retail spending by tourists is approximately 12% of Vermont’s retail sales,

based on the estimated $6.8 billion in retail sales for 1999. Tourist spending accounts for 9.7%

of merchandise sales, 13.6% of food and beverage sales, and 27.6% of gasoline sales (Table 7).

TABLE 7. COMPARISON OF ALL VERMONT RETAIL SPENDING AND TOURISM RETAIL SPENDING.

Vermont Retail Sales (Million$)1

Tourist Spending (Million$)2 Tourism %

Shopping 4,953 479.9 9.7% Food and Beverages 1,263 171.2 13.6% Gasoline 577 159.2 27.6% Total 6,793 810.4 11.9% Notes: 1. Estimated sales for 1999 (1997 Retail Sales x 1.1183) 2. Estimated spending by domestic tourists, April 1999 - March 2000.

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Economic Impact of Tourist Retail Spending

To evaluate the economic impact of retail spending by tourist's on Vermont’s economy,

this study used the IMPLAN economic impact model, which traces the flow of goods and

services, income, and employment among related sectors of the economy. The model estimates

the direct effects, indirect effects, and induced effects of tourism spending. These effects

characterize the way money is circulated through a region’s economy.

• Direct effect refers to production change associated with a change in demand for

the good itself. It is the initial impact to the economy caused by tourist spending

in Vermont.

• Indirect effect refers to the secondary impact caused by changing input needs of

directly affected industries (e.g., additional input purchases to produce additional

output). For example, a hotel buys food from local vendors, rents linens, uses

local services of banks, accountants, etc.

• Induced effect is caused by changes in household spending due to the additional

employment generated by direct and indirect effects. For example, the employees

of the hotel and the services used by the hotel take their pay and spend it in the

local economy, supporting other businesses.

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The IMPLAN model also estimates an output multiplier, an employment multiplier, and

an indirect business tax multiplier. Multipliers are summary indicators of tourism impact that

characterize how changes in tourist spending can affect other sectors within the state’s economy.

• Output Multiplier: An output multiplier for a sector is defined as the total

production in all sectors of the economy that is necessary to satisfy a dollar’s

worth of final demand for that sector’s output. In other words, for every dollar

change in direct industry output in one sector to meet final-demand spending, the

change in the total value of output in all sectors of the economy7.

• Employment Multiplier: For every million-dollar change in direct industry output

in one sector to meet final-demand spending, the change in number of jobs in the

whole economy.

• Indirect Business Taxes Multiplier: For every dollar change in direct industry

output to meet final-demand spending, the change in total indirect business taxes.

Using the IMPLAN software, the impacts of retail spending by tourists have been

estimated on industry output, employee compensation, jobs and indirect business taxes. Indirect

business taxes include all transaction taxes, such as the state sales tax, rooms and meals taxes,

and gasoline taxes.

7 For example, if more tourists eat at restaurants, the output of the food and beverage sector will increase. This in turn will lead to an increase in purchases from food vendors and other services by the restaurants, and increased employee compensation. The employees will buy all types of goods and services from the economy. Thus the multiplier effect as the tourists' dollars flow through the economy.

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Table 8 summarizes the impact on industry output. The direct impact is $708.9 million,

with an output multiplier of 1.571. In other words, for every dollar of industry output to meet

tourists' retail demand there is a total impact of $1.57 throughout all sectors of the economy.

Added to the direct effect of the tourist's dollar of spending is an additional 57.1 cents in indirect

and induced effects. The total impact on the economy is $1.1 billion including these indirect and

induced effects.

TABLE 8. IMPACT OF TOURIST RETAIL SPENDING ON INDUSTRY OUTPUT IN VERMONT. Industry Output Impact Direct Indirect Induced Total Multipliers Shopping 479,948,074 106,456,566 159,724,536 746,129,201 1.555 Food 171,193,876 56,587,786 48,562,571 276,344,240 1.614 Gas 57,794,159 11,428,655 22,169,169 91,388,561 1.581 Total 708,936,109 174,473,007 230,456,276 1,113,862,002 1.571 Source: IMPLAN impact analysis, 1999 dollars.

The $708.9 million in direct output impact is less than the $810 million in spending

because a portion of the tourists' purchases are for goods manufactured outside of Vermont. For

example, there is no petroleum industry in Vermont, so a large percentage of the gasoline

purchases cannot be attributed to the Vermont economy. The national survey data for 1999 -

2000 did not capture specific information about purchases of merchandise and food or the

percentages that are Vermont made, so this analysis may overstate the impact in these categories.

(See Appendix A, p. 15 for further discussion of the types of purchases made). Future studies

include more specific questions about Vermont made products that will help to refine the

spending analysis for that year.

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Based on the above assumption, the direct impact of tourist spending for merchandise

("shopping") is $479.9 million, with a total impact of $746.1 million; the direct impact of tourist

spending for food and beverages in retail stores is $171.2 million with a total impact of $276.3

million; and the direct impact of gasoline purchases is $57.8 million with a total impact of $91.4

million.

The impact on employee compensation of tourists' retail spending is shown on Table 9.

The direct impact is $222.7 million, with a multiplier of .484. In other words, for every dollar of

industry output to meet tourists' retail demand there is 48.43 cents of total employee

compensation as the tourists' dollar ripples through the economy . The total of the direct,

indirect and induced activity is $343.5 million in employee compensation (Table 9).

TABLE 9. IMPACT OF TOURIST SPENDING ON EMPLOYEE COMPENSATION IN VERMONT. Impact Direct Indirect Induced Total Multipliers

Shopping 160,610,650 31,263,859 49,778,405 241,652,913 0.503 Food 38,409,194 14,304,556 15,134,603 67,848,356 0.396 Gas 23,652,464 3,416,848 6,909,057 33,977,832 0.588 Total 222,672,308 48,985,263 71,822,065 343,479,101 0.484 Source: IMPLAN impact analysis, 1999 dollars.

Table 10 summarizes the impact on jobs. The direct impact of tourists' retail spending is

10,576 jobs, with a multiplier of 22.8 jobs. Based on this multiplier, there are 22.8 jobs

supported by each million dollars of industry output attributable to tourist retail demand. The

total number of jobs supported by tourism, including direct, indirect, and induced effects, is

16,192. This is 5.6% of total state non-farm employment in 1999 of 291,500.8

8 Vermont Department of Employment and Training, Labor Market Report for 1999. The average annual non-farm employment (unadjusted) in Vermont for 1999 was 291,500.

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TABLE 10. IMPACT OF TOURIST SPENDING ON EMPLOYMENT IN VERMONT (NUMBER OF JOBS).

Impact Direct Indirect Induced Total Multipliers Shopping 7,789.10 1,299.40 2,425.30 11,513.80 24.0 Food 1,917.10 666.4 737.4 3,320.80 19.4 Gas 869.5 150.9 336.6 1,357.00 23.5 Total 10,576 2,117 3,499 16,192 22.8 Source: IMPLAN impact analysis, 1999 dollars.

Table 11 summarizes the impact of tourists' retail spending on indirect business taxes.

The direct impact of spending for shopping, food and beverages and gasoline is $60.2 million,

with a multiplier of 11.4. In other words, for every dollar of industry output to meet tourists'

retail demand there is a total of 11.4 cents of indirect business tax revenue received. The total of

this tax revenue is $80.9 million for the year April 1999 - March 2000.

TABLE 11. IMPACT OF TOURIST SPENDING ON INDIRECT BUSINESS TAXES IN VERMONT (1999 - 2000).

Impact Direct Indirect Induced Total Multipliers Shopping 41,335,884 4,072,701 9,693,481 55,102,069 0.115 Food 10,189,446 2,206,733 2,947,202 15,343,380 0.090 Gas 8,661,622 431,309 1,345,419 10,438,313 0.181 Total 60,186,952 6,710,743 13,986,102 80,883,762 0.114 Source: IMPLAN impact analysis, 1999 dollars.

A portion of the indirect business taxes go to the federal governemnt, and the balance is

paid to the state or municipalities. Based on the IMPLAN impact analysis used for this report,

the federal portion of the tax is $9.5 million and the state and local share is $71.4 million. Of the

state indirect business taxes, $18.8 million is sales and use tax, the primary transaction tax

assessed on retail purchases. This is approximately 9% of the total sales and use taxes collected

in fiscal year 2000 (July 31, 1999 to June 30, 2000), which were $210.8 million on taxable

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receipts of $4.2 billion.9 The general sales tax rate is 5%, and it is imposed on sales of tangible

personal property, certain public utility services, printing and fabrication services, amusement

charges (including ski tickets), telephone calling cards and some other services. There are 44

exemptions, including food, clothing with purchase price of $110 or less, and medicines.10 The

5% tax rate would have been imposed on some portion of the tourists' spending for shopping that

cannot be determined from the data. This report accounts for the sales tax generated from retail

spending, and does not include the additional taxes paid by tourists when purchasing ski tickets,

lodging and meals.

Summary and Conclusions

Tourist spending for merchandise, food and beverages and gasoline has a significant

impact on the retail sector of the Vermont economy. The total of $810 million spent in 1999 -

2000 represents about 12% of retail sales in the state (Table 7, page 7). These tourist dollars

ripple through the economy, providing a total impact of $1.1 billion dollars in total state output

(Table 8, page 10). This retail spending as a total impact on employee compensation of $343.5

million (Table 9, page11) and supports 16,192 jobs in the state (Table 10, page 11).

More than half of the tourist spending ($479.9 million) is on "shopping." The impact of

this spending presented in this report is based on the assumption that most is for Vermont made

products. However, future studies will be based on data that is more specific as to the proportion

that is for products that are made out of state. The 1999 report that analysed the spending of

9 Vermont Department of Taxes, "Sales and Use Statistics Report - Period Summary by County/Town," Fiscal Year 2000. 10 Vermont Department of Economic Development website, http://www.thinkVermont.com.

14

tourists who indicated that they had purchased Vermont products11 on the National Survey

showed that a quarter of their purchases were for clothing and accessories, of which only 41%

were perceived to be Vermont made. On the positive side, however, over 70% of purchases

were perceived to be Vermont made, and included a wide variety of products such as fok art,

pottery, furniture, glassware and jewelry.

Tourists spend about $171.2 million on food and beverages in stores, less than one half of

the amount spent on merchandise. Spending for gasoline accounts for an additional $159.2

million, close to 20% of tourists' retail spending. Based on the 1999 visitor spending study12 a

large percentage of the food expenditures may be Vermont made; but Vermont has no petroleum

industry so over 60% of the dollars spent on gasoline leaves the state.

In conclusion, the greatest benefit to the state economy comes from spending that is for

products that are made within the state. Strategies that encourage the transfer of purchase

choices from non-Vermont products to Vermont made products will increase the already

significant impact of tourism on the retail economy.

11 University of Vermont, Vermont Tourism Data Center and School of Business, "A Further Examination of Vermont Visitor: The 1999 Phase Three National Reports, Report #2: Product Purchases in Vermont." 12 University of Vermont, Vermont Tourism Data Center and School of Business, "A Further Examination of Vermont Visitor: The 1999 Phase Three National Reports, Report #2: Product Purchases in Vermont."

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Appendix A: Tourists' Purchase Choices

As indicated in the prior section, the economic impact of tourists' retail spending is based

on the assumption that most, with the exception of gasoline, is for Vermont made products. The

national survey data collected for 1999-2000 was not specific enough to determine specific items

purchased.

However, a follow up survey of a sample of tourists who indicated that they bought

Vermont products provides some insight. The spending of these tourists were analyzed in

"Report #2: Product Purchases in Vermont," one of several reports included in "A Further

Examination of the Vermont Visitor: The 1999 Phase Three National Reports."13 Based on

information about visitor spending by product category, 93.6% of food purchases were perceived

to be Vermont made (Table A-1) and 70.6% of merchandise purchases are perceived to be

Vermont made.

TABLE A-1. VISITOR SPENDING ON FOOD BY PRODUCT CATEGORY.

Food Category Avg. Spent per

Visitor ($) % Perceived

VT Made Avg. Spent on VT Made ($)

Maple Syrup 5.53 97.9% 5.41 Dairy 1.98 93.6% 1.85 Specialty Food 1.64 93.1% 1.53 Fresh Fruit 1.05 85.8% 0.90 Meat 0.89 77.3% 0.69 Totals 11.09 93.6% 10.38 Source: The 1999 Phase Three National Report #2.7

13 University of Vermont, Vermont Tourism Data Center and School of Business, "A Further Examination of Vermont Visitor: The 1999 Phase Three National Reports, Report #2: Product Purchases in Vermont," statistics taken from Table 2, page 9.

16

Based on Table A-1, the average amount spent per visitor for food for this sample was $11.09, of

which $10.38 was for Vermont made foods. Maple syrup represents more than one half of this

spending. In comparison, in the national sample as a whole the average amount spent per visitor

for food and beverages was $13.98. This would include a variety of products such as bread,

snack foods, sodas, beer, etc., that are not included in the phase 3 analysis.

Table A-2 summarizes the spending on merchandise, with the amount of each category

perceived to be Vermont made. Of the total spending per person of $41.98 about one quarter

($10.61) is for clothing and accessories, of which only 41% is perceived to be Vermont made.

The next largest category of spending is for folk art ($5.40), of which nearly 94% is perceived to

be Vermont made, followed by pottery (90.7% Vermont made), furniture (85.6% Vermont

made), jewelry (83.7%), and furnishings (75%).

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TABLE A -2. VISITOR SPENDING ON MERCHANDISE BY PRODUCT CATEGORY.

Shopping Category Avg. spent per

Visitor ($) % Perceived

VT Made Avg. spent on VT Made ($)

Clothing/Accessories 10.61 41.0% 4.35 Folk Art 5.40 93.8% 5.07 Pottery 2.99 90.7% 2.71 Furniture 2.57 84.6% 2.17 Jewelry 2.49 83.7% 2.08 Furnishings 2.48 75.0% 1.86 Candles 2.19 86.4% 1.89 Glassware 1.83 88.8% 1.63 Books 1.69 52.1% 0.88 Prints/Cards/Photos 1.66 62.1% 1.03 Toys/Games 1.65 61.6% 1.02 Woodenware 1.58 96.8% 1.53 Wicker/Baskets 1.50 85.7% 1.29 Garden/Accessories 1.38 74.2% 1.02 Personal Care 1.03 43.8% 0.45 Music/Tapes/Videos 0.51 57.9% 0.30 Floral (Dried Silk) 0.42 86.6% 0.36 Total: 41.98 70.6% 29.64 Source: The 1999 Phase Three National Report #2.7

For comparison, in the 1999-2000 national sample the average per person spending for

shopping was slightly less at $39.19. If 70.6% of this spending was for Vermont made products

that would translate into $27.67 per visitor, and would indicate that about 30% of the shopping

expenditures were for products made out of state.

The current survey now underway for the year 2000-2001 includes more specific

questions about the purchase of Vermont made products that will help refine the spending

analysis for that year.

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Appendix B: Estimating 1999 Vermont Retail Sales

The Economic Census of the U.S Census Bureau provides complete data on retail sales

by state every five years. The 1997 census was the most recent data for sales for Vermont based

employer operated businesses. For smaller, non-employer businesses there is more current 1999

data available. The census data is based on calendar years.

The purpose of this report is to analyze the impact of tourism retail spending that

occurred during the study year of April 1, 1999 through March 31, 2000. Nine months of that

period fall within the calendar year 1999, so the comparison is made to sales during that year. An

estimate was made of the sales of employer-owned businesses because of the lack of data from

either the U.S. Census or from the State of Vermont.

For employer businesses, which constitute most of the retailers in the state, we have

compared the overall increases from 1997 - 1999 reported or estimated by three sources, and

determined that 11% - 12% is a reasonable estimate of the increase in Vermont retail sales

between 1997 and 1999 :

a. the Bank of Tokyo-Mitsubishi, Ltd (New York) estimated an increase of 11.83%

in Vermont retail sales, based on 5.8% from 1997 to 1998, and 5.7% from 1998 – 1999.

b. the Vermont Department of Taxes data shows an increase of 12.0% in sales and

use tax receipts from 1997 to 1999.

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c. 11.8%is the average increase for two years based on increases estimated for 1997 to

2002 by Editor & Publisher in their 2002 Market Guide.14 (Note: I chose the 2002 Market Guide

over the 2001 Guide because the averages were more moderate and closer to the other sources. I

did not use the 1999 or 2000 Guide estimates because they were based on the 1992 economic

census, used SIC codes and were inconsistent with the 1997 census.)

2. Having established a 12% overall increase, I've taken the Editor & Publisher two year

average increases for Food (8.3%), Merchandise (13.7%) and Gasoline (2.7%) and applied them

to the 1997 sales from the Economic Census. That gives us estimates for the employer operated

businesses. Table B-1 summarizes the percentage increases applied to 1997 retail sales, and the

TABLE B-1. CALCULATIONS OF INCREASES IN VERMONT RETAIL SALES, 1997 TO 1999. Editor &Publisher

Estimated Vermont Retail Sales 2002

Increase from 1997 (5 Years)

Average Increase Per Year (/5years)

Average Increase for 1997 – 1999 (x 2 years)

Shopping 5,745,212 34.4% 6.9% 13.7% Food & Beverage 1,339,487 20.6% 4.1% 8.3% Gasoline 547,638 6.8% 1.4% 2.7% Total 7,632,337 29.4% 5.9% 11.8%

following Table B-2 summarizes the estimated retail sales by employer operated businesses

based on the percentage increases in Table B-1. The total sales are $6.59 billion, which includes

$4.86 billion in sales of merchandise (“shopping”), $1.2 billion of food and beverage sales, and

$526 million in sales of gasoline.

14 The Market Guide 2001, Editor & Publisher, NYC, NY, Volume 77.

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TABLE B-2. ESTIMATED 1999 RETAIL SALES BY EMPLOYER OPERATED BUSINESSES. 1997 U.S. Economic Census

Vermont Retail Sales (Employer Operated)

Estimated Increase 1997 – 1999

(Table A-1) 2 years

Estimated 1999 Vermont Retail Sales

(Employer Operated Businesses)

Shopping 4,275,810 13.7% 4,863,570,800 Food & Beverage 1,110,284 8.3% 1,201,965,200 Gasoline 512,552 2.7% 526,586,400 Total 5,898,646 11.8% 6,592,122,400

3. For the non-employer operated businesses (no employees) the Economic Census

provides numbers for food and merchandise. I've added these to the employer operated

businesses. For gasoline there is no census data for 1999 because there were too few businesses

to report without compromising proprietary information, so we increased the 1997 sales by the

same percentage (2.7%) as for the employer operated businesses. Table B-3 summarizes the

calculations for the estimates of 1999 sales of all Vermont retail businesses.

TABLE B-3: CALCULATIONS FOR ESTIMATED 1999 SALES BY ALL VERMONT RETAIL BUSINESSES. Vermont Total

Retail Sales 1997

Estimated Sales 1999 Employer

+ 1999 Non –Employer

Sales

Total Estimated 1999 Retail Sales

Average Increase

1997 - 1999 Shopping 4,428,740,000 4,863,570,800 155,741,661 5,019,312,461 13.3% Food 1,129,308,000 1,201,965,200 17,073,000 1,219,038,200 7.9% Gas 516,253,000 526,586,400 3,802,339 530,388,739 2.7% Total 6,074,301,000 6,592,122,400 176,617,000 6,768,739,400 11.4%

The estimated sales for 1999 are $6.768 billion, which is an increase of 11.4% over 1997,

and includes $6.592 billion in sales by employer operated retail businesses and $176 million in

sales by non-employer businesses.