Source: Lake Geneva Regional News

Measuring tourism’s impact

July 12, 2012

I was enjoying spring so much this year that I almost hated to see the first official day of summer arrive.

Eighty degree temperatures in March were bonus days to me and diminished the sense of urgency that I normally feel to take advantage of any day that you don’t have to wear a parka or scrape ice off of the windshield of your car.

It may be a little early to tune up the snow blower, but the days are getting shorter and it’s time to give serious thought to how to maximize the rest of summer. Summer means travel and vacations, and Walworth County is the destination of choice for many vacationers.

As a result, tourism plays an important role in our county’s economy. Two interesting studies were recently released on the subject. The first was the State of Wisconsin’s annual update on tourism spending. The second, prepared by the Wisconsin Taxpayers Alliance, focused on the issue of room taxes, an important, but poorly understood source of revenue for municipal governments and the tourism industry, itself.

Having just written my last column on the importance of applying sound statistical methods to study data, I need to point out the inherent difficulties in quantifying the exact economic impact of tourism.

For starters, the tourism industry is not precisely defined, but rather, is comprised of numerous other industries as diverse as hospitality and new construction. As a result most of the data depends on surveys of travelers of how they report spending their time and money.

While I think it is reasonable to draw some general conclusions from all of this information, I get less hung up on year-to-year fluctuations than I used to. The state, itself, has made large revisions to its own statistics concerning tourism rankings in the past. While it’s possible to take issue with some of the data, it is beyond dispute that tourism has important impact on Walworth County.

According to the Wisconsin Department of Tourism, visitors spent almost $410 million in Walworth County last year, an increase of 13.75 percent over 2010. This overall spending places our county sixth among 72 Wisconsin counties, behind only Milwaukee, Dane, Sauk, Waukesha and Brown counties. In recent years, Walworth County has consistently placed sixth or seventh on this list.

All of this spending helps county residents in terms of the jobs it creates and taxes that it generates. According to the state, visitor spending supports 6,260 jobs in Walworth County, a 6.2 percent increase over 2010. Our own financial statements, which relied on third-quarter 2011 Department of Workforce Development statistics, placed the number of workers serving the leisure and hospitality industry at over 7,200.

As an industry, leisure and hospitality is second only to manufacturing in terms of the number of people it employs here. The impact of tourism extends beyond those directly employed in the industry. Studies typically cite two more categories of jobs that it creates.

First, tourism creates “indirect” jobs, such as those in construction, business services and manufacturing.

Hotels and restaurants, for example, remodel and expand. They require legal and financial services, and buy things for their guests. The people who supply those goods and services are said to be indirectly employed by the tourism industry. A final category of jobs are those “induced” by industry.

These are jobs that are supported by the paychecks of employees who are directly employed by tourism. Here is where the math can get a little fuzzy because of the generalizations that have to be made. I once read a study of the economic impact of professional sports teams that applied the same “indirect” and “induced” methodology to the salaries of athletes it directly employs.

The departure of former Milwaukee Brewers slugger Prince Fielder has probably had some negative impact on Milwaukee’s economy, but I am skeptical that all of his quarter billion dollar contract will be fully shared by the citizens of Detroit.

It isn’t, however, a stretch for me to believe that workers directly employed by Walworth County resorts and restaurants purchase groceries for their families and gasoline for their cars, thereby creating a substantial number of induced jobs in our county.

Another important economic impact of tourism comes in the form of room taxes. Since 1967, state law has permitted municipal and town governments to impose a tax on rooms or lodging that are provided for fewer than thirty consecutive days.

Prior to 1994, there were no limits on the rate that could be charged or the manner in which the tax could be spent. That year the legislature capped the maximum rate at eight percent and required that at least 70 percent of any new room tax be used for tourism promotion and development. According to the study, 11 local governments in Walworth County impose a room tax. Room tax rates range from three to eight percent.

Use of the money, likewise, varies greatly. Revenue raised from the tax is significant. During the period 2006-2010, those eleven municipalities collected a total of $10.8 million.

Numerous groups, including the Geneva Lake Area Chamber of Commerce, the Walworth County Visitors Bureau and the Geneva Lake West Chamber work tirelessly to promote tourism in our county.

If you haven’t finalized your summer plans yet, save some gas money and vacation here. You can get started by checking out the Visitors Bureau website at