In my last Economic Development post I discussed data that was received about the trend over the past several years on hotel tax revenue for the town. I left that discussion off with a discussion about anticipated changes in the coming year for the tourist industry. Specifically, that the expectations are that there will be a drop in tourist travel, and that those who do travel will spend less. This is obviously going to be a major on-going issue that the town will have to follow over the coming months.
There are a variety of sources that have predicted significant, continued, drops in leisure travel until the economy bottoms out. The following analysis is based upon the “best” information available. Unfortunately, given detailed economic data from the 2007 County Business Patterns analysis is not yet available, much of the information is based upon trends in surrogate information.
Total hotel expenditures were approximately $28M in 2002, this dropped to about $20.9M, a nearly 25% drop in expenditures in Dennis hotels and motels. This is a combination of less travel and less rooms available. In 2002 combined hotel and secondary spending (excluding transportation) was about $70.4M, in 2008 this dropped to about $52.2M, a loss of over $18M in expenditures in the local economy. These drops in expenditures between 2002 and 2008 equates to about 210 jobs being potentially lost in the service economy in the town of Dennis, about 11% of those employed in the accommodations, restaurant and retail sectors in town.
Looking forward to what the projections for 2009 mean. A 3.5% drop in travel would mean a reduction in hotel expenditures to $20.2M from $20.9M, a loss of about $700,000 in direct hotel expenditures in a single year. If the secondary spending of these visitors do not change, this would mean a drop of about $810,000 in expenditures on meals and entertainment and $280,000 in retail expenditures. The job impact of this change would be about 24 more jobs impacted by the decline. If secondary spending is curtailed on meals (fast food rather than sit down restaurants), entertainment and retail expenditures by 15% as is predicted in some sectors, the impacts will be far more dire, with meals and entertainment spending dropping by a total of $4.1M and retail sales dropping $1.4M. This $5.5M drop would impact nearly 70 jobs in the meals, entertainment and retail sectors.
But there are even more dire predictions of as much as an 8% drop in leisure travel during 2009, in the worst case scenario, the 8% drop in leisure travel combined with the 15% reduction in discretionary spending the town would be looking at hotel expenditures of about $19M, rooms tax revenue as low as $770,960, meals expenditures by travelers dropping to $18.2M (a drop of about $5M in a single year) and a drop in retail expenditures by travelers to about $6.2M (a drop of about $1.7M in a single year). These drops in travel and related spending would impact about 110 jobs.