2010-Heritage-Golf-Tournament-Economic-Impact-Report_2

Research Findings/Executive Summary Introduction Clemson University’s International Institute for Tourism Research and Development and USCBeaufort’s Department of Hospitality Management conducted an Economic Impact and Marketing Study of the 2010 Verizon Heritage Golf Tournament for the Heritage Classic Foundation The study took place during the week of the tournament (April 12-18, 2010) Over 1800 tournament spectators completed a survey that gathered demographic, spending, and marketing data The economic impact analysis was completed by the Strom Thurmond Institute’s Regional Dynamics and Economic Modeling Laboratory Method Survey’s were developed using SNAP Survey software and were administered using touchscreen laptop computers at the main entrance to Harbour Town Golf Links and in the Heritage Expo Area between the 1st and 9th holes Students from Clemson University and USC-B intercepted patrons and asked them to participate in the survey To insure as random of a sample as possible at this event, students were to approach every 10th individual crossing a line determined by the researchers until the computers in their area were full When computers opened, the students continued with the same sampling frame Students kept track of acceptances and rejections on an intercept report form Over 2100 individuals took the survey with 1891 of those surveys being useable The overall response rate was 53% Spectator Profile Heritage spectators tend to be older (over 60% are 55 or older), males (53%), well educated (64.8% have a bachelor’s degree of higher), and have high incomes (55.5% reported incomes of $100,000 or more with 17.4% of those respondents reporting incomes of $200,000 or more) Permanent residents made up 39% of respondents, non-resident property owners (with a permanent residence outside of Beaufort County, SC) made up 21.2% of respondents, and visitors (permanent residence outside Beaufort County, SC) made up 39.8% of respondents Heritage spectators tend to be loyal While 15.7% of individuals surveyed indicated that the 2010 Verizon Heritage was the first time they had attended the tournament, 27.9% have attended 2-5 times, 18.2% have attended 6-10 times, and 16% have attended 11-20 times Approximately 29% of respondents indicated they would be very unlikely or unlikely to visit Hilton Head Island if the Heritage was no longer held there, 13.4% were unsure, and 46% said they would be likely or very likely to visit Also, 55.8% of respondents indicated that the primary reason for their visit was to attend the tournament However, it is important to note that the majority of the 46% that indicated that they were likely or very likely to visit Hilton Head without the Heritage and the 23% of respondents that indicated the primary purpose of their visit was “Other” were permanent residents or non-resident property owners The average number of days spectators attended the tournament was 3.36 with 48.1% of respondents attending or more days Advertising and Marketing Word of mouth was, by far, the best form of advertising with 41% of respondents indicating that word of mouth was extremely or very influential in their decision to attend the tournament New advertising campaigns (Get Your Plaid On and Sir William, Tournament Spokesperson) were very or somewhat influential in decisions while all other forms of advertising (tv, radio, print, etc) scored between somewhat and slightly influential Just over 43% of spectators indicated that they had used the tournament website (www.verizonheritage.com) to obtain information about the tournament Survey respondents indicated that they used Facebook (30.7%), internet news sites (44.8%), internet sports sites (41.6%), and general internet search engines (49.1%) on a regular basis Respondents were asked about their recollection of different forms of advertising Based on these results, radio advertising appears to be relatively ineffective in reaching spectators Zip codes collected from the survey and online ticket sales were used to determine which markets are generating spectators and compared to the Neilson, Arbitron, and Scarborough market shares in those DMA’s to aid in determining where marketing dollars should be spent • Strong Markets for 2011: Savannah, Columbia, Augusta, Charleston, GreenvilleSpartanburg- Ashville, and Macon • Moderate Markets for 2011 (a little more emphasis might go a long way): Knoxville, Richmond, Cincinnati, Nashville, Raleigh-Durham, Charlotte-Gastonia-Rock Hill • Weak Markets for 2011 (will get business regardless because of large populations within the DMA and advertising is costly within these locations): Washington, Boston, Philadelphia, Chicago, and New York • Atlanta is important because of its large DMA and ability to reach the surrounding communities adjacent to the Augusta and Macon DMA’s No unexpected or other significant differences between respondent groups based on gender, age, income, education, residence, etc that should cause the Heritage Classic Foundation to take any action based on the results were found Satisfaction with Tournament/Hilton Head Island Attributes and Tournament Operations Verizon Heritage Spectators are very satisfied with tournament/Hilton Head Island attributes (location, professional golf, dining options, timing, etc) and tournament operations (prices, food, transportation system, etc.) On a 5-point scale, with being very dissatisfied and being very satisfied, satisfaction with “How the tournament is being run” scored a 4.47 and “Overall satisfaction with the 2010 Verizon Heritage Golf Tournament” scored a 4.48 Economic Impact The economic impact of visitor spending was estimated using primary data collected in the survey and modeled using Regional Dynamics In addition to visitor spending, spending by the Heritage Classic Foundation was included in the model The economic impact analysis does not include spending by sponsors, television and media, or players and caddies nor does it take the prize money awarded to players ($5.7 million which they will pay state income taxes on) into account – all of which have additional positive impacts on the local and state economy not reported here Most importantly, the model did not include spending by permanent residents An overall individual attendance estimate based on ticket sales and distribution and information obtained in the survey (badge type and average number of people using badges) yielded a total individual spectator estimate of 42,591 with 25,980 (61% of total) of those indicating a permanent residence outside of Beaufort County, SC Only spending data for the 25,980 visitors was included in the economic impact analysis Spending by permanent residents was not included An estimate of daily spending by individuals was determined by dividing the amount of spending indicated by visitors survey responses in categories (lodging, dining, retail, entertainment, transportation, and other) then dividing by the number of people that individual was financially responsible for to control for travel party size From survey responses the 25,980 individual visitors were segmented by the number of days they attended the tournament (1, 2, 3, or or more) and the average number of days spent on Hilton Head Island/Beaufort County by category was determined There were 4390 individual visitors who attended the tournament one-day and had an average trip length of 5.01 days for a total of 21,933 visitor days in Beaufort County with an average daily expenditure of $335 There were 4650 individual visitors who attended the tournament two-days and had an average trip length of 5.36 days for a total of 24,924 visitor days in Beaufort County with an average daily expenditure of $324 There were 4442 individual visitors who attended the tournament three-days and had an average trip length of 6.35 days for a total of 26,652 visitors days in Beaufort County with an average daily expenditure of $337 There were 12,496 individual visitors who attended the tournament four or more days and had an average trip length of 8.23 days for a total of 102,842 visitor days in Beaufort County with an average daily expenditure of $385 Visitor Spending by Category, Heritage Classic Foundation (HCF) Spending, and Overall Direct Spending Category 1-day Attendees 2-day Attendees 3-day Attendees 4+ day Attendees Lodging $128 $117 $110 $149 Dining $71 $70 $81 $78 Retail $58 $56 $59 $72 Entertainment $53 $55 $58 $60 Transportation $25 $26 $29 $26 Daily Total $335 x $324 x $337 x $385 x Visitor Days in BC Generated 21,993* 24,924* 28,206* 102,842* $7,367,655 $8,075,376 $9,505,422 $39,594,170 $64,542,623 Other Reported $ 910,009 Total by Visitors HCF Spending $65,452,632 Overall Total $72,308,084 $ 6,855,452 *Visitor Days in BC Generated by Category = Visitors in category x Average trip length by category Overall Economic Impacts of the 2010 Verizon Heritage on Beaufort County – Regional Dynamics Model 1999/2001 2005 2010 Visitor Output $40.280m $72.594m $74.129m HCF Output $4.362m $7.318m $7.779m Total Output $44.642m $79.912m $81.908m ($74.317 discounted to 2005) Wage Bill $16.819m $30.937m $35.056m Jobs 551 948 1115 Net Local Government Revenues $2.151m $3.661m $4.095m Comparison of Implan and ReDyn Models 1999/2001-2005-2010 1999/2001* 2005 2010 Implan $51m $84m $86m** ReDyn $44.642m $79.912m $81.908m $79.912 $74.317m Difference ReDyn Discounted to 2005 dollars *ReDyn data only goes back to 2001 – therefore, 1999 data was used to run a 2001 model in ReDyn **Estimate only – Implan Model not run in 2010 When the 2010 impact is discounted/adjusted to 2005 dollars, the total output decreases from $81.908m to $74.317 or a percent decrease in overall output since 2005, which was expected given the state of the economy Estimate of Local and State Government Revenues and Expenditures for 2010 – Regional Dynamics Model State Local Revenue $9.186m $4.349m Expenditures $ 623m $ 254m Net Government Revenues $8.560m $4.095m Attached spreadsheets outline state and local government revenue and expense details Comparison to Economic Impact of Other Events Event Total Output Wage Bill 2005 Players Championship Darlington Raceway $95.78m* 2010 NASCAR Las Vegas 2009 Champs and Capital One Bowl Games Super Bowl $165+m $54m $40.71m Jobs Taxes 1398 $5.97m $7.9m total $3.4m directly to state and local $80m Low: $176m in 1992 High: $463m in 2007 $217.8m 2001 Kentucky Derby Cooper River $20m** Bridge Run Family Circle $25m Cup 2010 US Open, $150m direct Pebble Beach spending *During 2010 Players Championship TV coverage, total economic impact of the tournament was reported as over $120 million but the report is not yet available **Report by College of Charleston shows that runners spend considerably less per day than the average tourist As the table above illustrates it is difficult to compare economic impact analyses Several problems have been discussed in the literature throughout the years First, some organizations and researchers have tended to overestimate economic impacts by using inappropriate secondary data, overestimating the proportion of spending attributable to visitors/spectators based on that secondary data, and using wildly disproportionate multipliers Second, often time these numbers are pulled out of thin air, are based on inadequate data, or not use models like Regional Dynamics or Implan In these cases, the reported impacts tend to be lower or more conservative Finally, many people apply multipliers that are out of date or, again, pulled out of thin air Unless the exact same methodology and inputs are used, one should use caution in comparing economic impact studies (or not even attempt to so at all) Collecting primary spending data from visitors or spectators, controlling for travel party size and financial responsibility of the individual reporting spending, and using input/output models like Implan or ReDyn is the most accurate way to estimate economic impacts associated with an event or activity The current study follows those guidelines and actually leaves out some spending that would increase the overall impacts (player and caddie spending, sponsor spending, spending by the media and television personnel – are all left out of this model) In addition, the multiplier calculated by Regional Dynamics for this study is a very modest 1.13 In the table above the only study that even comes close to utilizing the same method as this study is the 2005 Players Championship Researchers surveyed over 2000 spectators and utilized Implan to determine outputs Economic Impact Conclusion The Verizon Heritage Golf Tournament is an important part of the tourism industry in Beaufort County Occupancy rates in Beaufort County spike during the month of April (Easter week/public school spring breaks and the Heritage Golf Tournament are responsible for this spike) and fall off again by as much as 12% for the first couple of weeks of May leading into the summer tourist season With a total output of $81.9 million (economic activity generated by tournament spectators who live outside Beaufort County, SC) and 71.2% of visitors indicating that the Verizon Heritage Golf Tournament was the primary purpose of their trip to Hilton Head/Beaufort County and 62% of visitors indicating that they are unsure, unlikely, or very unlikely to visit the area if the tournament was no longer held there, a conservative estimate of between $50.78 million and $58.31 million of total economic output would be lost in Beaufort County if the Verizon Heritage was no longer held in the county Projected and Total Impacts 2001-2015 ReDyn has the ability to project economic impact out several years Assuming that spending remains level, the Verizon Heritage Golf Tournament’s impact will be approximately the same each year through 2015 ($81.879m in 2015) Using ReDyn’s yearly estimates of total output, the Verizon Heritage has had a total economic impact of almost $660m since 2001, has generated over $62 million in net government revenues for the State of South Carolina, and over $26 million in net local government revenues during the same period When the 2011-2015 impacts are added in, the total economic impact of the Verizon Heritage between 2001 and 2015 will reach $1 billion, net state government revenues will grow to nearly $100 million, and net local government revenues will grow to $44 million Economic Impact Summary and Fact Sheet for the 2010 Verizon Heritage Golf Tournament Introduction In 1999, 2005, and 2010, Clemson University’s International Institute for Tourism Research and Development has conducted studies for the Heritage Classic Foundation to: 1) Provide snapshot demographic information about tournament spectators 2) Determine the effectiveness of marketing activities 3) Estimate the economic activity and impact generated by tournament spectators and the Foundation’s spending on Beaufort County Primary data was collected at the tournament each year through spectator surveys For the purposes of estimating the economic activity and impact of the tournament, spending by permanent residents of Beaufort County is excluded from the analysis In 2010, the Strom Thurmond Institute’s Regional Dynamics and Economic Modeling Laboratory and USC-Beaufort’s Department of Hospitality Management were centrally involved in conducting the study Economic Impact Modeling Input/output modeling software was utilized each year to determine tournament impacts Implan was used in 1999 and 2005 while Regional Dynamics (ReDyn) was utilized in 2010 ReDyn is a newer model and offers advantages over Implan Estimates for total output/impact tend to be more conservative than Implan and ReDyn provides impact projections rather than only point in time estimates Data from 1999 and 2005 was run using the ReDyn model to provide an apples to apples comparison across time However, since ReDyn’s data only goes back to 2001, the 1999 numbers were used to run the model beginning in 2001 Therefore, the researchers were able to provide economic impact estimates looking backwards to 2001 and forward through 2015 Economic activity and impact estimates are reported in five ways: 1) Direct Spending - estimate of actual expenditures by visitors and the foundation 2) Wage Bill - payroll to support economic activity 3) Jobs - number of jobs supported by economic activity 4) Net Government Revenues - taxes and other fees generated by economic activity minus expenses incurred 5) Total Output - total impact including direct, indirect, and induced effects Limitations The estimates provided here not include spending by the television network and it’s personnel, members of the media, Verizon as the title sponsor and other major sponsors, tournament vendors, players, caddies, agents, and their families, club manufacturers, PGA Tour staff, or state income taxes paid by players on prize money Impact Comparison 2001-2005-2010 (Regional Dynamics Model) Impact Indicator 2001 2005 Direct Spending $34.11 million $70.35 million Wage Bill $16.81 million $30.93 million Jobs 551 948 Net Government State: $4.58 million State: $7.70 million Revenues Local: $2.15 million Local: $3.66 million Total Output $44.64 million $79.91 million 2010 $72.30 million $35.05 million 1115 State: $8.56 million Local: $4.09 million $81.90 million Discussion and Conclusion The million dollar question is: what would the effect be if the Verizon Heritage is no longer held in Beaufort County? Because it is highly unlikely that all visiting spectators would not return to Hilton Head if the tournament was no longer held there, it would not be accurate to say that the entire $81.9 million in total output would be lost Therefore, spectators were asked their likelihood of returning to the area if the tournament was no longer held on Hilton Head (62% were unsure, unlikely, or very unlikely) and if the tournament was their primary purpose for their visit to the island (71.2% indicated it was) Using those indicators as a gauge, it is likely that between $50.78 million and $58.31 million in total output would likely be lost in Beaufort County It is important to note that even though some spectators will still return to the area, it is highly unlikely that they would all decide to so during the same week in April Since 2001, spending by visitors (permanent residence outside of Beaufort County, SC) and spending by the Heritage Classic Foundation has created almost $660 million in total output, over $62 million in net state government revenues, and over $26 million in net local government revenues When the 2011-2015 projected impacts are added, the total economic impact of the Verizon Heritage between 2001 and 2015 will surpass $1 billion, net state government revenues will grow to nearly $100 million, and net local government revenues will grow to $44 million Results Tables 10 Get Your Plaid On Females were significantly more influenced than males by the Get Your Plaid On campaign Television Advertising The more visits an individual had made to the Verizon Heritage, older, more education, and higher income spectators are significantly less likely to be influenced by television advertising Permanent residents were significantly more likely to be influenced by television advertising than visitors Radio Advertising Older and higher income spectators were significantly less likely to be influenced by radio advertising Print Advertising Older spectators were significantly less likely to be influenced by print advertising Permanent residents and property owners were more likely to be influenced by print advertising than visitors Online/Internet Advertising Older spectators were significantly less likely to be influenced by online/internet advertising Direct Mail Advertising Older spectators were significantly less likely to be influenced by direct mail advertising Email Advertising Older spectators were significantly less likely to be influenced by direct mail advertising Word of Mouth Older spectators and spectators who had made more visits to the Verizon Heritage were significantly less likely to be influenced by word of mouth Female spectators were significantly more likely to be influenced by word of mouth Permanent residents and property owners were significantly less likely to be influenced by word of mouth than visitors News Coverage Older and higher income spectators were significantly less likely to be influenced by news coverage 21 Table 14: Heritage/HHI Website Usage Website Verizon Heritage Website Percent 43.7 HHI/Bluffton Chamber Website 12.1 Verizon Heritage Website Use • Spectators who with a lower number of visits to the Verizon Heritage were significantly less likely to have used the Verizon Heritage Website • Older spectators were significantly more likely to have used the Verizon Heritage Website • Permanent residents were significantly more likely to have used the Verizon Heritage Website than visitors, while non-resident property owners were significantly less likely to have used the Verizon Heritage Website than visitors HHI Chamber Website Use • Males were significantly less likely to have used the HHI Chamber Website than females • Older spectators were significantly more likely to have used the HHI Chamber Website • Permanent residents were significantly less likely to have used the HHI Chamber Website than visitors 22 Table 15: General Internet Usage by Spectators Percent/Count (significant differences)* Site/Type of Site Facebook 30.7/580 (males, younger) Twitter 2.8/53 (younger, higher income) MySpace 1.5/29 (less visits, females, younger) YouTube 10.9/206 (females, younger, non-resident property owners) News Sites 44.8/848 (younger, higher education, higher income) Sports Sites 41.6/786 (female) Entertainment Sites 8.1/154 (male, younger) Travel Sites 23.4/442 (higher education) General Search Engines 49.1/928 (male, higher education, visitors) Other 8.7/164 None 10.0/190 (older) *Groups indicated in significant differences are more likely to use the indicated internet site or type of site 23 Table 16: TV and Radio Advertising Detail TV Station Percent/Count WTOC 13.8/261 Do Not Recall Station 9.5/180 WSAV 8.5/160 Hargray 7.2/136 WTGS 5.9/112 Other 4.8/91 WJCL 4.3/82 Radio Station Percent/Count Do Not Recall Station 5.7/108 News Radio 1290 WTKS 5.6/106 Quality Rock 105.3 WRHQ 4.2/79 The Drive 103.1 WGZO 2.0/37 24 Table 17: Print and Online/Internet Advertising Detail Percent/Count Print Advertisement Source The Island Packet 25.9/489 Other/Not Listed 8.3/157 Bluffton Today 6.5/122 Golfstyles Magazine 5.1/96 Savannah Morning News 3.1/59 SC Chamber Business Magazine 2.2/42 Palmetto Golfer 1.7/33 Online/Internet Advertisement Source Percent/Count PGATour.com 26.7/504 IslandPacket.com 20.0/379 Yahoo!Sports.com 5.2/99 25 Table 18: Direct Mail and Email Advertising Detail Percent/Count Direct Mail Advertising Source Letter on Tournament Letterhead 16.8/318 Postcard 12.3/232 Email Advertising Source Percent/Count Verizon Heritage 18.6/351 Sea Pines 11.1/210 HHI/Bluffton Chamber 4.9/93 Golfweek 2.4/46 26 Table 19: Zipcode Analysis of Markets Rank DMA Savannah, GA Columbia, SC Augusta, GA Charleston, SC Greenville-Spartanburg, SC (includes Asheville, NC) Macon, GA Knoxville, TN Richmond, VA Cincinnati, OH Nashville, TN Raleigh-Durham, NC Charlotte-Gastonia-Rock Hill, NC-SC Cleveland, OH Pittsburgh, PA Atlanta, GA Washington, DC Boston, MA Philadelphia, PA Chicago, IL New York, NY 10 11 12 13 14 15 16 17 18 19 20 • • • • %Heritage %Heritage Freq Share Freq Share of minus All Top 20 %Arbitron DMA's Share 61% 61% 7% 6% 5% 4% 4% 3% %Heritage %Heritage Freq Share Freq Share minus minus %Neilsen %Scarborou Share gh Share 60% 61% 6% 7% 4% 5% 3% 3% 4% 1% 1% 1% 2% 1% 1% 2% 0% 0% -1% -1% -2% -2% 1% 0% -1% -1% -1% -2% -3% 2% 1% -1% -2% -2% -3% -2% 2% 1% 1% 3% 1% 1% 1% 1% 2% -2% -3% -3% -5% -6% -6% -7% -13% -26% -2% -4% -3% -4% -6% -6% -8% -10% -22% -2% -5% -3% -6% -10% -7% -8% -12% -15% Strong Markets for 2011: Savannah, Columbia, Augusta, Charleston, GreenvilleSpartanburg- Ashville, and Macon Moderate Markets for 2011 (a little more emphasis might go a long way): Knoxville, Richmond, Cincinnati, Nashville, Raleigh-Durham, Charlotte-Gastonia-Rock Hill Weak Markets for 2011 (will get business regardless because of large populations within the DMA and advertising is costly within these locations): Washington, Boston, Philadelphia, Chicago, and New York Atlanta is important because of its large DMA and ability to reach the surrounding communities adjacent to the Augusta and Macon DMA’s 27 Table 20: Badge Type and Number of People Using Badge Percent Badge Type Number Using Badge Percent Clubhouse 41.7 50.7 Grounds 33.8 24.0 Sponsor/Daily 6.8 4.2 Other 8.0 8.0 No Badge 1.2 1.2 Missing 8.5 or more 2.9 Missing 9.0 Table 21: Where Badge Was Purchased and Months Badge was Purchased in Advance Percent Percent Where Purchased Months in Advance From Sponsor/Gift/Free At Tournament Ticket Office Other 25.7