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MONT,- : , , 

1515:.. ^ 

►HELENA, MONTAN'A 59620 



WAR 18 1938 



STATE DOCUMENTS COLLECTlOil 

fr^AR 1 1988 

MONTAKA STATE LIBRARY! 

1515 E. 6t;i AVE- 
HELENA, MONTANA &9(£P. 



The Montana Travel Industry, 1983 



Prepared for 

Montana Promotion Division 

Department of Commerce 

and 

Governor's Council on Economic Development 



Richard Dailey 

Bureau of Business and Economic Research 

University of Montana 

Missoula, Montana 



October 1984 



Pi FAS- pi 




MAR 2 3 1988 

DEC 7 -1989 



-.-^t «^ 



ACKNOWLEDGEMENTS 

A i;real many people made a contribution to this study of the economics of 
travel and tourism in Montana. I especially appreciate the time they took 
to provide assistance often on short notice which allowed us to conduct the 
analysis without interruption. 

Maxine Johnson, Paul Polzin, and Jim Sylvester of the Bureau of Business and 
Economic Research at the University of Montana provided excellent technical 
and editorial assistance. 

Bruce Finnie, partner in Eco Northwest assisted in the research design and 
methodol ogy . 

Merle Faminow and Gary Brester of the Department of Agricultural Economics and 
Economics at Montana State University provided the Montana Input-Output Model 
and computer time for the input-output analysis. 

William Elison, Mansfield Library, University of Montana gave us expert 
assistance on a computerized literature search. 

Philip Colbert, Montana Department of Highways provided the highway traffic 
statistics and petroleum use statistics. 

Bob Rafferty, Montana Department of Jobs and Industry made available employ- 
ment (lata. 

Patricia Roberts, Montana Department of Commerce saw that we had the most 
up-to-date census information. 

Erie Ditwiler was my research assistant. His insight and careful attention 
to detail made a substantial contribution to the research. 

Judy Donovan of the Bureau of Business and Economic Research is commended 

for maintaining a sense of humor while deciphering our handwriting and heipins 

is meet deadlines. 

To all of these individuals I express my sincere thani<s. 



(• 



TABLE OF rnNTFNT^ 

Executive Summary 

I. Purpose of the Study 1 

II. Choice of Methodology 3 

III. Step-by-Step Analysis 5 

Number of Nonresident Visitors 5 

Visitors Arriving by Automobile 5 

Visitors Arriving by Bus 8 

Visitors Arriving by Air ' 10 

Visitors Arriving by Rail 13 

Total Nonresident Visitors 13 

Nonresident Expenditures Per Party Per Day 13 

Total Nonresident Expenditures 17 

Income from Nonresident Travel Expenditures 21 

Nonresident Expenditures and Labor Income from 

Nonresident Travel by Type of Travel 25 

Resident Expenditures for Travel in Montana 27 

Income from Resident Travel 29 

Total Travel Expenditures and Total 

Labor Income from Travel 30 

Checking the Expenditure Figures 30 

Employment 34 

The Travel Industry at the County Level 36 

Gasoline Taxes 41 



Page 

Other State and Local Taxes 4i 

Capital Formation 44 

IV. Review of Literature Z,q 

Appendix A: Input-Output Model 63 

Appendix B: Determination of the Percentage of 

Autos from Out-of-State 5=^ 



LIST OF FIGURES 

Figure Page 

1 Location of Traffic Count Stations 7 



■ LIST OF TABLES 

Table Page 

1 Estimating the Number of Visitors Arriving 

by Automobile, Montana, 1979-1983 9 

2 Estimating the Number of Visitors Arriving 

by Bus, Montana, 1979-1983 11 

3 Estimating the Number of Visitors Arriving 

by Air, Montana, 1979-1983 12 

4 Estimating the Number of Visitors Arriving 

by Rail, Montana, 1979-1983 14 

5 Nonresident Visitors, Montana, 1979-1983 15 

6 Inflation of Expenditures from the 1979 

Old West Survey to 1983 Dollars 18 

7 Expenditures Per Party Per Day from Old West Survey, 

Inflated to 1983 Dollars 19 

8 Estimating Total Expenditures by Nonresident 

Visitors, Montana, 1979-1983 20 

9 Estimating Labor Income from Expenditures 22 

. 10 Labor Income from Nonresident Travel 

Expenditures, Montana, 1979-1983 23 

11 Labor Income from Nonresident Travel Expenditures, 

by Purpose of Trip, Montana, 1983 26 

12 Total Travel Expenditures in Montana, 1979 and 1983 31 

13 Total Labor Income Generated by Travel, 

Montana, 1979 and 1983 32 

14 Travel-Related Employment, Montana, 1979 and 1983 35 

15 Counties With One Percent or More of Total 

Employment in Hotels and Motels, Montana, 1982 37 

16 Counties With One Percent or More of Total Labor 

Income from Hotels and Motels, Montana, 1982 38 



Table Page 

1" Counties With One Percent or More of Total 

State Hotel and Motel Employment, Montana, 1982 39 

18 Counties With One Percent or More of Total State 

Labor Income from Hotels and Motels, Montana, 1982 .... 40 

19 Travel-Related Employment in Counties with One 

Percent or More of Total State Travel Employment, 

Montana, 1982 42 

20 Estimates of Taxes Attributable to Nonresident 

Travel Activity, Montana, 1983 45 

21 Selected Characteristics of Travel- 

Related Industries, Montana, 1977 and 1982 47 

22 Multipliers from Selected Tourism Studies 61 



EXECUTIVE SUMMARY 



Montana's nonresident travel industry is alive and reasonably healthy. 
Among the state's basic industries — those which sell goods or service- 
III udiir csidcfil s or oLIkt w i sc l)ring nujiioy in I rom ouL-ol -sUil r — milv 
nonresident travel and heavy construction have increased their employment 
and payrolls in recent years. 

Since 1979, most of Montana's basic industries have suffered permanent 
losses of jobs and income as plants and mines have closed and an interstate 
railroad ceased operation. Heavy construction was an exception because of 
the Colstrip project, but as that project nears completion construction 
too will likely experience a decline. 

That portion of the travel industry which serves nonresident visitors 
also is defined as a basic industry. It brings money in from outside the 
state. Between 1979 and 1983, labor income generated by the expenditures 
of nonresident travelers is estimated to have increased 10 percent, from 
S96 million to $105 million, after adjustment for inflation. This was a 
notable achievement during a period of recession and increasingly unfavor- 
able money exchange rates for Canadian visitors. 



About the Data 

This study is based on data from secondary sources. We attempted to 
use the best information available, but data on travel and tourism in 
Montana are out of date and incomplete. Accordingly, some of the figures 
may not be entirely accurate, but we believe that the trends revealed are 
reliable. We tried to be conservative in making the estimates, preferring 
to err by understatement rather than overstatement. 



2 

Figure 1 illustrates changes in labor income earned bv workers in 
Montana's basic industries between 1979 and 1983. Labor income includes 
wages and salaries and certain fringe benefits plus proprietors' income — 
in other words, all the income earned through participation in the labor 
force. Labor income is used as a measure of changes in economic activity 
when data equivalent to gross national product are not available, and as 
a measure of an industry's contribution to the economy. The figures are 
expressed in constant 1983 dollars. 

In 1983, labor income from the nonresident travel industry accounted 
for 6 percent of total labor income from basic industries in Montana. 
Four years earlier, in 1979, it had contributed 5 percent of the total. 

The increased income from nonresident travel resulted from a growth 
in number of visitors. Their numbers increased from less than 2.0 million 
in 1979 to more than 2.2 million in 1983 (figure 2). Total expenditures by 
nonresident travelers also are estimated to have grown — from $382 million 
in 1979 to $423 million in 1983 after taking inflation into account (figure 
3). It was not a steady growth; small setbacks occurred in 1980 and 1982. 
But certainly the industry has been much less cyclical than most other basic 
industries in the state. 

People travel for a variety of reasons. The most recent travel survey 
in Montana — the Old West Commission Survey completed in 1980 — reported 
that 30 percent of nonresident travel in the state in 1979 was travel for 
pleasure. Travel for pleasure is the usual definition for tourism. It 
should be noted that it is a rather narrow definition, by virtue of 



excluding the 23 percent of nonresident visitors in 1979 who said they 
were visiting friends and relatives. 

Applying the 30 percent figure to expenditures and labor income 
suggests that nonresident tourists spent $127 million in Montana in 
1983, and those expenditures generated $32 million in labor income. If 
one chose to include travelers visiting friends and relatives as tourists, 
those numbers would be $224 million and $56 million respectively. 

We emphasize expenditures of nonresident travelers because, as noted 
above, they bring money into the state; the portion of the travel industry 
serving them is part of our economic base. 

But Montanans also travel in Montana. The Billings resident vaca- 
tioning in Flathead County has not added to the state's economic base, but 
he has contributed to the county economy. And if he chose Flathead over 
a trip to Puget Sound, he has kept money in state that otherwise would 
have left. We estimate that Montanans traveling in Montana spent a total 
of $391 million in 1983, of which $98 million was for pleasure (tourist) 
travel. Those figures compare to $366 million and $92 million in 1979. 
Labor income generated by these expenditures is estimated at $98 million 
in 1983 and $92 million in 1979 (table 1). These figures are very rough 
estimates. 

Employment 

There were approximately 20,200 travel-related jobs in Montana in 
1983, compared to 17,600 in 1979. About one-third of the 1983 total was in 
the hotel-motel sector. 

Average earnings per worker are considerably lower than in many other 
Montana industries because of lower wage rates and the large number of 



parr-time and seasonal jobs. Nevertheless, the industry fills an importar.f 
function by providint; a large number of jobs for unskilled workers as well 
as those who desire part-time or seasonal work. It also offers entre- 
preneurial opportunities for people wanting to start their own businesses. 
A few of the larger counties — Yellowstone, Gallatin, Flathead, and 
Cascade — account for almost half of total travel-related employment (table 
2). Yellowstone and Cascade counties, partly because of their size, are not 
so dependent upon travel as are Flathead and Gallatin counties. Those two 
counties are located adjacent to our two national parks, and together with 
Glacier and Park and Beaverhead counties (also adjacent to the parks) are 
the most heavily dependent upon travel (table 3). About 23 percent of the 
Glacier County's total employment is concentrated in travel-related businesses. 
In each of the other four counties, the proportion is approximately 10 percent 
or more. 



9 



Table 1 



The Montana Travel Industry 
1979 and 1983 



1979 



1983 



(Millions of Constant 1983 Dollars) 



Total travel expenditures 

Nonresident 
Tourist 

Resident 
Tourist 

Total labor income generated 

Travel by nonresidents 
Tourist 

Travel by residents 
Tourist 



Number of travel-related jobs 
Nonresident 
Resident 



748 

382 
114 

366 
92 

188 



814 

423 

127 

391 
98 

204 



96 


106 


29 


32 


92 


98 


23 


24 


(Number 


of Jobs) 


17,600 


20,200 


9,000 


10,500 


8,60U 


9,700 



Percent 
Change 



11 
11 

7 
7 



10 
10 

7 

7 



15 
17 
13 



Source: University of Montana, Bureau of Business and Economic Research. 
Note: Percentage changes calculated from unrounded numbers. 



Table 2 

Concentration of Travel-Related 

Employment in Montana 

Counties, 1983 

Percent of State 
Travel Employment 
County in County 

Yellowstone 15.4 

Gallatin 11.2 

Flathead 10.8 

Cascade 9.2 

Silver Bow 6.8 

Missoula 6.6 

Glacier 6.5 

Lewis and Clark 5.0 

Park 3.3 

Dawson 2.9 



Source: University of Montana, Bureau of 
Business and Economic Research. 






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I. Purpose of the Study 

Travel and tourism are an important part of the economy in the state 
of Montana. With two national parks, splendid scenery, a nationwide 
reputation for superb hunting and fishing and several well-known wilderness 
and ski areas, it is only natural that Montana would attract a great number 
of visitors from other states. Furthermore, the state shares a common 
border with Canada and as a result many Canadians cross over to ski, shop, 
and eni^age in other activities. 

Besides the Canadians, Montana attracts a large number of visitors 
from Japan and Western Europe. They visit the state primarily to tour 
Glacier National Park and Yellowstone National Park. 

Although it is obvious that travel accounts for a significant portion 
of state income, questions are often asked by legislators and policy makers 
about just how important it actually is. The employment that can be 
attributed to travel, its role in creating new jobs, how much money out- 
of-state visitors spend in Montana, the income created by those expenditures, 
and the amount of taxes generated by travel expenditures are examples of 
the issues that are of interest to state officials and private sector 
decision makers. 

The purpose of this study is to address some of these issues in an 
attempt to provide legislators, policy makers and others with better 
information on which to base their decisions. The specific objectives 
of this study were: 

1. To determine the trend in the travel sector of the economy 
between 1979 and 1983. 



(% 



J. To estimate the total expenditures for travel and tourisir, in 

1979 and 1983. 
3. To determine the impact of the travel industry on employment and 

income in Montana. 
A. To estimate selected tax revenues that result from expenditures 

by nonresident visitors. 



II. Choice of Methodology 

An extensive literature review was conducted to evaluate alternative 
methodologies. Upon concluding the review, we decided to use a refined 
version of the methodology wich Dr. Bruce Finnie used in his 1980 study. 
This decision was made for several reasons: 

1. Updating the 1980 study would provide continuity; differences 
in conclusions would not be caused by dissimilar methodologies. 

2. It was one of the more sophisticated methodologies found in the 
literature. 

3. This methodology makes the best use of information which is 
available for Montana. Identical data are not available for every 
state. For example, there are no hard figt-res for retail sales 

in Montana (except for Census years) because there is no sales 
tax in this state. 
While this report uses the same basic outline as Finnie, it was possible 
to make some refinements because more and better data were available. 
The greatest weakness of Finnie' s report — and of this study — 

is that both are based on data from the Old West Regional Commission's 

2 
travel survey, completed in 1980. There are questions about the accuracy 

of the expenditure data from that survey because they came from respondents' 



Finnie, Bruce, The Economic Impact of Tourism in Montana, Helena, 

September 1980. 

^Old West Commission, Old West Region Nonresident Travel and Recreation 
Survey, November 1980. 



recollections of how much money they had spent in particular expenditure 
categories. In addition, some of the findings of the survey may be out 
of date. For example, given the recent change in gasoline prices, does the 
average traveler still spend 27.7 percent of his travel budget on gasoline? 
Until another survey is done, we have no better expenditure data available. 
The review of literature appears at the end of this report. Following 
the review. Appendices A and B provide further information about methodology 



III. Step-by-Step Analysis 
Number of Nonresident Visitors 

Visitors Arriving by Automobile . In order to estimate the number of 
people who have visited Montana since 1979, data were collected from several 
sources. The Montana Department of Highways and the U.S. Customs Service 
provided data used to estimate the number of visitors who arrived by auto 
(including pickups and motor homes) or bus. The Civil Aeronautics Board 
in San Mateo, California and the Division of Aeronautics, Montana 
Department of Commerce were the sources of data on air travel. Amtrak 
figures on visitors arriving by train were obtained from the Montana 
Department of Commerce. 

Appendix B provides a description of how the traffic count data were 
manipulated to determine the proportion of visitors who were from out-of- 
state. Since the majority of people who visit Montana arrive by auto, that 
proportion becomes an extremely sensitive element in the analysis. Slight 
changes in the percentage can have a significant impact on the expenditure 
estimates. In this study we assumed that 36.7 percent of all auto traffic 
was from out-of-state. This estimate came from the visual traffic counts 
conducted by the Department of Highways. Unfortunately 1983 was the last 
year that the Department of Highways used this technique for measuring 
out-of-state traffic, thus a current estimate will not be available for 
future studies. 

The Department of Highways measures the daily traffic flow at several 
stations throughout Montana. However, not all of them have a significant 



portion of out-of-state traffic, an important consideration for the pur- 
poses of this study. 

Figure 1 shows the border traffic count stations whose reports were 

used in this study. The Department of Highways stations pictured are 

3 
estimated to measure at least 95 percent of the traffic coming into 

Montana while the U.S. Customs stations measure virtually all of the traffic 

4 
crossing the border from Canada to Montana. 

Highway traffic count data were not available for traffic coming into 
Montana from the west on U.S. Highway 2, the west on U.S. Highway 12, the 
east on U.S. Highway 2, or the southeast on U.S. Highway 12. Accordingly, 
our estimates of the traffic count may be somewhat conservative. Future 
reports should, if possible, incorporate data from these entrances. 

To estimate the number of visitors who arrived by auto, the yearly 
incoming totals for each traffic count station for each year were summed. 
This total was then multiplied by the percentage of vehicles estimated to 
be noncommercial and the percent of noncommercial estimated to be from 
out-of-state. This resulted in a total number of out-of-state noncommercial 
vehicles entering the state for each year. These totals were then multi- 
plied by the figure of 2.56 people per car, from the Old West Survey. 
This provided a final figure of the number of visitors arriving by 
automobile for each year. 



3 
Telephone conversation with Mr. Phil Colbert, Director of Planning, 

Montana Department of Highways, July 12, 198A. 

Telephone conversation with Mr. John Sharone, U.S. Customs Service, 
Great Falls, July 12. 1984. 






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8 



The data in table 1 summarize the number of people who came to Montana 
by private motor vehicle for the years 1979 to 1983. The greatest number 
of auto tourists during this period (almost 1.9 million) came in 1981 and 
1983. The data show a decline between 1979 and 1980 and in 1982 from 1981. 
However, the trend was upward, with 1983 showing nearly a 10 percent increase 
over 1979. 

Although most people who come to Montana arrive by automobile, many 
others come by bus, airplane, or train. The following sections show the 
derivation of the number of tourists in the study period who arrived by each 
of these modes of transportation. 

Visitors Arriving by Bus . In the 1980 study, Finnie used a ratio of 
2.57 buses for each 1,000 vehicles entering the state. We used the same 
ratio for this study. Since buses are considered commercial vehicles, we 
used a ratio approach without fear of double counting. Thus, the total 
incoming traffic for each year was multiplied by .00257 to determine the 
number of buses. This was then multiplied by 31, because we assumed a 
75 percent load factor, to determine the number of incoming bus passengers. 
These figures were then multiplied by 36.7 percent to determine the number 
of nonresident visitors who arrived by bus for each of the relevant years. 

The number of out-of-state visitors arriving in Montana by bus followed 
the same pattern as those arriving by automobile, because bus traffic was 
assumed to be a constant proportion of all traffic. The visitor arrivals 



This is close to Mr. Phil Colbert's (Department of Highways) estimate 
that .2 percent of all traffic is bus traffic. 



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are summarized in table 2. In 1979 nearly 70.000 out-of-staters came to 
Montana on the bus. By 1983 the number had increased to about 76.400 or 
an increase of about 10 percent. 

Visitors Arriving bv Air . The Civil Aeronautics Board uses an origin 
and destination survey consisting of a 10 percent sample of tickets to 
estimate total airline passenger traffic. 

From the San Mateo, California, office of the CAB we obtained its 
sample data for flights into and out of each of Montana's commercial 
airports. To arrive at an estimate of the number of arrivals, we multiplied 
by ten to account for the 90 percent of tickets not sampled and then divided 
by two to eliminate departures. These figures were then summed for all 
airports except West Yellowstone. That airport has a considerable amount 
of charter traffic which would not be picked up by the ticket sample. To 
capture this nonsampled traffic, we obtained statistics kept by the 
Aeronautics Division of the Montana Department of Commerce. These figures 
were then added to our total which was multiplied by 36.7 percent to derive 
an estimate of out-of-state visitors arriving by air. 

These data are summarized in table 3 and show a pattern of visitors 
to the state somewhat similar to the automobile traffic flows. There is 
an exception, however, for 1981. While auto traffic was up in 1981 over 
the previous years, air traffic dropped off. This may have been a result 
of the recession which began in that year. During the study period, on 
the other hand, visitors coming by air showed an upward trend with 1983 



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Table 3 

Estimating the Number of Visitors Arriving by Air, 
Montana, 1979-1983 



Airoort 



1979' 



1980 



1981 



1982 



1983 



Number of arrivals: 












Billings 




155,3^7 


195,140 


194,285 


240,560 


237,435 


Butte 




40,060 


33,960 


25,465 


27,735 


27,910 


Helena 




43,140 


41,200 


36,525 


43,615 


47,715 


Bozeman 




54,810 


53,215 


43,140 


48,515 


58,080 


Glasgow 




2,380 


2,170 


3,195 


670 


925 


Glendive 




900 


1,500 


2,030 


545 


750 


Great Falls 




121,685 


99,125 


40,565 


115,235 


133,455 


Missoula 


• 


87,950 


75,655 


63,645 


84,175 


101,295 


Kalispell 




42,525 


35,405 


31,145 


33,585 


39,390 


Havre 




675 


1,030 


995 


375 


315 


Lewis town 




460 


470 


790 


210 


105 


Miles City 




740 


940 


1,110 . 


630 


520 


Sidney 




1,250 


2,490 


4,325 


2,245 


1,055 


Wolf Point 




1,295 


1,580 


2,400 


240 


360 


West Yellowstone 


6,920 


9,086 


9,086 


9,416 


13,394 


Total 




560,137 


552,966 


458,701 


607,751 


662,704 


Percent out-of- 


-state 


36.7 


36.7 


36.7 


36.7 


36.7 



Total number of 
visitors by air 



205,570 



202,939 



168,343 



223,045 



243, 2i: 



Note: Data for 1980-1983 were obtained from Mr. John Smith, Civil Aeronautics Board, 
San Mateo, Califuiaia, telephone conversation, July 12, 1984. West Yellowstone data 
obtained from Mr. Michael Ferguson, Aeronautics Division, Montana Department of 
Commerce. 



Derived from Finnie, 1980 study, 



13 

showins an increase of over 18 percent over 1979. This was greater thar. 
Che increase in auto traffic for that same period. 

Visitors Arriving bv Rail . Amtrak serves eleven passenger railroad 
depots in Montana with its "Empire Builder." On-boardings and off-boardings 
for each year of the study period, 1979-1983, were available. We totaled 
the off-boardings for each station and then multiplied that figure by 36.7 
percent to obtain our estimate of the number of out-of-state visitors who 
arrived in Montana by train (table 4). 

The data for rail visitors differ from both the auto and airline data 
in that they show an increase in passenger arrivals each year of the study 
period. The percentage increases in rail traffic are also significantly 
greater than for either air or auto. This is no doubt due to the much 
smaller base for rail traffic. From 1979 to 1983 out-of-state rail 
passenger numbers increased from 12,030 to 20,399, nearly 70 percent. 
Nearly one-third of all these passengers got off the train in Whitef ish 
while nearly one-fifth disembarked at Havre. Although one might suppose 
that Glacier National Park would be the most popular rail point for 
tourists, four of the eleven Amtrak stations in Montana accounted for 
more passengers getting off the train than did Glacier Park. 
Total Nonresident Visitors 

Table 5 summarizes the number of nonresidents estimated to have 
visited Montana during the years 1979-1983, by type of transportation. 



. Table A 

Estimating the Number of Visitors Arriving by Rail, 
Montana, 1979-1983 

1979 1980 1981 1982 1983 



Number of arrivals: 

Wolf Point 2,443 3,041 2,956 

Glasgow 2,887 3,041 2,898 

Malta 1,197 1,675 1,949 

Havre 6,114 7,995 8,635 

Shelby 2,382 3,431 3,835 

Cut Bank 1,585 1,217 1,431 
Browning 56 619 550 

Glacier Park 2,902 4,223 4,395 

Belton 946 1,746 1,900 

Whitefish 10,777 15,213 16,095 

Libby 1,489 1,954 1,915 

Total 32,778 44,155 46,559 51,536 55,583 

Percent out-of- 
state 36.7 36.7 36.7 36.7 36.7 

Total number of 
visitors by 

rail 12,030 16,205 17,087 18,914 20,399 



Note: Amtrak data obtained from Mr. Richard Howell, Montana Department 
of Commerce. 



3,342 


6,131 


3,207 


3,459 


1,920 


2,088 


10,112 


10,223 


4,588 


4,824 


1,680 


1,741 


825 


1,211 


4,730 


4,745 


1,910 


1,975 


17,115 


17,036 


2,107 


2,150 



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16 

The total number of nonresident visitors is estimated to have 
increased by about 11 percent, from under 2.0 million in 1979 to more 
than 2.2 million in 1983. 

Automobile travel is by far the preferred way for people who travel 
to visit Montana. However, there does appear to be a very slight shift 
to increasing numbers arriving by train and airplane relative to auto. 
In 1979, for example 85.6 percent of our visitors arrived by car; in 1983 
it was 84.6 percent. The increased proportion was in rail and air travel. 

Nonresident Expenditures Per Partv Per Dav 

After we had determined the total number of visitors, we estimated 
their expenditures. 

In 1979 the Old West Regional Commission sponsored a survey of 
travelers in each state in and of the region. From this survey, we had 
available average expenditures per day per visitor party by expenditure 
category. These figures were in 1979 dollars. Since expenditures were 
broken out by category, we were able to go to the various constituent 
elements of the Consumer Price Index to adjust the figures for inflation. 
This allowed us to include in our analysis the above-average increase in 
the price of gasoline and the below-average increase in restaurant prices. 
In each case the 1983 CPI was divided by that of 1979. The 1979 expendi- 
tures then were multiplied by that value to get the equivalent expenditure 
in 1983 dollars. This method assumes that the change in relative prices 
did not change people's consumption patterns. 



17 

Tables 6 and 7 show the price inflators and the 1983 values by exper.li- 
ture category. The category with the greatest price increase was motor fuel 
(41.72 percent) and the category with the most modest increase was food 
away from home (31.70 percent). Overall, 1979 expenditures were inflated 
by 37.12 percent to translate them into 1983 dollars. The expenditure per 
party day in 1983 dollars was estimated at $92.83. 

Total Nonresident Expenditures 

To determine total visitor expenditures we multiplied the estimated 
total number of visitors by 4.77 , the number of days, on the average, 
visitors remained in the state in 1979. This provided us with the total 
number of visitor days. Since the expenditure data we used were based on 
expenditure per party, rather than per visitor, total visitor days was 
divided by 2.31 to arrive at the total number of visitor party days. 
This figure was then multiplied by the estimated expenditure per party day 
($92.83) to provide an estimate of total expenditures by nonresident 
travelers in Montana in 1983. 

Table 8 summarizes the calculations involved in estimating visitor 
party days and total expenditures for the years 1979 to 1983. Total 
expenditures, in constant 1983 dollars, are estimated to have risen from 
almost $382 million to $423 million between 1979 and 1983. That is an 
increase of approximately 11 percent. During these years, the U.S. and 
Canadian economies experienced severe recessions and the value of the 



From the Old West Survey. 



Average number of people per party. From the Old West Survey. 



Table 6 

Inflation of Expenditures from the 
1979 Old West Survey to 1983 Dollars 



Category 1979 1983 Inflator 



Ind- 


ex 


1979 


1983 


242.9 


319.9 


265.6 


376.4 


217.4 


298.4 



Food away from home^ 242.9 319.9 1.3170 
Motor fuel'' 265.6 376.4 1.4172 

All items (CPI)^ 217.4 298.4 1.3726 



^U.S. Bureau of Labor Statistics, CPI Detailed Report, 
various issues. 

Joint Economic Committee, Economic Indicators, May 
1984. 



Table 7 

Expenditures Per Party Per Day From Old West Survey, 
Inflated to 1983 Dollars 



1979 



Hotels and motels $ 15.64 

Campgrounds 1.13 

Eating and drinking 

places 16.72 

Food stores 3.58 

Sporting goods stores 1.17 

Gasoline service stations 18.72 

Amusement and recreation 

services 3.62 

Other 7.12 

Total $ 67.70 



Note: Based on Table 6. 



Inflator 


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$ 


.983 


1.3726 


21.47 


1.3726 




1.55 


1.3170 




22.02 


1.3726 




4.91 


1.3726 




1.61 


1.4172 




26.53 


1.3726 




4.97 


1.3726 




9.77 


1.3712 


$ 


92.83 



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Table 3 

Estimating the Number of Visitors Arriving by Air, 
Montana, 1979-1983 



Airport 1979 

Number of arrivals: 
Billings 
Butte 
Helena 
Bozeman 
Glasgow 
Glendive 
Great Falls 
Missoula 
Kalispell 
Havre 
Lewis town 
Miles City 
Sidney 
Wolf Point 
West Yellowstone 

Total 

Percent out-of-state 

Total number of 
visitors by air 205,570 



1980 



1981 



1982 



1983 



155,347 


195,140 


194,285 


240,560 


237,435 


40,060 


33,960 


25,465 


27,735 


27,910 


43,140 


41,200 


36,525 


43,615 


47,715 


54,810 


53,215 


43,140 


48,515 


58,080 


2,380 


2,170 


3,195 


670 


925 


900 


1,500 


2,030 


545 


750 


121,685 


99,125 


40,565 


115,235 


133,455 


87,950 


75,655 


63,645 


84,175 


101,295 


42,525 


35,405 


31,145 


33,585 


39,390 


675 


1,030 


995 


375 


315 


460 


470 


790 


210 


105 


740 


940 


1,110 


630 


520 


1,250 


2,490 


4,325 


2,245 


1,055 


1,295 


1,580 


2,400 


240 


360 


6,920 


9,086 


9,086 


9,416 


13,394 


560,137 


552,966 


458,701 


607,751 


662,704 


36.7 


36.7 


36.7 


36.7 


36.7 



202,939 



168,343 



223,045 



243, 2i: 



Note: Data for 1980-1983 were obtained from Mr. John Smith, Civil Aeronautics Board, 
San Mateo, California, telephone conversation, July 12, 1984. West Yellowstone data 
obtained from Mr. Michael Ferguson, Aeronautics Division, Montana Department of 
Commerce. 



Derived from Finnie, 1980 study, 



^ 



13 

showins an increase of over 18 percent over 1979. This was greater thar. 
the increase in auto traffic for that same period. 

Visitors Arriving by Rail . Amtrak serves eleven passenger railroad 
depots in Montana with its "Empire Builder." On-boardings and off-boardings 
for each year of the study period, 1979-1983, were available. We totaled 
the off-boardings for each station and then multiplied that figure by 36.7 
percent to obtain our estimate of the number of out-of-state visitors who 
arrived in Montana by train (table 4). 

The data for rail visitors differ from both the auto and airline data 
in that they show an increase in passenger arrivals each year of the study 
period. The percentage increases in rail traffic are also significantly 
greater than for either air or auto. This is no doubt due to the much 
smaller base for rail traffic. From 1979 to 1983 out-of-state rail 
passenger numbers increased from 12,030 to 20,399, nearly 70 percent. 
Nearly one-third of all these passengers got off the train in Whitefish 
while nearly one-fifth disembarked at Havre. Although one might suppose 
that Glacier National Park would be the most popular rail point for 
tourists, four of the eleven Amtrak stations in Montana accounted for 
more passengers getting off the train than did Glacier Park. 
Total Nonresident Visitors 

Table 5 summarizes the number of nonresidents estimated to have 
visited Montana during the years 1979-1983, by type of transportation. 



Table 4 

Estimating the Number of Visitors Arriving by Rail, 
Montana, 1979-1983 

1979 1980 1981 1982 1983 

Number of arrivals: 

Wolf Point 2,443 3,041 2,956 3,342 6,131 

Glasgow 2,887 3.041 2,898 3,207 3,459 

Malta 1.197 1,675 1,949 1,920 2,088 

Havre 6,114 7,995 8,635 10,112 10,223 

Shelby 2,382 3,431 3,835 4,588 4,824 

Cut Bank 1,585 1,217 1,431 - 1,680 1,741 

Browning 56 619 550 825 1,211 

Glacier Park 2,902 4,223 4,395 4,730 4,745 

Belton 946 1,746 1,900 1,910 1,975 

Whitefish 10,777 15,213 16,095 17,115 17,036 

Libby 1,489 1,954 1,915 2.107 2.150 

Total 32,778 44,155 46,559 51,536 55,583 



Percent out-of- 
state 



36.7 36.7 36.7 36.7 36.7 



Total number of 
visitors by 
rail 12,030 16,205 17,087 18,914 20,399 



Note: Amtrak data obtained from Mr. Richard Howell, Montana Department 
of Commerce. 



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16 

The total number of nonresident visitors is estimated to have 
increased by about 11 percent, from under 2.0 million in 1979 to more 
than 2.2 million in 1983. 

Automobile travel is by far the preferred way for people who travel 
to visit Montana. However, there does appear to be a very slight shift 
to increasing numbers arriving by train and airplane relative to auto. 
In 1979, for example 85.6 percent of our visitors arrived by car; in 1983 
it was 8^.6 percent. The increased proportion was in rail and air travel. 

Nonresident Expenditures Per Party Per Day 

After we had determined the total number of visitors, we estimated 
their expenditures. 

In 1979 the Old West Regional Commission sponsored a survey of 
travelers in each state in and of the region. From this survey, we had 
available average expenditures per day per visitor party by expenditure 
category. These figures were in 1979 dollars. Since expenditures were 
broken out by category, we were able to go to the various constituent 
elements of the Consumer Price Index to adjust the figures for inflation. 
This allowed us to include in our analysis the above-average increase in 
the price of gasoline and the below-average increase in restaurant prices. 
In each case the 1983 CPI was divided by that of 1979. The 1979 expendi- 
tures then were multiplied by that value to get the equivalent expenditure 
in 1983 dollars. This method assumes that the change in relative prices 
did not change people's consumption patterns. 



17 

Tables 6 and 7 show the price inflators and the 1983 values by exper.li- 
ture category. The category with the greatest price increase was motor fuel 
(41.72 percent) and the category with the most modest increase was food 
away from home (31.70 percent). Overall, 1979 expenditures were inflated 
by 37.12 percent to translate them into 1983 dollars. The expenditure per 
party day in 1983 dollars was estimated at $92.83. 

Total Nonresident Expenditures 

To determine total visitor expenditures we multiplied the estimated 
total number of visitors by 4.77 , the number of days, on the average, 
visitors remained in the state in 1979. This provided us with the total 
number of visitor days. Since the expenditure data we used were based on 
expenditure per party, rather than per visitor, total visitor days was 
divided by 2.31 to arrive at the total number of visitor party days. 
This figure was then multiplied by the estimated expenditure per party day 
($92.83) to provide an estimate of total expenditures by nonresident 
travelers in Montana in 1983. 

Table 8 summarizes the calculations involved in estimating visitor 
party days and total expenditures for the years 1979 to 1983. Total 
expenditures, in constant 1983 dollars, are estimated to have risen from 
almost $382 million to $423 million between 1979 and 1983. That is an 
increase of approximately 11 percent. During these years, the U.S. and 
Canadian economies experienced severe recessions and the value of the 



From the Old West Survey. 



Average number of people per party. From the Old West Survey, 



Table 6 

Inflation of Expenditures from the 
1979 Old West Survey to 1983 Dollars 



Ind( 


BX 




1979 


1983 


Inf lator 


242.9 


319.9 


1.3170 


265.6 


376.4 


1.4172 


217.4 


298.4 


1.3726 



Catesory 



Food away from home 

Motor fuel 

All items (CPI)^ 



U.S. Bureau of Labor Statistics, CPI Detailed Report, 
various issues. 

Joint Economic Committee, Economic Indicators, May 

1984. 



Table 7 

Expenditures Per Party Per Day From Old West Survey, 
Inflated to 1983 Dollars 





J 
$ 


L979 
15.64 


Inf lator 
1.3726 


j 

$ 


.983 


Hotels and motels 


21.47 


Campgrounds 




1.13 


1.3726 




1.55 


Eating and drinking 
places 




16.72 


1.3170 




22.02 


Food stores 




3.58 


1.3726 




4.91 


Sporting goods stores 




1.17 


1.3726 




1.61 


Gasoline service stations 




18.72 


1.4172 




26.53 


Amusement and recreation 
services 




3.62 


1.3726 




4,97 


Other 




7.12 


1.3726 




9.77 


Total 


$ 


67.70 


1.3712 


$ 


92.83 



Note: Based on Table 6. 



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21 

g 
Canadian dollar fell about 6 percent relative to the value of U.S. currencv. 

Both of these phenomena would be expert nd to have had a negative imi)aci on 

travel to Montana. It is important to note that in spite of these economic 

forces there was an upward trend in Montana's tourism industry. 

Income from Nonresident Travel Expenditures 

Unfortunately, not all the money spent by visitors in Montana stays 
in Montana. Table 9 shows how a personal income multiplier was derived for 
travel expenditures. Where possible, a ratio of earnings to expenditures 
(or receipts) was calculated using preliminary 1982 Census of Business 
data. For industries where data were not available, ratios developed by 
Polzin and Schweitzer were used. The calculations in Table 9 suggest that 
about $25 of each $100 spent in Montana by people from out-of-state is 
destined as income to the proprietor or employees of the firms at which it 
is spent. The income figure is properly referred to as labor income or 
earnings and represents wages and salaries plus certain fringe benefits as 
well as proprietors' income. 

Because of the nature of our model and a lack of more precise measure- 
ment techniques we were forced to assume that the other 75 percent of the 
dollars spent leaked from the system. 

The total expenditures derived in table 8 were multiplied by the .2501 
expenditure multiplier to determine labor income. The results appear in 
table 10. Again, all income figures are in 1983 dollars. Thus we estimate 
that about $96 million accrued to Montanans as labor income in 1979 and 



^On September 28, 1979, the Canadian dollar was valued at U.S. $.8622. By 
September 30, 1983, it had fallen to U.S. $.8122. Wall Street Journal. 



Table 9 

Estimating Labor Income from Expenditures 







Percentage 






of Total 


SIC 


Industry 


Expenditures' 


7011 


Hotels and motels 


23.1 


7032 


Campgrounds 


1.7 


58 


Eating and 






drinking places 


24.7 


54 


Food stores 


5.3 


59A1 


Sporting goods 






stores 


1.7 


5541 


Gasoline service 






stations 


27.7 


79 


Amusement and 






recreation services 


5.4 




Other 


10.5 



Labor Income (including Proprietors') 
per Dollar of Receipts 

nib •! C 

Polzin ::e"..' 



.30 
.27 

.27 
.10 

.15 

.11 

.31 

N/A 



.3606 
N/A 

.3717 

N/A 

N/A 

.0705 



Weight 

8.3299 

0.4590 

9.1810 
0.5300 

0.2550 

1.9529 



N/A 


1.6740 


.2501 


2.6261 


Total 


25.0079 


xpenditures: 


.2501 



.Old West Survey. 

Polzin, Paul E. , and Schweitzer, Dennis L., Economic Importance of Tourism in Montana , U.S.D.A. 
Forest Service, Research Paper INT-171, July 1975. 

Estimated from U.S. Bureau of the Census, 1982 Census of Retail Trade, Preliminary Report, and 
U.S. Census of Service Industries, Preliminary Report, unpublished data from U.S. Bureau of 
Economic Analysis, Regional Economics Information System. 

Data are for sporting and recreation camps. 

Estimated from the sources listed in c above and Robert Morris Associates, Annual Statement 
Studies, June 30, 1982 to March 31, 1983 . Average profit before taxes in U.S. service stations 
with sales less than one million dollars equals 1.5 percent. See page 287. 

Note: Weights derived by multiplying percentage of total expenditures by new ratio of earnings 
to receipts where available and Polzin ratio in all other cases. 



Table 10 

Labor Income from Nonresident Travel Expenditures, 
Montana, 1979-1983 

(In Constant 1983 Dollars) 





Total 
Expenditures 


Labor 
Income 


1979 


$ 


381,998,792 


$ 95,537,898 


1980 




365,710,840 


91,464,281 


1981 




409,612,004 


102,443,962 


1982 




407,575,129 


101,934,540 


1983 




423,314,361 


105,870,922 



Income estimated to equal 25.01 percent of 
expenditures, per table 9. 
Labor income includes wages and salaries, 
certain fringe benefits, and proprietors' 
income. 



Ik 



.ibout 5106 million in 1983. Both figures are in 1983 dollars. Once 
again, Che increase amounted to about 11 percent. 



25 



Nonresident Expenditures and Labor Income £rom Nonresident Travel bv Tvpe 
of Travel 

People travel for many different reasons. The Old West Commission 
Survey reported that nonresident visitors to Montana in 1979 visited the 
state for a number of reasons, in the following proportions: 

Percent 
Purpose of Trip of Total Trips 

Tourism 30 

Visiting friends 

and relatives 23 

Business 20 

Passing through 27 

Total 100 

Tourist travel is presumed to be travel for pleasure. Applying the 
30 percent figure from the above table to total expenditures indicates that 
nonresident tourists traveling for pleasure spent about $127 million in 
Montana in 1983, thereby creating $32 million in labor income for Montanans 
(table 11). 

If one assumes that visiting friends and relatives might also be 
classified as pleasure travel, and therefore tourism, then expenditures 
amount to $224 million and income to $56 million. 

The balance, $199 million in expenditures and $50 million in income, 
is attributed to business travelers and those passing through the state. 

The same method was used to estimate 1979 expenditures and labor 
income by purpose of trip (table 11). 

A note of warning about computing rate of growth by purpose of trip from 
table 11: differences are due to rounding and should not be quoted. All 



Table 11 

Labor Income from Nonresident Travel 
Expenditures, by Purpose of Trip, 
Montana, 1979 and 1983 

(In Millions of Constant 1983 Dollars) 



Expenditures Labor Income 
1979 1983 1979 1983 

Total 382 423 96 106 

Tourism (pleasure trips) 
Visiting friends and relatives 

Subtotal 

All other^ 



Includes business and other travel, 



114 


127 


29 


32 


88 


97 


22 


24 


202 


224 


51 


56 


180 


199 


45 


50 



r 



r- 



r 



flciire? in the breakdown were derived using the same ratios and if r.i~.br-r~ 
were not rounded, the percentage increases would all be the same, 10,8 percent. 

Resident Expenditures for Travel in Montana 

The results we have reported to this point are for nonresident travel 
in Montana. We emphasize nonresident travel because that portion of the 
travel industry is part of the economic base — that is, it brings in money 
from out-of-state. To complete the picture of the travel industry, it is 
necessary to include the expenditures made by Montana residents on travel 
within their state. 

This is a very difficult task. There are few guideposts and almost 
no data. The figures which follow are merely ballpark estimates. The 
methodology is described in some detail so that readers will understand how 
rough the estimates are. Estimates were prepared only for 1979 and 1983. 

According to the U.S. Travel Data Center, Americans spent $858 per 
capita in travel in the United States in 1982. (Total expenditures: $199 
billion; total population: 231,786,000). 

The figure of $858 was inflated by 3.6 percent to obtain a 1983 estimate 

9 
of $890. But Montanans, with lower per capita incomes than the U.S. average, 

may spend less than the typical American on travel. In 1983, per capita 

income in Montana was 86 percent of the U.S. figure. Eighty-six percent 

of S890 is $765. 



^Based on changes in components of the CPI between 1982 and 1983 as follows: 
food away from home, 4.37 percent; motor fuel, -3.34 percent; all items, 
3.22 percent. Calculated as in tables 6 and 7. 



10 



U.S. Bureau of Economic Analysis, Survey of Current Business, August 1984. 



28 

For purposes of estimating travel expenditures by Montana re^ivie-c? 
ill 1983, we used a per capita figure of $765 and multiplied it by 817,000, 
the midyear population estimate from the Bureau of the Census, to arrive 
at an estimate of S625 million in total travel expenditures by Montana 
residents in 1983. 

As noted above, the Old West Commission Survey reported that 30 percent 
of nonresident visitors to Montana in 1979 were pleasure trips. For want 
of better information, we have assumed that 30 percent of Montanans' travel 
also is for pleasure. This means that of Montanans' travel expenditures, 
some S188 million in 1983 is attributable to pleasure travel and $437 
nillion to business and other travel. Of course, not all pleasure travel 
by Montanans is in-state. There is almost no information available to 
indicate how Montanans divide their travel between Montana and other stcites. 
The Montana Poll, in September 1981 and March 1982, asked respondents about 
the principal destination of the major trip they had taken in the past 
six months. Fifty-two percent named a Montana destination. We applied the 
52 percent to our estimate of tourist travel expenditures ($188 million) 
to obtain an estimate of spending by Montanans in Montana for tourist 
travel. The result was $98 million. 

This is a conservative figure, since over half (54 percent) of the Poll 
respondents had taken more than one trip. Even if the major trip reported 
was not in-state, it is likely that some of the other trips were. 

We had no evidence as to how much of Montanans' nontourist travel 
(including business travel) occurs in-state. We assumed, because it seemed 
reasonable, that two-thirds of all other travel Montanans do takes place 



29 
in-state. Multiplying the $437 million estimated total "all other" travel 
expenditures by 0.67 yielded an estimate of $293 million spent in-state. 
Total travel expenditures by Montanans in Montana, then, are estimated at 
$391 million in 1983 (table 12). 

Following the same procedure for 1979, we divided the estimated total 
expenditures by U.S. residents traveling in the U.S. ($140.7 billion) by 
1979 resident population (224.6 million) to obtain a per capita expenditure 
figure of $626. We inflated that figure by 1.3712 (per table 7) to trans- 
late Lt into 1983 dollars. That resulted in a $858 per capita figure. We 
then reduced our Montana per capita estimate to .87 percent of $858, or 
$746, to reflect Montanans' lower per capita income that year. We multiplied 
the $746 by 789,000 midyear population and arrived at a total travel expendi- 
ture estimate of $588 million in 1979 (expressed in 1983 dollars). 

We then broke that figure down into tourist and other, in-state and 
out-of-state estimates as described above. The results were $366 million 
total travel expenditures by Montanans in Montana in 1979 (expressed in 
1983 dollars). The figure for tourist (pleasure) travel was $92 million 
and all other, $274 million. 

Income from Resident Travel 

According to our estimates, total expenditures by Montanans traveling 
in-state for all purposes in 1983 amounted to $391 million. If we apply 
the .2501 ratio of personal income to expenditures, this represents $98 
million in personal income (wages and salaries and proprietors' income) 
generated by Montanans traveling around Montana that year. 

For 1979, the comparable figure was $92 million (in 1983 dollars). 



30 

Tdt.il Tr.ivpl F.xpenrj 1 Lures and Total Labor Income fror. Travel 

All travelers in Montana — resident and nonresident — are estimated 
to have spent $8l4 million in the state in 1983 (table 12). Total labor 
income attributable to the expenditures is $204 million (table 13). For 
1979, the comparable figures were $748 million in expenditures and $188 
million in labor income. 

Of the total expenditures and income the amounts generated by 
nonresident travel may be regarded as contributions to the economic base. 
Thus in 1983, travel is estimated to have added $423 million to out-of- 
state sales by Montana's basic industries, thereby creating $106 million 
in basic labor income. Those figures were $382 million and $96 million 
respectively in 1979, expressed in 1983 dollars. 

The increase in total labor income attributable to travel between 1979 
and 1983 amounted to 9 percent after adjusting for inflation (table 13). 

Checking the Expenditure Figures 

Travel data are notorious for errors and inconsistencies. Anyone 
involved in estimating or using travel expenditure and related data is 
rightly concerned about accuracy. 

There are few ways of determining accuracy, but we offer the following 
as a rough check on the total travel expenditure estimates. 

The Preliminary Reports of the 1982 Census of Retail Trade and 198J 
Census of Service Industries report the following receipts for hotels and 
motels, eating and drinking places, and gasoline service stations in 
Montana in 1982. 



Table 12 

Total Travel Expenditures in Montana 
1979 and 1983 

(In Millions of Constant 1983 Dollars) 



Percent 
1979 1983 Change 

Total $ 748 $ 8U 9 



Nonresident 


382 


^23 


11 


Tourism 


114 


127 


11 


All other^ 


268 


296 


11 


Resident • 


366 


391 


7 


Tourism 


92 


98 


7 


All other^ 


274 


293 


7 



Includes visiting friends and relatives, 
business, and all other travel. 



Table 13 

Total Labor Income Generated by Travel, 
Montana, 1979 and 1983 

(In Millions of Constant 1983 Dollars) 









Percent 




1979 


1983 


Change 


Total 


$ 188 


$ 204 


9 


Nonresident travel 


96 


106 


10 


Resident travel 


92 


98 


7 



33 

Price 
Industry 1982 Receipts Ad lustnenl 

Hotels and motels $ 156,441,000 $ 161,478,000 

Eating and drinking places 392,529,000 409,683,000 
Gasoline service stations 399,439,000 336,098,000 

Total $ 948,409,000 $ 957,259,000 

The figures were adjusted according to changes in the Consumer Price 
Index to obtain a rough estimate of 1983 receipts. Our estimate of total 
travel expenditures in Montana in 1983 is $814 million. If we apply the 
percentage of breakdown of expenditures from the Old West Commission Survey 
(table 9), to that total we arrive at expenditures per industry as follows: 

Total Nonresident 

Hotels and motels (23.1%) $ 188,000,000 $ 98,000,000 

Eating and drinking places 

(24.7%) 201,000,000 104,000,000 

Gasoline service stations 

(22.7%) 185,000,000 96,000.000 

Total $ 574,000,000 $ 298,000,000 

It is obvious at first glance that the hotel and motel expenditure 
figures exceed estimated receipts of hotels and motels in 1983. But some 
of the difference — perhaps all — is because our expenditure estimates for 
hotels and motels are for lodging only. Some of the expenditures attributed 
to eating and drinking also were made in hotels. The total expenditure 
figure for the three industries, $574 million, is equal to 60 percent 
of their total receipts. That is, our estimates of expenditures by 
nonresident and resident travelers account for 60 percent of the estimated 
total receipts of these three heavily travel-oriented industries. Non- 
resident expenditures alone amounted to 31 percent. 



34 

Although the percentage breakdown of expenditures appears inaccurate, our 
estimates of total expenditures for these three industries do seem reasonable. 

Employment 

In 1983, wage and salary workers in retail trade in Montana earned an 
average of $9,126. Service employees earned an average of $12,220. 
We weighted these averages according to the expenditure distribution in 
table 9. That is, .302 for services (hotels, motels, campgrounds, amusement 
places) and .698 for retail trade. This provided an average earnings figure 
of $10,059 rounded to $10,100. It probably is high for wage and salary workers 
in travel industries because their earnings tend to be among the lowest in 
trade and services. But we are dealing with all workers (including the 
self-employed) and with labor income (which includes fringe benefits and 
proprietors' income.) 

Dividing total labor income generated by travel ($204,000,000) by 
average annual earnings ($10,100) provides an estimate of 20,200 workers in 
travel-related industries in 1983 (table 14). Of that number 10,500 jobs 
are attributable to nonresident travel ($106 million i $10,100) and 9,700 
to resident travel ($98 million t $10,100). 

The same process was followed to obtain estimates for 1979 (table 14). 
The number of jobs in the travel industry increased more rapidly than 
travel expenditures or labor income, 15 percent between 1979 and 1983. One 
reason appears to be that employees are working fewer hours per week in 1983 
than in 1979. Montana Department of Labor and Industry figures show that 
workers in wholesale and retail trade worked an average of 30,9 hours per 



^^Calculated from U.S. Bureau of Economic Analysis data, 



Table 14 

Travel-Related Employment, 
Montana, 1979 and 1983 









Percent 




1979 


1983 


Change 


Total 


17,600 


20,200 


15 


Nonresident 


9,000 


10,500 


17 


Resident 


8,600 


9,700 


13 



36 

week in 1983 compared to 33.9 hours in 1979. Service workers put in an 
average of 30.7 hours per week in 1983 and 34.0 hours in 1979. 

The Travel Industry at the County Level 

In addition to looking at statewide expenditures, income, and employ- 
ment, we wanted to get some idea of the importance of the travel industry 
to Montana's counties. 

Tables 15 and 16 list the counties with more than one percent of their 
total employment or total labor income in hotels and motels. In general, 
counties located near the two national parks and some of the smaller 
counties in the state appear to be the most dependent upon travel. 

The figures are for 1982; no later data are available as of November 
1984. It should be noted that labor income provides the better measure of 
the importance of hotels and motels because it includes estimates of income 
of the self-employed. The hotel and motel employment figures, on the other 
hand, include only wage and salary workers. No estimates of the number of 
self-employed are available. 

Tables 17 and 18 list the counties where hotel and motel employment 
and income (and presumably travel activity) are concentrated. There is a 
great deal of concentration. Four counties — Yellowstone, Gallatin, Flathead, 
and Cascade — accounted for almost half the total state labor income and 
employment from hotels and motels in 1982. Four additional counties — 
Silver Bow, Missoula, Glacier, and Lewis and Clark — accounted for another 
one-fourth. 

Because of the interest in the importance of travel and tourism to 
local economies, we have estimated total travel-related employment by county, 
using hotel/motel employment as a proxy. Once again, a caution that the 
figures are very rough is appropriate. 



Table 15 

Counties With One Percent or More of 

Total Employment in Hotels and Motels, 
Montana, 1982 

Rank Percent 

1 Glacier 7.8 

2 Park 4.1 

3 Flathead 3.4 

4 Gallatin 3.4 

5 Beaverhead 3.4 

6 Madison 3.2 

7 Silver Bow 3.1 

8 Wheatland 3.0 

9 Dawson 2.8 

10 McCone 2.1 

11 Sheridan 2.0 

12 Roosevelt 1.9 

13 Richland 1.8 
lA Powell 1.8 

15 Yellowstone 1.8 

16 Phillips 1.8 

17 Jefferson 1.7 

18 Fergus 1.7 

19 Cascade 1.6 

20 Custer 1.6 

21 Lewis and Clark ' 1.5 

22 Missoula 1.3 

23 Valley 1.2 

24 Lincoln 1.2 

25 Hill 1.1 

26 Sweet Grass 1.1 

27 Meagher 1.1 



Source: U.S. Bureau of Economic 
Analysis, Regional Economic Informa- 
tion System, unpublished data, April 
1984. 



Table 16 

Counties With One Percent or More of 

Total Labor Income from Hotels and Motels, 

Montana, 1982 

Rank Percent 



4.6 
3.7 
2.8 
2.3 
1.9 
1.8 
1.8 
1.8 
1.5 
1.5 
1.3 
1.3 
1.3 
1.2 
1.1 
1.1 
1.0 
1.0 
1.0 



Source: U.S. Bureau of Economic 
Analysis, Regional Economic Informa- 
tion System, unpublished data, April 
1984. 



1 


Glacier 


2 


Park 


3 


Madison 


4 


Gallatin 


5 


Flathead 


6 


Sweet Grass 


7 


Silver Bow 


8 


Beaverhead 


9 


Wibaux 


10 


McCone 


11 


Fergus 


12 


Wheatland 


13 


Dawson 


14 


Phillips 


15 


Powell 


16 


Roosevelt 


17 


Cascade 


18 


Jefferson 


19 


Sheridan 



Table 17 

Counties With One Percent or More of 

Total State Hotel and Motel Employment, 

Montana, 1982 

Rank ■ Percent 



1 


Yellowstone 


2 


Gallatin 


3 


Flathead 


4 


Cascade 


5 


Silver Bow 


6 


Missoula 


7 


Glacier 


8 


Lewis and Clark 


9 


Park 


10 


Dawson 


11 


Richland 


12 


Beaverhead 


13 


Custer 


14 


Hill 


15 


Roosevelt 


16 


Fergus 


17 


Madison 


18 


Lincoln 




All other 




Total 



15 


.4 


11 


.2 


10 


.8 


9 


.2 


6 


.8 


6 


.6 


6 


.5 


5 


.0 


3, 


.3 


2. 


.9 


2, 


.0 




.9 




,5 




,5 




,5 




,4 




,2 




,1 


10. 


2 


100. 






Source: U.S. Bureau of Economic 
Analysis, Regional Economic Information 
System, unpublished data, April 1984. 



Table 18 

Counties With One Percent or More of 
Total State Labor Income From Hotels and Motels, 
■ Montana, 1982 

Rank Percent 



15.9 
11.0 
10.2 
10.0 
7.7 
6.9 
6.1 
5.6 
^.3 
2.5 
1.9 
1.5 
1.4 
1.3 
1.3 
1.1 
1.1 
1.0 



Source: U.S. Bureau of Economic Analysis, 
Regional Economic Information System, unpub- 
lished data, April 1984. 



1 


Yellowstone 


2 


Gallatin 


3 


Flathead 


4 


Cascade 


5 


Silver Bow 


6 


Glacier 


7 


Missoula 


8 


Lewis and Clark 


9 


Park 


10 


Dawson 


11 


Richland 


12 


Beaverhead 


13 


Fergus 


14 


Custer 


15 


Hill 


16 


Madison 


17 


Roosevelt 


18 


Lincoln 



41 



Statewide travel-related employment, as noted above, is estimated at 

20,200 Ln 1983. In 1982, there were 6,800 wage and salary workers employed 

12 
in hotels and motels in the state of Montana, From this we can draw the 

20,200 
tenuous inference that there are about two other jobs ( . qqq = 3) directly 

related to trrivsl for each wage- and salary job in the hotel sector. If 
we assume that hotel and nonhotel travel jobs are dispersed evenly through- 
out the state, we can simply multiply the number of hotel jobs in each 
county by three to get some idea of the total number of travel-related 
jobs in each county. 

Table 19 indicates that there are 18 Montana counties with more than 
3 percent of their work force in travel-related employment. In fact, in 
five counties roughly 10 percent or more of the work force is dependent 
on the travel-tourism industry. Once again, they are counties located near 
the national parks — Glacier, Park, Flathead, Gallatin, and Beaverhead. 
As one would expect, Glacier County has the greatest proportion of travel 
workers, nearly one-fourth of the total. This is a result of the location 
of the county and the nature of its economy. 

Although Yellowstone has the state's largest number of travel jobs 
of any county, its total employment is not so heavily weighted towards the 
travel industry. This is because its economy is larger and more diverse, 
making it less travel dependent than a county such as Glacier. 

Gasoline Taxes 

There is a great deal of interest in how much out-of-state travelers 
pay in gasoline and other fuel taxes when they travel in Montana. This 



^^U.S. Bureau of Economic Analysis. 



r 



Table 19 

Travel-Related Employment in Counties with One 

Percent or More of Total State Travel Employment, 

Montana, 1982 





Yellowstone 


Number 
Jobs 

3 


of Travel 
in County 

,095 


Percent of State 
Travel Employment 
in County 


Perce 
Emplc 

is Ti 


?nt of County 
)yment Which 
-avel Related 


1 


15.4 


5.3 


2 


Gallatin 


2 


,251 


11.2 






10.0 


3 


Flathead 


2 


,171 


10.8 






10.1 


U 


Cascade 




,849 


9.2 






4.9 


5 


Silver Bow 




,367 


6.8 






9.2 


6 


Missoula 




,327 


6.6 






3.9 


7 


Glacier 




,306 


6.5 






23.0 


8 


Lewis and Clark 




,005 


5.0 






4.3 


9 


Park 




663 


3.3 






12.0 


10 


Daw3on 




583 


2.9 






8.4 


11 


Richland 




402 


2.0 






5.2 


12 


Beaverhead 




382 


1.9 






9.9 


13 


Custer 




302 


1.5 






4.7 


14 


Hill 




302 


1.5 






3.4 


15 


Roosevelt 




302 


1.5 






5.8 


16 


Fergus 




281 


1.4 






4.9 


17" 


Madison 




241 


1.2 






9.5 


18 


Lincoln 




221 


1.1 






3.6 




All other 


2 


,150 


10.2 






NA 



Total 



20,20C 



100.0 



5.5 



Source: Based on data from U.S. Bureau of Economic Analysis, Regional Economic 
Information System, unpublished data, April 1984. 



V 



V 



43 



is iho only means the state has of collecting something from visitors for 
Lheir share of road and highway maintenance. 

During the summer of 1979 the average price of gasoline in Montana 
rose from 86.52 to 97. OC If we assume an average price for the year of 
95C^^ we can divide this into the $18.72 which the Old West Survey deter- 
mined that the average visitor party spent per day at service stations. 
If all of this represents expenditures for motor fuel, it comes to 19.7 
gallons per day. In 1979, Montana levied a 9e per gallon gasoline tax. 
This means that the average visitor party spent $1.77 per day on the state 
fuel tax. If the 666,199 cars which entered the state in 1979 stayed an 
average of 4.77 days, the state collected $5,624,652 in fuel tax from visitors 
This is $7,971,257 in 1983 dollars (using the inflator from table 7). 

By the summer of 1983 the Montana price of gasoline had risen to about 
$1.25 a gallon - in part reflecting the higher state tax of 15C per gallon - 
while total statewide sales had dropped from the 1979 level of 519,822,755 
gallons to 434,779,599^^ gallons. This is a decline of 16 percent. If 
we reduce the 19.7 gallons consumed per day in 1979 by this percentage we 
arrive at a figure of 16.5 gallons per visitor party per day for 1983. 
If the 729,810 visitor autos stayed the same 4.77 days, they paid a total 
of $8,633,360 in fuel tax to the state of Montana. In 1983 dollars this 
represents an increase of about $660 thousand in increased fuel tax 
collections to the state. 



l^Estimated from data published by the American Automobile Association. 
l^Montana Petroleum Association, year-end reports. 



4<i 

Other State and Local Taxes 

Input-output analysis is the only method available for estimating 
the value of state and local taxes (other than gasoline) that are generated 
bv travel and tourism expenditures. We had available to us the Montana 
Input-Output Model (MIOM) from Montana State University. In 1983, out- 
of-state visitors spent about $A23 million in Montana and this amount 
was then used as the basis for estimating the level of taxes that those 
expenditures would generate. The model estimated that $423 million in 
expenditures would create an additional $14.3 million in state income taxes 
and an additional $22.5 million in property taxes in 1983. However, we have 
reservations about these tax figures because the income and expenditure 
relationships built into the model are based on national income and 
expenditure patterns. For these estimates to be completely reliable the 
relationships would need to be adjusted for Montana patterns of income 
and expenditures. However, the MIOM does provide a means of observing 
the relationship between expenditures by out-of-state travelers and 
increased state and local taxes. 

Capital Formation 

There is considerable interest in the rate of capital formation by 
businesses in the travel industry. Business formation and expansion of 
existing firms, along with job creation, are an important contribution to 
economic growth. Data that can be used to measure capital formation, 
however, are extremely difficult to obtain. The only relevant data avail- 
able for Montana have to do with the number of firms in the various sectors 
of the travel industry. A comparison of the number of these firms, their 
sales, and their payroll over a period of time provides some measure of 



Table 20 

Estimates of Taxes Attributable 

to Nonresident Travel Activity, 

Montana, 1983 

Gasoline tax $ 8,600,000 
State income tax $ 14,300,000 
Property taxes $ 22,500,000 



Ji.T»| 



# 



46 

the trends that may be taking place in the industry. If, for example, 
the number of establishments is increasing it indicates that some form ol 
capital expenditure is taking place. An increase in the number of employees 
in an industry with a decline in the total number of firms would indicate 
that firms are increasing in size. 

The data in table 21 provide some comparisons for 1977 and 1982, from 
the last two Census of Business reports. The employment data are not 
comparable to other employment figures in this report. 

The five industry sectors listed in the table are considered as 
heavily travel dependent. Restaurants and lunchrooms and refreshment places 
increased in number of units as well as in number of employees, gross sales, 
and payroll from 1977 to 1982. In fact, these two sectors had a combined 
increase of 3,614 or nearly 30 percent in employees. On the other hand, 
bars and lounges serving alcoholic beverages showed a loss of 48 establish- 
ments, while the number of employees increased by 8 percent. This would 
suggest that the small less competitive firms are going out of business, 
existing firms are expanding and new bars and lounges are larger. In 
1977 these firms averaged five employees and by 1982 the typical bar or 
lounge had about six workers. 

Not surprisingly gasoline service stations declined in both number of 
firms and number of employees between 1977 and 1982. Both gross sales and 
payroll expenses, however, increased more rapidly than the rate of infla- 
tion indicating that the remaining businesses were likely in a stronger 
financial position. 



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48 

The hotel industry in Montana had a loss of 25 establishments from 
1977 to 1982, but an increase of 858 employees. The smaller "mom and pop" 
motels have been going out of business for a variety of reasons while those 
with a stronger capital base have been expanding. New hotels and motels 
are likely to be larger firms, usually employing over 50 people. 

The sales and payroll figures included in table 21 have not been 
adjusted for inflation. In all cases, the increase in sales is substantially 
higher than the rates of inflation shown in table 7, indicating increased 
volume. 



f 



49 

IV, Review of Literature 

An extensive review of economic research in the tourism industry was 
conducted in an effort to determine the appropriate methodology for this 
project. A total of 32 studies from 28 different states and one Canadian 
province were included in the review. In addition, a computerized literature 
search was performed at the Mansfield Library at the University of 
Montana. The computer search used key words to examine nationwide four 
data bases to find other studies or publications that may have been useful 
for this project. 

Following is an annotated bibliography of the publications reviewed 
for this study. Table 22 at the end of this section contains a summary of 
the multipliers that were developed or used in the articles that were reviewed 
for this research. 

The Eaonomia Impact of Tourism in Montana 
Bruce Finnie 
unpublished mimeograph, 1980 

I. Conclusions: In 1979, 3.5 million visitors came to the state. 
They spent close to half a billion dollars and generated 10,000 jobs. 
Resident travel expenditures were estimated at about $400 million. 
Combined, this resulted in slightly over 20,000 jobs and $172 million 
in income. 

II. Methodology: Much of the data for this study came from the 



f 



50 



Helena firm of Western Analysis, Inc., much of which was based on a 
survey that was done by the Old West Regional Commission. This survev 
determined why people came to the state, how they got here, the average 
number of people per party, and the amount each party spent per day, bv 
expenditure category. Major conclusions of this survey were that the 
average party of 2.31 people spent $67.70 per day for 4.77 days in Montana. 

Traffic data came from the Planning Division of the Montana Department 
of Highways. This was broken down into resident and nonresident traffic 
by calendar quarter. The final figure was 14,284,967 automobile visitor 
days. 

For air traffic, the numbers were provided by the U.S. Civil 
Aeronautics Bureau (415-876-2676). Finnie multiplied this total by .2824 
which is the ratio of nonresident to total auto traffic. This was then 
multiplied by the average length of stay to get 1,509,061 air days. 

For rail traffic, an estimate of 53,381 nonresident passengers in 
1979 was multiplied by 4.77 to derive a total of 254,627 rail visitor days. 

For bus traffic, Finnie used the 1977 Census of Transportation 
conclusion that 3.66 percent of auto traffic is by bus to check the border 
count of 35.4 busses per day. Assuming 75 percent capacity and 28.24 
percent nonresident, he calculated 522,830 bus visitor days each year. 

This gives a total of 16,571,485 visitor days. This was multiplied 
by the average per visitor day expenditure of $29.31 for a total non- 
resident yearly travel expenditure of $485,666,470. This was multiplied 
by .1775 to convert expenditures to income. The total income figure was 
$86,205,798. 



51 

This total income was divided by $8,464, the average wage in trade 
and services, to get 10,185 jobs. The Old West Survey estimated that 
52.37 percent of travel is defined as tourism which gives a final figure 
of 5,334 jobs from nonresident tourism. 

III. Resident Model: A figure of $500 per annum expenditure on 
travel was provided by the U.S. Travel Data Center (1976 estimate inflated 
to 1979 dollars). Thus the total resident travel expenditure can be 
estimated by multiplying $500 by the state's population. This gives $392 
million. Next this was multiplied by a conversion factor of .219 (this 
comes from the Travel Data Center), Thus total income from resident tour- 
ism was estimated to be $85,848,000. The 1977 Census of Transportation 
determined that 30 percent of all travel could be defined as tourism. 
These dollar amounts for travel and tourism are then divided by the average 
wage in trade and services to get the number of jobs from resident travel 
and tourism. 

Resident and nonresident travel are summed to arrive at a total of 
20,328 jobs. 

These jobs were then allocated to the various counties. This was done 
by dividing the number of motel/hotel jobs in each county (from the 
Department of Community Affairs, Research Division) by the state total of ■ 
motel/hotel jobs. This was then multiplied by the 20,328 total to get 
travel jobs per county. 

IV. Taxes: The total income estimate for tourism (resident and 
nonresident) was multiplied by .0395 to get the personal income tax 
contribution. 

The survey had an estimate of $80.36 spent on gasoline by the average 
nonresident party during its stay in the state. This was divided by 
price per gallon to get gallons which was then multiplied by nonresident 



52 

cars per day, days in year, and tax per gallon. The resident gas tax from 
tourism was derived by subtracting the nonresident from the total and 
multiplying the remainder by .30. 



Eoononia Imoortance of Townsm in Montana 
Paul E. Polzin and Dennis L. Schweitzer 
Forest Service, U.S. Department of Agriculture, 1975 



I. Conclusions: About one-fourth of each dollar spent accrues to 
Montanans as income — this ratio is somewhat less for outdoor-oriented 
activities. This results in about $33 million in direct income. 

II. Methodology: Polzin and Schweitzer used a ratio approach to 
manipulate traffic flow data obtained from the Montana Department of 
Highways and from other studies. Much of their methodology was based on 
the 1966 Montana Travel Study by Robert Wallace and Daniel Blake. They 
first broke expenditures into the categories of lodging, food, transporta- 
tion, and "all other." They then divided tourists into four types: 
campers, fishermen, hunters, and the all-inclusive "average tourist." 
From there they "guesstimate" the expenditure breakdowns for each of these 
types. From the 1967 Census of Business they got "earnings per dollar 

of receipts" for the various expenditure types. It was then a matter of 
summing the products of the proportions spent and the earnings per dollar 
of each category. The total number of tourists came from the Highway 
Department counts and from sales of nonresident hunting and fishing 
licenses. The estimate for campers came from the Wallace-Blake study. 
The Highway Commission estimated that the average 1971 visitor spent $40 
per day. Polzin and Schweitzer estimated that campers spent 60 percent 
of this figure, fishermen 150 percent, and hunters 200 percent. 



s 



53 

Montana Travel Study 

Robert F. Wallace and Daniel R. Blake 

Rnrcaii of Business and Economic Research, School of Business Adniinist ration. 
University of Montana, 1966 

This study was based on a survey of people in lodging facilities and 
at state borders from July 1963 to August 1964. Questions included the 
month in which the vacation was planned and which family members made 
the decision to visit Montana as well as the factors which affected that 
decision. Separate hunting and fishing surveys were conducted. They did 
not convert expenses to income. 

Minnesota's 2978 Tourist-Travel Industry 

The Research Division, Department of Economic Development 

State of Minnesota, 480 Cedar Street, St. Paul, MN 55101, 1979 

A compilation of data consisting of: lodging receipts, customs reports, 

licenses, traffic counts, park attendance, and car rental receipts. 

The Impact of Travel on the Oregon Economy and Visitor Use of Tourist- 
Serving Facilities 
Marvin Clement, Keith E. Yandon, and William A. Reardon 
Battelle Pacific Northwest Laboratories, Richland, WA 99352, 1973 

This used a stop-traffic survey. Questionnaires were also sent to a 

sample of hotel/motel operators. A gift valued at $20 for those who 

returned diary data contributed to a 40 percent response rate. The model 

used input/output analysis which developed an income multiplier of 1.42, 

but then discussed an "induced" expenditure: "When this type of effect 

is taken into account, the effective multiplier becomes about 3.2 . . ." 

If indirect expenditure is secondary, then induced expenditure is tertiary. 

Ohio's Hidden Asset — Travel and Tourism in the Buckeye State 
Ohio Travel Council, Inc., and Laventhol and Horwath 
1978 

Used county and the travel economic impact model developed by the 
U.S. Travel Data Center. 



54 



2979 Vacation Travel by Canadians in the United States 
Travel Data International 
Canadian Government Office of Tourism, United States Travel Service, 1980 

This report discusses how they got here, when they came, where they 

went, why they came back, etc. There is no discussion of economic impact. 

Colorado Ski and Winter Recreation Statistics, 2982 
Charles R. Goeldner and Karen Duea 

Business Research Division, Graduate School of Business Administration, 
University of Colorado, Boulder, CO, 1983 

Seventy-eight pages of detailed statistics before the chapter on 

economic impact of skiing. The authors used an income multiplier of 2.0 

from Peckett, Margaret S. and Dan M. Bechter: "Skiers: Their Local 

Economic Impact," Monthly Review, FRB of Kansas City, June 1972. 

The Economic Impact of Travel on Tennessee Counties, 2979 
U.S. Travel Data Center 
Tennessee Department of Tourist Development, 1980 

The study was done by U.S. Travel Data Center and used the "Travel 

Economic Impact Model" which is available from USTDC. The report showed 

that about 1.4 percent of tourist expenditures went to local taxes. Data 

were from the 1977 National Travel Survey. Only direct expenditures were 

considered. 

Study of Economic Benefit of Vermont's Travel Industry, August 2979 
Laventhol and Horwath 
State of Vermont Agency of Development and Community Affairs, 1979 

This study used USTDC s TEIM (above). Multipliers ranged from 1.65 

to 2.26 (income) and 1.45 to 2.32 (employment). These are included in a 

several-page discussion on multiplier determination. Data on receipts 

by SIC came from state agencies. 



c- 



e 



(r 



55 



Colorado Travel and Tourism Statistics, 1980 

Business Research Division, Graduate School of Business Administration 
University of Colorado, Boulder, CO, 1980 

(Chapter XIV "Economic Impact of Travel," page 36.) Colorado 

commissioned the USTDC, which used TEIM and tax receipts, to produce a 

county-by-county breakdown which was similar to the Tennessee study. 

2972-1979 South Carolina Travel and Tourism Data 
South Carolina Department of Parks, Recreation and Tourism 

This study reported data only. It does have per person per day 

expenditures, but they are not broken down into expenditure categories. 

Appendix A: Estimating the Impact of Travel Expenditures for the 

Michigan Economy 
John Mattila 
unpublished mimeograph, about 1977 

Used data from U.S. Travel Data Center for per person per diem 

expenditures. Used a multiplier of 1.78 from the National Tourism 

Resources Review and an employment multiplier of 1.48. 

West Virginia Travel 1977-1978 
Patricia E. Goeke 
Governor's Office of Economic and Community Development 

This was a survey of lodging facilities. It also reports the amount 

spent on promotion by regions within the state. 

1977 Visitor Expenditure Survey (Hawaii) 
Evelyn Richardson and Ernest J. Donehower 
Hawaii Visitor Bureau, 1978 

This study was a diary survey of a random sample of hotel guests. 

Respondents received a gift upon return of the questionnaire. 



r 



c 



56 



Vacation Patterns in the North Central Region Market Area with Special 

Application to Minnesota 
unpublished mimeograph, about 1978 

This was merely a report of comings and goings in the north central 

region. 

Economic Impact of the Minnesota Tourist and Travel Industry y 1976 
Department of Economic Development, Research Bulletin #36, 1977 

The report contains percentages of total receipts by industry segment 

for Minnesota and the U.S. Wisconsin ratios from the 1972 Census of 

Transportation were used in the analysis. The study considered only 

direct expenditures, hence no multiplier was developed. 

Travel Alberta 

Alberta Ministry of Tourism and Small Business 
mimeograph, 1980 

Included are annual reports for 1978-79, and a marketing strategy 

for 1980-81. The marketing was to be done by product rather than by region. 

South Dakota Travel Industry Statistics 
1980 Autumn Tourism Conference 
mimeograph 

This report contains tables of: vehicle miles driven by month, 

overnight guests, (June, July, August, September) motel occupancy by month, 

and campground occupancy rates. 

Nebraska Vacation Guide Program Training Manual 
Catherine L. Roberts and Richard B. Gartrell, editors 
Department of Economic Development, 1979 

A tour guide training manual: "The Selling of Nebraska." 



57 



Out-of-state Travelers in South Dakota, June, July, August 1975 
V.E. Montgomery 

Business Research Bureau, School of Business, University of South Dakota, 
Vermillion, 1976 

Questionnaires which were sent to lodge keepers, traffic counts, and 

the Census of Business report were employed to produce a picture of the 

tourist in South Dakota. 

The 1979 Gasoline Shortage: Lessons for the Travel Industry 
Travel Industry Association of America, 1980 

This study asserted that fuel expenses were 9.2 percent of auto 

vacation costs in 1977 and that the Mountain West suffered the most severe 

reductions in real sales. It used a survey of service station 

owners. 

The Georgia Travel Industry, 1960-1975 
Polly W. Hein 

Division of Services, College of Business Administration, University of 
Georgia, Athens, GA, 1977 

A benchmark survey was done in 1960-61 and was updated by estimation 

each year after that. "Current estimates are that each travel dollar is 

multiplied between 1.5 and 2.0 times." This was based on a breakdown of 

the percentage of total expenditures for various goods and services. 

The 1960 survey used a mailback diary questionnaire, but later they used 

mailbacks from their "Welcome Centers" for the updates. 

Winter Recreation Visitor Study, Wisconsin, 1979 

Rollin B. Looper, et al. 

University of Wisconsin Extension, 1979 

Questionnaires were mailed to a random sample drawn from registrations 

at various types of lodging facilities. Their expenditure multiplier was 

1.7. The report also had a section on marketing — segmentation and 

targeting, etc. 



58 



The Impact of Tourism in the Four Comers Region (Draft Interim Report) 
Stephen R. Fiance and Associates, Inc. 
Santa Fe, New Mexico 
mimeograph, 1979 

This study employed secondary data including the 1970 Census. "Each 

regional travel dollar generates an additional $1.80 in indirect local 

spending. Twenty-three cents of each dollar goes directly to wages, 13 

cents to taxes." "Regional travel employment multiplier of 2.4." 

"Expenditure multiplier of 2.8." The study also includes grocery price 

differences for communities dependent on tourism versus those not, and 

also a bibliography of data sources. In addition, there is an appendix on 

multipliers. 

Washington Travel and Tourism Report j, 1983 Review 

David B. Tanner 

Washington State Department of Commerce and Economic Development, 1984 

The most significant findings reported were: Expenditures of $45,324 

generate one direct job and state and local taxes are 4.8 percent 

of direct travel expenditures. The total employment multiplier is 2.4 

. . . the tax multiplier is 2.1 . 

Proceedings: Conference on "The Old. West Region — Energy and its Impact 

on Tourism — 1980 and Beyond" 
Boys Town Research Center, Boys Town, NE, 1979 

This conference included presentations from various individuals on 
the general theme that as gasoline prices increase relative to the rest of 
the CPI, tourism will be hurt. Some of the speakers referred to question- 
naires relating various price levels to travel plans. The general tone 
of the conference was pessimistic. 



r 



f 



^ 



59 



198S Travel Advertising Study, Preliminary Reports 
Oregon Economic Development Department, Tourism Division 

It used a survey sent to a sample of those who responded to their 
advertising campaign via a toll free telephone call. A copy of the 
questionnaire is included. . 

"Diary" surveys were passed out to people stopping at border informa- 
tion centers. The people were asked to fill them out and mail them back 
at the end of their stay in Oregon. 

The Oregon Department of Transportation also conducted interviews 
of visitors at five different locations in that state. 

Kentucky — Eaonomia Impact of Visitors 
Ayse Somersan 

Recreation Resources Center, University of Wisconsin — Extension, Madison, 
WI, 1980 

Data were from the Kentucky Department of Revenue. Tables show the 

percentage of Kentucky and U.S. jobs for each SIC with LQ > 1 . The former 

over the latter is the "location quotient," if it is greater than 1.0 then 

the state is a net exporter in that SIC. The report showed a "static 

export employment multiplier of 2.97." 

Kentucky — Tourism Marketing Analysis 
Jack Gray 

Recreation Resources Center, University of Wisconsin — Extension, Madison, 
WI, 1980 

This report is a marketing plan for the state of Kentucky. 

Gross Sales of South Dakota's Hospitality — Recreation — Tourism Industry, 1978 
Arnold Bateman 
Cooperative Extension Service, South Dakota State University 

The report is a data set which breaks receipts down by industry and 

by county. 



^ 



60 



Arkansas Tourisn Report 

Arkansas Department of Parks and Tourism 

mimeograph, 1979 

Primarily tables of data of visitors, "economic impact" and "travel 
tax" revenue — there is no statement of how the data were derived. 



% 



Table 22 illustrates the variation in multipliers derived from several 
reports reviewed for this study. The income multipliers range from a low 
of 1./.2 to a high of 3.2 in the Oregon studies. Employment multipliers 
had a range from 1.45 in Vermont to 2.4 in the Four Corners and Washington 
'studies. The multipliers shown in the table also reveal how difficult it 
is to compare the results of tourism research from state-to-state and of 
selecting a research methodology. 



r 



(r 



# 



Table 22 
Multipliers from Selected Tourism Studies 



Mul t i pi i ers 

I ncome Empl oyment 



Colorado 


2.0 




Oregon 


1 .'♦2-3.20 
(2.31)" 




Vermont 


1.65-2.26 
(1.96)^^ 


1 .^45-2. 32 
(1.89)* 


Michigan 


1.78 


1.A8 


Georgia 


1 .50-2.0 
(1.75)* . 




Wi scons i n 


1.7 




Four-Corners-" 


2.8 


2.k 


Washington 


— 


l.h 


Kentucky 


1.65-2.36 

(2.01)* 


2.36 


Montana 

(Fi nnt e) 


\.Bh 


2.38 


Mean 


2.02 


2.15 


Standard deviation 
of the means 


• 35 


• 38 


Range 


1 .A2-3.2 


1 .'45-2.'4 



*Mean value. 

■•'•■•'•The area where the corners of the states of Arizona, 
New Mexico, Colorado, and Utah meet. 



r 



% 



63 



Appendix A 
Input-Output Model 

During the early stages of this study Dr. Merle Faminow of the 
Department of Agricultural Economics and Economics at Montana State 
University offered us the opportunity to run our data through their 
Montana Input-Output Model (MIOM). Results from this type of analysis would 
provide information about the impact of tourism on the Montana economy that 
would not be available from the ratio model used by Finnie. 

The ratio model may be considered a less sophisticated version of the 
MIOM. The ratio model examines expenditures and the income that these 
expenditures produce initially. It does not account for the additional 
economic impact due to expenditures by proprietors and employees of the 
businesses which tourists patronize. For example, a hotel may contract with 
a local linen service which will lead to increases in output and possibly 
greater employment. This is the type of economic impact which the MIOM is 
designed to ascertain. 

The Montana input-output model consists of nearly five hundred economic 
sectors. It is based on the national Bureau of Economic Analysis model, but 
some coefficients which determine the relationships between the sectors have 
been changed to better describe the Montana economy which is' smaller and 
less diverse than the U.S. economy. 

To derive Montana coefficients from the national model, the national 
coefficients were multiplied by the fraction of total consumption in that 
sector which the state provides itself. This, however, tends to overestimate 



6A 



impact — especially in a small, isolated, relatively homogenous economv 

like that of Montana. Isard points out: 

Consider first the factors which in our isolated regional 
economy lead to changing cents worth of inputs per dollar 
output as output varies. One is economies of scale, which 
is present in most industries. A second is localization 
economics — external economies when like plants agglomerate 
at one place. A third is urbanization economies — external 
economies which derive when unlike plants agglomerate at one 
locality. These economies tend to deny the use of constant 
production coefficients . . . 

Hence, the impact for all industries, with the likely exception of 

transportation, is probably overestimated. Although this may be considered 

a weakness in this methodology it does provide information about trends 

and impacts on the total economy of the state resulting from expenditures 

in various sectors of the economy. Hence input-output analysis can be a- 

useful tool for travel and tourism research. 



Isard, Walter, Technology Press — M.I.T. and John Wiley & Sons, N.Y., 1960. 



r 



r 



65 



Appendix B 
Determination of the Percentage of Autos from Out-of-State 

The Montana Department of Highways provided us with four year averages 
(1980-1983) of the percentage of out-of-state traffic by quarter at five 
count stations. We multiplied these figures by the percent which the 
quarterly daily average is of the yearly daily average, summed the results 
and divided by four hundred to determine what percentage of the yearly 
traffic flow is from out-of-state. This method gives more weight to the 
out-of-state percentages of the high volume quarters. These results are 
shown in table 1. 

Determination of the Percentage of Noncommercial Traffic 

The Highway Department and the U.S. Customs Service provided us with 
estimates of the percentage of total traffic which is commercial. In the 
case of the Highway Department these figures came from their visual counting 
as did the figures for the percent out-of-state. The Customs Service 
estimates were made by Mr. John Sharone of the Great Falls office. 

First, total incoming traffic was determined (table 2). The Customs 
Service numbers came in this form while the Highway Department data were 
in the form of daily averages. These averages count traffic going both ways 
so they were divided by two and then multiplied by 365 to get numbers which 
could be directly compared with those from the Customs Service. 

Using these total incoming traffic figures we derived a weighted 
average of the percent of noncommercial traffic. These results are 
provided in table 2. 



c 



Table 1 

Determination of the Percentage of Out-of-State Auto Traffic 

1980-1983 



Lima 



West Yellowstone 



Gardiner 



Wibaux 



Superior 



Quarterly 
Daily Average 





Percent from 


as Percent of 


Weighted 


Yearly Percentage 


Quarter 


Out-of-State 

(31.2) 
(32.8) 
(49.9) 
(22.3) 


Daily Average 

(78.39) 
(103.83) 
(131.81) 

(85.98) 


Figures 

2,446 
3,406 
6,577 
1,917 
14,346 


Out-of-State 


1 
2 
3 
4 


T 400 = 35.87 


1 
2 
3 

4 


(13.6) 
(34.0) 
(55.4) 
(22.0) 


(39.09) 

(101.70) 

(208.38) 

(50.83) 


532 

3,458 
11,544 

1,118 
16,652 


T 400 = 41.63 


1 
2 
3 
4 


(8.8) 
(15.1) 
(52.4) 
(12.1) 


(54.92) 
(100.86) 
(180.08) 

(64.14) 


483 

1,523 

9,436 

776 

12,218 


T 400 = 30.55 


1 
2 
3 
4 


(24.9) 
(36.8) 
(42.3) 
(32.7) 


(72.92) 
(106.24) 
(138.16) 

(82.69) 


1,816 
3,910 
5,844 
2,704 
14,274 


T 400 = 35.69 


1 

2 
3 

4 


(22.9) 
(34.2) 
(52.5) . 
(22.2) 


(60.55) 

(108.02) 

(150.39) 

(81.04) 


1,387 
3,694 
7,895 
1,799 


- 



14,775 



400 = 



36.94 



Table 2 

Determination of the Percentage of Noncommercial Traffic 

from Out-of-State 

1983 Incoming 1983 Incoming 

Noncommercial Traffic Traffic 

Lima^ 168,813 234,330 

West Yellowstone^ 260,063 301,855 

Gardiner^ 156,038 181,770 

Wibaux^ 286,708 387,995 

Superior^ 473,223 643,860 

Chief Mountain'' . 36,905 36,905 

Piegan^ 100,691 101,708 

Roosville^ 71,638 89,597 

Sweetgrass^ 86,104 172,207 

Raymond^ 44,528 63,612 

Total 1,684,711 2,213,839 



Incoming noncommercial _ 1 ,684, 711 _ jr-in 
Total incoming 2,213,839 



.Highway Department. 
U.S. Customs Service. 



68 



Determination of Out-of-State Percentage of Noncommercial Traffic 

In order to determine the percentage of noncommercial traffic from 
out-of-state, we took the figures from the Montana Highway Department count 
stations (see table 1) and weighted them by their total noncommercial 
incoming traffic count (see table 3). This gives us an average out-of-state 
percentage of 36.7 percent which we assume holds true for the customs stations 
as well as the Wyoming Highway count station (Parkman North). The results 
are summarized in table 3. 



f 



Table 3 
Determination of Out-of-State Percentage for Noncommercial Traffic 







(1) 


(2) 


(1)(2) 




Station 
Number 

17 • 


Out-of-State 
Percentage 

35.87 


1983 
Total Incoming 
Traffic 


1983 

1 ncomi ng 

Out-of-State 

Traffic 


Lima 


23'»,330 


8i*,05A 


West Yel lows tone 


18 


'41.63 


301,855 


125,662 


Card i ner 


20 


30.55 


181,770 


55,531 


Wi baux 


25 


35.69 


387,995 


138, A75 


Superior 


30 


36. 9A 


643,860 


237,842 






36.66 


1,7^9,810 


641,564 




Stat ion 
Number 

17 


Out-of-state 
Percentage 

35.87 


1983 

Noncommerci a1 

Incoming Traffic 


1 ncomi ng 
Noncommerci al 
Out-of-State 

Traffic 


Lima 


168,813 


60,553 


West Yel lows tone 


18 


A1.63 


260,063 


108,264 


Gardi ner 


20 


30.55 


156,038 


47,670 


Wi baux 


25 


35.69 


286,708 


102,326 


Superior 


30 


36. 9A 


A73.223 


174,809 



36.70 1,3'*^, 845 493,622