MITEIM Model Summary
Page 1
Michigan Tourism Spending and Economic Impact Model
MITEIM.XLS
Daniel J. Stynes
October 1, 2000
INTRODUCTION
The Michigan tourism spending and economic impact model (MITEIM) was developed for Travel Michigan
and the tourism industry within the state to help estimate the economic impacts of tourism-related decisions.
The model can be used to estimate total visitor spending in an area and the associated economic effects in
terms of sales, income, jobs, and tax receipts. The model is implemented in an Excel workbook.
The basic equation for estimating economic impacts of tourism is:
Economic Impact = number of visits * average spending per visit * multiplier
At a minimum, users of the model must provide estimates of the number of visits for which spending and
impacts are desired. A database of spending profiles for different types of tourists and recommended
economic multipliers for different regions are provided with the spreadsheet to complete the analysis.
The model is, of course, more detailed and complex than this simple equation may indicate. To apply the
model, visits are broken down between several distinct types of visitors (market segments) with different
spending patterns. Spending is reported in up to 12 categories in order to capture differences in spending
across these subgroups of tourists and also reveal which sectors of the economy are linked to tourism
spending. The impact model employs sector-specific multipliers and economic ratios derived from inputoutput models fro Michigan and sub-regions. The ratios and multipliers capture the income and jobs
resulting from tourist spending in a given sector and the associated secondary effects. Sets of multipliers are
provided for the state and sub-regions so that impacts may be estimated for the state as a whole,
metropolitan areas, CVB regions, or individual counties. The spreadsheet model may be used to estimate
impacts of all tourism in an area, or to evaluate impacts of particular market segments or proposed
marketing or development decisions.
Lodging segments
A more accurate estimate of spending and impacts can be provided if visitors are divided into subgroups or
market segments with distinct spending patterns. For example, day visitor spending is quite different from
that of overnight visitors and spending also varies across groups of overnight visitors depending on lodging
types. While the model can accommodate any segments for which spending data are available, we
recommend five lodging-based segments as a starting point. Default spending profiles for these five
segments are provided on the spreadsheet.
1. Day visitors
Overnight visitors staying in …
2. Motels, B&B's and other commercial lodging
3. Campgrounds
4. Owned seasonal homes,
5. With friends and relatives.
Note that rented homes, condos ands B&B's are included with motels and the final segment includes visitors
staying with friends and relatives. VFR here is a lodging type, not a trip purpose. To use the spending
profiles for these (or any other segments), the number of visits must be broken down by segment.
MITEIM Model Summary
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Generic, Custom and Local Data
Estimates of the number and kinds of visitors for a given application must be provided by the model user.
Several options are provided in the model for selecting spending averages and multipliers. The model is
designed to be useful in situations with limited or more extensive information and for either "quick and
dirty" or quite detailed kinds of analyses. "Generic" spending data sets (low, medium and high) built into
the model are general averages that can be readily applied to particular regions or applications. A database of
"custom" spending datasets has also been assembled from recent studies and this will be extended and
updated as new studies are conducted. Users may also enter their own spending data based on local surveys
or judgment. Any of the spending datasets may be easily adjusted on the spreadsheet to better reflect a
particular region, group of visitors or intended application. Multipliers are also provided in both a "generic"
form and "custom" multiplier datasets for particular sub-regions of the state down to a county level.
Spending data
A database of spending profiles for a range of tourism market segments are provided for use with the
MITEIM model. Model users may adjust or edit these spending profiles, as deemed necessary, to fit their
own application. Users may also input their own spending data. The system is designed to easily add new
spending data as it becomes available. Spending estimates from previous studies may also be updated using
price indices that are built into the model. The general tourism spending profiles (defaults) included with
the model were estimated based on the 1998 Michigan Welcome Center visitor survey and selected other
recent studies. When applied to American Travel Survey statewide estimates of the number of trips to
Michigan, the tourist spending averages yield total spending that is consistent with the state's lodging room
use tax collections and selected other sources. Spending averages are generally presented on a party-night
basis, as these generalize better across applications involving different lengths of stay and party sizes. The
averages are also more readily evaluated against our own judgment in this form ( e.g., average spending on
a motel room can be weighed against an average room rate when spending is presented on a party night
basis). The default spending profiles apply best to applications involving a broad range of tourists. We are
gathering additional spending data to profile more specialized markets such as resort golfers and downhill
skiers.
Multipliers and Secondary Effects
The model converts tourist spending to the income generated and the number of jobs supported by using
sets of economic ratios and multipliers for the state and sub-regions. The MITEIM model itemizes the direct
effects within key tourism-related sectors of the economy by using sector-specific ratios of jobs and income
to sales. Total effects are presented in aggregate form and include both indirect and induced effects.
Three "generic" sets of multipliers may be chosen: (1) Rural - for local regions of 1-6 counties with overall
populations less than 100,000 and fairly limited economic development, (2) Small metro - for regions that
are larger in geographic extent and/or contain one or more smaller SMA's , and (3) State - for statewide
analysis or regions containing the Detroit Metro area. Model users may import custom multipliers for many
sub-regions of the state and others may be generated upon request. We can generate multipliers for use with
MITEIM from the IMPLAN system for any region defined as one or more Michigan counties.
Economic ratios and multipliers for the state and sub-regions are derived from input-output models
estimated with the IMPLAN Pro 2.0 using the 1996 and 1997 economic databases. For users with access to
and knowledge of the IMPLAN Pro software, there are spreadsheet utilities for creating multiplier data files
from an IMPLAN model for use with MITEIM.
Using the MITEIM model
The economic impact model provides users with considerable flexibility. Analysts with limited knowledge
of regional economic methods and/or limited data can generate impact estimates quickly and easily using
the defaults built into the spreadsheet. The only input that is absolutely required is the number of visits,
hopefully broken down by lodging segments. The statewide spending profiles should apply reasonably well
MITEIM Model Summary
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to any general tourism application, although they should be adjusted when analyzing narrowly defined and
specialized markets. Use the "high" spending profiles for upscale markets and regions with higher prices and
more spending opportunities. Use "low" spending profiles in rural areas with limited spending opportunities
and applications involving "budget" travelers. Multipliers for a given area may be selected on the
spreadsheet using either the generics or custom multiplier datasets.
For analysts with more skills or information, the model can be customized and extended to suit your
particular interests. All of the data and calculation formulas can be inspected in the workbook. Segments can
be changed to suit a particular application and local spending data can be entered. Users familiar with inputoutput techniques may also adjust multipliers or use the MITEIM model with an input-output modeling
system like IMPLAN Pro.
The user interface includes a number of push-buttons to simplify routine procedures for those less familiar
with Excel. These buttons run simple macros. Users proficient with Excel may use the Excel commands to
paste data into a worksheet, copy information out of the workbook, or print selected ranges. Users may
generate their own custom reports in the workbook.
A basic understanding of economic impact concepts and methods is helpful to properly interpret the results.
Three bulletins explaining economic impact concepts and methods are available at our website along with
reports and other material on estimating the economic impacts of tourism. At the website, you may also try a
simple on-line version of the model or download the most recent MITEIM model. Go to the MITEIM
section of our website http://www.msu.edu/course/prr/840/econimpact for further information or to
download the latest version of the model.
For more information about the model contact:
Daniel J. Stynes
Michigan State University
131 Natural Resource Building
East Lansing, Michigan 48824-1222
E-mail : Stynes@msu.edu
Phone: (517)-353-5190 -ext 109
FAX: (517)-432-3597
Home page: http://www.msu.edu/user/stynes - has link to economic impact site
Economic Impact web site: http://www.msu.edu/course/prr/840/econimpact
MITEIM Model Summary
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The MITEIM.XLS WORKBOOK
The MITEIM model is set up as a multi-page Excel workbook. The workbook includes a number of
macros to automate various steps. You must answer "Yes" to enable macros when you first open the
file. The MITEIM workbook has eight displayed pages as follows:
WELCOME : the welcome page includes the basic steps for estimating economic impacts with the
MITEIM model and contains links to our economic impact webpage and other useful sites. The
basic steps are to A) choose or edit spending data, B) enter visits, and C) select multipliers and
compute economic impacts. An optional tax calculation page is also included.
SPEND: On the SPEND page you choose or edit a set of spending profiles from those provided or your own
spending data. A spending profile gives the average amount spent (usually on a per party/per day
basis) for a particular visitor segment. The spending data are organized in sets of up to 12 visitor
segments that can be used in a given application. The default spending figures are the 1998
statewide lodging segment spending averages. There are buttons on the SPEND page to import
other spending datasets (generic or custom datasets) and to price adjust spending to any year
between 1990 and 1999. You may also edit the spending data directly on this page or create and
save your own spending datasets.
VISITS: On the VISITS page, you enter the number of visits, usually in party nights and the breakdown of
these visits by segment. Visits may be entered as segment shares or absolute amounts. The
segments for the analysis are implicitly chosen when you select a spending dataset. Segment names
from the spending columns are transferred to the VISITS page. You needn't use all segments in the
dataset. Enter 0 visits for segments not included in your application. Be sure to enter visits in the
same units for which spending is reported. Note that all of the spending datasets provided with the
MITEIM model are in party nights. We recommend using party day = party night as the unit for
visits and spending. Visitation figures in other units may be converted to party nights using
average party size and length of stay information.
TOTSP : Total visitor spending is computed on the TOTSP page by multiplying the number of visits (in
each segment) entered on the VISITS page by the spending averages on the SPEND page. Spending
is summed across segments to estimate total spending.
MULTIPLIERS: Economic impacts are calculated using a set of economic multipliers and ratios for the
designated region. The defaults on this page are the Michigan statewide multipliers for 1997,
estimated using IMPLAN Pro 2.0. Button are provided to import multipliers for other regions or
years. If multipliers for your region are not available use those for a similar region or one of the
"generics". Contact us for custom multipliers for a particular area. Impact calculations are carried
out in Tables M1 and M2 below. See the summary page for a summary of results.
TAXES: Taxes accruing to federal, state or local governments are computed based on the estimated sales
and income effects. You must enter or edit local tax rates and have the option of including any
combination of federal, state, or local taxes. Taxes are only computed for the direct effects.
SUMMARY: Economic impact results are summarized in a single page report. Table 1 reports the direct
effects in some detail. Table 2 summarizes direct and total effects including aggregate multipliers.
Table 3 reports selected impact measures on a per dollar of visitor spending basis and Table 4
summarizes tax revenues.
PRINT-CHARTS: Macros on this page allow you to create a variety of charts and graphs or to print tables
from previous pages.
Move from page to page in the workbook by selecting page tabs at the bottom
Normal steps are:
1. Select or edit spending data on SPEND page
2. Enter visit data and segment shares on VISIT page
3. Check total spending estimates on TOTSP page
4. Choose multipliers on MULTILIERS page
5. Enter local tax rates on TAX page (optional)
6. Inspect results on SUMMARY page
MITEIM Model Summary
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SPEND Page
SPEND: On the SPEND page you select spending profiles and at the same time a set of segments that will
be used in the analysis.
Table 1 contains the default ("Medium") spending profiles. Spending is itemized in 12 standard categories.
There are twelve columns for segments. The default segments are five lodging-based segments as defined
above. The other seven columns are blank. The blank columns may be used to add your own segments. You
may also import different spending datasets The first row of the table contains important identifying
information: the unit of analysis in Column G, the name of the dataset in column I, and the year of the
spending data in Column L.
The segment names in row three define the segments. These names appear again on the VISITS page where
the number of visits for each segment must be entered.
The spending figures in each column are average spending figures on a party night basis for the given
segment in 1998 dollars. Rounding to the nearest dollar, the default medium level per night spending for a
Michigan tourist staying in a motel is $171 including $65 for the room, $38 in restaurants and $13 for gas
and oil.
Table 1. Spending by Segment in Michigan
CATEGORY
Motel, hotel cabin or B&B ($)
Camping fees ($)
Restaurants & bars ($)
Groceries, take-out food/drinks ($)
Gas & oil ($)
Other vehicle expenses ($)
Airfares, bus, rail, taxi, ferry ($)
Admissions & fees ($)
Clothing ($)
Sporting goods ($)
Gambling
Souvenirs and other expenses ($)
Total
Day
0.00
0.00
17.56
4.96
10.24
0.39
1.23
8.47
5.60
0.43
0.72
17.42
67.00
Party-night
SEGMENT
Motel
Camp Seasonal
Home
65.00
38.00
10.00
12.67
1.37
5.85
8.76
8.55
1.06
5.42
14.32
171.00
0.00
11.00
13.00
10.00
12.00
1.67
2.58
4.52
4.00
1.14
1.00
9.07
70.00
0.00
0.00
16.52
12.49
9.33
4.08
3.64
3.24
5.61
1.56
1.25
9.27
67.00
General Tourism
1998
Space for up to 12 segments
With
F&R
0.00
0.00
11.00
17.74
9.76
0.20
0.58
3.39
3.05
8.81
1.24
11.24
67.00
Day visitors, campers, visitors in seasonal homes and those staying with friends and relatives all spend
about $67 per party per night, although the patterns of spending on different items vary quite a bit.
Remember these are statewide averages that may be adjusted upward or downward for a particular
application. Click low or high buttons to replace the medium profiles with lower or higher values. Custom
spending datasets may be imported using the "import custom spending profiles" button (these are special
files with a *.t12.xls extension). Choose from the available datasets.
Buttons on Spending page let you:
 Import other spending datasets
 Price adjust spending data to different years
 Edit spending data
 Save a spending dataset
MITEIM Model Summary
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VISITS PAGE
VISITS PAGE : Once you have a suitable set of spending profiles for your application, jump to the VISITS
page to enter the number of visits in Table 2.
Buttons at top allow you to enter visits as a total and segment shares or as actual visits by each segment. If
using the first option, enter the total number of visits for which spending is being estimated in cell E3. Be
sure visits are entered in the same units as indicated in cell G1 of the SPEND page. This will normally be
party nights. There is a reminder about the unit of analysis at the bottom of Table 2 on the VISITS page.
The distribution of visits across segments must be entered in Column C as "Shares". Be sure to enter the
shares as percentages and make sure these sum to 100% at the bottom. The total visits in the CHECK SUM
row should be the same as cell E3. The "balancing button" will adjust visits to sum to 100%. If you prefer to
enter actual visits by segment, choose this option at top and enter visits in Column E. Cells where you
should enter data are always shaded in Yellow. Other cells are Protected.
NOTE that the segments correspond to those on the SPEND page.
Table 2. Visits by Segment
SEGMENT
SHARE
Day
Motel
Camp
Seasonal Home
With F & R
CHECK SUM
Partynights
(000's)
16.0%
21.0%
5.5%
17.5%
40.0%
14,400
18,900
4,950
15,750
36,000
100.0%
90,000
Converting visitation data to party nights. If your visit data is in person days, party trips, or some other
units, you may convert to party nights using party size and length of stay information. The conversion
factors from the 1995 American Travel Survey are shown below.
Table 3. Conversion Factors for Michigan Trips (from 1995 ATS Survey )
ATS 1995
Conversion Factors
Party size
Nights at destination
Day Trip
Lodging segments
Motel
Camp
SH
VFR
Total
2.53
3.57
2.30
3.61
2.29
2.78
All Trips to Michigan
2.13
1.00
2.18
2.88
3.11
3.65
MITEIM Model Summary
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MULTIPLIERS Page
The multiplier page computes the direct and total economic impact of the visitor spending. Direct and total
effects are computed using a set of economic ratios and multipliers for the given study area. The default
analysis is for a statewide impact, using the 1997 Michigan statewide economic ratios and multipliers.
Choose the rural, small metro or IMPORT Custom Multipliers button to replace the Michigan Statewide
multipliers with another set of multipliers. Users may choose multipliers for different regions. Multiplier
files have a fixed format and a "*.m12.xls" file extension.
Table 4. Default Statewide Michigan Multipliers by Sector , 1997a
Direct effects
Jobs/
MM sales
Personal
inc/sales
Hotels And Lodging Places
23.78
0.37
Eating & Drinking
31.00
0.34
Amusement And Recreation
31.64
0.36
Auto dealers and service stations
11.49
0.30
Local transportation
25.08
0.57
5.14
0.16
Sector
Food processing
11.10
0.31
Petroleum refining
0.59
0.05
Sporting goods
7.44
0.27
Manufacturing
8.13
27.54
0.26
0.49
8.13
0.41
Apparel from purch mate
Retail Trade
Wholesale trade
a. IMPLAN Pro Type SAM Multipliers
Total effects multipliers
Value
Added Sales
JobsII/
/sales
II MMsales
0.56 1.67
33.49
0.48 1.66
39.07
0.61 1.62
40.29
0.52 1.56
18.38
0.66 1.63
33.33
0.28 1.54
11.80
0.38 1.51
17.51
0.14 1.36
3.58
0.46 1.56
14.05
0.41 1.58
15.06
0.78 1.52
34.66
0.70 1.53
15.37
IncII/ VA II/
sales
sales
0.63
0.99
0.57
0.86
0.60
0.99
0.51
0.85
0.80
1.04
0.34
0.58
0.50
0.68
0.14
0.35
0.47
0.79
0.47
0.74
0.68
1.11
0.61
1.03
sales I
1.35
1.37
1.32
1.31
1.22
1.37
1.26
1.29
1.32
1.34
1.18
1.22
Direct sales are estimated by sector. For retail goods, wholesale and retail margins are assigned to the
wholesale and retail trade sectors, respectively. The producer prices of these goods are assigned to the
appropriate production sector. Direct sales will be less than visitor spending, as only the retail and a part of
wholesale margin on imported goods are attributed to the Michigan economy. Generally between 70 and
90% of visitor spending is captured by the local economy with lower capture rates in rural areas..
Direct income and employment effects are estimated by applying ratios of jobs and income to sales for
each sector. For example, the Michigan job to sales ratio in the hotel sector for 1997 is about 24 jobs per
million in sales (Table M). Thirty-seven cents of every dollar spent in a hotel accrues to personal income
(wages, salaries and proprietor's income). Therefore, two million dollars in room receipts supports 48 jobs
and generates $740,000 in income for the region.
Secondary effects are estimated using a Type II sales multiplier and total effects multipliers for income,
jobs, and value added. These are also computed by sector to account for differences across industries. The
Type II sales multiplier of 1.67 for hotels indicates an additional $.67 in sales is generated in all other sectors
for every dollar of direct sales in the hotel sector. Every dollar of direct sales in the hotel sector supports a
total of 33 jobs in the region, including secondary effects. This includes 24 direct jobs in hotels plus another
9 jobs in other sectors through secondary effects.
Table 5 shows how multipliers vary across different regions of the state using the hotel sector to illustrate..
MITEIM Model Summary
Page 8
Variation in Multipliers for different Regions
Table 5 . Comparison of Selected Multipliers by Region, Hotel Sector (1996 models)
Direct effect Multipliers
Region
Michigan Type II
Michigan Type SAM
Detroit Metro (6)
West Michigan (31)
Detroit CVB (3)
Traverse City CVB (3)
Grand Rapids MSA (4)
Lansing Tri-county (3)
Saginaw (3)
Benton Harbor (1)
Ann Arbor (3)
SW Mich (3)
Kalamazoo MSA (3)
Jackson County (1)
Flint county (1)
Straits (4)
UP (15)
Sunrise Side (9)
Muskegon County
Alpena County
Dickinson County
Houghton (2)
Eastern UP (3)
Alger County (1)
Jobs/
$MM Personal
sales inc/ sales
22.8
22.8
20.5
23.5
20.2
23.2
23.4
24.9
25.0
25.7
22.3
25.9
23.3
27.6
25.8
22.0
25.2
24.7
26.5
32.9
28.6
29.4
21.8
29.3
0.34
0.34
0.36
0.33
0.36
0.34
0.34
0.32
0.32
0.32
0.34
0.31
0.34
0.30
0.32
0.35
0.32
0.32
0.31
0.26
0.29
0.28
0.35
0.29
Total effect multipliers
Value
JobsII /
Added Sales
$ MM
/sales Type II
sales
Inc II/
sales
VA II
/sales
Sales Output
Type I ($MM)
0.52
0.52
0.55
0.51
0.55
0.51
0.51
0.49
0.49
0.48
0.52
0.48
0.51
0.46
0.48
0.53
0.49
0.49
0.47
0.39
0.44
0.43
0.53
0.43
1.78
1.70
1.66
1.63
1.63
1.63
1.61
1.59
1.58
1.57
1.55
1.55
1.53
1.51
1.49
1.48
1.45
1.43
1.42
1.41
1.41
1.40
1.39
1.30
33.8
32.7
29.1
33.6
28.5
33.3
32.8
34.2
33.9
35.2
30.3
35.1
32.8
37.1
33.6
30.0
33.0
32.5
33.6
40.5
36.6
36.7
28.1
34.0
0.63
0.60
0.61
0.57
0.61
0.57
0.56
0.55
0.54
0.53
0.55
0.52
0.55
0.51
0.51
0.52
0.48
0.48
0.47
0.40
0.44
0.43
0.48
0.38
1.01
0.96
0.97
0.90
0.95
0.91
0.89
0.87
0.86
0.84
0.87
0.82
0.85
0.79
0.80
0.83
0.76
0.76
0.73
0.64
0.70
0.68
0.77
0.62
1.40
1.40
1.37
1.35
1.36
1.36
1.35
1.37
1.35
1.35
1.33
1.35
1.29
1.32
1.29
1.27
1.26
1.26
1.24
1.28
1.28
1.26
1.25
1.21
1837
1837
653
656
614
158
210
78
68
29
82
41
95
16
13
126
157
47
30
6
10
11
71
4
Average
24.9
0.32
0.49
Standard deviation
3.0
0.02
0.04
Coef. Of Variation
12%
8%
8%
Range/Mean
51%
33%
33%
a. Number of counties in region in parentheses
1.53
0.11
7%
31%
33.38
2.79
8%
37%
0.52
0.07
12%
48%
0.83
0.10
12%
46%
1.32
0.05
4%
14%
285
507
178%
MITEIM Model Summary
Page 9
SUMMARY Page
The following are impact estimates for visitor spending in Michigan for 1998 (based on 90 million party nights from Table 2 and
medium spending profiles in Table 1 - does not include air-related spending of about $3 billion, gambling estimates are not
reliable).
SUMMARY OF RESULTS
Table 6. Economic Impacts of Visitor Spending : Direct Effects
Direct Effects
Direct Sales
$Millions
Jobs
Thousands
Personal Income
$Millions
Value Added
$Millions
Motel, hotel cabin or B&B
1,138
27
419
642
Camping fees
Wholesale Trade
54
1,566
756
144
111
219
456
10
12
182
27
1,278
273
1
48
4
0
1
5
14
0
0
6
0
35
2
20
531
118
7
34
124
165
3
3
66
7
620
111
31
754
210
21
58
144
276
4
6
110
11
998
191
Total
6,226
143
2,228
3,455
Sector/Spending category
Restaurants & bars
Groceries, take-out food/drinks
Gas & oil
Other vehicle expenses
Local transportation
Admissions & fees
Clothing
Sporting goods
Gambling
Souvenirs and other expenses
Retail Trade
Table 7. Direct and Total Economic Impacts of Visitor Spending
Economic measure
Output/Sales ($ Millions)
Personal Income ($ Millions)
Value Added ($ Millions)
Jobs (000's)
Total Visitor Spending ($ Millions)
Capture rate
Effective spending multiplier
DIRECT
EFFECTS
$ 6,226
$ 2,228
$ 3,455
143
Multiplier
1.60
1.61
1.65
1.34
$ 8,010
78%
1.24
TOTAL
EFFECTS
$ 9,959
$ 3,594
$ 5,699
192
MITEIM Model Summary
Page 10
Table 3. Marginal Impacts per dollar of spending and per 1,000 party nights
Impact measure
Direct personal income
Direct value added
Direct jobs
Total personal income
Total value added
Total jobs
Change per $1,000 of Change per 1,000 party
Visitor spending
nights
$ 278
$ 431
0.018
$ 449
$ 711
0.024
$ 24,760
$ 38,387
1.593
$ 39,935
$ 63,322
2.130
Table 4. Tax Impacts of Direct Sales and Income ($ Millions)
Federal
State
Local
Total
Sales
88
438
54
580
Income
325
76
401
Total
413
514
54
981
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MITEIM Model Summary
Page 11
Glossary of Economic Impact Terms
Terms are presented in groups within a logical rather than alphabetical order
Region – defines the geographic area for which impacts are estimated. The region is generally an
aggregation of one or more counties.
Sector is a grouping of industries that produce similar products or services. Most economic reporting and
models in the U.S. are based on the Standard Industrial Classification system (SIC code ). Tourism is
more an activity or type of customer than an industrial sector. While hotels (SIC 70) are a relatively
pure tourism sector, restaurants, retail establishments and amusements sell to both tourists and local
customers. There is therefore no simple way to identify tourism sales in the existing economic reporting
systems, which is why visitor surveys are required to estimate tourist spending.
Impact analysis estimates the impact of dollars from outside the region (“new dollars”) on the region’s
economy.
Significance analysis estimates the importance or significance of an industry or activity to a region usually
including spending by both local residents and visitors from outside the region.
Input-output model. An input-output model is a representation of the flows of economic activity between
sectors within a region. The model captures what each business or sector must purchase from every
other sector in order to produce a dollar’s worth of goods or services. Using such a model, flows of
economic activity associated with any change in spending may be traced either forwards (spending
generating income which induces further spending) or backwards (visitor purchases of meals leads
restaurants to purchase additional inputs -- groceries, utilities, etc.). Multipliers may be derived from an
input-output models.
IMPLAN is a micro-computer-based input output modeling system. With IMPLAN, one can estimate 528
sector
I-O models for any region consisting of one or more counties. IMPLAN includes procedures for
generating multipliers and estimating impacts by applying final demand changes to the model.
Final Demand is the term for sales to final consumers (households or government). Sales between
industries are termed intermediate sales. Economic impact analysis generally estimates the regional
economic impacts of final demand changes. Tourist spending is one type of final demand.
Direct effects are the changes in economic activity during the first round of spending. For tourism this
involves the impacts on the tourism industries (businesses selling directly to tourists) themselves.
Secondary effects are the changes in economic activity from subsequent rounds of re-spending of tourism
dollars. There are two types of secondary effects:
Indirect effects are the changes in sales, income or employment within the region in backward-linked
industries supplying goods and services to tourism businesses. The increased sales in linen supply firms
resulting from more motel sales is an indirect effect of visitor spending.
Induced effects are the increased sales within the region from household spending of the income earned
in tourism and supporting industries. Employees in tourism and supporting industries spend the income
they earn from tourism on housing, utilities, groceries, and other consumer goods and services. This
generates sales, income and employment throughout the region’s economy.
Total effects are the sum of direct, indirect and induced effects.
Multipliers capture the size of the secondary effects in a given region, generally as a ratio of the total
change in economic activity in the region relative to the direct change. Multipliers may be expressed as
MITEIM Model Summary
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ratios of sales, income or employment, or as ratios of total income or employment changes relative to
direct sales. Multipliers express the degree of interdependency between sectors in a region’s economy
and therefore vary considerably across regions and sectors.
Type I multipliers do not include induced effects while Type II multipliers do. Type SAM multipliers
adjust the Type II multipliers for income that is not normally respent immediately within the region, e.g.
commuting workers who live outside the region and retirement benefits.
A sector-specific multiplier gives total changes throughout the economy associated with a unit change
in sales in a given sector.
Aggregate tourism multipliers are based on some assumed initial changes in final demand. An
aggregate tourism spending multiplier is based on an assumed distribution of tourist spending across
economic sectors. These are basically weighted averages of sector specific multipliers with the
percentage of spending in each sector as the weights.
Capture rate is the percentage of spending that accrues to the region’s economy as direct sales or final
demand. All tourist spending on services within the region is captured, however, tourist purchases of
goods is generally not all treated as final demand to the region. For imported goods bought at retail
establishments, only the retail and possibly wholesale margins will accrue to the local economy.
Purchaser prices are the prices paid by the final consumer of a good or service. Producer prices are the
prices of goods at the factory or production point. For manufactured goods the purchaser price =
producer price + retail margin + wholesale margin + transportation margin. For services, the producer
and purchaser prices are equivalent. The retail, wholesale and transportation margins are the
portions of the purchaser price accruing to the retailer, wholesaler, and shipper, respectively. Only the
retail margins of many goods purchased by tourists accrue to the local region, as the wholesaler,
shipper, and manufacturer often lie outside the local area.
Measures of economic activity:
Sales or output is the dollar volume of a good or service produced or sold
Final Demand = sales to final consumers
Intermediate sales = sales to other industrial sectors
Income is the money earned within the region from production and sales. Total income includes
Wage and salary income, and
Proprietor’s income, rents and profits
Jobs or employment is a measure of the number of jobs required to produce a given volume of
sales/production. Jobs are usually not expressed as full time equivalents, but include part time
and seasonal positions.
Value Added is the sum of total income and indirect business taxes. Value added is the most
commonly used measure of the contribution of a region to the national economy, as it avoids
double counting of intermediate sales and captures only the “value added” by the region to
final products.