NRPA Measuring Impact of Park & Rec

Measuring the Economic Impact of Park and Recreation Services www.NRPA.org National Recreation and Park Association © 2010 All Rights Reserved 42 Exhibit 4-3 An Illustration of the Impact of Capture Rates a Table A: Visitor Spending Spending Category/Sector Total Spending Hotel 1,150,000 Restaurant 1,200,000 Amusements 500,000 Groceries 350,000 Gas 500,000 Souvenirs 600,000 Total 4,300,000 Table A shows the visitor spending data collected at a hypothetical special event. These visitors assigned their total spending of $4.3 million into six categories. Table B: Impacts of Spending on the Local Economy Direct Effects Total Effects Sector Direct Sales Jobs Income Sales Jobs Income Hotel 1,150,000 26.6 381,170 1,798,183 32.5 594,875 Restaurant 1,200,000 26.0 373,948 1,796,193 31.4 554,921 Amusements 500,000 9.1 155,272 770,454 11.6 246,077 Grocery Stores 70,000 1.3 29,844 112,328 1.7 44,198 Gas Stations 75,000 1.0 23,331 110,174 1.3 35,292 Souvenirs 300,000 5.4 126,866 483,920 7.1 189,324 Total 3,295,000 69.4 1,090,431 5,071,252 86.6 1,664,687 Average capture rate 77% – capture rate is total direct sales divided by total spending (3,295,000 ÷ 4,300,000) In column 2 of Table B, the visitor spending data are modified to reflect the capture rate in the retail sectors of groceries, gas, and souvenirs. No modifications are included for the hotel, restaurant, and amusement sectors because they are services that do not include significant cost of sales. For example, 80% of groceries sales value reflects cost of sales for goods that have been imported from outside the local economy. Thus, only 20% ($70, 000) of the total visitor expenditures of $350,000 is captured in the local economy. The local economy capture ratios for gas and general retail are 15% and 50%, respectively. The average capture rate across all six categories is 78%. These modified visitor spending amounts are entered into the multiplier model to show both the direct effects (columns 2-4) and total effects (columns 5-7). a This illustration was developed and provided by Daniel J. Stynes. It has been suggested as a rule of thumb that tourists’ total expenditures should be multiplied by about .8 to account for the leakage of manufacturing-related activity for purchases of goods at retail that are not locally made (Stynes, 2010). This rule was adopted earlier in the chapter to calculate the multipliers based on the data in Exhibit 4-2. A more detailed illustration of the impact of capture rates is provided in Exhibit 4-3 .