RETURN ON INVESTMENT
FISCAL YEAR 2013
Prepared for the New Hampshire
Division of Travel and Tourism Development
by
Daniel S. Lee, Ph.D.
The Institute for New Hampshire Studies
Plymouth State University of the
University System of New Hampshire
March 2015
Table of Contents
I.
II.
III.
Executive Summary
ROI Calculation
Recent Trends in State’s Tourism Industry
I. EXECUTIVE SUMMARY
It was estimated that:
1. Travelers spent $4.7 billion in New Hampshire during the study period between September 2012
and August 2013.
2. Of this $4.7 billion, $535 million was resulted from the DTTD promotional activities.
3. Of this $535 million, $62.4 million was accrued to the state and local governments.
a. The state government received $57.5 million.
b. The local governments received $4.9 million.
4. This means the state and local governments received $9.16 cents per every dollar invested.
a. State’s return on investment per DTTD $ was $8.44.
b. Local governments’ return on investment per DTTD $ was $0.72.
5. Therefore, the state government had a net revenue of $50.7 million, the gross revenue of
$57.5 million less the DTTD budget of $6.8 million, which is an increase of 12.1% from
$45.2 million during fiscal year 2012.
II. ROI Calculation
Table 1 shows how the state’s return on investment in tourism promotion was estimated. Estimated visitor
counts, spending and tax revenues shown in this report is for the period of September 2012 to August
2013, while the Division of Travel and Tourism Development (DTTD) budget is for the fiscal year (FY)
2013 budget, July 2012 to June 2013. The time lag of two months is intended to capture the effect of the
DTTD’s promotional spending in spring on visitation during the following summer. The information used
in this model is based on surveys conducted of travelers in New Hampshire by an independent firm, the
TNS Global Market Research, during FY 2012. In addition, conversion studies of DTTD target markets
were conducted by INHS during FY 2013, and monthly travel barometers have been prepared for the past
25 years. Finally, all tourist spending information was benchmarked back to the 2007 US Census of
Business.
Table 1: Step by Step Explanation of Return on Investment Calculation and Data Sources
Variable
FY13
%,2012-13 Source
Visitor
Number of person trips (millions)
35.22
3.7% Multitude of data*
spending
Visitor spending ($ millions)
$4,719
5.3% Multitude of data*
Visitor
Conversion rate
11.3%
8.9% Conversion study /
spending
Visitor Surveys
that
Visitor spending that resulted from
$535.37
14.7% (Visitor spending) *
resulted
promotional activities ($ millions)
(Conversion rate)
from DTTD
Return in
Revenue to Government in total,
$62.4
11.7%
Total
which resulted from promotion
Revenue to state govt.
$57.5
12.1% (state’s share) * (visitor
spending that resulted
from promotional
activities)
Revenue to local govt.
$4.9
7.4% (local share) * (visitor
spending that resulted
from promotional
activities)
Return per
DTTD budget
$6.81
11.9% DTTD
DTTD $
Revenue to Government per dollar
$9.16
-0.2%
Revenue to state govt.
$8.44
0.2% (State return) / (Budget)
Revenue to local govt.
$0.72
-4.1% (Local return) / (Budget)
Net Return
State’s net return ($ millions)
$50.7
12.1% =(Gross Return) - (DTTD
budget)
*Multitude data sources for estimating number of visitor trips include visitor surveys and government
data such as U.S. Census Bureau and U.S. Bureau of Economic Analysis.
**Conversion rate is the percent of visitor spending that resulted from promotional activities
(state’s share) = share of total visitor spending (paid by both those who came as a result of DTTD
promotions and those who came regardless) that ended up in the state’s coffer
Visitor spending
 For the period between September 2012 and August 2013, the state attracted 35.2 million visitors,
up by 3.7 percent from a year earlier.
 The visitors spent $4.7 billion, up by 5.3%.
Visitor spending that resulted from DTTD
 Comparing conversion studies and visitor surveys shows that these visitors attracted by DTTD
promotional activities spent about 24.0 percent more per day than did other visitors; they both
stayed longer and were more likely to stay at lodgings which pay the rooms and meals tax than
typical visitors to the state.
 As a result, it was estimated that 11.3 percent of all visitor spending was a result of DTTD
promotional activities.
 This 11.3 percent conversion rate means that, out of $4.7 billion total visitor spending, $535
million was estimated to have resulted from the DTTD’s promotional activities.
Return to Government in total, which resulted from promotion
 It was estimated that, out of $535 million,
o $57.5 million accrued to the state government, up by 12.1 percent from FY 2012.
o $4.9 million accrued to the local governments, up by 7.4 percent from FY 2012.
 State government revenues from tourist spending include rooms and meals taxes, gasoline taxes,
admission fees, licenses, tolls, tobacco taxes, beer taxes, lottery tickets, State Liquor Store sales,
and business profits/enterprise taxes. This information is shown in Table 2.
 Local governments’ revenues consist of airport landing fees, parking revenues, and municipal and
county park and ski area revenues. But they do not include property taxes or user fees on second
home properties.
Return to Governments per dollar spent, which resulted from promotion
 The DTTD total budget was $6.81 million for FY 2013.
 This means that each dollar spent by DTTD brought:
o $8.44 to the state government, up by 0.2 percent from FY 2012.
o $0.72 to the local governments, down by 4.1 percent from FY 2012.
 Thus, the sum of $9.16 was received by the state and local governments during the period
between September 2012 and August 2013.
Return to Governments in net
 As a result, the state government netted $50.7 million, after paying for the DTTD budget, which
represents a 12.1% increase from $45.2 million during fiscal year 2012.
Table 2: Estimated Tax Revenues to State and Local Governments Resulted from DTTD Promotion
Tax
Millions of dollars
State
Rooms and Meals
Business tax
State liquor store
Gas tax
Tolls
Tobacco and beer
Parks and recreation
Lottery
Communication tax
Other Govt.
Total State
$20.1
$8.6
$8.3
$3.2
$2.7
$2.2
$2.0
$1.8
$0.3
$7.1
$56.3
Local
Parks and Recreation
$2.11
Airport
$1.15
Parking
$0.07
Other Govt.
$1.46
Total Local
$4.79
 State liquor store receipts are gross sales, not net revenue to the state’s general fund.
 The above includes indirect and induced state and local government receipts from direct traveler
spending.
 Local government tax and revenues do not include property taxes on second homes and commercial
properties supported by traveler spending.
 Parks and recreation is defined as provision and support of recreational and cultural-scientific
facilities and activities including golf courses, play fields, playgrounds, public beaches, swimming
pools, tennis courts, parks, auditoriums, stadiums, auto camps, recreation piers, marinas, botanical
gardens, galleries, museums, and zoos. Also includes building and operation of convention centers
and exhibition halls.
III. Recent Trends in State’s Tourism Industry
The New Hampshire’s tourism industry has done very well since the Great Recession. Spending at
lodgings has been on the rise since fiscal year 2010. It is important to note that spending at lodgings is not
an estimate, but an official count, which is mostly paid by travelers. Rooms and meals taxes are collected
by the New Hampshire Department of Revenue Administration. All traveler spending, which is estimated
based on spending at lodgings and other travel barometers, also shows a similar pattern. During the period
of fiscal year 2010-2012, spending at lodgings increased by 15 percent. During the same period, the rest
of the economy in the state grew by only 6 percent, measured by the state’s GDP.
Figure 1: Spending at Lodgings since Fiscal Year 2007
Spending at Lodgings
in millions of dollars
$650
$600
$562
$550
$542
$524
$508
$490
$500
$473
$450
$400
Spending at lodgings includes sales at restaurants that are part of a hotel or resort.
Figure 2: All Traveler Spending since Fiscal Year 2007
All Traveler Spending
in millions of dollars
$4,800
$4,600
$4,649
$4,503
$4,435
$4,400
$4,200
$4,000
$3,800
$3,600
$3,400
$3,200
$3,000
$4,219
$4,114
$3,952