Ralf Garrison: For those who hate tourism …
High Country Business Review
I talked to a fellow the other day who declared himself an anti-tourism, real-estate-industry hater. He’s sick of the perpetual construction and is glad he has nothing to do with it.
The fact that he’s a bartender in Frisco caused me to chuckle. From an economic standpoint, he is quite involved in those industries; he supports them as part of the service-industry labor pool, and most of his wages are generated either directly or indirectly from those businesses that he has “noting to do with.”
In a typical mountain resort area there are four key economic drivers: tourism, real estate, construction and service. Some are not only primary drivers of their own economics, but also help create secondary markets. The cause (primary) and effect (secondary) relationships come close to a chicken-and-egg kind of discussion.
Tourism is the top driver, leading both the primary and secondary categories. It includes direct expenditures, such as guest lodging, activities, dining and shopping. As a secondary effect, tourism creates jobs for those in related support services. It also drives the real estate and construction industries, serving as a “destination magnet” by promoting an attractive lifestyle.
Most tourism expenditures are taxable sales, yet another revenue stream is generated from sales and lodging taxes ” one largely responsible for funding many of our municipal services.
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The real estate community makes economic contributions and creates the “built product,” a major community appeal to tourists, second-home owners and full-time residents.
It makes a primarily economic contribution with revenues generated by the sale of commercial and residential real estate, as well as wages for developers, architects, engineers, brokers, sales agents and bankers.
Real estate development also contributes to the overall resort appeal and lifestyle magnet. Some developers have a “build it, and they will come” philosophy, suggesting that a resort’s appeal and success is largely a result of the “built product” they create.
The urban-renewal project in Vail is a massive reinvention of the Vail product and is designed to retain the resort’s position at the top of the world-class destinations.
Additionally, real estate is directly related to the construction industry; it drives construction related revenues discussed below. Finally, an increasing number of communities are taxing real estate, or more precisely, the transfer of real estate, to generate additional revenues.
Construction related industries are huge employers, from the guy who swings the hammer to the architect who designs the space. Construction materials are the primary revenue generated by the construction industry. But building materials are just the start ” furniture, fixtures, appliances and landscaping also contribute.
The above industries make up much of our work force. Employees need housing, groceries, gas, clothing, education, health care, social services, roads, utilities, police/fire protection and an occasional beer at the end of the day. Unlike the others, support services don’t create much of a secondary market except for the benefit of what economists call an economic multiplier: A dollar has a multiplied economic value to the extent that it trickles through the community several times before landing in someone’s piggy bank. For example, a guest might buy a lift ticket with a dollar that goes out in wages to a liftie, who tips a waitperson, who buys groceries. Some dollars have a multiplier value of four; some, just one. Often expenditures are subject to sales tax several times, so the multiplier works on the front end as well.