Short Term Rentals 2017 Profile and Economic Impact Analysis Prepared for Alliance for i Neighborhood Prosperity By THE UNIVERSITY of ago NEW ORLEANS HOSPITALITY RESEARCH CENTER De?ning Tourism Opportunities May 2018 Profile and Economic Impact Analysis Short Term Rentals - 2017 Acknowledgments This report was prepared by Maria J. Ortiz, Project Manager in the Hospitality Research Center (HRC) at The University of New Orleans (UNO). Special recognition is given to Reese Templet, Student Research Assistant, for his assistance in preparing this report. Further thanks also go Karen Brakel, Project and Budget Coordinator, for her valuable support. Special recognition is given to John A. Williams, Ph.D., Dean of the College of Business Administration, and Director of the Hospitality Research Center, for his valuable contribution to this project. Special thanks also go to Jim Brubaker, Eric Bay, and their team at the Alliance for Neighborhood Prosperity (ANP) for their ongoing assistance and support throughout this study. UNO Hospitality Research Center 1 Profile and Economic Impact Analysis Short Term Rentals - 2017 Table of Contents Executive Summary......................................................................................................................... 5 Introduction .................................................................................................................................... 8 Methodology................................................................................................................................... 8 Profile .............................................................................................................................................. 9 Economic Impact........................................................................................................................... 28 Conclusion ..................................................................................................................................... 33 Appendix A: Market Size ............................................................................................................... 34 Appendix B: States ........................................................................................................................ 38 UNO Hospitality Research Center 2 Profile and Economic Impact Analysis Short Term Rentals - 2017 List of Tables Table 1: Domestic and International Visitors ....................................................................................9 Table 2: Country of Residence for International Visitors ..................................................................9 Table 3: U.S. City of Entrance for International Visitors ..................................................................10 Table 4: State of Residence for Domestic Visitors ...........................................................................11 Table 5: Nightly Rate ........................................................................................................................ 14 Table 6: People per Accommodation .............................................................................................. 14 Table 7: People per Party .................................................................................................................15 Table 8: Adults per Travel Party .......................................................................................................15 Table 9: Children in Travel Party ......................................................................................................16 Table 10: Number of Children..........................................................................................................16 Table 11: First Visit to New Orleans .................................................................................................17 Table 12: New Orleans Morial Convention Center Visitation ......................................................... 19 Table 13: Extended Trip for Pleasure ............................................................................................... 19 Table 14: Additional Nights in New Orleans ....................................................................................20 Table 15: Nights in New Orleans Before or After a Cruise .............................................................. 20 Table 16: Average Individual Visitor Trip Expenditures ...................................................................21 Table 17: Likelihood to Recommend New Orleans .........................................................................22 Table 18: Gender of Respondents ...................................................................................................24 Table 19: Race of Respondents ........................................................................................................25 Table 20: Important/Performance Indicators..................................................................................26 Table 21: Average Individual Visitor Trip Expenditures ...................................................................28 Table 22: Short Term Rentals Visitor Spending ...............................................................................29 Table 23: Historical Total Spending .................................................................................................30 Table 24: State and Local Tax Revenue ........................................................................................... 32 Table 25: Historical Total Taxes .......................................................................................................32 UNO Hospitality Research Center 3 Profile and Economic Impact Analysis Short Term Rentals - 2017 List of Figures Figure 1: Quarter of Visit..................................................................................................................12 Figure 2: Days in New Orleans .........................................................................................................13 Figure 3: Nights in New Orleans ......................................................................................................13 Figure 4: Mode of Transportation to New Orleans .........................................................................17 Figure 5: Primary Purpose of Visit ...................................................................................................18 Figure 6: Primary Purpose of Visit (Expanded) ................................................................................18 Figure 7: Proportion of Visitor Trip Expenditures ............................................................................21 Figure 8: Activities Participated in While Visiting the New Orleans Area .......................................23 Figure 9: Household Annual Income of Respondents .....................................................................24 Figure 10: Age of Respondents ........................................................................................................25 Figure 11: Importance/Performance Indicators ..............................................................................27 Figure 12: Proportion of Total Visitor Spending ..............................................................................29 Figure 13: Economic Impact Variables ............................................................................................. 30 UNO Hospitality Research Center 4 Profile and Economic Impact Analysis Short Term Rentals - 2017 Executive Summary Profile Place of Residence The majority of visitors who stayed in short term rentals (STR) were U.S. residents (87.7%). The fraction of foreign visitation represented 12.3% STR international visitors were mostly from Canada (40.1%), followed by the United Kingdom (15.1%), and Australia (8.5%). Cities of entrance to the U.S. most commonly reported by international visitors include Los Angeles (19.3%), New Orleans (19.3%), and Houston (18.1%). The most common states of origin for domestic visitors were California (14.6%), Texas (9.5%), New York (6.9%), Florida (5.6%), Georgia (4.9%), and Illinois (3.8%). Stay-Specific STR visitors arrived in New Orleans more frequently during the last quarter of the year (29.9%). Visitation during the first and second quarters was very similar, at 26.0% and 25.7%, respectively. About 40% of the STR visitors stayed between 3 and 4 days in the New Orleans area, while another 34.5% stayed 5 or 6 days. The average number of days was reported at 4.8. Just under half (48.8%) of the STR visitors stayed 3 or 4 nights in New Orleans. Another 21.8% stayed between 5 and 6 nights. The average number of nights in the area was 4.2. Over a third (38.0%) of the STR visitors paid $100 or less per nightly accommodation. Another 23.2% paid between $101 and $150. The average nightly rate was $153. 38.5% of the STR visitors had two people per accommodation. Another 12.7% had three people, while 13.4% had four people. The average number of people per accommodation was 3.7. About half (47.4%) of the STR visitors traveled in parties made up of two or three individuals. Another 14.5% travel in parties of four. The average travel party size was 4.1. In 2017, the average number of adults per party was 3.9. The vast majority of STR visitors did not bring children to New Orleans (92.3%). Visitors who brought children to the city had mostly one (39.1%) or two (29.5%) children. The average number of children per party remained unchanged at 2.2. The majority (69.9%) of STR visitors flew to New Orleans. Another 23.8% of visitors drove personal vehicles to the city. UNO Hospitality Research Center 5 Profile and Economic Impact Analysis Short Term Rentals - 2017 Over half (56.6%) of the STR respondents were first-time visitors to New Orleans. Nearly all (92.9%) of the STR visitors were in the city for vacation or pleasure purposes. Another 5.5% of visitors were in New Orleans for a convention or similar gathering. When considering a detailed primary purpose, visitors were in the city most frequently to vacation (35.6%), to attend festivals or events (20.3%), for a sporting event (8.0%), or to visit friends or relatives (7.9%). The majority (85.8%) of business and convention visitors who stayed in short term rentals reported attending activities at the New Orleans Morial Convention Center. Over half (55.3%) of the business and convention visitors extended their stay in the New Orleans area for pleasure. STR visitors who came for business or convention purposes and extended their stay for pleasure spent an average of 2.9 additional nights in the New Orleans area. Cruise visitors comprised about 1.3% of the total number of visitor responses. These visitors stayed in the New Orleans area for an average of 3.2 nights before or after their cruise. STR visitors spent an average of $918 during their trip to New Orleans. The largest proportion of visitor trip expenditures was for meals ($268), followed by lodging ($232). Out-of-town visitors spent proportionally less on shopping, and more on bars/nightclubs and local transportation. Other spending categories remained at similar proportions. Satisfaction and Activities Respondents indicated their likelihood to recommend New Orleans as a destination using an eleven-point scale (0=Not at all likely, 10=Extremely likely). The average likelihood to recommend New Orleans was 8.9, while the median was 10. When the results of likelihood to recommend were analyzed using the Net Promoter Score (NPS) model, a customer loyalty metric, New Orleans had a score of 60.8%. Scores of 50% and above are considered satisfactory. Nearly all visitors (98.7%) reported visiting the French Quarter, while 85.2% went specifically to Bourbon Street. 91.3% of respondents reported eating in casual dining restaurants, and 79.9% went to bars/nightclubs. Demographics Over half (56.3%) of the STR visitors surveyed had a household annual income between $50,000 and $149,999. Almost 21% of the visitors had a household income of $1500,000 or more. About 59% of the STR respondents were female. Most (80.1%) of the STR respondents were Caucasian. UNO Hospitality Research Center 6 Profile and Economic Impact Analysis Short Term Rentals - 2017 The most frequent age group among STR respondents was 25-34 years old (42.9%), followed by 35-49 years old (25.5%), and 50-64 years old (17.4%). Performance Indicators The most important destination attributes for ANY city were: variety of things to see and do, good food, unique, personal safety, and entertainment. Attributes with the largest negative variance or “gaps” are personal safety and cleanliness. Good value improved in 2017 and no longer presents a negative gap. Most attributes that ranked high in importance also ranked highly in performance. Attributes that ranked high in importance but low in performance include personal safety. Economic Impact Visitors who stayed overnight in short term rentals made a valuable contribution to the New Orleans metro area economy. In 2017, approximately 595,000 visitors to the New Orleans area stayed in short term rentals, and generated a total economic impact of $899.2 million. This impact comprises $546.4 million in direct expenditures and $352.8 million in secondary expenditures. In addition, spending is expected to create or support nearly 10,200 full-and part-time jobs. These jobs are projected to create a total of $263.1 million in additional earnings for residents of the New Orleans area. STR visitor spending is also expected to generate a total of $63.9 million in tax revenue for state and local governments. Of that total, roughly $38.9 million will go to the State of Louisiana, and $24.9 million will be claimed by local governments in the New Orleans area. UNO Hospitality Research Center 7 Profile and Economic Impact Analysis Short Term Rentals - 2017 Introduction Representatives from Alliance for Neighborhood Prosperity (ANP) contracted with the Hospitality Research Center (HRC) at The University of New Orleans (UNO) to prepare a comprehensive study of short term rentals (STR). The purpose of this report is to provide a thorough profile and economic impact analysis of visitors who stayed in short term rentals during the calendar year 2017. The profile is presented in the following section, while the economic impact analysis is provided in a separate section. Methodology Survey instruments designed by the HRC were administered periodically during the calendar year 2017. The questionnaires were designed to determine origin, trip characteristics, preferences, and demographics of visitors to New Orleans. A total of 319 completed surveys were obtained from visitors to the New Orleans area who stayed overnight in short term rentals. The total number of observations includes both national and international visitation. Additional sources available to the center were included in the analysis to balance for any biases inherent in data collection methodologies. Some of these sources include intercept survey data collected by the HRC and DBER, data purchased from TNS visitor panel, among others. External information, including travel statistics, was also collected and included as part of this analysis. All responses from the data set were weighted to correct for any additional biases contained in the data sample. The total number of visitors who stayed in short term rentals was estimated from the total number of people who visited New Orleans in 2017, along with survey results and historical data. Total visitor spending was determined from the average individual trip expenditures derived from survey results, and the number of visitors. Data included in this report was edited for accuracy and logical consistency. Statistical software was used to analyze the information and provide final results. In order to get more representative results, extreme spending outliers were omitted from the analysis. Responses to open-ended questions were categorized by hand and then organized based upon the most frequent themes that emerged from respondents’ comments. The profile section provides tables and graphs containing the results from each question included in the survey. The economic impact section contains an analysis of total spending, total income, total employment, and total state and local tax revenues generated by STR visitors. When available, the results include comparisons among data collected during the same period in previous years. It is important to note that all historical spending figures presented throughout the report are not adjusted for inflation. Furthermore, totals in some tables may not add up due to rounding. UNO Hospitality Research Center 8 Profile and Economic Impact Analysis Short Term Rentals - 2017 Profile Place of Residence Do you live in the U.S.? Table 1: Domestic and International Visitors Response Percentage 2013 Percentage 2017 Yes No 82.0 18.0 87.7 12.3 Total Valid Cases 100.0 170 100.0 319 The majority of visitors who stayed in short term rentals (STR) were U.S. residents (87.7%). The fraction of foreign visitation represented 12.3% If not from the U.S., what country do you live in? Table 2: Country of Residence for International Visitors Percentage 2013 Percentage 2017 Canada United Kingdom Australia New Zealand Netherlands France Brazil Other 53.4 10.2 15.9 4.5 15.9 40.1 15.1 8.5 6.8 6.5 3.4 3.1 16.5 Total Valid Cases* 100.0 22 100.0 39 Response *Caution should be used when interpreting the results as the surveys were not offered in different languages. In addition, caution should be used when interpreting the results due to a small sample size. STR international visitors were mostly from Canada (40.1%), followed by the United Kingdom (15.1%), and Australia (8.5%). Other countries or regions recorded during 2017 include Colombia, Croatia, Germany, Ireland, Mexico, Puerto Rico, Singapore, Switzerland, Austria, and Chile. UNO Hospitality Research Center 9 Profile and Economic Impact Analysis Short Term Rentals - 2017 Which city did you enter the U.S. through? Table 3: U.S. City of Entrance for International Visitors Percentage 2013 Percentage 2017 Los Angeles, CA New Orleans, LA Atlanta, GA Detroit, MI Houston, TX San Francisco Dallas, TX Washington DC Other 8.9 16.7 8.9 2.2 14.4 4.4 6.7 4.4 33.3 19.3 19.3 18.1 7.7 7.7 7.7 6.5 3.9 9.7 Total Valid Cases* 100.0 23 100.0 17 Response *Caution should be used when interpreting the results due to a small sample size. Cities of entrance to the U.S. most commonly reported by international visitors include Los Angeles (19.3%), New Orleans (19.3%), and Houston (18.1%). Other cities of entrance recorded during 2017 include Buffalo, Burlington, and Miami. UNO Hospitality Research Center 10 Profile and Economic Impact Analysis Short Term Rentals - 2017 What is your home Zip Code? Table 4: State of Residence for Domestic Visitors Percentage 2013 Percentage 2017 California Texas New York Florida Georgia Illinois Virginia Pennsylvania Colorado Michigan Louisiana Maryland Massachusetts Tennessee Kentucky North Carolina Washington Alabama Minnesota New Jersey District of Columbia Arizona Wisconsin Other* 10.7 12.3 3.9 2.9 3.6 4.7 0.6 3.9 0.6 1.6 5.6 4.2 2.6 0.6 1.6 4.5 2.9 1.9 1.3 2.9 1.3 0.6 3.2 22.0 14.6 9.5 6.9 5.6 4.9 3.8 3.4 3.2 3.1 3.1 2.9 2.9 2.7 2.6 2.4 2.1 1.9 1.9 1.8 1.7 1.7 1.7 1.4 14.1 Total Valid Cases 100.0 78** 100.0 270 Response *See a complete list of states in Appendix A **Caution should be used when interpreting the results due to a small sample size. The most common states of origin for domestic visitors were California (14.6%), Texas (9.5%), New York (6.9%), Florida (5.6%), Georgia (4.9%), and Illinois (3.8%). UNO Hospitality Research Center 11 Profile and Economic Impact Analysis Short Term Rentals - 2017 Stay-Specific When did you visit New Orleans? Figure 1: Quarter of Visit 0% 10% 20% 30% 40% 26.0% Q1 25.2% 25.7% Q2 29.9% Q3 18.4% 2017 N=190 15.2% Q4 2013 N=140 29.9% 29.7% STR visitors arrived in New Orleans more frequently during the last quarter of the year (29.9%). Visitation during the first and second quarters was very similar, at 26.0% and 25.7%, respectively. UNO Hospitality Research Center 12 Profile and Economic Impact Analysis Short Term Rentals - 2017 If you stayed overnight in the New Orleans Metro Area, how many days and nights did you stay? Figure 2: Days in New Orleans 45% 39.6% 40% 2017 N=316 Avg=4.8 34.5% 35% 30% 25% 20% 17.0% 15% 8.9% 10% 5% 0% 1 - 2 days 3 - 4 days 5 - 6 days 7 days or more This question was added to the analysis in 2016. About 40% of the STR visitors stayed between 3 and 4 days in the New Orleans area, while another 34.5% stayed 5 or 6 days. The average number of days was reported at 4.8. Figure 3: Nights in New Orleans 60% 2013 N=132 Avg=5.0 48.8% 50% 2017 N=316 Avg=4.2 39.5% 40% 34.1% 30% 21.8% 17.6% 20% 10% 19.5% 11.8% 6.9% 0% 1 - 2 nights 3 - 4 nights 5 - 6 nights 7 nights or more Just under half (48.8%) of the STR visitors stayed 3 or 4 nights in New Orleans. Another 21.8% stayed between 5 and 6 nights. The average number of nights in the area was 4.2. UNO Hospitality Research Center 13 Profile and Economic Impact Analysis Short Term Rentals - 2017 If you are staying in a paid accommodation, what is your nightly rate? Table 5: Nightly Rate Percentage 2013 Percentage 2017 $100 or less $101 - $150 $151 - $200 $201 - $250 $251 and above 31.0 26.2 16.2 10.5 16.2 38.0 23.2 16.6 8.0 14.2 Total Average rate Valid Cases 100.0 $168 103 100.0 $153 254 Response Over a third (38.0%) of the STR visitors paid $100 or less per nightly accommodation. Another 23.2% paid between $101 and $150. The average nightly rate was $153. If you are staying in a paid accommodation, how many people are staying with you, including yourself? Table 6: People per Accommodation Percentage 2013 Percentage 2017 One person Two people Three people Four people Five people Six people or more 3.0 38.8 9.7 20.3 6.4 21.8 8.9 38.5 12.7 13.4 7.7 18.8 Total Average no. of people Valid Cases 100.0 3.9 114 100.0 3.7 308 Response 38.5% of the STR visitors had two people per accommodation. Another 12.7% had three people, while 13.4% had four people. The average number of people per accommodation was 3.7. UNO Hospitality Research Center 14 Profile and Economic Impact Analysis Short Term Rentals - 2017 Including yourself, how many people were in your travel party? Table 7: People per Party Percentage 2013 Percentage 2017 One person Two people Three people Four people Five people Six people or more Seven people or more 5.0 39.2 11.7 18.2 5.6 7.4 12.9 7.4 35.5 11.9 14.5 6.9 6.9 16.9 Total Average party size Valid Cases 100.0 3.8 136 100.0 4.1 317 Response About half (47.4%) of the STR visitors traveled in parties made up of two or three individuals. Another 14.5% travel in parties of four. The average travel party size was 4.1. How many people in your travel party were adults (ages 18 and over)? Table 8: Adults per Travel Party Year Average Number Median Number of Adults of Adults 2013 2017 3.5 3.9 3.0 3.0 Valid Cases 136 316 In 2017, the average number of adults per party was 3.9. UNO Hospitality Research Center 15 Profile and Economic Impact Analysis Short Term Rentals - 2017 Did your travel party bring children under the age of 18 to New Orleans? Table 9: Children in Travel Party Response Percentage 2013 Percentage 2017 Yes No 12.1 87.9 7.7 92.3 Total Valid Cases 100.0 133 100.0 258 The vast majority of STR visitors did not bring children to New Orleans (92.3%). If your travel party brought children under the age of 18, how many did you bring? Table 10: Number of Children Percentage 2013 Percentage 2017 One child Two children Three children Four children or more 54.7 23.4 9.4 12.5 39.1 29.5 19.3 12.0 Total Average no. of children Valid Cases* 100.0 2.2 16 100.0 2.2 19 Response *Caution should be used when interpreting the results due to a small sample size. Visitors who brought children to the city had mostly one (39.1%) or two (29.5%) children. The average number of children per party remained unchanged at 2.2. UNO Hospitality Research Center 16 Profile and Economic Impact Analysis Short Term Rentals - 2017 What was your mode of transportation to the New Orleans Metro Area? Figure 4: Mode of Transportation to New Orleans 0% 20% 40% 60% 80% 69.9% Airplane 61.4% 23.8% Personal Vehicle 34.2% 6.3% Other 2017 N=319 4.4% 2013 N=136 The majority (69.9%) of STR visitors flew to New Orleans. Another 23.8% of visitors drove personal vehicles to the city. Was this your first visit to the New Orleans Metro Area? Table 11: First Visit to New Orleans Response Percentage 2013 Percentage 2017 Yes No 51.4 48.6 56.6 43.4 Total Valid Cases 100.0 118 100.0 188 Over half (56.6%) of the STR respondents were first-time visitors to New Orleans. UNO Hospitality Research Center 17 Profile and Economic Impact Analysis Short Term Rentals - 2017 What was the primary purpose of your visit to the New Orleans Metro Area? Figure 5: Primary Purpose of Visit 100% 97.2% 92.9% 2013 N=140 80% 2017 N=319 60% 40% 20% 5.5% 1.7% 1.1% 1.5% 0% Vacation/ Pleasure Convention Business Nearly all (92.9%) of the STR visitors were in the city for vacation or pleasure purposes. Another 5.5% of visitors were in New Orleans for a convention or similar gathering. Figure 6: Primary Purpose of Visit (Expanded) 0% 10% 20% 30% Other vacation/pleasure 35.6% Other festival(s) and event(s) 20.3% Sporting event(s) 8.0% Friends/Relatives 7.9% Conv., trade show, corp. meeting 5.5% French Quarter Festival 4.7% Food/Dining 4.3% Nightlife/ Entertainment 4.0% Other (Specify) 40% 2.8% Jazz Fest 1.7% Business 1.5% Cruise 1.3% Other local attraction(s) 1.2% Museum(s)/Art 0.6% School 0.4% Mardi Gras 0.2% 2017 N=319 When considering a detailed primary purpose, visitors were in the city most frequently to vacation (35.6%), to attend festivals or events (20.3%), for a sporting event (8.0%), or to visit friends or relatives (7.9%). UNO Hospitality Research Center 18 Profile and Economic Impact Analysis Short Term Rentals - 2017 If you came for business or a convention, did your trip include activities at the New Orleans Morial Convention Center? Table 12: New Orleans Morial Convention Center Visitation Response Percentage 2013 Percentage 2017 Yes No 40.0 60.0 85.8 14.2 Total Valid Cases* 100.0 4 100.0 13 *Caution should be used when interpreting the results due to a small sample size. The majority (85.8%) of business and convention visitors who stayed in short term rentals reported attending activities at the New Orleans Morial Convention Center. This question includes people whose primary purpose of visit was a convention, association, trade show, corporate meeting, or for business. Respondents self-selected the purpose of their visit to New Orleans. If you came for business or a convention, did you extend your trip to stay for pleasure? Table 13: Extended Trip for Pleasure Response Percentage 2013 Percentage 2017 Yes No 80.1 19.9 55.3 44.7 Total Valid Cases* 100.0 4 100.0 16 *Caution should be used when interpreting the results due to a small sample size. Over half (55.3%) of the business and convention visitors extended their stay in the New Orleans area for pleasure. This question includes people whose primary purpose of visit was for convention, association, trade show, corporate meeting, or business. Respondents self-selected the purpose of their visit to New Orleans. UNO Hospitality Research Center 19 Profile and Economic Impact Analysis Short Term Rentals - 2017 If you extended your business or convention trip to stay for pleasure, how many additional nights did you stay? Table 14: Additional Nights in New Orleans Year Average Number of Nights Median Number of Nights Valid Cases* 2013 2017 3.8 2.9 4.0 2.0 3 9 *Caution should be used when interpreting the results due to a small sample size. STR visitors who came for business or convention purposes and extended their stay for pleasure spent an average of 2.9 additional nights in the New Orleans area. If you came for a cruise, how many nights did you spend in New Orleans before or after your trip? Table 15: Nights in New Orleans Before or After a Cruise Year Average Number of Nights Median Number of Nights Valid Cases* 2013 2017 4.6 3.2 5.0 3.0 3 4 *Caution should be used when interpreting the results due to a small sample size. Cruise visitors comprised about 1.3% of the total number of visitor responses. These visitors stayed in the New Orleans area for an average of 3.2 nights before or after their cruise. UNO Hospitality Research Center 20 Profile and Economic Impact Analysis Short Term Rentals - 2017 How much money did you personally spend in total in the New Orleans Metro Area during that visit? Table 16: Average Individual Visitor Trip Expenditures Response 2013 2017 Restaurants/Meals Bars/Nightclubs Recreation/Entertainment Shopping Local Transportation Gambling Lodging $282 $104 $117 $162 $51 $23 $254 $268 $122 $107 $95 $75 $19 $232 Total $993 $918 STR visitors spent an average of $918 during their trip to New Orleans. The largest proportion of visitor trip expenditures was for meals ($268), followed by lodging ($232). Figure 7: Proportion of Visitor Trip Expenditures 35% 30% 2013 28% 29% 2017 26% 25% 25% 20% 16% 13% 15% 10% 12% 12% 10% 8% 10% 5% 5% 2% 2% 0% Restaurants/ Bars/ Meals Nightclubs Recreation/ Ent. Shopping Local Transport. Gambling Lodging Out-of-town visitors spent proportionally less on shopping, and more on bars/nightclubs and local transportation. Other spending categories remained at similar proportions. UNO Hospitality Research Center 21 Profile and Economic Impact Analysis Short Term Rentals - 2017 Satisfaction and Activities How likely would you be to recommend New Orleans as a destination to your friends and family? Table 17: Likelihood to Recommend New Orleans Response Promoters (rating 9 to 10) Passive (rating 7 to 8) Detractors (rating 0 to 6) Total Valid Cases Net Promoter Score Average rate Median rate Percentage 2017 69.2 22.4 8.4 100.0 149 60.8% 8.9 10.0 This question was modified in 2017. Respondents indicated their likelihood to recommend New Orleans as a destination using an eleven-point scale (0=Not at all likely, 10=Extremely likely). The average likelihood to recommend New Orleans was 8.9, while the median was 10. When the results of likelihood to recommend were analyzed using the Net Promoter Score (NPS) model, a customer loyalty metric, New Orleans had a score of 60.8%. Scores of 50% and above are considered satisfactory. UNO Hospitality Research Center 22 Profile and Economic Impact Analysis Short Term Rentals - 2017 On this trip, what places did you visit or activities did you participate in? Figure 8: Activities Participated in While Visiting the New Orleans Area 0% French Quarter Casual dining Bourbon Street Bars/Nightclubs Cafe du Monde Jackson Square Frenchmen Street Other French Quarter French Market Garden District Fine dining Shopping Canal Street Music Magazine Street Riverwalk Cemeteries Street car City Park St. Louis Cathedral WWII Museum City tour Swamp tour Other guided tours Other museums Parades Festivals Harrah's Casino Gambling River boat tour Plantations Aquarium N.O. Museum of Art Ferry on Mississippi Mardi Gras World Audubon Zoo Carriage ride Sporting events N.O. School of Cooking Superdome LA State Museum Ogden Museum Insectarium Children's Museum Other activities/places 20% 40% 60% 80% 100% 98.7% 91.3% 85.2% 79.9% 73.1% 68.1% 65.7% 64.8% 63.9% 60.0% 57.4% 57.3% 55.3% 52.1% 49.3% 46.0% 43.3% 42.0% 36.0% 31.3% 25.4% 25.1% 21.3% 21.3% 18.0% 18.0% 15.2% 14.2% 12.8% 10.4% 9.7% 9.1% 9.0% 8.5% 7.2% 2017 N=2,259 5.7% 4.7% 4.3% 4.0% 3.2% 2.7% 2.6% 2.0% 0.7% 13.9% Total equals more than 100% due to multiple responses. Nearly all visitors (98.7%) reported visiting the French Quarter, while 85.2% went specifically to Bourbon Street. 91.3% of respondents reported eating in casual dining restaurants, and 79.9% went to bars/nightclubs. UNO Hospitality Research Center 23 Profile and Economic Impact Analysis Short Term Rentals - 2017 Demographics Which category best describes your household annual income, before taxes? Figure 9: Household Annual Income of Respondents 0% Under $25,000 $25,000 - $49,999 10% 20% 16.2% 8.2% 22.3% 19.9% 15.9% 20.2% $75,000 - $99,999 18.1% 24.9% $100,000 - $149,999 $200,000 and over 40% 6.6% 7.0% $50,000 - $74,999 $150,000 - $199,999 30% 11.7% 13.0% 9.2% 6.8% 2017 N=264 2013 N=122 Over half (56.3%) of the STR visitors surveyed had a household annual income between $50,000 and $149,999. Almost 21% of the visitors had a household income of $1500,000 or more. What is your gender? Table 18: Gender of Respondents Response Percentage 2017 Male Female 40.8 59.2 Total Valid Cases 100.0 297 This question was added to the analysis in 2017. About 59% of the STR respondents were female. UNO Hospitality Research Center 24 Profile and Economic Impact Analysis Short Term Rentals - 2017 Which category best describes your race? Table 19: Race of Respondents Percentage 2017 Response Caucasian African American Asian Hispanic Other 80.1 7.4 3.5 6.1 2.8 Total Valid Cases 100.0 291 This question was added to the analysis in 2017. Most (80.1%) of the STR respondents were Caucasian. Which category best describes your age? Figure 10: Age of Respondents 0% 18 - 24 years old 20% 60% 9.8% 1.9% 42.9% 25 - 34 years old 22.5% 25.5% 35 - 49 years old 23.4% 17.4% 50 - 64 years old 65 years and older 40% 40.9% 4.5% 11.3% 2017 N=301 2013 N=140 The most frequent age group among STR respondents was 25-34 years old (42.9%), followed by 35-49 years old (25.5%), and 50-64 years old (17.4%). UNO Hospitality Research Center 25 Profile and Economic Impact Analysis Short Term Rentals - 2017 Performance Indicators Respondents were asked to rate the importance of certain destination attributes for ANY city using a five-point scale (1=Not at all important, 5=Extremely important). Later in the survey, visitors were asked to rate their satisfaction (performance) with these same attributes specifically for New Orleans using a similar scale (1=Not at all satisfied, 5=Extremely satisfied). The most important destination attributes for ANY city were: variety of things to see and do, good food, unique, personal safety, and entertainment. The satisfaction of visitors with these attributes is often essential to their overall trip satisfaction. One way to assess the performance of New Orleans is to look at the “gaps” between importance and performance for the different attributes by examining the difference between means. Table 20 includes the mean scores for importance and performance of destination attributes. The variance of 2013 was also included for comparison purposes. The variances in this table exemplify the difference between means; however, they do not represent the statistical defined variance. Attributes with the largest negative variance or “gaps” are personal safety and cleanliness. Good value improved in 2017 and no longer presents a negative gap. Table 20: Important/Performance Indicators Attribute Variety of things to see and do Good food Unique Personal safety Entertainment Quality of service Good value Easy to travel to Cleanliness Nightlife UNO Hospitality Research Center Importance 2017 4.61 4.54 4.35 4.17 4.17 3.83 3.80 3.75 3.51 3.20 Performance 2017 4.66 4.63 4.76 3.59 4.53 4.24 3.96 4.22 3.18 4.39 Variance* 2017 0.05 0.09 0.41 -0.58 0.36 0.41 0.16 0.47 -0.33 1.19 2013 0.12 0.13 0.42 -0.57 0.38 0.07 -0.06 0.10 -0.41 0.96 26 Profile and Economic Impact Analysis Short Term Rentals - 2017 The means for both importance and performance indicators were also graphed on a grid divided into quadrants according to rate levels. The axes have remained unchanged over the years to allow for historical comparisons. The symbol for each attribute indicates the quadrant in which it was located when first analyzed. Most attributes that ranked high in importance also ranked highly in performance. Attributes that ranked high in importance but low in performance include personal safety. Figure 11: Importance/Performance Indicators 5.25 HI IMP/HI PER - LO IMP/HI PER 5.00 Unique 4.75 4.50 Performance Variety of things to see and do Entertainment Good food Nightlife 4.25 Quality of service Easy to travel to 4.00 Good value 3.75 Personal safety 3.50 3.25 Cleanliness 3.00 2.75 LO IMP/LO PER - Δ 2.75 3.00 3.25 HI IMP/LO PER 3.50 3.75 4.00 4.25 4.50 4.75 5.00 5.25 Importance UNO Hospitality Research Center 27 Profile and Economic Impact Analysis Short Term Rentals - 2017 Economic Impact Introduction Short term rentals visitor spending generated valuable economic benefits in the New Orleans area. The purpose of this section is to estimate the total economic impact of STR visitors on the 8-parish New Orleans Metropolitan Statistical Area (NOMSA) during the calendar year 2017. This analysis estimates total spending, total income, total employment, and total state and local tax revenues created by STR visitors. Visitor Breakdown According to estimates obtained from an analysis of total visitation to the New Orleans area during 2017, the number visitors who stayed in short term rentals was approximately 595,000. The total STR visitation represents about 5.4% of the total New Orleans visitation during 2017. Direct and Secondary Spending Table 21: Average Individual Visitor Trip Expenditures Response 2013 2017 Restaurants/Meals Bars/Nightclubs Recreation/Entertainment Shopping Local Transportation Gambling Lodging Total $282 $104 $117 $162 $51 $23 $254 $993 $268 $122 $107 $95 $75 $19 $232 $918 Estimates of STR visitors trip expenditures were derived from survey results (Table 21). Based on these individual trip expenditures, estimates can be made of the total direct spending attributable to visitors who came to New Orleans and stayed overnight in short term rentals. Total direct spending was determined for each expense category as the product of visitors’ average trip expenditures and the total number of STR visitors. For every new dollar of direct spending, additional dollars of secondary spending are generated in the economy. Secondary spending, or the ripple effect, is based on indirect and induced spending generated from direct spending. Indirect spending corresponds to changes in industry-to-industry spending, while induced spending corresponds to changes in household spending. Secondary spending was calculated as a proportion of direct spending using multipliers provided by the United States Department of Commerce, Bureau of Economic Analysis (BEA). The 2016 BEA Regional Input-Output Modeling System (RIMS II) values for the New Orleans Metropolitan UNO Hospitality Research Center 28 Profile and Economic Impact Analysis Short Term Rentals - 2017 Statistical Area were used in this analysis. These multipliers are specific to each industry in a given area. The multipliers used in this report correspond to industries in the New Orleans metro area represented by each spending category. It is important to note that three years ago, St. James Parish was added into the official definition of the New Orleans Metropolitan Statistical area by the Federal Government. This new definition of the metropolitan area is accounted for in the 2016 Multipliers. Total Visitor Spending Total impact attributed to visitors who stayed in short term rentals during 2017 was determined as the sum of direct and secondary spending. Visitors spent a total of $546.4 million for direct or primary spending (Table 22). The largest category was for restaurants/meals, followed by lodging and bars/nightclubs (Figure 12). Based on their primary spending, out-of-town visitors generated another $352.8 million in secondary spending. Therefore, the total economic impact produced by STR visitors during 2017 was $899.2 million. Table 22: Short Term Rentals Visitor Spending Spending Restaurants/Meals Bars/Nightclubs Recreation/Entertainment Shopping Local Transportation Gambling Lodging Total Direct Spending Secondary Spending Total Spending $159,674,591 $72,492,748 $63,649,227 $56,506,684 $44,594,963 $11,469,795 $137,990,443 $546,378,450 $131,140,741 $59,538,294 $47,972,422 $44,244,734 $50,427,984 $8,644,785 $10,859,848 $352,828,807 $290,815,332 $132,031,042 $111,621,649 $100,751,418 $95,022,946 $20,114,580 $148,850,291 $899,207,257 Figure 12: Proportion of Total Visitor Spending 35% 32% 30% 25% 20% 15% 15% 17% 12% 11% 11% 10% 5% 2% 0% Restaurants/ Bars/ Meals Nightclubs UNO Hospitality Research Center Recreation/ Ent. Shopping Local Transport. Gambling Lodging 29 Profile and Economic Impact Analysis Short Term Rentals - 2017 Comparison of Economic Impacts Table 23 provides a comparison of STR visitors total spending between 2013 and 2017. In addition, Figure 13 includes a graphical representation of the growth rate of all factors influencing the economic impact. This growth rate is estimated using 2013 figures as the base point. The total economic impact of STR visitors reached $899.2 million during 2017, a significant increase from $174.8 million recorded in 2013. The increase in the number of people staying overnight in other accommodations, specifically visitors who chose to stay in private home rentals, had a positive contribution on the calculation of the total direct spending. Other factors such as trip spending decreased moderately, while the secondary effects, measured by the 2016 multipliers, remained stable. Thus, after factoring in such positive and negative contributions, the total economic impact of STR visitors was significantly higher during 2017. Table 23: Historical Total Spending Spending (Millions) 2013 2017 Direct Spending Secondary Spending* $99.8 $74.9 $546.4 $352.8 Total Spending $174.8 $899.2 *It is important to note that in 2017, the multipliers and subsequent calculations applied to estimate secondary spending for shopping and lodging were modified to reflect updates in methodological procedures. Figure 13: Economic Impact Variables 700% 2017 600% 500% 400% 300% 200% 100% 0% STR Visitors (%) Total STR visitors Trip spend. UNO Hospitality Research Center Direct spend. Second. Total econ. spend. impact Total taxes Jobs Earnings 30 Profile and Economic Impact Analysis Short Term Rentals - 2017 Earnings Direct spending created by visitors also generates earnings or income in the economy. These earnings are created across different employment industries, including non-tourism related sectors. The 2016 BEA RIMS II Multipliers were used to estimate the earnings created for each industry impacted by direct spending. In total, STR visitors will be responsible for generating $263.1 million of new earnings for residents in the New Orleans metro area economy, a substantial increase from $56.1 million reported in 2013. Employment Direct spending generated by visitors is also responsible for the creation or support of full-and part-time jobs in the economy. Similar to earnings, these jobs are part of different employment industries, including non-tourism related sectors. The respective 2016 BEA RIMS II Multipliers for employment were used to estimate the spin-off jobs that will result from visitor spending. This analysis was done for each industry impacted by direct spending. In total, STR visitor spending will be responsible for the creation or support of about 10,200 full-and part-time jobs in the New Orleans metro area economy, an increase over the 2,200 jobs reported in 2013. It is important to note that some of these are not new jobs necessarily, but rather existing jobs which are supported by the spending generated by visitors. Tax Revenues Spending and employment created in the New Orleans area by STR visitors during 2017 also generate taxes for state and local governments. There are two types of tax revenues estimated in this report: direct and indirect taxes. Direct revenue includes taxes that visitors and organizations pay to state and local governments directly. Examples include occupancy taxes paid on hotel rooms and sales taxes paid on retail purchases, including food and drinks. The direct tax revenue in this analysis was measured by current lodging, sales, and gambling taxes. In 2017, lodging taxes were revised to include taxes collected from both hotels and short term rentals. Indirect taxes are paid on the revenue or earnings generated by direct spending. The revenue created by direct spending results in jobs and salaries, and on those salaries, the recipients pay state income taxes. In addition, the recipients buy goods and services and pay taxes that correspond to those transactions. The retail sales tax applies to the purchase of most goods and services. However, other items are not taxable under the retail sales tax, but are taxable under various other taxes. Examples of these are taxes on gasoline, insurance premiums, and alcohol. These are referred to as excise taxes. The assumption used to estimate the revenue from these indirect taxes is that the recipient of newly created income is no different from the average Louisiana consumer. Therefore, the proportion of taxes paid on secondary income is equivalent to the average values of the state as a whole. The indirect taxes for state and local governments in this analysis were measured by current income, sales, excise, and business taxes. UNO Hospitality Research Center 31 Profile and Economic Impact Analysis Short Term Rentals - 2017 In total, the state of Louisiana is expected to receive $38.9 million in tax revenue from the economic activity produced by STR visitors. In addition, local governments in the New Orleans area will raise another $24.9 million in tax revenue. Total tax revenue is the sum of state and local revenues. In summary, STR visitors are expected to generate a total of $63.9 million in government tax revenue (Table 24). Table 24: State and Local Tax Revenue Government and Tax Total Revenue State Taxes Sales Taxes Lodging Taxes* Excise Taxes Gambling Taxes Income Taxes Business Taxes Total State Taxes $24,079,705 $5,174,642 $2,878,177 $2,466,006 $3,808,427 $531,701 $38,938,658 Local Taxes Sales Taxes Lodging Taxes* Total Local Taxes $21,727,647 $3,213,373 $24,941,021 Total Governmental Revenue $63,879,678 *Short term rentals occupancy taxes were added to the 2017 analysis. In 2017, total government revenue increased substantially to $63.9 million from $10.8 million reported in 2013. The substantial increase of revenue in 2016 was attributed to the increase in visitation and direct spending, along with the implementation of occupancy taxes for short term rentals in early 2017 and taxes implemented in late 2015 and early 2016, including the hotel assessment tax, the French Quarter security sales tax, and the increase of the state’s sales tax. (Table 25). Table 25: Historical Total Taxes Government and Tax (Millions) 2013 2017 Total State Tax Revenue Total Local Tax Revenue $6.1 $4.7 $38.9 $24.9 Total Governmental Revenue $10.8 $63.9 UNO Hospitality Research Center 32 Profile and Economic Impact Analysis Short Term Rentals - 2017 Conclusion Visitors who stayed overnight in short term rentals made a valuable contribution to the New Orleans metro area economy. In 2017, approximately 595,000 visitors to the New Orleans area stayed in short term rentals, and generated a total economic impact of $899.2 million. This impact comprises $546.4 million in direct expenditures and $352.8 million in secondary expenditures. In addition, spending is expected to create or support nearly 10,200 full-and part-time jobs. These jobs are projected to create a total of $263.1 million in additional earnings for residents of the New Orleans area. STR visitor spending is also expected to generate a total of $63.9 million in tax revenue for state and local governments. Of that total, roughly $38.9 million will go to the State of Louisiana, and $24.9 million will be claimed by local governments in the New Orleans area. UNO Hospitality Research Center 33 Profile and Economic Impact Analysis Short Term Rentals - 2017 A. Appendix A Market Size The analysis presented in appendix A includes graphs portraying the market size of STR in comparison to indicators of tourism activity in the New Orleans metro area as a whole. Figure A-1: Accommodations - Overnight and Daytrip 60% 50.6% 50% 2013 N=12,795 45.8% 2017 N=5,890 40% 26.7% 26.1% 30% 20% 15.1% 10% 6.6% 5.4% 1.1% 18.6% 4.1% 0% Hotels Friends or relatives Short term rentals Other accommodations Daytrippers In 2017, STR visitation represented 5.4% of the total visitation to the New Orleans area. Figure A-2: Accommodations - Overnight 70% 60% 59.5% 2013 2017 56.2% 50% 40% 31.4% 32.0% 30% 20% 6.7% 10% 1.2% 7.8% 5.1% 0% Hotels Friends or relatives Short term rentals Other accommodations STR visitation represented 6.7% of the overnight visitation to New Orleans during 2017. UNO Hospitality Research Center 34 Profile and Economic Impact Analysis Short Term Rentals - 2017 Figure A-3: Average Number Nights in New Orleans 4.3 2017 4.2 4.2 4.1 4.0 3.9 2017 3.7 3.8 3.7 3.6 3.5 3.4 STR Visitor N.O. Overnight Visitor Overnight visitors include those who stayed in hotels, with friends or relatives, in short term rentals, and in other paid accommodations. In 2017, STR visitors stayed for an average of 4.2 nights in New Orleans, almost half day more than the average (3.7 nights) of all overnight visitors to New Orleans. Figure A-4: Average Individual Trip Expenditures 950 2017 $918 900 850 2017 $773 800 750 700 650 600 550 500 STR Visitor N.O. Overnight Visitor Overnight visitors include those who stayed in hotels, with friends or relatives, in short term rentals, and in other paid accommodations. The average trip spending of STR visitors ($918) was almost $150 more than that of all overnight visitors to New Orleans during 2017 ($773). UNO Hospitality Research Center 35 Profile and Economic Impact Analysis Short Term Rentals - 2017 Figure A-5: Average Party Size 2017 4.1 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 2017 3.0 STR Visitor N.O. Overnight Visitor Overnight visitors include those who stayed in hotels, with friends or relatives, in short term rentals, and in other paid accommodations. The average party size of STR visitors (4.1) was higher than that of all New Orleans overnight visitors (3.0). Figure A-6: Children in Travel Party 2017 14.8% 16% 14% 12% 2017 7.7% 10% 8% 6% 4% 2% 0% STR Visitor N.O. Overnight Visitor Overnight visitors include those who stayed in hotels, with friends or relatives, in short term rentals, and in other paid accommodations. In 2017, 7.7% of the STR visitors brought children to New Orleans, while the same indicator was 14.8% for all overnight visitors. UNO Hospitality Research Center 36 Profile and Economic Impact Analysis Short Term Rentals - 2017 Figure A-7: Net Promoter Score 2017 60.8% 0.7 0.6 2017 47.5% 0.5 0.4 0.3 0.2 0.1 0.0 STR Visitor N.O. Visitor The net promoter score for STR visitors was 60.8%, while that of all visitors to New Orleans was 47.5%. Figure A-8: New Orleans MSA Tourism Activity 8% 2013 6.8% 7% 6% 2017 5.9% 5.4% 5% 4.2% 4% 3% 2% 2.2% 1.1% 1.5% 1.3% 1.1% 0.5% 1% 0% Number of Visitors Visitor Spending (Direct) Jobs Earnings Taxes The graph above indicates the proportion that STR visitors contribute to the impact of total visitation to New Orleans. The measurements include visitation, direct spending, job, earnings, and taxes. In 2017, STR visitation represented 5.4% of the total visitation to New Orleans. STR visitors generated 6.8% of the total direct spending. In terms of jobs and earnings, STR visitors contributed 4.2% and 2.2% respectively. Regarding total taxes, STR visitors generated 5.9% of the total taxes collected from visitors to New Orleans. UNO Hospitality Research Center 37 Profile and Economic Impact Analysis Short Term Rentals - 2017 B. Appendix B States FigurB-1: State of Residence for Domestic Visitors Response California Texas New York Florida Georgia Illinois Virginia Pennsylvania Colorado Michigan Louisiana Maryland Massachusetts Tennessee Kentucky North Carolina Washington Alabama Minnesota New Jersey District of Columbia Arizona Wisconsin Ohio Oregon Oklahoma Mississippi Nebraska South Carolina Nevada Indiana Rhode Island Utah Kansas UNO Hospitality Research Center Percentage 2017 14.6 9.5 6.9 5.6 4.9 3.8 3.4 3.2 3.1 3.1 2.9 2.9 2.7 2.6 2.4 2.1 1.9 1.9 1.8 1.7 1.7 1.7 1.4 1.2 1.2 1.1 1.0 1.0 1.0 0.7 0.7 0.7 0.7 0.7 38 Profile and Economic Impact Analysis Arkansas Connecticut Hawaii Maine Montana New Mexico Delaware Missouri Vermont West Virginia Total Valid Cases UNO Hospitality Research Center Short Term Rentals - 2017 0.6 0.5 0.5 0.5 0.5 0.5 0.2 0.2 0.2 0.2 100.0 270 39 Profile and Economic Impact Analysis Short Term Rentals - 2017 Definitions of Key Terms Visitor: Any person who lives outside the New Orleans Metropolitan Statistical Area (NOMSA). The NOMSA parishes include Jefferson, Plaquemines, Orleans, St. Bernard, St. Charles, St. James, St. John, and St. Tammany. The term traveler is used as synonym, while “tourist” is not used as readers might not be aware that business travelers or meeting attendees are also tourists. Domestic Visitor: A resident of the U.S. who travels to places outside his/her usual environment. Foreign Visitor: A resident of a foreign country who travels to the U.S. Overnight Visitor: A visitor who spends at least one night in the New Orleans Metro Area. Daytripper: A visitor who does not stay overnight in the New Orleans Metro Area. Short Term Visitor: A visitor who stays in the New Orleans Metro Area for up to 15 days. Long Term Visitor: A visitor who stays in the New Orleans Metro Area for 16 days or more. Association, Convention, Trade Show, and Corporate Meeting Visitor: A visitor who indicates that the primary purpose of visit is to attend a gathering such as a convention, trade show, exposition, or corporate meeting. Business Visitor: A visitor who indicates that the primary purpose of visit is to conduct business in the New Orleans Metro Area. Leisure Visitor: A visitor who indicates that the primary purpose of visit is to vacation, visit friends and relatives, attend a special event, go to a sporting event, shop, dine out, gamble, or for entertainment. Visitors who pass through are also categorized as leisure visitors. Valid Cases: Represent the number of responses of a particular question. Percentage: Represents the number of times an event occurred in an experiment or study. It is estimated by dividing the number of responses in a particular category over the valid cases. Percent of Cases: Indicate the percentage of respondents who select each category for a given question. It adds up to over 100% since each respondent can select more than one category. Mean: The mean is a measure of central tendency that indicates the most representative score in a group. The arithmetic mean, often called average, is the sum of all scores divided by the number of scores. For example, if the scores are 1, 3, 4, 6, 9, the mean would be 4.6. Median: The median is also a measure of central tendency that indicates the most representative score in a group. The median is helpful when the mean does not make sense (e.g., average party size of 3.1 or average number of kids of 2.5), or when the mean is affected by extreme scores or outliers. The median is the number that lies at the midpoint of a distribution. It divides the distribution of scores ranked from lowest to highest into two equal halves. For example, if the scores are 2, 3, 5, 7, 8, the median would be 5, with two scores above and two scores below. UNO Hospitality Research Center 40