TheImpactoftheTorpedoFactoryArtCenter

ontheCityofAlexandria’sEconomy

TheStephenS.FullerInstituteforResearchontheWashingtonRegion’sEconomicFuture

ScharSchoolofPolicyandGovernmentGeorgeMasonUniversity

withanalyticalsupportfrom

Alexandria,Virginia

Preparedfor

TheTorpedoFactoryArtists’Association

February2017

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The Stephen S. Fuller Institute would like to express our appreciation to Kaptivate, a Alexandria-based management consulting firm, for identifying this research opportunity and partnering with us on the data collection, analysis and project coordination for this study.

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TheImpactoftheTorpedoFactoryArtCenterontheEconomyoftheCityofAlexandria

ExecutiveSummary

Theresearchpresented in this report confirms the findingsofother researchon theeconomic impactsof theTorpedoFactoryArtCenter; that is, theTorpedoFactory isthemost citedmajor attractionof visitors toOldTown, 83%of its visitors arenon-residents of Alexandria, its visitors combine their trip to the Torpedo Factory withmultiplevisitstootherOldTownattractions,andvisitorsattractedtoOldTownbytheTorpedoFactoryspendonaverage$92.88duringtheirvisitincludingpurchasesattheArtCenter.Otherfindingsinclude:

• VisitationtotheTorpedoFactorydeclinedsteadilyfrom1994,reachingitslowpointin2007;sincethenithastrendedhigherreaching470,000in2016;

• Out-of-town visitors comprise 83% of the visitors attracted to the Torpedo

Factory;

• The Torpedo Factory was cited by 48.6% of the visitors surveyed as theirprimaryattractionfortheirvisittoOldTown;

• 95.7% of Torpedo Factory visitors combined their visitwith other Old Town

attractions,mostnotablyrestaurantsandshopping;

• TheTorpedoFactory attracts visitors of all ages and includedasmany20-29yearoldsas50-59yearolds;

• The incomes of visitors to the Torpedo Factory reflect a broad range and

included as many persons with below-average incomes as above averageincomes;and,

• Out-of-townvisitors to theTorpedoFactoryspent$92.88during theirvisit in

Alexandria ($64.48 per visitor day) including purchases at the Art Center; in2016, this spending totaled an estimated $35.2 million to the benefit of theCity’s hotels, restaurants, retail establishments, resident artists at the ArtCenterandotherbusinessesacrosstheCity.

With growing competition from other jurisdictions in the Washington region andchangingtouristtastes,Alexandria’stouristindustryhasnotkeptpacewiththegrowthof theCity’sothermajor sectors. The long-termdecline invisitation to theTorpedoFactorybetween1994and2007andrecentslowrecoveryreflectontheCity’sbroad-base of visitor attractions and the ability tomaintain and increase their competitivepositionintheregion’stouristmarket.

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TheTorpedoFactoryArtCenterandthecombinationofrecreationalandcommercialservices clustered in convenient proximity constitute the City’s principal touristmagnetforattractingday-trippersfromthroughouttheWashingtonmetropolitanareaaswellasmulti-dayvisitorstotheWashington,DCregionfromelsewhereintheU.S.andinternationally.TheTorpedoFactoryisaprovenplacemakerinconcertwiththeAlexandriawaterfront,anditistheCity’sstrongestcatalyticforceinattractingvisitorsduring all four seasons. As such, it has the potential to increase its competitivepositionbut tobe successful it needs the complementaryattractions inOldTown tokeep pace and improve their relative competitive positions. The food scene,entertainmentoptions,qualityof lodging,useofandaccesstotheRiver, themixandqualityofretailingandotherconsumerservicesareallpartofthesolutionbuildingontheCity’sbrandthatreflectsOldTown’shistoricresourcesandtheiconicpresenceoftheTorpedoFactory.TheTorpedoFactoryistheCity’ssinglelargestvisitorattractionandhastheinherentcapacity to increase its drawof visitors toOldTownbybecomingmore extravertedandmore aggressive in the programming of its public spaces and after- hour uses.However,fortheTorpedoFactoryArtCentertomaximizeitscontributiontotheCity’seconomy,OldTown’scomplementaryattractionsmustalsoincreasetheircompetitiveposition in an increasingly competitive marketplace that has been undergoingfundamentalsocial,culturalandeconomicchangeforthepasttenyears.

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TheTorpedoFactoryasaPlaceMaker

The Torpedo Factory Art Center has been fixture on the Alexandria waterfront formorethan40yearsandhasbeenanintegralpartofthelonghistoryofthewaterfront’srevitalizationstartinginthemid-1970s.Thesuccessfulrepositioningandreplacementoftheoriginaltorpedofactorybuildingsbecameasymbolof therevitalizationofOldTown’s commercialbase thathad struggled togainviability through false startsandmisplacedeffortsepitomizedbythecontroversialdemolitionsundertheCity’surbanrenewalprograminthe1960s.ThatexperiencemayhavehelpedsavetheremainingbuildingthatcomprisestheTorpedoFactoryArtCenterthatarguablyhasbecomethereferencepoint forout-of-townvisitors aswell as city residentswhen theyvisitOldTown. Combined with the attractive power of Alexandria’s waterfront, theseattractions define the destination for the large majority of Old Town visitors andbecome the starting point (or ending point) for their excursion throughOld Town’sotherlessindividuallyimpactfulattractions.It hasbeen long recognized thatOldTown’s attractionas theCity’sprincipal touristdestination is the interdependencies itoffersamonghistoricresources,businessandrecreational outlets, cultural venues and the magnetism of the Potomac River. OldTown’spedestrianscale(withtheadditionoftheKingStreetTrolley)hasenableditswide range of attractions to be easily navigated by familieswith children and oldervisitors thereby strengthening its appeal across a wide demographic. However,withoutastandoutattraction,thewholewouldnotbegreaterthanthesumofitsparts.The Torpedo Factory Art Center has long served as this catalyst for Old Town’sseparatesub-marketsbycontributingsignificantlytoOldTown’sbrand,byprovidingavisual,almostmonumental,referencepointforvisitorsastheystarttheirjourney,andasastand-aloneactivitycenterofferingdiverseactivitiesandculturalenrichmentaswellascommercialopportunities.

ConsideringtheEconomicImpactsoftheTorpedoFactoryTheimpactoftheTorpedoFactoryontheeconomicvitalityofOldTownshouldnotbeunderestimated. In order to fully assess the Torpedo Factory’s contribution to theCity’s economy each of itsmultiple dimensions needs to be assessed independently.While these economic contributions are cumulative and complementary they cannotbemeasuredbyapplyingthesamemetrics;iftheycould,itwouldbeeasytoaddupthecontributionsintoasinglenumber.TheTorpedoFactoryArtCenterisacomplexeconomicactivity.Itseconomicimpactsare generated by: the spending associated with the building’s operations, thebusinessesthatarehousedwithintheTorpedoFactory,theexpendituresgeneratedbythe building’s special and after-hours uses, and the people themselves who areattractedtotheTorpedoFactoryforallofitsvariedactivities,especiallythosevisitorswho are not residents of Alexandria. What is especially important about this lattersourceofeconomicimpactisthespendingpotentialitbringstotheCity,especiallyto

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thebenefitofmerchantsandserviceprovidersco-located inOldTownalongsideorwithinaconvenientwalkingdistanceoftheTorpedoFactory.BeyondthesecategoriesofpotentialcontributionstotheCity’seconomy(anditsfiscalbase), the unique identity of the Torpedo Factory Art Center defines the City ofAlexandriatomanyofitsvisitorsfrombothwithintheWashingtonmetropolitanareaand beyond the region. It is a symbol that distinguishes Alexandria from itscompetition. There are other attractions in the City (e.g., the Masonic Temple, theHistoricDistrict,ChristChurch),butindividuallytheirattractivepowerisnotasgreatastheTorpedoFactory’s.TheTorpedoFactoryisrecognizedworldwideforitsadaptivereuseofadeterioratingfactory-style structure transforming it into a successful cultural center thatprovidesworkspace for local arts and also created a business, recreational, and educationalenvironmentunderoneroof.Asa resultof this transformation, theTorpedoFactoryhas been the stimulus for a historic commercial center’s revitalization that hasattracted largenumbersof customers to enlivenOldTown’s streets and commercialoutlets for40years. It is thisuniquenessasaneducationalexperience thathasbeendescribed by the Torpedo Factory Artists’ Association, in its business plan, as the“touchpoint” where visitors can experience personal interaction with the creativeprocess—this is what distinguishes this venue as a visitor attraction unique in theWashingtonmetropolitanregion.

PreviousResearchontheTorpedoFactory’sImpacts

The research reported herein benefits from several previous studies of theTorpedoFactory’s impacts on the City and more broadly the City’s tourist industry and itsimportancetotheCity’seconomy.Theseincluded:TorpedoFactoryArtCenterVisitorImpactStudy(1994)bytheInternationalInstituteofTourismStudies,GWU,preparedfortheTorpedoFactoryArtists’Association;TheVisitorMarketinAlexandria:Presentand Prospective—A Foundation for Strategy Planning (2007) by the Center forRegional Analysis, GMU, prepared for the Alexandria Convention and VisitorsAssociation;andAStudyoftheTorpedoFactoryArtCenter(2010)byMAI,preparedfortheCityofAlexandria.ThisresearchspansaperiodofcontinuingeconomicgrowthintheWashingtonregionand the City of Alexandria and expansion and evolution of the visitor industry thatended with the Great Recession in 2008-2009, the period during which the last ofthesethreefoundationalresearchreports(MAI)wasbeingprepared.Still,allthreeofthesereportsestablishtheTorpedoFactoryasauniqueandimpactfulsourceofvisitorattraction to the City of Alexandria and identify its importance to the vitality of OldTown’sbusinessbase.Thetouristindustryin1994,2007and2009,asreflectedintheresearchreportedinthesestudies,isdifferentfromtoday’seconomicenvironment.ThetouristindustryintheWashingtonmetropolitan areahasbecomemuchmoreupscale, as illustratedby

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NationalHarbor’s emergencewith the additionof theGaylordHotel andConferenceCenter and MGM Casino as a major East Coast visitor destination, and is beingrefocused by significant generational changes in the use of leisure time andentertainmentvalues.TheMillennialsaredisplacingtheBabyBoomersastheprincipalmarketdrivingurbantourism;this ishappening inAlexandriaand isreflected inthedeclining market for antiques and changing preferences in retail shopping and inrestaurantformatsandstyles.The success of Alexandria’s tourism industry is important to Alexandria’s economichealth—historically tourism has been more important to Alexandria’s economy, itscontributionis larger,thanintheWashingtonregionasawhole—somaintainingtheCity’s competitivepositionwithin the regional touristmarketplace takes on greatersignificance. And,with the large andvisible investment in tourist attractions acrossthe PotomacRiver in Prince George’s County (NationalHarbor andMGM) this is anopportunetimetorevisittheTorpedoFactoryArtCenteranditscurrentandpotentialrole insustaining theCityofAlexandria’scompetitiveposition in theregion’s touristindustry.Achieving the City’s tourist industry full potential and maintaining the City’scompetitive tourist industry advantages have become more important since 2010.Federal spending in the Washington region peaked in 2010 and declined sharplythrough2013with thecostsofbeingoverlydependenton federal spending todrivethelocaleconomybecomingveryclearduringthefederalshutdowninOctober2013followed by The Sequester during FY 2014 that brought economic growth down tozero. This experience convinced city and state leaders that diversifying Virginia’seconomyawayfromthisdependencyonfederalspendingwasessentialifthelocalandstateeconomiesweregoingtoreboundandavoidthefullimpactsoffuturechangesinfederalspendingpolicies.Alexandria’s tourist industry is independentof federalspendingand isexport-based,meaning that it is aprincipal sourceof attractingnon-residents to theCity to spendtheirdollarsonlocalservicestherebygrowinglocalbusinessesandstrengtheningtheCity’s taxbase.Additionally, growing the tourist industry inAlexandriawill advancethe City’s efforts to diversity its economy away from its current level of federalspending dependency and is a second good reason to revisit the Torpedo Factory’seconomiccontributiontothecity’seconomy.

MeasuringtheTorpedoFactory’sEconomicImpacts

TheTorpedoFactorycombinestwomarketfunctions—itisabusinessanditisapublicservice—andthisrequirestwoseparatemethodologicalapproachestomeasurement.ToexaminetheTorpedoFactoryasabusinessinvolvesasimilaranalysisaswithanyother business in Old Town whether profit making or not-for-profit. The economicimpactsofabusinesson its localeconomyare largelya functionof itsexpenditures;that is, howmuchmoney does it put back into the economy in the form of payrolloutlaysandnon-payrolloperatingexpenditures.Thisismoneythatintheabsenceof

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thebusiness—inthiscasetheTorpedoFactory—wouldnothavebeenspentintheCity.AstheTorpedoFactorycanberentedforvariousprivateuses,thecostsofexecutingtheseextraeventsmayalsorepresentexpenditures thatwouldnothaveoccurred inthe absence of the Torpedo Factory Art Center. These economic impacts weredocumentedintheMAIstudyalthoughthatStudyalsoincludingsalesinformationthatis actually the source by which businesses (artists) make payroll and coverexpenditures.Accordingly, includingrevenuesaseconomicimpactconstitutesdoublecountingastheydonotrepresentindependenteconomicbenefitstothehosteconomy.The public service or benefit dimensions of the Torpedo Factory are much moredifficulttoquantifyalthoughthesevaluesareeasilyappreciatedingeneraltermsandaregenerallyconsideredacontributiontotheCity’suniqueculturalfabric,itsqualityof life.Thesebenefitsareexternalitiesof theprimarypurposeof theArtCenterasabusiness—a place for local artists to ply their crafts and sell their goods. But, incarryingout thesebusiness functions, theyarealso sourceof cultural educationandrecreationforvisitorswhetherthesevisitorsbecomecustomersoronlyconsumersofarteducationandvicariouscreativity.TheeducationalvaluesoftheTorpedoFactoryare all positive—it is difficult to have a negative experience frombeing exposure toartistsatworkortalkingabouttheirwork—butitcannotbemeasuredindollarsandcents.TheWashington area does not have a strong history ofmonetizing exposure to thevisual arts. Most art museums and galleries are open to the public free of charge.However,wherethereisanentryfeetoanartexhibitandgallery,onemightconcludethisisthemonetaryvalueofthisexperience.AttheTorpedoFactorythisexperienceisfreeandbeingfreeitattractsawiderrangeofvisitorsthaniftherewasanentryfee.Thiswider penetration of the touristmarket is the source of the Torpedo Factory’smost important and enduring economic contribution to the City’s economy. TheTorpedo Factory’s attractive power ismeasured by its annual visitor traffic and theimportanceofthisvisitortrafficisdefinedby:(1)thenumberorpercentageofthesevisitorswhoarenotcityresidents—non-residentsbring“new”money into theCity’seconomywhich could have been spent in these visitors’ home jurisdictions; and (2)howmuchtheyspendwhileonthisvisittotheCity.Lengthofstay,trippurpose,ageofthevisitorsandsizeofthevisitorgroup,whetherthevisitorsaredaytrippersorfrommore distance trip origins requiring overnight stays, and other visitor characterizesmaymodifyspendingpatternsandthefrequencyofvisits.The most important determinant of economic impact is how many non-AlexandriaresidentsareattractedtotheCitytoenjoyitsvariedattractions—historic,commercial,educational, cultural, and environmental. Market penetration is the keymetric andthen it is up to the localmerchants and their success inmerchandising and servingtheircustomerstorealizethesevisitors’spendingpotentials. WhethervisitorstotheTorpedoFactoryspend$50or$100alongKingStreetbeforeoraftertheirvisittotheTorpedoFactoryisnotdeterminedattheTorpedoFactorybutratherinthestoresandrestaurantsinOldTownorelsewhereintheCity.

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AttractingvisitorstoAlexandriaisdependentonknowingthatthereisaplacetostartthe visit, a place known for its dependability of the experiences it offers.Supplementingthisprimaryattractionwitharangeofothercomplementaryvenuesinconvenient proximitywill extend the visitor’s tripwith a diversity of experiences tomakeitmorefulfilling.TotheextentthattheTorpedoFactoryisknownandprovidesaclearlydistinguishedpointofreferenceforvisitorsconsideringadaytrip fromotherlocal jurisdictions, this focus becomes the articulation of the City’s brand thatencompasses its history, its quaint qualities and comfortable scale, its culturaldiversity,anditswaterfront.Thestartingpoint,andthereforethecatalystformanyofthesetouristswantingtovisitOldTown,istheTorpedoFactory—itistheplacemakerandhasbeenfor40years.

TheEconomicImpactoftheTorpedoFactoryasaBusiness

TheeconomicactivitieshousedintheTorpedoFactoryandtheirassociatedeconomicimpactsareconstrainedbythesizeofthebuilding—howmanygalleriesorstudioscanbe provided and the intensity of the work being undertaken on site. AdditionalimpactscanbegeneratedbytherentalofthepublicspacesintheTorpedoFactoryforprivate functions. Building operations represent another source of annual spendingthatwillimpacttheCity’seconomy.ThemostrecentinventoryoftenantsandactivitiesthatdescribetheTorpedoFactoryas a business are as follows: there are 136 artists who are leaseholders in studios;there are 5 gallerieswith 116 totalmembers. There are several other organizationshousedinthebuilding(e.g.,theArtLeague,theCity’sArcheologyMuseum,ArcheologyCommission and Archeologist’s offices). This is the visible workforce housed at theTorpedo Factory and these are augmented by other jobs related to buildingmanagement,maintenanceandcustodial services.Thepayrollof theseartists,publicoffices,andbuildingsupportworkersisameasureoftheTorpedoFactory’seconomicimpact. Especially important are those artists, city employees, and building supportworkerswhoresideintheCity.Complementing the payroll outlays generated by the Torpedo Factory areexpenditures by the artistsworking there for goods and services needed to operatetheirbusinesses,outlaysassociatedwiththeArtLeagueandtheeventsithostsandtheArcheology program, and outlays to operate the building. Previous studies of theTorpedoFactoryhavenotreportedpayrollandnon-payrolloperatingoutlaysalthoughtherearepartialdatafromincompletesurveysfrom1994and2009.Estimatesbasedonthe1994surveyswouldsuggestthattheeconomicimpactoftheTorpedoFactory’sbusiness functions in today’s dollars would range between $4 and $5 million notincludingannualbuildingoperationsandexpendituresassociatedwithrentalsof thepublicspacesforprivateevents.

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TorpedoFactoryasSourceofVisitorSpendinginAlexandria

TheTorpedoFactoryArtCenterismorethanabusinessanditsabilitytoattractout-of-townvisitorstotheCitywhothencanextendtheirvisittoparticipateintheCity’smanyothereconomicactivitiesiswhatdifferentiatestheTorpedoFactoryfromothereconomicactivities.TheidentityitcontributestotheCity’sbrandanditsplacemakingrole at the foot of King Street, where the City meets the River, embodies the extrabenefits that theCityderives fromthe longhistoryof theArtCenterand itspositivereputationatarecognizedandvaluedtouristdestination.Thesuccessof theTorpedoFactory indelivering theseeconomicbenefits to theCityaremeasuredbythevisitorvolumeattractedtotheTorpedoFactory,thegeographicdistribution of these visitors (city residents vs. non-residents) and visitor spendingpatterns.TorpedoFactoryVisitationVisitor counts at the Torpedo Factorywere reported in the 1994 and 2010 reportsthrough2008. Thesenumbersweredevelopedfromdoorcounts,adjustedforundercounts(individualsenteringinagroupmightbeundercounted),andfurtheradjustedtoexcludeartists,studentsandcityemployeesworkingintheTorpedoFactory.ThesesurveysshowedtheTorpedoFactory’svisitationdeclining intheearlytomid-2000s,reachingitslowin2007beforetherecession.Morerecentdoorcounts,adjustedinasimilarfashionasinthe1994and2010reports,showannualvisitationgrowingand,aftersomebackslidingduringtheperiodofTheSequesterin2013-2014,visitationin2016reacheditshighestlevelinmorethantenyearswith459,385totalvisitorsattheTorpedoFactory(excludingpeopleworkingorstudentsattheCenter). TheTorpedoFactory’srecentvisitationtrendisshowninFigure1.

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Figure1

VisitationTrendsattheTorpedoFactory,2004-2016

InassessingtheTorpedoFactory’scontributiontotheCity’seconomythedistributionof itsvisitors is importantaseconomic impactresults frombringing“new”moneytotheCity’seconomy—dollarsthatwouldnototherwisecometotheCity.Unfortunately,previoussurveyshaveseta50-mileradiustodistinguishbetweenlocalandnon-local(thereasonbeinganattempttoseparatedaytrippersfromovernighttravelers).This50-mile radius excludes potential visitors to Alexandria who reside in Arlington,FairfaxCounty,PrinceGeorge’sCounty,Washington,DCandotherclose-inportionsofMarylandandVirginiaandyet, these closer-invisitorsactuallyaremore likely tobefrequentorrepeatvisitorstoAlexandriaoncetheyhavebeenintroducedtotheCity’sattractions.DaytripvisitationhasbecomeparticularlyimportantasNationalHarbor,justacrossthePotomacRiver,hasbecomeanimportantsourceofvisitorstoOldTownviawatertaxiormotorvehicle.Still,the1994reportconcludedthat83%ofthevisitorstotheTorpedoFactorywerefromout-of-town(triporiginsof50milesormoreaway)andtheMAI(2010),fromitssurvey, set this percentage at 60.6%. A study conducted in December 2016 andJanuary2017intheconfinesoftheTorpedoFactoryfoundthefollowingdistributionof visitors: Alexandria residents, 17%; U.S. but non-City residents, 75%; andinternational visitors, 8% (1% did not answer the question). This distributiongenerallymirrors the findings in the year-long survey conducted in1993-1994with83%oftheTorpedoFactory’svisitorsbeingnon-cityresidentswhosespendingintheCitywouldbeconsideredanexporttothelocaleconomy.

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WhatBroughtYouToOldTownToday?Whyvisitors come toOldTown,or theCitymorebroadly, is an importantmetric inconsideringhowtobetterpositiontheCityinresponsetoitscompetitivepositionasatourist designation being challenged by newer and higher-end attractions inneighboring jurisdictions. In the end-of-the-year 2016-2017 survey, non-residentvisitors were asked what the primary attraction was for their visit that day, asreported inFigure2.Formanyvisitors thereweremultipleattractionsunderscoringthe importance of the complementary among the attractions that compriseAlexandria’stouristbrand.Forty-ninepercent(48.6%)of therespondents identifiedtheTorpedoFactoryas theprimaryattractionfortheirvisit.Eatinglunch(18.3%)andshopping(13.6%)werethenextmostfrequentlycitiedtrippurposes. Only1.2%citedbusinessastheirprimaryattractionandtheremainder(18.3%)weremorevaried(e.g.,visitafriend,walkalongthe River, all of the above). Clearly, as found in previous research, the TorpedoFactoryfigureslargeinvisitor’sdecisionstomakeOldTownandtheCityofAlexandriatheirdestinationforanouting.

Figure2

WhatattractedyoutoOldTowntoday;whatwasyourprimarydestination?

Becausewhatattractsnon-residentvisitorstotheCityisimportanttothehealthandvitality of the City’s tourist industry, survey respondents were asked this questionearly in the survey (as reported above) and at the end of the survey with theexpectation that the interviewprocesswould result in amore refined responseas aresultofthelearninggainedduringthesurvey.The answers to the second question (Figure 3, page 10) resulted in more multipleresponses as the independencies among the City’s (Old Town’s) attractions becameclearer.Inthisquestion,theTorpedoFactoryiscitedby31%oftherespondents,andthewaterfrontexperiencewascitedby22.5%.Restaurants,OldTown’shistoricalsitesand shopping received frequentmention. Shoppingwas theweakest (11.8%). Thispercentage speaks to the changingnatureof tourists, especially theMillennials,whopreferthesocialinteractionofarestauranttoashoppingexperiencethatisnolonger

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Shop EatLunch ConductBusiness Other

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considered recreation but rather a necessity and more easily accomplished on-linethaninastore.

Figure3

WhatspecificattractionorplacedoyouidentifywithinOldTown?

WhatElseWillYouDoOnYourVisitToday?The beneficial interdependencies of destinationswithin reinforcing proximity inOldTownandalong lowerKingStreetwereconfirmedbyaskingvisitors in theTorpedoFactory “what else have you already done on your visit today or do you plan to dofollowingyour timeat theArtCenter?”The responses to thisquestionare shown inFigure.4,page11.WhiletheseincludearangeoftheCity’sprincipalbrandelements—shop,eat,visitotherhistoricsites—combiningavisit totheArtCenterwith lunchordinneristheprimarycombination,withlunchbeingnumberoneasthetimingofthevisit to the Art Center better coincides with the lunch hour than with dinner time.Althoughnotsingledoutasoneoftheday’svisitoractivities,ananalysisofspendinginformationidentified38percentofthevisitorsinterviewedasspendingonlodgings,suggestingthatthesevisitorswerenotday-trippers(althoughmayhavebeenonadaytripvisittotheCity)andwerevisitingtheTorpedoFactoryaspartofalongervisittotheCityorothermetropolitanareajurisdiction.HowMuchDoYouPlanToSpendOnYourVisitToOldTown?Ofthe83%oftheTorpedoFactory’svisitorscomingtoAlexandriaforatripcombiningmultiplepurposes(with48.6%of theseattractedprimarilybytheTorpedoFactory),andregardlessofprimaryattraction,allbut4%hadplanstoshop,eat,orexperience

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Old Town in other ways. This combination of multiple trip activities represents animportant economic potential; these visitors can be spendingwhilewalking aroundOldTownenjoyingthecultural,historicandnaturalenvironments.The spending potential of visitors has been the focus of all of the previousTorpedoFactoryArt Center studies. The1994 research, including1,500 face-to-face surveysover the spanof a year, reported$54.48million in spendingbyout-of-townvisitors(more than50-mileradius) linked to theirTorpedoFactoryvisitwithapproximately20%ofthisspendingforlodging,36%forfoodand44%forotheritems(thesewerelargelyretailpurchases).Onaperdaybasis,thesevisitorsspentanaverageof$39.34each($63.16in2016$s).

Figure4

AdditionalActivitiesOfNon-ResidentTorpedoFactoryVisitors

ThetotalspendingattributedtovisitorsmotivatedtocometoAlexandriasolelyforthepurposeofvisitingtheArtCenterwasfoundtobe19.9%.Byusingthatmetricasthedeterminant of the Torpedo Factory’s economic impact, the value of theinterdependencies,thecloselylinkedvisitorexperiences,istotallydiscounted.Aswasfound in all of these studies, Old Town is the vessel inwhich tourists achieve theirvisitor satisfaction and for many visitors it takes several venues to make the tripworthwhile.However,thevenuethatisidentifiedastheplacemakerandtheprimaryattractoristheTorpedoFactoryforreasonsthatareeasytoidentifyandunderstand.Itislarge,visible,offersinsidespacecomfortableinallkindsofweather,offersabroadpallet of visual experiences, has garage parking nearby, and is an excellent staginglocationforwalkingexcursionstootherattractions,especiallyplacestoeat.

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HowmuchdovisitorstotheTorpedoFactorysaytheyexpect tospendontheirvisitduring their time in Old Town? In the 2016-2017 survey of visitor spending, aconservative estimate of the average value of spending by out-of-town visitors,including purchases at the Torpedo Factory Art Center, was $92.88 per visitor (pervisit).Onaperdayvisitorbasis,theaveragepervisitorspendingtotaled$64.48;thispervisitordailyspendingvaluein2016isverysimilartothepervisitordailyspendingaveragefoundinthe1994Studywhenexpressedin2016dollarvalues.Multiplyingthisaverageperout-of-townvisitorspendingtimestheestimated378,993out-of-town visitors to the Torpedo Factory in 2016 yields a total of $35.2 millionspent at the Art Center, the City’s restaurants, retail stores, hotels, and othercommercialenterprises.While the spending totals reported in the 1994 Study and calculated here from thiscurrentsurveycannotbeconsideredcomparable,evenifthepervisitordailyspendingexpressedincurrentdollarsisalmostthesame,asthespendingdataweredevelopedusing different methodologies; most particularly, spending by day-trippers wasexcluded fromthe1994Study.Still,bothstudiesconfirm themagnitudeof spendingassociated with visitor trips in which the Torpedo Factory served as the majorattraction.WhatElseDoWeKnowAboutVisitorsToTheTorpedoFactory?RoundingoutthecharacteristicsofTorpedoFactoryvisitorsthathelptobetterdefinetheirnatureandeconomicpotentialare:

• theiraveragelengthofvisittotheTorpedoFactorywasbetween1.5and1.75hours;

• the largemajority learnabout theTorpedoFactorybywordofmouth (62%)followedbyitswebsite(12%);

• the age of visitors is concentrated among20-29 years olds (25%) and50-59

yearolds(25%)withthe30-39and40-49yearoldscombiningfor(32%);and,

• the average income of respondents spans a wide range confirming that theTorpedoFactoryoffersvaluetoabroadrangeofvisitors—33%ofvisitorshadincomes below the city’s average, 27% had incomes ranging around theaverageand39%hadincomesabovethecity’saverage.

TheTorpedoFactoryArtCenter’sEconomicImpact

Throughout thehistoryof theTorpedoFactory its importanceas aplacemaker andcatalystinsupportoftherevitalizationofOldTown’scommercialbaseandOldTownasadestinationforout-of-townvisitorshavebeenwelldocumented.Bythenumbers

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alone, the Torpedo Factory contributes directly to the City’s economyby generatingon-site employment (payroll) and supporting continuing operating outlays by thevendors—the artists—for goods and services, expenditures for building operations,and expenditures by organizations and individualswho rent the public space in thebuilding for special events. A dollar value for these outlays could be carefullyestimated—itwasn’taspartofthisstudy—althoughwouldlikelyfallwithintherangeof$4to$5millionannually.TheeducationalandculturalvalueoftheTorpedoFactoryArtCenterisnotdebatableandnodollarvaluecanbeplacedorshouldbeplacedonthispublicbenefit. Itisthevisitors to the City, who are attracted by the Torpedo Factory and its surroundingcollection of complementary attractions, that together create an multi-purposerecreational,cultural,andleisure-timeexperienceandthatcanbecustom-shapedtofitthe interestsandtimebudgetofeachvisitor, it is thiscontribution thatprovides theTorpedo Factory is most important and largest economic impact. This is the onelocation, the only one in themetropolitan area,where visitors can interactwith thecreativeprocess; thisuniqueeducationalandexperientialquality isdescribedas the“touchpoint” and, in Alexandria it can be combined with a multi-purpose visit thatincludesotherformsofrecreationandcommercialendeavor.As reportedpreviously, the average spendingof out-of-townvisitors to theTorpedoFactory during their visit to Alexandriawas estimated at $92.88 ($64.48 per visitorday).With a base of 378,993 out-of-town visitors (83% of all annual visitors to theTorpedo Factory in 2016), their combined economic contribution to the City’seconomywould total $35.2million. TheTorpedoFactoryoperations—thepayroll itgenerates among its artists, building management, and other functions—and theexpenditures to operate the businesses and educational activities locatedwithin thebuildingareestimatedtototal from$4to$5millionannually. Combined, thisdirectspendinglinkedtotheTorpedoFactoryArtCentertotalsapproximately$40.0million,monies spent in the City of Alexandria that might not be captured by the City’seconomyintheabsenceoftheTorpedoFactoryArtCenter.This $40 million is direct spending. As this direct spending is circulated and re-circulatedwithin theCity’seconomy—that is,asvisitorsbuygoodsandservicesandshopkeepers and restaurants pay their employees and purchase goods and servicesfrom their supply chain and these payroll dollars and purchases support additionalpurchases—theinitial$40millionindirectspending(byvisitors,byemployeesintheTorpedoFactory,bytenants)accountsforalargerimpact.Theseindirectandinducedeconomic impacts, along with the direct or initial outlays, are captured in the“multiplier effect.” Economic multipliers are unique to each jurisdiction and itseconomy.Eachbusinessoractivityhasitsownmultiplierreflectingitscapitalintensityandinterdependencieswithothersectors.ThesemultipliersarecalculatedbyandcanbepurchasedfromtheU.S.BureauofEconomicAnalysisusingitsRIMSIImodel.FortheCityofAlexandria,withisrelativelysmalleconomyandsmallgeographicsize(e.g., themajorityofpeopleworking in theCitydonot live in theCityand therefore

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muchof their payroll leaks out to their jurisdiction of residence), itsmultipliers aresmaller than for larger jurisdictions with more complex economies. Still, for eachdollar spent by out-of-town visitors to Alexandria in the tourist sector’s businesses,including hotels, retail outlets, restaurants, consumer services, galleries, the City’seconomy gainsmore than one dollar. For Alexandria and thismix of spending thatdescribes out-of-town visitors to the Torpedo Factory, the current multiplier isestimatedat1.3275;thatis,foreach$1indirectspending,theCity’seconomy,itsgrosscityproduct,wouldgainatotalof$1.33.

For the$35.2million inspendingbyout-of-townvisitors to theTorpedoFactoryArtCenterin2016,theCity’seconomyrealizedatotalof$46.7million,includingtheinitialspendingplustheaccumulatedeconomiceffectsofthere-spendingofthesemoniesinthe City’s economy—their indirect and induced effects. Additionally, this spendingsupported employment beyond the jobs on-site in the Torpedo Factory. Theemploymentmultiplierforthismixofspendingasdescribedaboveis4.9jobsper$1millionindirectspending.Hence,the$35.2millionindirectspendingbyout-of-townvisitors to the Torpedo Factory in 2016 supported 172.5 full-time, year-roundequivalentjobsalthoughonlyaportionofthesejobswouldbebasedintheCity.Thesameanalysiscouldbedoneforthe$4to$5millioninoperatingoutlaysandpayrollexpendituresgeneratedbytheTorpedoFactory.Each$1spentwouldgenerateextraeconomicbenefitsbeyondthevalueofthatinitialspendingasthesepayrolldollarsandoperatingoutlayswerere-spentintheCity’seconomy.

The direct, indirect and induced spending generated by the Torpedo Factory ArtCenter exceeds the initial direct dollar value of this spending and benefit the broadbusinessbaseoftheCity’seconomyasthesemoniesarere-spentbybusinesseslocatedinandworkersresidingintheCity.ThisspendingalsosupportsjobsbeyondthoseattheTorpedoFactoryorintherestaurants,hotels,andstorespatronizedbyvisitorstotheTorpedoFactoryastheyextendtheirvisittootherOldTownattractions.And,thisspendingandthejobsandbusinessactivityitsupportsbroadenstheCity’staxbaseasseeninpropertyvaluesandtaxablesales.

Conclusions

TheessentialfocusofthisresearchisonthebroaderquestionoftheTorpedoFactory’simpactoftheeconomy,beyonditswalls,ontheeconomyofOldTownandtheCityofAlexandria.WiththetourismindustryinAlexandriafacinggrowingcompetitionfromnewer and more upscale venues as well as changing tourist values (MillennialsreplacingBabyBoomers),theTorpedoFactory’splacemakingrole,inconjunctionwiththemagnetismofthewaterfront,becomesofever-greaterrelevanceinsustainingtheCity’scompetitiveadvantageandregaininglostshareintheregion’stouristindustry.The Torpedo Factory has been shown to be the City’s most widely known touristattraction,itsvisitorbaseisgrowingandthesevisitorsroutinelycombinetheirvisittothe Torpedo Factory with patronage of other Old Town attractions. In the process,thesevisitors spenda significant sumofmoney thatwouldnot likelybecaptured inOldTownintheabsenceoftheTorpedoFactory.

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Thechallengegoing forward ishowbest tomaximize thisasset to thebenefitof theCity’s economic base. The City and business leaders should focus their efforts onstrengthening the primary tourist attractions that will raise the City’s competitivepositionintheWashingtonRegion’stouristindustry.Thisneedstobeacollaborativeprocess.OnevenueoronegroupcannotachievethefullpotentialoftheCity’stouristassetsbyitself.TheTorpedoFactoryistheCity’smostimportantsingletouristattraction.Toachievethe Torpedo Factory’s full potential as a magnet for out-of-town visitors, it mustbecomemoreextraverted in itsoperations.Thismaybeachieved through improvedmanagementandprogrammingofitspublicspaces,initiatingjointactivitieswithothertourist-servingorganizations inhostingeventsoutside theTorpedoFactorybuildingonadjacentdeckspaceandelsewhereintheCity,andbymoreeffectivelypublicizingthe featuredevents,exhibitions,educational functionsandotheractivitiessponsoredattheTorpedoFactorytobroadenitsmarketandincreaseitscapturerate.Thesearenotnewstrategiesandtheremaybeothersworthconsidering. Art-relatedorganizations elsewhere in the U.S. are re-inventing themselves to adjust to thechangingmarketplaceandtoincreasetheircontributionsasimportantcenterpiecesoftheircities’economicdevelopmentefforts.The importanceof a strong tourist industry toAlexandria’s economic vitality iswellestablished.TheTorpedoFactorArtCenterofferstheCityofAlexandriaauniqueandwell-recognizeddestination-visitorattraction.ItisingrainedintheCity’stouristbrand.TheresearchfindingspresentedhereshouldhelptoprovidedirectionfortheCityandbusinessleadershiptobetterrealizethepotentialsofitsuniquetouristindustryassets.

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Appendix A

From “The Visitor Market In Alexandria: Present and Prospective (ACVA, 2007) Hospitality as a Core Economic Sector

The hospitality sector is more important to the Alexandria economy than it is to the regional economy generating approximately 4% of its total value of goods and services where regionally this sector accounts for approximately 2.1%. As the hospitality sector is projected to grow more slowly than the regional economy over the next five years, its share of the economy will decline extending a trend that has been under way for at least 10 years. The contribution of the hospitality industry to the Alexandria economy could follow this regional trend, as both sectors tend to perform in parallel. However, the hospitality industry’s local trend has the potential for growth; this would enable the sector to maintain its role in the Alexandria economy and even to grow faster than the City’s economy, translating to a stronger performance during the slower growth portion of the business cycle that will play out over the next five or more years. Strengthening and expanding Alexandria’s hospitality industry is the goal of the strategic plan that will flow from these analyses presented herein. As an important component of Alexandria’s economy, the hospitality industry should be viewed as interdependent with the economy’s other sectors. Growth in any one of these other sectors will generate spending that may be captured and recycled within the hospitality sector adding jobs and generating additional local economy (and tax revenues). Similarly, the expansion of the hospitality sector strengthens the City’s other core sectors and generates jobs and income within the City’s local retail and personal service businesses. Understanding the economic relationships between the core sectors is essential to the successful development of the City’s economy. Economic development is more than just adding more jobs. It builds from expanding the capacity of the City’s economy to grow and has the primary objective of attracting and retaining more and better paying jobs to increase the level of total personal income in the city. This will support increased consumer spending and strengthen the local tax base by attracting more and higher quality commercial development (real estate taxes) and increased retail spending (sales taxes).

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Appendix B

TorpedoFactoryResearchMethodology

Themethodologydesignedtomeasurethe impactof theTorpedoFactoryArtCenteron the City of Alexandria’s economy consisted of (1) a survey of visitors to the ArtCenterand(2)ananalysisofsurveyresultsandsecondarydocumentsrelatingtotheTorpedoFactoryandtheAlexandriavisitorsindustry.Thesurveysweretheprimarymethodforgatheringprimary information inordertoestimate the economic impacts of visitors. Surveys involved in-person interviewsconducted with visitors throughout the public spaces in the Torpedo Center. Thesurvey team purposefully selected its sample to assure that a cross section of age,genderandethnicitywasincludedinthesample.Surveydatesandtimeswerechosentocaptureabroadspectrumofvisitors.AsseeninFigure1,61surveyswerecollectedinDecember2016and139werecollectedinJanuary2017.Themajorityofresponseswere collectedonFridayandSaturdayas shown inFigure2. Surveyquestionsdealtwiththeprimaryresidenceofthevisitor,theattractiontoOldTownAlexandria,hotelstays,andestimatedspendingpervisitor.Thefullsurveyisattached.Spendingestimationsobtainedthroughthesurveyswereusedtoestimatetheimpactofvisitors.First,residentsofAlexandriawereexcludedfromtheanalysistonarrowitto spending by non-city residents; that is, to identify new money into the City’seconomy.Theestimatedspendingprovidedbythenon-cityresidentvisitorswasusedtoconstructspendingdistributions.Thefinalspendingdistributionusedthelow-endand mid-ranges of spending categories in order to provide conservative estimates.SpendingdistributionswerethenappliedtodoorcountdataprovidedbytheTFACandadjustedforconsistencywiththe2009MAIreport.

Figure1

Surveydatesincluded:12/15,12/17,12/18,12/22,1/7,1/12,1/14,1/15,1/21

051015202530354045

Dec1

4De

c16

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8De

c20

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2De

c24

Dec2

6De

c28

Dec3

0Jan1

Jan3

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Jan13

Jan15

Jan17

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Survey'sByDate

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Figure2

35

2317

6

6356

010203040506070

Monday Tuesday Wednesday Thursday Friday Saturday

SurveysbyDayofWeek

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TorpedoFactorySurvey

Hi,mynameis___________________.TheAlexandriaTorpedoFactoryArtCenterisconductingashortsurveyinordertobetterknowitscustomerbasesoitcanbetterservethisbaseinthefuture.MayIaskyouafewquestions?Itwillonlytake2-3minutestocompletethisinterview.BaseData(tobefilledinbyenumerator).GenderofInterviewee:MFCoupleGroupEthnicity:WBHAsianOther DayofVisit:12/15,12/17,12/18,12/22,1/7,1/12,1/14,1/15,1/21 HourofInterview: 11-11-33-51.Whereareyoulive(zipcode)? ________________

1bIffromoutofarea,ask:Areyoustayingintownovernight?Y N 1cIf“Yes”,Whereareyoustaying?Hotel/model Family/friends 1dIf“hotel/model”,WhereistheHotel/Modellocated(city/County)?______2.WhatattractedyoutoOldTowntoday;whatwasyourprimarydestination?

a.VisittheTorpedoFactoryb. Shopc. Eatlunchd. ConductbusinessincludingvisitCityHalle. Other_________________________

3.BesidesvisitingtheTorpedoFactory,whatelseareyouplanningondoinginOldTowntoday?

a. shopb. eatlunchc. visitotherhistoricsitesd. other__________________________

4.HowmuchdoyouthinkyouwillspendinOldTownonyourvisittoday,forshopping,restaurants,parking,etc.?

a. lessthan$20b. $20-$50c. Morethan$50d.$_______________________

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5.Hopemuchtimedidyou(ordoyouplanto)spendattheTorpedoFactorytoday?

a.lessthananhourb.1-2hoursc.2-3hoursd.morethan3hours

6.HowdidyouhearabouttheTorpedoFactory?MultipleanswersOK

a.advertisingb.websitec.socialmediad.wordofmouthe.newscoveragef.visitorinformationg.other(pleasespecific)_______________________________________

7.Didyoumakeapurchase(orplantomakeone)fromanartiststudiotoday?YesNo

Ifno,whynot?a.nothingIsawappealedtomeb.theoptionsweretooexpensivec.Icouldn’tfindwhatIwaslookingford.needmoretimetomakeadecisione.other(pleasespecify)_______________________________________

8.Whatagecategoryareyou(ifcoupleorgroup,askapparentspokesperson)

under2020-2930-3940-4950-5960-6970+

9.IfIreadyouseveralincomecategorieswouldyoutellmewhichonetestcapturesyourhouseholdincome? Under$50,000, $50,000-$75,000, $76,000-$100,000,

$101,000-$150,000,$150,000+

10.Onelastquestion,whenyouthinkofvisitingAlexandria’sOldTownwhatisitthatyouthinkaboutasyourdestination?Whatspecificattractionorplacedoyouidentifywith?(Multipleoptions)

a. theTorpedoFactoryArtCenterb. thewaterfrontc. restaurantsd. shoppinge. historicalsites

other__________________________________________________