The economics of tourism
By Shebby Lee

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According to the U.S. Travel Association, America's tourism industry was a $855.4 billion business in 2012, providing 7.7 million direct jobs and $128.8 billion in tax revenue. While the nation as a whole is still registering monthly trade deficits, travel represents a surplus. The first-quarter report for 2013 stated flatly "the March 2013 trade deficit in all goods and services would be 11 percent larger without this travel trade surplus."

Yet, despite the data, states around the country are slashing advertising and marketing budgets for tourism, citing the need for schools, health care, etc. The problem is, these legislators do not understand the impact of tourism dollars on their own economy. Tourism not only pays for itself, it produces income far out of proportion to its cost. Legislators considering such rash decisions need to ask themselves, "How will we replace the tax revenues generated by the very budget we are cutting?"

Ever hear the expression "out of sight, out of mind"?

Ask Colorado. Several years ago — in a fit of cost-cutting — the Colorado legislature eliminated the tourism department altogether. Apparently they felt Colorado's upscale winter sports venues, major national parks, a United Nations World Heritage Site plus spectacular scenery and wildlife nearly everywhere in the state were enough to draw people in on their own merit.

From 1992-97, after tourism funding was eliminated, Colorado's market share of national overnight visits dropped by 30 percent. In 1997 alone, approximately $2.4 billion in tourism revenues and $134 million in taxes were lost. Suffice it to say, Colorado has since reinstated its state tourism office, but has yet to regain the market share it had 18 years ago, before the cuts went into effect.

In today's challenging economy, approximately half of states are cutting tourism budgets — an alarming statistic. But, fortunately, the other half are heeding the lessons of Colorado.

Case in point: Michigan. With the highest unemployment rate in the nation and great losses to its top industry — automobile manufacturing — Michigan made the wise decision in 2006 to increase its tourism budget five-fold. The Pure Michigan advertising campaign that resulted was so wildly successful the state is now planning to double its current budget to $50 million by 2017. George Zimmermann, vice president for Travel Michigan, said their research indicates a dollar spent on out-of-state advertising returns $4.90 in tax money alone — and much more for businesses.

Washington state, with similar statistics, somehow came to the opposite conclusion, voting to eliminate its Office of Tourism in 2011. Before the cut, tourism was Washington's fourth-largest industry, showing a 7.4 percent overall increase between 2009 and 2010 and a whopping 30 percent increase in international visitors, one of the fastest rates in the country. Any guesses as to where those stats are now?

Here's an interesting tidbit I ran across while researching this article: Between March 2010 and July 2012, tourism job growth was 29 percent, far faster than the rest of the economy.

But don't believe me: The first line of a press release from the U.S. Travel Association says it all: "Reducing state and local tourism marketing programs in the name of saving taxpayer dollars impedes economic growth, according to new research conducted by Longwoods International and commissioned by the U.S. Travel Association." Read 'em and weep, Washington state.

The statistics are clear: if your state or region disappears altogether from the public's awareness, the damage will cut deeper and last longer than any temporary savings made to a single annual budget.

Shebby Lee is a historian, writer and tour operator specializing in the historic and cultural heritage of the Great American West. Her company, Shebby Lee Tours, is a founding partner of Travel Alliance Partners (TAP), 31 premier North American tour operators offering guaranteed departures worldwide.