When a state government invests in tourism promotion, it’s a win for economic growth, job creation and tax revenues. The evidence is simply overwhelming.
Despite these obvious benefits, destination marketers have inexplicably found themselves in the crosshairs of state budget cutters. Since the beginning of this year, elected officials in at least seven states have proposed slashing or eliminating state tourism promotion budgets.
Recently, VISIT FLORIDA emerged victorious from challenges to its funding—but only after a months-long fight in which critics appeared to have spent mightily to convince lawmakers that tourism promotion was merely an outlay, rather than an investment that pays sizable dividends.
The Mackinac Center—a Michigan-based advocacy group funded by the Koch brothers—jumped into the Florida debate with claims that funding for VISIT FLORIDA was a waste. A mountain of economic data refutes Mackinac’s findings.
The Power of Travel Promotion (POTP) report—developed by U.S. Travel with data from by Longwoods International USA, widely acknowledged as the industry standard for economic data—highlights case studies of destinations whose investment in tourism promotion reaped major rewards:
Every dollar New Mexico invested in its “New Mexico True” campaign generated $7 in tax revenue (not to mention $72 in visitor spending at local businesses).
The “Lake Erie Love” campaign has made the once little-known Lake Erie Shores & Islands one of the most popular tourist destinations in the Midwest—and every dollar invested comes back fourfold in terms of tax revenue.
Nashville’s adoption of the “Music City” brand—and its continued investment in travel and tourism, even through the Great Recession—has yielded significant results: developments such as the city’s new Music City Center have helped attract more than $5 billion in visitor spending, directly supporting 58,000 jobs—and drawing in more than $1 billion in new development.
Conversely, the POTP report series outlines exactly how states suffer when tourism promotion funding is cut or eliminated.
Travel revenue growth in Connecticut slowed to just half the pace it achieved during the deep recession years of 2009-2010 after the state eliminated its tourism office (Connecticut’s governor called the funding cuts “a gigantic mistake”). Pennsylvania, which also slashed its tourism budget recently, has so far lost $600 million in travel-generated state and local tax revenues.
Mackinac’s methods also render its conclusions unconvincing. Rather than employing a reliable survey-based approach, Mackinac employs an econometric gimmick that both a leading University of Pennsylvania economist and the head of a Florida-based research and development consultancy have identified as fundamentally flawed.
Also well worth noting is that Michael Hicks, one of the Mackinac report’s authors, sang a very different tune on the value of tourism promotion in a paper he wrote for the state of Indiana a few years back: “Using a model that specifically accounts for the reverse causation problem of tourism taxes and tourism expenditures we found that a dollar spent on tourism promotion generates roughly 15 dollars in additional tax revenues for state and local governments.”
Mackinac even concedes tourism’s bedrock benefits. As Mackinac’s Michael LaFaive said: “There’s no question that many of these states have economies that benefit greatly from people visiting to spend their entertainment and recreation dollars.”
However, as we saw in Florida, that sometimes will not deter lawmakers from making ill-advised attempts to cut tourism promotion funding—and threatening millions of jobs in doing so, particularly those supported by small, local businesses.
Ultimately, Florida made the right choice: a faction of lawmakers once determined to cut VISIT FLORIDA eventually saw the light, and entered a budget deal with Gov. Rick Scott to keep the agency funded, with some minor adjustments, at the same level as the previous year.
But as we’ve seen lately, not every state capital has learned the same lesson. I’ve said it before, and will continue to reiterate: strong tourism promotion budgets are sound fiscal policy and translate to massive benefits for communities large and small. The data proves it.