Tourism IS Economic Development

Tourism IS Economic Development

Tourism and travel is BIG business, and an important goal for DMO leadership should be to ensure that virtually everyone in your community (this includes your board of directors, elected officials, local business leaders as well as tourism and travel stakeholders) understand its value.

The take-away: To make it clear that your DMO is doing what it needs to do in order to protect and grow this important driver of your local economy.

The motto: Tourism is Economic Development. This is a motto that our industry advocates (shout out to all the TMPs from the Southeastern Tourism Society’s Marketing College) have been encouraging DMOs (and the many of us that serve the tourism and travel industry) to be sure we repeat often. How can we do so with confidence?

Know the Numbers:

  • 947 billion dollars. According to US Travel Association, that is the amount of domestic and international travel expenditures in the U.S.
  • 5.63 million US jobs. According to Statista, that is the direct contribution of travel and tourism to employment in the U.S.

However, when it gets down to the local level, DMOs don’t have cash registers at their front desks so it seems daunting to be able to demonstrate the economic contribution your organization is helping to foster in your community. And because of this, the first challenge often becomes determining what local information you can and should repeat with confidence.

According to Daniel J. Stynes’s Economic Impacts of Tourism white paper, there are a number of (seemingly mind-numbing) ways to go about determining this impact. However, one of the best points this paper makes in its introduction is why this is a worthwhile endeavor:

“Tourism’s economic benefits are touted by the industry for a variety of reasons. Claims of tourism’s economic significance give the industry greater respect among the business community, public officials and the public in general. This often translates into decisions or public policies that are favorable to tourism. Community support is important for tourism, as it is an activity that affects the entire community. Tourism businesses depend extensively on each other as well as on other businesses, government and residents of the local community. Economic benefits and costs of tourism reach virtually everyone in the region in one way or another. Economic impact analyses provide tangible estimates of these economic interdependencies and a better understanding of the role and importance of tourism in a region’s economy.”

Using the Judgement Approach to Tourism Economic Impact Assessment found in Table 1 on page 10 of Stynes’s white paper, try doing some basic calculations.

  1. How many rooms do you have in your community?
  2. What is your Average Annual % Occupancy? (60.9% has been the national average over the last ten years).
  3. How many days are in a year? 365 (that is the easy one 😉 )
  4. How much does a visitor spend (per room night) when they are visiting your market? (an educated but reasonable guess that would include hotel room, food, fuel, retail purchases, etc.)
    • Example: So, with 7,500 rooms X a 60.9% average occupancy X 365 days X $100 average daily spend per room night sold, you could report a $166 million direct economic impact of tourism and travel.
    • That is $166 Million dollars of direct economic impact from tourism in your area! Tourism is economic development.

There are obviously MUCH more complex models involving multipliers, etc., etc. but even with this simple formula you will produce a talking point. My suspicion is that most people you explain this to will be surprised just by the sheer number of hotel rooms in your community, and that tid-bit alone will get them thinking. For example, think how impressed your stakeholders will be when you show your destination’s tourism impact.

This is obviously an extremely simplistic approach to this process, but hopefully it demonstrates that you can have a compelling story to tell and will inspire you to dig into this effort. How deep you dig will depend on the available data and budget to collect that data. A next step we have taken for one of our DMO clients is to present their data in an interesting way on a business card-size brochure (that folds once longwise) that is distributed widely throughout the year among their stakeholders as a constant reminder of the impact of travel and tourism to their local community.

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Wouldn’t it be great if your partners were provided these numbers for your destination year after year and could recite them whenever someone challenged them? Talk about having community partners to help spread the value of tourism!

Posted in DMO Challenges, DMO Collaboration, Research Tags

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