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 the Southeast Tourism Society) 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?

Some national “numbers to know” according to the US Travel Association:

  • Over 1 billion dollars – is the amount of domestic and international travel expenditures in the U.S. in 2017
  • Over 8 million jobs – were directly supported by tourism and travel in 2017

However, when it gets down to the local level, DMOs don’t have cash registers at their front desks so it can seem 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 (often 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: 7,500 rooms X a 60.9% average occupancy X 365 days X $100 average daily spend per room night sold, you could fairly conservatively estimate $166 million of direct economic impact of tourism and travel in your destination.
    • That is “over $150 million dollars of direct economic impact from tourism in your area! Tourism is economic development.

This is obviously a 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. And there are certainly numerous more complex and comprehensive models involving multipliers, etc., etc. that can reveal some VERY relevant and powerful data about your individual market. How deep you dig will depend on the available data and budget to collect that data.

However, an even simpler place to start is to simply multiply the # of rooms in your destination x 365 days per year. My suspicion is that most people you visit with about this subject will be shocked by just the sheer number of hotel room inventory that exists to “sell” in your community per year. And think how impressed your stakeholders will be when you start to regularly discuss the economic impact of tourism and travel in your destination – and give them all credit for being stewards of this economic engine in your community.

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 mini “brochure” (that folds once longwise) that is distributed widely throughout the year 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 the target groups that could influence your success as a DMO were provided these numbers for your destination year after year and could recite them whenever someone challenged them? Talk about having educated community partners to help spread the value of tourism!

Posted in DMO Challenges, DMO Collaboration, Research Tags

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