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ARCHIVES
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Special Edition 10
December 10, 2002
Vol. 1
Issue 10
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Issue 9
November 26, 2002
Vol. 1
Issue 9
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Issue 8
October 29, 2002
Vol. 1
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Issue 7
October 2, 2002
Vol. 1
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Issue 6
September 5, 2002
Vol. 1
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Special Edition 5
August 16, 2002
Vol. 1
Issue 5
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Issue 4
July 29, 2002
Vol. 1
Issue 4
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Issue 3
June 28, 2002
Vol. 1
Issue 3
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Issue 2
May 23, 2002
Vol. 1
Issue 2
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Introductory Issue
April 17, 2002
Vol. 1
Issue 1
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Best of Times and Worst of Times for Michigan Tourism
By Don Holecek and Joe Fridgen, MTB’s Editors 
As the year 2002 comes to a close and the holiday season arrives, like you, we have been reflecting on the past year and the year to come. Quite probably, Charles Dickens is the author that comes to mind when this time of year rolls around for his classic A Christmas Carol, which many of us have read or least seen on television or as a live theater performance.
Yet it is not Scrooge & Company but rather one of Dickens’ later classics that provide the theme for this editorial. In A Tale of Two Cities, Dickens begins his very lengthy text with the memorable statement, “It was the best of times; it was the worst of times.” Over 200 years later, his statement captures how many of us perceive the world around us in late December 2002.
The terrorism attacks on 9/11/01 set the tone for much of what followed in 2002. No industry was more negatively impacted than was ours by the opening of the war on terrorism. Prior to 9/11, we in the U.S. were largely insulated from terrorism threats and could further mitigate them by not traveling to destinations where we might be vulnerable to an attack by terrorists. Few of us found this to be more than a minor inconvenience, since the vast majority of the world still welcomed American tourists and could be visited without fear of exposure to terrorist attacks.
After 9/11, travel by air has become far less convenient, a tangible negative development, and we will probably never be as comfortable boarding a plane, entering a tall building or departing the U.S. than we were before 9/11. Our perceptions of where it is safe to visit, as well as the reality of the threats that exist today have changed, severely reducing the number of destinations that we consider safe to visit. Our lives are less rich because our options are more limited and because the terrorism threat robs us of some of the pleasure we derive from traveling. All of us have more in mind when we say, “It’s good to be home” than we did before 9/11. Could we quantify this, we would have some measure of how the terrorism threat has diminished the quality of lives of the millions of Americans who travel each year.
While terrorism remained a concern throughout 2002, it ultimately appears to have had a minimal negative impact on domestic travel in the U.S. and in Michigan. The same cannot be said of the economy. As expected, the U.S. economy climbed out of recession in 2002, but its recovery has been less robust than most economists had predicted. A federal double dip recession was avoided, but with the unemployment level holding at around 6% and consumer confidence lagging, most Americas have reason to remain concerned about the recovery. Business travel remains in a state of major depression, recently contributing to the declared bankruptcy of the nation’s leading airline. Leisure travel has been less sensitive to the economic malaise experienced over this year, but year-to-year growth in tourists’ spending has been below recent norms.
The data currently available are limited, but they suggest 2002 was generally not a profitable year for Michigan’s overall tourism industry. The picture that is beginning to emerge is mixed, largely due to each destination’s reliance on business travelers and its proximity to major population centers. For example, southeast Michigan’s lodging industry experienced a near double digit revenue decline while, on the other side of the state, lodging industry receipts were strongly positive.
One consequence of our weak economy with the potential to impact Michigan’s tourism industry in coming months is the major decline in the state’s tax revenue collectibles. To balance the state’s budget, major cuts have been made across agencies, local government revenue sharing, etc., and more cuts are likely as 2003 unfolds. These not only have the obvious impact of limiting what the state spends to promote tourism but permeate the entire tourism support infrastructure, reducing the range and quality of support state and local governments provide to tourists and the businesses that serve them.
State revenue forecasts for 2003 recently released by economists at the University of Michigan suggest further slippage this year. Unfortunately, they indicate that even full economic recovery—projected to occur in 2004—will not fully eliminate the state’s budget deficit, which the U of M economists categorized as “structural” in nature. (“Structural’ means that government costs exceed government revenues even in a strong economic environment.)
The above paints a rather bleak picture—the worst of times—for Michigan’s tourism industry; yet we would counter that these are also the best of times for our industry. It has once again been bent but not broken by adverse circumstances. The national and state economies appear better positioned to cope with negative impacts than has been the case historically. For example, it was not that long ago that most economists viewed an unemployment rate of 5% as “about right” to prevent the economy from over-heating. And, the demand for travel continues to grow despite a fluctuating economy, terrorist threats, and increasingly varied forms of competition for our leisure time. We are indeed an aging population, which has grown accustomed to traveling and who, with increasing discretionary income, can afford to travel more than ever before.
We wish you a happy holiday season and all the best for the New Year!
Comments about this column may be sent to Don Holecek at dholecek@msu.edu and Joe Fridgen at jfridgen@msu.edu.
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