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Friday, February 7, 2003 www.imakenews.com/tourism   VOLUME 2 ISSUE 1  
A publication of the Michigan State University Tourism Resource Center and Department of Park, Recreation & Tourism Resources
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Joe Fridgen

Don Holecek
Lori Martin
Kathy Adair
Fong Bristor
JeongHee Noh
Joe Deming

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Michigan’s $3 Billion Travel Trade Deficit
By Don Holecek & Joe Fridgen, Michigan Tourism Business Editors

We know that there are 24 hours in a day, seven days in a week and, with the exception of leap year, 365 days in a year.  But, while time is a constant, there is a tendency across much of society to try to reduce it as a constraint both on our personal and professional lives.  We host “power” breakfast meetings and “burn the midnight oil” to extend our work days; we work over our weekends; and we carry mobile phones and/or laptop computers at all times, even on our vacations, to minimize the possibility of missing an opportunity to be productive.  As we struggle to keep up with our fast paced modern world and the immediate challenges it presents, we more often than not have less time to reflect on the past and contemplate its long-term implications for the future.
The pace of life has quickened in the academic environment much as it has beyond its ivy covered walls, but we had the opportunity in recent months to focus our attention on the “big picture” as it relates to Michigan’s tourism industry.  We began by assembling and reviewing a plethora of relevant reports extending back for several years.  We also retrieved and analyzed data that we have accumulated since the Michigan Travel, Tourism and Recreation Resource Center was established in 1985.  What emerged is both encouraging and somewhat disconcerting.  Highlights of our assessment appear below, and a fuller discussion will follow in a report to be published in the next few weeks.
Michigan’s tourism industry has grown at an average annual rate of about 4% since the mid-1980s.  While the rate of year-to-year growth varied over this period, increased tourism activity was registered each and every year.  Complete information is not yet available for 2002, which may prove to be the year the industry’s long-running series of growth years is broken.  Michigan is primarily a regional tourist destination, drawing most of its tourists from within Michigan, adjacent states and Ontario.  It ranks 14th among the states in attracting domestic (i.e., U.S.) tourists and 16th in attracting international visitors.  While tourism activity continues to peak in the summer months, the long term trend has been toward being open for business on a year around basis.  And, our aging population with time and money to allocate to an increasingly popular leisure activity—TRAVEL—bodes well for the future of Michigan’s tourism industry.
But, our assessment of Michigan’s tourism industry also revealed strong evidence of serious long-term problems.  Results from the American Travel Survey conducted by the US Census Bureau indicate that, in 1995, Michigan residents took 3.5 million more household trips to out-of-state destinations in the US than non-residents took to MichiganWe project that this created a domestic balance of trade deficit in travel for the Michigan economy of 1.6 billion dollars. We also project that Michigan holds an international travel trade deficit of about 1.3 billion dollars.  Thus, Michigan residents spend nearly three billion dollars more when traveling out-of-state than do non-residents visitors to our state.   This leakage of Michigan dollars costs the state jobs and results in lost business profits and tax revenues.  Michigan’s travel trade deficit is long standing and is probably growing.  Michigan’s climate encourages its relatively wealthy population to travel out-of-state during many months of the year.  Its geographic location and minimal pass-through traffic complicate efforts to draw visitors to our state.  And, while tourism demand is growing and is projected to continue to grow, the global competition for tourists’ dollars is growing even faster.  Michigan’s tourism industry’s product offering does not appear to be ideally positioned to appeal to an aging population base which is less inclined to pursue outdoor recreation, a hallmark of Michigan as a tourist attraction, or to attract non-whites who are becoming a larger proportion of the population in this region of the country.
What conclusions can be drawn from this “big picture” assessment of Michigan’s tourism industry and its role in the Michigan economy?  Clearly, tourism is a very large and growing Michigan industryBut, Michigan’s multi-billion travel dollar trade deficit is definitive evidence of an industry facing major challenges.  The size and persistence of this deficit are rooted in many causes, most of which cannot be directly mitigated.  Nonetheless, we believe there are actions that can be taken now and into the future to combat tourism’s net drain on the Michigan economy.  We need to begin by accepting the fact we have a problem, which is not going away when the economy turns around or if we only tinker with what we have been doing in the past to attract more tourist dollars.  Big problems require big solutions.  We won’t close the deficient by simply matching the moves of our competition; rather we must strive to better them on many fronts.  We will have to work harder, invest more, and invest smarter to offset our disadvantages and identify and exploit our advantages
We invite you to join us on March 5, 2003 at the annual
Michigan Tourism Outlook Conference, which will feature closing the travel trade gap as its central theme.
Don Holecek & Joe Fridgen
Published by Lori A. Martin
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Published by the Tourism Resource Center and the Department of Park, Recreation & Tourism Resources. MSU is an affirmative-action, equal-opportunity institution.
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