EDITORIAL:  No Pain, No Gain for Michigan’s Tourism Industry
By Dr. Donald F. Holecek, Professor in the Department of Community, Agriculture, Recreation & Resource Studies (CARRS) and Director of the Travel, Tourism & Recreation Resource Center at Michigan State University

Tracking the course of Michigan’s tourism industry continues to be frustrating and depressing.  The early tracking data for 2004 are not at all encouraging.  Mackinac Bridge crossings, an indicator of Upper Peninsula tourism activity and general outdoor recreation in northern Michigan, were below 2003 levels in nineof twelve months in 2004 and down for the full year.  Sales and use tax collections by the lodging sector were also down through September 2004, depressed especially by weak performance in southeast Michigan. 

Lodging tax collections are a good indicator of overall tourist expenditures, so it appears that revenue captured by Michigan tourism businesses continued to decline for yet another year.  Year-to-date sales plus use tax collections by the lodging sector were down 1.5 percent through September, due largely to a 3.3 percent decline during the peak summer season (June-August). 

Looking back a few years, Michigan’s tourism industry has not experienced growth in sales since 2000, and the picture would be even bleaker were one to account for inflation in costs that tourism businesses have had to absorb over the last four years.  And, we can’t look for any consolation in the national data which indicate that the U.S. travel industry, with the one glowing exception of the airline sector, has recovered from 9/11 and the recession and is growing at a healthy pace.

So, why does our industry continue to suffer while the nation’s travel industry is healthy once again?  I believe the primary cause for what ails Michigan’s tourism industry now is that the economies in Michigan and much of the rest of the prime market region (e.g., Ohio) lag the nation’s recent strong economic growth.  Our rate of unemployment remains well above the national average, and we face yet another significant state budget deficit this fiscal year.  Imbedded in the state’s fiscal problems is the issue of how much (or how little) the state is investing in promoting Michigan as a travel destination.  Despite growing evidence, including my own research, that Travel Michigan’s advertising actually generates state tax revenue in excess of what it costs, the state’s travel promotion budget remains essentially coupled to the state’s fiscal circumstances.  Neither lobbying by the industry nor the emergence of research that confirms the positive return on investment in Travel Michigan’s advertising have been very effective to-date in decoupling the state’s allocation to travel promotion from its fiscal circumstances.

What might be done to put Michigan’s tourism industry back on the road to sustainable growth? Clearly, the growth of our tourism industry will be impacted by economic conditions here in Michigan, nearby states, Canada, the U.S., and the world, but I believe that this industry is not helpless when it comes to controlling its destiny.  So, let’s focus on what actions we can take and/or stimulate to be taken that will help our industry to meet whatever challenges that may lie ahead.

I think the logical place to begin is with a plan to include a plan for regularly updating this plan.  This should be a comprehensive strategic plan developed on a solid foundation of objective information and the best thinking that can be accessed.  The plan should be focused forward, a decade into the future, as opposed to a year or two as is the norm across most of our industry.  The plan should draw upon inputs from the broadcast possible coalition of industry stakeholders. The result should be a plan reflective of all industry “players”, large and small, government and private sector, urban and rural, north and south, east and west, DMOs, Chambers of Commerce, MDA, MDOT, MDNR etc., etc.  The plan should be comprehensive in its focus covering issues related to investments, promotion, packaging, regulations/policy, transportation, training/education, organization, leadership, environment, climate change, etc., etc.

This call for a plan in no way is intended to denigrate efforts, both past and present, to improve the health of the industry.  For example, industry leaders have worked hard and have had noteworthy success in efforts to maintain and increase the state’s tourism advertising budget.  It is impossible to envision a plan emerging that will not call for greater state investment in advertising.  With a plan in hand, the effort to grow investment in travel advertising will become integrated into a multi-faceted set of actions supported by a broad government/industry coalition rather than being perceived as one isolated special interest issue supported by the typically small contingent of loyal industry representatives that can be recruited to testify in support at a hearing in Lansing.

I would be remiss in not noting that developing a plan will not be easy and without controversy.  Were this not the case, we would likely have had a plan in place when it was first proposed in legislation dating back to 1949.  I suppose the question now is:  Has the industry matured enough during the past 50+ years to work together to develop a plan that will enhance its vitality over the next 50+ years?  An alternative question is: Are we suffering enough pain now to accept the hopefully lesser pain associated with developing and implementing a comprehensive strategic tourism plan for Michigan?  I believe the answer to both of these questions is YES!

I welcome your thoughts at dholecek@msu.edu.