Measuring How Tourism Pays Off: Start with 12-to-One

When the state of Washington virtually eliminated its budget for attracting tourists, it raised a critical question: how effective are the millions of dollars spent on attracting visitors, both at the local, state and national level?

A new study has some answers.

Marketing campaigns more than pay for themselves by the business they generate, according to the study. It also found there’s a 12-to-1 return on marketing dollars.

“Legislators are ignoring basic economics if they slash destination marketing programs,” said the report’s author, Bill Siegel, founder and CEO of Longwoods International. “The return on investment of destination marketing programs is significant and nearly immediate.”

“There’s a reason that America’s most prominent brands continue to increase their marketing budgets: it works,” said Roger Dow, president and CEO of the U.S. Travel Association.

The study was conducted by Longwoods and commissioned by the US Travel Association. It analyzed marketing campaigns by the State of Michigan and the Greater Philadelphia Tourism Marketing Association.

“After inconsistent promotion efforts for decades, the Pure Michigan state promotion campaign began regionally in 2006 and went national in 2009. The powerful and non-traditional storytelling of Pure Michigan has stimulated 7.2 million trips to Michigan by out-of-state visitors,” the study found.

Those visitors spent US$2 billion at Michigan businesses and generated $138 million in new tax revenue for Michigan — more than three times the cost of the advertising itself.

“In 2010, the second year of national Pure Michigan advertising, spending by out-of-state leisure visitors jumped 21 percent from 2009, to $6.4 billion. At the same time, Michigan tourism-related employment rose by 10,000 jobs,” the study added.

In Philadelphia, a 1995 report by The Pew Charitable Trusts identified leisure travel as a potential replacement industry for lost manufacturing jobs. This led to the creation of the Greater Philadelphia Tourism Marketing Corporation (GPTMC) in 1996 by Pew, the City of Philadelphia and the Commonwealth of Pennsylvania to promote the region to leisure travelers.

Since 1997, overnight visitation to Greater Philadelphia has grown by 66 percent, six times faster than the national growth rate of 11 percent.

According to the US Travel Association’s 2009 annual Survey of State Tourism Office Budgets, 31 states cut funding for tourism advertising and marketing by 13 percent, or $52.7 million, between 2008 and 2009.

The state of Washington closed its tourism office in June 2011, harkening back to Colorado’s decision to abolish its marketing program in 1993 due to budget constraints.

According to a study by Longwoods International, Colorado eventually lost more than 30 percent of its share of domestic visitors and more than $2 billion annually in visitor spending.

“With funding for Colorado’s marketing program now restored, the state treasury sees a 12-to-1 return on marketing investment, and trips to Colorado have rebounded to record levels,” the study found.

The Travel Insider says it makes no economic sense for states to cut back on tourism spending but adds that the US in many ways goes out of its way to discourage international tourists.

“At the same time, other countries are bending over backwards to make it easier for foreign visitors to go to their country and spend money there,” he writes.

The latest example of this is in South Korea, which will now allow foreigners arriving by cruise ship to stay in the country for up to three days without needing a visa.

This compares unfavorably with the US which recently put a group of elderly British tourists through an up to seven-hour wait before allowing them to be readmitted to the US.

“We’re being shown up by every other country in the world, who almost without exception seem able to do better than us at treating visitors with courtesy and respect,” he writes.

(Source: http://bit.ly/zQC21f)