A major boost in funding for tourism promotion for the next few years provides the industry another test to further prove the business case for a permanent spending increase.
If the return on investment pans out during the period and tracks favorably with data for recent years – and she fully expects it will – Gov. Jennifer Granholm says she’ll ask lawmakers to sustain the funding increase to promote Michigan nationally as a travel destination.
“We’ve got a couple years to make this good case, and then we need a dedicated source of revenue to make sure that we have a permanent commitment to marketing Michigan,” Granholm said last week during an address to the Michigan Tourism Conference in Grand Rapids.
“We want to make sure these next couple of years, as we are marketing Michigan, that we are able to come back to the Legislature and say ‘look at what we were able to do, what we were able to generate in our economy as a result of this investment,'” she said. “Our hope is over these next couple of years is that we can really demonstrate that return on investment really means that the more you invest in marketing, the greater economic value you get.”
Her address came a day before legislative approval of a package of bills that will steer $45 million over three years to tourism promotion and $15 million to the Michigan Economic Development Corp. for business development.
Tourism was an $18.1 billion industry in Michigan in 2007.
Research data produced by Longwoods International for Travel Michigan shows that from 2004 to 2007, every $1 spent on tourism generated $40.29 in spending for Michigan businesses and $2.82 for the state in tax revenue.
“That, to me, is a great business case,” Granholm said.
Travel Michigan will use the additional funding to take its award-winning Pure Michigan campaign to three new markets – St. Louis and Columbus and Dayton, Ohio – and mount a winter travel campaign for 2008-2009 as well as a national cable television campaign in 2009.
Also planned are the development of niche campaigns for activities such as golf, hunting and fishing, and an interactive promotion aimed at the 25- to 35-year-old demographic.
The additional funding comes as the industry faces another decline in 2008, following a 3.6 decrease in visitor spending in 2007. Michigan State University economists project travel volumes to fall two percent this year, heightening the importance of a stronger and broader promotional pitch.
Granholm optimistically believes the higher promotional spending in 2008 can help offset the forecast decline in travel volume.
“We’re going to come back next year and say, ‘whew – that was a fantastic year … bested all expectations,'” she said. “We will have the most money promoting Michigan ever in our history, dedicated to telling our story. If that doesn’t have an impact, I’m not sure what will.”
Travel spending in 2007 by Michigan residents declined 10.2 percent, to $9 billion, a reflection of the state’s poor economy, while nonresident spending grew four percent, to $9 billion, according to Longwoods International.
The data supports the need to do more promotion outside the state, Travel Michigan Vice President George Zimmerman said. His ultimate goal is to have a $30 million annual budget to promote the state.
“That’s the new bottom,” he said. “What we need to do now is take this to the next level.”
Of the additional money the Legislature approved, Travel Michigan will spend $5 million to $6 million in 2008, on top of the $10 million already budgeted, and the rest in 2009 and 2010, Zimmerman said.