State Tourism Index Dips to 3-Year Low
Local Labor Day Rally Not in Line With Trend
By Karen Gould

A boost in tourism reported over the Labor Day holiday in the Straits area was not enough to overcome the statewide decline in tourism numbers for the third quarter. According to the Michigan Tourism Index compiled of Comerica Bank in Detroit, tourism in Michigan for July, August, and September was down 3.4 percent from last year and reached the lowest index level in more than three years. Third quarter indexes were also down three percent from the second quarter index report.

A poor economy in Michigan and surrounding states, which is expected to continue, and high gas prices are two reasons trend-watchers say the third quarter fell short.

In Michigan, tourism employs approximately 190,000 people, contributes more than $970 million in state taxes, and generates approximately $17.5 billion in revenue.

The report, which is a quarterly summary of five seasonally adjusted travel and lodging data reports, is an indicator for statewide tourism activity. The data comes from hotel occupancy rates, airline traffic, vehicular traffic, Mackinac Bridge crossings, and museum attendance.

Dana Johnson, chief economist at Comerica Bank, who prepares the report, told The St. Ignace News Monday, November 20, the tourism index is compiled by the bank because the information is important to the bank and its customers. He said the report fills a state-wide void not addressed by national measures of tourism or local measures, such as a report prepared by the Convention and Visitors Bureau in the Detroit area.

In a written statement released with the numbers, Mr. Johnson said, "The recent decline in energy prices may provide some near-term relief, but tourism in Michigan won't show a sustained recovery until jobs and incomes start trending higher here in Michigan."

Dr. Don Holecek, director of Michigan State University's Tourism Center, told The St. Ignace News that a sense that the tourism industry is struggling is a fair observation to make. He said tourism numbers for the year have been mixed, with June sales and use tax at hotels up between seven percent and eight percent. He speculates that approximately half of that increase reflects a rise in hotel room rates, and the rest may relate to increased volume.

Mackinac Bridge crossings, traffic data, and sales and use tax information from hotels provide the most meaningful data in tracking tourism, he believes.

Both men cite high gas prices and lack of jobs as the cause for declining tourism.

Three things affect tourism, Dr. Holecek said, including poor economy, high prices, and the cost of travel. He said that 70 percent of tourism dollars spent in Michigan come from in-state residents, who have been affected by the sagging economy, layoffs, and high gas prices. Michigan has the second highest unemployment rate in the nation, and has gone through summer tourist season with travelers facing high gas prices at the pump, he noted.

"We have a soft economy in our prime market," said Dr. Holecek.

Most of the remaining 30 percent of tourists who visit Michigan travel from neighboring states like Ohio, Indiana, and Illinois, which are states whose economies are not much better than Michigan's, he explained.

"Our basic market is in the doldrums in terms of ability of people to travel," he added.

Mr. Johnson confirms that sentiment in his October Michigan Business Activity Index.

"The downward trend of our index strongly suggests that the state economy is still contracting," he reported. "While I believe that Michigan will bottom out sometime in 2007, the near-term prospect is for more weakness, given that national growth has slowed and the local auto companies are still cutting jobs and slashing fourth-quarter production schedules."

This summer's television advertising campaign designed to draw travelers from neighboring states, which later ran in-state, was not expected to have a strong impact on tourism numbers this year, Dr. Holecek said, but it did help some.

"We'd expect the market to be down, and I would expect it to be down more than it appears to be," he said. "I would attribute that to promotion."

The state budget for tourism promotion was almost doubled this year, to $13.2 million, allowing Travel Michigan to launch a "Pure Michigan" promotional campaign on television, with Michigan actor Tim Allen providing the voice.

A "lag factor" is involved with advertisements, said Dr. Holecek. Some people who saw the promotional ads in August may already have taken their vacation, but will keep the information in the back of their mind for future planning.

He said it is too early to assess the success of television ads. If the state maintains the promotions for three to four years, he said he would expect to see accelerating response to the advertising because people will remember.

The state-wide post-Labor Day school opening mandate also helped buffer tourism's decline, said Dr. Holecek. A few schools with labor contracts started early this year, he said, but will open after Labor Day in the future.

"It could have been a lot worse," said Dr. Holecek said of the tourism drop.

Fall is the second biggest travel season for the state, he said, because of the fall color. Approximately 19.3 million acres, or more than half of the state, is forested.

"Michigan has what it takes to put on a dazzling display of fall color," reported Travel Michigan Vice President George Zimmerman at the September launch of a radio campaign ushering in the fall season. The radio spots were part of the Pure Michigan message to lure tourists to fall travel destinations.

Compounding a poor summer, Dr. Holecek noted the fall weather did not cooperate this year. Weather, he said, always is the unknown factor that affects tourism. This year, he expects fall numbers to be soft because of the short color season. Dr. Holecek reported he talked to people in the Western Upper Peninsula who said they had great color, but only for one day. He said other areas in the state also reported a lack of color on the trees this year.

One indicator of tourism is the monthly Mackinac Bridge traffic report. While September numbers are up 3.2 percent from last year, the annual traffic volume through September is down 3.1 percent.

October traffic numbers on the International Bridge at Sault Ste. Marie was down 5.9 percent and the year-to-date tally through October is down 1.7 percent.