Tourism in Michigan is projected to increase this year, although it will not reach 2007 levels, nor will it make up for losses in last year's decline, said tourism analyst Dan McCole of Michigan State University at the Pure Michigan Governor's Conference at Grand Hotel Thursday, May 6.

This year, spending will increase by 3% to 4% and travel volume will improve by 2% to 3% over last year, he said. A hike of 2% to 3% is estimated for travel prices.

“The worst does seem to be behind us,” said Mr. McCole. “There's a general agreement across the board that we've passed the worst part of this, but the light at the end of the tunnel is still rather small.”

The travel forecast is based on trends in the gross domestic product, unemployment levels, consumer confidence, currency exchange rates, interest rates, the stock market, and housing.

Unemployment levels are a major factor in Michigan's tourism and economic recovery, he said.

“This is a big concern in general about the recovery and certainly the big concern for us as we look at tourism,” he said. “Unemployment [nationally] is still very high, at 9.5%. It is higher now than it was a year ago. Michigan, at 14.1% in March, is higher than last year... We've heard the term 'jobless recovery' and that certainly seems to be what we have here for now, and it is not truly going to be a recovery until these numbers can go down.”

In 2000, Michigan's unemployment rate was 3.2%.

This year's forecast can be affected negatively by what Mr. McCole calls “wild cards,” which include changes in the economy, fuel prices, weather, and any terrorism acts.

Last year within the state, travel decreased slightly while travel spending dropped 13.6%. People still traveled around the state, but they did not spend as much, he said, which indicates that, even when times are tough, they still want experiences and they still want deals.

This year's projections will not bring the state back to 2007 levels. By comparison, since 2008, travel spending has dropped 13.1% and travel has fallen 7.1%.

Unemployment remains high in the state ,at about 14%. By next year, Michigan is projected to have lost 937,000 jobs since 2000, with 855,500 jobs already gone. High wage jobs for those without a college education have disappeared by about 30%, with mid-wage jobs shrinking 23%.

“These jobs are not coming back,” Mr. McCole said. “When the economy comes back, there aren't very many people who think these jobs are coming back. I think this represents a fundamental shift in the travel market in Michigan.”

On a positive note, he said, the auto industry seems to be rebounding and the state is positioning itself for green technology development.

The new “normal” for Michigan tourism is for travelers to spend less money, look for bargains, make last minute travel decisions, and for companies to seek other ways to do business rather than traveling. The new normal, said Mr. McCole, will force the travel industry to seek new markets.

Forecasted spending in 2009 fell shy of actual levels, he said. Spending was projected to drop 3.4%, but it fell 13.6%. The primary reason was a lack of confidence in each person's financial situation. Michigan lost 230,000 jobs last year alone, and those who did not lose their jobs were worried that they would, he said. In addition, most retirement accounts were cut in half when the market plummeted. More of those who traveled stayed with friends and family. And those who stayed in hotels often were offered deals, paying less than travel experts expected.

“The other reason why we saw such a large decrease,” he said, “is business travel really went off a cliff.”

Business travel only accounts for about 20% of Michigan's tourism volume, but it accounts for 30% of tourism spending.

In the past, 70% of Michigan's tourism volume has come from instate residents. Out-of-state tourists make up about 30% of the Michigan market, said Mr. McCole, yet they account for about 50% of tourism spending.

“If you're really looking to rebound in the tourist industry, you're going to have to look elsewhere,” he said. “Pure Michigan is an exceptional campaign for spreading the good word of what Michigan has to offer out-of-state people. Although it wasn't funded as highly this year, the decision was made to invest the money they did have on out-of-state promotion. I think that was probably a wise decision.”

He recommended that those in tourism be creative and consider alternative markets, offering the statistic, for example, that 100 million Chinese people will be traveling internationally within the next eight years, a potential market.