Editor’s note: This commentary is by Vicky Tebbetts, the vice president of the Vermont Hospitality Council, the tourism division of the Vermont Chamber of Commerce.
The holidays are a time of reflection: a time to look upon what is important, and contemplate our expectations and goals for the New Year.
Five days after the crystal ball descends in Times Square, 180 legislators will descend upon Montpelier to look into their own crystal balls as the legislature convenes.
Our lawmakers will grapple to reach agreement on a state budget that is predicted to be one of the leanest in decades. In the face of a recession, there will be many demands on Vermont’s ever-tightening money belt. Last year, the legislature and the governor recognized the importance of tourism marketing funding. What is going to be important to Vermont in 2010?
The Vermont Hospitality Council, the tourism division of the Vermont Chamber of Commerce, has identified funding for tourism marketing as a priority for our state. Tourism is a critical investment for the state of Vermont, particularly now. In the upcoming session, we will urge the Legislature to appropriate $6.8 million to tourism funding, which would bring the allocation back to FY 2000 levels.
A robust appropriation that funds marketing to inspire people to travel to Vermont is key to an economically successful 2010. Marketing tourism to the state of Vermont outside our borders is one of the few ways in which the state invests money that in turn generates a significant investment of out-of-state dollars. Much of that return stays in state, rippling through multiple sectors of the Vermont economy. In fact, based upon national and state metrics, Vermont receives an estimated $4.48 in additional state revenues for every $1 spent on marketing. Additionally, state marketing efforts generate revenue returns quickly, within three to six months.
Vermont is poised within a day’s drive of 80 million people, located in our drive markets of Boston, New York, Montreal, and along the East Coast. When people come to Vermont, they book rooms in our hotels, B & Bs, inns, and at our resorts. They create their own Vermont traditions as they dine out, shop, recreate, visit our attractions, buy our products, and fill their cars with gas for the drive home. In fact, according to the latest available benchmark study of the economic impact of visitor expenditures, performed by Economic and Policy Resources in Williston, visitors make an estimated 14.3 million person trips to Vermont, resulting in 24.5 million overnight stays and $1.61 billion in direct spending.
All this spending filters down to our people and communities. The Vermont tourism employee who is the primary household wage earner earns $42,350 per year, 15 percent above the average income of $36,949 for all employed individuals in Vermont. Tourism businesses and their employees take those dollars and buy goods and services from other Vermont businesses, such as banks, contractors and construction companies, landscapers and maintenance services, auto dealers, and professional services such as those provided by attorneys, insurance agents, and accountants.
The state coffers benefit from our tourists and the businesses they visit through meals and rooms tax, sales tax, gas tax, and property taxes. Visitor spending contributes almost $207 million in tax and fee revenues to the State of Vermont, and directly and indirectly supports 37,490 jobs (12 percent of all jobs in the state).
Further, Vermont has shown itself to be surprisingly resilient in a down economy. The wounds here are not as deep as they are in many other places in the country. According to Travelclick, an international provider of hotel marketing products, at the close of the third quarter Vermont hotels experienced the largest increase in its market share, while the returns softened or declined for other states across the country.
Vermont is distinguished beyond its borders by its character and reputation. We embrace the Green Mountain State’s culture and integrity. Now, with the help of the Legislature, we must wield that brand and make the most of it. That’s one investment that will work for everyone; our people, our businesses, and our state tax revenue figures. That’s one revenue stream we can rely on, one we have built over decades. That’s one investment that we don’t have to look into our crystal balls to predict.
Vicky Tebbetts, a resident of Cabot, is the vice president of the Vermont Hospitality Council, the tourism division of the Vermont Chamber of Commerce.
I’ve never understood why, if the members of the Chamber really believe that advertising increases State revenues this much, why they don’t assess themselves to raise and spend this money. If the State gains $4.48, the operators of the tourist businesses must gain even more.
This argument is trotted out every year. Unfortunately, it is largely without merit.
First, no one questions the magnitude and importance of the tourist industry. The only question is whether the state subsidy is a good investment. In fact, the assertion that “Vermont receives an estimated $4.48 in additional state revenues for every $1 spent on marketing” cannot be substantiated and is terribly misleading.
The flaw in this reasoning is that it assumes that none of that economic activity would occur without the state expenditures. That is absurd on its face.
Think about it. The businesses in the related industries spend huge sums of money on advertising & marketing — probably $50 – $80 million per year. The state spends $5m +/- but only half of that is direct spending because the rest is for salaries & overhead. So how can we measure the return on investment from the state’s $2m – $3m compared to the industry’s $50 – $80m? The answer is we can’t. There is no methodology available to answer the question.
Here is what the Legislature’s economist said about this issue in Nov. 2002:
“There is currently no credible analysis that can quantify the return-on-investment of public travel and tourism expenditures to the State of Vermont. Due to significant questions associated with cause and effect as well as lags in the timing of impacts, absent any further Vermont-specific analysis, the State should not assume that incremental public expenditures in this area will necessarily be offset by increased state tax revenues.”
http://www.leg.state.vt.us/jfo/Reports/VDTM%20Study%2011-2002.pdf
So how do we justify spending $5m versus $10m or nothing? If you can’t answer that question, there’s a good chance we’re wasting money.
The legislature will be tempted this year to spend more money for anything that purports to create jobs. But with limited resources, they should be careful, especially when presented with such unsubstantiated but feel good proposals as this one.
I also wonder about this, “The Vermont tourism employee who is the primary household wage earner earns $42,350 per year, 15 percent above the average income of $36,949 for all employed individuals in Vermont.”
Lift attendants, chambermaids, food servers make this much? I know people who are primary household wage earners with these jobs and they don’t make that much …
So what, we cut more from social services for advertising? Preposterous. That’s like not eating three days a month to watch television.
Tom – Note how they worded it: “primary household wage earner”. This excludes an awful lot of workers. Here are some figures (Occupation, Jobs, Median hourly wage; all from the VT Dept. of Labor, 2008 OES)
Maids & Housekeeping Cleaners – 2,240 – $10.16
Hotel, motel, and resort desk clerks – 820 – $10.85
Amusement and recreation attendants – 680 – $9.36
That’s 3,740 jobs that pay less than $23,000 / year (even assuming they’re all year round, which they’re not).
And this doesn’t include food service workers or retail, both of which pay poorly as well. Indeed, if the wages were so good, why do ski areas have to import workers from other countries?
And let’s not forget the hidden costs like the hundreds (perhaps thousands) of tourist industry workers who receive various types of public assistance because of their low wages.
In the end, we shouldn’t demonize the industry. The only question is whether these subsidies are an appropriate (and cost-effective) use of taxpayer funds.
to the editor
once again, the Chamber posted something on your site but has failed to respond to any of the comments; why should you give them access if they’re just using the site to spread their misleading talking points but refuse to engage?
Given that Vermont has an established “brand” and tourism is a known category, I’d expect 10 or 15:1 ratios for marketing to revenue. If this were a single business, we’d be spending 18% on marketing…which is not sustainable.
The hospitality taxes are not 18%; even with the income taxes added in, it’s hard to see how the state isn’t losing money on this. But more troublesome to me…why tourism? Most of it is automotive, causing all sorts of carbon footprint. Why not software? I could sure use some extra marketing money to compete against those mean, big bad California companies…and we don’t pollute! How’s about it, state lady?