DIY Economic Development – The Tourism Industry Way

We live in an interesting time for the public sector. Local and state governments are struggling to allocate scarce tax dollars to a variety of important programs and needs, and often short term issues (public safety, social services) are winning out over long-term investments like higher education and economic development. Whether you think that’s the right way or the wrong way to approach it, that’s what’s happening, and so it’s interesting to see how economic development organizations are dealing with the new reality.

And one of the most interesting reactions that we’re seeing is “Fine, if you won’t help me, I’ll do it myself.” Like the tourism industry is proposing to do.

With budget cuts threatening to eliminate the Washington State Tourism Office, travel-industry groups are launching initiatives aimed at pumping millions of new dollars into attracting more visitors…The [new Washington Tourism Alliance] is a consortium of trade and government groups, including the Port of Seattle, the Washington Restaurant Association and the Washington Lodging Association…The alliance will meet March 31 to come up with new ideas for funding. One is to approach the Legislature with a plan similar to one used in California and other states. Restaurants, hotels, attractions and retail businesses assess themselves fees (technically not taxes) the states collect but can’t divert to other uses.

Of course, self-assessment by the tourism industry isn’t a new idea, even in this region. Tacoma and Everett both use an additional fee on hotels to fund marketing and promotion activities, which is different than, say, King County’s lodging tax; the former funds are voluntarily charged and go directly back to tourism, whereas the latter are collected by the government and used for a variety of purposes.

Now, a cynic would say, “well, hey, if they can fund it themselves, why do they need government funds in the first place?”  And, in fact, the industry could be better off in terms of investment and coordination: the Governor is proposing to cut the tourism office and its “1.8 million annual budget” whereas a statewide self-assessment could net “$9 million to $15 million annually”. For a state that ranks 48th out of 50th in terms of state investment in tourism promotion, that’s a huge step forward…we might even get into the 30’s, if we’re lucky!

But of course, it’s not necessarily better. When you think about public dollars, you often talk about them in terms of investment and the return on that investment. Every group in Olympia that can, from arts to education, has a study that talks about how “every $1 of state investment generates $___ in return.” That’s new tax dollars, new businesses, new jobs and other related benefits. And the logic goes that, the more you invest in job creation, the less you have to invest in the other stuff – basic health, unemployment, etc.

So, sure, the tourism industry can, and maybe even should, contribute but imagine how much success we’d have in attracting new tourists to the state if we had both private AND public dollars. We could do some of those awesome California commercials, and/or actually take advantage of the huge opportunity that new tourism from China and India have to offer. And by the way, tourism leads to business, as visitors come here, realize how great it is, and want to return for professional reasons. Yes, we have a great state with a wide variety of natural beauty and things to do…but as we’ve said a zillion times on this blog (seriously, count it): “in a competitive international economy you can’t just assume that things are going to come your way just because you think you’re great.”

So kudos to the tourism industry for being proactive and not letting the fourth biggest industry in the state (behind aerospace, IT and ag) wither on the vine (that’s a Visit Walla Walla Wine Country pun). But in the long-run, we have to figure out a way to continue to invest public dollars in key economic development opportunities.

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