Michigan State University Extension
Ag Experiment Station Special Reports - 04089576
07/28/98
Status and Potentialof Michigan Natural Resources Michigan Agricultural Experiment Station, Michigan State University
January 1995 Special Report 76
SPECIAL REPORT
Tourism Lead Author: Donald F. Holecek Graduate Assistant: Teresa I. Herbowicz
Introduction A recently released report declares that tourism is the world's leading industry, providing jobs for one in nine of all people employed worldwide (World Travel and Tourism Council, 1993). Foreign tourists spent an estimated $17 billion more in the United States than U.S. citizens spent abroad in 1992 (U.S. Travel and Tourism Administration, 1993), making tourism one of this country's leading exports. Tourism has been growing in Michigan during the past decade at an average rate of about five percent per year (Williams and Spotts, 1992). Though, as will be explained later, these statistics and most others drawn upon in this report are subject to legitimate debate, they substantiate that tourism is both an economically significant industry and one that has exhibited steady growth.
In attempting to assess the status and potential of Michigan's tourism, one immediately encounters several challenges. The first is how to define tourism. Metelka (1989) defines tourism as an: ...umbrella term for the variety of products and services offered and desired by people away from home. Included are restaurants, accommodations, activities, natural and manmade attractions, travel agencies, government bureaus and transportation ...people traveling primarily for leisure and recreation ...industries and activities that provide and market the services needed for pleasure travel.
A plethora of alternative definitions can be found in the literature, in part because tourism is such a multifarious concept. But the existing multitude of alternative definitions is commonly attributable to issues involving measurement of tourism. To quantify tourism, one must define it in measurable terms. Furthermore, these measurements must be feasible to collect. The definition of "feasible" in the context of tourism measurement includes an economic dimension (i.e., is the research budget adequate to collect the desired measurements?) and a practical dimension (i.e., can reliable data be collected?). More often than not, when the theoretical definition of tourism comes in conflict with the realities of quantifying it, an alternative definition is developed to bring the definition and measurements into congruence. Thus, since no generally accepted definition of tourism exists or could be derived that meets varying feasibility requirements for measuring it, most tourism-related statistical series are not directly comparable because they are built on definitions of tourism that vary, often considerably.
Most definitions of tourism are based on a travel experience outside of one's daily routine whose purpose is for pleasure. This would include recreational travel, which, when connected to use of natural resources, is most central in assessing the status and potential of Michigan's natural resources in a tourism context. Only limited information exists to support a direct assessment of Michigan's natural resources' role in this state's tourism industry, however, so the task must be approached indirectly, drawing on and extrapolating from related information sources. Because specific information about tourism does not exist, resources are not available to fill the voids, and extrapolating from related secondary data is problematic, most tourism-related institutions, programs and policies subsume tourism under the even broader umbrella of travel, or link travel and tourism to form a single category.
Beyond measurement problems associated with tourism as travel for pleasure, travel (including its tourism component but also other components such as business travel) is a more useful concept than tourism for many analytical purposes. This is evident in the names selected by many organizations with major tourism missions, including, for example, the World Travel and Tourism Council, the U.S. Travel Data Center and the Michigan Travel Bureau. The clients of such organizations are not especially concerned about who rents rooms or cars, who eats in restaurants or who fills seats on airplanes. The success of such businesses, and thus their concern, is with the overall volume of travel, whether it be for pleasure, business, education, or visiting friends and relatives. Very few government agencies restrict their missions to tourism. Those involved in promoting economic development or generating revenue are likely to relate to travel as a descriptor of their focus, while those more involved in servicing the traveling public are more likely to use recreation in describing the services they provide.
Measurement problems and limited practical utility combine to limit availability of information directly relevant to assessing tourism and that proportion linked to natural resources. Thus, one is largely restricted to relying on statistics for the broader travel industry in assessing tourism in Michigan. Assessment is further complicated by the limited availability and quality of travel statistics. The U.S. government collects very little information about travel within the United States, focusing its attention rather on travel imports (U.S. citizens visiting other countries) and exports (foreign visitors to the United States). The last U.S. Travel Census was conducted in 1977, and its results underlie most models used to extrapolate travel patterns existing then to the present.
The most accessible source of non-proprietary information on national domestic and interstate travel is the U.S. Travel Data Center (USTDC). The USTDC receives major funding from the U.S. Travel and Tourism Association (USTTA), whose primary mission can be described as public relations. Clearly, the USTDC must focus its data gathering efforts on the needs of the USTTA rather than on information of primary interest to the traveling public, individual states, or small to medium-sized travel and tourism businesses. USTDC statistics, therefore, are helpful in assessing travel at the national and multistate regional levels but are of far less value in intrastate analyses.
Within Michigan government, no state agency's charge includes generating travel and/or tourism statistics on a systematic basis, though, in the course of other pursuits (e.g., collecting taxes and user fees), several agencies generate information useful in tracking Michigan's travel and tourism industry. Various state agencies have occasionally funded studies that yield information of use in assessing Michigan's travel industry. Results are not comparable or useful for trend analyses, however, because of inconsistencies in timing or the methods employed. One final but significant limitation in the data available for assessing the role of Michigan's natural resources must be noted.
Economists group the benefits from natural resources-based t indirect benefits. Benefits included under direct benefits are those that accrue to users of natural resources in the course of their recreation activities plus values derived from preserving natural resources for potential future use and value received from the knowledge that unique natural resource areas are protected for the benefit of their indigenous plants and animals and future generations of human beings. Indirect benefits result from expenditures made by tourists and others in the process of using natural resources. Indirect benefits accrue to individuals, businesses and others, including governments, that provide for the needs of the traveling public. Collectively, these indirect benefits from tourism are most often referred to as economic impacts of tourism. The majority of all travel and tourism statistics are most relevant to assessing tourism's indirect rather than direct benefits.
Direct benefits are the value that society places on its natural resources when they are used for tourism or other purposes, whereas indirect benefits are the measure of the impacts that such resource users have on the economy. Economic theory holds that direct benefits should be the key economic criterion for allocating natural resources among alternative uses, whereas indirect benefits should be used in assessing the distributional impacts of resource allocation decisions. In the "real world," however, resource allocation decisions rarely conform to economic principles. Furthermore, measurement of direct benefits associated with natural resources-based tourism, though theoretically feasible, is problematic, given the system by which tourism is distributed.
Tourism is a bundle of products and services, and this package is not generally sold in a competitive market where its value, as measured by market price, is readily observable. Though economic theory holds otherwise, indirect benefits/economic impact often enters and plays the dominant role in resource allocation decisions involving tourism.
In summary, assessing the status and potential of Michigan's natural resources-based tourism in a theoretically correct and completely objective way is not possible. Analysis must conform to the data available, and these are primarily aggregate measures of the overall economic impacts of travel activity rather than values of natural resources-based tourism per se. On the other hand, most natural resources policy is not made in accordance with the rules of theoretical correctness based upon complete and indisputable information. Thus, though what follows is less than a complete assessment, it does convey the essence of the information that can be derived from what is currently known about Michigan's tourism industry and the role that natural resources play in it.
Current Conditions and Salient Trends
International Tourism The most recent, thorough and methodologically sound analysis of global tourism was released in October 1993 (World Travel and Tourism Council, 1993). Projecting from actual 1991 data, the report indicated that by 1994 travel and tourism would:
- Generate $3.4 trillion in gross output.
- Produce 10.1 percent of direct and indirect GDP.
- Invest $693 billion (10.7 percent of total investment) in new facilities and equipment.
- Contribute more than $655 billion of tax revenue and 11.4 percent of total indirect taxes.
- Account for 10.9 percent of all consumer expenditures and 6.9 percent of government spending.
It is further concluded that the travel and tourism industry is the world's largest employer, accounting for 10.2 percent of global employment in 1991, or 1 of every 10 people employed. By 1994, the industry's share of global employment was projected to rise to 10.6 percent of employment. It provides jobs for about 1 in 10 people employed in the United States.
Unlike earlier studies, this latest World Travel and Tourism Council (WTTC) report accounts for the full range of economic activities associated with travel and tourism, including consumer expenditures (projected to equal $2 trillion in 1994), business traveler expenditures ($401 billion in 1994), capital investments by travel and tourism companies ($693 billion in 1994), and investments by governments in support of travel and tourism ($352 billion in 1994). This broader than earlier coverage of industry-related expenditures, coupled with rapid growth in the industry, resulted in the estimate of the industry's share of total employment increasing from one in 16 in 1987 (Wharton Econometric Forecasting Associates, 1990) to one in nine by 1994.
The recent WTTC study also provides evidence to dispute the commonly held view that travel and tourism employees earn below average wages. When the full extent of the industry is accounted for, its employees receive above average compensation in most countries, including the United States, but somewhat below average compensation in nearby Canada. In fact, the ratio of average travel and tourism industry compensation to overall average compensation across all jobs was reported by the WTTC to be 1.13 in the United States. Since the 13 percent above average employee compensation for travel and tourism industry jobs defies conventional wisdom, further examination of the WTTC's methodology may be helpful.
To the casual observer who travels, the most visible travel and tourism industry employees are those holding entry-level jobs in restaurants, hotels, service stations, airports, car rental outlets, etc. Wages earned by these employees may indeed be below average. However, one must note that wage statistics published by the government are not fully reflective of actual earnings by many employed in this industry, given that underreporting of earnings from tips is a global phenomenon. Behind these front-line service employees are people employed as their supervisors; owners of businesses and their lawyers, accountants and a host of other professionals who provide services to travel and tourism businesses; banks, construction companies and others who benefit from travel and tourism businesses' investments; aircraft and auto manufacturers who build transport vehicles; and so on.
When one takes full account of all direct and indirect jobs created by travel and tourism expenditures, compensation per person employed in this industry compares very favorably to that received across all industries. However, average travel and tourism industry employee compensation in countries with less developed economies is likely to be less than in the United States because such countries export their "quality" travel and tourism industry jobs_directly via filling high skill/high pay jobs with foreign nationals or indirectly via importing products (e.g., airplanes) produced in industries paying premium wages.
The above information provides some perspective on the relative scale of the global travel and tourism industry and hints that the industry is growing. Data presented in Tables 1 and 2 confirm that tourism is a global growth industry. The World Tourism Organization, a U.N.-sponsored o tourism arrivals increased from about 25 million in 1950 to more than 400 million in 1989, a 16-fold increase (Peterson, 1990). Arrivals nearly tripled between 1950 and 1960, about doubled between 1960 and 1970, nearly doubled again between 1970 and 1980, and increased by about 50 percent between 1980 and 1989. Growth in international tourist receipts (i.e., expenditures by tourists in destination countries), excluding international airfares, increased nearly a hundredfold between 1950 and 1989. Expenditures tripled in the `50s and `60s, increased over fivefold in the `70s, and about doubled during the `80s.
In combination, these arrival and receipts data indicate an industry that has experienced spectacular growth over the past 40 years, though its growth rate appears to have slowed recently. But the data, though labeled as relating to tourists, actually are more inclusive, in that they include travelers on both pleasure trips and business trips.
Figure 1, from another source (Wharton Econometric Forecasting Association, 1990), sheds some light on the relative shares of total international traveler expenditures by personal vs. business/government-related travel. The former accounted for about two-thirds of worldwide travel sales in 1987, so growth in business travel alone could not have accounted for the bulk of the overall international travel activity growth experienced over the past four decades.
Accounting for the billions of people who travel outside their home countries each year is a monumental task, one that is probably impossible to achieve with a high degree of accuracy. Still, the available evidence is conclusive in several respects. International travel and tourism is a large industry, has grown rapidly and is a major source of employment. In fact, it may be the world's largest industry and employer. When all direct and indirect jobs linked to the industry are included, these jobs provide average to above average compensation. Available data provide little information on the role of natural resources-based tourism in the international travel arena, except that personal travel is by far the dominant purpose of global travel. The latter category includes natural resources-based tourism, so one might reasonably assume that it is also growing.
The body of scientific literature related to international travel is replete with evidence of factors with a causal linkage to observed growth in international travel between selected countries over selected intervals of time. The most often suggested variables are listed and briefly discussed below.
Improvements in Transport Systems
Modern travelers benefit from transportation systems that provide speed, comfort and safety.
Income An increasing number of people across the world have seen their incomes grow to where international travel, once the domain of the wealthy leisure class, is now affordable. The most rapid growth in international travel today is occurring in countries such as Japan, South Korea and Taiwan, where incomes and the value of local currencies have experienced rapid growth.
Leisure Time Because of productivity growth, early retirement and a host of other factors, more and more people globally have more leisure time. The speed of air travel has effectively increased leisure by reducing the amount of leisure time that people must expend to reach distant destinations.
Population Even though population growth is greatest in less developed countries whose citizens generally lack the incomes necessary to travel internationally, slow population growth in the developed world and more rapid growth in age groups with a high propensity to travel have combined to increase the number of individuals traveling internationally each year.
Globalization Growth in international trade has boosted international business travel, and generally improving political relations among many countries have resulted in fewer barriers to cross-border travel.
Communications Our dramatically expanding ability to communicate simply and cheaply has been a fundamental force in fueling growth in international travel. Developments in communications have raised awareness of the world around us, thereby stimulating demand to visit other countries; greatly improved the effectiveness and efficiency of transport systems; and, of course, enhanced one's ability to "stay in touch" while traveling even great distances from home.
Terrorism and International Tension International tension can significantly alter and/or stifle international tourism. Recent periods of international tension have had roots in events in the Middle East. During these periods, not only have concerns about acts of terrorism directed at tourists increased, but energy costs have also spiked upward in response to actual or possible disruption in oil supplies from this energy-rich part of the world. The combination of increased safety risks and transportation costs has reduced tourism dramatically in countries where terrorists have become active. During such episodes, many elect to visit alternative international destinations, while others simply delay their travel until prices and safety risks return to normal. The net impact on total international travel has been either an actual decline in numbers of travelers or year-to-year growth considerably below what otherwise would have been projected.
"Green" Tourism "Green" tourism has become a recent theme across travel and tourism's marketing and professional literatures. Numerous new terms have been coined to describe this green tourism phenomenon: ecotourism, sustainable tourism, responsible tourism, adventure tourism, soft tourism, alternative tourism and low-impact tourism. The popularity of the green tourism theme is evidence that some change is taking place, but its nature and implications are far from clear. Most recent available demand and supply data do not suggest that green tourism has as yet produced significant shifts in either consumer tastes or product offerings. It is also unclear whether green tourism is really something truly new or simply a relabeling of products traditionally referred to as natural resources-based tourism or outdoor recreation. Green tourism most likely is rooted in increased global environmental awareness. As we have seen, environmental concerns can significantly influence public policy and consumer behavior. Thus, though green tourism to date appears to be primarily a literary construct, it may be a precursor of change that will have significant impacts on the travel and tourism industry in the future.
National Tourism The U.S. Travel Data Center (USTDC) is the source of the most comprehensive and reliable information on travel activity in the United States. As previously noted, the center's focus is on the broader travel industry rather than tourism per se. The USTDC defines travel to be a trip away from home of more than 100 miles, thereby eliminating a significant amount of tourism from its information bases. USTDC databases are more reflective of travel patterns in northern Michigan than in its southern counties, where shorter day trips constitute a greater proportion of tourism activity.
The USTDC produces a variety of reports each year on U.S. travel, which are recommended reading for those interested in further detail than we can provide here. In 1991, travelers in the United States spent $334 billion, an increase of 7.9 percent over the preceding year (U.S. Travel Data Center, 1992). Travelers spent almost $70 billion each on public transportation and food service, $50 billion each on private automobile transport and lodging, and about $25 billion each on retail purchases and entertainment. When the USTDC applied its Travel Economic Impact Model to account for the direct and indirect impacts of traveler spending, it yielded an estimate of a $698 billion total impact on the U.S. economy.
Direct and indirect traveler expenditures in 1991 generated almost 11 million jobs. This estimate of total employment in the U.S. travel industry is of the same order of magnitude provided in another more recent study. Wharton Econometric Forecasting Associates (World Travel and Tourism Council, 1993) estimated that the U.S. travel and tourism industry would employ about 12 million people in 1994. As illustrated in Figure 2, the U.S. Travel Data Center (Cook, 1992) estimates that during the decade of the 1980s, employment in the travel industry grew by 43.4 percent, roughly double the growth rate in total U.S. employment.
Domestic travel continues to dominate the U.S. travel industry. Recent trends in domestic travel are summarized below (U.S. Travel Data Center, 1993b). Between 1982 and 1992, domestic travel of 100 miles or more in one-way distance grew from 802 million person-trips to 1,063 million person-trips, an increase of about 33 percent or about 3 percent per year. About 70 percent of all trips taken in 1992 were for pleasure purposes, and more than 75 percent involved auto/truck/RV as the primary mode of transportation. The volume of pleasure trips increased by about 40 percent between 1982 and 1992, and person-trips by auto/truck/RV increased by about 25 percent over this same period of time. Over this period, the duration of trips declined fairly steadily from about five to about four nights. The typical U.S. household in 1992 took more trips but shorter trips than it did in 1982. The number of vacation trips taken increased by about 45 percent over the decade.
The East North Central (ENC) U.S. Census region (Michigan, Indiana, Illinois, Ohio and Wisconsin) was the origin of 17 percent of the person-trips taken in 1992 but received only 13 percent of these trips taken. The ENC region generated almost 50 million more person-trips than it received; thus, travel represents a net loss to this region's economy as its residents spend more traveling outside the region than do visitors attracted from other regions. This regional travel deficit is somewhat offset by international visits to the region, but their numbers are too small to materially alter the conclusion that the ENC region ranks No. 1 among the nine U.S. Census regions in the number of resident travelers lost to other regions.
International travel to the United States has been growing more rapidly than travel within the domestic market. Arrivals increased from 34.1 million in 1988 to 45.9 million in 1992, a 45 percent increase (U.S. Travel and Tourism Administration, 1993). Still, international travelers constitute only 4 to 5 percent of the total U.S. travel market. International travelers constitute a most attractive market segment, however, because their average per day expenditures are more than double what domestic travelers spend. Beginning in about 1989, the U.S. balance of payments in travel expenditures shifted from negative to positive, though the balance in foreign visitors to the United States vs. U.S. visitors abroad did not shift into positive territory until a couple of years later. The strongest causal factor in these shifts has been the weak U.S. currency, especially compared with European and Asian currencies.
The above brief review of the U.S. travel industry leads to several general conclusions. First, the U.S. travel industry is large, contributing about 10 percent to U.S. GDP and employment. Second, it has been growing at a rate generally higher than that of the overall U.S. economy. Third, the U.S. position in international travel and tourism trade is a net positive. In fact, it was the leading contributor to the positive balance of trade in services that the U.S. enjoyed in 1992. Finally, it is difficult to assess the natural resources-based tourism sector of the overall U.S. travel industry from the data presented. This sector clearly accounts for a significant proportion of overall U.S. travel activity, and available evidence, largely anecdotal, suggests its growth parallels that of the overall U.S. travel industry.
Many of the same factors noted for international travel underlie the observed changes in U.S. travel. Though specific scientific literature addressing causal factors underlying travel demand at the national level could not be found, considerable literature exists that covers regions within the United States and selected travel/tourism activities. Travel activity has been generally found to increase with increases in population, availability of leisure time, mobility and disposable income. Though all of these have increased since WWII, growth in recent years has moderated and, in some cases, may have ceased. Thus, something in addition to these four standards has been fueling recent U.S. travel industry growth. Declining prices, too, are not a factor in the national marketplace-most indices of travel costs suggest that travel prices have increased slightly faster than the overall cost of living.
My interpretation of societal trends suggests that three additional forces appear to be important in recent travel activity growth. The most important of these are linked to demographic changes other than population changes per se. Smaller families that are more dispersed nationally, an aging population that is relatively wealthy and healthy, and dual wage earner households have generated more potential travelers than overall slow growth in the U.S. population would suggest. Secondly, because of higher educations, increased awareness of travel opportunities and a growing felt need to escape the pressures of modern lifestyles, more and more Americans are turning to travel as a preferred leisure pursuit.
Evidence of Americans' growing taste for travel is widely evident. Once the domain of a few magazines, such as National Geographic, travel is now the focus of a host of travel-oriented magazines, and still more have added travel sections to entice readers. Travel has become the featured topic in conversations between family members, friends and first-time acquaintances. Travel advertising has grown rapidly, and travel has increasingly become the backdrop for selling just about every other imaginable product and service. Finally, the economic phenomenon we have come to know as globalization has provided both greater reason to travel for business purposes and greater interest in visiting friends and relatives, who have become more dispersed geographically because of the forces of globalization. The net result of all of these forces is that we have become a more mobile society and generally like it that way.
Michigan Tourism One encounters a "feast or famine" situation when searching for information about Michigan tourism. Most of what is known about the industry is summarized in Travel and Tourism in Michigan: A Statistical Profile (Spotts, ed., 1991). Indeed, it is a challenge to summarize this publication's nearly 600 pages and more than 350 tables and figures. Yet, some of the most elemental data needed to assess Michigan's tourism industry is not available.
The most striking example of what is unavailable is the lack of any reliable estimate of the numbers of people traveling in Michigan each year. The following quote is excerpted from the chapter I authored in the "Profile" (Holecek, 1991). It provides a good perspective on the challenge anyone faces in assessing travel in Michigan: Developing a reliable composite overview of travel in Michigan is a major research undertaking. It is very expensive and presents formidable methodological challenges.
Although the results have broad utility, no simple mechanism has emerged for sharing the costs of such research across many thousands of potential users. This explains why the only comprehensive Michigan travel research studies have been funded by government agencies. The results of these studies are useful for many purposes, but inconsistencies across studies significantly limit comparability. Moreover, their wide dissemination has not been a priority for the agencies involved. In the main, the studies have been conducted to address current internal agency needs for specific types of information. Creating and funding a comprehensive and reliable on-going research program to assess the characteristics of and trends in Michigan's travel market remains one of the most worthwhile objectives for government and the travel industry to achieve. Other reports will be providing assessments of highly significant and specific sectors of Michigan's natural resources-based tourism industry so the focus here will be on the composite travel and tourism industry. The goal is to provide enough information to convey its overall scale and economic importance, some of its geographic attributes, how it is changing over time, and some of the more significant challenges and opportunities it faces.
Most Michigan residents perceive tourism as a northern Michigan industry, and their suspicions are supported by highways often crowded with tourists headed north to boat, fish, golf, camp, ski, snowmobile or participate in some other seasonal activity. Public lands in Michigan and private lands open to the public are concentrated in northern Michigan, whereas the population is concentrated in southern Michigan. Northern Michigan's concentration of public lands and waters is a major attraction that draws residents of southern Michigan and of the neighboring states of Illinois, Indiana and Ohio.
Tourism in Michigan is far from being a northern Michigan industry, however. As illustrated in Figure 3, nearly 40 percent of the 96,503 guest rooms available in Michigan's commercial lodging establishments are located in only five southern Michigan counties: Wayne, Oakland, Kent, Ingham and Washtenaw. Wayne county's 15,795 commercial guest rooms exceed the total number of guest rooms available in the seven northern counties containing the most rooms: Grand Traverse (3,161), Mackinac (2,961), Cheboygan (2,679), Chippewa (1,799), Emmet (1,798), Gogebic (1,684) and Roscommon (1,298). Reliable estimates of tourist expenditures in each county are not available, but available data on employment in tourism exhibit a distribution pattern that closely parallels that of guest room distribution. Thus, tourism in Michigan is not the exclusive domain of its northernmost counties. Indeed, in terms of investment, employment generated and tourist expenditures captured, the industry is clearly concentrated in southern Michigan.
Tourism may be concentrated in southern Michigan when we look at its importance to the statewide economy but, as Figure 4 shows, many northern Michigan counties depend far more on tourism to provide jobs than do southern counties. Tourism provides jobs for at least 50 out of every 1,000 residents in seven northern Michigan counties, led by Mackinac County's 116.5/1,000 and Grand Traverse County's 81.1/1,000. This level of dependence is approached in only four southern counties, led by Oakland County at 49.5/1,000 and Ingham County at 45.2/1,000. Figure 5 illustrates the pattern of dependency on tourism as a provider of jobs-the most dependent counties appear in darker shades. The northern counties that depend most on tourism are those that serve as major tourism destinations (e.g., Keweenaw, Grand Traverse and Mackinac) or those located along major tourism corridors that offer opportunities to serve tourists on the way to other destinations, as well as those intending to stay in the immediate area (e.g. Roscommon County.)
The relative dependency of individual counties' economies on tourism can be best illustrated by mapping the distribution of guest rooms on the basis of rooms per 1,000 residents in each county. The high concentration of guest rooms in southern counties can be explained in part by large resident populations and businesses that utilize them to house visiting friends and relatives or business associates. The influence of local use in the distribution of commercial lodging is greatly reduced when room distribution is measured on a per 1,000 residents basis, as presented in Figure 6. Counties with relatively high ratios of guest rooms/1,000 residents are concentrated in northern Michigan and southern coastal counties along Lake Michigan and Lake Huron. There is an obvious correlation between the concentration of commercial lodging's dependency on non-resident travelers as depicted in Figure 6 and the distribution of Michigan's natural resources-based tourism industry.
Though the data underlying Figure 6 are rooms/1,000 residents, the pattern that emerges reflects Michigan's natural resources-based tourism industry. The state's natural resources-based attractions, natural resources-orien employment and tourists' expenditures linked to natural resources are all similarly distributed. Figure 6, therefore, serves as a visual composite for Michigan's natural resources-based tourism industry. It is important to recall, however, that tourism in Michigan is diversified and in its entirety is distributed quite differently than Figure 6 depicts. In its most recent report on the economic impact of travel on state economies, the U.S. Travel Data Center (1993) reported that domestic travelers spent $6.74 billion in Michigan, and that these expenditures provided jobs for 114,000 Michigan residents. The USTDC counts only trips greater than 100 miles in distance, so these statistics understate the scale of Michigan's travel industry.
Stynes (1991), using employment data provided by the Michigan Employment Services Commission, estimated that travel-related businesses employed between 278,000 (January) and 320,000 (August) people in 1987. A significant percentage of these jobs results from local rather than tourist business, so the latter estimate overstates the number of jobs directly linked to tourists' expenditures.
Lacking more accurate and consistent data and accounting for the considerable growth registered recently, we will estimate that traveler expenditures probably were in the range of $10 billion to $12 billion in 1993, and the industry provided jobs for 125,000 to 150,000 Michigan residents that year. Michigan's population base ranks it eighth among the 50 states. Visiting friends and relatives is the leading purpose of travel in the United States, so all heavily populated states rank high in the numbers of travelers they attract. Therefore, it is necessary to factor in population differences to assess how Michigan's travel industry compares with that of other states.
In 1991, Michigan ranked 13th in domestic expenditures collected from travelers and 12th in employment that these expenditures generated (U.S. Travel Data Center, 1993). That both are considerably lower than its population ranking suggests that Michigan is a net loser in the national travel market. Most of this loss occurs during winter, when Michigan residents flock to states with warmer climates. Florida tops the list of out-of-state less than competitive position in the U.S. domestic travel market is further illustrated by its ranking as 47th out of 50 states in domestic travel expenditures captured per capita and 48th out of 50 states in travel-gene are skewed by the Michigan's economy's heavy dependency on high wage manufacturing jobs.
In summary, travel is very significant to the Michigan economy but less significant than it is in almost every other state in the United States. Travel in Michigan, like international and national travel, has been increasing in recent years. Trends in Michigan highway traffic counts and hotel and motel sales and use tax collections, as depicted in Figure 7, indicate that both travel volume and travel-related expenditures have been growing (Williams and Spotts, 1992). Traffic counts, which indicate change in travel volume/visitor numbers, have been increasing at an average rate of 4.7 percent per year since 1985, while hotel and motel sales, use, and sales plus use tax collections (indicative of travel expenditures) have been increasing by 8.3, 3.3 and 5.5 percent, respectively. Over this time period, the hotel and motel sector has been operating under conditions of oversupply spawned by tax-induced overbuilding in the late 1980s. Room rental rates have not kept pace with inflation and actually declined between 1989 and 1992. Thus, overall travel expenditures have likely been more robust than the 5.5 percent increase in sales plus use tax collections indicates.
It appears from these data that Michigan's travel industry is growing at about 5 percent per year in traveler numbers and at about 7 percent per year in traveler expenditures. Recent growth in Michigan travel activity appears to be tracking recent international and national travel activity trends. This indicates that Michigan is keeping pace with overall growth in the travel market. Since 1977, however, when the last comprehensive national travel census was conducted, some evidence suggests that Michigan's travel industry has grown but its market share may in fact have declined. In 1977, Michigan ranked 45th in visitor numbers relative to the state's population and 46th in lodging industry receipts per capita (Holecek et al., 1981). If we assume the latter reflects overall travel expenditures, comparing Michigan's 46th rank in 1977 and its 1991 rank of 47th suggests that some loss in market share may have occurred.
The evidence available to verify Michigan's possible loss of travel market share over the past 14 to 15 years is very limited, but available information indicates that Michigan's share of the U.S. domestic market is very low when its population base is accounted for, and more importantly, that Michigan residents traveling to other states spend more in those states than do visitors to Michigan. In other words, Michigan's balance of payments in direct travel expenditures is strongly negative. The backbone of Michigan's travel industry is natural resources-based tourism. In 1983-84, trips of 100 miles or more were distributed across the following purposes for travel: visiting friends and relatives, 38 percent; other pleasure, 38 percent; business and convention, 15 percent; and other, 11 percent (Holecek, 1991). In a study focusing on pleasure trips, travel purposes were found to be: visiting friends and relatives, 45 percent; outdoor recreation and sightseeing, 43 percent; and other, 14 percent (Holecek, 1991).
Interpolating among data sources suggests that roughly 40 percent of Michigan's travel activity is linked to natural resources-based travel, 40 percent involves visiting friends and relatives, and 20 percent is business-related. In 1977, Michigan ranked third in the nation in "travel in pursuit of outdoor recreation" and sixth in sightseeing (Holecek et al., 1981). Without its strong natural resources base to serve as an attraction, Michigan's travel industry would be even less competitive, given its relative isolation from north-south a manmade attractions (e.g., Disney World or Mall of America). The following list of distinguishing features of travel and tourism in Michigan selected from Spotts (1991) provides further evidence of the role of natural resources in this state's travel and tourism industry.
Michigan ranks #1 in the United States in number of public golf courses. Michigan ranks #2 in the United States in number of downhill ski areas.
Michigan ranks #5 in the United States in number of state parks.
Michigan ranks #1 in the United States in number of modern campsites in its state parks.
Michigan has more state land available for recreation than any other state in the eastern United States except Florida.
Michigan's state parks rank #2 in number of overnight stays.
Michigan ranks 3 in hunting license sales.
Michigan ranks 3 in fishing license sales.
Michigan ranks 1 in number of licensed boats.
Michigan ranks 1 in number of licensed snowmobiles.
Michigan ranks 2 in recreational vehicle shipments.
Finally, in assessing trends and current conditions, it is useful to relate natural resources-based tourism to a couple of broader societal trends, which, if they persist, may have significant future implications.
During the 1980s, Michigan's total population remained relatively stable, but population increased considerably in some northern Michigan counties. Growth has been most rapid in counties perceived as significant generators of tourism activity. Population growth in these counties has also been linked to their ability to attract retirees. Also intertwined in population growth in these counties is the growing importance of "quality of life" considerations in business and personal location decisions. The latter has become an increasingly important criterion in both individual and business location decisions as transportation and communications systems and the nature of commerce have evolved. The commerce of this nation is no longer linked so closely to its urban centers, railway hubs and superhighway interchanges.
In the 1990s, employment statistics indicate that approximately 80 percent of people employed in the United States work in service industries, many of which are thriving in what might be described as rural America. Remote location for many individuals and businesses is no longer a competitive disadvantage in the world of commerce, so they can base location decisions on alternative locations' relative attractiveness as places to live and work. Concentrations of population growth across Michigan and the United States suggest that, given the choice via retirement or advances in communications and transportation systems, people and businesses will choose to locate where they like to play. Thus, today's tourism destinations are high potential areas for future population and overall economic growth.
Assumptions About the Late 1990s Extrapolating from recent trends suggests that travel is likely to continue to grow both nationally and internationally, driven by very favorable demographics and somewhat less certain but generally expected economic growth. Continued globalization, probably at an even faster pace than we have experienced over the past decade, and enhanced communications and transportation systems will fuel growth in travel.
Politics, in its broadest sense, is the greatest unknown and the greatest potentially negative influence on the international demand for travel over the next decade or so. Political tensions that directly restrict intercountry travel or indirectly affect it via threats of terrorism or disruption in commerce, especially involving energy, would dampen the upward trend in international travel despite growing strength in underlying demand. Michigan is not, however, a primary participant in either the national or the international (with the exception of neighboring Canada) travel market. Instead, it depends primarily on a regional market for travelers that includes Michigan, Illinois, Ohio, Indiana and Ontario. Very considerable and very effective new government and private sector investment would be needed to make Michigan's travel and tourism industry more competitive in the national and international travel markets. Such a major shift in economic development strategy is unlikely, so changes in demand factors within Michigan and adjacent states and Ontario are most important to the industry's future.
Demand Assumptions Population growth is expected to be at best modest in Michigan and other areas within Michigan's primary travel market. However, above average growth in age groups with a high propensity to travel (e.g., seniors) should boost the potential traveler market above the level of overall regional population growth. Though the regional economy has rebounded to the extent that it has shaken its "rust belt" image, it remains a highly manufacturing-dependent region subject to major fluctuations as the overall national and global economies expand and contract. Globalization will continue to erode the wage advantages that many Americans hold over counterparts in countries with which we trade. The U.S. economy, strapped with record levels of government debt, a huge and growing total trade deficit with the rest of the world, and historically low rates of savings and investment, can not be expected to grow rapidly. The regional economy will struggle to keep pace, so, at best, only modest growth in average personal disposable income can be expected in Michigan's prime travel market over the next five to ten years.
Supply Assumptions The dependence of Michigan's travel industry on natural resources to attract visitors indicates that continued access to and quality of these resources are crucial to the industry's future. As more and more retirees and others not dependent on local natural resources for their livelihoods migrate to areas where Michigan's natural resources serve to attract tourists, continued access for tourists and tourist-related development will become increasingly problematic. Tourist access is very dependent on the receptivity of locals to the presence of tourists "on their turf." Residents, not tourists, vote in local elections, serve on local planning and zoning committees, and have the most influence on those they elect to state and federal government positions. Recent trends in state and local environmental policies and regulations suggest that tourist business developers and tourists themselves will face growing challenges in attempts to access natural resources at the same time that more policies and regulations take effect to protect natural resource quality. If the balance continues to shift toward maintenance of quality over access considerations, Michigan's travel industry growth will be dampened considerably.
One of the most rapidly growing sectors in the travel industry is gaming. States from coast to coast are liberalizing gaming regulations to tap into this growing market. Michigan has traditionally yielded its serious resident gaming market to states such as Nevada, but now it must also contend with gaming in Illinois, Iowa, Minnesota and Ontario. With gaming conveniently available just outside its borders, Michigan may lose even more gaming-related business unless more opportunities are made available in state. The labor-intensive travel industry must have an abundant supply of workers to expand in response to growth in travel demand. It is an industry with a pronounced annual business cycle that generally peaks during the warm season. It experiences weekly peaks around weekends. Traditionally, the industry has relied on young people to fill its entry-level positions and for seasonal and part-time workers to contend with peaks in business activity. The numbers of young people have been generally adequate, especially since, in many communities, very few of the part-time, seasonal jobs often sought by young people have been available outside of the travel industry. Shifting demographics has resulted in smaller numbers of young people entering the labor force and a shrinking travel industry labor pool. The industry will respond in various ways; the net result will be an average age increase across the travel industry's work force and wage-induced travel price increases above those levied across all consumer purchases.
After labor, the next most severe constraint on travel industry expansion may be availability of capital within both the private and the public sectors. Government investment in transportation infrastructure is needed for efficient and safe travel. Highway systems are particularly important to Michigan's travel industry_they currently carry almost 90 percent of the state's tourist traffic. Northern Michigan's competitive position in both national and international markets is constrained by limited air service. Limited air service is a particular problem for some businesses, such as those seeking to attract major international or national conventions. The overall capital scenario for the remaining 1990s is assumed to be neutral to slightly negative for expanding the public infrastructure and private sector facilities required by an expanding travel industry.
Technology Assumptions The competitiveness of Michigan's travel industry over the coming five to ten years will also hinge in part on technological developments. Communications and computer developments have provided for an information-based productivity revolution that is already widely evident in manufacturing and poised to take root across service industries as well. Organizations of all types are learning that overhead costs associated with information exchange through the organization can be significantly reduced by buying and networking computers to replace middle managers whose primary function has been to pass information up and down the layers of the typical vertically organized system.
Today's more efficient organizations are structured horizontally and require fewer employees to deliver higher quality products and services. These "leaner" organizations also tend to be more in tune with market changes and can respond more quickly to them. The travel industry has lagged behind in adopting these new technologies and so is not positioned to exploit them to produce more with less. Relatively slow adoption of new technologies will result in relatively higher travel prices vis a vis other products and services, as well as Michigan travel products and services that are perceived to be somewhat below quality expectations and out of tune with market preferences. On the other hand, should Michigan choose to invest in information generation and delivery systems more quickly, consistently and at higher levels, it could achieve a significant competitive edge in the market for travelers. Michigan appears to be ahead of the competition in the technology arena, with a state-of- came on line in 1994 and research support systems that are somewhat superior to those available in many other states. If Michigan continues to invest in technology, it will become an increasingly positive factor for Michigan's travel industry.
Policy/Regulation Assumptions Changes in federal and state travel industry-related policies and regulations will have considerable influence on the future competitiveness of Michigan's travel industry. It is probable that cross-border constraints on travel will continue to erode, thereby further stimulating inter-country travel for all purposes. Expanding recognition of the economic importance and growth potential of tourism will stimulate governments to expand existing policies and formulate new ones to enhance the competitiveness of their tourism industries. At the same time, governments will expand efforts to generate more tax revenues from tourists to offset their burden on government-provided services and to take advantage of a politically safe source of new revenue for governments' general funds. Therefore, almost all governments are likely to expend more money to attract tourists and to tax them more heavily. These actions will be perceived as contradictory by travelers (that government, on the one hand, will be more aggressively inviting tourists to visit while, on the other hand, asking them to pay more for the privilege via new taxes.)
States that are sensitive to this inherent contradiction will be more competitive than those that perceive tourists as primarily non-voters to be taxed indiscriminately. One tax that appears certain to grow over the next decade is the fuel tax. At both the state and federal levels, this tax is likely to increase more rapidly than overall consumer prices. When added to the cost of labor-induced price increases, this tax increase makes it even more likely that travel prices will grow considerably faster than most other prices.
Projections to the Year 2000 No one can predict with any degree of precision how all of the factors introduced above will interact to produce future change for Michigan's travel industry. Still, travel (international, national and in-state) has grown dramatically and fairly consistently. A simple extrapolation of travel indicator variables would clearly indicate a growth rate for Michigan's travel industry of 5 to 10 percent per year to the year 2000. This, of course, derives from a net status quo assumption across the many factors influencing the travel industry. Is this a reasonable assumption? Or is there evidence to suggest that a combination of trends in negative factors will dampen growth below the extrapolated historical trend? Or is it possible that some combination of positive factors will boost travel growth above this trend?
Negative factors that merit consideration include probable higher relative prices, environmental regulations that limit development, availability of labor, limited population growth in Michigan's prime market area, and growing global competition. Balancing these are a host of positive trends, including growth in age groups with a high propensity to travel, continued improvement in travel's safety and comfort, and a growing interest in travel as a leisure pursuit.
My "reading of the tea leaves" suggests that Michigan's travel industry will continue to grow through the year 2000 but at a rate somewhat slower than global and national growth rates. Natural resources-based tourism will largely fuel Michigan's travel industry growth. However, this state's geographical location, climate and relatively weak competitive position in rapidly growing segments of the overall travel industry will continue to hamper Michigan's ability to compete outside its traditional and largely regional markets. Even maintaining its share of its regional market may be difficult in the face of growing competition. There are strategies that Michigan could pursue to materially support its tourism industry in both the short run and beyond. The most common path taken to boost tourism in states and local regions has been to focus on marketing investments, particularly the promotion component of the marketing mix.
State travel office personnel anxiously await the U.S. Travel Data Center's annual report on travel in the 50 states to see how their travel advertising budgets compare to those of other states, especially those in closest proximity. Should the report indicate that any given state is falling behind its competitors, a lobbying frenzy often follows to push for emergency supplemental appropriations to meet the competition. Yet, few states exhibit a similar level of enthusiasm for conducting research to evaluate the effectiveness of their advertising investments or to better target them to optimize returns. The recent passage of P.A. 59 has made local convention and visitor bureaus significant players in promoting their travel attractions. The newfound monies (approximately $7 million in 1993), generated from room assessments, are earmarked for promotion. The marketing research required to optimize return on investment of these millions of dollars is rarely undertaken.
Though promotion is clearly a factor in marketing Michigan tourism, a marketing strategy focused exclusively on it is unlikely to be optimal. In fact, such a one-dimensional strategy indicates an industry oriented toward selling, rather than toward addressing the needs and wants of its customers. Marketing theory and empirical evidence strongly indicate that long-term success in the marketplace hinges on adopting a customer orientation. Sales-oriented businesses and industries ultimately fail because their introverted focus eventually leaves them with products that fewer and fewer customers need and ever-increasing advertising efforts can not convince enough customers to buy.
For Michigan to gain market share, especially in the national and international travel markets, its travel and tourism industry must become more broadly oriented to the needs of these markets. It must also expand its marketing strategy beyond promotion to include the full range of elements in the marketing mix. The marketing mix contains four elements: promotion, price, product and place/location. Each must be weighed from the consumer's perspective to develop an effective marketing strategy. Before this can be accomplished, information about the markets must be collected, and the industry must have the marketing knowledge necessary to make good use of research outputs to develop and implement effective marketing strategies.
Michigan's travel and tourism industry appears to lack the orientation, information and expertise required to employ its existing marketing resources in an optimal manner. These limitations present an excellent opportunity for the Michigan Agricultural Experiment Station (MAES) and Michigan State University Extension (MSUE) to contribute materially to improving the vitality of this significant and growing industry. It is not appropriate or possible here to pose a detailed MSU response to this opportunity, but a few illustrations will help to bring some elements of a possible response strategy into focus.
For example, the industry's general lack of the appropriate customer orientation and expertise in developing effective marketing plans presents a target for MSU's educational programming. This would be a formidable challenge because of the many thousands of small businesses and other organizations involved in the industry that currently lack a high degree of understanding of marketing principles or how to employ them effectively. Most involved in the industry have limited formal education in the travel and tourism field, or even business or marketing, and the opportunities for such education are relatively few. Furthermore, many in the industry would not readily accept the suggestion that they might benefit from additional education and reorientation: indeed, some will perceive it as a threat.
There is also a major opportunity for MSU to assist the industry via research and demonstration programs. The information base relevant to Michigan's travel and tourism industry is minimal and, with the exception of MSU's on-going research programs, no other public or privately sponsored on-going research programs are designed to support the industry's specific needs for objective and timely information. Many in the industry are unlikely to agree that they need more information for developing improved marketing strategies. Rather, they would argue that they simply need more money for advertising what they have to sell. In essence, then, for MSU to effectively address this opportunity to help the Michigan travel and tourism industry, it also must develop a carefully designed and customer/client-oriented strategy for delivering its services.
Increasing research investment alone does not appear to be an optimal strategy, even though more research-based information is clearly needed. A program is needed that includes leadership development programming to "educate" key individuals and to develop a partnership network, education/technical assistance programs to expand skill levels and assist in the use of information, and research to develop needed information and to demonstrate its value and use. In other words, our overall strategy should include both market readiness and product development dimensions if it is to achieve optimal return on investment.
Current and Emerging Issues and Research Needs
In this section, current and emerging issues confronting Michigan's travel and tourism industry will be highlighted, and possible roles that research might play toward their resolution will be noted. No attempt will be made to prioritize the relative importance of the issues, and the order in which issues are introduced has no bearing on their perceived relative importance.
Understanding and Coping with Impacts
The central issue here is that we know very little about cause and effect with respect to travel and tourism. More often than not, this lack of understanding involves key and fundamental elements of information needed to make sound investment, policy and marketing decisions_it is not simply information of secondary importance. Because of all that is unknown, management and policy decision making across this industry is more of an intuition-based art form than an information-based science. The research possibilities involved here are far too numerous to list, though we have identified one of extreme importance: the industry lacks fundamental information about its markets, the kind of information generated from an on-going marketing survey of households. This research is too expensive for most individual businesses to support, though they and others, including other researchers, would potentially benefit. Specifically, what is needed is a recurring household survey in Michigan's primary market (i.e., Michigan and adjacent states plus Ontario) using a base research instrument (to identify and track trends) with additions designed to address timely questions (e.g., interest in a potential new product offering).
Packaging and Co-op Marketing
The per capita cost of advertising Michigan as a travel destination and of promoting one's individual business to potential customers increases dramatically with distance. As distance increases, the number of households increases, but the number of potential customers decreases. As noted, Michigan has not been an effective competitor outside its regional market, and future growth in the travel market appears stronger outside this region. How, then, do the overall Michigan travel and tourism industry and specific Michigan businesses generate awareness of their products, given the high costs of advertising nationally and globally? Several strategies come to mind. First, advertising dollars might be pooled to generate a larger overall advertising budget. Second, the industry and individual firms could single out particularly high potential distant markets and concentrate on them rather than the entire nation or the globe. Third, there may be alternative channels through which to market. Research, demonstration and evaluation all are needed to sort out the many options available.
Research is needed to identify the most promising alternatives; demonstration and evaluation are needed to further reduce the range of options; and additional research is needed to improve those options found to be effective. The "Quality" of Tourism Industry Jobs One of the more perplexing questions encountered under the rubric of economic development, especially when the focus is travel and tourism, is: "But are these quality jobs?" A labor economist once defined a quality job as "one which pays someone more than her/his services are worth." It was not his intent to be purely facetious. He went on to point out that what one is paid has more to do with where she/he might have been born or reside, who elected to offer her/him a job, etc., than how hard she/he works or how educated and/or experienced she/he may be. By his definition, quality jobs are the exception rather than the rule. Such jobs are also less likely to persist over one's full career than they were earlier in this century, when countries and industries were more sheltered from both the ravages and the benefits of global competition.
High wage jobs tend to be in capital-intensive industries with above average productivity growth, such as the auto, steel and energy production industries. The dark side of productivity growth from an employment perspective is that these industries are producing more product with less and less labor and more and more labor-saving capital equipment. In the industries just noted, a single wage earner in 1993 produced an average of $360,000 worth of product in the auto industry, $210,000 in steel, and $480,000 in the energy industry. New demand for these industries' products would need to develop in these same amounts to generate a single new job. The combination of global competition, high capital requirements, continuing productivity growth and limited capacity of consumers to absorb (and pay for) more autos, steel and energy combine to indicate that these industries (and most others) will not create large numbers of quality jobs in the future. The vast majority of wage earners in the United States are employed in labor-intensive service industries, including travel and tourism.
Tracking employment trends to include salaries and benefits paid is complicated by government data collection systems developed decades ago to reflect then dominant manufacturing and extractive industries. Lack of objective information and the prevalence of misinformation about travel and tourism industry employment combine to handicap informed planning and policy development involving the service sectors of our economy. Governments have been aware of the limitations in the employment data systems for some time, so help from existing sources is unlikely. If we desire more insight into the quality of jobs in travel and tourism, we must conduct research to develop, test and implement appropriate research methodologies.
Job Retention and Skill Enhancement
Many senior travel and tourism industry leaders have suggested that the employment issue of the future for this industry is an impending shortage of labor. Though it has not been the subject of extensive study, employment turnover in the travel and tourism industry appears to be exceptionally high, and filling even low-skill winter downhill ski season, for example, several Michigan resorts reported that they had yet to fill all of their open positions. The basic product delivered by the travel and tourism industry is dominated by a highly important service dimension. Service quality and consistency are very important when competing in travel markets.
Maintaining service quality in the face of high employment turnover and a work force with minimal experience and skills is a constant problem across this industry. In addition to studies of industrywide total employment and employee compensation paid, there is also a need for more studies of the individuals employed in this industry. We need answers to such questions as: Why did they seek employment? What prior work experience have they had? What do they like and dislike about their jobs? How do they compare with employees in other occupations? This information is fundamental for dealing with the causes of employee turnover and to developing strategies to enhance service quality as a means to compete more effectively.
Product Development
With respect to the four elements of the marketing mix_price, promotion, place/location and product_Michigan's tourism offerings appear to be competitively priced and rival competitors in how they are promoted, though none achieve high standards in this regard. Probably little can be done to offset locational disadvantages. This leaves "the product" as a potentially rewarding focus for further study. The fundamental question is: How can Michigan alter its travel and tourism product line to attract more tourists? Again, supporting information currently available is minimal, and a wide range of useful research could be suggested. Among the more promising possibilities is the recurring household survey discussed earlier.
Technology and Tourism
This is a particularly exciting avenue for study because technology is developing very rapidly, the travel and tourism industry has been slow to adapt to and adopt new technology, and few understand its implications and potential. Technology will not only alter how traveler services are provided (e.g., customized "on-line" travel itineraries) and boost productivity and/or product quality, but also may revolutionize how MSU and other organizations service their clientele. Those businesses, communities and states that learn to capitalize on the potential of emerging technologies will hold a distinct competitive edge in the future. Though this is intuitively appealing, those involved in the travel and tourism industry face a major challenge in selecting from the many options becoming available. Considerable cost is always involved in these choices and, of course, above average risk because they involve unproven new technology. Potentially greater costs and risks are associated with inaction, however, because failure to adopt or adapt to new technology can result in loss of the competitive edge needed to expand or simply to maintain market share.
There are obviously many research opportunities to help the industry make more informed selections from among its technology options. Research is also needed to assess how MSU can utilize technology to better service its many thousands of potential clients in this industry. As more and more of these potential clients become equipped with personal computers and modems, electronic delivery of research outputs not only is becoming increasingly feasible but also offers the possibility of servicing more people more quickly at lower cost. Clearly, resources available to MSU for servicing this industry are limited, especially in light of the scale of the industry. For these resources to have the maximum impact, we must find ways to reach a wider audience as cost effectively as possible. Emerging technologies appear to offer options for achieving this goal, and these merit serious consideration for future research investments.
Taxes and Tourism
The steady growth in tourism has not gone unnoticed by governments, and increasingly they appear inclined to target tourism as a relatively safe source of new tax revenues. Such taxes raise the price of the travel experience and are equivalent to placing a tax on exports, thereby reducing their appeal in competitive markets. Governments seldom place taxes on exports_rather, they tend to place tariffs on imports to protect domestic industry. Taxes on tourists function to penalize the domestic travel industry. This would appear to be counter to customary government economic development policy. What makes this behavior appealing to governments is that it offers the prospect of shifting some of the costs of government to outsiders who, of course, do not vote in local elections. Fairness and equity considerations aside, applying this tourist tax policy entails another central potential problem. At some level of tax, rising prices will reduce travel volume to the extent that direct tourism tax revenues decline. The break-even point occurs even sooner when one factors in indirect tax revenues associated with lost payroll taxes because fewer people are employed in servicing travelers and in construction and other sectors of the economy servicing the needs of tourism businesses, and lost local property tax revenues as travel business revenues decline, forcing some businesses to close and others to become less profitable, and as non-resident owners of vacation property seek more tax-friendly destinations to enjoy their leisure.
The impacts of taxing tourists, as suggested above, are not intuitively apparent nor easy to quantify even if necessary data are available, which is not the case in Michigan's travel industry. Under such circumstances, there is the real probability of seeing tourism tax policy development that will not only inequitably burden Michigan tourism businesses but also produce a net decrease in government revenues, thereby effectively shifting the cost of government in the direction of Michigan's resident population_exactly opposite the effect intended. Objective research is needed to produce information to raise the quality of the debate about how to tax tourists and how much. References
Cook, S.D. 1992. "Travel Trends in 1991." 1992 Outlook for Travel and Tourism. Washington, D.C.: U.S. Travel and Data Center.
Holecek, D.F. 1991. "Characteristics of Michigan's Travel Market." In: Travel and Tourism in Michigan: A Statistical Profile (second edition), D.M. Spotts (ed.). East Lansing, Mich.: Travel, Tourism and Recreation Resource Center of Michigan State University.
Holecek, D.F., Allen, D.J., and Mill, R.C. 1981. "Recreation Resources and Tourism in the Michigan Economy." In: Natural Resources in Michigan's Economic Future. East Lansing, Mich.: Cooperative Extension Service, Michigan State University.
Metelka, C.J. 1989. The Dictionary of Hospitality, Travel and Tourism (third edition). Albany, New York: Delmar Publishers, Inc.
Peterson, E. 1990. "Tourism: Planning, Promotion and Marketing." The Courier, No. 122, July-August. Brussels, Belgium: Commission of the European Communities.
Spotts, D.M. 1991. "Distinguishing Features of Travel and Tourism in Michigan." In: Travel and Tourism in Michigan: A Statistical Profile (second edition), D.M. Spotts (ed.). East Lansing, Mich.: Travel, Tourism and Recreation Resource Center of Michigan State University.
Spotts, D.M. (ed.) 1991. Travel and Tourism in Michigan: A Statistical Profile (second edition). East Lansing, Mich.: Travel, Tourism and Recreation Resource Center of Michigan State University.
Stynes, D.J. 1991. "Employment in Tourism-Related Businesses in Michigan." In: Travel and Tourism in Michigan: A Statistical Profile (second edition), D.M. Spotts (ed.). East Lansing, Mich.: Travel, Tourism and Recreation Resource Center of Michigan State University.
U.S. Travel Data Center. 1992. Travel printout. Vol. 21, No. 8. Washington, D.C.
U.S. Travel Data Center. 1993a. 1992 Travel Market Report: Full-Year Results from the National Travel Survey. Washington, D.C.
U.S. Travel Data Center. 1993b. Impact of Travel on State Economies, 1991. Washington, D.C.
U.S. Travel and Tourism Administration. 1993. 1993 Outlook for Travel and Tourism. Washington, D.C.: U.S. Travel Data Center.
Wharton Econometric Forecasting Associates. 1990. The Contribution of the World Travel and Tourism Industry to the Global Economy. New York: American Express Travel Related Services, Inc.
Williams, J., and Spotts, D.M. 1992. Michigan Travel Activity, July 1993 Report. East Lansing, Mich.: Travel, Tourism and Recreation Resource Center of Michigan State University.
World Travel and Tourism Council. 1993. Travel and Tourism: The World's Largest Employer. Brussels, Belgium.
Status and Potential of Michigan Natural Resources List of Reports
Table 1. International tourist arrivals worldwide (1950-1989).
International
Year Tourism Arrivals Percent rate Index
(thousands) of change (1950=100)
1950 25282.00 1960 699296.00 174.09 274.09 1965 112729.00 51.32 445.89 1970 159690.00 36.36 631.64 1975 214357.00 30.47 847.86 1980 284841.00 29.36 1122.66 1981 288848.00 1.41 1142.50 1982 286780.00 -0.72 1134.32 1983 284173.00 -0.91 1124.01 1984 312434.00 9.94 1235.80 1985 326501.00 4.50 1291.44 1986 334543.00 2.46 1323.25 1987 361165.00 7.96 1428.55 1988 393160.00 8.86 1555.10 1989 405306.00 3.09 1603.14
Table 2. International tourist receipts worldwide (1950-1989).
Figure 1. Distribution of total worldwide 1987 travel and tourism sales between personal and business/government-related travel ($ billion U.S.).
International
tourism receipts
Percent rate Index
Year ($ thousands U.S.) of
change (1950=100)
1950 2100
1960 6867 227.00 327.00
1965 11604 68.98 552.57
1970 17900 54.26 852.38
1975 40702 127.39 1938.19
1980 102372 151.51 4874.86
1981 104309 1.89 4967.10
1982 98634 -5.44 4696.86
1983 48395 -50.93 2304.52
1984 109832 126.95 5230.10
1985 115027 4.73 5477.48
1986 138705 20.58 6605.00
1987 169539 22.23 8073.29
1988 194171 14.53 9246.24
1989 209155 7.72 9959.76
TOTAL $1916
Business/Government:$637
Personal:$1279
Figure 2. Trend in U.S. travel-related employment vs. total U.S. industry employment.
Figure 3. Number of guest rooms in commercial lodging establishments by Michigan county, 1986.
Figure 4. Number of jobs in tourism-related businesses per 1,000 residents by Michigan county, 1987.
Figure 5. Tourism-related jobs per 1,000 residents by Michigan county, quintile distribution.
Figure 6. Guest rooms in commercial lodging establishments per 1,000 residents by Michigan county, quintile distribution.
Figure 7. Trends in Michigan highway traffic counts and hotel/motel sales plus use tax collections.
Reports on the Status and Potential of Michigan Natural Resources
This special report is one of a series (listed below) prepared for a project of the Michigan Agricultural Experiment Station (MAES) called the "Status and Potential of Michigan Natural Resources" (SAPMINR).
The project was designed to take an inventory of the current status of Michigan natural resources, identify emerging trends, and appraise future opportunities. The purpose was to assist MAES in establishing priorities and planning programs.
Both overview and focused topic assessments have been made. The overview reports provide background information on the political, economic, and social environments influencing Michigan natural resources. The focus reports examine specific resources, including timberland resources, fisheries and wildlife resources, parks and recreational resources, and land and water resources.
The SAPMINR project began in early 1993. At that time, interdisciplinary teams of MSU faculty members, graduate students, federal and state government officials, and others collaborated to develop preliminary reports. In March 1994, a SAPMINR conference took place during MSU's Agriculture and Natural Resources Week. The objective of the conference was to provide a public forum for discussion of the preliminary reports. Based on interaction with conference participants, the authors prepared the final drafts of the special reports (SR).
This report should not be considered final. Efforts to analyze the past and forecast the future are ongoing. Even so, this report is a base for dialogue on both the status and potential of Michigan natural resources.
To receive any of the reports listed below, contact: MSU Bulletin Office, Room 10B Agriculture Hall, Michigan State University, East Lansing, MI 48824-1039.
Overview Reports SR 67 --SAPMINR Highlights SR 68 --Michigan Natural Resources Policy SR 69 --Demographic, Social and Economic Trends SR 70 --Integrated Natural Resource Systems
Focus Reports SR 71 --Timber and Timberland Resources SR 72 --Lumber, Furniture, Composition Panels and Other Solidwood Products SR 73 --Pulp, Paper, Allied Products and Wood Energy SR 74 --Fisheries SR 75 --Wildlife SR 76 --Tourism SR 77 --Boating and Underwater Recreation SR 78 --Camping, Trails and Dispersed Recreation SR 79 --Water Resources SR 80 --Land Resources SR 81 --Nonrenewable Resources SR 82 --Natural Resources and Communities
Acknowledgements
This paper is truly the product of a team effort. Without the support of Bob Gast and the Michigan Agricultural Experiment Station, there would not have been a SAPMINR program. Without the leadership of Vince Bralts, SAPMINR would still only be an idea without an implementation strategy. Without the enthusiastic encouragement and guidance of Chuck Nelson, I doubt that I would have accepted the challenging assignment of lead author. The final product owes much of its substance to the major research outputs of others, especially Dan Spotts. He willingly contributed whatever we asked of him and, in the process, donated many hours to our cause. Joe Fridgen and Dan Stynes provided critical reviews of drafts of the manuscript. Carolyn Koenigsknecht cheerfully prepared what now must seem like countless versions of the manuscript. Editors in Outreach Communications have added greatly to the readability and appearance of the final manuscript. Finally, I was able to count on Teresa Herbowicz to assist with every aspect of the overall project.
The Michigan Agricultural Experiment Station is an equal opportunity employer and complies with Title VI of the Civil Rights Act of 1964 and Title IX of the Education Amendments of 1972.
printed on recycled paper using soy based ink
New_1:95_.75M_TCM_CW