Michigan State University Extension
Tourism Educational Materials - 33529766
06/06/02
Tourism and Your Community
Michigan State University
E0729
McIntosh, Robert
June 1979
CONTENTS
Benefit to the Community
Tourist Dollar Distribution
The Tourist Dollar Multiplier
Tracing Tourist Dollars
Planning for Tourism
Environmental Controls
Zoning
Building Codes
Responsibility and Leadership
Organizing for Tourism
Research and Development Committee
Making a Community Survey
Promotion Committee
Education Committee
Executive Committee
Tourism Hospitality
Reception. Services
Hospitality Schools
Getting Community Support
Michigan Week
By Robert W. McIntosh, Extension Specialist Tourism and
Recreation School of Hotel, Restaurant, and Institutional
Management
Tourism helps a community become more attractive and
prosperous - more attractive, because a community must be
appealing to draw and satisfy visitors; more prosperous,
because these visitors spend money.
Visitors who enjoy and appreciate your community are
likely to spend more money, come back again (perhaps
often), and recommend it to their friends. As a tourist
center becomes more popular, word spreads fast to create
a reputation as an attractive, hospitable, and satisfying
place to visit or spend a vacation.
Prospects are very favorable for further growth of
tourism in Michigan. Communities which most completely
prepare for tourists will benefit most.
BENEFIT TO THE COMMUNITY
Tourism is the science and business of attracting
visitors, accommodating and serving them. Like any
business or industry, it needs the moral and financial
support of the entire community. Although certain
businesses receive the bulk of the tourist dollar motels,
hotels, resorts, restaurants, gift shops, retail stores,
tourist attractions, gasoline stations and transportation
companies - secondary businesses also benefit.
This latter group includes construction firms, laundries,
food and other types of wholesalers and suppliers, public
utilities, entertainment places and local services -
barbers, hairdressers, printers, photographers, even
doctors and dentists. Thus, every one in the community
eventually benefits financially, either directly or
indirectly.
All levels of government benefit from tourist tax
dollars. Examples of taxes he may pay are sales, use,
gasoline, cigarette, liquor, and entertainment. The
tourist as a consumer helps pay real estate, business,
and income taxes since these are paid by the business
firms from customer revenues.
According to recent estimates, two travelers in Michigan
spend about $50 to $60 per day on lodging, meals,
recreation, sightseeing, and shopping. By attracting 100
additional visitors per day for a year, an established
tourist area would gain about 100 new, part or full-time
jobs, $960,000 in personal income, $192,000 in bank
deposits, and tax money to pay for the education of 42
children for one year.
The average amount spent per person-trip in the United
States is $88.92 according to a recent nationwide survey
of 24,000 households.
TOURIST DOLLAR DISTRIBUTION
American Automobile Association surveys show that the
typical automobile traveler's dollar is spent as follows:
Lodging: 26 cents
Transportation: 22 cents
Food: 25 cents
Entertainment and Recreation: 15 cents
Other Expenses: 12 cents
Note that a considerable share of the tourist dollar goes
to business other than lodging and food services.
THE TOURIST DOLLAR MULTIPLIER
Dr. Maynard Keynes, the English Economist (1883-1946) was
the first to expound on the "multiplier" and "rippling"
effect of additional inputs of money into a community.
This phenomenon also occurs with tourist spending.
According to Keynes, "marginal inputs" (money spent which
would not otherwise have entered the economic stream of
the' community), produces a multiplying effect above and
over the original amounts spent. This expanded income
effect occurs because the amounts initially spent are
re-spent a number of times during the course of the year.
After one year, this effect is usually dissipated. The
more often the dollar "turns over" in a year, the higher
the multiplier. The higher the multiplier, the more
beneficial is the economic effect on the community. Thus,
the more goods and services provided for the traveler,
the greater the economic benefits for the community. The
longer the traveler is induced to stay (even a half a day
longer makes a difference), the greater the expenditures
and the multiplier effect.
Offsetting the multiplier effect are counter-forces, such
as money saved (taken out of circulation), and money
which leaves the community for imported goods and
services. Examples of such "leakages" are (1) bank
deposits which are not loaned within a year, and, (2) a
restaurant's purchase of French champagne. Both of these
leakages have the same effect of reducing the multiplier,
because the money spent by the tourist is subsequently
removed from circulation within the community.
The American economist, Dr. Paul Samuelson, has expressed
these relationships in a series of formulas:
Where M = marginal (extra)
P = propensity (inclination)
C = consume (spending)
S = savings (money out of circulation)
MPC denotes one's inclination to spend additional income
for consumptive goods. For example, if you receive a
$1,000 bonus, and spend $500 of this (for goods and
services) your MPC would be one-half.
If an extra (marginal, $1,000 were spent by tourists in a
community, utilizing unused labor and material resources,
and if the primary recipients of these monies all have an
MPC of one-half, the recipients will spend $500 on new
goods and services. Those in the community who produce
these goods and services will now have an extra income of
$500, or one half of the amount originally spent by the
tourists. Let's assume these secondary producers also
have a marginal propensity to consume of one-half. Since
they have only $500 to start with, their spending is
$250. Each subsequent round of spending, from the initial
amount would be thus: $1,000 + $500 + $250 + 125 + $62.50
+ $31.25 + 15.63 + $7.81 + $3.90 ... = $1,999.99 or
$2,000 (rounded). Thus, with an MPC of one-half, the
multiplier is two, made up of the original spending of
the $1,000, plus the additional $1,000 of secondary
consumption re-spending.
Using the same financial analysis method, an MPC of two
thirds, would result in a multiplier of three. If the MPC
is three-fourths, the multiplier is four. The extent of
the multiplier depends upon the characteristic of the
MPC, or, stated another way, upon the marginal propensity
to save (MPS). If the MPC is two-thirds, then the MPS is
one-third and the multiplier is three, or, the reciprocal
(inverse) of the MPS. The formulas are:
Multiplier = 1 divided by MPS
Multiplier = M divided by 1-MPC
The greater the extra re-spending of the tourist's dollar
in the community, the greater the multiplier and
consequent economic benefits. Likewise, the more
"leakage" into purchases from outside the community, and
savings (not loaned to another spender), the smaller the
multiplier.
In these illustrations, a multiplier of two means that
every extra (marginal) dollar received into the community
through tourism produces an income of twice the amount
originally spent during the following year. For example,
if $500,000 were actually spent by tourists in one year,
and the multiplier is two, the actual economic impact
from tourism would be $1 million. Such estimates are only
approximates, and ignore what might happen economically
within the community during the year. Changes in buying
procedures may occur and more of this income may be spent
outside the community.
There are two other multipliers which result from tourist
spending. These are the employment multiplier and the
transactions multiplier. In areas where unemployment
exists, increased tourist spending can bring about a
total increase in employment, which we term the
employment multiplier. Increasing tourist expenditures
also brings about an increased number of transactions -
the spending and re-spending of funds originally spent by
visitors. This concept is illustrated in Chart 1. Each
round of new expenditure can bring idle resources into
use, creating new production (mainly of services) and
employment.
According to a recent survey by the Travel Bureau,
Michigan Department of Commerce, annual direct
expenditures for travel and tourism in Michigan are $4.7
billion. And, since every $1 spent generates another 78
cents in the economy through the multiplier effect, add
$3.6 billion. That makes the total overall impact of
travel and tourism in Michigan (including convention and
business-type meetings) $8.3 billion. In addition, travel
and tourism generate $157.4 million in state tax revenues
annually.
Employment generated by travel and tourism in Michigan
accounts, directly for about 143,800 jobs; indirectly,
another 69,000 jobs. This amounts to 212,800 jobs
according to recent Travel Bureau figures.
The effect of the economic multiplier, that is, the jobs
created as those directly employed spend incomes on food,
clothing, shelter, and other necessities and
non-essentials, and the total number of jobs generated by
travel, adds something like 250,000 jobs. In other words,
the removal of domestic travel from the Michigan economy,
with no replacement by another industry, would cost the
state about 250,000 jobs, averaged annually, or a peak of
375,000 summer jobs and a low of 175,000 winter jobs.
TRACING TOURIST DOLLARS
To illustrate the economic impact of tourist dollars on
any community, let's examine the spending flow of $100
received by a motel proprietor for a group of guest
rooms., He spends this amount approximately as follows:
(according to nationally publicized averages)
Salaries and wages $25.08
Laundry and dry cleaning 2.50
Linen purchases 1.39
Cleaning and other supplies 3.05
Advertising and sales promotion 3.21
Telephone 2.78
Travel and automotive expense 1.52
Fuel, water, electricity 6.19
Repairs and maintenance 4.11
Other operating expenses 4.15
Total operating items $53.98
Licenses and taxes 6.70
Insurance 1.94
Interest 10.72
Depreciation 12.21
Total Capital items $31.57
NET PROFIT $14.45
In the course of a year, tourist dollars permeate the
entire community, becoming income to virtually everyone
and assisting in tax collections for all levels of
government.
Similar patterns of expenditures are also made by other
businesses serving the tourist, such as restaurants, gift
shops, service stations and others.
PLANNING FOR TOURISM
Benefits from tourism don't "just happen." Investments of
talent, time, capital and operating funds, community
spirit and determination are required to make tourism a
significant part of a community's economic life.
Probably the biggest single deterrent to tourism
development is lack of appreciation and enthusiasm from
civic and business leaders. When tourism is not
understood, and its benefits unclear, proper planning and
implementation of measures to improve the industry are
often lacking or poorly attempted.
Tourism is similar to many other industries---it needs a
harmonious environment conducive to growth. The most
feasible way to create such an environment is through
planning. Tourism should be included in a Master Plan for
the community, along with other sectors, such as
agriculture, forestry, mining, fishing, manufacturing,
retailing, wholesaling, service industries, and
government. Tourism includes planning for recreational
developments-parks, golf courses, marinas, docks,
shopping, entertainment and information centers.
ENVIRONMENTAL CONTROLS
For successful tourism, enlightened regulations must be
formulated and enforced to control and eliminate air,
water, soil, and noise pollution. Spacing of buildings,
provisions for open spaces, parks and greenbelts are
typical provisions needed f or tourist areas.
Zoning
Zoning provides for compatible land use. Logical,
attractive arrangement of land uses, conducive to
tourism, are as important as good hotels and fine
beaches. Commercial zoning must allow for motels, hotels,
resorts, recreational vehicle parks, campgrounds, and
other visitor accommodations. A well conceived, precisely
written and enforceable zoning plan will provide the
community with comprehensive land-use guidelines that
include tourism. In brief, zoning should consider all the
needs and interests of the community.
Building Codes
Building codes are also essential for successful tourism.
How buildings are constructed is just as important as
where they are located. Quality and appeal of tourist
accommodations strongly affect the comfort, safety, and
satisfaction of visitors.
Responsibility and Leadership
Government leaders at all levels are responsible for
recognizing zoning and building code needs. They must
also take other appropriate action to safeguard the
resources of the community which make tourism possible. A
major motivation for travel is enjoyment of a serene,
beautiful, and unspoiled environment. If this environment
becomes less attractive due to clashing land uses and
other obvious deteriorations, the tourist will go
elsewhere. Thus, if tourism is to become a sustaining
element in the community's economy, forward-looking plans
and legislation are necessary to safeguard and enhance
the community's natural and cultural resources.
To achieve the best possible plan, an advisory committee
of tourist business people should work with government
officials. Expert consultants are often necessary.
The ultimate objectives of the tourism plan must be
firmly kept in mind. How and when these are to be
accomplished is part of the plan.
ORGANIZING FOR TOURISM
After planning has been completed (modifications of the
plan are likely to be made continually), community
leaders must then determine exactly what activities are
required to accomplish the objectives. Once these
activities have been identified (e.g., printing and
distributing a first-class tourism brochure), the
planning body must group these activities into workable
units. Roles', activities, objectives, and
authority-responsibility relationships must be
structured, and pertinent information continually
reviewed.
The most logical organization for tourism development and
promotion is the community or area chamber of commerce
(sometimes referred to as board of commerce). Many
chambers of commerce have a tourism or resort division.
Major responsibilities of this organization are community
growth, improvement, and economic development. As an
element in the prosperity of the community, tourism is a
responsibility of the chamber of commerce.
If there is no chamber, a county or city tourism
organization could be established. In either case,
committees should be established for 1) Research and
Development; 2) Promotion; 3) Education, and 4)
Executive.
Research and Development Committee
This committee is responsible for investigating tourism
trends and relating them to the facilities and services
which the community offers or should offer.
It should collect, evaluate, and disseminate market
information (e.g. identify new marketing opportunities
and discover new approaches to the market).
Here are some typical research problems that this
committee should explore:
* Where is the market and what is its potential?
* What segment of the market could be served that isn't
now?
* What is the present or potential breakdown of the
tourist dollar?
* How does tourism increase real estate values?
* What new services and facilities are needed?
* How does tourism affect:
- gasoline and auto repair services?
- agriculture, food stores, and restaurants?
- other retail stores?
- the job market?
- professional people?
- the entertainment business?
- the sports business?
The Research and Development Committee should recommend
specific projects needed to reach its goals. Such
recommendations often become the basis for action for the
other two committees.
Research methods might include review of marketing news
and data or field trips to other tourist destination
areas to observe trends in the various components of
tourism. ("Components of tourism" refers to
accommodations, shopping, transportation, entertainment,
tourist activities, and promotional methods, etc.)
MAKING A COMMUNITY SURVEY
The Research and Development committee should also make a
"community survey of tourism." The purposes of this
survey are to: (a) measure the impact of tourist spending
on the economy of the community, and (b) determine the
travel habits and characteristics of present and
potential visitors.
This information, when analyzed in conjunction with other
surveys, makes it possible to evaluate the economic
importance of tourism to the area and provide data that
can be used to attract more tourists.
Basic Assumptions
* Sales in any tourist area come from three major
sources: permanent residents, temporary residents and
transients.
* Present economic importance of tourism can be estimated
through a pre-arranged sampling of buyers outside
selected stores. (Spending by temporary residents and
transients is separated from that of permanent
residents.)
* Merchants must be willing to provide their sales slips
or other evidence of total sales each day.
* There must be clearly defined exit and entry points to
your community, for accurate traffic counts.
After the data on the amount of purchases and
characteristics of the visitors are collected, the
results are tabulated. Now, it is possible to arrive at
an estimate of the amount of nonresident spending in the
area during the survey week. The tabulation can be quite
involved, depending upon the variety of questions asked.
The count of travelers entering the community must be
complete for at least one week and for another week in
the off season, for comparison.
These surveys should yield the following:
1) approximate amount and percentage of non-resident
spending, and its initial economic impact on the
community.
2) characteristics of the travelers
* Where they come from
* Type of accommodation(s) used
* Length of stay
* Purpose of trip
* Number in party
* A variety of other information which may be useful in
promotion campaigns and basic analyses.
Other Information Required
It is also necessary to have an accurate picture of the
background of travel information mail inquiries. Did the
prospective tourist make the trip after receiving
information in the form of folders and/or brochures? If
he didn't make the trip to your community, did he decide
to go someplace else, and if so, why? Was the
information provided adequate?
Promotion Committee
The major responsibilities. of this committee are
preparing the annual advertising and sales promotion
budget, planning and programming sales, carrying out the
marketing plan, and evaluating marketing success.
Directions for work by this committee could be provided
by the Research and Development Committee. For maximum
effectiveness, promotion must be guided by the findings
of organized research. Otherwise, it is just "hit or
miss" in nature and largely ineffective.
Education Committee
Education and training programs are essential for
developing managerial and supervisory talent in tourism
industries. Many educational opportunities are available,
but it takes initiative and organization to bring books,
instructors, and learners together. Educational resources
and opportunities in tourism are provided by the 1)
Cooperative Extension Service of Michigan State
University, 2) the Education Institute of the American
Hotel and Motel Association, 3) community and junior
colleges, and 4) 4-year colleges. The County Extension
Director of the Cooperative Extension Service, can easily
contact these resources for you. He can also help plan
educational meetings and courses, and arrange assistance
from MSU specialists.
Responsibilities of the Education Committee:
* identify the industry's educational needs
* identify groups or levels of employees interested in
such education
* provide educational assistance for new or prospective
operators
* plan and offer educational programs
* develop a library of reference materials on hotel and
motel, restaurant and general business management,
tourism, planning and zoning.
Executive Committee
Creation of an executive committee is recommended to
facilitate speedy decision-making when time is crucial.
This committee would consist o a president,
vice-president, and secretary-treasurer. Thus, fast
action could be accomplished, giving the tourism
organization flexibility and power to act advantageously.
Organization Charts
An organization chart can be useful since it helps define
at a glance the relationships within an organization.
TOURIST HOSPITALITY
The success of any tourist destination area ultimately
depends upon the degree of satisfaction derived by each
visitor, which is largely determined by the hospitality
of the area. A warm, genuine greeting and complete,
competent attention will help assure the visitor's
delight with the area and a desire to return.
Reception Services
It is necessary to have a good method of receiving
visitors and informing them of accommodations,
sightseeing opportunities, etc. All tourists need some
information to make their trip smooth and pleasant.
Often, the chamber of commerce office is located on the
principal transportation artery into the community. It is
necessary to have adequate sign displays to inform
motorists of the chamber of commerce office. Essential
information needed before establishing an information
center:
* traffic survey to determine location
* adequate parking facilities
* service for other than auto traffic
* adequate signs - number and placement within the
reception center:
* adequate counterspace
* rack displays of literature and storage space for
literature
* kinds of promotional material to stock and its sources
* photos, maps, and posters
* current information poster
* hours and days open posted on door, and where to obtain
information when closed
* free souvenirs (if feasible)
* refreshments (extra)
* washroom facilities (extra)
* staff requirements and training
special services which should be provided:
* list of interpreters, languages, and contacts
* local homes for accommodation when commercial
facilities are full
* list of persons with special interests (e.g.,
rockhounds, botanists, guides, etc.) who will assist
visitors
* tours to local points of interest, and how to contact
* list of families who would welcome visitors into their
homes in the evening- "meet the Michiganians." List
should indicate languages spoken, occupation and hobby
skills which they may have in common with visitors.
* list of emergency medical, dental and veterinary
doctors
Hospitality Schools
These schools can help tourist service personnel become
more aware of the value and benefits of tourism. They can
increase knowledge of local points of interest, improve
ability to offer directions and provide better and more
enthusiastic services. Such a program helps better
satisfy the visitor, which often will induce him to stay
longer, spend more money . . . and return.
Suggestions for planning and conducting such schools are
found in the folder Conducting a Tourist Hospitality
School in Your Community, Tourist and Resort Series
R-102. This is available from your county office of the
Cooperative Extension Service, or by writing the MSU
Bulletin Office, P.O. Box 231, East Lansing, Michigan
48824.
GETTING COMMUNITY SUPPORT
Start by conducting a vigorous public relations campaign
about the benefits of tourism. Emphasize research on
distribution of the tourist dollar and its multiplier
effect. Always use accurate statistics-never use untrue
or misleading propaganda. First try to achieve acceptance
of the idea, then seek community support and
participation.
Enlist cooperation of local and area newspapers, radio
and television stations in all aspects of the tourism
program. To insure adequate publicity and help build
public relations, talk to newspaper people about the
types of stories they prefer.
The following subjects might be used for a series of
local newspaper articles, radio or television programs:
* value and importance of tourism to Michigan, your area
and community
* descriptions, photos, and films of local and regional
tourist attractions and their significance to tourism
* spring, summer, fall, and winter sports available
* employment opportunities in tourism
* accommodations available
* locally-made products of interest to tourists
* historical resources
* the importance of courtesy and hospitality to
successful tourism
* natural resources for tourism - scenery, climate,
forests, beaches, water, fish, game, birds, mushrooms,
berries, rocks, etc.
* cultural and other resources for visitors enjoyment.
Seize every opportunity to discuss tourism with service
clubs, women's groups and similar organizations,
explaining how citizens can help and participate. Similar
efforts with schools can be useful, particularly in
forming good attitudes among the youth.
Michigan Week
Michigan Week in May provides an excellent platform for
building good public relations and community support.
"Hospitality Day" is set aside as a day to promote the
concept of Michigan's friendly attitude toward visitors.
Highlight the economic and social benefits of tourism on
this day and express hospitality through a friendly
greeting, welcome signs, or perhaps free Michigan fruit
juice or punch.
This information is for educational purposes only.
Reference to commercial products or trade names does not
imply discrimination or endorsement by the Cooperative
Extension Service. Cooperative Extension Service Programs
are open to all without regard to race, color, or
national origin. Issued in furtherance of cooperative
extension work in agriculture and home economics, acts of
May 8, and June 30, 1914, in cooperation with the U.S.
Department of Agriculture. Gordon E. Guyer, Director,
Cooperative Extension Service, Michigan State University,
E. Lansing, MI 48824 . IP-2R-6:79-5M-DB, Price 30(D
This information is for educational purposes only. References
to commercial products or trade names does not imply
endorsement by MSU Extension or bias against those not
mentioned. This information becomes public property upon
publication and may be printed verbatim with credit to MSU
Extension. Reprinting cannot be used to endorse or advertise
a commercial product or company.
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