Mackinac Center researchers challenge state to defend claim that program is worth its cost
Wednesday, Nov. 30, 2016
MIDLAND — Researchers with the Mackinac Center for Public Policy have invited two tourism officials to publicly debate the effectiveness of the Pure Michigan tourism and advertising campaign. The debate challenge comes after the Mackinac Center’s own study demonstrated that state tourism promotion does not generate net positive returns on investment.
Researchers Michael D. LaFaive and Michael J. Hicks looked at 39 years of data from the 48 contiguous states. A $1 million increase in state promotion efforts, they found, leads to just an extra $20,000 in economic activity in a state’s accommodations industry. They examined three sectors most likely to benefit from tourism promotion spending – accommodations, amusement and recreation, and arts and entertainment. The accommodations sector, which includes but is not limited to hotels and motels, was the only area that showed a gain in economic activity.
“Each year taxpayers spend tens of millions of dollars on the Pure Michigan advertising campaign with little if anything to show for it,” said LaFaive, director of fiscal policy for the Mackinac Center. “The state’s tourism officials and lobbyists believe otherwise, and that’s one reason we have challenged them to a debate.”
The Michigan Economic Development Corporation and its tourism arm, Travel Michigan, have recently claimed that the state receives $7.67 back in tax revenue for each dollar taxpayer spent on the Pure Michigan program. The figure was generated by a consultant who refuses to explain precisely how the number was generated.
“The MEDC insists that lawmakers and taxpayers just take their word on Pure Michigan’s return on investment. It is naive to do so given the evidence to the contrary, and the MEDC’s reputation for trumpeting its own alleged successes,” said LaFaive.
The Mackinac Center’s study, in stark contrast to the one purchased by the MEDC, explains its methodology in detail, identifies its publicly available data sources, and was peer reviewed by economists unknown to the authors. The work can be replicated by other earnest scholars, which is a key hallmark of scholarly inquiry.
The debate challenge was sent to David Lorenz and Deanna Richeson. Lorenz is vice president of Travel Michigan, which oversees the Pure Michigan campaign, and Richeson is the president and CEO of the Michigan Lodging and Tourism Association, a trade group that lobbies for the tourism industry.
The Mackinac Center has offered to host a Lansing luncheon or dinner featuring the debate broadcast live over the internet. LaFaive emailed the invitation to both parties on Nov. 1 and followed up with hard copies and phone calls to each. At the time of this release, neither Lorenz nor Richeson has responded to the invitation.
A copy of the invitation is available here: Debate Invitation
The full study is available here: An Analysis of State-Funded Tourism Promotion.
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About the Mackinac Center for Public Policy
The Mackinac Center for Public Policy is a nonpartisan research and educational institute dedicated to improving the quality of life for all Michigan residents by promoting sound solutions to state and local economic policy questions. As a free-market think tank, the Mackinac Center is guided by its belief in free markets, individual liberty, limited government and the rule of law. Founded in 1988, it is headquartered in Midland, Michigan. For more information, visit www.mackinac.org.