Study: State Tourism Promotion Ineffective

Every $1.00 Spent Generates 1 Cent Extra Spending at Motels and Hotels

Friday, May 29, 2015


Anne Schieber
Mackinac Center for Public Policy

MIDLAND — The Mackinac Center for Public Policy today released preliminary findings from its forthcoming study about the state’s tourism promotion efforts, including the large subsidies appropriated for its “Pure Michigan” campaign. The analysis is being released as government policymakers meet at the annual Mackinac Policy Conference, hosted by the Detroit Regional Chamber.  
The statistical analysis was constructed to measure whether government expenditures on tourism promotion were effective and if so, to what extent.
“We found an actual link between state tourism spending and an increase in spending at state hotels and motels but it was microscopic and more than completely offset by taxpayer losses,” said Michael LaFaive, director of the Morey Fiscal Policy Initiative and co-author of the study.
Specifically, the Mackinac Center reports that from 1973 through 2012, every $1.00 spent by the state on tourism promotion generated an extra penny in economic activity for the accommodations industry.
“The opportunity cost here is huge,” said Michael Hicks, director of the Center for Business and Economic Research at Ball State University and adjunct scholar with the Mackinac Center for Public Policy. “Every dollar spent on this program is one that cannot be used for some higher purpose, such as fixing Michigan’s roads or cutting taxes.”
The model was constructed to control for other factors that may influence tourism in Michigan, such as access to large bodies of water, elevation, recessions and more. It is part of a larger study to be released by the Mackinac Center for Public Policy this fall.
For more on this subject, see the essay “State Tourism Spending Ineffective in Job Creation,” by the authors.

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