This Just In … Longwoods Out

Secretive MEDC consultant replaced

After serving many years as a consultant for the state, Longwoods International has been dropped in favor of another contractor. Longwoods provided return-on-investment estimations for the Pure Michigan advertising program. An Indiana-based company will now provide the same services under a new contract with the state.

I have been a frequent critic of Longwoods. The company claimed in previous reports that the state’s tourism advertising campaign provided huge financial returns. In its last report, Longwoods said $8-plus was returned in tax dollars for every dollar spent on Pure Michigan. But Longwoods refused to tell anyone how it obtained that number, claiming it was proprietary information.

This secrecy is unacceptable. It is like your kids telling you that they aced algebra, but refusing to show you their report card. The MEDC, the state agency responsible for Pure Michigan, remained with Longwoods, despite the secrecy. To determine whether the Pure Michigan program really delivered a positive impact on Michigan’s economy, I performed my own study, with the help of Michael Hicks, an economist at Ball State University.

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We collected 39 years of data on government spending to promote tourism. The data came from 48 states and — after doing a thorough review of the academic literature on the subject — we created a statistical model to measure the impact of such spending. We found some, but on balance it was negative. We found that for every dollar spent on tourism promotion, there was an additional 2 cents worth of business in the average state’s accommodations industry. In other words, in just this sector, the Pure Michigan program had a return of minus 98 percent. Other sectors of the tourism economy fared no better.

Unlike the MEDC’s contractor we used publicly available data sources. The methodology is explained in such detail that a reasonably talented economist could replicate our work.

With a new contractor arriving on the scene, this is a great opportunity for the MEDC to demonstrate the confidence it has in its program. It should mandate 100 percent transparency in the methods and data sources used by its new contractor.

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