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New Research Reveals Destination Marketing as Unexpected Catalyst for Employment, Economic Development, Quality of Life

Monday, November 10, 2014
Oxford Economics Shows Broad Spectrum of Economic Development Fostered by Destination Marketing

Destinations that place a high priority on marketing their brands and amenities realize significantly greater employment and economic growth, well beyond the visitor economy, reports new research released today by the Destination & Travel Foundation and conducted by Oxford Economics.

“Tourism has always been a top driver of jobs and taxes,” said Destination Marketing Association International President and CEO Michael Gehrisch. “And, as an industry, we are setting our sights on understanding how and why destinations with devoted visitor economies – who treat tourism as a locally-produced export – realize even greater economic and social benefits, job growth, investments, workforce development and quality of life.”

Through a statistical analysis of more than 200 cities over more than 20 years, case studies, interviews and a literature review, the key findings reveal the broad economic benefits reaped by US destinations who spent an estimated $2 billion on promotion and marketing to encourage leisure and convention travel.

The visitor economy was found to drive broader economic growth through four primary channels:

1. Destination promotion supports development of transportation infrastructure, providing greater accessibility and supply logistics that are important in attracting investment to other sectors.

a. A study on the role of airline traffic in urban economic development analyzed 91 metro areas in the US and estimated that a 10 percent increase in passenger enplanements leads to a 1 percent increase in employment in service-related industries.

2. Destination promotion builds awareness, familiarity, and relationships in commercial networks (institutional, companies, individuals) that are critical in attracting investment. Similarly, destination promotion raises the destination profile among potential new residents, supporting skilled workforce growth that is critical to economic development.

a. In a 2011 survey by Development Counsellors International, 13 percent of executives with site selection responsibilities state that their perceptions of an area’s business climate were influenced by leisure travel and 37 percent reported influence by business travel.

3. By securing meetings, conventions and trade shows for local facilities, destination marketing organizations (DMOs) create valuable exposure among business decision makers and opportunities to deepen connections with attendees.

4. Destination promotion supports amenities and a quality of life that are integral to attracting investment in other sectors in the form of human capital, corporate relocations and expansion.

“The data substantiates the link between destination marketing and economic growth and why today’s visitor economy warrants investment,” says Destination & Travel Foundation Chair and Executive Vice President of the Louisville Convention & Visitors Bureau Cleo Battle. “What this study continues to demonstrate is that those markets which coordinate destination marketing and economic development realize even greater gains as a result.”

One-on-one interviews with DMOs and economic development agencies revealed opportunities for economic development agencies and destination marketers to work in concert to promote a place to national and international markets. Best practices include coordinating efforts on new investments bids, jointly leveraging trade shows and conferences, and building a consistent destination brand to appeal to both investment and travel audiences.

“Statistical analysis over the past two decades shows that destinations with substantial and growing visitor economies have outperformed their peers in the general economy,” said Adam Sacks, Director, Oxford Economics. “Cities and states that coordinate destination marketing and economic development are generally better positioned to compete for new investments and corporate relocations.”

Key Jobs Data from Destination Promotion: An Engine of Economic Development:

  • A 10 percent increase in a destination’s visitor-related employment (relative to the US average) causes a 1.5 percent rise in broader employment through catalytic channels.
  • Since 1998, hospitality and tourism employment has expanded nearly 10 percent, while aggregate employment in all other traded clusters shrank 1 percent.
  • As the visitor economy has recovered, it has contributed job growth since the end of the recession at a faster rate than the US average. As of July 2014, employment in key sectors of the visitor economy was 7.9 percent ahead of its June 2009 level, compared to a 6.1 percent gain for the broader economy.
  • There were a total of 2.5 million jobs in the sub-sectors that make up the hospitality and tourism traded cluster in 2012, representing 7.2% of total employment in traded clusters in the US. On a national basis, 1- in-14 jobs in traded clusters are in the hospitality and tourism sector.

Key Visitor Economy Data:

The research also demonstrates that across the US, economic trends have supported above average growth in the visitor economy. As income levels rise, consumers are dedicating a greater share of spending to travel and tourism. Specifically,

  • As incomes have risen over the past three decades, consumer spending on travel has grown at an even faster rate.
  • As income levels rise, consumers are dedicating a greater share of spending to travel and tourism. For example, in the span of slightly more than a generation, per capita consumer spending on hotel stays in the US has increased 200 percent since 1980, even as per capita GDP – as a measure of income levels – has increased only 75 percent.
  • Destination marketing plays an integral and indispensable role in the competitiveness of the visitor economy by pooling resources to provide the scale and marketing infrastructure to promote a place to national and international markets.

“Looking ahead, destinations are poised to capitalize on future growth even more, as consumer spending on travel continues to outpace other sectors,” said Gehrisch.

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