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April 1997

Tourism Advisory Forum

January 15, 1997

In lieu of a regular Advisory Council on Small Business, Agriculture and Labor meeting, on January 15 the Minneapolis Fed met with a group of Ninth District tourism business people-resort operators, academics, and government and visitor association officials to learn more about that industry.

The day-long forum focused on four questions that shed light on current and future concerns for the tourism industry.

* What is the financial health of tourism in the Ninth District?
Tourism is enjoying a prosperous period, but it is an evolving industry and over the next few years increased competition and changes in what people want will force operations to change. Concern was expressed about overbuilding of convention centers in the district. A South Dakota representative discussed the bidding wars among cities for conventions.

Participants discussed some reluctance of financial institutions to make loans to tourism-based operations, in part because it's difficult for tourism businesses to offer standard measurements of success or importance, as can many other industries with established SIC codes.

Some of the success of Ninth District tourism rests on businesses' ability to change as the markets change, and to contribute to marketing efforts. Those that change will likely prosper.

* What are the opportunities in international tourism?
Most international visitors to the Ninth District come for a particular attraction or are third or fourth-time visitors to the United States. A Wisconsin participant noted that Japanese tourists, for example, visit the small town of Pepin because it's the birthplace of author Laura Ingalls Wilder, whose books are popular in Japan.

One way to draw more overseas tourists is to reduce barriers, that is become more foreign visitor-friendly, and to market group travel opportunities, perhaps to regional destinations. A North Dakota participant suggested that the government is a player in drawing international tourists through its operation of national parks, historic monuments and taxes received from travel and tourism, and it should be more involved in encouraging international tourism. The Internet was also discussed as an increasingly important marketing tool to foreign audiences.

* What are the factors involved in staffing a growing tourism industry?
It's difficult in some areas to find workers, and in others where there are workers housing options are limited. Perceptions need to be changed about tourism jobs-not all are entry-level, and few are low-paying. According to a Michigan participant, travel and tourism is the world's largest employer and wages are generally above average.

To lure qualified workers, operators need to offer benefits or job advancement opportunities. More tourism education and training programs are needed in vo-tech schools and universities. One immediate solution for a large resort in Michigan's Upper Peninsula is to hire labor from Jamaica; others noted that resorts will import seasonal workers from urban areas.

* How does tourism affect your state/regional economy and how is tourism perceived in your state/region?
The lack of a standard economic model for tourism, coupled with no one SIC code to measure tourism's impact, make it difficult for tourism officials to sell the importance of the industry to legislators or community leaders. A North Dakota participant said tourism is the state's third leading industry and employs about 16,000 people, and the state Legislature has been responsive. A Minnesota participant noted that sometime it is difficult to make legislators aware of tourism industry needs, largely because it is still a very young industry.

Overall, residents of communities based on tourism recognize its importance. A Montana participant who has surveyed residents of tourism-based communities and found that in the small towns older residents welcome tourism as a way to keep young people at home; whereas, in larger, more diverse communities residents take a more jaded view of the vacation population's stress on infrastructure and quality of life.

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