State Tourism Budget Growth Slows Ahead of Governors’ Races in Midterms

As the midterm elections approach, in which 36 states will vote for governors, state tourism boards increasingly face pressure to justify higher spending, or in some cases even their existence.

Tourism budgets generally have gradually bounced back to or exceeded pre-recession funding levels. But the growth on average for state organizations has slowed, according to a Skift analysis of state tourism budgets ahead of the elections in November. In addition to governors, more than 6,000 state legislature seats will be decided.

Consider what’s happening to a major source of funding for state tourism budgets — the state budgets themselves. A report from the National Association of State Budget Officers, which details data collected from all 50 states, shows state general fund spending for enacted fiscal 2018 budgets is expected to grow just  2.3 percent from fiscal 2017 — the slowest growth rate since fiscal 2010.

That slowdown is having an effect. The average U.S. state tourism budget for fiscal 2018 was $19.6 million, a 3.7 percent increase year-over-year. But that is a significant pullback from four years ago at the last midterm election. The growth in tourism budgets from 2013 to 2014 was 14 percent.

With many states under financial strain, brought on by steep pension obligations, candidates are surely running campaigns touting austerity measures that will not bode well for state tourism budgets.

High-profile budget battles have plagued states like Florida, Hawaii, and Texas in the past year. George Szigeti, ex-president and CEO of the Hawaii Tourism Authority, the state’s tourism board, was fired largely because of the difficulty the organization had in getting its budget passed through the state legislature this year, the Associated Press reported. Hawaii’s legislature also voted to cut $13 million from the organization’s current $82 million for the upcoming fiscal year.

Governors set the tone for the debate around tourism budgets, and Destinations International conducted an analysis of governors’ annual state of the state addresses earlier this year, including that of Hawaii Governor David Ige, a Democrat.

“Even though tourism is up and unemployment is low, many of our residents are living paycheck to paycheck, one health emergency or car repair away from a crisis,” said Ige on January 22. “Some people may have two or three jobs to make ends meet. The challenge is not just creating jobs, it’s about creating quality jobs and the training to go with them. I understand the frustration. That’s why I’m working to transform our economy to give residents a diversity of employment opportunities that pay higher wages and lead to a better quality of life… Imagine a future economy for Hawaii that isn’t reliant solely on tourism and the military.”

Texas’s state tourism budget has also been slashed in recent years, from more than $67 million in 2015 to about $34 million this year (a nearly 50 percent drop), as the state faces budget cuts across the board.

On the flip side, Oregon had the highest percent increase in funding in 2018, going from $21.5 million in fiscal 2017 to $33.2 million in fiscal 2018 (up 54.4 percent), according to data from the U.S. Travel Association and state budget documents (see charts below). California’s budget has topped the list for years and maintained its spot on top of the leaderboard at $120.5 million in fiscal 2018, a 5.3 percent increase year-over-year.

Of course, statewide marketing funds aren’t the only resources many destinations have to promote themselves. Dallas, Houston, and San Antonio’s budgets were $37.2 million, $35 million, and $25.5 million, respectively, for fiscal 2018. While Nevada’s state tourism budget was about $20 million for fiscal 2018, the budget for the Las Vegas Convention & Visitor’s Authority, the city’s tourism board, will be a whopping $359.8 million for fiscal 2019.

Some $101.5 million of the organization’s budget will be spent on advertising Las Vegas as a destination, the Las Vegas Review-Journal reported. It will likely spend some of that cash on producing more commercials and digital short films such as its recent “Only Vegas Moments” campaign that put a modern spin on the “what happens in Vegas, stays in Vegas” adage.

Two other speeches that are part of Destination International’s analysis include those from Colorado Governor John Hickenlooper, a Democrat, and Michigan Governor Rick Snyder, a Republican, who both spoke about why their administrations have prioritized tourism.

“We have one of the best economies in the country, but some rural communities struggle,” said Hickenlooper on January 11. “That’s why we have invested significant resources and focused all cabinet agencies in an effort to fully realize the expansion of our economy across the entire state.”

“Last summer, Blueprint 2.0 announced their support for initiatives that local communities identified: from tourism promotion and outdoor recreation to tiny homes and affordable housing,” said Hickenlooper. “Our small towns represent a fraction of our total population, but they are a crucial piece of the fabric of our economy, and when small communities flourish, the whole state benefits. We have improved access to the outdoors, partnered with local government and communities to improve and ultimately complete and connect 16 priority trails across the state.”

Snyder spoke about the importance of Michigan’s wineries in attracting tourists. “To give you an idea in the terms of economic impact, the economic impact of the Michigan Wine and Hard Cider Industry is now $5.4 billion annually; up from $300 million in 2005,” Snyder said on January 23. “Think about that growth and very importantly as part of Agritourism, we had over 1.7 million visitors to our wineries in the last year, so get out there and check out those grapes. Tourism, transitioning right into that. We have been setting records over the last several years. It has been extremely exciting and we have events that are drawing national attention.”

U.S. territories like Puerto Rico and Guam aren’t included in U.S. Travel’s data, but with budgets of $25 million and $26 million, respectively, both would rank among the top 10 most well-funded U.S. states or territories.

The Top 10 States With Highest Tourism Budgets for Fiscal Year 2017-2018

History of Average State Tourism Budgets

Source: U.S. Travel Association and state budget documents