Newfoundland and Labrador Product Development Strategy

- 95-The tourism industry needs to present the business case for supporting the tourism industry, andnot just to politicians, although they are, of course, a key target audience, it needs to also reachthe business community generally as well as the general public. And it also needs to reachtourism operators as well.There are a number of good reasons for governments to invest in tourism. But for an increasingnumber of governments, they are doing it because it generates tax revenues to support social andother public programs.And these revenues are not modest. In the USA where a number of states and cities track theimpact of their tourism marketing, they are able to demonstrate that the extra visitation they aregetting as a result of the marketing effort is providing a real return on investment in additionalstate taxes of many times the marketing investment made by the state, returns well beyond thoseexperienced in the investment business.A $4.5 million campaign in New Jersey generated incremental state taxes, directly attributable tothe campaign, of $61 million in 1991.Maine in a 1997/98 campaign earned $18.8 million in extra tax revenues from a campaigncosting less than $ 1 million.And Colorado learned to its chagrin that cancelling the entire state marketing budget cost themmoney rather than saved them money. Their state marketing budget of $12 million annually hadearned them 1 st place in the USA in the summer resort category. When the program wascancelled in the early 1990's, their summer tourism revenues dropped 30% - by some $2.4billion. That directly caused a reduction in state government tax revenues of some $134 millionannually.So, a primary reason for a government to invest in tourism is to generate more tax revenuesfor itself. As a bonus, it creates more business for its tourism industry, and income foreveryone in the province or state.Where Does Newfoundland and Labrador Fit?The province has experienced solid growth in tourism in recent years and has excellent prospectsfor the future. Newfoundland and Labrador received some 440,000 non-resident visitors(including visitors on all types of trips – for pleasure/vacation, business, and to visit friends andrelatives) in 2002 and they spent over $300 million in the province, all of these dollars being‘export earnings’ for the province. This is an increase of over 65% in the number of visitors since1992, and an increase of almost 140% in direct spending. Some 55% of the province’s visitorsarrive between the months of June to September. Preliminary results for 2003 indicate that thenumber of visitors and their expenditures was on a par with 2002 levels, with 439,000 visitors.Tourism is truly a powerful economic engine for the province. The provincial government’sannual investment in tourism, albeit modest, still was an important factor in spurring the growthin tourism export dollars for the province. And the provincial government earned a direct returnTHE ECONOMIC PLANNING GROUP of Canada Newfoundland & Labrador Tourism Product DevelopmentD. W. Knight Associates Strategy and Accommodation Needs Study