Arthur Canter is president and chief executive officer of the Massachusetts Lodging Association.
Thirteen years ago, a number of tourism representatives met with Gov. Bill Weld to explain the importance of tourism to the Massachusetts economy. They had recently funded a research study at Harvard University to assess the relationship of tourism to the broader economy in Massachusetts. This landmark study confirmed what these representatives had known for years: Tourism provides economic development for the state’s economy. For every dollar invested in Tourism there, would be a significant return on investment, and for every visitor who stays in a lodging establishment, revenues are also generated in restaurants, shops, taxis, shuttles and attractions.
Gov. Weld was sold! He worked with the Legislature to implement the Massachusetts Tourism Fund, which would serve as a dedicated marketing vehicle for Massachusetts’ then-faltering economy. The concept was simple: garner support from hotels, inns and other lodging establishments in the commonwealth to market their respective establishments and the visitors who stay over would pay lodging taxes. Sixty-five percent of the collected state lodging taxes would go to the commonwealth’s General Fund, with 35 percent of all lodging tax collections going into a tourism fund. This fund would cover the administrative and marketing costs for the state’s Office of Travel and Tourism (MOTT), the only entity in Massachusetts that markets the commonwealth both domestically and internationally. In addition, the Tourism Fund would cover the administration and marketing of the Boston and Springfield convention centers, a small international trade office and 13 not-for-profit regional tourism councils focused on marketing individual regions from Boston and Cape Cod to the Berkshires. RTCs, through the ultimate public private partnership, had to match every dollar they received from this fund, which further bolstered the use of the Tourism Fund dollars.
This simple concept worked throughout the 1990s. The lodging establishments expended millions of dollars in marketing to bring people to their properties, the commonwealth benefited from quadrupled lodging tax collections and the Tourism Fund generated millions of dollars to fund the state’s tourism infrastructure. Then everything changed in 2001.
Revisiting Priorities
With the recession beginning in the first quarter of that year, lodging establishments realized that corporate business was reduced significantly, which led to major layoffs in all regions of the state, affecting some 20 percent of the workforce. In some areas of Massachusetts, this corporate business had represented at least 40 percent of all of the business for a hotel. The tragic events of Sept. 11, 2001, saw the demise of international visitation and an increase in individuals who refused to fly. Boston had been one of the top 10 U.S. cities for international visitation prior to 9/11. With the addition of the SARS scare, the commonwealth’s tourism sector saw a major shift from a “fly market” to a “drive market,” with a focus on the leisure traveler who could get to Massachusetts by car within a few hours. In addition, with the advent of national companies such as Hotels.com, Expedia and Travelocity marketing significantly discounted lodging rates to consumers and businesses, lodging establishments had become dependent on these resellers just to put “heads in beds,” much to the detriment of revenue growth.
While the commonwealth has suffered major deficits, Massachusetts’ lodging establishments have continued to expend the marketing resources, even with significantly reduced occupancy and revenues. Last year they spent $180 million to drive people to their respective establishments. The commonwealth, however, has not maintained its end of the bargain, last year reducing MOTT’s budget by 40 percent to $6 million, even with lodging tax collections generated from hotels’ marketing efforts reaching the $190 million range for the state and municipalities. Massachusetts has gone from being the 19th-ranked state in tourism marketing to 31st, just below South Dakota. With less marketing dollars, Massachusetts is beginning to lose market share in Hartford, Conn., a market we share in direct competition with New York and Pennsylvania. Last year MOTT was forced to curtail its marketing efforts in France, Italy and Japan, three of the commonwealth’s five primary international markets. One of our major competitors, Pennsylvania, with similar deficits in their state’s budget, is expending $28 million to market Philadelphia and the commonwealth of Pennsylvania as tourism destinations this year. Their commercials are currently being aired on Massachusetts television stations
The governor and the Legislature have to realize that tourism must be treated as a business, requiring continuous marketing to maintain market share in a highly competitive business environment. The commonwealth’s tourism industry provides much-needed economic development, bringing visitors who, in 2003, spent $21.5 billion in shops, lodging, restaurants, attractions and travel. However, without a reasonable investment of public-sector marketing dollars generated from the commonwealth’s lodging taxes, Berkshires’ business will be lost to the Poconos and Boston’s to Philadelphia. This loss in business would further lead to business closings, job loss and an increased drain on the commonwealth’s unemployment and welfare resources. The future of tourism in Massachusetts is now in the Legislature’s hands.
