RI Tourism Spending Lags Far Behind Rest of U.S.

RI Tourism Spending Lags Far Behind Rest of U.S.

Rhode Island spending on tourism promotion at the state level lags behind nearly every other U.S. state, a GoLocalProv analysis of national data has found.

Just three states funded their tourism offices at a lower rate: Ohio, Indiana, and Pennsylvania.

In order to fairly compare the Ocean State with others, GoLocalProv examined the budgets for state tourism offices as a ratio of overall state spending. Even when adjusted for the relatively its relatively smaller financial footprint, Rhode Island still ranked almost dead last.

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In fiscal year 2013, the most recent for which the data was available, Rhode Island budgeted $710,000 for its state tourism office, .009 percent of $7.8 million of overall spending, according to figures from the National Association of Budget Officers and skift.com, a global travel news and information site.

States like New Hampshire have similar-size budgets but devoted more of them to tourism promotion. New Hampshire spent .137 percent of $5 billion in expenditures on tourism promotion, a rate 15 times higher than Rhode Island. Massachusetts spent more than double at the rate of Rhode Island, with $6.9 million of its $57.5 billion in expenditures set aside for marketing the state to tourists. (See below slides for figures for all states.)

“I do think we could do better compared to them,” said Jody Sullivan, executive director of the Newport County Chamber of Commerce.

“State investment in marketing and promotion for business development purposes has long been miniscule. This is a component of the state’s economic development strategy that needs immediate attention, as we have repeatedly pointed out,” said Laurie White, president of the Greater Providence Chamber of Commerce. “As members of various national associations, we see very clearly what other places are doing to attract investment and the numbers are staggering. Rhode Island needs to get in the mix in a much more aggressive way.”

In terms of the economy, tourism seems an obvious winner for Rhode Island. It is the fourth largest industry in the state, generating about $1.6 billion in wages and salaries and helps provide jobs for one in every ten Rhode Islanders, official state figures show.

“Tourism is a critical to the state’s economy. With little dollar support to date, the state has been able to develop a positive image among U.S. and foreign tourists. Imagine the number of new jobs that could be created and the revenue that could be generated if we invested in this industry, had the leadership and a one-state focus. The strategic location of the state, the number of venues, sites and events in the state, and our transportation system make Rhode Island a major destination location for tourists and residents,” said Ed Mazze, the Distinguished University Professor of Business Administration at the University of Rhode Island.

Need for state leadership

Notably, the state budget figures do not include money that is funneled through the state budget to regional tourism districts like the Providence Warwick Convention and Visitors Bureau, which received $1.8 million through the hotel tax for its activities in fiscal year 2013. Another $6 million in revenues from the hotel tax passed through state coffers to other regional tourism districts that same year, state records show. (The figures for others states would not include regional spending either.)

White said the efforts of the convention and visitors bureaus in Providence-Warwick and Newport have been “exceptionally strong in promoting Rhode Island” for meetings and events, filling a “critical gap.”

“It appears to me that in Rhode Island, it’s the individual cities that are driving the biggest change in tourism,” said Samantha Shankman, a reporter for skift.com, which follows trends in the national and global travel industry. “We sometimes see cities doing a better job at managing their budgets and promoting tourism than overall states.”

Still, some say the state should be more proactive in promoting Rhode Island as tourist destination.

“There’s a lot to see in Rhode Island and we could feed off each other,” Sullivan said. “I think it would be advantageous for all of us we marketed ourselves as a whole.”

One of the state’s biggest selling points for tourists, she said, is its small size. Tourists visiting Newport during the day could easily make it up to Federal Hill for dinner or explore the John. H Chafee Blackstone River Valley National Heritage Corridor in the Blackstone Valley, according to Sullivan.

Robert D’Uva, the president of the Federal Hill Commerce Association, agreed that the state should do more to bring in tourists. “We generate a lot of revenue for the city and the state and if there’s any way we can enhance that, I’m all for it,” D’Uva said.

With Federal Hill, he said the state already has an economic resource that it is already working. As just one example, he pointed to the Columbus Day Festival in October, which brought in between 75,000 to 125,000 visitors over a three day period. “If that works and generates more money, why not? Why not go for it?” D’Uva said. 

“The keys to success in growing this sector of the economy include the focus that the promotion program for tourism takes, the dollars invested by the state and the private sector and how the sector is organized and led,” Mazze said. “Does the state need six destination marketing organizations and other business associations and government organizations to promote tourism in the state? And, what would happen if we pooled the resources from all these organizations and used them to promote tourism? These are the questions we need to consider if we want to grow this industry.”

Efforts to ramp up tourism promotion stall

So far, recent efforts to boost marketing and tourism promotion at the state level seem to have gone nowhere.

In 2010, two consultants—the Radcliffe Company and Nichols Tourism Group—developed a tourism plan for the state. But their recommendations, which included increased spending, reportedly didn’t make it into the state budget.

In fiscal year 2013, state spending for tourism topped out at about $700,000, according to the state budget officer, Thomas Mullaney. Of that amount, $400,000 was budgeted for “direct tourism activities.” The remainder, close to $300,000, went towards staff costs.

Governor Lincoln Chafee requested an additional $600,000 more for the state tourism office for fiscal year 2014, but the request was not approved by the General Assembly, according to Chafee spokesperson Faye Zuckerman. (House Finance Chairman Raymond Gallison, D-Bristol, did not respond to a message seeking comment.)

The Governor acknowledges that the regional promotional efforts are on similar footing as other states but our statewide branding effort needs additional resources as seen in the chart you emailed to us,” Zuckerman said.

Nonetheless she said tourism is growing in the state. “Through October of this year, hotel revenue is up by 6.5 percent. Rhode Island continues to appeal to tourists as well as visitors to large-scale events and conventions,” Zuckerman said. (As examples she pointed to the Volvo Ocean Race stopping in Newport this spring and the NCAA Basketball Tournament scheduled for March 2016.) 

Next Monday, the same two firms that urged greater action four years ago will be making another presentation on tourism investment and branding before the board of directors for CommerceRI, which houses the state tourism office, according to the agency’s spokesperson, Melissa Czerwein. Until that presentation, she said agency staff, including the state’s tourism director, were “not ready” to comment.

During the recent campaign for Governor, both major party candidates discussed the need to make tourism promotion more of a priority. A spokesperson for her transition team confirmed that Governor-elect Gina Raimondo intends to follow through once she takes office.

“Rhode Island has tremendous natural, cultural and historic assets that drive our tourism sector. Governor-elect Raimondo believes that we can better leverage the money we spend on tourism by coordinating our efforts and creating a comprehensive statewide plan. She knows we need to reopen our visitor centers and give people a reason to make a stop in Rhode Island, but she also believes that the solution isn’t just spending more money—it’s spending our dollars more wisely. She looks forward to working with the state’s tourism bureaus to develop a plan that grows the tourism and hospitality industry and puts Rhode Islanders back to work,” said Cara Cromwell, the transition team spokesperson.