Michigan tourism industry projected to rebound

After declining in 2001 and 2002 and lackluster growth last year, Michigan’s tourism industry can look forward to healthy growth in 2004, if a forecast presented at the Michigan Tourism Outlook Conference proves to be correct.

A research team headed by Don Holecek, director of MSU’s Tourism Resource Center, projects that the number of travelers will increase by 3 percent to 4 percent in 2004 over last year and travelers’ spending will increase by 4 percent to 5 percent. The team reviewed a multitude of factors known to influence travel activity in Michigan and surveyed industry leaders across the state.

Since travel prices are projected to increase only slightly – 1 percent to 2 percent – Michigan travelers can expect to receive a high value at a very reasonable price again this year.

But, with demand building, Holecek recommends booking preferred accommodations early to avoid possible disappointment.

Gaming, shopping market segments and outdoor recreation are expected to show the largest increases at 4 percent to 6 percent, Holecek noted.

Other projections include:

• The Upper Peninsula is expected to show the largest increase in tourism volume at 4 percent to 5 percent.
• The northern Lower Peninsula and Southeast region will show a 3 percent to 4 percent increase.
• The Southwest region will show the smallest increase at 2 percent to 3 percent.

The projected growth for Michigan’s tourism industry is in line with average industry growth over the past 20 years.

Holecek noted that the economy, consumer confidence, stock markets and international political climate have all improved since last spring and will boost travel activity in 2004.

The weaker U.S. dollar should also benefit Michigan’s tourism industry because it will discourage residents from traveling to other countries while making traveling to Michigan less expensive for international travelers, especially from Canada, the most important source of Michigan’s foreign travelers.

But a continuing high rate of unemployment in the state, relatively high gasoline prices and scarce funding to promote travel to Michigan are expected to weigh negatively on the rate of travel growth this year. Industry profits will improve but not keep pace with growth in travel volume because high-margin business and conference travel have not fully recovered from the recession and both the business and leisure traveler are maintaining a tight rein on their travel expenditures.

Holecek said that consumers have become wedded to discount shopping necessitated by the recession, and the emergence of the Internet makes shopping for the best prices easier.

This year and beyond, Michigan's tourism industry faces mounting competition for travelers' dollars, a challenge even though the travel market is expanding. Participants in the Michigan Tourism Outlook Conference last year concluded that Michigan would need to invest in its travel products in order to maintain and grow its travel market share.

For more information, visit www.tourismcenter.msu.edu

Copyright 2001 Michigan State University Division of University Relations.