Keeping the Stage Set

Will Tennessee continue to put its money where its tourism is?

When other candidates were talking tax reform during the 2002 gubernatorial campaign, Gov. Phil Bredesen cited a need to modernize the state's economy, championing, among other things, tourism as a means to further economic growth. About two years later, Bredesen's commitment to the industry manifested itself in the form of a $4.5 million one-time appropriation for the state Department of Tourist Development to use for media advertising. It brought the department's media buying budget to about $6.1 million—quite a jump from the $1.6 million the department received in years past.

Tourism commissioner Susan Whitaker requested that money to launch the "The Stage is Set For You" campaign, and, the next year, she requested and received $4.75 million to continue the campaign. She got that same amount for 2007-2008 and has requested it again for 2008-2009.

And every year, it has paid off. In 2006, Tennessee's tourism industry contributed $13.4 billion to the state's economy—a $1 billion increase for the second consecutive year. According to market insight and information group TNS Travel and Leisure, every dollar spent on advertising generated $21 in sales tax revenue, up from about $17 in 2005 and $14 in 2004. That figure doesn't even take into account the 181,000 Tennesseans employed in the state's tourism industry—a number that also continues to grow. According to the state Department of Labor and Workforce Development, the leisure and hospitality sector had 8,100 more jobs in October 2007 than in October 2006—the largest increase of any sector.

So, it's apparent that tourism is an economic engine in Tennessee. And despite competing budget needs, Bredesen says he will "try hard" to maintain the monetary commitment for 2008-2009 because tourism (and economic development) is the future of revenues for the state.

"When things are tight, it's one of the times you have to keep up the advertising. It's like when business is tight—you don't want to cut the advertising back very much. You want to keep the business flowing in," he says. "We are a sales tax-dependent state, and tourism brings nice, fresh, new people into town who do things and buy things and pay sales tax on them."

He also advocates tourism because in addition to bringing in revenue for the state, it also supports small businesses.

"While there are some big organizations like Opryland that benefit from it, on the whole, it's a small business business—it's hotels and motels and attractions and restaurants," he says.

Yet, can the tourism industry sustain its growth, continuing to weather economic blows that this year extend well beyond the rising gas prices to include a weakening housing market and a slowdown in consumer spending? Whitaker says, "yes," and she thinks the tourism industry could be a bright spot in an otherwise sluggish economy.

"When the economy gets rocky, people do travel—they just may not go as far, which actually makes Tennessee a better option because two-thirds of the U.S. population is within a day's drive," Whitaker says. "With the right advertising, we believe we can be a leveler to keep dollars up."

So far, the annual growth rates indicate that gas prices have not yet dramatically affected Tennessee's tourism industry.

"It may be slowing our growth, but it's not bringing it to a halt by any means," Whitaker says.

Beyond the numbers, though, state attractions set to open this year serve as further evidence that business is booming. The $110 million Belle Island Village project, which contains 126 hotel rooms, 95 retail locations and four restaurants, is scheduled to open in Pigeon Forge this fall. The project also includes attractions such as the Debbie Reynolds Hollywood Motions Picture Museum and the Darrel Waltrip Racing Experience, which features an interactive theater, competition radio-controlled cars, a racing car simulator, pit crew area, arcade and exhibits showcasing stock cars.

And while tourism officials throughout the state commend Bredesen's commitment and agree that the state's investment in the industry has come a long way, they would still like to see more in the way of funding.

"The states that are truly serious about tourism, like Florida and California, really don't hold back when it comes to tourism marketing dollars," says Pace Cooper, president and CEO of Cooper Companies, builders and managers of hotel properties across Tennessee and the United States.

Tennessee ranks 13th among states in terms of the 2006-2007 projected domestic advertising budget, according to the latest "Survey of U.S. State & Territory Tourism Office Budgets." The state recorded a budget projection total of $7.1 million (which includes media buying and creative cost projections). California tops the list, appropriating $15 million to the cause, and number five, Florida, boasts an $11 million budget. To crack the top 10, Tennessee would have to climb over South Carolina, which reported $7.3 million, Arkansas, which reported $7.7 million, and number 10, New Jersey, which reported $8.8 million. That should certainly be a goal for the state and would be a valuable step toward accelerating the commitment to this powerful economic force.

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