Economic Recovery: Phase 1 - A Shot in the Arm

We are excited to be able to share the first phase of our economic recovery plan from Covid-19. Please consider supporting our efforts in the legislature to move forward these and other ideas. If you missed our introduction to this plan, you can find it here.

Phase 1 – A shot in the arm. Vermont’s tourism sector has taken a beating. Last summer, hospitality revenue was down 97% and food service 86%.[1] This happened over the season when tourism should be firing on all cylinders. (Interesting fact, we generate more tourism revenue in the summer than winter.) What’s worse is that the usually stable revenue from weddings and other events fell precipitously as well. The Wilmington Inn, for example, saw a 40% drop in events during September and October, prime wedding season.[2] Most of our nightly lodging stock are small “mom and pop” providers which are part of a $2.8B tourism industry and support 32k jobs in the state.[3] Vermont is the third most dependent state on tourism spending, but compared to regional states, our share of tourism spending is shrinking.[4] The Vermont Department of Tourism and Marketing is asking for an additional $1M for tourism marketing. We should give it to them. Our annual $3M marketing budget supports this industry that generates $373M in tax revenue.[5]

Not only does this funding support a workforce that has been hit hardest by the pandemic, but it also makes sense for taxpayers. A study of the Pure Michigan marketing campaign indicated every dollar spent generated $5.75 in tax revenue for the state. (Note: Michigan has a lower meals & rooms tax rate so Vermont’s ROI could potentially be higher.)[6] This is a phenomenal return on investment all around.

We can likely bump this ROI even further using new digital marketing techniques as opposed to traditional print, billboard, and TV ads. These digital campaigns tap into what is called the experience economy where tourists themselves become net promoters based on their experience while staying here.

This also provides a quick economic boost. Vermont is within the drive market for major metropolitan areas like Albany, New York City, Boston, and Hartford. As growing evidence suggests, there is pent up demand for travel.[7] Many lodging providers are indicating that six-month bookings are up 40% over a normal year as people prepare to travel this summer.[8] Given that a large number of people may be reluctant to travel by air, this puts destinations within driving distance at a competitive advantage. However, this means that Vermont is in a footrace with our neighbors that have much larger marketing budgets than we do. An early investment here can pay dividends in spades later this year and provide the shot in the arm our economy really needs.

The second area that is a worthy investment for quick economic activity is housing. VT Digger reported in January that housing construction in Chittenden County dropped by 50% in 2020. That’s a problem.[9] It’s a problem not just for the state’s 15k construction workers but also for the longevity of our workforce attraction and development programs.[10] If we hope to attract and retain a skilled workforce, we need to have housing they actually want to live in. Directing stimulus money into housing projects will create immediate economic activity from our idle construction workforce and also pay dividends for years to come (more on this later).

 

[1] https://www.wcax.com/2020/08/31/vermont-tourism-industry-suffers-a-big-hit-from-covid/

[2] https://vtdigger.org/2020/08/26/allen-a-perfect-storm-is-buffeting-vermonts-storied-inns-and-hotels/

[3] https://vermontbiz.com/news/2018/december/21/scott-releases-tourism-benchmark-study#:~:text=In%202017%2C%2013%20million%20people,percent%20of%20the%20state's%20workforce.

[4] Based on testimony to House Commerce Committee on 3/12/2021.

[5]https://legislature.vermont.gov/Documents/2022/WorkGroups/House%20Commerce/Economic%20Development/FY2022%20Budget/W~Heather%20Pelham~Vermont%20Department%20of%20Tourism%20and%20Marketing%20Budget~2-9-2021.pdf

[6] https://www.canr.msu.edu/news/tourism_marketing_return_on_investment

[7] https://www.travelpulse.com/news/features/theres-pent-up-demand-for-travel-but-covid-has-altered-consumer-behavior.html

[8] https://corp.inntopia.com/new-winter-records-in-occupancy-and-rate-for-southeast-lodging-properties-strength-continuing-into-summer-months/

[9] https://vtdigger.org/2021/01/31/new-apartment-construction-in-chittenden-county-dropped-by-half-in-2020/

[10] https://www.bls.gov/eag/eag.vt.htm

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  • Ben Kinsley
    published this page in Blog 2021-04-17 11:36:15 -0400

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