2009 outlook: Industry anticipates effects of layoffs, lower gas prices

It's safe to say that the economy is on the forefront of everyone's mind in today's world. One of this region's largest business sectors – tourism – is feeling the economic volatility each and every day.

The industry expects 2009 to be another difficult year with the enduring recession and consumer confidence dilapidated. Even though 2008 tourism statistics are not yet available, we know that tourism generated $874 million in state taxes and employed 192,000 workers in 2007, making tourism the third largest industry in the state.


With economic uncertainty, travelers took fewer trips in 2008: highway traffic counts on Michigan's popular highways down 6.2 percent. The Mackinac Bridge saw a decrease in crossings of 8.9 percent in 2008. A steady decline has been recorded in crossings over the past few years.

Weather did help winter sports enthusiasts this year at local ski resorts, which had a positive year. Precipitation was up 16.5 percent and temperatures were down 4.5 percent, making 2008 a great year for a long snow season.

Gas prices were up 14.4 percent in 2008 compared to 2007. However, we have seen these level out and consumers, in most cases, are not letting gas prices affect their plans.

Hotel occupancy overall is down nationwide; however, Michigan is feeling a significant impact over other states. Smith Travel Research, which measures occupancy and travel habits across the country and internationally, continually places Michigan in last in occupancy nationwide.

Compared to 2007, Michigan dropped 3.2 percent over the national average drop of 4.2 percent in occupancy. Detroit fell 5.2 percent.

2009 outlook…

The travel industry has many wild cards to contend with, but overall is optimistic regarding its future. Many hoteliers, along with other travel-related business segments, are looking to move forward and continue providing visitors an experience to see our true treasures up north.

With lower gas prices expected, and with layoffs, buyouts and early retirements, it's anticipated that more people with open schedules will take vacations this year. However, instead of longer trips out of state, it is expected that people will take shorter trips closer to home.

Realistically, 2009 will have its ups and downs, with weather playing a large factor in its success.

The Michigan Film Production Incentive Program has also helped the state's tourism industry out tremendously. Although northern Michigan has only seen a small segment of this market so far, it's expected to increase rapidly. The incentive provides a 42 percent tax credit to bringing film industry projects to the state. In 2008, 32 productions were completed with $65.4 million in spending. It's expected to see even more in 2009.

With the industry looking to an additional 3-4 percent drop in tourism in 2009, much talk continues to focus on new trends and collaborative initiatives between many business segments in order to continue to drive tourism and look beyond our current economic state.

Despite the dim outlook, many see the Pure Michigan advertising campaign a large boost to the industry. This campaign, which is designed by Travel Michigan, has expanded into many new markets around the Midwest, which are day drives to our region.

Almost every industry in the state is showing economic volatility currently. The tourism industry is no exception, but with the resources available, the industry looks to forge ahead through these times.

Nick Trahair is GM of AmericInn in Traverse City and past president of the Grand Traverse Area Hotel & Motel Association. BN