Most businesses predict stronger tourist season: Survey says National Cherry Festival has greatest economic impact, but Film Fest closing fast

REGION – The business community in the Grand Traverse region is more optimistic about the tourist season this year than it was last year, despite a worsening economy in Michigan and the nation.

That's one key finding of the 2009 Tourism Survey that the Traverse City Business News conducted in March. The email poll delved into attitudes toward current economic conditions and events such as the National Cherry Festival, the Traverse City Film Festival, Horse Shows by the Bay and other key elements of the local tourism scene.

The participants ranged from single individuals to a company with more than 500 employees, and included hotels, restaurants, bars, retail stores, wineries as well as organizations not directly related to tourism. About 82 percent of the roughly 200 respondents own businesses in the region.

A full 75 percent believe the season will be better than or the same as it was last year. Most of the respondents who foresee an improvement expect their growth rates to be between 1 and 20 percent – no small achievement given that the U.S. economy has been contracting several percent a quarter lately, according to the U.S. Bureau of Economic Analysis.

"I think you have to be optimistic if you are in the tourism business, and I just hope they are right," said Don Holecek, an expert on the tourism industry at Michigan State University.

"One reason to be optimistic is that we didn't do that badly last year when the environment was pretty poor," he said, when asked for his reaction to the survey results.

"This is sort of the 'glass is half full' philosophy – with the layoffs and the retirements, people have more time on their hands. So the time side is improving, and the money side is worsening."

In general, however, the region's positive outlook runs counter to his assessment that tourism will decline 3 to 4 percent in the state in 2009. And even respondents to the survey said their revenues were generally weaker in March than during the same month last year.

If gas prices stay low and the economy picks up, Holecek says the Grand Traverse region could conceivably beat his statewide forecast for the year. "You have the benefit of a tourism infrastructure, a large number of second homes, and the name recognition."

In any case, northwest Lower Michigan will certainly surpass downstate areas dependent on business travel and conventions, he said.

But he still says it would be a long shot for the Grand Traverse region to surpass 2008.

"If you assign a downside and an upside risk to the current forecast, there is probably more of a downside risk."

Some of the optimism in the Grand Traverse region may be based on the conviction that businesses will draw more customers from outside the region this year. That in turn may be due to the region's status as a relatively low-cost vacation destination.

That's a good thing: Survey responses suggest that businesses depending heavily on local trade may not be doing as well as those drawing visitors from outside the region.

Visitors from outside markets represent about 50 percent of business activity for about half of area companies that participated in the survey.

As a result, going after out-of-towners "makes a lot of sense," said Holecek. But there are limits to that strategy: "If you look at the other states we could reasonably expect to draw upon, they aren't doing all that well either. And the Canadian dollar is weaker, so we can't count on the Canadians."

Similarly, some local businesses depend heavily on first-time customers. The survey's respondents indicated that about a third of their trade comes from brand-new clients. The figure was more than 40 percent for the hotel industry, and just below 40 percent for retail stores, and more than 36 percent for wineries.

This suggests that the state's new "Pure Michigan" tourism campaign could prove to be a blessing.

"People are putting a lot of faith in the 'Pure Michigan' campaign, which is going national," he said. "Your region would probably be one that would benefit more than many others."

Take the importance of out-of-town and brand-new visitors into consideration, and it becomes all the more important for the community to be "welcoming" to visitors.

The region's residents are apparently rising to the occasion: A full 91 percent of respondents said residents of the Grand Traverse area are either very or somewhat welcoming to visitors. Last year, the figure was 78 percent.

Holecek says hotels catering to tourists should consider an even warmer welcome than usual: They should offer major discounts, such as adding an extra day to a weekend or weeklong stay at no charge.

"I think the real key this year is to address the customer where the customer is right now," he said. "The customer is in the Wal-Mart mode, and not in the Saks Fifth Avenue mode."

"That's one thing you could have going for you: the idea that you are a value destination."

A number of participants are clearly putting their faith in the drawing power of events like the National Cherry Festival, the Traverse City Film Festival and Horse Shows by the Bay.

Holecek isn't sure that new or expanded festivals will make much of a difference in tough times like the current ones. But he acknowledges that "every little bit helps."

If more or better festivals can indeed give the region a boost, people in the Grand Traverse region certainly have no shortage of ideas on how to proceed.

In one survey response, Carrie Gray, a yoga instructor, called on the community to "develop a wine festival that incorporates Old Mission and Leelanau." It could be held in June or in the fall. Along similar lines, another respondent recommended that Wineries of Old Mission Peninsula (WOMP) hold events throughout the year.

Respondents also recommended more activities for young people or more upscale activities for adults. Some urged that the Cherry Festival return to its roots by refocusing more on the fruit and its northern Michigan heritage. "The Cherry Festival could use some more events that are really related to the cherry industry and some 'classier' events," said Janice Binkert of NorthWord. "The film festival seems to be doing everything right."

A number of respondents also expect the festivals to grow and their relative importance to the community to shift.

Shelley Quinn-Becker of Transnation Title Agency predicted that the "National Cherry Festival will become the second festival, with the film festival becoming the primary festival in the region." She wasn't alone: Most forecast that the film festival will surpass the cherry festival as an attraction within 10 years.

Steve Cassens, executive director of Capital City Airport, recommended that Horse Shows by the Bay be extended to six weeks.

"The event is a sleeper, and the impact on the area could be huge." This year, the event will be held July 8 through Aug. 2.

Some respondents even proposed that some activities be cut back or not allowed to overlap with one another. Judith Lindenau, president of JWL Associates, would like to see a smaller Cherry Festival. "It is the only fest that uses the entire community as its staging area and thus interferes with quality of life for residents," she said.

It's not only residents feeling the event's impact. More than 13 percent of the businesses reported actually losing revenue during the Cherry Festival. On the other hand, more than 40 percent have seen an increase.

The vast majority of respondents, however, agreed that Horse Shows by the Bay, the National Cherry Festival and the Traverse City Film Festival are either extremely or very important to the regional economy.

More than half the respondents would like to see even more festivals in the region, and a number mourned the loss of the Epicurean Classic to St. Joseph. More than 60 percent of those surveyed said local officials should have worked harder to keep the event in Traverse City.

But whatever the value of festivals over the long-term, Holecek sees little chance that anything can boost the '09 season over '08.

"I would really be shocked if we did better than we did last year," he said. "I think the best case would be to stay even with last year.

"The employment is not there to support an increase, even if gas prices stay low and 'Pure Michigan' works out great, and we get everything else that actually needs to happen." BN