Tourism 2009: Anxiety tempered with optimism
by Cape Business staffAmid the worst economy in memory, the Cape Cod tourism industry is approaching the 2009 season with anxiety tempered by optimism.
“If you allow yourself to look at the future as half empty, it will become so. You will fulfill that attitude,” says Mark Novota, managing partner of the Wequassett Resort & Golf Club.
Like many other hospitality executives, he sees the Cape as well positioned to turn the recession into an opportunity by emphasizing the region’s value across the Northeast – compared to longer, more expensive trips. But Novota does not underestimate the challenges ahead.
“It will take focus and talent, optimism and enthusiasm,” he told the Travel Industry Symposium on Wednesday, which was organized by the Cape Cod Chamber of Commerce, the Cape Cod Hospitality Marketing Association and the Zammer Hospitality Institute at Cape Cod Community College. “That doesn’t solve the economic fundamentals, but it gets you and your team into a fighting mood.”
Attitude aside, a look at the numbers can help chart the Cape’s tourism landscape for 2009.
Until recently, international tourism, which has been increasing in recent years, continued to show positive growth, said Tony D’Agostino of the Massachusetts Office of Travel and Tourism. Visitors from Canada, the United Kingdom, Germany and France were up from the previous fiscal year. Only Japanese tourism was down.
However, D’Agostino cautioned that since late last year in particular, Western Europe is suffering from banking and housing meltdowns at least as severe as in the ones in the United States.
More significantly, the values of the British pound and the Euro have eroded substantially since November, making travel to the United States more expensive.
“Surely that [international] number is going to dim,” said Tony D’Agostino of the Massachusetts Office of Travel & Tourism, who also spoke at the symposium held at Cape Cod Community College. “The exchange rate is going the wrong way, and Western Europe is suffering a recession,” he said, noting that the majority of the Cape’s international visitors come from Britain, Germany, France and Italy.
At the same time, D’Agostino provided numbers that show growing strength among domestic travelers. Studying the data should give both local chambers and individual businesses significant guidance as they construct their own marketing efforts for 2009.
Emphasizing the issue of value for the travel dollar, D’Agostino underlined that the vast majority of statewide tourists – including those coming to the Cape – come from the Boston metropolitan area, the Springfield/Worcester Area, the Providence/New Bedford area, and the Albany/Troy area.
That’s in some cases less than two hours away by car, suggesting that during tough economic times, the Cape can market itself even more as a weekend, overnight and even one-day destination.
Adding further confidence, numbers suggest that Massachusetts and the Cape in particular are better positioned to weather the recession than the nation as a whole.
D’Agostino noted that last fiscal year, occupancy rates across the United States were down 4 percent, but up in the state and the Cape. Room rates across Barnstable County, meanwhile, were up more than twice the national average.
That’s extremely significant given the amount of room tax dollars the Cape represents for both the state and local governments. In fiscal 2007, for example, Barnstable County represented 9.5 percent of total room tax collections, said D’Agostino. That included $8.4 million in local collections.
Of the nearly $16 billion spent by domestic visitors alone in Massachusetts, about $818 million happens directly on the Cape; with $218 million going to local payrolls, D’Agostino noted.
And that is just the direct impact; indirectly, as much as another $9 million ripples through the Cape economy.
Here are excerpts of D’Agostino’s presentation at the chamber travel symposium:
What are the primary reasons domestic visitors come to Massachusetts?
Visitors represent people who travel at least 50 miles and stay overnight. Percentages exceed 100 percent because visitors choose multiple reasons.
• Visit friends, relatives – 42.6 percent
• Personal – 15.2 personal
• Entertainment/sightseeing – 12. 5 percent
• Business – 11 percent
• Outdoor recreation – 5.9 percent
• Combined business/leisure – 6.4 percent
• Convention/seminar – 5.8 percent
When they visit Massachusetts, what do they do?
• Attend family and social events – 26. 8 percent
• Shop – 20.3 percent
• Fine dining – 16.5 percent
• Beaches – 13.6 percent
• Rural Sightseeing – 15.3 percent
• Visit historical places – 11.5 percent
• Visit museums – 9.8 percent
• Urban sightseeing – 13.2 percent
• Visit state and national parks – 7.4 percent
• Attend art galleries – 3.9 percent
Where do they stay?
• Hotels – 44.1 percent
• Private homes – 41.8 percent
• Condos/Timeshares – 4 percent
• RVs/Tents – 3 percent
• B&Bs – 2.2 percent
• Other – 5 percent
How do they get to Massachusetts?
• Their own vehicle – 63.5 percent
• Airplane – 19.9 percent
• Rental car – 4.6 percent
• Camper/RV – 1.2 percent
• Train - 2.5 percent
• Ship/boat – 1 percent
• Bus – 2.1 percent
Where do the most visitors to Massachusetts come from?
FY 2008 metropolitan areas
• Hartford/New Haven, Conn.
• Albany/Troy, N.Y.
• Providence, R.I/New Bedford
• Boston
• Springfield/Holyoke/Worcester
How do visitors spend money in Massachusetts?
• Public transportation – $4.625 billion
• Automobile transportation – $1.933 billion
• Lodging – $3.498 billion
• Food services – $2.876 billion
• Entertainment and recreation – $918 million
• General retail trade – $1.293 billion
What direction are we heading?
By taking the long road, D’Agostino’s numbers suggest the state and Cape may be better positioned than the rest of the country to weather the current storm.
That long view requires going back to 2000 when Massachusetts had 2.3 percent of total market share nationwide. Then, 9/11 occurred, and the state suffered more than the nation as a whole.
Soon after 9/11, Massachusetts’ market share dropped about 10 percent, while the rest of the country combined declined 7 percent. Since then, however, the state has steadily inched back at a pace ahead of the national rate.
The impact of 9/11 was particularly severe among international travelers, noted D’Agostino. But that trend troughed in fiscal 2005 and has steadily improved since then.
The steep decline earlier in the decade was not only because of geopolitical events, he emphasized, but also because the state cut back significantly on marketing overseas. That trend has been reversed, he emphasized – with good results, at least through the current recession.
While expecting some fall off from the number of foreign visitors last summer, that number could well be made up by increased domestic travel here. “What is important now and in the future is market share,” he said. “How are we doing compared with the rest of the United States?
“Everyone’s volume may go down, but hopefully, our market share will stay up. We are working hard to [ensure] that,” he told the symposium.
To view or download presentations from the chamber's Travel Symposium, click here.
Published in Cape Business March/April 2009
