2014-11-27 / Around Town

Tourism Plays Larger Role in State Economy

By Tom Shevlin

In what’s expected to be a boost for local businesses, the number of out-of-state visitors to Rhode Island is expected to double this year during the normally sleepy period between November and January.

According to a report in the Providence Business News, off-peak conventions and other large-scale events are accounting for nearly 20,000 hotel room nights this month alone – a significant increase from the same period last year, when 8,465 room nights were booked.

While most of those room nights are concentrated in the Providence-Warwick area, the news belies a broader trend seen in Newport where the extension of the socalled “shoulder season” in recent years has driven out the length of what tourism officials and business owners consider to be peak season. It also speaks to an even larger issue facing state leaders: the need for Rhode Island to play to its strengths in order to sail beyond its current economic doldrums.

Indeed, as highlighted in a 2014 industry report conducted by IHS Consulting, Rhode Islanders – and Newporters in particular – continue to be the happy recipients of a robust tourist trade. And as the state looks to grow its economy in the coming years, tourism is expected to assume an even higher profile.

The data reveals why tourism is such an important factor in the state’s discussions surrounding its economic recovery.

In 2013, for example, the total economic impact of travel and tourism in Rhode Island was $2.8 billion, good enough to represent the state’s fourth-largest economic sector, an increase of over five percent from the previous year. That number also represents 5.3 percent of the state’s Gross State Product and accounts for some 45,000 jobs – or nearly 10 percent of the state’s total employment.

That translates into roughly $1.55 billion in wages and salaries in 2013 alone, with the average worker taking home $32,273 per year in stated compensation.

And because of its economic underpinnings, Newport’s share of tourism-related jobs is disproportionate to the rest of the state. So too, for that matter, is its share of the $1.12 billion in taxes generated by tourist activity in 2013.

According to IHS, in 2013, each visitor to the state created approximately $122 in tax receipts, $74 of which went to state and local authorities. And that’s just the tip of the data stream.

So the next time you’re irked by the throngs of people clogging Ocean Drive and America’s Cup Avenue, consider this before losing your cool: Without the state’s tourism industry, each household in Rhode Island would be responsible for paying $1,597 more in taxes every year to maintain the current level of state and local tax receipts, burdening even further what is already one of the country’s highest taxed populations.

Parents might also bear in mind that it only takes 214 visitors staying in Rhode Island to pay for one child to attend public school for one year.

Don’t think your business is affected by tourism? According to IHS, each traveler generates over $450 in expenditures, with $45 going to businesses that don’t directly impact that visitor. More broadly, for every 203 visitors that pass through the state, one new job is created and about $259 is added to Rhode Island’s Gross State Product.

Overall, according to IHS roughly $682 million in state and local government revenue and $431 million in state tax revenue is generated by the tourism sector.

So with a looming budget shortfall and the sluggish economic recovery vexing residents and businesses alike, state and local leaders are expected early next year to begin a renewed push to bolster the state’s tourism economy through a series of measures to better market and leverage our existing travel industry.

If effective, the results could be significant – even to local residents.

Look for more news coming from the Statehouse after the new slate of general officers is sworn into office in January.

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