HARRISBURG, Pa. – A new economic impact study conducted by Tourism Economics shows that Pennsylvania has experienced a significant decline in tourism market share, and that the commonwealth does not have sufficient funds to adequately market itself.
(Photo courtesy VisitPA.)
The study was commissioned by the Pennsylvania Restaurant & Lodging Association (PRLA), along with many of the state’s destination marketing organizations, and shows that travel’s total impact supports nearly seven percent of jobs in the state and $4.8 billion in state and local taxes, despite a lack of meaningful investment from the state.
“Pennsylvania’s travel and tourism sector in recent years has not realized its full potential,” Adam Sacks, President of Tourism Economics said. “Instead, Pennsylvania has experienced a significant decline in tourism market share, with its share of visitor spending among eight competitive states declining 6.3 percent between 2010 and 2019.”
The travel and tourism sector is essential to the Pennsylvania economy and its residents.
“Prior to the COVID-19 pandemic, travel’s total impact supported 6.6 percent of jobs in the state, including 348,661 direct jobs, and $4.8 billion of state and local taxes,” the report reads. “The effects of the pandemic were significant, resulting in job losses that have only partially been recovered, and making the future of the sector even more critical to the future of the commonwealth.”
“In the competitive market to attract visitors, Pennsylvania does not have sufficient funds to adequately market itself,” the report said. “Considering its size, Pennsylvania spends much less than virtually all other states on state tourism promotion activities.”
Research conducted by Tourism Economics shows that Pennsylvania’s tourism budget in 2020-2021 ranked 35th of 41 states. Furthermore, the commonwealth is 40th of 41 states by amount of tourism budget per leisure and hospitality job, and 40th out of 41 states by amount of tourism budget as a ratio to earnings in the accommodations sector. States that have large tourism sectors like Pennsylvania tend to have tourism marketing budgets greater than $20 million. Unfortunately, the budget for Pennsylvania hasn’t been close to $20 million since FY 2008-09, when tourism received nearly $30 million (including grants).
“In our assessment, destination marketing of Pennsylvania is substantially underfunded and the tourism budget excluding grants should be increased to $39 million,” the research suggests. “This would be closer in line with the size of the state’s tourism industry.”
Some of the key highlights of the study include:
– Between 2015 and 2019, shortfalls in the PA tourism budget have caused Pennsylvania to lose $9.7 billion of visitor spending, which is an average of 11,300 jobs per year, $4.5 billion of labor income, and $679 million of state and local tax revenue. Meanwhile, the state only saved $151.7 million of tourism budget expenditures. In other words, for every dollar saved on tourism spending in the budget, PA has lost $4.48 in combined state and local tax revenue.
– If the state increased funding to $39 million excluding grants, a five-year future period Pennsylvania stands to gain $9.6 billion of visitor spending, an average of 9,300 jobs per year, and $660 million of state and local tax revenue. The net tax benefit would save each Pennsylvania household $100 on combined state and local taxes.
– In 2019, Pennsylvania visitors generated $46 billion of traveler spending and 348,661 direct travel economy jobs.
– According to the report, “If state tourism marketing had been more competitive, growth would have been even stronger. As estimated in the scenario analysis in this study, had state tourism marketing received additional funding, visitor spending would have been $9.7 billion higher in total between 2015 and 2019.”
– Pennsylvania’s state and local governments would have to tax each PA household an additional $950 per year to replace the taxes generated by travel and tourism.
After reviewing the report, Representative David Millard, Representative Mary Jo Daley, Senator John Yudichak, and Senator Amanda Cappelletti, majority and minority Chairs of the PA House Tourism Committee and the Senate Community, Economic and Recreational Development Committee agreed:
“The report produced by Tourism Economics definitively shows the positive impact tourism can have on our state’s economy, but also highlights the missed opportunity our state has seen when it comes to potential tourism revenue. Based on its size, Pennsylvania spends much less than virtually all other states on state tourism promotion activities. Yet, we have so much to offer. With the right investment in travel and tourism, Pennsylvania stands to generate billions of dollars more in travel spending and close to 10,000 additional jobs per year. It’s clear that tourism is drastically underfunded in the Commonwealth. It’s important that we seriously invest in the industry in order to maximize tourism’s full potential as the revenue generator we know it to be.”
Though the research suggests that $39 million, excluding legislative grants, is the funding necessary for tourism to reach its full potential in Pennsylvania, it has been an uphill battle securing any additional funding from the General Assembly at all. As recently as FY 2008-09, Pennsylvania had a budget of $29.8 million for state tourism marketing. By FY 2014-15, this has been reduced to $7.3 million, of which only $2 million was available for destination promotion, excluding grants. Over the past five years, PA’s tourism budget excluding grants has ranged from $4 million to $9 million, well below the recommended level.
PRLA, along with tourism partners across the entire state of Pennsylvania ranging from hotels to amusement parks to destination marketing organizations, are calling for the state to increase funding for the tourism office to $20 million.
“Ultimately Pennsylvania should invest $39 million into tourism, a proven revenue generator,” John Oliver, President & CEO of Visit Erie and Chair of the PRLA Tourism Coalition said. “However, $20 million will be a very significant step in the right direction.”
Visit www.prla.org/tourismstudy to download the full report and executive summary.
