Michigan spends big to lure tourists
State launches record $30M ad campaign in effort to give industry boost during recession.
Michigan has launched a record travel promotion campaign in the middle of a national recession, banking on the notion that $30 million worth of TV ads featuring former Michiganian Tim Allen will offset the impact of a dismal economy on the state's second largest industry.
For the first time in 15 years, the state is running a series of winter tourism commercials and will follow that with a first-ever $10 million national cable TV buy in the spring to coax out-of-state vacationers to flock to the Great Lakes State in the summer.
Will it be enough to perk up the $18 billion-a-year travel industry in 2009?
"It's unfortunate we have the money for this campaign at a time when people don't have money to spend for travel," said Larry Alexander, president and CEO of the Detroit Convention & Visitors Bureau. "But we still have to get the message out."
The numbers aren't in yet for 2008, but there are indications that a steady decline in travel and tourism that started with the beginnings of Michigan's own recession in 2001 continued this year. Recent reports had this state ranked last in hotel occupancy.
In 2007, the latest year available, in-state travel dropped off by $1 billion, said George Zimmermann, vice president of Travel Michigan, an arm of the Michigan Economic Development Corp.
"It's not the best situation for us given the economy," said George Zimmermann, vice president of Travel Michigan. "Travel is something people will stop when the money is tight. Half of travel spending -- from in-state travelers -- is soft.
"On the flip side, Michigan offers a lot of good values."
Most of the record promotional spending comes from the state's lawsuit settlement with the big tobacco companies. Travel Michigan will use about 85 percent of its ad budget outside the state because "we know we need to bring in new visitors" to make up for declining in-state travel, Zimmermann said.
Until now, the ad effort has focused on three Midwest markets: Chicago, Cleveland and Indianapolis. But it will expand to Cincinnati, Dayton and Columbus, Ohio; St. Louis; Milwaukee, Wis.; and Ontario this year. And the national ads will push the envelope even further.
The award-winning "Pure Michigan" TV ads feature the voice of Michigan-raised comedian Allen, the score from the movie "The Cider House Rules" and pictures of the state's tourist attractions.
Ads may help recession
The $30 million ad budget almost doubles what the state spent last year, and is more than five times the amount spent just four years ago.
Ken Hayward, vice president of sales and marketing for Mackinac Island's Grand Hotel, said the record travel budget can help a lot -- even during a recession.
"Getting the word out is always good," he said. "Hopefully, we can drive some new people into Michigan. In these struggling times, tourism can be part of the economic solution."
Hayward said the majestic Grand Hotel had "an OK year" in 2008. "Not quite as good as the year before but probably a little better than we expected given the economy."
The Grand had 91 percent occupancy on the 177 nights it was open this year, down a bit from last year, Hayward said, but far better than the 55 percent statewide average this year. The national average is 63 percent.
Crystal Mountain resort in northwest Michigan had a "good year, thanks to a very good winter" followed by a so-so summer, said Chris MacInnes, senior vice president. The fall has been strong, thanks to early snow on the ski slopes, which allowed the resort to open for the season on Thanksgiving Day.
"In 2009, we're aware of the significant economic challenges, and we're doing our best to offer values," MacInnes said.
She said she's "delighted" about the state's record promotional budget this year, but when asked whether it'll be enough to make up for the down economy, MacInnes said: "That's a biggie. That will be difficult."
Out-of-state market key
Brad van Dommelin, president of the Traverse City Convention & Visitors Bureau, said the growing winery travel trade and falling gas prices helped the area to a modest 1 percent increase in business this year. He said travel in the Traverse City area from southeast Michigan "is still a strong market for us, but we've seen a weakening the last couple years. We've seen growth from Illinois, Indiana, Missouri, Ohio, New York and Canada.
"For us, the real growth is the out-of-state markets," he said. "Michigan is going to come back, and when that happens, it will enable us to have real growth in the future."
Alexander at the Detroit Convention & Visitors Bureau said the faltering economy has led to less business and leisure travel.
"We know companies are canceling meetings and planning fewer meetings," he said. "With the economic crisis and the credit crunch, we know our industry is the first one cut and the last to come back. People don't have discretionary income for trips.
"We had a slow year in 2008, and it really slowed up in September when the financial market collapsed. I'd say there was a 10 percent decrease" in tourism.
He said the recent opening of new Detroit hotels, including casino lodgings, may provide a boost. But for now, the bureau's theme will be "vacation at home."