When it comes to promoting our state to tourists, many of us seem to believe that God did so much for Colorado that we don’t need to do anything for ourselves. We’re paying dearly for that attitude in lost jobs and falling tax revenues.
We weren’t always so short-sighted. For a decade, Colorado funded tourist promotion with a 0.2 percent sales tax on tourism-related items like restaurant meals and motel and hotel rooms. The tax was producing $11.2 million a year when voters abolished it in 1993 in an election triggered by the TABOR amendment.
As a result of the repeal, my wife and I now save two cents on every $10 we spend on our beloved low-fat sandwiches at Subway.
Yahoo.
If the tourism tax’s story ended with our two-cent windfall, there’d be no need to write this column. Unfortunately, those pennies here and there eventually mushroomed into a $2 billion drop in Colorado’s tourism revenue, delivering a crippling blow to our economy and worsening the 2001-2002 recession. The loss of so many tourist dollars, in turn, cost state and local governments at least $134 million in annual sales tax revenue – contributing to the cutbacks in highway spending, higher education and other services that accompanied the recession.
The moral of the story is that in the modern tourism economy, it’s not enough to have spectacular scenery. You also have to advertise your product. While Colorado was hiding our state’s virtues under a bushel, other states were promoting vigorously and stealing our business.
Few Coloradans would trade our state’s natural splendor even for the obvious beauty of such neighbors as New Mexico or Wyoming. But our rivals do a far better job of promoting what they have. A New York family that sees a great television spot for Utah and starts planning its vacation isn’t likely to stop and wonder if Colorado might offer even better vistas.
In the decade following the tourism tax’s repeal, Colorado’s share of the tourism market dropped by 30 percent, causing annual tourism spending here to decrease by $2.4 billion. The decline worsened after 2000, when everything from the Sept. 11 terrorist attacks to wildfires cut into Colorado’s tourism and convention business.
Finally, Gov. Bill Owens and the 2002 legislature scraped up $5.18 million to market the state in 2003, more than double the $2.55 million budget in 2002. A study by Longwoods International credited that modest increase for a $1 billion increase in tourism spending. The study also concluded that for every $1 the state spent promoting tourism in 2003, state and local governments received $15.58 in taxes. A stronger tourism industry means more jobs for Coloradans, and so lower costs for unemployment insurance, Medicaid, public assistance and other “safety net” programs.
Tourism industry critics often ask why it shouldn’t pay directly for its own promotion. The answer is that big players in the industry, like our top ski resorts, do spend a lot of money promoting their specific wares. But most of the thousands of restaurants, motels and tourist attractions are too small to mount effective individual campaigns. Most officials recognize the benefits of some kind of collective effort.
That’s the logic the Denver Metro Convention and Visitors Bureau is now exploring along with the city’s major hotels. As Kris Hudson detailed in last Tuesday’s paper, hotel owners may be willing to support a 1 percent increase in the city’s lodger tax if it’s earmarked to promote more convention business.
At the state level, Rep. Al White, R-Winter Park, has worked tirelessly for a $15 million program that would use tax credits to promote tourism across Colorado. White’s plan deserves to be a top priority next year – especially if voters approve Referenda C and D this fall to ease TABOR’s vise-like grip on state finances.
Politicians are always pledging to run state government like a business. But in business, you often need to invest money to make money. With a return of more than $15 in tax revenue for every buck we spend on promotion, it’s high time Colorado got back into the tourism business.
Bob Ewegen is deputy editorial page editor of The Denver Post. He has written on state and local government since 1963.
