The Palmetto Insider

The blog of the South Carolina Policy Council

Taxpayer-Funded Tourism Marketing: Worth the Investment?

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Palmetto State taxpayers have shelled out more than $15 million over the last two years to Rawle Murdy & Associates of Charleston and another $1.8 million to The Bounce Agency of Greenville to promote our state’s tourism economy, according to S.C. Comptroller General Richard Eckstrom’s spending transparency website (STARS).

Are we receiving a good return on that investment?

Not really, as South Carolina tourism numbers are down for the second straight year.  Consider the following:

  • In June 2007, the statewide occupancy rate for hotels was 70.2 percent. This June, that rate had dropped to 61.3 percent.
  • Average room rates are also plummeting, down from $100.77 two years ago to $93.76 this year – a 7 percent drop.
  • Perhaps the most critical tourism metric – revenue per available room (or RevPAR) – has fallen from $70.76 in June of 2007 all the way to $57.47 this June. That represents a steeper decline than what’s been seen across the region during the same time period.

In short, fewer rooms are being booked for less money – which means profits are harder to come by and fewer jobs are being created.

On Hilton Head Island, things have gotten so bad that local officials tapped into an emergency tourism fund earlier this year – to the tune of $200,000.

According to The Hilton Head Island Packet, this emergency fund was mainly to be used after a hurricane scare – as a way of letting people know that the island was undamaged and open for business.

This time it wasn’t a hurricane scare that caused the emergency, just ineffective marketing.

And even after the fund was tapped, results on Hilton Head Island are still a mixed bag. On the one hand, occupancy rates are up 4 percent from the previous year, on the other, room rates are down 9 percent.

While it’s likely much of the $15 million Rawle Murdy has received from the Department of Parks Recreation and Tourism (PRT) has been for buying media rather than creative services, the agency has also gotten $670,000 over the past two years for creative work done for Patriots Point, a Charleston maritime museum.

While Patriots Point is run by the Patriots Point Development Authority, an enterprise agency that receives no appropriated funding from the state, it also recently received a $9.2 million loan from the state to repair a World War II-era destroyer.

Two things to consider: Is it really the purpose of government to spend tax dollars to promote a specific industry; and does a business tourism’s resources and means require the state’s assistance to market itself?

After all, we’re talking about an industry that employs more than 128,000 state residents – one out of every 15 working South Carolinians – and has a direct impact on the gross state product of $4.6 billion, greater than the entire GDP of nearly two dozen African nations.

In addition, there are serious concerns about accountability.

PRT is technically a cabinet agency accountable to the governor’s office, but this year’s budget included several budget provisos inserted by the General Assembly that directed the agency how to spend its money.

For example, PRT was forced to keep open several money-losing “welcome centers” while shutting down more profitable ones.

What is the agency’s outlook on all of this? 

“Keep the faith, things will get better,” a recent Parks Recreation and Tourism marketing outline concluded.

That’s not exactly the sort of response that inspires much confidence, is it?

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Written by Cotton Boll Conspiracy

August 12, 2009 at 10:25 am

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