Topic: Miller College of Business

January 15, 2009

Each dollar spent on tourism promotion and marketing by Indiana's convention and visitors bureaus generates roughly $15 in taxable revenues, creating jobs in a sometimes overlooked industry, says a new report by Ball State University.
A preliminary analysis of innkeeper's taxes and tourism marketing in Indiana finds the industry producing a positive economic impact on nearly every county in the state, said Michael Hicks, director of Ball State's Center for Business and Economic Research (CBER). 
"Tourism is sometimes overlooked as a major industry in Indiana, but it has a major economic impact," Hicks said. "Thousands of people visit the state's various attractions from around the country each year. The industry goes far beyond hotels and motels; it includes restaurants, retailers and manufacturing."
"The return on investment of 15 to 1 not only creates jobs but also supports state and local governments. In the end, tourism is a driving force in our state's economy," he added.
"Tourism Related Commerce in Indiana: The Innkeeper's Tax, Industry Structure and Impacts" was prepared by Ball State for the Indiana Association of Convention and Visitors Bureaus. The full report is now available online. 

The study found:  

  • The impact of tourism-related taxes occurs within the year the expenditure is made. 
  • In 2006, the average county in Indiana received about $11.7 million in wages from hotel and motel accommodations, $66 million in food service, $7.5 million in amusement and gaming, almost $2 million from museums and $19.5 million from the arts and recreation activities.
  • Other commercial economic activities supported by tourism include general merchandise, which accounts for more than $22 million per year in wages in the typical county. 
  • Statewide, spending on hotels — an almost exclusively tourism related activity —exceeded $1.4 billion in 2006. About 60 percent of the value added production from hotels and motels stays in the state in the form of wages and investment.

Indiana supports tourism marketing and development through its convention and visitor bureaus in 62 locations around the state. Funding for such operations is provided by local innkeeper's taxes.
An innkeeper's tax is levied on every person renting or furnishing, for periods of less than 30 days, accommodations in a hotel, motel, inn, tourist camp or cabin.
Hicks said his study is consistent with previous evaluations of the tourism industry but points out the value of attracting out-of-state residents to Indiana and retaining the Indiana tourism dollar at home.
"Basically, we are taxing people from other states when they stay in our hotels, eat at our restaurants and buy our merchandise," he said. "The hotel/motel tax will continue to be a strong economic force during the recession because people will try to make their vacations less costly. Instead of traveling to New York to see a Broadway show, they'll come to Indianapolis to go to the zoo or see a less-costly version of a play."