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May 15, 2005Tough times for tourismEconomy, weather batter resort businessByRecord-Eagle business editor TRAVERSE CITY - Diane Hansell remembers the first season at her five-room bed-and-breakfast overlooking Crooked Lake, when guests often visited twice a year and she regularly took in overflow visitors sent from other lodges. That was just five years ago, in 2000, but now it looks like the good old days. "(It) was a pretty good year," Hansell said. "Since then, everything has been down from the previous year." "You can weather a couple of bad years, but three or four in a row makes it difficult," she says. Her experiences reflect a Michigan tourism industry trying to awaken from a multi-year slumber that has experienced largely flat growth since the peak tourism season in 1999. An industry that used to grow 3 to 4 percent statewide in a typical year expanded by less than 1 percent last year, squeezed by a sluggish economy, high gas prices and fickle weather. Both local tourism officials and state travel analysts are predicting a rebound this season, but won't make any guarantees. "It's still a tight market," said Deborah Knudsen, executive director of the Traverse City Convention and Visitor Bureau. "I think we'll do well in the marketplace, but I don't think it's going to be where people hoped it would be." The Travel, Tourism and Recreation Resource Center at Michigan State University projects a 2 to 3 percent statewide increase this year both in travel volume and spending compared to 2004. The state estimates tourism in Michigan generates more than $15 billion annually, accounts for 182,000 Michigan jobs and raises $853 million in state taxes. But forecasts aren't always on target, including last year, when Michigan's travel spending was projected to increase by 4 to 5 percent but went up only a half-percent. Experts blamed some of that on lousy summer weather, but the state's flagging economy was also a factor. Tourism research shows other parts of the country rebounded sooner from the recession than Michigan. The national average occupancy rate for hotels hovered around 61 percent last year, but in Michigan the rate continued to fall, from the 2000 level of 60 percent to 54 percent in 2004, the Michigan Economic Development Council said. Hansell, who owns the Inn at Crooked Lake along U.S. 31 north of Petoskey, said she gets about 50 percent of her visitors from the metro Detroit and Chicago areas. She's seen a drop in the frequency of their stays, which she attributes to tough economic times. "What we really see is that people take one trip. They don't take two anymore," she said. There are some positive indicators for this summer. Knudsen said early reservations reported by some lodges meet or exceed last year's numbers, and she expects an "uptick" in the region's tourism performance this year. Hansell said her advanced reservations are running about 5 percent ahead of last year, making her "cautiously optimistic" about the coming season. State travel analysts project outdoor recreation and camping activities to be among the strongest sectors of this year's tourism travel, along with golf at upscale resorts. All three are major sectors of northern Michigan's tourism market. New attractions Some of the region's major tourism destinations made significant investments to draw and retain visitors. They compete not only with each other but with other states and cities in the Midwest that pour big money into tourism promotions. The area's largest new tourist attraction debuts over Memorial Day weekend when Boyne USA Resorts opens the 88,000-square-foot Avalanche Bay water park - the largest indoor water park in Michigan. It's part of an estimated $72 million upgrade, including the $50 million 220-room Mountain Grand Lodge and Spa. Boyne spokeswoman Julie Ard said the facilities have generated plenty of interest. The water park also will be open to non-guests in hopes of drawing local traffic and visitors staying elsewhere in the region. "The calls are just phenomenal right now," Ard said, adding that Boyne's advance golf reservations are 50 percent ahead of last year. Visitors to the Grand Traverse Resort in Acme may notice upwards of $9 million in improvements, while Treetops Resort in Gaylord pumped almost $3 million into its lodge with renovated rooms, an expanded play area for kids and a new spa. Shanty Creek Resort in Bellaire also added around $2 million in improvements this season. New challenges The state's tourism slump coincides with a drop in tourism spending from Lansing. Michigan spent $12.1 million in 2000 to promote tourism, and the amount declined ever since. With about $7.9 million allotted this year, the state ranks 31st nationwide and trails other midwest states like Illinois, Ohio and Wisconsin. "We're lagging behind," said Lori Martin, a research specialist at MSU and editor of the Michigan Tourism Business newsletter. But the state's promotional dollars get results, officials say. A study commissioned by the Travel Michigan state tourism agency tracked tourism advertising last year in the Chicago, Cleveland and Indianapolis markets, and estimate more than $160 million was generated in those areas, producing about a three-to-one return on advertising dollars. Researchers at MSU suggest the state invest more in tourism promotion in Canada and other sites overseas, and in high-growth areas outside the Midwest. But experts say it won't be easy jump-starting Michigan's tourism industry. Besides increased competition and the poor economy, there are other worries that were almost unthinkable before the Sept. 11 terrorism attacks four years ago staggered state tourism. "You just don't know anymore," Knudsen said. "It's a different world."
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