With California facing a multi-billion dollar shortfall, Gov.
Gray Davis has proposed massive tax hikes and drastic spending cuts
in a budget that would eliminate promotional funds for one of the
state’s biggest breadwinners: tourism.
Tourism is a $75 billion industry in California, and the fifth
largest contributor to an economy rivaling that of France. Those
involved with state tourism say the marketing budget currently $7.3
million is a drop in the bucket compared to the return on the
California’s deficit, fueled by a loss in income tax revenue and
increased spending, has been pegged at $34 billion by the governor,
who is proposing $21 billion in cuts.
“In my estimation it’s very short-sighted,” said John Marks, the
president and CEO of the San Francisco Convention and Business
Bureau. “Obviously all of us in the state recognize the severity of
the budget gap. It’s more than most countries have to deal with.
But what the governor and his people are missing is that tourism is
a provider of revenue, not a consumer.”
California Tourism, the program that creates and executes the
state’s tourism promotion, runs on a $12 million marketing budget.
A little more than half that amount comes from the state, the rest
from an assessment on the private sector.
In 1997 California became the first state to have an
industry-approved assessment to be spent on tourism marketing.
Florida has since approved a similar program.
According to California Tourism’s own performance evaluation,
state tourism promotion works. Its study shows that over the last
four years, the state successfully increased market share against
states with larger tourism budgets, resulting in an additional $8.7
billion in tourism revenue.
The commission also says it returned $196 for every dollar spent
on its national television and print advertising campaigns.
Although California remains the number one travel destination in
the United States, its marketing budget is one of the smallest. For
example, Las Vegas alone spends roughly $58 million annually on
advertising and promotion.
“Without funding from the state, we won’t have money to make a
dent with a campaign,” said Anastasia Mann, owner of Corniche
Travel in West Hollywood and a member of California Tourism’s board
of directors. “This is a humongous problem to deal with, but we can
show that this is one budget that needs to be protected.”
Marks, who has suggested that the federal government adopt an
assessment program similar to the California and Florida models,
fears that if state funding is cut assessment money might
“There may be those in the industry who will walk away and say
they’re just going to look out for themselves,” he said. “We got a
good thing that we started. It’s a miserable time to be doing
Although California has difficult decisions to make, it is
hardly alone. Virtually every state in the nation is struggling to
cope with budget deficits. How those states view tourism varies
According to the Travel Industry Association of America (TIA),
which is conducting a survey on how states are handing their
tourism budgets, total elimination of the budget is unusual. Many
states are cutting, but Colorado is seeking an additional $10
million to its current $9 million fund.
“The governor had a challenge and it’s not an easy challenge,”
Marks said. “It’s not over. It’s a hard way to begin the process,
but it’s by no means over.”