The Tourism Plateau
Most conversations about economic development in Taos are grounded in the same basic premise: “Taos is a tourism-based economy.”
But Taos economist Bill Stevens says the emphasis on tourist dollars is overblown — and he has the numbers to prove it.
To gauge the tourism industry’s contribution to the Taos County economy, Stevens combines revenue numbers reported to the state from four business categories: eating, drinking, lodging, and amusement and recreation.
It’s not a perfect picture, he says, but it gives us a good idea.
According to this model, tourism had a meteoric rise in the 1980s and early 1990s — from about $20 million in revenue in 1980 to $75 million by 1994.
But in the subsequent 17 years, income from tourism has been relatively flat, hovering steady between about $72 million and $78 million.
While tourism held steady, the county’s economy as a whole went from $500 million in 1994 to nearly $1 billion in 2006.
As such, tourism contributed less and less. In 1994, tourism accounted for 12 percent of the total economy. Last year it was just 8 percent.
It’s not that tourism dollars haven’t exactly been plummeting. It’s just that other parts of the economy left the tourism industry in the dust.
So what’s responsible for the swelling Taos economy over the last 15 years?
In Stevens’ opinion, an enormous wave of “in-migrants” caused the big economic boost.
Between 1994 to 2005, the county’s population went from 25,000 to almost 32,000 people, and 35 percent of those people were 55 and older. Using data collected from IRS tax returns, Stevens notes that the majority of these “in-migrants” were older, out-of-state newcomers to Taos.
The majority of them were well-educated and were coming to Taos with retirement and savings to spend.
They bought or built homes. They filled their homes with furniture and art. They skied and shopped for groceries. And many started small businesses.
The biggest boom, by the numbers, was in construction.
From 1990 to 2006, the construction industry rose by an average of more than 8 percent per year, and building permits in the town and county were flying off the shelves. The housing craze employed a lot of locals, and had the effect of beefing up the economy as a whole, Stevens says.
But when the nationwide recession crippled the housing market, it stopped the boom dead in its tracks. The construction industry as a whole dropped by 30 percent from 2006 to 2009, and general contracting fell by more than half. Hundreds of construction workers are still out of a job.
In-migrants stopped coming in droves, and Stevens thinks local businesses in all areas are now feeling the hangover.
The end of the massive influx may be exposing the vulnerability of the Taos tourism business, or at least highlighting how small a role it now plays.
More importantly, Stevens argues, people should recognize that the minor ups and downs in the visitor tally have little to do with the general health of Taos businesses. All of them.
Consider this: Numbers provided by the town show that more people walked into the visitor center last year than in any of the previous five years. But many businesses, especially those in the historic district, are struggling to stay afloat.
Meanwhile, Taos is losing at least half its local dollars to retailers and businesses outside of the area. According to a 2006 study, less than 50 percent of the purchases made by Taos County residents were local. And the percentages for higher-priced items like construction materials and vehicles were even lower.
Stevens thinks Taos has been left aimless amid the economic maelstrom. Few people understand what really drove the economy in the 2000s, and decision makers and business owners don’t fully understand what needs to be done to save Taos from slipping further into despair.
Whether it’s a renewed focus on tourism, or an approach that explores burgeoning industries and sectors that could find a home in Taos, Stevenssays something needs to change.
Marketing matters, but how much?
Since 2007, the town of Taos has steadily increased the amount of its marketing contract from around $100,000 to more than $400,000 this year. Each year, the contract has gone to the same marketing firm: Griffin and Associates based in Albuquerque.
Some people think its too much. Others, not enough.
Joanie Griffin, who heads Griffin and Associates, says the firm has effectively leveraged its annual budget and spent it in ways to get the most bang for the buck. But that claim is hard to quantify.
It isn’t easy to draw a correlation between what the town shells out for magazine ads, online campaigns and other marketing, and what it gets back in tourist visits. According to numbers provided by the town of Taos and the Taos County Chamber of Commerce, 119,558 people walked through the door of the visitors center in 2006.
While the marketing budget went up, the number of visitors dipped slightly to 115,933 in 2008. Last year, visitor numbers climbed back up to 126,863.
By comparison, the visitor center counted 138,000 people in 2003. Town of Taos lodgers tax numbers — a reflection of overnight stays — are similarly varied. Aside from a spike to over $1 million in 2007 (the same time visitor numbers were going down), lodgers tax revenue has hovered around $900,000 a year.
The 15-year trend shows revenue improving since 1996, but the rising cost of a room and the fact that the tax went up by 0.5 percent in 2002 could account for at least part of the increase.
Meanwhile, the international effects of the recession (gas prices, decreased disposable income, etc…) and wide-swinging weather patterns have likely had an impact on the number of people coming to town.
Griffin admits that there is no way to be sure that advertising is working. Instead, she said the real incentive is the marketing maxim that if you don’t advertise, the consequences could be dire.
“You have to stay in front of people,” Griffin says. “And if you don’t, they’re going to do something else.”
With the recession, Griffin says more destinations are competing for the same visitors, and those visitors are more picky with how they spend their cash. Though there are an infinite number of factors that affect someone’s decision to visit Taos, it helps to get the name out there and remind people why they should come.
Griffin thinks lodgers tax is the best barometer for the health of the tourism industry, and compared to numbers in Albuquerque and Santa Fe, she thinks Taos has faired better than those areas over the last few years.
But what’s unclear is how much in public funds should go into advertising, especially if it’s hard to prove that the town and its businesses are getting a direct return on that investment.
via The Taos News
September 1, 2011