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Tourism means economic development
January 28, 2015
Steve Windham Executive Director, CEcD, EDFP, CPAOffice of the Lieutenant Governor Denise Thevenot, Executive DirectorLouisiana Tax Free Shopping
How can you make tourism an economic development program?
• Develop a cooperative spirit among everyone who benefits from tourism—dining, lodging, attractions and transportation along with artists and retailers.
• Tourism organizations should offer support for applications for grants that will make the community more attractive to visitors. Seek out creative ways to frame tourism as economic development.
• Demonstrate that tourism enriches more than just tax coffers—it promotes private investment, urban revitalization and infrastructure improvements that benefit the entire community.
Value Added and Income Distribution Effects of Tourism
• Value is added when a product is developed, processed, refined, or marketed in a manner that allows it to be sold at a higher price than the prices of the raw materials, services, and components bought for its production.
• Local businesses and tour operators need to be given the opportunity to sell their goods and services if tourism can have real economic impact. Otherwise the value of tourism will be “exported” from the local economy.
• It has been estimated that, worldwide, tourism directly or indirectly supports sixty-five million jobs, including hotel managers and staff, taxi drivers, tour operators, and shop attendants, among others. Secondary employment is generated in agriculture, industry, handicrafts, and services.
Other economic development benefits
• Cultural attractions and improved infrastructure make a community more attractive to businesses and young professionals.
• An outstanding tourism experience can influence visitors to relocate to your area—or to open a business or move their companies there.
• New business ventures spring up to take advantage of tourism growth, promoting entrepreneurship and opportunity for new jobs and support services.
Other economic development benefits
• The tourism sector, particularly hotels, plays an important role in attracting business investment and providing needed technical training for local workers.
• The construction of hotels and attractions serves as a stimulus to the local economy.
• Tourism actually serves to diversify the local economy, providing employment and revenue outside “traditional” sectors.
Louisiana Tax Free Shopping
• A division of the Louisiana Department of Revenue, created in 1988 by the Louisiana legislature in partnership with the World Trade Center of New Orleans and support from business leaders
• Provides cash sales tax refunds to international visitors on tangible goods purchased from member merchants
• More than 1100 participating stores in the state, from big box retailers to high-end department stores to small specialty boutiques
• Logged over $32 million in eligible purchases in 2013
History of the LTFS Program
• Managing Director Eugene Schreiber of the World Trade Center visited and experienced tax free shopping in Europe
• Schreiber proposed a voluntary participation program to retailers, business leaders, and members of the Louisiana legislature
• State Senator Hank Lauricella, Lieutenant Governor Paul Hardy and others united to promote the idea of a tax free shopping “zone” across the entire state
History of the LTFS Program
• Louisiana Tax Free Shopping for International Visitors was an unprecedented program in the United States
• The expansion of the program has been led by business leaders and elected officials.
• The program is subject to annual review and renewal, but has never failed to be renewed thanks to public-private partnerships.
President's E Award Winner
• After 25 years of service in attracting international visitors, Louisiana Tax Free Shopping was awarded the President's “E” Award for exporting excellence
• The “E” Award represents excellence in helping facilitate exports.
• Louisiana Tax Free Shopping was one of only 66 companies or organizations in the United States to be recognized with the President's “E” Award.
President's E Award Winner
• Louisiana Tax Free Shopping helped generate more than $73 million in 2011 for the State of Louisiana
• The award represents both economic development at home and expansion of exports abroad
• Most of all—Louisiana Tax Free Shopping was recognized for job creation!
How LTFS affects spending by international visitors
• The program makes shopping at small and specialty retailers just as attractive as shopping at major department stores and chains.
• Studies show that international visitors are likely to immediately spend their cash refunds among nearby merchants.
• International visitors are often influenced to choose Louisiana because of the tax free shopping program.
Benefits of the Tax Free Shopping Program
• Louisiana Tax Free Shopping has created new partnerships between state, local, and regional tourism promotion agencies and retailers.
• LTFS put international visitors’ retail spending in the spotlight.
• The program makes large amounts of previously uncaptured data available to retailers and economic development and tourism agencies.
• LTFS tells the interested parties where to target their overseas marketing resources.
• For every one dollar refunded by the state, $1.80 is returned in revenue by the program.
Case study: Baton Rouge• In 2010, eligible purchases by international visitors in
Baton Rouge totaled $233,691.70 on 1,033 transactions.
• In September 2011, LTFS opened a new refund center in Baton Rouge at the Mall of Louisiana.
• 2013: $1,074,803.97 on 2,855 transactions
• The expansion of the program in Baton Rouge was the result of a collaboration between the Chamber of Commerce, Visit Baton Rouge, and LTFS—a true public-private partnership
How has the program changed in 25 years?
In our first decade, shoppers from Latin American countries were the largest group
Six of our top ten nations were from Latin America—Mexico, Honduras, Brazil, Costa Rica, Guatemala and Venezuela
As of 2014, only three Latin American countries were in the top 10—Brazil, Mexico, and Honduras
2014 Top 10 LTFS Countries by Spending
1. Brazil2. China3. Philippines4. Canada5. France
6. United Kingdom7. Mexico8. Australia9. Germany10. Honduras
More international visitors are on the way
• 2012 federal initiative is in place to attract 100 million international visitors to the United States.
• 9.2 million visas were issued in 2013, up 42% from 2010.
• 38 countries now participate in the visa waiver program.
• Visa waiting times in China and Brazil have fallen to an average of five days.
• Between 2009 and 2013, combined spending by travelers from Brazil and China increased from about $8 billion to just over $20 billion.
