Tourism increases influx of money

Spring Break means more than just a party at the beach in terms of economics.

Though many South Dakota State University students are going home this Spring Break, others are traveling to states across the country. 

Rapid City, Myrtle Beach, Miami Beach, South Padre Island and Breckenridge are among the top places SDSU students are visiting this year. 

Maddy Reed, a junior early childhood education major, will travel to Nashville, Tennessee and Myrtle Beach, South Carolina.

“It is my first Spring Break trip,” Reed said. “It’ll be fun and I’ll be able to have a lot of new experiences.”

Money will also be playing a factor in her trip.

“I’m excited for the boot shopping, country bars and the Country Music Hall of Fame, the Grand Ole Opry and things like that,” Reed said. “I’m going to spend so much money.” 

Reed, like many other students and tourists this Spring Break, will contribute to different cities’ economies.

According to the 2013 Myrtle Beach Economic Impact Study, March is the fourth largest month for tourists to visit Myrtle Beach behind July, August and September. The average expenditure of a four-person trip to Myrtle Beach is $2,800.

This trend is mirrored by South Padre Island. According to the Occupancy Tax Revenue information provided by South Padre Economic Development Corporation, March 2015 brought in about $400,000 more tax dollars from hotels, motels and condos than in February. However, like Myrtle Beach, March is still the fourth largest month for tourists in South Padre Island.

Economists measure economic activity in gross domestic product, which is how the amount of goods or services are produced. 

However, the economic impact from tourism is not just the literal amount of money tourists spend. Economic impact takes into account the subsequent flow of money due to the tourists’ spending.

Any outside money coming into a city results in more economic output, said Tim Meyer, an economics professor. If the money is external to the city’s economy, it boosts that economy.

“It really doesn’t matter why the tourists are there. If it’s people going to visit the Smithsonian in Washington, D.C. or if you’re going to do Jell-O shots in Fort Lauderdale it has the same effect,” Meyer said. “But I don’t encourage people to do Jell-O shots in Fort Lauderdale.”

Though economies of larger cities can be boosted by tourism due to their size, this amount of tourist revenue isn’t necessarily a “big thing” to their economy. But dollars are still dollars, Meyer said. Cities that rely on tourism, though, are taking a big risk.

“It’s risky because they count on a very short season to drive all of their economic activity for the year,” Meyer said.

Businesses that rely on tourism are called seasonal businesses. Due to this, seasonal businesses have to compensate for the lack of revenue the rest of the year.

“It would be like a teacher who gets paid nine months and then they don’t get paid in the summertime. They have to save money for June, July and August,” Meyer said. “Except for a seasonal business it might be they get paid in June, July, August and then they have to save for September through May.”

In cities like this, business turnover is common because it doesn’t take much for businesses to go under, Meyer said.

“Those are the types of expenditures that we cut out first when people have lower income or they have lost their job,” Meyer said. “They stop purchasing luxury items and vacation would certainly fit there.”

The fact that students are going on Spring Break trips is a good sign for the economy. 

“I would say that if students are going on Spring Break and spending money that is a qualitative indicator that the economy is doing well,” Meyer said.

Although Spring Break has a positive impact on economies of cities around the United States, it still remains a time of relaxation for students.

“I’m excited not to have any homework,” Reed said. “I’m ready to lay around on the beach and get a nice sunburn.”