Tourism Industry in NYC, Term Paper Example

Introduction

Travel and tourism is America’s largest service export and a major jobs engine.

Within the United States, New York holds a dominant position in terms of both international visitor arrivals and spending, placing New York at the top of the global tourism industry

New York City accounts for nearly one third of all international arrivals to the United States, and ranks as either first or second among destinations of choice in international traveler surveys[1]. In terms of national employment, New York City ranks fourth in travel and tourism related jobs.[2]

Especially, under Bloomberg administration New York City was a brand and he kept tourism a top priority, praising the industry for creating many jobs and bringing extremely well amount revenue to the city.

As international travel and tourism is expected to grow considerably over the next couple of years, the whole New York economy is likely to benefit from this growth. Below the authors will present some key elements describing the importance of international travel sector to the New York city economy.

Historical problems

Tourism has always been one of the “bright spots” of New York’s economy, according to Bram[3]. Even though it started off as a main manufacturing location[4], in the 1920-s, it became the largest financial  center of the world. After World War II, population of New York declined, and due to the improved transport links and infrastructure, many middle class residents moved out of the city. Warehouses and cargo operations also moved outside of New York, as the city was unable to accommodate the companies’ space requirements. This resulted in a higher rate of unemployment. Efforts were made between 1977 and 2001 to turn around the economy and create jobs outside of manufacturing and logistics. Housing stock rehabilitation and building was tackling the problem of high unemployment and demographic changes in New York’s population. Middle class residents left behind the city and the majority of New Yorkers who stayed were of low socio-economic status. The growth of finance, real estate and insurance has finally managed to turn around the decline of New York’s economy. The boost of the financial services industry and the economic interventions based on tax incentives to attract investments in the city have positively impacted New York’s economy right until 9/11, when as a result of the attack on financial companies, jobs were lost, companies left the city and air traffic declined. The situation called for a revolutionary approach, and Mayor Bloomberg had to face with a major deficit in the city’s budget. His program has resulted in an economic recovery at an unprecedented scale. His program will be reviewed below.

General characteristics of Bloomberg’s economic development program

In 2008, in a letter[5], Bloomberg prepared the citizens of New York for tough times and outlined his program to deal with the economic challenges American cities faced during the recession. He stated that “there are storm clouds in the horizon. The national economy has begun to slow. New York City is not immune to the forces causing this slowdown”. Looking ahead and creating plans to improve the economy was always the strength of the mayor. When he was elected in 2001, just after the 9/11 attacks. He had to deal with a situation that brought New York’s economy to a standstill. He still managed to create an economic development strategy that resulted in a complete revitalization of New York, added 50.000 jobs to the New York market on the average each year between 2005 and 2009[6].

He started with reducing the city’s expenditures and increasing revenue through borrowing[7]. Bloomberg bid on 2012 Olympics; an initiative that failed over London, however, did not give up his plan to revitalize the city and rezone the city. He clearly communicated towards corporate leaders that “New York city is open for business” and attracted financial services corporations back in the city. His new program consisted of three main economic objectives:

a, To improve the quality of life in New York

1. Attract corporations to create new jobs in the city
2. Reduce New York’s dependence on the financial industry

The new mayor focused on education in the city to attract new talent. He also realized that new industries needed to be attracted in order to create an economy that is not standing on one leg only[8] (financial services). From supporting research companies to education, housing, Bloomberg also started to revitalize the city by creating regional development plans for the most disadvantaged zones in New York. Culture was once again in the focus, and the mayor worked alongside with artists to create a more attractive city for visitors. This step, and the improvement plan for the transportation infrastructure has created an ideal environment for developing tourism and attracting visitors to New York once again. According to the new economic initiatives described above, the new policies focused on promoting tourism through targeted developments of infrastructure and marketing, attracting new employers and increasing New York’s competitive advantage[9].

Tourism under Bloomberg tenure

Since Mayor Bloomberg took office in 2002, New York City’s tourism industry has boomed. The new Mayor worked with the private tourism sector to expand the scope of NYC & Company’s services by absorbing the responsibilities of NYC Marketing and NYC Big Events in 2006. Bloomberg’s goal of hosting 50 million annual visitors by 2015 was reached in 2011 when 50.2 million tourists visited in one year.  NYC& Company put in place a successful international expansion plan and five-borough promotional strategy. As a result, NYC tourism is still growing intensively. Overall visitation has increased by nearly 19%, including a 52% increase in international visitation.[10]

Mayor Michael R. Bloomberg, NYC & Company CEO George Fertitta announced in December 2013 that New York City will reach 54.3 million visitors in 2013, a new all-time high and an increase of nearly 20 million additional annual tourists from 2002. By the end of this year, visitors to New York City will have generated $58.7 billion in overall economic impact and $39.4 billion in direct spending, while jobs in the leisure and hospitality sector are anticipated to reach a monthly average of more than 370,000 by year’s end, demonstrating the importance of the tourism and hospitality industry to New York City and its economy. The Mayor also announced that the City is on pace to reach 55 million annual visitors by next year, one year ahead of his original goal of 2015.[11] Mayor Bloomberg. “Since 2002, overall tourism here has grown more than 50 percent, while international visitation has increased more than 100 percent.

Economic impact of Bloomberg’s economic program on NYC

Bloomberg focused on promoting tourism and developing targeted infrastructure projects not only to attract tourism companies but to boost service industry in the city as well. International visitors’ 90 percent preferred shopping, 85 percent said they were likely to dine out,   and a large proportion of tourists spent time and money on culture; visiting exhibitions or  performing art productions. As a result, not only the total number of travel and tourism jobs increased to 350.000, but visitor spending in New York city increased to 32.1 billion[12]. As a recent report puts it: “The economic impact of travel and tourism extends beyond direct and indirect employment in the sector. International visitor spending contributes significantly to New York’s tax revenues and therefore to city and state budgets[13]”.

According to the Office of the Mayor[14], the city focused on New York’s historical capital of being a central cluster of international trade. The reasons for this competitive advantage of the city is described as: strong export links of the New York metro area, 36 percent of the population is 1^st generation immigrant, providing natural international trade connections, New York’s harbor being the largest on the East Coast, Air links providing support for growing cargo export, and the strength of the tourism industry. The four key pillars of Mayor Bloomberg’s economic development strategy[15]were: improving the quality of life in NYC, creating a pro-business environment, investing in the future and innovation to transform the economy.

Supporting start-up activities, the mayor has not only attracted new tourism and leisure companies, but also created domestic innovations and technological improvements that have benefited the growing number of visitors.

The Ten-Year Capital Strategy of New York (2008-2017)[16] determined environmental protection and education as the main strategies of the city. Further, bridges and highway spending and other city services accounted for a total of 25 percent of the expenditure, indicating that the newly elected mayor, De Blasio continues to focus on improving the quality of life and transportation in the city, as well as supporting services, which will, in terms, account for a more favorable environment for the tourism and leisure industry.

Steady Job Growth

Tourism has become the City’s fastest growing industry, supporting more than 363,000 in 2008.  The number of jobs was up by 27% since 2006. Indeed, over these past seven years, tourism jobs have been growing at a faster rate than any other major industry in the City. And tourism has been one of only three industries to see a double-digit percent increase during this period. The annual travel and tourism industry wages in New York City in 2009 was over 12 billion[17]. Tourism in New York state in 2009 was the third largest employer. Average wages in the city exceed state salaries by almost 10.000 dollars[18]. This results in an increased tax revenue for NYC.

Fastest growing industry  (2006–2012)

Between 2006 and 2012, leisure and hospitality grew by 27.4%, education and health services expanded by 13 percent, while the average growth of New York’s economy was 10.3 percent.

However, at the same time, professional and business services saw a growth of 8.4%. Even though financial activities industries declined by 4.3 percent and goods producing shrunk by 14 percent, information technology industry grew by 7.1 percent, trade, transportation and utilities by 5.1 percent[19].

The results of the economic plan of Bloomberg has achieved the three main objectives: growth of industries was consistent across the board, while tourism drove many of the supporting service industries towards new heights. The decline of the financial services and producing was in line with Bloomberg’s original objective to reduce the city’s dependence on financial services, while the city was unable to support manufacturing industry any further, due to the lack of space within the city to allocate plants.

The creation of NYC & Company allowed the city’s leadership to develop a strategic long-term plan and follow up the steps of implementation[20]. As a result, direct visitor spending between 2006 and 2012 grew by 41 percent, and this means that the city has managed to create 10.7 billion dollars of extra revenue for development plans. While in 2006 only 22.4 billion nights were sold by hotels, in 2012 this figure grew to 29 billion. Culture visitation grew by a stunning 30 percent.

Tourism industry post Bloomberg

The impact of cultural, science, tourism and infrastructure projects in NYC is going to create a steady long-term growth and a more sustainable city for future residents and visitors. As Mayor Bloomberg has been and still is focusing on investing in the future and making NYC self-supportive, sustainable, it is likely that the economy of the city is going to continue to grow as a result of the 10-year development plan that outlines the main focus areas of the city management until 2017. The investment of 150 billion dollars to support New York start-ups[21] is likely to pay off over the next decades.

Xenias and Erdmann[22] state that the outlooks of the U.S. economy are positive for the next few decades, and travel industry is going to remain one of the main drivers of NYC. Travel trend forecasts and government initiatives “should provide a winning combination for the continued success of this industry in New York”[23]. President Obama recently created the Corporation for Travel Promotion, which is likely to be able to support New York’s tourism marketing initiatives in the future, as well as national level programs. George Feritta, the CEO of New York City & Co currently represents cities in the Board of Directors, and has been named the vice chairman of marketing. His influence can create a competitive advantage for NYC on a national and international level.

The New York City and Company’s 2013 document[24] confirms the new target of the city’s tourism. By 2015, the city would like to attract 55 million visitors and create an economic impact of 70 billion dollars. The company projected the number of international visitors in 2015 as 12.5 million. The analysis included the anticipation of the growth of global markets, such as Chile, Singapore, Venezuela and Colombia.

The programs of Mayor de Blasio[25] include programs to increase the number of jobs available for New Yorkers, improving transport links, and creating a sustainable city. There is a great overlap between the programs of Bloomberg and de Blasilo, and this indicates that most of the development plans are likely to continue further empowering New York as a tourist hub. The new mayor also focuses on creating safer streets and transports, which will be improving the image of the city, potentially attracting even more visitors in the future. De Blasio’s vision to support the emerging industries, such as technology, communication and design is, however, a tool to create more opportunities and help residents strengthen their workforce skills. Provided that the new mayor will keep on focusing on culture, innovation, infrastructure and sustainability, New York will be able to support future growth of the tourism industry and attract even more international visitors, increasing tax revenue and employment rates alike. As the New York &Co publication confirmed in 2013, “the next administration will be relied on to push forward and support exciting development and rebuilding projects that will help drive more visitation”[26].

Works Cited

Bloomberg, “Letter by Mayor Bloomberg, January 2008 Financial Plan” The City of New York, January, 2008. Web.

Bram, J. “Tourism and New York City’s Economy” Current Issues.

De Blasio, B. “Website of Bill de Blasio” 2014. Web.

Durkin, P. “Jobs fears for ‘one-legged’ economy” Financial Review, 2011. Web.

New York City & Co. “NYC Tourism: A Model for Success” 2013. Web.

NYC & Company Leadership Team and Members “Preface to NYC Tourism: A Model for Success” 2013. Web

New York City Economic Development Corporation. “Travel and Tourism” 2012. Web.

New York City Office of the Comptroller “Economic Trends in New York State”  2008. Web.

Office of the Mayor, “NYC Economic Development Strategy by Deputy Mayor Robert K. Steel”. 2012. Web.

Porter, M., Ketels, C., Habiby, A., Zipper, D. “New York City: Bloomberg’s Strategy for Economic Development” 2009. Web.

Xenias, A., Erdmann, R.  “International Travel and Tourism Exports and the New York Economy”. 2011. Web.

[1] Based on data from the World Tourism Organization (http://unwto.org)

[2] Harvard Business School industry clusters

[3] Bram, J. “Tourism and New York City’s Economy. Current Issues.

[4] Porter, M., Ketels, C., Habiby, A., Zipper, D. “New York City: Bloomberg’s Strategy for Economic Development. p. 3

[5] Letter by Mayor Bloomberg, January 2008 Financial Plan, The City of New York, January, 2008

[6] Porter, M., Ketels, C., Habiby, A., Zipper, D. “New York City: Bloomberg’s Strategy for Economic Development. p. 2

[7] Ibid, p. 10.

[8] See: Durkin, P. “Jobs fears for ‘one-legged’ economy” Financial Review, 2011 for explaining the term: one-legged economy

[9] New York City Economic Development Corporation.

[10] New York City & Company. 2013. New York City Tourism: A Model for Success.

[11] New York City Economic Development Corporation.

[12] Ibid.

[13] Xenias, A., Erdmann, R. 2011. International Travel and Tourism Exports and the New York Economy.  p. 7.

[14] Office of the Mayor, 2012, NYC Economic Development Strategy by  Deputy Mayor Robert K. Steel

[15] Ibid, p. 4.

[16] New York City Office of the Comptroller, 2008

[17] Xenias, A., Erdmann, R. 2011. International Travel and Tourism Exports and the New York Economy.  p. 11.

[18] Ibid, p. 9

[19] New York City Economic Development Corporation.

[20] NYC & Company Leadership Team and Members.

[21] Office of the Mayor, 2012, NYC Economic Development Strategy by Deputy Mayor Robert K. Steel

[22] Xenias, A., Erdmann, R. 2011. International Travel and Tourism Exports and the New York Economy. p. 13

[23] Ibid, p. 14.

[24] New York City & Company. 2013. New York City Tourism: A Model for Success.

[25] Website of Bill de Blasio, http://www.billdeblasio.com/issues/

[26] New York City & Company. 2013. New York City Tourism: A Model for Success. p. 60.