“In the short term, the market is a voting machine. In the long-term, it’s a weighing machine.” – Benjamin Graham
With the Memorial Day holiday weekend just around the corner, our regional visitor economy swings into full speed for what will once again be a busy summer.
In the short-term, our commerce engines continue to generate remarkable economic vitality, and subsequent tax revenue, for our region by almost any measure.
A recent N.C. Department of Commerce report, for example, highlighted a statewide tourism impact up 15.2% for 2022 as compared to 2021. That kind of growth is admirable in any industry, let alone our dominant one locally.
That kind of revenue isn’t limited within the industry, either.
For example, one current state budget proposal contains stunning amounts of healthcare investment in eastern North Carolina reflecting essentially a state budget office flush with cash as a result of the strength of our economic engines.
With that growth in mind, we turn in our strategic thinking not to the coming summer (that’s already baked in a sense) but to the coming years relative to the growth we’ve seen over the past several years.
Can we, in other words, keep that kind of growth up or do we normalize to something more like 2019?
Most importantly, how soon and through what indicators will we know?
Any time we’re dealing with the future, predictions become problematic. We’ve got excellent backward facing data, on the other hand, from a wide range of sources but barometers for future economic growth remain hard to find at best.
In a seasonal visitor economy, time has proven only a few potential barometers with which to steer a course:
First, future year reservations within the lodging sector.
The willingness of a visitor this year to commit to a return visit next year is perhaps the strongest single indicator of success based on their experience this year–any data here is critical.
Keep in mind reservations can be measured in several ways, of course, but overall visitation is at least a guide.
For example, as a region this summer we’ll be looking to resolve the conflicting trend with potentially less visitors but higher prices; does that trend suggest experience or inflation as the story of the year?
Second, a sense of anecdotal overall visitor sentiment based on their experience this year.
That’s important because, simply, if the experience begins to erode visitors will be more likely to look for other destinations in their planning for next year.
It’s easy to think a few less visitors might ease congestion, but beware volatility within our tax structures that support healthcare and education among others.
Third, it’ll be worth keeping an eye on the composition of seasonal residents over the summer.
More homes filled by seasonal residents suggests a decline not only in tourism revenue but also in market share for future lodging potential.
That’s not a bad thing if we can detect the trend and plan for it, but as with all budgets surprises are seldom welcome.
That’s all to say that the future is, as ever, through a glass and darkly.
The national economy overall continues to send remarkably conflicting signals and more locally it’s as hard as ever to gauge future year sentiment as we think about resources, priorities, and sentiment.
Above all, though, the quality of the visitor experience – one that we all influence – is perhaps the surest gauge of both our economic success and any economic unraveling.
In short, the best economic barometer our region has is one simple question asked to a visitor: “Are you planning to come back next year?”
“Sound Strategy”, a weekly commentary from our publisher Clark Twiddy, features issues, ideas and information focused on our mission statement of “Covering the Business News of the Greater Outer Banks”.
