Traveler Spending in Montana

When asked what souvenirs were the best to sell in a store, a blogger responded by saying, “Tourists buy any and all crap. That’s what’s so great about tourists.” While there is likely some truth to that statement, nonresident visitors to Montana who purchase “Made in Montana’ goods and services, are more likely to spend more money in the state than other types of visitors.

In 2015, nonresident visitors to Montana spent $3.6 billion in the state, an increase of 170 percent over 20 years. Adjusted for inflation that’s $1.9 billion more than expected in 2015, if spending patterns had remained consistent, but why is this happening?

Over the years, the Institute for Tourism and Recreation Research (ITRR) has conducted nonresident visitor studies to assess spending and economic impacts of tourism to Montana, and to identify visitor characteristics and travel patterns. In 2007, the Montana tourism industry adopted the geotourism charter as a way to promote the state to the best type of visitor for Montana and to help sustain Montana’s distinct character. By doing this, Montana sought to invite visitors who best represented a geotraveler – one who cares about our well-being, our scenic and natural qualities, our culture and heritage, and looks to experience what it’s like to be a Montanan. Purchasing local products and services is one way this geotraveler attempts to experience our state.

Two recent ITRR studies have assessed the spending patterns of visitors. In one study, the Geotourism Tendency Scale was used, created and tested by University of Montana graduate student Bynum Boley. It was discovered that visitors with strong geotraveler tendencies tend to spend more nights and more money in Montana than those who did not display strong geotraveler tendencies.

The second study focused on the details of spending. Did these visitors really care about Montana and express it through their pocketbook, putting their money where their mouth is, so to speak? Were they spending their money on homegrown, homemade products and services? The goal was to measure the economic benefit to our state.

Within economic impacts, economists refer to leakages as an important component to recognize when estimating the impact of spending by visitors in a locale. Leakages refer to the dollars leaving an area because the products purchased by visitors are produced outside of the local region. The key is the smaller the leakage, the higher the economic effect. Therefore, locally made items and local services sold to visitors produce a higher impact to the region.

ITRR’s on-going nonresident study was used to gather data. On-site visitor intercepts of travelers in Montana were conducted on random days and times, at a random sample of gas stations and rest areas throughout the state, as well as at each of Montana’s seven largest airports from January through December of 2015. In that time period, 14,082 nonresidents were intercepted and asked about their spending over the past 24-hour period. That day could have been the travelers’ first, last or any day in between their visit, providing a randomized sample of all possible spending days.

We split the data into visitors who purchased at least one Montana made good or service and those who did not purchase such goods or services – this included actual “Made in Montana” products, goods from farmers markets or utilizing local outfitters or guides for trips. Table 1 displays a side-by-side comparison of average daily group expenditures for the two types of visitors.

Visitors who did not spend any money on local products had their highest expenditure in gasoline followed by restaurants and bars, and hotels. Visitors who spent money on made-in-Montana products and services, spent the most on outfitter and guides, made-in-Montana products, then restaurants and bars. The clear difference in spending between the two groups also shows that visitors who spend on Montana-made products also spend more per day in all other categories except gasoline and diesel. Forty-one percent of their daily spending was on made-in-Montana products and services.

Table 1. Average Daily Group Spending in Montana by Nonresident Travelers, 2015 – Groups Who Spent on Montana-made Goods & Services vs. Groups Who Did Not.

While only 16 percent of travelers purchased locally made products or services, they spent nearly $185 more per day than the traveler who did not spend money on local products. Clearly, the amount spent by those who purchased Montana-made goods and services is significantly higher. Furthermore, we found that visitors purchasing Montana-made products and services were more likely to be on vacation and to be domestic travelers who flew into Montana.

Adding to these differences was the length of stay. Visitors who purchased local products and services stayed an average 4.62 nights longer than those who did not make local purchases.

And finally, ITRR data shows that 5 percent of nonresidents used the services of a guide during their visit – perhaps a half-day raft trip or an eight-day hunting trip in the Bob Marshall Wilderness. Money dropped into the pockets of guides and outfitters rarely leaks out of the local economy.

Additionally, the products purchased (Table 2) by nonresidents vary widely, assisting a variety of producers from candy makers to log furniture builders. Thirty-four percent of local goods purchased by travelers were food items, followed by 31 percent in local brews.

Table 2. “Made in Montana” Goods Purchased by Nonresident Travelers, 2015.

The geotraveler appears to be the type of visitor who values what Montanans value and who is interested enough to take a piece of Montana home with them, whether it is huckleberry taffy or the thrill of a rafting trip. They are sustainable visitors who contribute to the well-being of local residents by purchasing goods and services made and delivered in Montana. Their economic contribution is greater because the items purchased locally reduce leakages and enhance the recirculation of outside dollars in the community.

The Montana Office of Tourism and Business Development has been promoting to the geotraveler, which connects these travelers to locally made products, enhancing their visit and their experiences. But it’s important to remember that while a growing tourism industry is beneficial to the state, it must grow in a way that is sustainable and desirable for local residents, too.