George Washington did Alexandria a multimillion-dollar favor.

At age 17, he came to the port city to survey its cobblestone streets. Deciding to stay awhile, he built a home, worshiped at Christ Church and dined at Gadsby's Tavern.

Today, 256 years after his birth, Washington is a major reason for Alexandria's flourishing tourist trade, an increasingly important industry that draws 1 million visitors a year, almost 10 times the city's population.

With only 16 square miles of land and limited open space on which income-generating offices can be built, the city has placed more emphasis on attracting business travelers and vacationers, who pour considerable sums into city coffers.

According to the U.S. Travel Data Center, travelers injected $242 million into Alexandria's economy in 1986, more than twice as much as the $114 million visitors spent in 1980. Travel-generated revenue includes money spent for hotels, restaurants, gift shops, recreation and transportation.

In 1986, $5.8 million of the tourist dollars went directly to City Hall, compared with $2.5 million in 1980. In addition, according to the Travel Data Center, the number of jobs generated by travelers increased from 3,300 in 1980 to 5,600 in 1986.

Business investors, aware of the heightened tourist trade, are putting more money into restaurants and hotels, according to the Alexandria Chamber of Commerce.

Restaurants, which once hugged King Street in the blocks closest to the Potomac River, now stretch the 15 blocks from the river to the King Street Metro station. In five years, the number of hotel rooms has increased by 70 percent to 3,400 rooms.

"Tourism is one of our largest industries," said G. Barton Middleton, president of the Chamber of Commerce. "We have watched the growth over the past several years; it's been continuous."

Alexandria Mayor James P. Moran Jr. said a flourishing tourist trade is a return on investments in expensive restoration projects, such as the waterfront and the Torpedo Factory. "It's a symbiotic relationship," he said. "We have a right to recoup the revenue."

And recoup they do. Through more aggressive promotion and by hosting special events such as the nation's largest parade honoring George Washington, which yesterday drew 50,000 viewers to Old Town, the city gets national -- and increasingly international -- exposure.

Almost all of the special events, from the Red Cross Waterfront Festival to the Scottish Christmas Walk, have blossomed in the last few years. When the summer Waterfront Festival started in 1982, it attracted about 20,000 people, according to the Red Cross organizers; this year more than 100,000 are expected.

Likewise, the December parade of kilt-clad Scotsmen has begun to draw viewers from around the world and has expanded to include highland dancing and bagpipe competitions.

"Almost no community can't benefit from visitors," said Barbara Janney, director of the Alexandria Tourist Council. "They bring money and jobs."

Although most Alexandria officials welcome the influx of visitors, some Old Town residents feel overrun. For them, the George Washington parade means noise, congestion, and not being able to park their cars in front of their homes.

"From an economic standpoint it is probably good," said Old Town resident Carol Anderson. "But sometimes you get overwhelmed by all the traffic and people. You don't want to bite the hand that feeds you, but you feel entitled to quiet enjoyment of the area."

City officials recently limited the number and location of allowed weekend events, but continue to say that tourism revenue is vital.

In publicizing Alexandria's connections to George Washington and the city's 1,000 restored buildings from the 18th and 19th centuries, Janney recently has focused on foreign travelers and conventioneers.

"When we hear the Japanese yen has gone up leaps and bounds," Janney said, the council targets Japanese tourists, primarily by enticing Japanese writers to profile the city in their newspapers and by promoting the city's offerings at international travel conventions. Travelers on the direct All Nippon Airlines flight from Tokyo to Dulles International Airport have only to pick up the inflight magazine to read about Old Town.

The tourist council has translated its brochure into several languages, including Japanese, Dutch, German and Swedish.

Since business travelers tend to spend more money in their host city than pleasure travelers, Alexandria has put special emphasis on attracting conventions. That effort has been greatly aided by a dramatic increase in the number of national associations that have located their headquarters in Alexandria -- from 42 to 168 in six years, according to the Chamber of Commerce. Notably, the American Society of Travel Agents moved to Alexandria last year.

Since 1962, when the City Council voted to establish a Tourist Council and appropriated $6,000 to pay its director, the city has tried to entice the tourist trade that was thriving across the river in the District. The momentum, however, picked up in 1983.

That year, the Torpedo Factory -- a former World War I munitions factory that was converted into an artists' colony -- was reopened after extensive renovation. The Torpedo Factory now draws 600,000 people a year; the White House draws 1.1 million.

In 1983 the city also formed a department called the Office of Historic Alexandria, which oversees the city's museums, archeological division and Tourist Council. It operates on a $2 million budget and is responsible for two new projects, the Black History Resource Center and the Waterfront Museum.

Last year, a marina was added behind the Torpedo Factory, and Moran said a boardwalk of specialty shops and a riverfront restaurant also is planned. "It will be not unlike Annapolis," he said.