Over the past six years, the economic recession and decline in federal spending have delivered a Mayweather-style one-two punch to the Washington economy, hitting the once thriving federal contracting and professional services industries particularly hard. Many local academics and economists have been questioning whether another sector could help pick up the slack and fuel the economy.
It seems tourism and hospitality may provide at least part of the answer.
More than 18.3 million Americans visited the nation’s capital last year, marking the fifth straight year of record-breaking domestic tourism, according to report to be released Tuesday by D.K. Shifflet and Associates, a travel research firm, as well as Destination DC, the city’s nonprofit tourism arm. That’s an increase of roughly 900,000 visitors–or a 5.2 percent uptick–over 2013.
The increase in visitation corresponded with a $100 million increase in spending by travelers to D.C. last year. All told, U.S. travelers spent an estimated $6.8 billion while in Washington.
“This industry continues to be extremely important from a job creation and economic growth perspective, and it appears to be heading in the right direction,” said Elliott Ferguson, president and chief executive at Destination DC.
While continuing to grow that top-line visitation number remains important, Ferguson said, his team has doubled down over the last couple years on ensuring that visitors — especially those from outside the country — not only come to the District, but that they stay here longer.
“When they’re looking at coming to the United States, they talk about going to Disney World, they talk about coming to New York, and while they’re here, they may make a day trip to Washington,” he said. “What we’re doing is trying to get them to think about staying for longer and exploring more of the city.”
Destination DC functions as a nonprofit promoter of travel to the District and includes more than 800 member businesses and organizations. The group has received $3 million from the city in each of the past two years to promote tourism; that number ticked up to $4 million to expand the group’s efforts in 2015.
“We have to work hard to bring tourists to the city,” Ferguson said, noting that the additional funding would allow his group to produce and air television ads this year promoting D.C. “It’s good to see the return on investment remains strong.”
Indeed, the Washington area’s leisure and hospitality sector spearheaded an accelerated recovery in 2014, adding 8,700 workers last year — it’s fifth straight year of job growth in the wake of the recession.
However, some economists have expressed concerns about the region’s sudden reliance on sectors like tourism, leisure and hospitality for new jobs and economic growth. Several have noted that openings at restaurants, hotels and stores tend to pay a fraction of the wages as the jobs being shed in sectors like professional services, technology and health and education.
“The leisure and hospitality sector is the lowest-wage segment among all the major segments,” Anirban Basu, the top executive at Baltimore-based Sage Policy Group, said in an interview earlier this year. He noted that an increase in tourism from other parts of the country merely offers further evidence that “the rest of the nation is sort of carrying the Washington metro area along.”
Ferguson pushed back against those concerns. He noted the District has a significant number of workers without the skills for higher-paying professional occupations — many of them younger, unemployed individuals — and pointed out that a growing hospitality industry can help fill those gaps.
In addition, with every new hotel comes at least some jobs at a management level, requiring higher-skill workers and churning out higher salaries.
“These sectors really do produce jobs on both ends of the spectrum, and I think that’s what the city needs,” Ferguson said.
Citing early reports coming in from hotels in the area, Ferguson says the city is primed for another potentially record-breaking year in 2015. With the opening of the new Marriott Marquis one year ago, he noted that more groups are looking at holding conventions in the nation’s capital.
“We’re very optimistic that this upward trend will continue,” he said.