Is Consultant Inflating Economic Impact of NM Tourism?

A new report from our friends at the Michigan-based Mackinac Center raises some interesting questions about the numbers being provided by a consultant “Longwoods International” that provides reports to various states, including New Mexico, on the impact of tourism on the economy.

As the Mackinac report notes, “These reports have a stunning lack of transparency that makes the uses to which they are put inappropriate and even patronizing to legislators and the people they represent…Longwoods generated a report that claimed the “Pure Michigan” advertising campaign has increased state tax collections by $6.87 for every $1 spent, for a 587 percent return on investment. The Legislature agreed to spend $33 million on the ads this year.

Such claims should come with a high burden of proof, yet the company refuses to disclose the calculations behind this extraordinary claim.”

When it comes to New Mexico, Longwoods International “touts a 2012 headline from the Albuquerque Business News article out of New Mexico: ‘Tourism Department Cites Success as Reason to Double Budget.’ One of Longwoods’ reports, the article says, claims that a $1.2 million campaign called ‘New Mexico True’ generated $3 for every $1 spent.”

“In 2015 – Longwoods reported on the ‘New Mexico True’ campaign’s performance from September 2013 through April 2015. The company claimed that the $2.5 million ad campaign generated $7 for every $1 spent. (The 2015 report was a follow-on to the 2012 report mentioned above.)”

New Mexico is not alone. Every state tourism program the company has studied in recent years found very positive results. But this is the way economic development consultants tend to work as we saw a few years ago with Ernst & Young’s inflated findings relating to New Mexico’s film subsidies.

In an article called “Economic Impact Studies: Instruments for Political Shenanigans?,” tourism scholar John L. Crompton writes:

Ostensibly, the people hired to conduct economic impact studies appear to be both expert and neutral. However, “they are in truth the exact equivalent of an expert witness in a lawsuit who comes to testify in support of the side that is paying the expert’s bill. An expert whose testimony harms his employer’s case doesn’t get much repeat business”

In other words, when it comes to providing a better understanding of New Mexico’s economy and transparency in terms of economic incentives, one cannot rely on businesses that are trying to win repeat business by pleasing their customers.