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Badlands National Park in South Dakota is pictured in this July 16, 2014, handout photo. The South Dakota Department of Tourism has seen an increase in the market segment for adventurers, including hikers. Badlands National Park/Handout via REUTERS

SD capitalizing on rising tourism from new market segments

PIERRE, S.D.—South Dakota tourism grew for the eighth straight year in 2017, although expansion was hindered somewhat by a lagging farm economy.

"We're a rural state, and we depend a lot on our drive market," said Kirk Hulstein, industry outreach and development director for the South Dakota Department of Tourism. "We definitely did feel the impact of the ag economy," he said.

The picture drawn from the department's recently published 2017 annual report is broadly positive. Visitation increased 0.1 percent from a year earlier. Visitor spending reached $3.88 billion, a 1.2 percent increase over 2016. And travel generated upward of $291 million in state and local taxes, a $12 million increase from 2016.

Without the tax revenue from tourism, Hulstein said, the average South Dakota household would pay an additional $871 to maintain current state and local spending.

"At times, tourism is probably seen as more of a fun and exciting industry, but it's not valued in some cases for the actual impact it has to our state," Hulstein said Tuesday, May 22. "We'd love to get the word out it does impact every household in our state."

Travel generated $2.59 billion of the state's gross domestic product last year, accounting for 3.2 percent of the South Dakota economy. The visitor economy sustained 53,894 jobs, or 8.9 percent of all South Dakota jobs.

State efforts to increase tourism dollars have grown increasingly sophisticated, Hulstein said.

"The data and technology available to us are almost overwhelming," he said, although South Dakota is embracing it faster than many states.

The department works with two data modeling and audience segmentation projects to identify the types of visitors coming here so they can fine tune and better target marketing. Most advertising occurs in the background on digital media platforms.

During the past three years, Hulstein said, the department has increased its outreach to a market segment known as active couples, people who travel for soft adventures, such as hiking.

"We've seen that segment start to grow," Hulstein said.

Other rising market segments include friends traveling together and multigenerational visitors—grandparents taking entire families on vacations. Celebration vacations, including reunions, anniversaries and retirements, also are rising.

Two sectors struggled somewhat in 2017.

Hotel occupancy declined 3.4 percent last year.

"Especially in multigenerational vacations and business travel, a lot are choosing to stay at alternative lodging options like Airbnb and rental cabins," Hulstein said.

Supporting his explanation, lodging taxable sales, which includes alternative lodging, increased by 0.9 percent last year.

Efforts to lure pheasant hunters also struggled in 2017, which was related to last year's decline in brood numbers.

A lower bird count tends to dissuade visits, Hulstein said, so the department has transitioned to emphasizing the hunting experience over bird numbers.

"People come to experience the beautiful scenery and get outdoors with their dogs and hunting buddies," he said. "While bird counts are important, you don't lose those other things ... (like) watching your dog work the field."

Some state advertising now features the dog's perspective: "Take me outdoors to the wide-open fields of South Dakota."

Even in the down years, South Dakota still has way more pheasants than any other state, Hulstein said. The question is how to entice hunters to drive 500 miles and spend more money versus hunting in their backyard.

The department has looked at expanding its partnership with Pheasants Forever to reach quail members, reasoning that if they like quail hunting, they're likely pheasant hunters as well.

"Tourism is a fun industry, but it's also an important industry and has a serious impact on our state," Hulstein said.

Increasingly, tourism is being recognized as the front door to economic development, he said.

"Those who travel here have a better impression of the state," he said, "and that can result in people wanting to go to college here, retire here and create a business here."