Choose Chicago, the city’s official tourism sales and marketing organization, announced it was forced to eliminate jobs and reduce programs as a result of frozen state funding.
Choose Chicago Chair Desiree Rogers and President and CEO Don Welsh on Oct. 9 announced that due to the State budget stalemate Choose Chicago must eliminate 28 positions and close its international offices in Canada and Mexico, effective today. Due to lack of a budget, the State has refused to release more than $7 million in budgeted funding for 2015. Additionally, the Visitor Information Center located within the Chicago Cultural Center will close on Jan. 3, 2016. These actions add to earlier cuts which include cancelling the Chicago Epic campaign two months early and halting all travel to and from domestic and overseas markets.
These significant changes come on the heels of a record summer for Chicago’s visitor industry. Chicago had one of the most exceptional summers on record with nearly 200,000 new hotel rooms to fill. Demand for hotel rooms from May through August outpaced U.S. growth by 1.5 percent with gains in all segments. The 4.1 million occupied nights in hotel rooms was 3.7 percent higher than the same time last year. New demand generators including the Grateful Dead concerts and the NFL Draft coupled with new convention bookings such as Microsoft Ignite yielded strong hotel performance and delivered on record hotel tax revenue for the city.
“We are incredibly disappointed that we have to take such drastic measures, but after making more than $2.3 million in expense reductions, and with no timeframe for the release of the $7 million in state funding we had budgeted for July through December 2015, we have no choice,” said Rogers.
The loss of 28 positions and the closure of Choose Chicago’s international offices in Canada and Mexico will significantly impact Choose Chicago’s ability to execute its core sales and marketing plans, which, to date, have been very successful delivering a 15% increase in visitation since 2011.
Without state funding certainty, Choose Chicago will have to consider further cuts to its core operations and programs including, but not limited to, canceling its regional advertising campaign promoting leisure travel to Chicago during the winter season and shuttering its remaining international offices throughout China.
“I am incredibly proud of what the Choose Chicago team has accomplished in the last four years,” said Welsh. “Choose Chicago’s strategies and initiatives have helped Chicago’s visitor industry grow at an exponential pace, delivering immense economic benefits, including new jobs and tax revenue. This industry delivers a critical source of tax revenue to the state with no investment from the state’s general fund. The tremendous momentum this industry has witnessed will now begin to shift to a dramatic slowdown.”
Chicago’s visitor industry is directly responsible for continued growth in jobs, direct spending and tax revenue. For every dollar invested in Choose Chicago, $25 in state and local taxes are generated. Chicago’s entire visitor industry will be negatively impacted and it could be significant. With the absence of Choose Chicago’s critical sales and marketing programs the city of Chicago is poised to lose $750 million in economic impact, $90 million in hotel revenue, $15 million in tax revenue and potentially 7,000 jobs. These losses are directly attributed to a potential decrease in meetings and convention bookings and fewer hotel room nights booked, the absence of the regional winter campaign and potentially the summer campaign, and the closure of two international offices.
Rogers reiterated what will happen sooner rather than later if the funding is not fully restored prior to the end of the year.
“If the statutorily mandated funding is not fully restored to Choose Chicago, everything we have worked for and successfully achieved over the last four years will become undone.”
In 2014, Chicago welcomed 50.2 million visitors joining New York City and Orlando as the only three U.S. cities to exceed 50 million visitors annually. Tourism-related employment since 2011 has increased 6 percent to 136,000 jobs. More than 2,500 jobs were added in 2014, the fourth largest increase in the past ten years. Direct spending by visitors has increased by $2.1 billion to $14.1 billion since 2011.