Visitor Spending in Northwest OregonNovember 21, 2022
Visitor spending rose to $1.46 billion in Northwest Oregon in 2021. This was an increase of 46.4% after adjusting for inflation from 2020. Visitor spending collapsed by 42% in 2020 when the pandemic recession struck and businesses were curtailed in March of that year. The jump in spending in 2021 was the largest since data has been collected, but it still yielded less spending than the $1.73 billion that was spent in 2019. Visitor spending had been growing about 3% per year since 2011. The region had seen drops in spending before, such as during the Great Recession, but nothing compared to the collapse in 2020.
Leisure and hospitality was commonly the largest industry sector in Northwest Oregon measured by employment, but the pandemic recession reduced its size to where it was slightly smaller than the trade, transportation, and utilities sector in 2020 and 2021. Leisure and hospitality provided 14,906 payroll jobs on an annual average basis in 2021. This was about 16% of all jobs (excluding self-employment) in Benton, Clatsop, Columbia, Lincoln, and Tillamook counties combined. The two largest parts of the sector are the accommodation industry (e.g. motels and campgrounds), and the food services and drinking places industry (e.g. restaurants and bars). The sector’s health depends in large part on spending by visitors.
Visitors also spend money in other sectors such as retail trade, transportation, and even health services when vacation accidents happen. But because visitors account for a smaller portion of spending in these industries, the leisure and hospitality sector is considered the best proxy for the tourism industry as a whole.
Visitor spending peaked in 2006 at $1.43 billion (in 2021 dollars), and then fell two percent the next year. Spending was up and down during the Great Recession and recovery before climbing steadily from 2012 until the pandemic hit in 2020. Travel and occupancy restrictions reduced the number of customers available for lodging and food service businesses, and many tourism businesses closed or dramatically reduced their offerings. Visitor spending in Northwest Oregon fell 42% in 2020 to $998 million. This was just above the level of 1992.
Benton County had the second-largest drop in visitor spending (-57.2%) of all counties in Oregon in 2020. But the county bounced back dramatically in 2021 with visitor spending increasing 158% to a record $148 million. The drop and recovery are probably due to changes by students at Oregon State University; in-person attendance was suspended in 2020 and resumed in 2021. The other counties in Northwest Oregon saw visitor spending increase sharply in 2021, but not quite recover to pre-pandemic levels.
Employment in the leisure and hospitality sector tends to parallel visitor spending. It’s improving rapidly but is still not completely recovered, except in Benton County. Employment in the five counties in Northwest Oregon dropped an unprecedented 54% from March to April in 2020. Employment has been growing since then. In September 2022 it was 8.6% higher than the year before, but it remained 1.2% lower than in September 2019 – the last year before the pandemic recession. As Northwest Oregon’s leisure and hospitality sector headed towards winter in 2022, employment was starting its seasonal decline. It seems likely that the sector will continue to grow in the longer run and its employment will return to pre-pandemic levels by next year. In fact, there is some reason to think that the main constraint on employment growth in 2022 was the tight labor market, not lack of visitor spending. Job vacancy surveys showed that there were more job openings than people who were unemployed in 2022.
The long-term outlook for visitor spending is good. The leisure and hospitality sector’s employment in Northwest Oregon is expected to grow 44% from 2020 to 2030. Most of that growth is based on the expectation that the sector recovers to its former level. After that, the sector’s employment will probably grow at a little less than 1% per year. A major unknown factor will be how the pandemic recession and subsequent tight labor market will affect the sector’s adoption of labor-saving technology and business practices. Businesses may be more likely to implement service models, such as takeaway food, that allow them more flexibility in adapting to any future pandemic. There is nothing leisurely in the work life of leisure and hospitality managers!