Building Communities Free Enterprise Staff  | May 12, 2016

Seattle’s Economic Fuel? Startups and Sightseers

Seattle’s thriving tech community is no secret. Microsoft and Amazon currently call the region home, and the city ranked fifth nationally for overall startup activity in the new Innovation That Matters report we released last week in partnership with 1776 and the U.S. Chamber of Commerce Foundation. In recent years, city officials have launched a Startup Seattle program to help local tech entrepreneurs start and grow new ventures.

While the city’s startup scene has grabbed the spotlight, Seattle’s record-breaking tourism industry is quietly providing an unexpected boost to local businesses, as well. In a sense, it’s the unsung hero behind the city’s recent economic success.

Last year, tourism generated $9.7 billion in total economic impact, according to an annual report by Visit Seattle, a nonprofit organization that promotes local tourism. That’s up an impressive 61 percent in just three years over the $6 billion visitors poured into the city in 2012.

Tourism revenue not only helps established businesses grow, it also benefits the city’s startups, explains Rebecca Lovell, the city’s director of entrepreneurship and industry.

“Revenues flow into the hotels, restaurants, the arts and entertainment industries and transportation services, supporting the small businesses and entrepreneurs across those sectors,” she says. “It also has an impact on the new ‘sharing’ economy: Airbnb, Uber, Lyft and beyond.”

The influx of visitors and travel industry money also spurs innovation in its own right. Seattle-based startup UTrip helps curate activities and experiences for tourists, and nearby, Concur Technologies helps with travel expense management. Concur was acquired by SAP for $8.3 billion in 2014.

In 2015, visitors spent $6.8 billion in the city and county and paid $692 million in state and local taxes. A strong tourism industry helps the city expand its reputation abroad and provides funds to redevelop the city’s downtown core, where many businesses are located, says Tom Norwalk, president and CEO of Visit Seattle. “The message is that tourism helps businesses benefit from a strong economy,” he said.

So how has Seattle managed to attract tourists? Bold new outreach techniques have helped Seattle attract more international and millennial tourists. For example, Visit Seattle partnered with music superstar P. Diddy’s cable network, Revolt, last year to produce a series about the city’s music scene.

Meanwhile, the city has created an ambassador program in China to highlight Seattle as a great tourist destination. In doing so, the initiative is introducing the Emerald City to potential international visitors from a country with “growing affluence” and an increasing desire to travel, says Norwalk.

It seems to be working: Last year Chinese president Xi Jinping met with local business leaders during his U.S. tour and called Seattle “America’s gateway to Asia.” China has also become the city’s number one Asian tourist market, with a 40 percent year-over-year growth rate, says Norwalk. “We have more people from overseas that want to invest in the city and businesses after visiting.”

Some of them may just want to stick around and start their own ventures.

“It’s one of the underlying and unspoken truths about tourism: people will create a business or invest in a city that they visited as a tourist or came to for a business conference and saw potential in,” says Norwalk.