Iowa tourism revenue hits record high

Iowa’s tourism industry reached a historic milestone in 2023, with visitor spending surpassing $7.3 billion, marking a 5.1% increase from 2022, according to the state’s latest economic impact report.

This surge in tourism revenue generated a total of $10.9 billion in business sales and $1.9 billion in government revenues, with $1.1 billion directly contributing to state and local taxes.

However, despite the growth, Iowa’s tourism success also highlights ongoing challenges related to workforce shortages, labor demographics, and uneven economic recovery between urban and rural areas.

Had tourism revenues not been generated, each Iowa household would have faced an additional $857 in taxes to maintain equivalent public funding levels.

The sector supported 70,954 jobs, accounting for 5.4% of the state’s total employment, and contributed $2.5 billion in labor income. However, rural counties have struggled to share in these gains, with a growing urban-rural divide becoming evident.

Uneven Gains Across Counties

Polk County, home to the Iowa State Fair, led the state with $1.69 billion in tourism revenue, marking an 8.24% increase from 2022.

Other urban counties, including Linn, Johnson, and Scott, saw similar growth, while several rural counties, like Fremont and Cedar, experienced declines. Fremont County saw the steepest drop of 8.42%, while counties like Floyd, Louisa, and Henry also reported negative growth.

This trend underscores the challenges faced by rural areas, especially those relying on agritourism and limited infrastructure.

Spending patterns reveal further discrepancies, with urban centers benefiting from larger events and venues.

Transportation, food, lodging, and recreation accounted for the majority of tourism spending, further favoring urban areas.

Iowa’s Marquee Attractions: Iowa State Fair and Caitlin Clark’s Impact

Major events like the Iowa State Fair and the rise of Caitlin Clark, the University of Iowa’s star basketball player, have significantly contributed to Iowa’s economic growth.

The Iowa State Fair alone generates over $100 million annually, while Clark’s career has boosted the state’s GDP by an estimated $14.4 million to $52.3 million, alongside $82.5 million in increased consumer spending.

Labor Force and Immigration Gaps

Despite the tourism boom, labor shortages remain a significant challenge. Iowa’s workforce struggles with an aging population, limited immigration, and slow recovery from the pandemic, leading to gaps in essential sectors, including tourism.

University of Iowa economist Peter Orazem highlighted that immigration, which historically contributed to Iowa’s population growth, has slowed, exacerbating labor shortages.

“We have a double whammy in terms of our labor market,” said Orazem.

“We don’t have enough immigrants filling the holes, and we don’t have enough older people who are carrying on.”

These workforce shortages extend beyond tourism and into manufacturing, agriculture, and high-skill sectors such as engineering and computer science.

Rural Economic Struggles

Rural Iowa continues to face economic difficulties due to its reliance on agriculture, which has been affected by fluctuating commodity prices and global trade challenges.

Orazem noted that when agriculture underperforms, the broader economy in rural areas suffers, particularly impacting manufacturing and local services reliant on farm-generated revenue.

Building on Tourism Success

While Iowa’s tourism industry is poised for continued growth, addressing workforce shortages, improving immigration policies, and fostering rural economic development will be key to ensuring long-term success.

By leveraging marquee events, such as the Iowa State Fair, and investing in rural infrastructure, Iowa can better share the benefits of tourism across the state.

“Iowa has a lot to offer, and by being a welcoming state, we can continue to grow economically and ensure that all communities share in that growth,” Orazem concluded.