Tourism Leads To Economic Boom

April 01, 2000

Many Illinois communities are using tourism, the world's largest industry, to reap new economic development benefits. Illinois, like many states, recognizes tourism as one part of a balanced economy.

Tourism revenue contributed over $21 billion to Illinois' economy in 1998, directly accounting for more than 297,700 jobs statewide[1]. Consumer spending on travel and tourism in Illinois has increased every year for the last 13 years. Illinois has committed to developing historical and cultural destinations other than Chicago to reach its economic impact goal of $29 billion by the year 2001.

This kind of tourism, also known as cultural heritage tourism, is expected to be the fastest growing segment of the market. Because of aggressive marketing to attract new visitors, heritage tourism is stimulating economies, generating new jobs and creating renewed pride and recognition of the value of Illinois communities.

What is Cultural Heritage Tourism?

Cultural heritage tourism focuses on making history come alive and experiencing life in a community as it used to be. In other words, visitors can learn about the past while exploring the present. In a practical sense, it means maintaining and preserving tangible community assets, such as historic places, buildings and sites, as well as intangible assets like traditions, customs and folklore. Local communities identify and share their stories through museums, theaters, historic sites, fairs, festivals, ethnic diversity, music and the arts.

Cultural heritage tourism seeks to develop natural historic and cultural sites with the strongest potential to increase economic impact. Benefits to a local community may include: an expanded tax base, increased tax revenues, increased production and sale of goods and services, better property values and new jobs. Increased economic activity benefits local banks, which see increasing deposits and loan demand.

The Illinois Approach

One of the toughest challenges to development is getting multiple communities to work together to develop heritage sites. With this in mind, two years ago, the Illinois Heritage Tourism Program was created after research uncovered that nearly a third of all travelers participate in some form of heritage tourism. Illinois started by forming new partnerships between state government agencies and private organizations that traditionally had not worked together, particularly in neglected rural areas of the state.

Many new funding sources have been created for financing nonprofit and for-profit tourism projects, including:

  • The Experience Illinois Loan Program, which is administered by the State Treasurer's Office, may be used for historic preservation, tourism development or community development.
  • Tourism Attraction Development Grants, Tourism Marketing Partnership Grants, the International Tourism Fund and Tourism Private Sector Grants, which are administered by the Department of Commerce and Community Affairs.
  • The Economic Development Program, which is administered by the Illinois Department of Transportation.
  • Several other grant programs, which are administered by the Illinois Department of Natural Resources, Office of Capital Development.

Illinois' approach has met with such success that cultural heritage tourism demonstration areas have been created across the state. Three of these are located in the Federal Reserve's Eighth District. The areas are recognizing the potential for increasing tourism revenues by applying economic development principles to enhance travel in areas near important historic and recreational sites.

Transportation, Petroleum and Agriculture

Through its Crossroads of Illiana project in southeastern Illinois and southwestern Indiana, Main Street Flora is demonstrating how a region may use existing assets to leverage additional development. In fact, the greatest success, thus far, has been the ability of the project to spur other groups and individuals to begin new development approaches.

The project is showcasing the history of the region with a focus on transportation heritage--from waterways and trains to automobiles and aviation. Its design attempts to tie together many of the region's existing transportation resources, festivals and events. For example, rail depots are being restored to create a "Depot Hop" across the region and are being tied into the state's rails and trails project.

Petroleum has a rich past throughout the region, as illustrated by the oil field museum in Oblong, Illinois. Smaller projects include highlighting products made from oil, public art on storage tanks, and works of art using oil field pumps.

Next on the agenda for Crossroads is developing tourism that is associated with agriculture and the family farm. Agricultural tourism is one alternative for improving the incomes and potential economic viability of small rural communities. An agri-tourism market survey has been conducted to identify existing and potential development.

Infrastructure and Site Development

Tourism along the Ohio River Scenic Route was identified as a primary economic development tool for the community of Golconda, Illinois, and the surrounding area. Some of the early activities needed to build an infrastructure for tourism were leadership, hospitality training and the development of accommodations and customer services. Main Street Golconda has assumed the leadership role, and one of its first major accomplishments was the passage of an overnight lodging tax in four counties. This helped address the need for financing additional beds for travelers. Plans are now under way to renovate four historic cottages that face the river, along with the renovation of a former powerhouse on the property into a visitor's center.

The greatest challenge faced by the project leaders is product development because it requires consensus, capital and a thorough understanding of the market (consumer preferences, demand and available opportunities). To meet this challenge, developers have begun working extensively with the economic development organizations in the region to begin a planning process.


The Trace of the Ages refers to tourism products along the Great River Road that scenically stretches from Galena, Illinois, to Cairo, Illinois. The project consists primarily of marketing that is designed to attract visitors from around the world to 18 counties that border the Mississippi River. The project sponsor, Western Illinois Tourism Development Office, acts in partnership with nine individual convention and visitors bureaus. Another important partner is the Illinois Department of Transportation, which has installed more than 25 kiosks along the route to inform visitors of the attractions and businesses in area communities.

Like the Crossroads of Illiana project, the Trace partners have learned that international visitors are very interested in agri-tourism, so they market extensively in several foreign countries.

Economic Impact

Because growth and development cannot always be measured by traditional economic indicators, the Tourism Research Laboratory at the University of Illinois has calculated economic impact for each of the cultural heritage tourism demonstration areas (see table). The Laboratory also has developed the Community Self-Assessment Survey. It helps Illinois communities assess outcomes of activities intended to advance economic development. The economic impact is great because of the large number of consumers involved, which increases the demand of community destinations, as well as the capital and operating expenditures. Future research will include a description of the new business created as a result of heritage tourism development.


The development of heritage tourism is an arduous process, taking years to reach its potential. This is largely because development is a joint effort, leveraging public and private resources. However, the benefits can be significant. Illinois' cultural heritage efforts are an important contributor to its standing as the sixth most visited state in the country by international tourists and fifth in domestic travel spending.

Certain information in this article is taken from the Illinois Department of Commerce and Community Affairs web site:

1998 Assessed Outcomes of Selected Illinois Heritage Tourism Projects

($ in millions)

  Crossroads Ohio River Route Trace
Jobs 1,470 1,070 12,780
Expenditures $138.05 $78.80 $1019.92
Payroll $28.20 $21.76 $266.94
State Tax Receipts $7.67 $2.86 $43.37
Local Tax Receipts $4.09 $2.86 $26.15

Source: Tourism Research Laboratory at the University of Illinois.


  1. The Economic Impact of Travel on Illinois Counties 1998, U.S. Travel Data Center, Travel Industry Association of America, June 1999. [back to text]

Bridges is a regular review of regional community and economic development issues. Views expressed are not necessarily those of the St. Louis Fed or Federal Reserve System.

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