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LMI Myth Busting Series

LMI Myth Busting: South Dakota’s Tourism Industry Doesn’t Exist

We all know this warmer weather (which we had to be especially patient for this year) brings more visitors to South Dakota. And we all know visitor spending provides a huge and necessary boost to our state’s economy. So, what is this crazy talk of a “tourism industry” not existing?

In the world of labor market information, we categorize business activity into an industry taxonomy called the North American Industry Classification System (NAICS). NAICS is used not only in labor market information, but in other realms to ensure industrial statistics produced in the United States, Canada and Mexico are comparable. NAICS groups businesses that use similar production processes and provide similar services. The system is revised over time, as needed, to reflect major changes in technology and diversification of services.

Within NAICS, there is no “Tourism Industry.” Rather, because of the nature of the taxonomy, there are industries that sell goods or provide services to tourists but are classified based on the broader nature of their business activities.

Within NAICS, there is an increasingly specified categorization of business activity, ranging from the broadest two-digit NAICS codes (for example “72, Accommodation and Food Services”) down to a six-digit code for the most narrowly defined type of business activity. For example, within the Accommodation and Food Services sector is NAICS 721191, bed and breakfast inns.

The three-digit NAICS level is the greatest detail at which we can normally provide labor market data without running into safeguards in place to protect confidential information. The three-digit NAICS industries for which employment data shows the impact of tourism in South Dakota are:

Food and Beverage Stores (NAICS 445) – including supermarkets and grocery stores, convenience stores, specialty food stores (like candy stores and meat markets) and gasoline stations

Miscellaneous Store Retailers (NAICS 453) – including gift, novelty and souvenir stores

Scenic and Sightseeing Transportation (NAICS 487) – trolleys, helicopter sightseeing rides, bus tours, etc.

Museums, Historical Sites and Similar Institutions (NAICS 712) – zoological gardens, science museums, etc.

Accommodations (NAICS 721) – hotels, motels, bed and breakfast inns, RV parks and campgrounds

Food Services and Drinking Places (NAICS 722) – full-service restaurants, limited-service eating places, buffets, snack bars, mobile food services and bars

There are additional NAICS industries closely related to tourism, including Administrative and Support Services (NAICS 561) – think travel agencies, and convention and trade show organizers. Another industry working closely with tourism is Membership Associations and Organizations, and Business Associations (NAICS 813). Specific examples are chambers of commerce and local economic development organizations. While their employment numbers may not significantly increase during tourism season, many of those organizations are directly involved in encouraging tourism-related business.

In summary, while it is not possible for us to provide labor market data (such as employment levels or worker earnings data) for the “tourism industry,” we do have such data available on the NAICS industries most directly impacted by those who visit our great state. Monthly patterns within data typically show the impact of tourism each year. Please contact us any time you are interested in such information. We will be happy to help you.