Economic Impact Of Hurricane Katrina On The

Introduction to the New Orleans Tourism Industry

Before Hurricane Katrina in August of 2005 New Orleans, Louisiana boasted a thriving tourism industry. Hurricane Katrina devastated the city. Thousands of lives were lost and businesses and homes vanished overnight. So did the tourism industry. This paper will discuss the New Orleans tourism industry before and after Hurricane Katrina. It will analyze the economic impact of the hurricane on employment, housing and healthcare in the area, which all directly affects the tourism industry. It will also discuss the rebuilding the city and revamping the tourism industry.

Before Hurricane Katrina

Prior to August 2005, tourism in New Orleans was a $5 вЂ" 8 billion dollar industry. Tourism was the biggest source of revenue in the city of New Orleans and the state of Louisiana. In 2004 New Orleans drew more than 10 million visitors according to the Metropolitan Convention and Visitors Bureau. “New Orleans employed more than 84,000 people in the tourism industry and annually took in $5 billion, half of the state's tourism total.” (Thomaselli)

The New Orleans tourism industry has many economic drivers, among them, Mardi Gras, sports, gaming and music. “Noted as the city is for jazz, Cajun and Creole cooking, and the French Quarter, Mardi Gras eclipses all as New Orleans’ most famous centerpiece. It has arguably the greatest economic and cultural impact of any event in the city.” (http://www.neworleanscvb.com)

“New Orleans has hosted more major sporting events across a huge spectrum of categories than any other destination: a record nine Super Bowls, some of the greatest NCAA finals and championships, the annual Allstate Sugar Bowl Classic, the PGA's Zurich Classic, the R&L Carrier's New Orleans Bowl, the Bayou Classic, the Bassmaster Classic and more.” (http://www.neworleanscvb.com)

After Hurricane Katrina

After moving into the Gulf of Mexico on August 29, 2007, Hurricane Katrina, a category 4 storm, made landfall near the Louisiana-Mississippi border. The storm’s eye passed within 15 miles of the city. As a result, levees in the city failed and about eighty percent of the city flooded. (Dolfman)

New Orleans tourism industry was, like the rest of the city, devastated. After the hurricane hit, the city lost approximately 22,900 jobs. “Over the 10 months following the hurricane, the loss in wages in the (tourism) sector was about $382.7 million.” (Dolfman)

Economic Drivers

The tourism industry is the largest employer in the metropolitan New Orleans area and the second largest industry in the state of Louisiana. It includes hotels, restaurants, retail, sporting arenas, music venues, museums, galleries and theaters, destination management companies and tour operators. This portion of the paper will discuss the economic drivers of the New Orleans tourism industry.

Mardi Gras

The tradition of Mardi Gras came to North America from Paris, where it had been celebrated since the Middle Ages. The term Mardi Gras is French for Fat Tuesday and is an annual festival marking the final day before the Christian fast of Lent. Carnival parades in the streets of New Orleans begin twelve days before Lent. Mardi Gras attracts tourists from all around the world to New Orleans. “Mardi Gras draws more than 3 million people to parades and generates approximately $1 billion for the local economy.” (http://encarta.msn.com)

Mardi Gras is essential to the New Orleans economy because it generates a better than 4-to-1 return on investment. According to a study in 2000 conducted by the University of New Orleans, investing $4.6 million dollars of direct tax revenues in Mardi Gras celebrations generated $20.5 million dollars for the city. (http://neworleansonline.com/pr/releases/releases/Why%20NO%20is%20Important%20to%20America.pdf)

Sports

Over the past 25 years New Orleans has established itself as one of the world’s leading sports cities. The city is home to several professional and collegiate teams and is well renowned for hosting major sporting events. Hosting major sports events has pumped nearly $1 billion dollars into the city’s economy. “Since 1980, New Orleans has played host to six college football championships, five Super Bowls, four National Collegiate Athletic Association basketball Final Fours, four NCAA basketball regional tournaments and two Southeastern Conference basketball tournaments.” (Price)

New Orleans has hosted the Super Bowl on a record nine separate occasions. “The 2002 Super Bowl generated an estimated $350 million economic impact for New Orleans up 41 percent from the $249 million the Super Bowl brought to the Crescent City in 1997 and up 47 percent from $238 million in 1990, according to Tim Ryan, economist and chancellor of the University of New Orleans.” (Price)

In addition to hosting the Super Bowl, New Orleans has also been the site of 25 Sugar Bowls, 25 Professional Golfers Association Tour tournaments and four New Orleans Bowls. (Price)

Gaming

Casino gaming is very popular in New Orleans and attracts many tourists to the city. When Harrah’s New Orleans opened in late 2000, it created 4,400 jobs more than half of which went directly to the citizens of Orleans Parish. In one study illustrating the economic impact of casino operations on New Orleans it was estimated that Harrah's New Orleans attracts at least 6,674,000 customers annually; a number that is about one and a half times the State's population. Of these, 2,369,000 will be from out of state. Furthermore, out of state visitors spend $100.8 million at other New Orleans' businesses during their stay. Just over $40 million is spent in hotels, in excess of $30 million in restaurants, and $29 million in other retail. (JCC Holding Company's)

Music

New Orleans is synonymous with Jazz. In 2004 there were three major music festivals in New Orleans: the New Orleans Jazz and Heritage Festival, the French Quarter Festival and the Essence Music Festival. These drew well over 1 million people combined. The Jazz Fest, which began in the 1970s, has grown consistently attracting larger and larger audiences each year. According to the New Orleans Jazz and Heritage Foundation, in 2004, Jazz Fest had an economic impact of more than $300 million. In 1983, civic