Domestic tourism in the District has experienced a resurgence since the COVID-19 pandemic. In 2019, 22.8 million domestic visitors came to the city. During the pandemic, domestic tourism plummeted to 13.1 million in 2020. Since then, domestic tourism has not only rebounded but exceeded its pre-pandemic 2019 level—reaching 24 million domestic visitors in 2023.
The effects of tourism extend beyond bustling airports, livelier city streets, and booked hotels. Tourists contribute to the District’s economy as well as its sales and use tax coffers by spending on car rentals, parking, restaurant meals, and more. With office occupancy rates at about half of pre-pandemic levels, spending by tourists can help fill the gap in economic activity due to fewer workers coming into the office.
As the chart above shows, a moderately strong, positive correlation exists between the change in number of domestic tourists and the change in the District’s sales and use tax revenue.[1] Put differently, as domestic tourism increases, the District’s sales and use tax revenue often increases as well. The positive correlation is not surprising. Over the course of 2023, tourists—domestic and international—spent a little over 10 billion dollars, with spending on accommodations, food, and beverages accounting for 67 percent of the total. And the money spent by visitors made up roughly 6 percent of the District’s economic output in 2023.
Data notes:
Tourism data, including spending by tourists, for 2023 can be found here. The District’s Annual Comprehensive Financial Reports can be found here.
[1] The correlation coefficient is .674. While correlation does not imply causation, strong correlations can point to areas that deserve more exploration. Previous D.C. Policy Center research documented a positive correlation between monthly general sales tax collections and office occupancy rates.