PIEDMONT, S.D. — In early May, John Carley joined approximately 100 business leaders for a conference organized by the Black Hills & Badlands Tourism Association, outlining what to expect for the 2025 tourist season. While the forum was usually a time of optimism, this year the atmosphere was more subdued. Carley, who manages Elk Creek Resort and Petrified Forest in Piedmont, noted that enthusiasm was lower than in previous record-setting years for tourism in South Dakota.
For the first time since the pandemic began, there is widespread concern among tourism executives and local officials that visitor counts and revenue might fall. Across cities like Sioux Falls and Rapid City, there is unease over factors such as stubborn inflation, rising costs of living, reduced federal budgets affecting employment and national parks, and an overall downturn in economic confidence. These elements may dampen tourism numbers and spending.
James Hagen, who heads the South Dakota Department of Tourism, expressed concerns, citing growing anxiety among American travelers who are becoming increasingly economical. He also pointed out remarks from President Donald Trump regarding the potential annexation of Canada have decreased the usual influx of Canadian visitors.
Recent surveys underscore that while many Americans are still keen on traveling, over half are apprehensive about a possible national recession. This concern is causing about a quarter of them to reconsider their travel plans for the year, reveals Hagen. Despite economic challenges, South Dakota often weathered downturns relatively well as it remains a cost-effective, primarily drive-in destination compared to other more expensive travel spots.
If tourism experiences a downturn, it will impact South Dakota’s economy, which has been grappling with declining sales tax revenues. Tourism accounted for $400 million in tax revenue, representing 17% of total state sales tax collections in 2024. In the same year, about 14.9 million visitors generated $5.1 billion in expenditures, supporting almost 59,000 jobs. Remarkably, tourism has mostly seen an upward trend in the state, except during the pandemic in 2020.
In Sioux Falls, Teri Schmidt, CEO of Experience Sioux Falls, paints a mixed forecast for 2025. While not dire, hotel occupancy rates are showing year-over-year declines, dropping 5.7% in March and 11.4% in April. Many potential tourists might opt to trim their travel plans, driven by fears over economic stability and expenses related to healthcare, tariffs, and gas.
New data also suggests lukewarm tourism trends in neighboring regions such as Fargo, North Dakota, Madison, Wisconsin, and Omaha, Nebraska. This cautious mindset is noticeable, with a recent tour group canceling their South Dakota trip due to economic woes. The drop in Canadian travel interest further compounds the situation, likely affected by geopolitical tensions with the U.S.
Michelle Thomson, heading the Black Hills & Badlands Tourism Association, mentions the impact of “financial uncertainty” leading to a tighter “booking window,” where potential visitors delay finalizing travel plans. This trend adds to the anxiety of tourism-based businesses, which rely on early bookings.
Toni Woodruff from Buffalo Chip campground and venue in Sturgis comments that although visitor interest for the August motorcycle rally remains high, the increased living costs might curtail spending, particularly in food, beverages, and merchandise.
Despite these concerns, John Carley reports a promising start at Elk Creek Resort, with early bookings above typical levels for significant events like the Black Hills Bluegrass Festival and the Sturgis rally. Yet, he remains cautious about periods without major events, which could see fewer arrivals.
In Sioux Falls, efforts persist to actively promote the state as a destination, trying to attract tourists for short or economical visits. With tourism so critical to sustaining many local businesses, even a modest decline in tourism could pose a significant challenge.