PIEDMONT, S.D. – John Carley joined about 100 other business operators in early May for a meeting of the Black Hills & Badlands Tourism Association to preview the 2025 tourism season.
The mood in the room, he said, was "a little muted" compared to recent years, when South Dakota set repeated records for visitors and tourism spending.
"I wouldn't say they were jumping up and down like, 'Yeah, we're going to have a great year,'" said Carley, manager of the Elk Creek Resort and Petrified Forest in Piedmont.
For the first time since the COVID-19 pandemic, tourism officials across the state are feeling cautious, and perhaps even a bit worried, that tourist numbers and revenues will be lower this year.
From Sioux Falls to Rapid City, officials said stubborn inflation, the rising cost of living, cuts to federal jobs and national parks, fear of tariff impacts and a general malaise over the national economy could curtail visitor counts and spending.
"Anxiety is starting to grow among American travel consumers," said James Hagen, secretary of the South Dakota Department of Tourism. "People are being very cost-conscious right now."
Comments by President Donald Trump about annexing Canada is also blunting the state's typical rush of visitors from north of the border, officials said.
A recent industry survey showed that while most Americans remain excited about potential travel this year, more than half are worried about a pending national recession, Hagen said. One quarter of those respondents said their worries will cause them to travel less this year, he said.
Hagen said when travel budgets were tight in the past, such as during the 2008 Great Recession and the COVID-19 pandemic, South Dakota still performed well because it is mostly a driving destination that is seen as affordable compared to its competition.
"There are some things that are out of our control, national and world politics for example, so we need to keep a close pulse of what's going on," Hagen said. "But we can adjust our message in a heartbeat nine ways to Sunday to reach the right consumers at the right time to get in front of those consumers to inspire them to pull the trigger."
Any reduction in visitors and tourism dollars will cause ripples across the economy of South Dakota, which has seen falling sales tax revenues in recent years.
According to the state, tourism generated nearly $400 million in tax revenues, making up 17% of all state sales tax collections in 2024. An estimated 14.9 million visitors spent $5.1 billion in 2024, supporting nearly 59,000 jobs, state data show.
Tourism has been on a roll in South Dakota in recent years, with increases in visitors and spending in seven of the past eight years, dipping only during the pandemic in 2020.
Worrisome hotel data in Sioux Falls
Teri Schmidt, CEO of Experience Sioux Falls, said the East River tourism outlook for 2025 “isn’t looking the worst, but it’s not looking the best either.”
Signs of market weakness are showing up in Sioux Falls hotel vacancy rates. Schmidt said year-over-year occupancy was down 5.7% in March and down 11.4% in April.
“I don’t ever remember that happening, so that’s a tough one to swallow,” she said. “We’re working as hard as ever, but it’s just not happening so far.”
Schmidt said she’s hearing potential tourists indicate they might cut back on travel or reduce the length or extent of vacations this year.
“Some are saying, we’re just not going to come because, 'What if we lose our Medicare or tariffs cause my groceries to increase or the cost of gas or my medications?” she said. “And it’s not just the older generations that feel this way. … There’s a lot of young people just getting established who are being a bit more careful with their money.”
New data also show soft tourism bookings in locations that compete with Sioux Falls, including in Fargo, North Dakota, Madison, Wisconsin and Omaha, Nebraska, Schmidt said.
A tour group of 18 people recently cancelled their trip to South Dakota over economic uncertainty, and she’s not hearing the usual travel interest from Canadians, many of whom are upset over Trump’s effort to make the country the 51st U.S. state.
“Canada has always been a great visitor market for our state and we’re just not seeing it all,” she said.
'Booking window' tighter when money is tight
Michelle Thomson, CEO of the Black Hills & Badlands Tourism Association, said she is hearing about “financial uncertainty” and worry over a possible economic recession among potential visitors, which is causing the so-called booking window to shorten.
That means visitors aren’t locking in travel plans as early as usual, which adds to unease for tourism businesses that can’t be sure if people are coming, Thomson said.
“Optimism is still very high, and people are still talking about vacations,” she said. “But ultimately, the financial concerns people are having is causing some visitors a little bit of heartache over whether they’re going to take a vacation this year.”
Thomson said she expects visitors to come to western South Dakota, but they might be more frugal than in the past.
“After COVID, people really feel like a vacation is something that is automatic for them,” she said. “They’re just taking another look at where they go and they may spend a little less time and a little less money.”
Spending at Sturgis rally could fall this year
Toni Woodruff, spokeswoman for the Buffalo Chip campground and event venue in Sturgis, said the annual motorcycle rallies tend to draw bigger crowds in anniversary years marked by a zero or a five, including this year’s 85th.
And while bookings for the early August event are very strong so far, Woodruff said the high cost of living could reduce spending by bikers this year.
“The people are coming and they’re very excited,” she said. “Where we might see some of the impact (from the economy) will be more in how much disposable income they’re spending, maybe less on food and beverage and merchandise.”
Any tightness in spending will hurt businesses across the Black Hills and among the nearly 900 temporary vendors that arrive for the event, she said.
Woodruff said she attended the Daytona Bike Week in Florida earlier this year and spoke to vendors who were concerned about rising food costs and the tariffs placed on goods from China, where they order much of the merchandise they sell.
“Food vendors are going to have to pay higher prices and those higher costs will be pushed onto tourists,” she said. “And like what we saw happened during COVID, when those prices went up, they never went back down.”
Like other South Dakota tourism officials, however, Woodruff remains confident that 2025 will be a good year for the tourism industry, at least during the rally.
“The rally is really an affordable vacation option, and it’s like Mecca in how people prepare for it in advance so it’s on their radar and on their calendar,” she said. “They’ll say, ‘Yes, It’s going to cost some money, but I’m going to find a way to make it happen.’”
So far, so good at Elk Creek Resort
From his vantage point, Carley said 2025 is off to a good start at Elk Creek Resort, which opened on May 1. The sprawling recreational vehicle, camping and cabin resort with a pool and a lake sits a mile east of Interstate 90 between Rapid City and Sturgis.
Early bookings are above average for the resort's two big annual events – the Black Hills Bluegrass Festival in June and the Sturgis motorcycle rally in August.
"Those are both barometers for us, and so far they're looking good," he said.
Early season interest in the Petrified Forest has been solid, and he's hoping to attract both visitors with plans in place and those just passing through.
Carley, who is a state senator from Meade County, said predictions about visitors can be gauged largely on inflation rates and gas prices. While prices for many things remain high, he said the $3.39 per-gallon unleaded gas price in Rapid City in early May is acceptable.
His only concern is that the 2025 season might be soft in times when there isn't a big event scheduled in the area. "Those in-between periods, that's where I'd say we don't have the same level of bookings as we've had in the past."
Schmidt said she and her team continue to promote aggressively to keep the doors open to anyone who wants to visit Sioux Falls or elsewhere in South Dakota, even if it's for a shorter or less extravagant stay.
"I’m just so concerned for those businesses who live by the tourism dollar because that is their livelihood," she said. "Especially if you’re a seasonal business, and we certainly have many of those in our state, if that tourism season doesn't come through with a bang, it's pretty hard to take."
This story was produced by South Dakota News Watch, an independent, nonprofit organization. Read more stories and donate at sdnewswatch.org and sign up for an email to get stories when they're published. Contact Bart Pfankuch at bart.pfankuch@sdnewswatch.org.
