The Multicultural Multiplier: Why Showcasing Diversity is Good Business
Travelers worldwide view diversity as a quintessential part of American culture. For U.S. destination marketers, highlighting diversity can positively impact community development, disperse tourism and enhance the traveler experience. But cultural diversity also has a positive impact on the bottom line.
While the virtues of multicultural marketing are clear, the travel industry has lacked quantitative data to measure the impact on tourism. A March 2022 study from iolite research illustrates the monetary benefits of showcasing diversity. Travelers visiting the U.S. from mature markets who favor multicultural activities spend more, with a higher average spend per person per night. This Multicultural Multiplier shows that when it comes to the business of tourism, diversity pays.
Understanding the Multicultural Multiplier
To capture the full range of unique experiences U.S. destinations have to offer, iolite defines cultural diversity as local culture in all its forms, including ethnic communities and LGBTQ+ landmarks, as well as, for example, fishing culture, local art or a musical genre important to a given destination.
iolite surveyed travelers across the U.S., Canada, Mexico, the U.K. and China to identify the subset of travelers who are most interested in engaging in multicultural experiences while visiting the U.S. Instead of having travelers self-identify as being interested in diversity, however, the research took a more organic approach.
Travelers were asked to imagine they were taking a trip to a given U.S. city and select the activities they would most want to include. Figure 1 shows a sample itinerary exercise for a trip to Minneapolis. (Domestic respondents focused on one of four cities, while international respondents planned an itinerary for one of two cities.) Prospective activities included both iconic and multicultural experiences, but travelers were not informed of the study objectives – they simply chose the activities that most interested them.
iolite’s Multicultural Index segments travelers into three key groups: iconic, neutral and multicultural (see Figure 2). Multicultural travelers are those who choose a majority of multicultural activities to add to their itinerary. In contrast, Iconic travelers select a majority of iconic activities – i.e., those popular experiences that destinations are known for (e.g., New York’s Statue of Liberty, Seattle’s Space Needle); and neutral travelers prefer itineraries with an even split between iconic and multicultural activities.
This segmentation made it possible to compare iconic, neutral and multicultural traveler audiences to assess the economic impact of each group. The results identify a Multicultural Multiplier for multicultural travelers from mature markets.
After completing the itinerary exercise, respondents were asked how much they would spend, how many people they would travel with and how long they would stay if they were to visit that city. Based on these responses, average trip spend per person per night shows clear differences between multicultural travelers and others (i.e., iconic and neutral travelers combined).
In mature markets including the U.S., Canada and U.K., multicultural travelers have a higher average trip spend compared to other travelers (see Figure 3). The differential is greatest among Canadian travelers (+46%), followed by U.S. travelers (+36%) and U.K. travelers (+14%).
In the emerging markets, Mexico and China, a multiplier effect is not seen. These travelers are more likely to be sensitive to the high price of iconic activities versus multicultural activities and estimate the cost of their itineraries accordingly. In contrast, travelers from mature markets who prefer a cultural itinerary are consistent with the profile of the multicultural traveler.
The multicultural segment is comprised of seasoned travelers who place a high priority on discovering unique, cultural experiences. Though they do not have significantly higher average income compared to others, these travelers are willing to invest in experiences that immerse them in a destination’s local culture. Multicultural travelers are seasoned explorers who place a high priority on discovering unique local experiences. Therefore, for the culturally curious, diversity makes a destination more appealing, and that strong appeal translates into higher trip spend. The Multicultural Multiplier provides quantitative evidence that showcasing cultural diversity is not only the right moral thing to do, it’s the right business thing to do.