Is Tourism Economic Development?
The Kansas City Fed just published a rural development manual disguised as a Route 66 story. Here's what it actually says.
The Kansas City Fed’s Byways Report: The Scenic Route to Rural Prosperity — published ahead of Route 66’s 2026 centennial — is, underneath all the heartwarming roadside Americana, a fairly rigorous argument for why rural communities are leaving real money on the table by treating tourism as a side hobby.
Not marketing. Not nostalgia. Not the thing you do when you can’t land a manufacturer.
Tourism as deliberate economic strategy.
Let me tell you what they actually found — and what I think it means for communities that aren’t on Route 66.
The Part We’re Getting Wrong
When most rural towns hear “tourism strategy,” here’s what they actually build:
A festival
A mural
Maybe a logo that took six months to approve
A Facebook page that gets updated sporadically by someone’s retired aunt
That is not a strategy. That’s arts and crafts with a budget line.
What the report makes clear — through 31 expert interviews, field visits, and a solid literature review — is that route-based tourism works when communities build systems around it. Not vibes. Systems.
Coordinated storytelling. Shared promotion. Entrepreneurial infrastructure. Authentic experiences. Regional cooperation.
The difference between a road trip people rave about and a road trip people forget is almost never the scenery.
It’s whether anyone organized the experience.
What a Byway Actually Is
Strip away the romance and a byway is just this: a road with a story that multiple towns agree to tell together.
That’s it.
Route 66 didn’t succeed because it’s old. It succeeded because:
Towns invested in preserving what made them distinct
Businesses promoted each other instead of quietly hoping competitors would fail
Volunteers kept things alive for decades before anyone called it “economic development”
State and regional partners eventually showed up with real resources
Somebody kept convening people across county lines
No single town carried the whole thing. That’s the point.
Most small towns I’ve worked with are exhausted because they’re trying to be everything alone. A byway model distributes the weight. You play to your strengths. Your neighboring town plays to theirs. Visitors get a coherent experience and spend money in multiple places. Everyone wins more than they would have competing.
It is, in theory, the easiest regional collaboration pitch in economic development.
In practice, it requires people to stop hoarding credit. So. You know. Easy and also not easy.
The Numbers Are Real
The report cites research suggesting that a well-developed byway — one with genuine heritage or cultural assets, multiple spending opportunities, and distinctive food and lodging — can generate roughly $250,000 to $450,000 per mile per year in visitor spending.
Per mile.
That’s not boutique money. That’s payroll. That’s sales tax. That’s occupied storefronts.
And here’s the part that matters for communities that always feel like they’re starting from zero: you don’t need to build new schools, hospitals, or subdivisions to capture it. Visitors don’t require sewer expansion. They require something worth stopping for.
The Psychological Barrier (This One Stings)
The biggest obstacle the report identifies isn’t funding.
It’s local perception.
Long-time residents often genuinely cannot see what’s special about their own town. They’ve looked at the same buildings for forty years. They see chipped paint and empty storefronts and what used to be there.
Visitors see character. Authenticity. Stories. Weird concrete whales. Neon signs that somehow survived. A diner that hasn’t changed its menu since 1987.
That gap — between how insiders evaluate a place and how outsiders actually experience it — is a documented phenomenon in asset-based development. And it costs rural communities real money, because you can’t organize around assets you don’t believe you have.
Newcomers and outsiders frequently spot what locals overlook. This is not a knock on people who’ve lived somewhere their whole lives. It’s just a reminder that fresh eyes have value, and one of the most useful things an outside economic developer can do is name what’s already there.
Oklahoma Case Study: A Whale and What It Actually Did
The report profiles Catoosa’s Blue Whale — and it’s worth unpacking honestly, because it illustrates both the potential and the limits of this model.
A retired zoologist built a 20-foot concrete whale for his wife in the 1970s. Private, quirky, completely unreplicable. It became a roadside attraction, then it decayed, then it almost disappeared.
Here’s what saved it: not nostalgia. Capital deployment.
The chamber got involved. The city purchased the property. Fans organized. A visitor center was planned. It became a public asset instead of a private curiosity.
That is a real economic development sequence: identify asset, organize stakeholders, acquire and preserve, build infrastructure around it, promote regionally.
Now — because I know some of you are asking — here’s what the whale didn’t do.
Catoosa is a town of about 7,600 people with a median household income around $70–72K, which is pretty good by Oklahoma standards. Individual wages cluster in the $39–43K range. The whale did not remake that picture. It’s not a factory. It didn’t single-handedly raise median wages or transform the job market.
What it did:
Give Catoosa a distinctive identity and a reason for visitors to stop rather than blow through
Generate ancillary spending — gas, lunch, coffee, souvenirs
Create entry-level service jobs (real ones, but hourly, not career-launchers)
Shift the internal narrative from “why would anyone come here” to “of course people come here”
Justify continued public investment in the tourism corridor
That last one matters more than it sounds. Once a community believes its assets are worth organizing around, the strategic behavior changes. That’s how you build toward the $250K–$450K per mile number — not with a single attraction, but with a constellation of them.
The whale is a cornerstone. Not a miracle.
What This Means Beyond Route 66
Route 66 is getting all the centennial attention right now. But the report’s actual lesson is broader:
Any road can become a byway if it links real assets, tells a coherent story, and has someone managing the coordination.
Fishing loops. Music trails. Civil rights corridors. Agricultural heritage routes. Dark sky circuits. Tribal heritage trails. Outdoor recreation networks.
Many states have pieces of most of those.
Calling something a "trail" or a "byway" doesn't make it one. What makes it one is someone coordinating it across county lines.
And the coordination requires something rural places often don’t prioritize: a convener. A regional hub. A foundation, a CDFI, a multi-county collaborative, something that exists above the individual town level and can hold the connective tissue together.
Because in most small towns, the same five people do everything. If your tourism strategy depends on those five people indefinitely, it won’t outlast their energy.
The Honest Take
Tourism is not a silver bullet.
I want to be clear about that, because this piece could easily read as cheerleading, and I’m not a cheerleader.
Tourism is one of the few economic development strategies that doesn’t require industrial recruitment, doesn’t depend on population growth, leverages assets you already have, can improve quality of life for residents at the same time it attracts visitors, and can start small and build.
But tourism built on weak assets, poor coordination, and no regional structure will produce a festival, not an economy.
The difference is systems.
The Question Worth Sitting With
If someone completely unfamiliar with your community drove through tomorrow — no context, no local guide — would they know why it matters?
Would they see something worth stopping for?
Or would they just pass through at 70 miles per hour, adding nothing to your tax base?
That’s not a branding question.
It’s an economic one.
The Byways Report: The Scenic Route to Rural Prosperity was produced by the Federal Reserve Bank of Kansas City ahead of Route 66’s 2026 centennial. It’s worth reading if you work in rural economic development — it’s one of the more practically useful things the Fed has published on the topic.