Travel Promotion Act: hope or hype?

National Report–The Travel Promotion Act is a signature away from finally becoming law after passing the Senate yesterday. And despite some detractors, industry optimism abounds for this pro-travel legislation.

“I think it’s very much what everyone envisioned,” said Joe McInerney, president of the American Hotel & Lodging Assn. “It’s a no-brainer. It’s a win-win situation; doesn’t cost the government anything. It attracts more people and creates more jobs.”

As of press time, the Travel Promotion Act passed through the Senate and is on its way to President Obama's desk. From there, the marketing campaign—the main component of the bill—should be rolled out in the second half of 2010, according to Geoff Freeman, SVP of public affairs at the U.S. Travel Assn.

It is hoped that this new marketing effort will increase international travel to the U.S., therefore generating more money in the industry. By year three of the marketing effort, Oxford Economics estimates anywhere from $1.8 billion to $4 billion of new revenue will be brought to the U.S. These estimates are based on the revenue that was generated in comparable campaigns in other countries.

“Australia, in a recent campaign, measured $64 for every dollar spent,” said Adam Sacks, managing director of the tourism economics division at Oxford Economics. Sacks noted the United Kingdom returned $47 for every dollar and Canada’s campaign in the U.S. generated $11 for every dollar. There is a range of results, but each country’s marketing campaign returned more revenue than dollars spent.

Will a U.S. travel marketing campaign show similar results? Sacks cited one particular example: Three years ago, the government allocated federal funds for targeted marketing purposes. The amount was supposed to be $10 million, but ended up at only $4 million. After analyzing the data when the campaign ended, a third-party analysis showed a return of $117 for every dollar spent, Sacks said, also noting all of these campaigns happened in a much better economic time.

“Many of us have been working on legislation that would encourage inbound travel for close to a decade,” said Jonathan Tisch, CEO of Loews Hotels. “The passage of the Travel Promotion Act is a clear signal that our elected officials understand the significance of the travel and tourism industry.”

European dissent
The bill does have its detractors. The European Commission Delegation to the U.S., most notably ambassador John Bruton, head of the commission, thinks the bill will not have the anticipated positive effect, and instead create yet another inconvenience for travelers to the U.S. The inconvenience, he said, is the $10 fee travelers from visa waiver countries will pay in order to generate funds for the marketing campaign and agencies.

“If you get the word out by charging people to get the word out, by and large, it’s counter productive,” said Anthony Smallwood, first counselor and spokesman for the European Commission. “We don’t want to set up structures that make [international travel] more difficult.”

Bruton and Smallwood said the visa waiver program is a hassle, security at U.S. airports for international travelers is a hassle, and “putting a tax” on that process, even though it is $10, will only
annoy travelers more.

“The key is these procedures are irksome, and making them more irksome is generally risky,” Smallwood said. “Travelers don’t care if it’s $10 or $20, the whole business is just an additional procedure.” And he noted that the fee is only for travelers in visa waiver countries, and not levied against all travelers entering the U.S.

Proponents of the bill said the entry fee is no different than the exit fees in other countries, and the fee is for the visa waiver travelers because non-visa waiver travelers already pay $131 to enter the country, according to Freeman. He considers this fee structure to be fair because it only targets “those who receive a benefit” by not needing a visa.

And the inconvenience of traveling to the U.S., McInerney said, is a misconception.

“Some of the money will be used for informational ads to let international visitors know that we are making the process much more efficient,” he said.

TPA at a glance
— The bill (s. 1023) will establish a non-profit corporation and the Office of Travel Promotion within the Department of Commerce. Both will work to increase travel to U.S.

— The funding will come from 1) a $10 fee for visa waiver travelers and 2) a dollar-for-dollar match from the private sector—20 percent of which needs to be cash from contributors. The other 80 percent can be goods and services contributions.
Source: U.S. Travel Association