No shortage of lobbying on the travel industry's behalf went into the CARES Act. But with another round of financial stimulus on the horizon, the work is far from over.
The CARES Act passed in late March was a historic piece of legislation, one that included many relief provisions for the travel industry. But now that the dust has settled — if not all the checks signed — the U.S. travel industry has identified many places where the legislation is insufficient or leaves out various corners of the industry.
Congress is currently battling over what is being referred to as “phase four” of economic stimulus. (The first two phases were much narrower in scope than the CARES Act, which was phase three). And thus, another lobbying effort is afoot to ensure the travel industry is not left out again in the next round of legislation.
“Congress must move swiftly to correct and supplement the CARES Act with additional rounds of aid,” President of the U.S. Travel Association Roger Dow said in a statement. “Travel-related small businesses will be vital leaders of an economic recovery, but first they need to survive until the point when travel demand returns. In order to make it, these businesses need to be able to access the resources that will enable them to keep the lights on and retain their employees.”
The trade group posits that without further action, 5.9 million travel-related jobs could be lost by the end of April, which accounts for more than a third of the travel-supported workforce. Here’s a look at some of what the industry is asking for this time around.
Extension of the Paycheck Protection Program (PPP)
The payroll protection program was the CARES Act’s marquee provision for sustaining small businesses, by essentially giving them a way to avoid laying off employees now that revenue has sharply dropped.
A coalition of groups led by U.S. Travel is calling both for “amendments and technical corrections” to the program to make it more widely available for small business in the industry. These include an extension of the time frame the bridge loans can be used to cover salaries from June to December, as well as an additional $600 billion from which businesses can draw. They are also advocating that the PPP loans can be used not just to cover payroll, but non-payroll expenses as well, and that small businesses be eligible for up to three such loans if they can prove that previous funds have been used up. For the full list of enhancements and changes being requested, see here.
The American Society of Travel Advisors, a trade group, is also advocating strongly for changes to the PPP program. In addition to the worry that the $350 billion fund will be quickly depleted, the group worries that “that the last-minute rules put in place by the Small Business Association make the loans less attractive to both borrowers and lenders,” referring to the fact that many commercial banks have declined borrowers who have applied for the loan.
Include Destination Marketing Organizations and Convention and Visitors Bureaus
As Skift has covered, the CARES Act delineates between a 501(c)(3), which is a traditional charitable non-profit, and a 501(c)(6), which operate to promote a common business interest. Most DMOs and CVBs classify as the latter, which means they were not subject to funds outlined in the act’s aforementioned paycheck program. U.S. Travel and trade industry group Destinations International are advocating that these organizations should be subject to those funds.
A coalition of 600 travel industry organizations sent a letter to congressional leaders outlining the strong need to include these groups in the legislation if the industry is to recover.
“Without access to this program, DMOs across the country—which are among the hardest hit by the significant declines in travel spending—are being forced to lay off thousands of employees, which will only lengthen our country’s recovery from this crisis,” the letter read. “As civic-oriented nonprofits, it will be difficult for them to qualify for other types of SBA loans, and this will only reduce what they can reinvest back into their community’s economic recovery. Without these DMOs, recovery will inevitably take a much longer time. We must secure the immediate relief they so desperately need to ensure they can continue to deliver for our communities.”
U.S. Travel is calling for a range of tax benefits to further help businesses, including an enhanced tax credit for business that retain employees — particularly DMOs, which have been left out of other schemes. In addition it is calling for deferral of payroll taxes for two years for businesses in the Payroll Protection Program.
Allow the Treasury to Make More Direct Loans
The Economic Stabilization Fund was $500 billion set aside for larger businesses. U.S. Travel would like to see the treasury make direct loans to “severely impacted travel dependent businesses” without strict credit and financial solvency requirements, the same way it has to airlines. As the bill currently stands, the group says, many large business don’t meet the financial requirements to receive these direct loans.
Protect Travel Advisors from Credit Card Chargebacks
ASTA is concerned about its travel advisor members being left on the hook for credit card chargebacks initiated by the consumer when they have not gotten a refund for a cancelled flight. This is a scenario the group says is “more common now than ever before” and stem from “airlines’ inflexible refund and rebooking policies.”
Thus, it wants the next iteration of legislation to require that airlines that have received financial assistance must, among other things, issue refunds for any flight through to the end of 2020 and protect travel agent commissions and incentives on air travel bookings that are rebooked or refunded.
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Photo credit: Capitol Hill in Washington DC. Daniel Mennerich / Flickr