Skift Take

The hospitality industry got some love from Washington, but stakeholders shouldn't hold their breath waiting for industry-targeted relief to pass.

Not everyone in Washington is ignoring the hospitality industry when it comes to ongoing pandemic stimulus talks.

U.S. Senators Catherine Masto (D-NV) and Kevin Cramer (R-N.D.) proposed a bill Thursday aimed at providing economic relief to the hospitality and travel sectors following the pandemic’s brutal collapse of these industries. The measure comes after political analysts continue to expect the airline industry to be the only travel industry to get earmarked aid in future federal stimulus packages.

“The coronavirus pandemic has devastated economies and industries across the country, and Nevada’s hospitality, travel, and tourism sectors have been especially hard hit,” Masto said in a statement. “These industries are the economic engine of our state and our communities, and the incredible challenges they are now facing due to Covid-19 demand our attention — and action — in Congress.”

On top of that, CEOs from the major hotel brands sent a letter Thursday to President Trump calling on him to provide the hotel industry with aid from the Main Street Lending Program.

“Only a small fraction of the $600 million available through the program has been utilized,” the CEOs wrote. “While the remaining funds sit idle and go unused, the hotel industry is on the brink of collapse.” (See full letter below).

The Masto-Cramer measure, called the Hospitality and Commerce Job Recovery Act, establishes tax credits for attending or hosting a convention between the start of 2021 and end of 2023. It calls for improving the Employee Retention Tax Credit and would restore the Entertainment Business Expense Deduction eliminated in the 2017 overhaul of the U.S. tax code.

The convention tax credit would be a win for the U.S. hotel industry, as group business travel drives nearly a third of room revenue at luxury and upper-upscale U.S. hotels, according to McKinsey & Co. It would especially boost morale in Masto’s home state, where the normally convention boomtown of Las Vegas has gone months without any major events.

“Group business drives hotel profitability as a source of food and beverage revenue and high occupancy nights, and — because it typically books further in advance — it will inform everything from marketing strategy to revenue management,” Nathan Seitzman, a partner in McKinsey & Co.’s travel practice, told Skift in June. “So even when business and leisure transient travel fully recover, a lagging group recovery could have a disproportionate impact on hotel profitability.”

The legislation especially targets the restaurant industry by creating a tax credit for food service businesses that covers any costs associated with reopening or restoring service at a property impacted by pandemic shutdowns. That tax credit would run through the end of 2022.

Masto and Cramer’s bill arrives as the hospitality industry continues to lobby Congress on assistance, as the sector — at a 19 percent unemployment rate — has significantly higher unemployment than the 7.9 percent national average. Hotel unemployment, at 29.9 percent, is even more out of step with greater economy.

“The bill’s targeted approach to providing tax incentives would ensure that these hard-hit businesses — including those in the meetings, events and entertainment segments — get the help they so desperately need to recover from this crisis,” said Tori Emerson Barnes, executive vice president of public affairs and policy at the U.S. Travel Association.

It is still highly unlikely any industry-specific measure gets passed before a deal is reached on comprehensive coronavirus relief. The airline industry was generally seen as an exception to this rule, due to its political reach and many high-skilled jobs in swing states — especially in an election year.

But U.S. Speaker of the House Nancy Pelosi (D-CA), who initially supported an airline-specific bill, has said the House won’t vote on any further relief unless it is a bill that extends to the overall economy.

UPDATED: This story was updated to include a letter from CEOs of the major hotel brands to President Trump.

Download (PDF, 86KB)

Have a confidential tip for Skift? Get in touch

Tags: coronavirus, coronavirus recovery, economic stimulus, meetings and events

Photo credit: A bipartisan bill, if passed, would deliver tax credits to hosts and attendees of conventions and events in the U.S. through 2023. Moyan Brenn / Wikimedia

Up Next

Loading next stories