The U.S., thanks to accelerated vaccine distribution, appears on track to contain the spread of coronavirus at some point this year. Now comes the lobbying effort to find ways to get more people back into hotels, airplanes, and restaurants.
The dust is barely settled on the $1.9 trillion U.S. pandemic relief measure signed into law last week, and one travel organization is already looking ahead to the next round of legislative help.
But this time, lobbyists want Congress to deliver what would be unprecedented tax incentives to encourage more people to travel both for leisure and business.
The U.S. Travel Association expects Congress to consider business and travel tax credits later this year. A bipartisan, standalone bill was reintroduced last month, but some industry analysts even think it could be incorporated into negotiations of a long-awaited federal infrastructure package. The trade group hopes a finalized stimulus measure comes together over the summer.
It is still too early to know exactly what an infrastructure bill may look like. The Biden administration is only just beginning a national tour celebrating passage of the American Rescue Plan last week. While pundits largely expect a bipartisan infrastructure package to be the White House’s next legislative goal, the administration has yet to go public with its plan.
But that isn’t keeping the USTA from seeking as many cosponsors as possible for a tax incentive plan to encourage more travel.
A representative with the USTA declined to go on the record regarding the infrastructure tie-in but did point Skift to a standalone bill as an example of how a travel tax credit could materialize.
The bipartisan Hospitality Commerce and Jobs Recovery Act — sponsored by Sens. Kevin Cramer (R-N.D.) and Catherine Cortez Masto (D-Nev.), and Reps. Steven Horsford (D-Nev.), Darin LaHood (R-Ill.), Jimmy Panetta (D-Calif.), and Tom Rice (R-S.C.) — calls for a temporary business tax credit that would cover the cost of attending a convention, business meeting, or trade show in the U.S. between 2022 and the end of 2024.
The travel industry’s economic impact extends to the associated spending that go with events like conventions or group business meetings. Domestic and international travelers spent $1.1 trillion in the U.S. in 2019, the USTA reports. That translated to $180 billion in tax revenue for federal, state, and local governments.
“One of the things one always needs to focus on with travel and tourism is the multiplier effect,” said Stowe Shoemaker, dean of the William F. Harrah College of Hospitality at the University of Nevada, Las Vegas. “Travel and tourism yield an enormous multiplier effect.”
The measure would also create a tax credit to stimulate leisure travel within the U.S. through the end of 2023. The bill also includes tax relief for helping restaurants, entertainment venues, and performing arts venues recover.
While the travel industry has lobbied for stimulus measures like tax credits in earlier iterations of federal relief, the various measures signed into law largely focused more on helping companies survive while getting the virus under control.
But now that U.S. vaccine distribution appears to be on track to enable some degree of normalcy during the second half of the year, travel industry eyes are now on how to encourage more people to get back on the road or in the air.
Restaurants and performance venues garnered targeted aid with the American Rescue Plan. The airline industry has now received three rounds of multibillion-dollar payroll support measures since the beginning of the pandemic. The hotel industry has been left out of these industry-targeted relief measures.
While hoteliers have had to rely on pools of broader economic relief like the Paycheck Protection Program of small business loans, they should also view the travel industry’s push for travel tax credits as a major benefit, if passed. Leisure travel tax credits would permeate across all hotel market segments, but the meetings and events travel tax credit would be a major victory to struggling convention hotels and properties in urban markets.
“Even with the ray of hope provided by vaccines, it is unclear when travel demand will be able to rebound in earnest,” U.S. Travel Association CEO Roger Dow said in a statement of the standalone bill last month. “This bill contains critical provisions to assist in rebuilding this crucial but suffering American industry.”
The travel industry may have touted its economic impact for years as reason for providing some form of tax incentive, but passage has remained elusive during the pandemic. An earlier version of the February bill was introduced last October and died in Congress. Former Arizona Sen. Martha McSally also proposed a $4,000 travel tax credit last year to boost domestic travel, but that measure never passed.
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Photo credit: The U.S. Travel Association is pursuing a variety of paths to convince Congress to pass tax credits incentivizing people to return to convention and events travel. Carol M. Highsmith / Picryl