Cynics may dismiss the current effort by the U.S. Travel Association to get support for a $500 million BP-funded consumer promotional program to address the economic impact of the Gulf oil crisis. But there is a lot at stake, including the viability of the travel and tourism industry in the Gulf Coast region. In reality, U.S. Travel should be praised for its initiative that may well prove beneficial to the region that depends heavily on travel for its economic well-being.
For travel agents and the travel industry, it matters big time. How well the industry responds to the crisis in the Gulf coast states may well affect how the industry responds to other crisis of similar magnitude. As Roger Dow, president and CEO of the U.S. Travel Association put it, “When a disaster strikes and travel to an impacted region declines, local economies can never fully recover until travel is restored to pre-disaster levels.”
In fact while U.S. Travel’s proposed Roadmap to Recovery is focused on the Gulf crisis it also applies to other disasters the industry and the nation are likely to confront in the future. U.S. Travel's Roadmap to Recovery is built upon lessons learned from more than two dozen recent disasters. It is a private sector initiative that provides government with tools to mitigate crisis-related damage to local economies and utilize travel as a driver of economic recovery.
The plan outlines key recommendations for all crisis situations but highlights specific proposals to address the ongoing disaster created by the BP oil spill. The vision is to utilize travel to stimulate local economies and speed recovery.
U.S. Travel argues that the federal government should focus on three areas: public perception, incentivising travel and making businesses whole.
“Travel is a perception business where, in the wake of a disaster, facts often take a backseat to fears and rumors,” U.S.Travel says. “Informing public perceptions is the single most important thing that government can do in the wake of a crisis situation.”
The Recommendation: The federal government should secure $500 million from BP to be used over the next three years to fund information-based marketing campaigns designed to increase travel to the Gulf Coast.
U.S. Travel says that the federal government can spur economic recovery and send a clear message that an impacted region is safe and open by providing individuals and businesses with incentives to travel to and do business in a disaster-affected region.
The Recommendation: The Department of Commerce should consider organizing travel and tourism-specific trade missions to the Gulf Coast states. These trade missions will allow international buyers to visit the region, put the oil spill in perspective and, in turn, educate their clients about the spill’s impacts.
Making Businesses Whole
“Unfortunately, disasters will inevitably cause a certain amount of economic and physical damage,” U.S.Travel says. “In order to help businesses and families survive a major crisis, the federal government will need to provide increased access to capital, low interest loans and tax incentives. ”
The Recommendation: Expand the categories eligible for the Net Operating Loss tax credit to include items such as casualty losses, employment-related moving expenses, temporarily housing employees, depreciation and repair expenses. This expanded tax break would provide disaster-affected businesses with a smaller short-term tax liability during the first year of a crisis, U.S. Travel suggests.
There is lots more to it, to be sure. Travel and tourism is critical to the economies of Gulf coast states, responsible for $34 billion in direct traveler-generated spending along coastal communities’ Congressional districts in Alabama, Florida, Louisiana, Mississippi and Texas. An independent analysis by Oxford Economics sees the potential impact of the oil spill disaster in the Gulf of Mexico could adversely affect tourism arrivals in coastal communities for up to three years at a cost of $22.7 billion in lost revenues. At minimum, Oxford estimates Gulf region travel would be impacted for 15 months at a cost of $7.6 billion in unrealized revenues, though it is expected that this event will trend to the higher end of impact estimates.
“The high profile of the spill has led to incredibly widespread economic impacts,” Oxford Economics reports. “Although the losses have been concentrated where oil has come ashore, visitors have shifted away from the entire region in significant numbers, creating a striking effect on travel to the Gulf region. Current indicators show double-digit declines in plans to travel to the region. A series of surveys, along with greatly reduced searches on the travel web site TripAdvisor, reveals that the oil spill has already affected perceptions and intentions to travel to affected areas.”
The Bottomline is Clear: The Gulf Coast states are threatened and U.S. Travel has acted boldly but constructively to cope with the crisis. The call for a $500 million emergency marketing fund to counter misperceptions and encourage travel to the affected region— a move Oxford estimates would generate $7.5 billion in tourism spending based on a return-on-investment of 15:1— has to be welcomed, examined and supported. This time it’s the Gulf Coast. Next time it could be New England or the Pacific Northwest or the Midwest.
My Suggestion: Take a fair minded look at U.S. Travel’s plans and recommendations and share any constructive suggestions you think may help.
There may be better ideas out there but U.S. Travel has offered a timely, credible and commendable initiative.
Visit www.ustravel.org for full details of the Recovery Plan and updates on the crisis.
What do you think can be done to aid the Gulf Coast, and travel and tourism industry, during this crisis? Let us know. Post a comment below. Write us at our Facebook page. Send a tweet to our Twitter page (@travelagentmag). Join the discussion thread in real time at AgentNation.
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