Hearing: COVID’s Effects on Tourism

Hearing: COVID’s Effects on Tourism

April 16, 2021  | Jonathan Hammond

A full year of COVID emergencies has caused a tremendous decrease in travel which has only recently begun to recuperate. With travel, to a large extent, goes tourism.

It is not surprising that the Senate Subcommittee on Tourism, Trade and Export Promotion is chaired by a Senator from Las Vegas, nor that the ranking minority member is from the state that hosts Disney World and the plurality of the cruise industry. It therefore follows that, unsurprisingly, the subcommittee’s first hearing of the year (held April 13) examined the state of travel and tourism during COVID-19.

Witnesses included (click their name for their written testimony):

  • Steve Hill, CEO and President, Las Vegas Convention and Visitors Authority (LVCVA)
  • Jorge Perez, Regional Portfolio President, MGM Resorts International
  • Carol Dover, President and CEO, Florida Restaurant and Lodging Association
  • Tori Emerson Barnes, Executive Vice President, Public Affairs and Policy, U.S. Travel Association

Subcommittee Chair Jacky Rosen (D-NV) opened the hearing thanking Sen. Rick Scott (R-FL), the ranking member of the subcommittee for “agreeing to work with me in a bipartisan way on the critical issues that are so important to workers, businesses, and families in both of our states and across the country.”

The State of the Tourism Industry:

As the witnesses relayed their gratitude to the members of the subcommittee and members of Congress for their work in securing relief and aid for their respective industries, they also painted a bleak picture of the United States tourism industry. All four witnesses illustrated the decrease in domestic and international tourism across the United States, and its impact not only on regional economies, but the economy of the U.S as a whole. Representing the Vegas convention authority (LVCVA), Steve Hill noted that tourism is the seventh largest industry in the country, and one of the industries most affected by the pandemic. The LVCVA for instance, is only taking in a third of its normal tax revenue from room bookings. As a general rule, Hill mentioned that social distancing does not serve travel industries well.

Jorge Perez (MGM Resorts) further illustrated that sharp decline by revealing that travel spending across the United States was down by about $500 billion, potentially costing the U.S economy up to $1.5 trillion over the next year. Tori Barnes (USTA) noted that in addition to $500 billion in lost travel spending, international inbound travel declined 76 percent over the past year, erasing up to 5.6 million travel supported jobs. Finally, Carol Dover stated that Florida had the second highest hotel job loss behind California, losing 600,000 or so jobs in the state alone. When asked by Scott, Barnes noted that the decrease in tourism has also impacted Puerto Rico due to its heavy dependence on the travel industry.

In addition to reviewing revenue woes, Scott questioned Dover on the state of the tourism industry workforce. Dover claimed that competition with recently buffered state and federal unemployment systems was discouraging workers from applying to job openings. Perez echoed Dover’s sentiments, although he stated that as people begin to return to properties the workforce tends to increase as well. Hill also mentioned that uncertainty and dislocation make it difficult to attract a tourism workforce. Overall, without any serious investment or intervention, witnesses agreed it will take up to five years for the tourism industry to completely recover to pre-pandemic levels.

Thinking Abroad & Ahead

All four witnesses made sure to emphasize the importance of attracting international and business travel in addition to domestic tourism. Barnes pointed out that before the pandemic, 40 to 60 percent of revenues from a hotel come from business travel. Despite a small increase in leisure tourism over the past year, there has been little to no recovery in the Monday through Thursday travel window. When asked by Rosen on the importance of out-of-state and international travelers, Hill stated that getting customers comfortable with air travel was “paramount.” International travelers, he stated, stay longer, and tend to spend more on entertainment and retail.

Lack of guidelines for industry reopening prompted frustration from witnesses and Senators alike. Senator Dan Sullivan (R-AK) recalled a meeting he and his home-state colleague Lisa Murkowski (R-AK) had attended with the head of the Centers for Disease Control and Prevention (CDC) regarding reopening the state’s ports for cruises. Although the CDC Director claimed that they would be able to have ships running by May, that did not turn out to be true. When questioned by Sullivan on why it would be important to get the cruise industry operational again, Barnes stated that for every 30 cruise passengers, one U.S job is created. Additionally, Dover emphasized that some states, like Florida, have up to 150,000 state residents who rely on the cruise industry.

Federal Requests:

Considering the state of the tourism industry, the assembled witnesses had specific measures and suggestions they would like to see undertaken to facilitate an efficient reopening. While being questioned by Senator John Hickenlooper (D-CO) on rebuilding confidence in the tourism industry, Hill claimed that vaccines increase that confidence, claiming that ultimately “getting past the health crisis will restore confidence.” Barnes, responding to questioning by Senator Marsha Blackburn (R-TN) that some agencies are communicating mixed messages to the industry, believes that data and science should lead the way, and that there can be a science-based approach to reopening various tourist industries. Any future roadmap, however, should contemplate vaccination and infection rates, as well as create timelines aided by certainty, measurable benchmarks, and clear communication from the federal government. In addition to clear communication, Barnes set forth four key priorities she believes will help the industry recover:

  1. Safely and quickly reopen international travel based on a clearly defined road map
  2. Ensure the CDC provides clear guidance to help communities facilitate professional meetings and events, particularly because they can establish a level of control
  3. Pass the Hospitality and Commerce Jobs Recovery Act of 2021 to spur demand and accelerate hiring
  4. Provide temporary emergency funding for Brand USA, a public-private partnership that promotes tourism in the United States.

When asked by Senator Amy Klobuchar on what how much Brand USA would like appropriated for its continued operations, Barnes responded that $250 million would be necessary to meet current funding challenges. Barnes also responded to a comment by Sullivan on the his Visit America Act, sponsored by Senator Brian Schatz (D-HI) and Senator Angus King (I-VT). The act would not only require the Department of Commerce to develop a 10-year travel and tourism strategy but also establish the role of Assistant Secretary of Commerce for Travel and Tourism. In response to his reference, Barnes stated her support, as the United States is currently the only country in the Top 30 most visited countries in the world without a tourism cabinet position. Perez also mentioned bipartisan initiatives he believed would aid the industry. Perez specifically mentioned again the Hospitality and Commerce Jobs Recovery Act of 2021, introduced by Senator Catherine Cortez Masto, which “introduces new tax credits and revises existing credits to protect the hospitality and restaurant industries.”

Infrastructure Installations:

Chair Maria Cantwell (D-WA) shifted the conversation to the additional layer of infrastructure that might be necessary to facilitate reopening of international travel facilities. When asked by Cantwell on installing infrastructure in airports to test for temperature, Barnes responded that “a lot of good can be done creating biometric technical solution you can opt in to,” along with additional layers of infrastructure. However, Barnes noted that she did not think that these installations should be long-lasting burdens, and that they should be easily adjustable. In addition to airport infrastructure, Barnes noted her support for other forms of transportation infrastructure as well, including investments in high-speed rail, electric vehicles, and electric vehicle infrastructure, as well as technologies such as the hyperloop. Hill emphasized the importance of infrastructure when addressing the needs of the tourism industry. I-15, which runs through Las Vegas, has already seen traffic levels and congestion recover since the start of the pandemic. National infrastructure investment is critically important to alleviating those concerns, claimed Hill.

Moving Forward:

As for moving forward, there were several ongoing developments that drew the attention of the witnesses. Hill spoke on the upcoming Las Vegas “World of Concrete” convention slated to open in early June. Although it will not be nearly as heavily attended as past conventions, he hopes that it will serve as a template for how to safely facilitate trade shows in a slowly reopening world. Hickenlooper’s questioning on changing travel trends revealed the growing popularity of outdoor venues such as natural parks, but Barnes noted that parks staff and administration should be cognizant of visitation trends to avoid damaging the venues. Barnes also stated her appreciate for the CRUISE Act, introduced by Senators Marco Rubio, Dan Sullivan, and Rick Scott, and its establishment of a timeline and industry guidelines for reopening. However, both Barnes and Dover stated that proof of vaccination status should be discouraged or left out of any official future guidelines.

Despite the current state of the tourist industry, witnesses hoped that federal aid could hasten the recovery of the sector. If the federal government can deliver on the four key priorities laid out earlier, Barnes believes that recovery timeline could shrink from five to three years, creating an incremental 1.5 million jobs and 600 billion in spending.

If you would like to listen to the hearing, please follow the link here.

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