This could be messy – Nuts & Bolts of the Travel Promotion Act

30th Oct 2009
This could be messy – Nuts & Bolts of the Travel Promotion Act

The Travel Promotion Act (S. 1023 & H.R. 2935), having been passed by both the US Senate and the House, is on the verge of being enacted into law, awaiting the formalities of one more vote and the President’s signature. So now would be a good time to look into the nuts and bolts of how it is going to work.

US Capitol

Most of you already know what it is going to do – “establish a non-profit corporation to communicate United States entry policies and otherwise promote leisure, business, and scholarly travel to the United States.”  The corporation’s activities will be funded by a matching program featuring up to $100 million in private sector contributions.

Makes you wonder whether the travel industry – which is just getting up off the mat after having taken a thrashing from the recession, is capable and motivated enough to raise $100 million.

The second question arises from the language in the bill which says that the private sector cannot contribute more than 80% of it’s share of the matching funds in the form of goods and services.


This means that for every $1 raised in cash, the travel industry needs to contribute upto $4 in kind – this could be in the form of free travel services offered to the executives and officials of the Travel Promotion Corporation, and free promotion/advertising for the corporation and its website, among other things. 

The success of the enterprise now depends on how well the corporation’s officials carry out their duties. If they raise, say, only $20 million from the private sector, then they’ll get another $20m from the matching fund, the total comes to $40m – which would be a damp squid, to say the least, considering the hype and the amount of money the corporation will be spending on itself.

The contributions are voluntary, to start with. But if it doesn’t work, the corporation has the power - after a referendum – to “impose an annual assessment on members of the US travel and tourism industry represented on the Board in proportion to their share of the aggregate international travel and tourism revenue of the industry.”

And this is where it gets really interesting. While members explicitly represented on the board include hotels, restaurants, travel distribution, passenger rail , the shocker is that the airline industry – even though it is represented on the board, has been specifically granted an exemption from an assessment.

U.S. Travel Assoc. Senior VP Geoff Freeman told Travel Weekly that the airlines lobbied Congress separately without consultation with U.S. Travel and got themselves exempted form having to pay anything into the Travel Promotion Fund.

It should be no surprise, therefore, if the airlines also refuse to volunteer to pay cash or make contributions in kind.

Car rentals and tour companies are not specifically mentioned in the bill, so they could, in theory – opt out of having to pay their share. To make things worse, it is the Corporation which gets to decide who owes how much of the share. This is all a recipe for tearing the travel industry apart – if it comes to a situation where members are forced to pay.

Bottomline is that the travel industry needs to pony up the dough and make it easy for the Travel Corporation to fund its activities. If that doesn’t happen, there’s a whole can of worms down the road which will make things really difficult for any future efforts to promote the US as a tourist destination.

Photo by cliff1066

Related posts:-
Travel Promotion Act Clears U.S. Senate



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