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Senate Passes Travel Industry Promotion Bill

By Christopher T. Cardinale
September 2009
Practice: Hospitality & Recreation
People: Harold Stahler

Last week, Congress moved one-step closer to passing legislation designed to bolster the struggling travel and hospitality industries by promoting foreign travel to the United States.  The Travel Promotion Act of 2009, passed overwhelmingly by the Senate on September 9, 2009, and now under consideration in the House of Representatives, is expected by some experts to create up to 40,000 U.S. jobs and drive $4 billion in new consumer spending.

The House is considering H.R. 2935, a bill nearly identical to the Senate version, and while we await the emergence of the final House bill, the Senate version clearly illustrates Congress' intent.

Senate Bill Highlights

The primary goal of the Travel Promotion Act (the “Act”) is to reverse a disturbing trend in the U.S. travel industry since the 9/11 attacks in 2001 – an increase in global travel, yet a decrease in foreign visitors to the U.S.  To achieve this goal, the Act would establish a nonprofit corporation with the primary task of promoting leisure, business and scholarly travel to the United States.  The corporation, called the Corporation for Travel Promotion (the “Corporation”), would be managed by a Board of Directors appointed by the Secretary of Commerce and comprised of various industry experts – including directors with expertise in the hospitality and restaurant sectors.  The Corporation would be led by an Executive Director and would also employ a full-time marketing staff to carry-out the Corporation’s mission. The Senate Bill enumerated the following basic duties of the Corporation, to be implemented with a focus on those populations most likely to travel to the U.S.:

  • Distribution of practical administrative information for travelers entering the U.S.
  • Correct misperceptions about U.S. visitation policy
  • Promote economic and diplomatic benefits of travel to the U.S. through a variety of media (trade shows, outreach, advertising, etc.)

Initial funding for the Corporation of up to $10 million would be made available as early as Fall 2009 by the U.S. Treasury from existing reserves for the administration of foreign visitation visas.  Funds will be placed in a new, separate account at the Treasury called the Travel Promotion Fund, which will be managed by the Corporation.  Following the first year of operations, the Corporation will operate with public funding from a $10 “entry fee” charged to foreign visitors from countries eligible for U.S. visa waivers and up to $100 million in private sector contributions or assessments from the domestic travel and tourism industry.  All federal funding of the Travel Promotion Fund will cease as of September 30, 2014.

The Future of the Act

While the Senate Bill has received some overseas criticism on account of the “entry fees” being levied against the same audience Congress is trying to attract, most pundits expressing a view expect the House’s version of the Travel Promotion Act to pass with little resistance and for the Act to quickly become law.  Nonetheless, several questions remain unanswered and it is unclear exactly how the Travel Promotion Act will work to boost the travel and hospitality industries.  For example, Congress has yet to indicate the methodology for imposing private assessments or to identify who will pay them.  Additionally, the Corporation’s Board of Directors is comprised of representatives of each segment of the travel industry, such as hotel, restaurant, rail, airline, but without regard to the relative share of overall travel dollars for which any particular segment is responsible.

As the House bill is under consideration, these and other questions will need to be answered.  In the meantime, anyone wishing to discuss the Travel Promotion Act or to obtain assistance in submitting commentary to legislators should feel free to contact:

Harold Stahler
(617) 574-4101
hstahler@goulstonstorrs.com

This G&S Advisory was authored by Christopher T. Cardinale, an Associate at Goulston & Storrs.

This advisory should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own lawyer concerning your situation and any specific legal questions you may have.

Pursuant to IRS Circular 230, please be advised that, this communication is not intended to be, was not written to be and cannot be used by any taxpayer for the purpose of (i) avoiding penalties under U.S. federal tax law or (ii) promoting, marketing or recommending to another taxpayer any transaction or matter addressed herein.

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