Friday, March 5, 2010

Welcome to the USA! Now, Pay Up.

U.S. President Barack Obama yesterday signed the Travel Promotion Act into law. This was a cherished goal for much of the country's travel industry, which had been advocating the creation of a national board to promote international travel to the United States. Most other countries have national tourism boards. Why not us, is the thinking.

Sounds good. But there's a catch.

The catch is funding, specifically the ripple-effect from the funding mechanism. Creating an 11-member tourism promotion board and crafting the global marketing campaigns authorized by the law have got to be paid for - and in the present recessionary economic climate and fervent anti-tax political climate, it simply can't cost U.S. taxpayers one red cent.

So, the program will be funded by having every visitor to the United States from a visa-waiver nation - that is, travelers who don't already spend the hefty $131 fee for a U.S.-issued visa - to pay a $10 fee to enter the country, and match that with $100 million in funds raised in the private sector.

Thus, the law is as much a product of domestic political squabbling as it is a kinder, gentler outreach program and savvy marketing move.

Will it work? No one can say until it's been in place for a while. But I think there is a good chance the new policy will send a mixed message - hospitality mixed with penalty - to international visitors, and end up backfiring.

Moreover, consider the following: The 50 U.S. states and many cities already have tourism promotion boards. U.S. landmarks (Mount Rushmore, the Golden Gate Bridge) and other tourist attractions (Hollywood, New York restaurants) are very well-known abroad. The American 'brand' is very high-profile. It's not like no one knows what or where the United States is.

It is unclear what creating a national tourist board and slapping on a new entry fee will do to lift international visitor numbers that have fallen 9 percent since 2000. That's shortly before the terrible events of Sept. 11, 2001, when tighter - often illogical and sometimes insulting - security at U.S. airports and land border crossings was put in place.

It is also unclear how charging visitors more money - even just a little bit more money - will help offset the second major reason for falling visitor numbers: The worldwide Great Recession, and the subsequent reduction in spending by cash-strapped travelers and other consumers.

Another way that domestic politics comes into play is the way the Travel Promotion Act was sold to Congress, and to President Obama: i.e., as a welcome economic stimulus, a badly needed job creation program, even a deficit reduction measure.

U.S. Travel, the private, nonprofit trade group that represents travel industry stakeholders in the United States, strongly backs the new law. Citing numbers crunched by UK consulting firm Oxford Economics, U.S. Travel's president and CEO, the seasoned and smart Roger Dow, said "This is a historic victory for the U.S. economy and the one in eight American workers whose jobs depend on travel.''

According to Oxford Economics, the new law should generate $4 billion in additional consumer spending per year, $321 million in federal tax revenue per year and 40,000 new U.S. jobs, plus reduce the federal deficit by $425 million over the next 10 years. Of course, those numbers are estimates taken from an optimistic forecast.

Not everyone in the travel biz is happy. Steve Lott, the U.S. spokesman for the International Air Transport Association, which has 230 airline-members worldwide, told that better ways to lure international visitors would be to reduce long visa waiting-times and making the customs and immigration experience more streamlined and more welcoming.

In short, this may well be a situation in which better policy - not better marketing, and not a new de facto tax on travelers - would make the U.S. a more attractive place to visit.

Based on how the situation looks today, that is my view. I'm very willing to be proven wrong.

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