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:
Kenneth
E. MacKenzie
(617) 574-4067
[email protected]
Harold
Stahler
(617) 574-4101
[email protected]
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
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herein.
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