Steve Richer, DC correspondent
This morning, Americans awoke to a new federal taxation system which had been passed by both the House and Senate. H. R. 1, the Tax Reconciliation Act, will change how taxes are levied and is projected to create a minimum of a $ trillion additional deficit, according to most legislative analysts.
As inbound tour operators look ahead to 2018, here are the major issues facing inbound travel and some suggested steps for moving forward:
- International arrival trends. Through the second quarter of 2017, international arrivals were down 3.9 percent overall, led by a 9.4 percent drop from Mexico and 5.7 percent drop from overseas, according to the U.S. Department of Commerce. Only Canada was up 4.8 percent for the first half of 2017. This compares unfavorably to 2016, which was down 2.4 percent and 2015 which was up 3.3 percent. The drop makes the total international arrival goal of 100 million more elusive, as it peaked at 77.5 million in 2015. This interestingly is behind Canadian inbound travel trends, which saw a record-breaking total of arrivals and 11 percent growth over 2015 in 2016.Current analyses suggested that a three-fold set of circumstances is responsible for the downward trend in the United States, including the strong U.S. dollar, more restrictive visa policies and reaction to the current U.S. political environment. International inbound operators have little potential impact on the strength of the dollar, but are able to document the results of changing visa policies and political reactions by compiling “lost or reduced business” reports based on these factors and sharing them with IITA. It would be important to also report any increased business tied to the work of Brand USA or other national or regional marketing efforts in order to offer balanced information to policymakers. With Destination Capitol Hill coming up March 21-22, these reports will be important for sharing 2017 results with members of Congress.
- Brand USA. Brand USA can be impacted under the Statutory Pay-As-You-Go Act of 2010, which implements automatic budget cuts if the federal budget deficit is increased. According to a New York Times article on November 29, the entire budget for the Corporation for Travel Promotion (better known as Brand USA) of $100 million annually could be automatically wiped out, if the trillion-dollar deficit materializes. It appears that no steps were taken during the tax legislation discussion to exempt Brand USA, as there were no hearings on the bill and no input from anyone other than the House and Senate Republican Caucus members. IITA members, as well as the overall travel industry, need to keep an eye on this possibility and work for specific legislation before it occurs, should any discussion begin on the impact of “paygo.”
- National parks. Inbound operators are faced with two challenges with national parks. and public lands. The first is the proposed reservation system at Arches National Park, scheduled to go into effect in 2019. Inbound operators will have to submit all of their 2019 entrance date requests with their CUA (Commercial Use Authorization) application by December 31 of the prior year, which will be too late for advanced bookings and too early for any last-minute requests. And, since the number of daily motorcoach admissions will be limited, it will be the luck of the draw for operators to get their requested dates. It is expected that the reservation system would swiftly be adopted by other national parks.
The second issue is, of course, proposed changes in entry fees with some of the most popular national parks receiving up to 300 percent increases during peak seasons, and new requirements and costs for commercial tour operators will drive up group tour costs making it less attractive for operators to package the parks. With an almost $12 billion dollar infrastructure repair and maintenance backlog at the national parks, there is much skepticism over the impact of proposed increases that are likely to generate barely 1 percent of the needed funds. It will be a shame if the major international draw of America’s “crown jewels” is diminished by costs and a chaotic system of reservations. Inbound operators must prepare detailed reports on these impacts to share with Congress and the national administration now.
- The new tax bill, which could generate a trillion-dollar additional deficit over the next 10 years is most likely to have put a block on the commitment to fund another trillion dollars in infrastructure backlog, including the almost $12 billion at national park sites. The issue here for inbound operators is that both general infrastructure, including roads, airports, and intermodal connections between airports and downtown locations of major cities, and addressing the national park backlog are critical for the continuing success of international tourism to the United States and our long-term competitive standing. One needs only to look at the kind of investment in new roads, new airports, new bullet trains, and new railroad stations throughout China and other countries to see how the U.S. is falling behind. Once again, IITA members should prepare commentary and anecdotal information on these matters in preparation for Destination Capitol Hill and share it with IITA so we can carry your voice.
That’s the view from Washington, DC, on December 20. Happy Holidays, and Happy New Year to all. See you in 2018!