In Italy, the government is paying people to travel. In an effort to encourage domestic tourism and revitalize an industry that’s suffered some 106,000 job losses due to the coronavirus pandemic, it’s offering what’s become known as a “holiday bonus” to lower-income families to encourage spending in hotels, campgrounds, and beach resorts across the country during 2020. Hotels will reduce their prices for eligible guests (and claim tax credit to compensate) while travelers can claim expenses as a tax deduction. Households with at least three members are eligble for €500 (about US$544), couples will get €300 (US$327), and individuals €150 (US$163), the Local reports.
Similar proposals have been discussed in Poland, where the country’s ministry of development is considering vouchers amounting to some $242 (or 1,000 Polish zloty). It’s not clear yet who would be eligble (more is expected soon), but the money could be used for sporting events, exhibitions, and other entertainment, Travel Weekly reports. Slovakia and Romania have tried similar programs in recent years. And in Peru, Machu Picchu will reopen with free admission for lower-income families as the government tries to alleviate the projected $4 billion hit to the tourism industry during 2020.
Could a similar approach work in the United States? Both the U.S. Travel Association (USTA) and the American Hotel and Lodging Association (AHLA) hope so—and they’ve called for tax credits for every family to encourage domestic travel.
In a policy proposal outlined in late May, the USTA suggested an initiative similar to the homebuyer credit offered following the recent housing crisis (and taken up by 1.8 million people) that would encourage domestic business and leisure travel—“specifically a tax credit worth 50 percent of qualified travel expenses incurred in the U.S. between enactment and December 2021, up to a maximum tax credit of $4,000 per household.” Expenses could be anything over $50 incurred while away from home, including meals, lodging, recreation, transportation, and gasoline.
There are several reasons why this could be a vital next step from the government. The travel industry has been disproportionately hit by the coronavirus pandemic: 51.8 percent of the 15.8 million jobs in the sector have been lost, according to the USTA, with the organization’s president and CEO Roger Dow insisting that “our national economy is in a recession, but the travel industry is already in a depression.” Tourism Economics calculates that travel spending in 2020 will amount to some $4.2 billion, a third of last year’s $12.3 billion.
The American Hotel and Lodging Association (AHLA) was even blunter. “The hospitality industry is in a fight for survival,” Chip Rogers, its president and CEO, said in May. “We are urging Congress to do even more to help the hotel industry so that our small business hotel operators can keep the lights on and retain and rehire employees.”
But there’s another reason why subsidizing domestic travel is considered so essential. Not only would it bring money to local economies and protect jobs, but it also could give an enormous boost to the public’s collective well-being and give travelers something to look forward to in uncertain times.
“We want people to book travel, to get excited by it,” says Tori Emerson Barnes, the USTA’s executive vice president of Public Affairs and Policy. “One of the things we think about in the current environment is the lack of anticipation, the lack of something happy to look forward to . . . [it’s] really another crippling effect from a psychological perspective of the crisis.”
She says that the organization has been discussing the idea of a travel tax credit since early March and since before the CARES Act. But could it actually happen? Trump briefly mentioned the idea of an “Explore America” travel tax credit in a roundtable with the restaurant industry on May 18, something the USTA welcomed. But nothing has been announced since.
A subsequent proposal by Arizona senator Martha McSally entitled the American Tax Rebate and Incentive Program Act (or TRIP Act), also outlined a $4,000 travel tax credit for 2020, 2021, and 2022 for expenses incurred more than 50 miles from home. However, as Vox points out, it’s complicated and problematic. Many people, including those on lower incomes would be ineligible, and the proposal may not even make it to the Senate for a vote.
Right now, there’s no imminent news of the American public receiving a $4,000 travel tax credit.
Some travelers will need more than money to head back out
Of course, even with a financial incentive, many people will still feel uncertain about leaving home. Many states remain somewhat shut down, and there’s no way to know how the novel coronavirus will run its course—or how the industry will respond. Travelers have many questions: Is it safe to fly? What will the hotel be like when I get there? Will I be able to change my travel plans if I need to?
To address this, the USTA is also calling for $10 billion in Economic Development Administration grants for destination marketing organizations (otherwise known as DMOs) and other small businesses to help them communicate to the public what’s open and how to visit safely.
The “how” and “when” people will travel are the most frequently asked—and most challenging—questions to answer. Even as COVID-19 testing improves across the United States, there’s a crisis of confidence and the pandemic will impact our thinking long after the curves are fully flattened. But a safe and reasoned resumption of our favorite pastime will be essential.
As USTA’s Tori Emerson Barnes insists: “It’s critical that we try to get these jobs back. The sooner we can get folks moving in a healthy and safe way that’s in line with CDC guidelines—and the broader Travel in the New Normal guidance that our industry collaborated on—the better chance of helping the economy and helping people get out there and feel happy again.”
This article was originally published on May 22 and was updated on June 30 with new information.
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