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USTA seeks US$500m for Gulf Coast marketing
July 26 2010

The United States Travel Association has asked the federal government for US$500 million that would support a tourism marketing campaign for Gulf Coast states affected by the BP oil spill.

REPORT FROM THE U.S.—The United States Travel Association late last week asked for US$500 million in federal funding to offset the tourism sector’s financial losses following the BP oil spill.

The USTA wants the federal government to allocate money from BP’s current oil spill fund or other BP funds to help boost tourism to the Gulf States for the next three years.

Roger Dow
president and CEO

Data from Oxford Economics shows the financial damage on Gulf Coast communities from the spill will last about three years and total US$22.7 billion.

“If a region experiences a prolonged decline in travel, it can be felt throughout the entire community for years. There is a critical need for marketing plans to speed up recovery,” USTA president and CEO Roger Dow said during a conference call with reporters.

Tourist dollars essential

Tourist dollars are vital to the economic health of the region. An average of US$1,000 is spent by each U.S. traveler and approximately US$4,000 is spent by each foreign traveler, according to the USTA. Revenues from travel extend far beyond hotels and include restaurants, retailers, entertainment venues and recreation services, Dow said.

“If a region experiences a prolonged decline in travel, it can be felt throughout the entire community for years. It is very important to get visitors coming sooner, utilizing travel as a means of preventing future harm,” Dow said.

“The real wild card is: How will travelers react? Leisure travelers … may avoid regions which have only slight contamination or perhaps even the risk of oil,” said Adam Sacks, managing director, Oxford Economics.

Adam Sacks
managing director
Oxford Economics

If the Gulf Coast states have a “high impact” from oil, the Gulf Coast of Florida economy stands to lose the most money—US$18.6 billion—during the next three years, according to Oxford Economics. Louisiana is projected to suffer losses of US$2 billion, Mississippi will lose US$1.2 billion, Alabama will lose US$800 million, and Texas will lose US$100 million.

Florida’s tourism economy might suffer the most significant damages because oil-flow models demonstrate oil will likely flow into the Gulf Stream and up the Atlantic side of the Florida coast, according to Sacks. “Florida is taking such a big hit because there is the perception that oil is affecting the entire Gulf Coast, all the way down to the Keys,” Sacks said.

Texas tourism will likely remain relatively stable compared to other Gulf Coast states because “the flow of oil is not in its direction,” Sacks said.
Many leisure travelers already are changing travel plans. In June, a survey from research firm TNS found 10 percent of travelers intending to travel to the Gulf decided not to travel there and another 22 percent changed their travel plans for unspecified reasons. A June Louisiana Office of Tourism study found 17 percent of travelers postponed or cancelled plans to visit the state.

Still, Gulf Coast hotels reported largely positive results for the week ending 17 July, according to STR data. The region’s occupancy increased by 5.7% to 68.3%; average daily rate fell by 3.8 percent to US$101.58; and revenue per available room grew by 1.8% to US$69.39.

USTA call for action

The meetings and conventions market likely will decline, too. “We are hearing from multiple destinations that meeting planners are saying, ‘I am going to book my meeting elsewhere rather than take the risk (that oil will be in the region),’” Dow said.

In addition to the marketing funding, the USTA is calling on the U.S. government to provide individuals and businesses with incentives to travel to and do business in the Gulf Coast states. For example, the Department of Commerce should organize travel and tourism-specific trade missions to the states, according to USTA’s “Roadmap to Recovery” report.

“These trade missions will allow international buyers to visit the region, put the oil spill in perspective and, in turn, educate their clients about the spill’s impacts,” according to the report.

Dow is expected to testify before a U.S. House of Representatives subcommittee to explain the funding will lessen the industry’s losses by approximately US$7.5 billion during the next three years.
“The government should consider a wide range of incentives for business and leisure travelers, including waiving the fees for trade missions,” Dow said.

The government also needs to provide businesses with new tax breaks, increased access to capital and low-interest loans to mitigate damage during the next three years. “Expand the categories eligible for the Net Operating Loss tax credit to include items such as casualty losses, employment-related moving expenses, temporarily housing employees, depreciation, and repair expenses,” according to the report.

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