LAS VEGAS—There are plenty of issues coming out of Washington, D.C., that will affect the United States travel industry during the coming months. With more than 7.7 million Americans employed by the travel industry, it’s no wonder an entire session during last week’s Choice Hotels International’s 52nd annual conference was devoted to it.
In addition to the Internet Travel Tax Fairness Act, a number of issues were discussed by panelists:
International intrigue
Roger Dow, president and CEO of the U.S. Travel Association, said the recently passed Travel Promotion Act will help the hotel industry because it increases the number of inbound international visitors to the country. He said those travelers bring new money to the U.S., and that can only help hoteliers’ international inbound business.
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Roger Dow
president and CEO
U.S. Travel Association
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Dow said his group favors increasing the number of countries that receive visa waivers.
“Getting visas is the other problem,” he said.
The U.S. recently added eight countries to the visa-waiver list, and Dow said a number of organizations are working hard to add Brazil and Argentina, too.
“We have not done a great job of showing the horsepower of this industry,” Dow said. “This is a huge opportunity for us to address it. We’ve got to get more organized in what we do and speak as one voice.”
Franchising frenzy
Matt Shay, former president and CEO of the International Franchise Association and incoming president and CEO of the National Retail Federation, said the U.S. lost approximately 400,000 jobs in the franchise sector last year. The total number of franchised units in the U.S. dropped one-tenth of one percent.
“This year we’re predicting modest growth—a little more than 1 percent in total units, 3 percent in (gross domestic products) and one-half of one percent in job growths,” he said.
However, as hotel developers can relate to, the limited amount of credit available to start new franchised businesses, including hotels, is having a negative effect on growth.
“Credit to franchise companies last year dropped 40 percent,” Shay said. “We predict that this year that credit will be about a third less than what we need. … We need about (US)$11 billion.”
But there could be light at the end of the tunnel.
“There have been good conversations regarding about what the government could do in the short term to raise the (Small Business Administration loan limits),” Shay said.
There is legislation introduced in Congress that would increase the SBA minimum to US$5 million from US$2 million; doing so would help create 600,000 new jobs, he said.
Health-care debate
Just because a health-care bill was enacted earlier this year doesn’t mean the debate has come to an end, said Bruce Josten, executive VP of government affairs for the U.S. Chamber of Commerce.
“This new law unfolds over the next decade,” he said. “This is probably beyond being on the largest legislation ever enacted, this is the budget-buster for the federal government.”
He cited the so-called “Cadillac plan,” which is a 40-percent tax on high-cost health-care plans, as one that is haphazardly written and will most likely be rewritten several times before being instituted in 2018.
Value-oriented consumers
“Forget about 2009. It’s over,” said Rossi Ralenkotter, president and CEO of the Las Vegas Convention and Visitors Authority. “We all survived it. You should be very proud that you did.”
However, the value-oriented consumer that emerged from the recession is going to be a different customer than the hotel industry had in the past, he said.
Consumers will be apprehensive about spending a lot of money, he said, noting that the Consumer Confidence Index needs to climb to 90 for things to really turn around. It currently stands at 59.
Job creation
The biggest threat to the economy is the lack of job creation, said Steve Joyce, president and CEO of Choice, adding that the Obama administration needs to put more emphasis on it.
“When people have jobs and feel good about their jobs, they tend to travel,” he said.
Other issues
Dow said environmentally friendly hotels are more than just a fad. He said the United Kingdom is beginning to tax entities that don’t take environmentally friendly stances.
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Bruce Josten
executive VP of government affairs
U.S. Chamber of Commerce
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“In the U.K., they’re trying to stop travel … they’re raising taxes on it,” he said. “This whole environmental issue could raise its head and we’ve got to make sure we’re at the table and not on the menu.”
Josten said there has to be a breaking point for government intervention in industries such as automobiles, banking, health care and energy.
“The federal government is spending 26 percent of GDP and taking in 16 percent (through taxes),” he said. “Massive tax increases are coming.”
Ralenkotter said the U.S. must have a long-term solution to more easily facilitating the moving of people from point A to point B.
“We need to make sure all means of transportation will accommodate it,” he said, adding that an efficient rail system, highway system and air-traffic computer system are necessities.
Added Josten: “We need a complete redo on the intermodal system.” He called it a vital issue because that is the skeletal system and the circulatory system upon which the U.S. economy runs.
The new threat to pass the so-called card-check legislation, officially known as the Employee Free Choice Act, is coming from the inside rather than through legislation, Joyce said. The panel said the appointment of Craig Becker, a well-known supporter of the proposed legislation, to the National Labor Relations Board is a prime example of that. Josten said organized labor is trying to introduce policies that will allow quick elections, mail-in ballots and muzzle employers when it comes to unions forming.
Josten warned of an impending sea of forms that will need to be filled out next tax season. He said a new wrinkle to tax regulations will require any business that buys more than US$660 of goods or services in a given year from a vendor must file a tax form with the Internal Revenue Service for each purchase.
The vendor also has to file forms.
“With 20 million small businesses, you can start to see what the administration nightmare is going to be,” Josten said.
