Coronavirus and Meetings
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Updated April 20, 2020, 3:30 p.m. EDT
The economic fallout from coronavirus continues to mount each week. The latest report from the U.S. Travel Association and Tourism Economics suggests the impact of the virus on the U.S. economy will be nine times that of 9/11. The CARES Act, which was approved at the end of March, doesn’t adequately protect the 15.8 million Americans whose livelihoods depend on travel and tourism business, according to the U.S. Travel Association.
Findings from the report suggest coronavirus will result in a $519 billion decline in travel spending in the U.S., and job losses of 8 million across the travel industry by the end of April. Job losses are expected to spike in April and May, but will continue throughout the year with 2.9 million jobs lost in December.
To combat the growing impact of coronavirus, the U.S. Travel Association sent a new list of urgent requests to Congress. The document was accompanied by a letter signed by 600 travel organizations, which urges Congress to expand relief for the travel industry. The U.S. Travel Association has also reached out to the Department of Treasury for further clarification on some provisions of the CARES Act.
Among the requests are that another $600 billion be added to the Paycheck Protection Program (PPP), and that eligibility for the funds be extended to small businesses that were previously left out. Further, it requests assurance that loan forgiveness will cover payroll and other operating expenses during the travel shutdown.
As it stands, the CARES Act does not provide assistance for destination marketing organizations (DMOs and CVBs), whose work is crucial to the recovery of the travel and meetings business. "The CARES Act was an ambitious step, but now the urgent problem is that assistance is simply not getting where it needs to go," said U.S. Travel Association president and CEO Roger Dow. "Major adjustments and more aid are needed immediately to support small businesses, including local nonprofits."
Weekly travel spending in the U.S. has fallen 85 percent from the same point a year ago, according to figures prepared for U.S. Travel by the analytics firm Tourism Economics. That puts the economy on pace to lose 5.9 million travel-related jobs by the end of April.
An Urgent Call for Aid
The policy measures proposed by U.S. Travel include new relief provisions, as well as some corrections to the provisions of the CARES Act. Among them:
• Expand eligibility for the Payroll Protection Program (PPP) to destination marketing organizations that are classified as 501(c)(6) nonprofits or "political subdivisions" of their local governments, as well as to small businesses (fewer than 500 employees) that operate multiple locations.
• Appropriate an additional $600 billion for the PPP and extend the coverage period through December 2020. The PPP is currently slated to expire on June 30, but the economy will not realistically be in recovery by then, and the initial round of funding is expected to run out in just a few weeks.
• Revise the PPP maximum loan calculation to eight times a business' monthly outlays and allow it to cover both payroll and nonpayroll expenses. Currently the formula is 2.5 times the monthly outlay and covers payroll only, not other expenses.
• Provide loan forgiveness to large businesses under the Exchange Stabilization Fund (ESF), rather than just loan guarantees, and clarify ESF eligibility for 501(c)(6) nonprofits.
• Increase Economic Injury Disaster Loan (EIDL) funding to $50 billion, raise the loan cap from $500,000 to $10 million, and allow a second EIDL if a business is still unable to meet its ordinary expenses.
"Congress must move swiftly to correct and supplement the CARES Act with additional rounds of aid," Dow said. "Travel-related small businesses will be vital leaders of an economic recovery, but first they need to survive until the point when travel demand returns. In order to make it, these businesses need to be able to access the resources that will enable them to keep the lights on and retain their employees."
For more details, read U.S. Travel’s proposal for subsequent coronavirus relief legislation, which is supported by the American Hotel & Lodging Association, among other organizations representing travel and hospitality-related businesses.