Obama seeks to revitalize America's tourism industry

Over the past decade, travel to the United States has declined by ten percent[i]. Introduced to the Senate in May of 2009, the Travel Promotion Act seeks reverse that trend. This legislation will create the Corporation for Travel Promotion to oversee an international marketing campaign to attract foreign visitors and provide information on travel policies[ii]. The program would be financed by private funding and by a controversial ten dollar fee on some travelers. Consultants estimate that the initiative could bring in 1.6 million new visitors to the United States a year and create 40,000 U.S. tourism jobs[iii]. Eager to stimulate the economy, Obama signed the bill into law on March 4.

Many states have hailed the passage of the Travel Promotion Act as another step toward economic recovery. However, tourists from Great Britain and the European Union will be charged ten dollars before setting foot in America. Citizens of those regions do not need a visa to enter the United States, but they must fill out an ESTA (Electronic Scheme for Travel Authorization) application online[iv]. Whereas this form was previously free, it will now cost ten dollars per person. The actual fee is not excessive, but some are worried that Great Britain and the European Union could institute retaliatory measures. In the midst of a global economic downturn, protectionist policies will do more harm than good. If Europe responds negatively to the Travel Promotion Act, President Obama and Congress should look elsewhere for funding.

The Congressional Budget Office (CBO) estimates that over the 2010-2019 period, the Travel Promotion Act will reduce the deficit by $425 million[v]. This figure relies heavily on private contributions from the travel industry and the ESTA fee. Between 2010 and 2019, the CBO estimates that the ESTA fee alone will account for $810 million in revenues, while private contributions are expected to total $660 million[vi]. However, if the ESTA fee actually discourages travel to the United States or if the travel industry can find a better way to promote tourism, both of these revenue streams will quickly diminish. It is important to remember is that this new law expands the federal bureaucracy. The Travel Promotion Act establishes an Office of Travel Promotion within the Department of Commerce, and the Corporation for Travel Promotion will be a government agency. Centralized government programs rarely work efficiently and ideally. Obama should not assume that this program will pay for itself.

The Travel Promotion Act is an ambitious effort to encourage tourism that may well far short. While the prospect of increased employment and additional tax revenue is enticing, the government should be wary of any legislation that expands the government’s reach. The potential for protectionist measures in Europe and ambiguous sources of funding should also be matters of concern. The government’s experiment has the potential to revitalize America’s tourism industry, but the Travel Promotion Act should not be seen as an economic panacea.

[i] Fletcher, Michael A. "Obama Signs Travel Promotion Act." 4 March 2010. The Washington Post. 7 March 2010 .

[ii] Jacobs, Karen. "U.S. tourism measure draws mixed industry reviews." 4 March 2010. Reuters. 7 March 2010 .

[iii] Jacobs, Karen. "U.S. tourism measure draws mixed industry reviews."

[iv] Robbins, Tom. "US to charge tourists $10 for permission to visit." 5 March 2010. The Guardian. 7 March 2010 .

[v] Willie, Susan, et al. Congressional Budget Office Cost Estimate. 9 June 2009. 7 March 2010 .

[vi] Willie, Susan, et al. Congressional Budget Office Cost Estimate.