The U.S. economy, increasingly reeling from plunging financial markets and business closures due to the COVID-19 (coronavirus) pandemic, will take a $809 billion hit due to decreased travel, according to a new analysis by U.S. Travel Association.
The dire numbers, prepared by Tourism Economics, were presented by U.S. Travel Association President and CEO Roger Dow at a White House meeting yesterday with President Trump, Vice President Pence, Commerce Secretary Wilbur Ross and other travel leaders.
Small businesses, including those of most meeting planners, represent 83 percent of travel employers.
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“Travel-related businesses employ 15.8 million Americans, and if they can’t afford to keep their lights on, they can’t afford to keep paying their employees,” Dow said in a statement. “Without aggressive and immediate disaster relief steps, the recovery phase is going to be much longer and more difficult, and the lower rungs of the economic ladder are going to feel the worst of it.”
Huge Damage Before May
The latest data, U.S. Travel stated, shows that $202 billion in direct travel spending and 5.9 million jobs will disappear before May.
The numbers highlight the need for aggressive and immediate action by the federal government, travel leaders say. The non-airline travel sector is seeking $250 billion in disaster relief to avoid putting millions of Americans out of work.
Other findings in the impact analysis:
- Total spending on travel in the U.S.—transportation, lodging, retail, attractions and restaurants—is projected to plunge by $355 billion for the year, or 31 percent. That is more than six times the impact of 9/11.
- The estimated losses by the travel industry alone are severe enough to push the U.S. into a protracted recession—expected to last at least three quarters, with Q2 2020 being the low point.
- The projected 4.6 million travel-related jobs lost would, by themselves, nearly double the U.S. unemployment rate (3.5 percent to 6.3 percent).
“This situation is completely without precedent,” Dow said. “For the sake of the economy’s long-term health, employers and employees need relief now from this disaster that was created by circumstances completely out of their control.”
3 Paths to Recovery
At the Tuesday White House meeting, Dow urged the administration to consider $150 billion in overall relief for the travel sector. He suggested three possible mechanisms:
- Establishing a federal Travel Workforce Stabilization Fund to keep workers employed
- Providing an Emergency Liquidity Facility for travel businesses to remain operational.
- Bulking up and streamlining the SBA loan programs to support small businesses and their employees
U.S. Travel’s urgent recommendations echo that of a group of audiovisual experts, who launched a Change.org petition last week, COVID-19 Federal Aid Package for the Events Industry. It has so far collected more than 200,000 signatures.
The New York Times reports the White House is asking Congress to allocate $300 billion to help small businesses continue to meet payroll, according to a Treasury Department proposal circulating on Capitol Hill and among lobbyists.
The proposal, a copy of which was obtained by Times, would also include $50 billion for secured loans for the airline industry, and another $150 billion for secured loans or loan guarantees for other parts of the economy hard hit by the crisis.
“We’re witnessing the shutdown of travel. The economic effects of that are already disastrous but could become worse and permanent unless the government acts now,” Dow said.