Published on: Nov 22, 2019, Last Edited: Nov 22, 2019
Brand USA, which is a marketing organization that is funded by the ESTA, sees a way forward with passing a senate bill to extend its funding over the next few years. Brand USA is a mixed public/private organization that acts as the travel marketing arm of the United States. It has been involved in an ongoing struggle to prove that it plays a vital role in travel to the United States and is justified in receiving continued funding.
In July this year, the Senate Committee on Commerce, Science and Transportation passed S. 2203, otherwise known as the Brand USA Extension Act, by a large majority. Brand USA is funded with revenue from the Visa Waiver Program (VWP). Out of every $14 paid by international travellers, $10 goes towards Brand USA’s marketing campaigns, up to a maximum of $100 million per annum, which is then matched by the private sector. If the Senate had not moved on this, Brand USA was set to lose this funding at the end of the 2020 fiscal year. The senate is to vote on the bill in the coming weeks.
The proposed bill is an essential piece of legislation and its timing is crucial. Travel and tourism form the US’s second-largest industrial export sector and generated a $69 billion trade surplus in the last fiscal year. This, in turn, helped to reduce the national trade deficit by 11%. But in recent years, these economic advantages have been under threat as the United States’s share of the global tourism market fell from nearly 14% in 2015 to just under 12% this year. This represents a fall in numbers of 14 million travellers, a loss to the economy of $ 59 billion and up to 120,000 jobs.
The ongoing efforts of Brand USA have helped to prevent the fall in market share from being even worse. The organization helps to ensure that all regions of the USA benefit from inbound international tourism: according to a study by Oxford Economics, over the past 6 years, Brand USA’s marketing campaigns have achieved:
Spending by international visitors is considered to be an export, although the transactions are taking place within the United States. Thanks to the fact that travellers from overseas spend on average $4200 on each trip, maintaining this sector in a robust condition is a key economic goal that helps to reduce the nation’s trade deficit.
Brand USA has historically received bipartisan support. It gained authorization under the Travel Promotion Act (2009) and was re-authorized in 2014, Now that the Senate Committee has approved the Brand USA Extension Act, a full Senate vote will follow.
Funding for Brand USA had previously been axed (perhaps unintentionally) by a Congress budget cap deal in 2018 but the new bill proposed will assure funding for Brand USA up to 2027.
Previously, travellers have paid $14 ESTA (Electronic System for Travel Authorization) fee and this will now be increased to $21. The additional funding raised will be allocated as follows:
The new allocation means that CBP’s share stays the same while Brand USA’s share will be reduced by $3.
The US Travel Association, lobbyists for Brand USA, had been unsure of the legislative path to take to get their funding renewed but they are pleased with the progress and positive momentum of the proposed bill. They see it as essential to the future of travel and tourism promotion in the United States and as protecting the jobs of more than 15 million United States citizens whose livelihoods depend on this sector.
Perhaps surprisingly, not everyone supports the progress of the Bill. The industrial trade group Airlines For America (A4A) has spoken out against the reauthorization. While opposition to a move that should boost air passenger numbers may sound counter-intuitive, A4A believes that air passengers are already taxed too highly and would prefer funding from the ESTA fee to be used for enhancing security rather than marketing campaigns. They point to overlong waiting times at airports and border crossings and are demanding that ESTA fees are used to modernize entry and exit processes, better vetting of asylum seekers and travellers, and to boost staffing levels.
US Travel responded by outlining the factors that have led to a decline in visitor numbers, including President Trump’s harsh rhetoric against asylum seekers, currency fluctuations and tougher visa and immigration policies. ESTA fees have no effect on the price of airline tickets and their profit margin while since 2013, Brand USA has created over $5 billion of revenue for US airlines at no cost to US taxpayers.