Editorial: Stimulus funds should travel farther in 2021
The COVID-19 pandemic has undeniably hurt every inch of our economy in some way, from manufacturing to retail, distribution to service, but few sectors have been forced to weather the storm so alone as the tourism industry.
And by tourism industry, I don’t mean restaurants and hotels, although they surely have shouldered the lion’s share of the economic injury. No, I mean our tourism agencies known in industry parlance as destination marketing organizations, or DMOs.
In Delaware, that includes groups like the Delaware Tourism Office, the Greater Wilmington Convention and Visitors Bureau, Kent County Tourism Corporation, and Southern Delaware Tourism, which fund most of the First State’s out-of-state tourism marketing efforts in print, TV and online. Their budgets are primarily derived from the state’s 8% lodging tax and county piggyback taxes, but with bookings down to less than 50% occupancy year-to-date as of October. With revenue per available room off nearly $30 – from an average of about $80 per room in 2019 – their budgets have become razor thin.
But why should we encourage travel and tourism amid a global health crisis like the COVID-19 pandemic? Well, we don’t have to right now. But we need to start planning for the spring and summer when mass vaccinations are expected to be reached.
Our hoteliers and restaurateurs have largely done a commendable job rolling with the incessant changes to protocol and sanitary guidelines during the pandemic.
Restaurants alone have shouldered an estimated $1 billion loss in sales in Delaware this year, leading numerous owners to decide to close their doors for good and many more likely debating whether to soldier on. Roughly one in three restaurant workers lost their job in 2019 and two-thirds of restaurants expect additional layoffs unless the situation improves rapidly in the next 90 days.
According to a November survey of 1,200 members by the American Hotel and Lodging Association, one-third of respondents were facing bankruptcy or sale by the end of 2020 – almost every respondent said they would apply for more federal aid when available. Meanwhile, hope for increasing bookings is still far off, as a survey of 2,200 travelers found that just 30% have taken an overnight vacation since March and 44% said their next such trip won’t likely be for another year.
So how can we avert major state job losses tied to those travelers and ensure that retail and service businesses also see improved revenue streams in 2021? By ensuring that our DMOs get a piece of the stimulus funds flowing from Congress down through state and county coffers.
To date, funds that have flowed from the federal CARES Act in March and the second Coronavirus Relief bill in December have not appropriated funds to help with marketing. The latest funding opened eligibility for the U.S. Small Business Administration’s Paycheck Protection Program to DMOs, ensuring they won’t lose valuable staff members for a few more months, but most other support went directly to affected industries like airlines and transit companies.
States either need more leeway in using the federal funds for tourism marketing in a future stimulus package or Delaware needs to appropriate one-time allocations of taxpayer funds to DMOs to ensure a robust tourism showing in the second half of 2021.
The former is possible, as we saw Congress take up the pleas of the live arts industry with the inclusion of the Save Our Stages Act in the latest relief funding. That $15 billion appropriation created SBA grants for concert venues, performing art centers, theaters, and museums with 500 or fewer employees impacted by the pandemic. Grants up to $10 million can be used on payroll costs, rent, utilities, advertising, theatrical productions, and more.
The latter approach can be more directly addressed. While our DMOs wait, we’ve seen neighboring states working through loopholes in the CARES Act allocations. In Pennsylvania, places like Lancaster, Philadelphia, Montgomery County, and Bucks County have reached Delawarean TV viewers with ads about their COVID-19 safety protocols – all but a wink and a nod marketing that they’re safe enough to visit.
Our neighbors aren’t alone. Tennessee created a $25 million tourism program from CARES Act funds in a similar fashion, including $15 million for grants to its DMOs to market its safety to visitors. Alabama created a $10 million program, while Wyoming did the same with $5 million. Cities have followed the same formula, including Indianapolis, which spent $1 million, and Tampa Bay, which spent $2 million.
In 2018, the most recent data available, Delaware saw 9.2 million visitors, more than two-thirds of whom came from nearby metropolitan areas in the Mid-Atlantic and Northeast like Philadelphia, Baltimore, New York and Washington, D.C. They brought an estimated $3.5 billion economic impact and paid $545.1 million in state and local taxes and fees.
Without that spending, Delaware households would have either seen a reduction in services or an estimated additional $1,562 in taxes. Tourism is the state’s fourth-largest private employment sector, employing more than 40,000 people, many of whom also live and spend here. Thus, our commitment to ensuring those out-of-state license plates return to Rehoboth Beach, Wilmington or Newark next year is vital to not only our state businesses, but frankly our own wallets as well.