Nevada tourism officials said Tuesday that their industry needed more help from Congress to recover from the plunge in business triggered by the pandemic, testifying at the first hearing convened by a new panel led by Sen. Jacky Rosen (D-NV).
Steve Hill, president and CEO of the Las Vegas Convention and Visitors Authority (LVCVA), said that the industry after the pandemic emergency subsides "will be faced with a situation that is roughly equivalent to the depths of the Great Recession."
“That will be where we are once we get past the health crisis and are just simply dealing with the economic fallout,” Hill continued.
His case was among those heard by a subcommittee of the Senate Commerce, Science and Transportation Committee. It was the new panel’s first hearing, and Rosen said there are more to come. While Congress has acted to help tourism and the economy with loans, the employee retention tax credit, direct aid to restaurants and live entertainment, and unemployment relief, more needs to be done, according to Rosen.
“Now it's time to bring this critical industry back to its pre-pandemic economic status,” Rosen said. “I intend to use this subcommittee to find bipartisan pathways and solutions to do just that.”
The travel and tourism industry could take about five years to recover from pandemic-spurred shutdowns and will need help from Congress, including passage of hospitality and tourism industry tax breaks, industry officials testified.
"That's far too long to wait," said U.S. Travel Association's Tori Emerson Barnes. She called for President Joe Biden's administration to reopen foreign travel by setting benchmarks and the Centers of Disease Control (CDC) to issue guidelines for safely holding conventions.
While domestic leisure travel will come back more quickly, international travel will take longer and federal guidelines could help ensure an expedited return, Barnes said.
MGM International Resort's Jorge Perez said that international travelers are vital because they frequent Las Vegas and tend to spend more money than domestic travelers.
“We know those customers stay longer,” Perez said. “They enjoy our restaurants, they enjoy our casinos, they enjoy our shows, they spend quite a bit on retail,” Perez said. ”So anything that we can do to reduce those barriers, would be incredibly helpful, especially for Las Vegas.”
Hill said one barometer for judging the state of the industry is the portion of the tax on hotel rooms that provides much of the LVCVA's funding.
“Typically we would receive about $300 million a year,” Hill said. “In our current fiscal year, which ends in June, we will receive about $100 million, so about a third of our normal revenue.”
“We are projecting next year that we will receive about 70 percent of our normal room tax revenue,” Hill continued. “So we will show improvement, but it's only about halfway to where we need to be over the next 12 months.”
Barnes and Perez also called for the passage of a bill introduced by Sen. Catherine Cortez Masto (D-NV) and Rep. Steven Horsford (D-NV). Known as the Hospitality and Commerce Job Recovery Act, it includes a new tax credit that would let taxpayers write off the cost of attending or hosting a convention, business meeting or trade show between 2022 and 2024.
The bill is “one of the biggest policy priorities for the travel and tourism industry,” Perez told the subcommittee.
The measure would also extend the Employee Retention Tax Credit through January 1 and would restore, for two years, the tax deduction for meals and entertainment. Congress repealed the deduction to help pay for the 2017 tax cuts enacted under President Donald Trump. Prior to the repeal, a taxpayer could deduct 50 percent of entertainment, amusement, or recreation expenses incurred for activities related to trade or business.
Also, the legislation would establish a tax credit for restaurants or food service businesses to cover the cost of reopening or increasing service at an establishment forced to close down or scale back operations because of the COVID-19 pandemic. That includes any renovation, remediation, testing or labor cost needed to prevent the virus’s spread. The credit would be effective from the date of enactment through 2022.
Another tax credit established by the bill would encourage middle-class travel between 2021 and run through 2023. The credit would be worth 50 percent of qualified travel expenses up to a maximum of $1,500 per household plus $500 for each qualifying child. The credit begins phasing out for individuals making over $75,000 per year and $150,000 for married couples.
Barnes also called for $250 million to help fund Brand USA, which markets travel to the U.S. abroad. Funding for the program comes from private donations and fees charged to international visitors registering for visas to enter the U.S.
Barnes said that Brand USA has returned $26 for every $1 spent and that the program's funding has been "decimated" by the pandemic.
“If Brand USA is unable to continue its important work, international travel recovery will be severely limited,” Barnes said.
Panel witnesses also made the case that improving the nation's infrastructure would help tourism around the country. Their comments came as Biden has put forward a $2 trillion infrastructure plan. Rosen said that the passage of the package would represent a significant opportunity to give tourism a boost.
“We have an opportunity to make investments that will revive and enhance our travel and tourism economy,” Rosen said, adding that Nevada’s airports were nearly at capacity before the pandemic.
Asked about the importance of passing the package for tourism, Hill noted that several members of the committee represent states that would be affected by improving I-15, which connects California with Southern Nevada, but is also an important road for Arizona, Idaho, Utah and Montana.
“The importance of that corridor can be seen in the makeup of this committee,” Hill said, adding that the federal government should create a national travel infrastructure strategy, similar to the freight plan unveiled in September.
Hill also urged Rosen to create a congressional I-15 caucus to help push for improving the corridor.