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Monday, March 5, 2012

U.S. Travel and Tourism Industry

Suzanne M. Kirchhoff
Analyst in Industrial Organization and Business

The U.S. travel and tourism sector, a main economic and employment engine in a number of states, suffered a steep decline beginning in 2007 as the nation sank into recession. While tourism started rebounding in 2010, measured by the number of foreign visitors and overall spending, U.S. tourism-related employment at the end of 2011 remained well below the 2007 level. Overall, U.S. tourism-related businesses shed about 1 million jobs between 2007 and 2011, more than twice the number of jobs lost from 2001 to 2003, when the September 11, 2001, terrorist attacks dampened U.S. business and pleasure travel.

Congress and President Barack Obama have taken a series of steps to attempt to revitalize tourism-related businesses. On January 19, 2012, President Obama signed an executive order that seeks to expedite visa processing for tourists from China and Brazil and expand the Visa Waiver Program (VWP). In March 2010 Congress passed, and President Obama signed into law, the Travel Promotion Act (P.L. 111-145), creating a nonprofit corporation that will receive up to $100 million annually in federal funds through 2014 to market the United States as an international travel destination. During the 112th Congress, lawmakers have introduced a variety of legislation designed to spark economic activity in the tourism industry, including measures to restore areas of the Gulf Coast that would provide funding for tourism promotion (H.R. 1762, H.R. 3096, and S. 1400); legislation to speed up visa processing for visitors from China, Brazil, and India (H.R. 3039); measures to establish a competitive grant program to promote domestic regional tourism (H.R. 3484 and S. 1663); and legislation to provide certain Chinese nationals with a five-year visitor visa and create a special nonimmigrant visa for certain Canadian visitors (S. 1746, H.R. 3341). At the same time, a number of states and localities have increased taxes on tourism-based businesses, including levies on hotel rooms and car rentals. Such efforts are spurring a pushback by consumers and businesses that is spilling into Congress, including legislation introduced during the 111th and 112th Congresses that would limit the ability of states and localities to impose future taxes on automobile rentals, such as H.R. 2469.

While lawmakers have enacted or proposed specific legislation to aid travel and tourism, most congressional activities that affect the sector, sometimes in a major fashion, are indirect. The sector feels the impact of congressional action on such issues as the minimum wage; funding for national parks, forests, and historical sites; gaming industry regulation; and visa and immigration policy. As travel and tourism gain in economic importance, however, the industry is becoming a larger factor in legislative debate on a number of issues. For example, some lawmakers from states with major coastal tourism businesses oppose proposals to expand offshore oil and gas drilling, based on tradeoffs or perceived tradeoffs between the energy and tourism industries. Likewise, many tourism-related businesses have weighed in on debates regarding homeland security and immigration, asking Congress to streamline the process for obtaining a visa to visit the United States or to go through airport security, arguing that current policies serve as a deterrent to would-be visitors.

Date of Report: February 21, 2012
Number of Pages: 20
Order Number: R41409
Price: $29.95

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