The Gulf Coast region stands to lose $22.7 billion in travel-related revenue over the next three years due to the BP oil spill unless federal authorities act swiftly to promote the area, says the U.S. Travel Association. To offset the damages, U.S. Travel plans to lobby congress to set aside $500 million for tourism marketing in the area.
At a press conference on July 22, U.S. Travel released the findings of a study by Oxford Economics USA on the impact of the oil spill on travel in the Gulf region. Oxford’s research included an analysis of the impact of some 25 other different crises—hurricanes, the SARS virus outbreak, tsunamis—and how travelers reacted. “History shows that the travel industry experiences significant and immediate economic losses after man-made and natural disasters,” said Roger Dow, president and chief executive officer at U.S. Travel, speaking at the press conference. “However, the long-term economic losses are far greater.”
The Oxford research shows that the negative effects on travel revenues from these types of events are largely predictable and can be mitigated with an aggressive marketing campaign. “Travel is a perception business, and we’ve seen in the wake of any disaster, facts often take a back seat to fears and to rumors,” said Dow. “Right now, the perception is that there are multiple miles of oily beaches, which is not the case.”
The Gulf Coast region, which runs from Florida to Texas, generates $34 billion in travel- and tourism-related spending per year and supports 400,000 jobs, explained Adam Sacks, managing director at Oxford Economics USA, at the press conference. Between 13 percent and 22 percent of all jobs in the region are related to the travel industry, he said, compared to 12 percent of all jobs nationwide.
In calculating the potential economic impact of the oil spill on the region, Sacks looked at the damage so far, citing two recent surveys as well as travel trends reported through TripAdvisor.com. One of the surveys, conducted by TNS Global Market Research, found that 10 percent of people who were planning to travel to the region changed their plans because of the spill. Another 22 percent said they changed plans for unspecified reasons. The research didn’t quantify the impact on meetings specifically, however, Dow has heard from multiple destinations that the oil spill is causing groups to book elsewhere.
While Oxford predicts $22.7 billion in travel losses for the region over the next three years, U.S. Travel believes that the federal government can reduce that by $7.5 billion by acting now to promote the region and correct misperceptions. “It’s not too late to keep the visitors coming to the Gulf Coast, but much more importantly, to get them to return sooner and shorten that recovery time,” said Dow. He cited Canada’s reaction to the SARS epidemic, where officials poured money into marketing and got a 20-to-1 return on their marketing spend. If the U.S. government spent $500 million to promote the Gulf Coast region and got a 15-to-1 return, Dow said, the overall economic impact to the region would be reduced by $7.5 billion.
Dow contends that the $500 million should come from BP, which is responsible for the oil spill, either out of the existing escrow or separately. Whether the money would be distributed out of a central account or doled out to the state and regional tourism bureaus remains to be determined.
The marketing effort is part of what U.S. Travel calls its Roadmap to Recovery, which also calls on the federal government to develop an online portal where consumers can get information about which areas on the Gulf Coast are open for travel and business; provide tax deductions to the area; and provide increased access to capital, low-interest loans, and tax incentives that allow businesses to remain open and retain employees. Dow has presented this proposal to the U.S. House of Representatives Energy and Commerce Commission.