Brand USA: Congressional Appropriators and Administration Disagree on Funding Cuts for U.S. Tourism Promotion

Brand USA: Congressional Appropriators and Administration Disagree on Funding Cuts for U.S. Tourism Promotion

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December 14, 2017
Brand USA: Congressional Appropriators and Administration
Disagree on Funding Cuts for U.S. Tourism Promotion
The Trump Administration’s FY2018 budget proposed
The private sector funds half of Brand USA’s spending
eliminating the government’s annual grant to Brand USA, a
through annual cash contributions of at least 30% of its
public-private effort to promote the United States as a travel
budget plus in-kind contributions, such as advertising,
destination for foreign visitors, and using the money instead
tickets, and donated products. The federal government
for homeland security. That proposal has not been adopted
matches the cash and in-kind contributions with an annual
by Congress, in part because specific authorizing legislation
grant of no more than $100 million. The funds for this grant
would be required to effect this change. As a result, neither
come from a fee charged for use of the Electronic System
the House-passed nor Senate Appropriations Committee
for Travel Authorization (ESTA), which is required of
draft of the Department of Homeland Security (DHS)
international travelers who visit the United States for short
appropriations bill for FY2018 assumes these resources
business or leisure stays from the 38 countries participating
would be available for other purposes. However, Brand
in the U.S. Visa Waiver Program.
USA remains controversial, with some critics asserting that
Each traveler from a visa waiver program country who uses
promotion of tourism should be left to the private sector,
ESTA is charged a $14 fee, which consists of two parts:
and it is possible the Administration will again recommend
$10 is available to fund travel promotion through Brand
ending its federal grant when the FY2019 budget is released
USA, and $4 is used to cover the DHS’s costs of screening
in February.
visa waiver program applicants. The $10 travel promotion
Tourism Promotion in the United States fee generated nearly $150 million in 2016. Of this amount,
Over 75.5 million foreign visitors traveled to the United
$100 million, less the $7 million sequester required under
States in 2016, spending nearly $245 billion on hotels,
the Budget Control Act (P.L. 112-25) for FY2017, went to
meals, flights aboard U.S. air carriers, and other goods and
Brand USA, and the remainder was directed to the U.S.
services. America’s travel and tourism industry directly and
Treasury for deficit reduction purposes. Under current law,
indirectly supported 7.6 million American jobs in 2016, of
the travel promotion fee is to sunset on September 30, 2020.
which 1.2 million were supported by international visitors,
Brand USA’s travel promotion and marketing campaigns
according to an estimate by the U.S. Department of
include television, print, Internet, and social media
Commerce.
advertisements, as well as promotional events such as
Unlike many countries, the United States does not have a
hosting travel agents from other countries. Its promotional
central agency to oversee travel and tourism. The National
efforts are focused on 14 target markets, which together
Travel and Tourism Office (NTTO) within the International
account for more than 80% of inbound tourist travel. These
Trade Administration of the Department of Commerce is
markets include Brazil, Canada, Mexico, China, and Korea.
the federal government’s central point of contact for travel
Figure 1. International Visitors to the United States,
and tourism. Its main purpose is to provide official tourism
Selected Countries
statistics and research.
NTTO is also responsible for coordinating the federal
government’s activities in support of the U.S. travel and
tourism industry through the interagency Tourism Policy
Council established in the United States National Tourism
Organization Act of 1996 (P.L. 104-288). A private-sector
group, the U.S. Travel and Tourism Advisory Board, also
offers guidance to federal agencies on issues of importance

to them, including travel facilitation and visa policy.
Source: NTTO, accessed December 2017.
Brand USA
NTTO figures show that the number of international
Brand USA, formally known as the Corporation for Travel
arrivals fell between 2012 and 2016 from several of Brand
Promotion, was established under the Travel Promotion Act
USA’s target markets, including Canada, Brazil, and Japan,
of 2009 (TPA; P.L. 111-145). It began operations in May
with the volume of visitors down 15%, 6%, and 3%,
2011 as a nonprofit public-private entity charged with
respectively. During the same period, the number of
promoting international travel and tourism to all areas of
Chinese visiting the United States almost doubled to 3
the United States and communicating U.S. visa and entry
million annually. China, a high-growth market, has become
policies to overseas visitors. NTTO is the federal
a more important source of visitors than France, Australia,
government’s liaison to Brand USA, but the government is
and Germany. Another growing target market is South
not represented on the organization’s 11-member board of
Korea; the number of South Korean visitors traveling to the
directors.
United States rose to 2 million in 2016, up from roughly 1.3
million in 2012 (see Figure 1).
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Brand USA: Congressional Appropriators and Administration Disagree on Funding Cuts for U.S. Tourism Promotion
Determining whether Brand USA’s media, advertising, and
Using a government dataset, the Bureau of Economic
other outreach activities have directly led to increased travel
Analysis reports that foreign visitors account for a
to and economic activity in the United States is not
disproportionate amount of U.S. travel and tourism
straightforward because many factors affect international
spending. International visitors are estimated to have
travel, including general economic conditions and currency
accounted for 25% of tourist spending on lodging, 27% of
exchange rates. Using a proprietary econometric model, a
tourists’ food and beverage demand, and 24% of total
Brand USA-commissioned study by Oxford Economics
passenger air transportation demand in 2015.
claims Brand USA’s marketing attracted some 1.2 million
Tourism exports—a measure of foreign visitors’ spending
visitors in FY2016. This equaled approximately 1.5% of all
in the United States—have grown strongly over the past
visitors to the United States in that year.
decade, except in 2009, when they plunged 11% from the
Competition for International Tourists
previous year due to poor economic conditions in Europe
A challenge for Brand USA’s travel promotion
and elsewhere, and last year, when they dropped by 1% (see
efforts is
Figure 3). The U.S. travel and tourism sector has
that it is now much easier to visit many parts of the world,
maintained an annual trade surplus—$83.9 billion in
including Asia and Africa, than it was a few years ago.
2016—with the world every year since 1989.
With a greater proportion of international tourists coming
from Asia, these travelers, for example, may not seek
Figure 3. U.S. Travel and Tourism Exports
destinations that require trans-Pacific flights. That may
partly explain why the United States has lost market share
as a destination in recent years. The U.S. share of
international travelers shrank from 7.5% in 2001 to 6.3% in
2010 and 6.1% in 2016.
Figure 2 shows that since 2003 (after the September 11,
2001, terrorist attack), the number of international visitor
arrivals to the United States declined in two years, 2009 and
2016. In 2016, 75.6 million foreign visitors traveled to the
United States, down 2.4% from the record high of 77.5

million in 2015. Canada and Mexico are the largest source
Source: NTTO, accessed December 2017.
markets for international visitors.
Figure 2. International Visitors to the United States
Issues for Congress
The Trump Administration’s FY2018 budget proposed
defunding Brand USA and making the revenue available to
U.S. Customs and Border Protection (CBP), the agency
within DHS that processes arriving visitors. Although final
full-year funding for FY2018 has not been enacted,
Congress has taken no steps to accept the Administration
proposal.
Proponents of federally supported tourism promotion

activities, including industry groups like the U.S. Travel
Source: NTTO, accessed December 2017.
Association, argue that ending Brand USA would harm the
NTTO figures for the first six months of 2017 show total
U.S. economy because the strength of the U.S. dollar,
international arrivals to the United States from all countries,
stricter travel rules, and other homeland security and
including Canada and Mexico, shrank about 4% from the
immigration policies have made it more complex and costly
same period in 2016. Among the factors affecting inbound
for foreign visitors to enter the United States. Without
travel are the steep appreciation of the dollar against many
Brand USA, supporters assert, state tourism marketing
key currencies, which makes it more expensive for travelers
efforts would grow more expensive and would not reach as
to vacation in the United States, as well as tighter entry
many potential visitors, which could be especially harmful
requirements and immigration policies.
for major tourism destinations heavily dependent on
international visitors, like California, Hawaii, and Florida.
NTTO forecasts U.S. visitor volume will reach 94.1 million
Opponents have questioned the efficacy of the Brand USA
in 2021, lower than the Brand USA goal of 100 million
program. Some Members of Congress have criticized Brand
international visitors by the end of 2020.
USA for what they consider a history of waste, abuse,
U.S. Travel and Tourism Industry
patronage, and lax oversight. Others maintain that federally
supported tourism advertising is an inappropriate subsidy to
Foreigners spend, on average, far more on their U.S. travels
a private industry.
than Americans do. In 2016, an average foreign visitor
spent about $4,400 domestically on travel activities,
according to the U.S. Travel Association, a travel industry
Michaela D. Platzer, Specialist in Industrial Organization
advocacy group. Average spending per Chinese visitor was
and Business
$6,900 in 2016, the highest of all international visitors.
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Nonetheless, in 2016, domestic travelers accounted for 84%
of total travel expenditures, the association reports.

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Brand USA: Congressional Appropriators and Administration Disagree on Funding Cuts for U.S. Tourism Promotion

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