Travel and tourism gear up for political challenges

A growing unregulated online vacation rental market, global trade wars, government shutdowns. This is the short list of the challenges facing Arizona and the nation’s tourism and lodging industry this year.

As state and national halls of Congress convene this month, industry representatives will be fighting on these and other fronts to keep this multi-trillion-dollar industry safe.  

“Our top priorities are strengthening our ability to make Arizona a top choice for locating, whether it’s vacation plans, a business conference or a convention,” said David Drennon, executive vice president of the Arizona Lodging and Tourism Association.

Drennon and other tourism representatives will be promoting laws to address a host of issues: growing labor shortages, attracting more international visitors, and providing protections for legitimate businesses.

“The most important thing for us is that it’s all about leveling the playing field and having a fair and equitable business environment,” said Drennon, whose organization represents a $23 billion industry and 187,000 jobs. “The bills that we will be focused on when it comes to the online marketplace is finding something that has more parity with the lodging sector.”

Two measures already moving through the Arizona legislature are bills for additional funding for the state Office of Tourism and a sports betting bill that would allow Arizona Indian tribes with gaming compacts to offer sports betting in their casinos as well as off reservations at bars, resorts and other establishments that serve alcohol.

Among the state and federal legislative issues this year are joint-employer liability, online booking scams, mandated minimum wage hikes, taxes and regulation, and labor shortages.

Three of the top policy concerns identified by local and national advocacy groups including the American Hospitality & Lodging Association (AHLA), Asian American Hotel Owners Association (AAHOA) and the U.S. Travel Association are:

COMPETITION FROM UNREGULATED RENTALS

Cities, states and countries are increasingly passing laws to rein in short-term rental companies like Airbnb and HomeAway. Initially intended to allow property owners to occasionally rent out a room, there now is a proliferation of commercial operators who purchase and rent out multiple residential properties and operate them like hotels.

In Arizona, this is a major concern, particularly for rural areas that depend on tourism.

“Tourism is the only industry that offers a positive economic impact in all 15 counties,” Drennon said. “When you think about rural Arizona, that’s a lot of their bread and butter.”

“Illegal” hotels also are decreasing the available housing stock and driving up rentals across the nation, hotel and tourism officials said.  

Arizona already has passed legislation to require online marketing operations to register with the state Department of Revenue and remit all state and local taxes.

But cities that want to inhibit short-term rental properties can come up short. A state law enacted in 2017 declared that cities cannot place restrictions on these properties. There also are no restrictions on the number of properties an investor can own or the number of rental days.

SHRUNKEN LABOR POOL

An extremely tight labor market is compounded by an already high annual turnover rate in the hospitality sector. Leisure and hospitality top the nation with the largest number of job openings at 4.9 percent, according to the U.S. Bureau of Labor Statistics.

To attract employees, industry members are offering increased benefits and paid college tuition. The AHLA has committed $500,000 in grants to the Empowering Youth project to target 6 million unemployed 16- to 24-year-olds no longer in school.

“These are not dead-end jobs,” AHLA CEO Katherine Lugar said. “These are jobs that overwhelmingly lead to upward migration.”

The domestic labor market, however, is not enough to meet the industry’s workforce needs. As one of the largest employers of immigrants, industry officials want to see meaningful immigration reform including:

• Expand the H2-B and J-1 visa programs that issue visas to temporary non-agricultural guest workers and to researchers, professors and others for cultural exchanges and medical and business training within the U.S.
• Provide a permanent legal solution for the Deferred Action for Childhood Arrivals (DACA) children brought here as babies and young children illegally by their parents.
  
• Pass the JOLT Act that would modernize and expand the Visa Waiver Program and facilitate streamlined travel into the U.S. while bolstering homeland security and counterterrorism efforts.
  

FADING GLOBAL MARKET

Global travel is growing, but the U.S. share of the international travel market has declined since 2015, costing a potential 96,000 new jobs and an additional $30.7 billion in spending by international visitors, according to AHLA. Trade wars and a slowing global market are exacerbating the situation.  

To address the need for more promotion, industry officials are calling for the restoration of the Brand USA program that provided funding for tourism promotion worldwide. Last year, Congress diverted the funding to the general fund. Funding for the program comes from visa application fees.

“It has been an unqualified success – welcoming international travelers, generating American jobs and enhancing America’s image abroad – at zero expense to American taxpayers,” AHLA states. “Brand USA must be reauthorized by the end of 2020.”