There are few events in modern history that rival the immediate economic impact of the 9/11 attacks on the World Trade Center Buildings and the Pentagon. Except for the COVID-19 global pandemic, which has had an especially devastating effect on California’s once-thriving hospitality and tourism economy.
Before COVID-19, more than 1.2 million California workers earned their livelihoods in hospitality. In 2019, Golden State visitors spent $145 billion, generating $12.3 billion in state and local tax revenues. International travelers spent $28.1 billion in California, making travel the state’s largest export.
Then, 2020 happened. More than half of those employed in the tourism and hospitality industries lost their jobs due to the COVID-19 induced collapse. California’s Leisure & Hospitality industry has been significantly impacted by COVID-related job losses compared to the broader non-farm economy. According to a report released by the American Hotel and Lodging Association in conjunction with Oxford Economics earlier this year, California lost over 90,000 jobs in the hospitality and hotel industry. A recent report from Governor Gavin Newsom’s Task Force on Business and Jobs Recovery found more than half of California’s 1.2 million travel and hospitality workers lost their jobs due to the COVID-19 pandemic. Tourism spending in California dropped by $59 billion in 2020, to a level that was 41% to that of 2019.
Now, after more than a year of travel restrictions, quarantines, and lockdowns, during one of the most highly contagious outbreaks in recent human history, significant vaccine developments and ongoing public health measures are paving the transition to normalcy. Travel will return. But additional impacts of various COVID-19 factors such as changes in company travel policies, consumer sentiment and willingness to travel, structural changes to demand (such as video conferences instead of in-person events), hotels are expected to face the prospect of a long recovery.
That’s why a broad-based bipartisan coalition of California lawmakers (a rarity indeed) are taking a legislative approach to leverage a one-time funding allocation of $45 million in state funds to jumpstart California’s tourism economy. In February, California State Senator Mike McGuire introduced Senate Bill 285 to allocate $45 million towards an advertising campaign to help aid the hospitality industry’s recovery. The strategic infusion of funds is aimed to help get hundreds of thousands of Californians back to work and hospitality-based businesses re-opened safely.
Specifically, SB 285 would require the California Travel and Tourism Commission to implement the “Calling all Californians” media advertising campaign program to reverse the impact of the COVID-19 pandemic on the California travel and hospitality industries. This campaign, which would launch when the California Department of Public Health declares it is appropriate to resume travel, would emphasize that it is safe to travel and how to do so safely.
The formula has worked in the past. SB 285 is modeled after the state’s previous response following 9/11, when California’s tourism economy needed a boost in the form of state dollars. Championed by former Governor Gray Davis, the state allocated $8.3 million to tourism advertising. California saw a 10% jump in travel over the next 12 months, becoming just one of three states in 2001 to grow its hospitality market share, according to the author of the bill.
Related legislation to watch includes Assembly Bill 729, which would require the minutes and records of all California Travel and Tourism Commission meetings to be posted on the internet website of the Office of Tourism for at least two years. The bill is currently pending in the Assembly Committee on Arts, Entertainment, Sports, Tourism, and Internet Media.
Other states have undertaken efforts to encourage recovery in tourism and hospitality. For example, in November of 2020, New Mexico’s Governor proposed $25 million to support the tourism industry as part of its COVID-19 economic recovery plan. In December of 2020, Hawaii took a slightly different approach by offering free roundtrip airfare for any remote worker who agreed to live there for at least 30 days and support a nonprofit.
Senate Bill 285 will head to the Senate for a floor vote after having unanimously passed both the Senate Business, Professions, and Economic Development and Appropriations Committees. With no formal opposition, the bipartisan bill is publicly supported by a broad coalition of stakeholders and industry partners, such as the California Hotel & Lodging Association. UNITE HERE!, the California Teamsters Public Affairs Council, and the California Travel Association all find themselves on the same side of this issue. And for a good reason: Travel-related spending in California is not expected to reach pre-coronavirus levels until 2025.
Looking ahead, the end of the pandemic is within sight for some parts of the world. Many Americans are eager to travel again. Although it is still too soon to declare victory against COVID-19, the funding provided by SB 285 would help stimulate demand through marketing and promotions. The “Calling all Californians” campaign would get the word out on how to travel safely and responsibly, as well as inspire travelers to rediscover the wonders of California, from wine country to Disneyland and everywhere in between.
Stokes Wagner attorneys are fluent in hospitality. Our skilled, business-savvy professionals understand the world of hotels and restaurants intimately, allowing us to provide white-glove service across the country. Contact us with your labor and employment questions and concerns at info@stokeswagner.com, or visit www.stokeswagner.com to find the phone number for the office nearest you.
