U.S. Travel has been working nonstop for greater relief, protection and stimulus for all segments of the travel industry. Following months of positive engagement with Congress, we are pleased to report there is much to like in the HEALS Act, the Senate version of the next round of coronavirus relief.
Important policies that are in the bill:
Relief for destination marketing organizations
We are thrilled to see the Senate’s proposal expands Paycheck Protection Program (PPP) eligibility to non-profit and quasi-governmental destination marketing organizations (DMOs) and convention and visitor bureaus with 300 employees or less. These organizations were not eligible for PPP under the CARES Act, and we’re grateful to see this update in the HEALS Act.
Most DMOs are reliant on tourism-driven revenues that evaporated after the start of the pandemic. Travel and tourism businesses, 83% of which are small businesses, are deeply dependent on the work of DMOs to bring the customers that fill restaurants, shops, hotels, meeting and event venues, and attractions. When travel is ready to resume in earnest, DMOs will be essential to powering an economic resurgence in every pocket of America. Access to the PPP—in particular, the program’s loan forgiveness aspect—can help keep these economically vital organizations afloat until the crucial recovery period.
Liability protections for businesses
If businesses do not have the confidence to reopen, America’s recovery efforts will be further delayed, causing even more severe economic harm.
The HEALS Act recognizes the need for immediate, temporary and limited liability protections for businesses that make a good-faith effort to follow applicable government health and safety guidance to protect workers and reduce transmission of the coronavirus.
Employee Retention Tax Credit
The HEALS Act—like the House-passed HEROES Act—includes enhancements to the Employee Retention Tax Credit (ERTC) but is less generous.
The tax credit formula of each bill:
- The HEALS Act allows for 65% of compensation, up to $10,000 in compensation each quarter (limited to $30,000 for the calendar year)
- The HEROES Act allows for 80% of compensation, up to $15,000 in compensation each quarter (limited to $45,000 for the calendar year)
Currently, the credit can be used more broadly by small employers than large employers, helping them cover the pay of active employees. Employers with more than 100 employees can only use the credit to retain inactive employees. The HEALS Act extends this small employer exception to those with less than 500 employees, while the House bill extends it to those with 1,500 employees. The HEROES Act also extends eligibility to state and local government employers if their operations are fully or partially shut down, while the HEALS Act does not.
We are happy to see enhancements to the ERTC, but would like the final package to include provisions more closely aligned with those in the HEROES Act.
Health and safety provisions
Businesses that take the necessary steps to reopen responsibly are also taking on an added financial burden—thus the HEALS Act creates a refundable payroll tax credit worth 50% of expenses needed to prevent the spread of COVID-19, including testing, protective personal equipment, cleaning supplies, workplace reconfiguration and contactless technology solutions.
Importantly, components of the bipartisan TEST Act—which U.S. Travel strongly supports—were included in the HEALS Act. These provisions would increase the federal role in broadening the availability of efficient, effective, fast COVID-19 testing methods—crucial from both a health and an economic perspective. Critically, increased testing provides confidence to the general public to resume travel.
Other PPP enhancements
In addition to the vital DMO eligibility piece, there are several other positive enhancements to the PPP. The loan application deadline is extended through December, businesses with 300 or fewer employees and a 50% decline in revenue are able to get a second loan, and the bill adds flexibility for the loan forgiveness component.
The expenses that are eligible for loan forgiveness:
- Payroll costs
- Interest payments on mortgage debt (not including prepayments)
- Expenses for business software or cloud computing services
- Property damage costs related to any public disturbance occurring in 2020
- Supplier costs associated with a contract in effect before February 15, 2020
- Expenses required to meet federal COVID-19 health and safety guidelines
Relief for airports
Airport revenues have plummeted due to historic drops in air travel demand. A crucial provision in the HEALS Act helps keep airports afloat by providing a much-needed $10 billion in federal grants to U.S. airports. This will help airports around the country maintain operations while travel demand remains low.
U.S. Travel originally sought $13 billion for our nation’s airports.
Other provisions we’d like to see added
While there is much to like in the HEALS Act, U.S. Travel will advocate for other necessary relief measures as negotiations continue.
We hope to see the inclusion of the bipartisan Sustaining Tourism Enterprises During the COVID-19 Pandemic (STEP) Act (S. 4299). The STEP Act would provide $10 billion in Economic Development Administration (EDA) grants for promoting safe and healthy travel practices. These grants would provide tourism-related businesses with much-needed relief to sustain themselves until travel demand picks back up again.
Additionally, we’d like to see more direct relief for the hardest-hit medium-to-large businesses, and tax incentives to help companies transition to recovery.