While the CARES Act contains a number of hard-fought provisions to provide essential and immediate aid to the travel industry, a crucial problem is emerging with the distribution of funds: relief for destination marketing organizations (DMOs) with a 501(c)(6) tax designation.
Though regional businesses of all sizes are eligible for CARES Act provisions, DMOs are absolutely essential to driving customers to these businesses, and any relief package is incomplete without support for destination marketers. It’s the work of DMOs that bring the customers that fill restaurants, hotels and local attractions—the 15.8 million travel-related jobs in every pocket of America are deeply dependent on the efforts of these organizations.
501(c)(6) DMOs are eligible for Small Business Administration (SBA) disaster loans of up to $2 million and the Treasury Department’s Exchange Stabilization Fund, which will also be distributed in the form of loans.
However, these organizations are not eligible for the SBA’s Paycheck Protection Program (PPP), which provides loan forgiveness for payroll costs, group healthcare benefits and other operations expenses through June 30.
For nonprofits such as 501(c)(6) DMOs, the loan forgiveness aspects of PPP are critical.
Every dollar that comes out of a DMO is put toward its economic development mission of attracting visitors who spend money in local small businesses and support jobs. But, just like all these businesses, DMOs are suffering from revenue declines, and are being forced to lay off workers. If a DMO’s only survival option is to take on loans, every dollar that’s spent repaying those loans over the next few years will be one dollar less that’s spent on supporting the economic recovery.
Through absolutely no fault of their own, workers are facing devastating economic hardship. These are the exact workers the CARES Act sought to protect and support—but even with immediate relief, their jobs will continue to be in peril without the work of DMOs to build and sustain a recovery.
U.S. Travel sent a letter to the Treasury Department yesterday asking more than 40 questions to clarify our members’ queries about their PPP eligibility, and will continue to press for transparency and solutions.