Brand USA, under attack from the Tea Party and working hard to rebrand itself, scored a public relations coup on Sunday as the subject of a friendly lead article in the Washington Post’s business section headlined “A campaign to lure back foreign tourists – and their money”.
From its launch in 2010, America’s first federally funded destination marketing organisation has been under fire as “corporate welfare” for the US travel and hospitality industry, representatives of which, by law, occupy each of the seats on its 11-member board.
Supporters say it is a badly needed and cost effective effort to recoup America’s share of the international travel market. This fell from 17.2 per cent in 2000 to 12.4 per cent at the end of the decade, more than partly due to the increased hassle, post-9/11, of getting across the border.
The Travel Promotion Act of 2009 under which Brand USA was created specifically requires the organization to “develop and implement a plan…identify, counter and correct misperceptions regarding United States entry policies around the world.”
The US waives visa requirements for passport holders from 37 countries – not, alas, South Africa as yet — whose citizens are judged friendly and not an inordinate risk to overstay their welcome. They still need to obtain a “travel authorization” for which they must pay $14 (much less than the $160 others have to pay for a 90-day tourist visa). It can done online, but payment is by credit card only.
The $14 fee was created solely to fund Brand USA. $10 of it goes into a Treasury account from which Brand USA may draw up to $100 million a year. The remaining $4 goes to the Department of Homeland Security for administering the fee.
Congress was determined that Brand SA should be a public-private partnership in more than name.
Initially, Brand USA was permitted to draw two dollars from the Treasury for every dollar it raised via its board members, each of whom, by statute, represents a specific segment of the travel business. This fiscal year, the matching requirement is one for one.
The private sector contribution can be up to 80 per cent in kind rather than cash. The definition and valuation of in-kind contributions have inevitably been a source of controversy.
Senator Jim DeMint, a now retired Tea Party icon, and his Republican colleague Tom Coburn, a fierce deficit hawk, issued a report in October blasting Brand USA and its board – all appointees of President Obama — for lavish spending and dodgy accounting.
Among the things that stuck in their craws was board members’ first class airfares, limousine bills, baseball tickets and tips to porters being treated as a matchable donations.
“It is immoral to ask the federal government to shell out $100 million every year to pay for high ranking executives to enjoy parties in London and luxury suites at major league baseball games in the name of ‘travel promotion,’ “ Coburn thundered.
DeMint’s soundbyte: “Only Washington could think that taxing tourists will increase tourism or that we need a new bureaucracy to duplicate our vibrant tourism industry’s advertising budget.”
Brand USA relies heavily on outside contractors – PR agencies and the like – to do much of its work. Some, it is alleged, padded their bills and then agreed to forego full payment so that they difference between what they said they were owed and what they were actually paid could be booked as contributions.
Questions have also been raised about that quality of Brand USA’s management. The Daily Caller, a conservative news site, obtained a copy of an internal audit which stated “a majority of the staff did not have any idea what the mission was” and “staff spends money without any checks and balance or funds tied to a budget”. Staff turnover appears to have been high.
Brand USA’s business plan for 2013 implicitly acknowledges shortcomings. Among other changes, accounting standards of in-kind contributions, including “earned” media, are being tightened. Marriot International CEO Arne Sorenson, who joined the board in December, told the Post that “if we had to start the whole thing over again, some…hiccups would have been avoided.”
Travel to the US is picking up, especially from markets on which Brand USA is starting to focus. Arrivals from Brazil were up 26 per cent in 2011, to 1,5 million, from China up 36 per cent, to 1.1 million. Between them, they spent an estimated $16,2 billion.