The tax deferrals for the travel industry are being considered as airlines cut back on routes and warn about declining ticket sales. Hotel chains are struggling with vacancies in Asia and are bracing for similar waves in the United States. Business travel is falling, and trade shows, music festivals and conventions are being canceled from San Francisco to Chicago to Austin to Miami. Families and college students are reconsidering spring break excursions and distant summer plans.
Other countries have already enacted tax relief for their hardest-hit industries. On Sunday, Italy announced a tax credit for any company that has seen revenue decline by more than a quarter. That is on top of Italy’s announcement last month that companies and individuals in areas affected by the “epidemiological emergency” would be granted an extension on spring tax filings.
It’s not clear how U.S. relief would be administered or whether President Trump’s own hotels could be beneficiaries. Administration officials also disagree on the extent to which some of these measures could be undertaken without Congress.
On Friday, White House economic adviser Larry Kudlow confirmed that the administration is considering “timely and targeted” federal interventions to help workers, businesses and industries most vulnerable economically to the outbreak.
“Perhaps on a large scale, some of the sectors might need some temporary assistance,” Kudlow said on Fox Business, adding, “We don’t want to act prematurely.”
His comments were the administration’s most definitive public acknowledgment yet that U.S. companies have been hurt by the coronavirus.
Speaking on CNBC, Kudlow specifically pointed to airlines, saying they are “in trouble in some of their numbers.” But he stressed that the White House was not concerned about widespread economic damage, a stark contrast to most independent economists and investors who see growing risk of a recession.
Many travel experts and industry executives are comparing the current industry upheaval to that of the Sept. 11, 2001, attacks because fear and uncertainty are driving consumer behavior and keeping people at home.
“It has a 9/11-like feel,” Southwest Airlines chief executive Gary Kelly said Thursday on CNBC. He also said that “9/11 wasn’t an economically driven issue for travel. It was more fear, quite frankly, and I think that that’s really what’s manifested this time.”
This week, the International Air Transport Association warned that the outbreak could cost airlines as much as $113 billion in lost revenue. The U.S. Travel Association forecasts that international travel to the United States will decline 6 percent over the next three months — the largest drop-off since the 2008 financial crisis.
The sector’s grim outlook comes as coronavirus cases surpass 100,000 worldwide and deaths number in the thousands. The United States announced its 14th fatality, and Maryland joined states with confirmed new cases. Meanwhile, health officials have warned against travel to China, Iran, Italy and South Korea, and the Centers for Disease Control and Prevention has advised heightened precautions for those traveling to Japan.
While there are no restrictions on domestic travel — and basic habits like hand-washing remain among the best defenses against the flu-like virus — the outbreak has sent global markets into near-hysteria. The Dow Jones transportation average careened into a bear market this week, meaning these stocks have fallen more than 20 percent from their recent highs.
United Airlines and American Airlines stocks are both down about 40 percent this year, while Delta Air Lines has shed more than 20 percent.
In addition to helping sectors like hospitality and airlines, the White House is considering aiding people unable to work because they are forced to stay home, as well as small businesses that may need some “cash flow” help amid the outbreak, Kudlow said.
Kudlow didn’t specify what types of assistance the government could offer. Legislation Trump signed Friday to address the outbreak allows for up to $7 billion in low-interest loans for small businesses from the Small Business Administration.
Travel and tourism accounted for 5.9 million U.S. jobs in 2018, including positions in lodging, dining and transportation. The sector accounted for 2.9 percent of the economy in 2018, federal data shows.
Cruise prices are beginning to fall after two high-profile quarantines. On the Diamond Princess, 700 people were infected and seven have died, and now the Grand Princess is being held off the coast of California as passengers await test results.
Because cruises are generally booked months in advance, it’s hard to predict how many people will cancel summer plans, said Mike Driscoll, editor in chief of Cruise Week. Fewer Americans take cruises to Asia compared with Europe or elsewhere, so the long-term impact on the industry depends heavily on where the outbreak takes hold.
“The potential is so worrisome for the cruise business,” Driscoll said. “It depends on what happens in the Caribbean. It depends on what happens in Mexico.”
Debra Adams, 57, is counting down to April 19, the start of her 27-day cruise across the Atlantic and through Europe. She regularly checks for bulletins from Princess Cruises that may threaten her trip, but she says she and her 81-year-old father are determined to go. Adams said she sees no reason to sit at home and worry when she has this “opportunity to live.”
“Right before we get off the ship, my dad and I spend a day in Paris,” she said. “It’s going to be amazing. I’m going to go until they tell me I can’t.”
Glenn Wilcox has been fielding questions by anxious callers looking to rearrange European vacations or finagle flights to avoid certain airports. His company, Wilcox Travel, books trips for leisure travelers and humanitarian aid groups. Wilcox estimates that future bookings are down 20 to 30 percent compared with last year.
“We’ve had constant questions,” he said. “It’s a hard thing. What I’m telling folks is that we can only go off of what travel restrictions there are.”
As people cancel flights, they ditch hotel reservations, too. Marriott said in an earnings call that revenue from bookings in China plunged in February. Hilton estimates that coronavirus will affect its bottom line by as much as $50 million if the outbreak lasts several months. And Hyatt said its hotels in Singapore, Bali and Japan saw bookings fall as Chinese travelers stayed home.
At San Francisco’s Moscone Center, the city’s largest convention and exhibition complex, at least seven groups — including Facebook and IBM — have canceled or rescheduled for total economic losses of roughly $138 million, according to Laurie Armstrong Gossy of the San Francisco Travel Association.
Airport hotels in particular are seeing a dip in bookings, said Jan Freitag, senior vice president of lodging insights at the data firm STR, especially those with a lot of international traffic. And there’s some indication that people are canceling weekend bookings, suggesting that leisure travel could be pulling back more than corporate travel.
But Freitag said that if people want to travel, they’ll do it. He pointed to high occupancy rates at New Orleans hotels during Mardi Gras, where travelers come in very close contact with one another.
“One week does not a trend make,” Freitag said.
In suburban Maryland, it seemed like business as usual at the MGM National Harbor casino. In the food court, the only sign of coronavirus fears was an oversize jug of hand sanitizer next to the register at a Vietnamese restaurant. On the gambling floor, one slots player out of dozens wore a face mask. At blackjack and baccarat tables, players sat as close to one another as ever, fiddling with chips that had been handled by countless others that day.
Yet some were staying away. Maryland poker pro Andrew Brokos, an author and host of the podcast “Thinking Poker,” said he was focusing on his coaching business and finishing his latest book.
“I actually have not been going to casinos,” he said. “By the time we’re hearing about confirmed cases in the area, it’s too late."
An MGM spokeswoman declined to comment on the outbreak’s impact on business but said the casino had placed additional hand sanitizer dispensing stations in high-traffic areas, among other cleaning protocols.
The White House conversations about tax relief for hospitality firms raise questions about whether the president might directly benefit. Trump’s company, which he still owns but is run by his sons, owns and operates hotels in Washington, Chicago and Las Vegas, plus the Mar-a-Lago Club in South Florida and a vineyard in Northern Virginia.
The company also owns 11 golf courses in the United States and three golf resorts in Europe. Like Hilton, Marriott and other big-name hotel companies — which mostly manage but do not own hotels — the Trump Organization also operates properties under the Trump brand for other owners in Hawaii, New York and Vancouver.
Since Trump’s election, his politics have taken a toll on the business, with the “Trump” name being removed from hotels in New York, Rio de Janeiro, Toronto and Panama, as well as from a number of residential buildings in New York. The Trump Organization is now looking to sell its D.C. hotel business.
The company did not respond to questions about how the outbreak has affected its business and any actions it has taken in response.