Virginia’s economy is recovering, but Virginia Tourism Corporation (VTC) President Rita McClenny told legislators this week that a major infusion of $50 million is needed to help the struggling tourism sector.
“The $27 billion tourism engine stalled out in 2020 as a result of the global pandemic. Every component sector was negatively impacted: lodging, food service, attractions, business, conventions, events, transportation, entertainment and recreation. The entire sector needs financial recovery support,” McClenny told the Senate Finance and Appropriations Committee.
“Virginia’s travel economy is digging out of a $10 billion decline, or said another way, a loss of 30 percent of visitor expenditures,” she said. “Virginia is trending slightly behind the U.S.”
That’s because Northern Virginia tourism destinations are more indoor, event-based, and may require air travel, McClenny said. Outdoor destinations like Virginia Beach and areas around Shenandoah National Park have been impacted less.
In 2020, Virginia’s GDP dropped by 2.5 percent. McClenny said over half of that decline — 1.3 percent — was caused by the harm to the tourism industry and the decrease in tax revenue for local government. McClenny’s presentation showed that Virginia continued to lose travel expenditures through April. She said Virginia is competing with neighboring states that have launched recovery programs.
She described a repeating cycle: “You start with the downward pressure on travel expenditures. That goes to eroding the local excise and hotel tax revenue, which then goes to job losses and reduction in tourism resources, and ultimately hampering our ability and the destination markets are hampered.”
To interrupt the cycle, McClenny asked legislators for $50 million in American Rescue Plan Act (ARPA) funds with $20 million for state agency the VTC and $30 million for localities. That would expand marketing ability for both the VTC and localities.
Some localities are already taking action. Fairfax County has voted to use $25 million of its ARPA funds to provide grants to local business in hotel, food service, retail, and arts and culture industries.
In a press release response to Fairfax’s announcement, Virginia Restaurant Lodging And Travel Association (VRLTA) President Eric Terry said, “As the Commonwealth starts to open up, many of our businesses in the tourism industry are still suffering from the impacts of nearly a year of closed doors and reduced capacity. With labor costs and food product costs sky rocketing, this relief is greatly needed to get the businesses our communities depend upon back to full operation. It is my hope that the General Assembly and the rest of Virginia’s localities will follow suit.”
VRLTA is asking for more money than the VTC.
“Both locality and state funding are critical to the tourism recovery,” the release states. “The industry is calling on the Virginia General Assembly and localities to work together to help the industry to a full recovery through relief funding allocations, and has sent a letter to the General Assembly requesting $275 million of the $4.3 billion [ARPA funds] at the state level.”
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