On Friday, Congress failed to come to a resolution regarding the sequestration, and large, automatic spending cuts are set for federal programs. By the end of the fiscal year, $85 billion in cuts are expected to take place.
Although the extent and effects of these cuts are not yet known, they will likely deliver a blow to the travel and hospitality industries, as federal agencies furlough workers and cut travel and meeting budgets.
“Our industry is leading America’s post-recession recovery, and the nation cannot afford to see that economic progress derailed by gridlock in Washington,” says Roger Dow, president and CEO of the U.S. Travel Association. “We are communicating with federal agencies to understand the potential impact of cutbacks on travel and identify the ways in which those agencies will address the concerns of affected communities.”
Agencies affected by the cuts include he Federal Aviation Administration (FAA), the Transportation Security Administration (TSA), and Customs and Border Protection (CBP). These organizations will be forced to furlough workers, which will result in delays and extended wait times for airline and transportation passengers. National Parks across the country will also feel the effects of the cuts and may even be forced to close—a move that will directly impact both regional trips within and international travel to the United States.
And the hotel industry will not be immune from the impact of the cuts. Hotels can expect meetings to be postponed, travel bookings shortened, and government planners delaying contract signings as they await a solution.
“This sequester is taking a little bit of wind out of everyone sails right now,” says Joe McInerney, outgoing AH&LA President and CEO. “I have trouble understanding the people up on Capitol Hill. They’re more interested in what they want to do than what their constituents want to do. From our history we know that there are problems when you make these kinds of blanket cuts.”
Dow explains that the consequences of the budget cuts will likely not be felt until April 1, since most federal agencies are required to give 30-days' notice to furlough workers in advance of any widespread staffing cutbacks.
AH&LA and U.S. Travel are two groups that will continue to lobby on behalf of the travel industry in hopes of convincing leaders to minimize the impact of sequestration on federal programs. But one thing is clear—if no action is taken, the industry will feel a direct hit and the cuts will hamper 2013 progress.
“We will strongly advocate for minimized impacts on the traveling public as spending reductions are implemented,” says Dow. “And we will keep the pressure on all parties to find a pragmatic resolution to this artificial crisis.”