The Travel & Vacation Bailout

Some will read the headline and think, "huh?". Bear with me, I think this idea has some merit.

The Facts:
According to the US Travel Association, the travel industry generates $700 Billion in revenue, 110 Billion in tax receipts, 7.5 million jobs (roughly 5% of all US jobs) and $178 Billion in payroll. In the lodging sector, Convention/Tourism and Economic Development offices use a figure to calculate the economic impact of visitors to the area. That is calculated based on estimated purchases in the locality based on an guest staying overnight. For example, one might say the multiplier effect is $150 in a particular area - that means that for every hotel room sold in the city/area, on average an additional $150 in purchases of entertainment, gas, food and incidentals will accompany that lodging room purchase. Using that methodology you can use your imagination (or a calculator) to figure how big the trickle down effect is from travel on many other segments of the economy (gas, retail, restaurants, etc.). With the economy in a tailspin, the travel industry is one of the hardest hit and last to recover, and because of that the negative trickle down impact is substantial.

The Idea:
In the United States, there is no statutory requirement for vacation time, but in many other developed nation there are such laws. So, instead of bailing out companies that were irresponsible, and instead of spending a trillion dollars of governement money on various initiatives, I am suggesting a mandatory vacation for every American worker (150,000,000 people) - fully paid by the US governement, up to $5,500.

Why does this make sense? Well, for all the trickle down reasons I have previously identified. If people travel, they spend money on airfare, gas, retail purchases, restaurants, entertainment and ancillary related expenses. All of that spending would undoubtedly save or create jobs in all those various sectors of the economy and would generate an incredible amount of taxes for local and state governments. Of course the direct economic impact would be massive, but the bonus would be that with the incremental tax revenues the local governments could do what is best for their area to stimulate spending and really kick-start the economy back into gear. Once the economy is clicking again, new ideas will germinate and capitalism will generate the private investment and creativity necessary to sustain continued growth.

Some would argue that this would only benefit resort areas. I argue that is simply not feasible. Number one, $5,500 is not enough to travel to a resort and enjoy a full week stay. Second, there isn't enough resort inventory to accommodate the 150,000,000 vacationers. Also, in tough times, many people would be perfectly happy traveling to see family or friends and would use the bulk of their vacation stimulus on shopping, eating out and enjoying the company of their loved ones. That can/would occur in every city/town across the country thereby spreading the impact to all corners of this fine nation.

The Best Part
So you see how the math works, but the added benefit is the intangible but incredible optimism that would be stimulated by a free vacation for every American worker. People would be able to relax, recharge thier batteries and come back to work with a more positive attitude and outlook (ie: consumer confidence would be mended). And, the icing on the cake, is that for every single employer, private or public, they would have a full week of payroll relief for every employee. So, we improve moral, generate $800 Billion in consumer spending and save billions of dollars in payroll costs for employers, in turn kick starting the economy and stimulating job growth and innovation. With that, home values will stabalize and the housing crisis will resolve itself and we'll be on our way to another couple decades of American over-indulgence that our culture so deeply cherishes!

Doesn't that sound like a viable plan? I thought so - now, go, take a trip and stay at a hotel!