WASHINGTON (CN) – The head of the U.S. Travel Association asked lawmakers Tuesday to pressure BP to put up $500 million for a marketing campaign “to bring travelers back to the Gulf Coast.” The group says the region could lose $22.7 billion in travel and tourism revenue over the next three years as a result of the oil spill and the negative perception it created.
“Travel is a perception business,” said Roger Dow, president and CEO of the U.S. Travel Association, at a House Commerce subcommittee hearing.
The Gulf Coast tourism industry generates more than $94 billion in revenue and accounts for 1 million jobs, Dow said. The Gulf region is more dependent on tourism than any other region in the United States, and tourism is the number one industry in Florida.
Travel interest in the region has declined, even for beaches untouched by oil, due to the media’s profiling of the spill and the public’s lack of knowledge as to which areas are affected, Dow said.
“BP’s disaster is wreaking havoc,” Rep. Kathy Castor, D-Fla., said of beaches in her Tampa Bay district. “There’s no oil there, and yet, the word has gone out … that the Florida beaches are damaged, that the Gulf Coast is toxic.”
Castor complained that BP is spending money on TV, radio and newspaper ads designed to “polish” its corporate image when they should “explain to folks around the world that our beaches are pristine.”
“BP understands that changing perception is critical,” Dow said.
Herbert Malone, president of the Alabama Gulf Coast Convention and Visitors Bureau, said hotels that are usually at 85 to 95 percent occupancy during the summer season are running at less than 30 percent occupancy. “I don’t know of a single business in our town that has not been directly affect by this oil,” Malone said. “It’s created a sense of despair.”
Keith Overton, chief operating officer of TradeWinds Island Resorts, the largest resort on Florida’s Gulf Coast, said the hotel has lost $1.7 million so far this summer “without a drop of oil on our beaches.”
“This is a perception problem,” Overton said, citing a news story featuring President Obama standing on a Florida beach with a superimposed image of oil behind him.
“There’s no amount of money that is going to combat that kind of imagery,” he said.
Overton called on the federal government to hold the media accountable for “inaccurate or sensationalized reporting.”
Ralph Brennan, president of restaurant group in New Orleans, also faulted the media for presenting an inaccurate portrayal of the spill’s impact.
“The perception shaped by the media, even if unintentional, is that oil is on the doorsteps of New Orleans,” Brennan said. “That is sensationalistic and untrue.”
Dow said the proposed $500 million marketing fund could prevent $7.5 billion in lost revenues over the next few years.
BP has already paid a $70 million marketing grant to four Gulf Coast states — Louisiana, Alabama, Mississippi and Florida — but “of that 70 million, very little got to marketing,” Dow said. “We … need to cap the damages long-term.”
Dow proposed that the $500 million fund be administered by the independent claims facility being set up by Kenneth Feinberg, administrator of BP’s $20 billion escrow fund created to pay for claims arising out of the Gulf Coast spill.
Feinberg, who also testified in Tuesday’s hearing, said BP has paid more than $231 million in claims so far “as part of its petty cash,” but has avoided paying “certain problematic claims.”
He said that once he takes over the claims process from BP, he anticipates receiving claims for removal and clean up costs, physical injury and personal property damages, lost profits and lost earning capacity, loss of subsistence use of natural resources, and physical injury and death claims.
Feinberg added that a business does not have to prove any actual physical damage to be eligible for a claim, as “perception is compensable.”
He said the difficulty in administering the $20 billion fund will be determining what constitutes an eligible claim. He said it will be easy to award compensation to a hotel situated on a beach where oil is present, but harder to determine eligibility for a hotel located 70 miles inland.
“Proximity is going to be the problem here,” Feinberg said. “What I’m going to have to decide … is what constitutes a direct claim that is immediately payable and how far attenuated may a claim be from the spill?”
He said the new claims process should be in place by the middle of next month.
“I understand … time is of the essence,” Feinberg said. “I’m working as fast as I can … to get the Gulf Coast claims facility up and running.”