Brand USA funding cut and Esta fee hike will dent sales, fears trade

The trade has warned significant cuts to promotional funding for the US and an almost 100% increase in the Esta fee will be a further blow to tourism to the destination and could hit future sales.

The US Congress last week approved a legislative package that slashed federal funding for destination marketing organisation Brand USA from $100 million annually to $20 million, and raised the Esta visa-waiver fee from $21 to $40.

The reconciliation bill – which also includes funds for modernising air traffic control, increased customs staffing and security funding for the 2026 Fifa World Cup and 2028 Olympic Games – was signed into law by President Trump.

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Brand USA chief executive Fred Dixon admitted the “disappointing” funding reduction would require a “significant recalibration of our resources and programming that is still to be determined”. But he said he hoped the president’s previous support of a full funding package would lead to a reversal of the decision following further budget discussions in the autumn.

Travel agents and tour operators immediately expressed fears the funding cuts would mean fewer UK marketing campaigns and could lead to a fall in sales, branding the decision “short-sighted”.

Advantage Travel Partnership commercial director John Sullivan said cutbacks could particularly affect “visibility and opportunity” for US states that are less well known to agents.

“The US won’t be front and centre in agents’ minds,” said Sullivan, noting: “While the US might be better value now due to the exchange rate, we already know many consumers are heading east owing to the value for money it represents.”

The consortium described the planned hike in Esta fee – on a date yet to be confirmed – as a “blow to British travellers” and an “added expense” for US travel that would impact “already challenged US visitor numbers”. 

The Esta is mandatory for travellers entering the US under the country’s Visa Waiver Program and is valid for two years.

Tracy Clenshaw, head of commercial at Fred Olsen Travel, forecast the Esta increase could lead to a “decline in demand for US travel” among leisure travellers and first-time visitors. 

She added: “With the combination of rising travel costs and reduced destination marketing efforts, especially with other destinations increasing their promotional campaigns, we fear the US will become a harder sell in an increasingly competitive market.”

Dave Batley, co-owner of four-branch Savvi Travel, which has seen US bookings drop 15% year on year over the past five months, said Brand USA’s training modules were a valuable resource, adding the funding cut “would have a knock-on effect”.

America As You Like It managing director Maggi Smit also said sales were down on last year and added: “Price sensitivity is still high in the current climate. While we’re still receiving a healthy volume of enquiries, conversion rates are noticeably lower.”

Travelpack director Vishal Patel said the US continued to be the operator’s strongest destination but called the funding cuts to Brand USA “concerning” for the longer term.

“Brand USA’s support—through training, roadshows, fam trips, PR, and digital resources—has been incredibly valuable to Travelpack and, I’m sure, to the wider trade,” he said, adding: “The true impact may not be immediate, but I do think certain regions will feel it over time.”

Guy Novik, chief executive of US specialist USAirtours, said his key concern was also the funding drop.

He said: “The increased [Esta] cost as a percentage of the overall holiday cost is small. However, the decision to cut funding for Brand USA is very short-sighted. If there is less money around there will be less promotional activity.”

But he cited interest around next year’s football World Cup as a “silver lining” for trade sales.

East of England Co-op head of travel Caroline Thorne noted the World Cup was prompting “early interest in travel”, but predicted the Esta fee could hit enquiries.