Industry Trends

CapRelo Insider May 2024

Team meeting around table

Advocating for Tax Relief: WERC’s Push to Reinstate Moving Tax Deductions

The Worldwide Employee Relocation Council (ERC) is advocating for the reinstatement of the moving tax deduction and reduction, which were suspended as part of the Tax Cuts and Jobs Act until December 31, 2025. The deduction, aimed at offsetting the cost of relocating for work, was eliminated along with other targeted tax incentives to fund corporate tax rate cuts.

Established in 1964 and supported by both parties, the deduction benefits both businesses and individuals involved in relocations. Despite its limitations and strict eligibility criteria, it provides significant tax relief, estimated at $1 billion annually. Previous efforts to preserve the deduction during the Tax Cuts and Jobs Act and COVID-19 pandemic relief negotiations were unsuccessful.

Currently, the Relocation Mobility Coalition, formed by organizations including WERC, American Trucking Association (ATA), and International Association of Movers (IAM), is advocating for the deduction’s reinstatement. Efforts include collecting data on employee relocations to support the cause and reaching out to potential supporters in Congress. The coalition aims to update economic impact analyses and mobilize support from regional councils, relocation management companies, and individual members.

In addition to advocating for the deduction, WERC celebrates the enactment of the Moving Americans Privacy Protection Act (MAPPA), which safeguards transferees’ sensitive data from exposure and misuse. MAPPA closes a loophole in the Tariff Act of 1930 by directing the Secretary of the Treasury to remove personally identifiable information from vessel manifests before sharing them with data brokers. This victory follows a decade-long effort supported by industry partners, lawmakers, and advocacy groups.

The Impact: Overall, these advocacy efforts and legislative developments aim to enhance the relocation experience for transferees by addressing financial considerations and safeguarding their personal data, ultimately contributing to a smoother and more secure transition during relocation assignments.

To support the efforts of reinstating this deduction, WERC needs the help of regional employee relocation councils, relocation management companies and individual members to reach out to their members of Congress. WERC is laying the groundwork with Congress to support this initiative and they are planning to help equip members with the tools they need for effective outreach.

Travel Industry Trends: Prioritizing AI and Booking Systems in Technology Investments

According to Relocate Global and a survey conducted by the TravelTech Show, the travel industry is increasing its investment in technology, with a particular focus on AI and booking systems. The survey reveals that a significant majority of travel buyers anticipate budget increases in the next year, with over half planning to allocate funds to AI. Websites are identified as the most effective tool for driving bookings, overshadowing social media. Additionally, there’s a strong indication that AI will have a substantial impact on customer service and experience, for example, by making targeted recommendations based on customer preferences.

Nimet Sayeed, the Event Manager of TravelTech Show, emphasizes the importance of aligning technology investments with business objectives. As online interactions continue to rise, travel operators are recognizing the pivotal role of AI in enhancing both efficiency and customer experience. The upcoming TravelTech event aims to investigate deeper into the potential of AI and other emerging technologies within the travel industry.

The Impact: AI-driven booking systems can make the relocation experience smoother, more personalized, and cost-effective. Automated systems reduce the risk of human error in the booking process and can provide 24/7 support – answering questions and resolving issues quickly.

The survey highlights the growing importance of technology in the travel sector, with AI and booking systems at the forefront of investment priorities. The results signal a significant transformation in the technological landscape of the travel industry. With a notable focus on AI and booking systems, travelers can expect to witness advancements in how travel services are accessed and managed including smoother booking processes, more personalized travel recommendations, and improved customer service interactions.

As Demand for International Work Experience Rises Businesses Struggle to Support

The EY 2024 Mobility Reimagined Survey reveals that three in four businesses worldwide are failing to effectively manage talent mobility, risking losing out in the competition for skilled workers and holding back business resilience. Despite the increasing demand for international work experience, 75% of employers lack fully developed mobility functions.

Key findings reveal:

  • Employee Retention: 64% of employees are more likely to stay with their job after a long-term international assignment.
  • Mobility Risks: 71% of firms have seen increased mobility risks in the past two years but lack effective management policies.

The survey, involving 1,059 mobility professionals from 21 countries, emphasizes the importance of a robust mobility strategy for attracting and retaining talent. Despite challenges, there’s a clear recognition of the transformative impact of international mobility experiences on employees and businesses. To tackle these issues, successful organizations focus on five key drivers: strategic alignment, talent linkage, digital focus, flexibility, and external expertise.

The Impact: By understanding potential barriers, companies can better assess their readiness and capability to develop effective relocation programs that leverage modern technologies. With three in four businesses lacking fully developed mobility functions, assignees may struggle to access essential resources and support for a smooth and successful transition. This can lead to obstacles for assignees, including inadequate support for cross-border logistics, insufficient cultural adaptation assistance, and limited career development opportunities.

This survey emphasizes the urgent need for businesses to develop effective mobility functions to better support assignees, ensuring a positive and impactful experience for both the individuals and the organization.

Commissions & Litigations Update

CapRelo remains an active listener in state-by-state updates regarding the recent Buyer Brokerage Lawsuits.

Update: The World Wide ERC announced the National Association of Realtors (NAR) process changes, required by their proposed settlement agreement to multiple US buyer broker compensation litigation cases, will be effective August 17, 2024. This is later than the July date previously messaged.

Impact: It will be a month longer before NAR requires compensation related disclosures to sellers, buyer agency agreements with compensation commitments from buyers signed before viewing any properties, removal from MLS of the buyer broker compensation offer fields. Industry experts predict that we will continue to see additional states establishing new buyer broker agent agreement addenda and guidelines.

Global Mobility Radar

CapRelo’s Mobility Radar provides valuable insights into trends worth monitoring. This month, we have detected important global mobility updates in the shore of Yemen, the U.S., and India.

  • A recent news column by New York Times cites Maersk’s warning that expanded terrorist attacks in the Indian Ocean are causing more delays in shipping. The recent attempts to target ships farther from Yemen’s shore are straining logistics, leading to increased costs for the company. Maersk has cautioned customers to anticipate higher surcharges on shipping invoices due to the elevated expenses incurred by the shipping line.
  • CBS news mentions that the reopening of the shipping lanes in Baltimore has been delayed due to lightning and rising tides. Crews used explosives to break down the 500-foot steel span. The demolition aims to facilitate the refloating of the Dali cargo ship and the reopening of maritime traffic.
  • Economists polled by Reuters highlight unemployment as India’s major post-election economic concern, despite an expected 6.5% growth this fiscal year. The country’s rapid growth has not translated into sufficient job creation for its large youth population. Most economists see unemployment as the top challenge, followed by worries about rural consumption, inflation, and poverty. Despite government promises to prioritize job creation, the unemployment rate has remained stagnant.