[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]



 
                 THE STATE OF THE U.S. TOURISM INDUSTRY
=======================================================================



                                HEARING

                               before the

                            SUBCOMMITTEE ON
                COMMERCE, TRADE, AND CONSUMER PROTECTION

                                 of the

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION
                               __________

                            OCTOBER 17, 2001
                               __________

                           Serial No. 107-66
                               __________

      Printed for the use of the Committee on Energy and Commerce










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                    COMMITTEE ON ENERGY AND COMMERCE

               W.J. ``BILLY'' TAUZIN, Louisiana, Chairman

MICHAEL BILIRAKIS, Florida                   JOHN D. DINGELL, Michigan
JOE BARTON, Texas                            HENRY A. WAXMAN, California
FRED UPTON, Michigan                         EDWARD J. MARKEY, Massachusetts
CLIFF STEARNS, Florida                       RALPH M. HALL, Texas
PAUL E. GILLMOR, Ohio                        RICK BOUCHER, Virginia
JAMES C. GREENWOOD, Pennsylvania             EDOLPHUS TOWNS, New York
CHRISTOPHER COX, California                  FRANK PALLONE, Jr., New Jersey
NATHAN DEAL, Georgia                         SHERROD BROWN, Ohio
STEVE LARGENT, Oklahoma                      BART GORDON, Tennessee
RICHARD BURR, North Carolina                 PETER DEUTSCH, Florida
ED WHITFIELD, Kentucky                       BOBBY L. RUSH, Illinois
GREG GANSKE, Iowa                            ANNA G. ESHOO, California
CHARLIE NORWOOD, Georgia                     BART STUPAK, Michigan
BARBARA CUBIN, Wyoming                       ELIOT L. ENGEL, New York
JOHN SHIMKUS, Illinois                       TOM SAWYER, Ohio
HEATHER WILSON, New Mexico                   ALBERT R. WYNN, Maryland
JOHN B. SHADEGG, Arizona                     GENE GREEN, Texas
CHARLES ``CHIP'' PICKERING, Mississippi      KAREN McCARTHY, Missouri
VITO FOSSELLA, New York                      TED STRICKLAND, Ohio
ROY BLUNT, Missouri                          DIANA DeGETTE, Colorado
TOM DAVIS, Virginia                          THOMAS M. BARRETT, Wisconsin
ED BRYANT, Tennessee                         BILL LUTHER, Minnesota
ROBERT L. EHRLICH, Jr., Maryland             LOIS CAPPS, California
STEVE BUYER, Indiana                         MICHAEL F. DOYLE, Pennsylvania
GEORGE RADANOVICH, California                CHRISTOPHER JOHN, Louisiana
CHARLES F. BASS, New Hampshire               JANE HARMAN, California
JOSEPH R. PITTS, Pennsylvania
MARY BONO, California
GREG WALDEN, Oregon
LEE TERRY, Nebraska

                  David V. Marventano, Staff Director
                   James D. Barnette, General Counsel
      Reid P.F. Stuntz, Minority Staff Director and Chief Counsel

                                 ______

        Subcommittee on Commerce, Trade, and Consumer Protection

                    CLIFF STEARNS, Florida, Chairman

NATHAN DEAL, Georgia                 EDOLPHUS TOWNS, New York
  Vice Chairman                      DIANA DeGETTE, Colorado
ED WHITFIELD, Kentucky               LOIS CAPPS, California
BARBARA CUBIN, Wyoming               MICHAEL F. DOYLE, Pennsylvania
JOHN SHIMKUS, Illinois               CHRISTOPHER JOHN, Louisiana
JOHN B. SHADEGG, Arizona             JANE HARMAN, California
ED BRYANT, Tennessee                 HENRY A. WAXMAN, California
STEVE BUYER, Indiana                 EDWARD J. MARKEY, Massachusetts
GEORGE RADANOVICH, California        BART GORDON, Tennessee
CHARLES F. BASS, New Hampshire       PETER DEUTSCH, Florida
JOSEPH R. PITTS, Pennsylvania        BOBBY L. RUSH, Illinois
GREG WALDEN, Oregon                  ANNA G. ESHOO, California
LEE TERRY, Nebraska                  JOHN D. DINGELL, Michigan,
W.J. ``BILLY'' TAUZIN, Louisiana       (Ex Officio)
  (Ex Officio)

                                  (ii)













                            C O N T E N T S

                               __________
                                                                   Page

Testimony of:
    Abercrombie, Hon. Neil, a Representative in Congress from the 
      State of Hawaii............................................    18
    Berkley, Hon. Shelley, a Representative in Congress from the 
      State of Nevada............................................    15
    Conlin, Linda M., Assistant Secretary, Trade Development, 
      Department of Commerce.....................................    41
    Crye, J. Michael, President, International Cruise Lines 
      Council....................................................    65
    Jones, Terrell B., President and CEO, Travelocity.com........    71
    Keller, Hon. Ric, a Representative in Congress from the State 
      of Florida.................................................    22
    Lounsberry, Fred, Senior Vice President of Sales, Universal 
      Studios Recreation Group...................................    63
    Marriott, J.W., Jr., Chairman and CEO, Marriott 
      International, Inc.........................................    53
    Nicholas, Cristyne L., President and CEO, NYC & Company......    56
    Norman, William S., President and CEO, Travel Industry 
      Association................................................    45
    Underwood, Hon. Robert A., a Delegate in Congress from the 
      Territory of Guam..........................................    24
    Warren, Robert, Senior Vice President, General Counsel and 
      Secretary, Air Transport Association of America, Inc.......    50
Material submitted for the record by:
    Bono, Hon. Mary, a Representative in Congress from the State 
      of California, prepared statement of.......................    83
    International Association of Amusement Parks and Attractions, 
      prepared statement of......................................    84

                                 (iii)

  










                 THE STATE OF THE U.S. TOURISM INDUSTRY

                              ----------                              


                      WEDNESDAY, OCTOBER 17, 2001

              House of Representatives,    
              Committee on Energy and Commerce,    
                   Subcommittee on Commerce, Trade, and    
                                       Consumer Protection,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10:05 a.m., in 
room 2322, Rayburn House Office Building, Hon Cliff Stearns 
(chairman) presiding.
    Members present: Representatives Stearns, Shimkus, Shadegg, 
Pitts, Terry, Bass, Tauzin (ex officio), Towns, John, and 
Deutsch.
    Staff present: Brian McCullough, majority counsel; Ramsen 
Betfarhad, majority counsel/policy coordinator; Kelly Zerzan, 
majority counsel; Shannon Vildostegui, majority cunsel; Will 
Carty, legislative clerk; Jon Tripp, deputy communication 
director; and Bruce Gwinn, minority professional staff.
    Mr. Stearns. Good morning. The Subcommittee on Commerce, 
Trade, and Consumer Protection will come to order. I want to 
welcome everybody this morning.
    I represent a State that boasts one of the largest tourism 
industries in the country, but it would be foolish to think 
that only States with warm weather and beaches attract 
tourists. Just the opposite is true. We have world-renowned 
cities rich in tradition and culture, from New York to New 
Orleans. Our diverse topography allows every activity 
imaginable, whether it is skiing our mountains in the winter, 
exploring the desert canyons, or sailing in the Great Lakes in 
the summer. Every State and territory offers tourists something 
unique, enhancing the United States as the destination of 
choice for domestic and international tourists.
    Because every State and territory maintains an interest in 
our tourism industry, the health of this sector of our economy 
has taken on increasing importance. While I could quote 
impressive statistics demonstrating how important tourism is to 
our economy, allow me to share just two.
    The travel and tourism is a $600 billion industry, 
representing a little over 5 percent of our GDP and employing 
over 17 million Americans. In my home area of central Florida, 
tourism brought in $21 billion in visitor spending to the local 
economy last year and accounted for 211,000 jobs, with a total 
amount wages earned of $5 billion.
    That was last year. While the tourist industry is not 
isolated from the economic slowdown, the attacks of September 
11 have changed the dynamic immeasurably. Through no fault of 
their own, tourism and tourist-dependent businesses large and 
small that were already weathering economic challenges have 
been thrust into a more serious dilemma that could not be 
predicted.
    My State of Florida is especially hard hit for two reasons. 
First, Florida's economy is disproportionately dependent on 
travel and tourism revenues; and, like Nevada, New Hampshire 
and a few other States, Florida, not having an income tax, is 
heavily dependent on sales tax revenue to meet its public 
service obligation. An initial estimate puts the cost of the 
attacks to Florida at $183 million just in lost sales tax from 
tourists' spending by the end of the year.
    Though the Commerce Department has recently issued 
forecasts for a healthy return in the long-term outlook, the 
short-term outlook is less optimistic. I don't know that any of 
us could write a cure-all prescription, but the President's 
call to our routine and our way of life seems to be an 
excellent starting point. However, restoring the confidence to 
do that appears to be the obstacle holding back a full and fast 
recovery.
    If we are to restore confidence in travel, it is natural 
that we pay particular attention to the airline industry. The 
subcommittee held a hearing earlier this year on airline 
mergers, during which we received testimony highlighting the 
importance of air travel to our economy. No one doubts those 
claims now as we witness the struggles of every business 
dependent upon air travelers.
    Many Floridians' livelihoods are highly dependent on air 
travelers visiting the State. Before the attack, 55 percent of 
visitors to Florida arrived by air, so any substantial decrease 
in the number of air travelers creates serious ripple effects 
within Florida's economy. This is true of other parts of the 
country, including Nevada, Hawaii and indeed our own 
Washington, DC, where travel and tourism is the second-largest 
employer behind the Federal Government.
    Restoring the confidence in travel in general and air 
travel in particular in the wake of the September 11 attacks is 
one of the more difficult challenges we face today. Still, I am 
confident we can restore confidence and businesses will again 
flourish.
    The Federal Government immediately implemented new security 
measures for air travel and will continue to make any necessary 
changes. There are no guarantees in this world, but given our 
country's history of success we will find solutions that work.
    I welcome our witnesses today and thank them for their 
participation. I look forward to their insights so Congress can 
accurately identify the public policy issues where it is 
appropriate for the Federal Government to be involved. In that 
light, I am carefully reviewing with my colleagues the 
proposals offered on the Senate side by Senator Kyl and Senator 
Miller and on the House side by my colleagues Congressmen 
Shadegg, Abercrombie, and Ms. Wilson, including the $500 tax 
credit bill that they support.
    So, with that, I want to welcome our witnesses and also 
have the ranking member, Mr. Towns--welcome him for an opening 
statement.
    [The prepared statement of Hon. Cliff Stearns follows:]
  Prepared Statement of Hon. Cliff Stearns, Chairman, Subcommittee on 
                Commerce, Trade and Consumer Protection
    I am proud to represent a state that boasts one of the largest 
tourism industries in the country. But it would be foolish to think 
that only states with warm weather and beaches attract tourists. Just 
the opposite is true. We have world-renowned cities rich in tradition 
and culture, from New York to New Orleans. And our diverse topography 
allows every activity imaginable, whether it be skiing our mountains in 
the winter, exploring the desert canyons, or sailing the Great Lakes in 
the summer. Every state and territory offers tourists something unique, 
enhancing the United States as the destination of choice for domestic 
and international tourists.
    Because every state and territory maintains an interest in our 
tourism industry, the health of this sector of our economy has taken on 
increasing importance. While I could quote impressive statistics 
demonstrating how important tourism is to our economy, allow me to just 
share two. The travel and tourism is a $600 billion industry 
representing little over 5% of our GDP and employing over 17 million 
Americans.
    Specifically, in my home area of central Florida, tourism brought 
some $20.9 billion in visitor spending to the local economy last year 
and accounted for over 211,000 jobs with total annual wages earned of 
$5 billion. That was last year. While the tourism industry is not 
isolated from the economic slowdown, the attacks of September 11 have 
changed the dynamic immeasurably. Through no fault of their own, 
tourism and tourism dependent businesses large and small that were 
already weathering economic challenges have been thrust into a more 
serious dilemma that could not be predicted.
    My state of Florida is especially hard hit for two reasons. First, 
Florida's economy is disproportionately dependent on travel and tourism 
revenues. And like Nevada, New Hampshire and a few other states, 
Florida not having an income tax is heavily dependent on sales tax 
revenues to meet its public service obligations. An initial estimate 
puts the cost of the attacks to Florida at $183 million just in lost 
sales taxes from tourist spending by the end of the year.
    Though the Commerce department has recently issued forecasts for a 
healthy return in the long-term outlook, the short-term outlook is less 
optimistic. I don't know that any of us can write a cure-all 
prescription, but the President's call to return to our routine and our 
way of life seems to be an excellent starting point. However, restoring 
the confidence to do that appears to be the obstacle holding back a 
full and fast recovery.
    If we are to restore confidence in travel, it is natural that we 
pay particular attention to the airline industry. The Subcommittee held 
a hearing earlier this year on airline mergers during which we received 
testimony highlighting the importance of air travel to our economy. No 
one doubts those claims now as we witness the struggles of every 
business dependent on air travelers. Many Floridians' livelihoods are 
highly dependent on air travelers visiting the state. Before the 
attacks 55% of visitors to Florida arrived by air. So any substantial 
decrease in the number of air travelers creates serious ripple effects 
within Florida's economy. This is true of other parts of the country, 
including Nevada, Hawaii and indeed our own Washington, DC, where 
travel and tourism is the second largest employer behind the federal 
government.
    Restoring confidence in travel in general and air travel in 
particular, in the wake of the September 11 attacks, is one of more 
difficult challenges we face today. Still, I am confident we can 
restore confidence and business will once again flourish. The Federal 
government immediately implemented new security measures for air travel 
and will continue to make any necessary changes. There are no 
guarantees in this world, but given our country's history of success, 
we will find solutions that work.
    I welcome all our witnesses today and thank them for their 
participation. I look forward to your insight so that Congress can 
accurately identify the public policy issues where it is appropriate 
for the Federal government to be involved. In that light, I am 
carefully reviewing various proposals calling for direct federal 
assistance, including the $500 dollar tax credit bill introduced in the 
Senate by Senators Kyl and Miller and here in the house by my 
colleagues Mess. Shadegg, Abercrombie and Ms.Wilson.

    Mr. Towns. Thank you very much, Mr. Chairman.
    I would like to thank the witnesses for appearing here 
today to talk about the state of their industry. I would 
especially like to thank my colleagues and Mrs. Nicholas, who 
is the President and CEO of the New York City Travel and 
Tourism Board, for being here to discuss the state of the 
tourism industry in New York.
    Mr. Chairman, I would like to submit a letter from the 
Travel Business Roundtable which has compiled some statistics 
on the tourism industry which I feel members of the committee 
may find useful and, as a longstanding tradition, I would like 
to move that this information become a part of the record.
    Mr. Stearns. By unanimous consent, so ordered.
    Mr. Towns. I would like to use the remaining time to 
encourage all Americans to get out and travel this fall. There 
is nothing better than a weekend away in your favorite 
location, whether it is enjoying a golf weekend, relaxing on a 
beach or at a resort.
    My No. 1 suggestion, Mr. Chairman, is take a trip to New 
York City. There is no better place to spend a weekend, and 
there is certainly no better place to spend your money right 
now. Come to New York and see that Broadway show you wanted to 
see for the past year. Do your Christmas shopping a little 
early. Come walk the streets and get a feeling of patriotism 
rivaled by nowhere in America. Come see the baseball playoffs, 
and let me inform you in advance, come to the World Series. 
Come help rebuild New York City and get our economy moving 
again.
    Last, Mr. Chairman, I would urge all of my colleagues to 
support H.R. 2940, the I Love New York Tax Deduction Act. This 
bill would give tax deduction for meals, travel, entertainment 
in New York City until the end of 2002. I think it is so 
important that we do this and we do it now.
    Once again, I look forward to the testimony today, and I 
yield back my time.
    [The prepared statement of Hon. Edolphus Towns and the 
letter follow:]
Prepared Statement of Hon. Edolphus Towns, a Representative in Congress 
                       from the State of New York
    Thank you Mr. Chairman and I too would like to thank the witnesses 
for appearing here today to talk about the state of their industry. I 
would especially like to thank Cristyne Nicholas, who is President and 
CEO of the New York City Travel and Tourism Board for being here today 
to discuss the state of the tourism industry in New York.
    Mr. Chairman, I would first like to submit a letter from the Travel 
Business Roundtable. The T-R-B has compiled some statistics on the 
tourism industry which I feel members of the committee may find useful 
and I would like to move that this information be made part of the 
record . . .
    As everyone knows, my city along with the entire nation is still 
reeling from the effects of the September 11th tragedy. Our psyche has 
been damaged in many ways, but it has not been destroyed. We are a 
resilient people and are bouncing back from this attack. To do this, we 
need to start walking a little bit taller, keeping our chins held a bit 
higher and lastly Mr. Chairman, we need to get back to traveling!
    I would like to use my time today to encourage all Americans to get 
out and travel this fall! There is nothing better than a weekend away 
in your favorite location, whether it's enjoying a golf weekend 
getaway, relaxing on a beach or at a resort in Las Vegas OR--and this 
is my number one suggestion Mr. Chairman, take a trip to New York 
City!!! There is no better place to spend a weekend and there is 
certainly no better place to spend your money right now either!
    Come to New York and see that Broadway show you've wanted to see 
for the past year. Come do your Christmas shopping a little early! Come 
walk the streets and get a feeling of patriotism rivaled by nowhere in 
America today. Come see the baseball playoffs and hopefully, the World 
Series!!! Lastly, come help rebuild New York City and get our economy 
moving again.
    Lastly Mr. Chairman, I would urge all of my colleagues to support 
H.R. 2940, The I Love New York Tax Deduction Act. This bill would give 
tax exemptions for travel, meals and entertainment in New York City 
until the end of 2002. I think it is an important piece of legislation 
and one that should be passed as quickly as possible.
    Once again, I look forward to the testimony today and I yield back 
the balance of my time.
                                 ______
                                 
                                 Travel Business Roundtable
                                                   October 15, 2001
The Honorable Edolphus Towns
U.S. House of Representatives
2322 Rayburn House Office Building
Washington, DC 20510
    Dear Congressman Towns: In my capacity as Chairman of the Travel 
Business Roundtable (TBR), and on behalf of the thousands of small, 
medium and large scale travel and tourism businesses around the United 
States, I am writing to thank you and Chairman Cliff Stearns for 
focusing on the plight of the travel and tourism industry in your 
hearing this week in the House Energy and Commerce Subcommittee on 
Commerce, Trade and Consumer Protection.
    Travel and tourism is one of the few industries whose economic 
reach touches upon each congressional district in all 50 states. In 
2000, travel and tourism generated a trade surplus of $17 billion, 
helped support more than 17 million domestic jobs, and created local 
tax revenues of $99.5 billion. The industry is the first, second or 
third largest employer in 28 states and the District of Columbia.
    As you and Mr. Stearns have witnessed in your own states, since the 
horrific acts of September 11, 2001, the travel and tourism industry 
has been affected on a broad scale. Businesses are being forced to lay 
off workers, hotel occupancy rates have plummeted in major metropolitan 
areas and the uncertainty of future attacks is taking its toll, as both 
business and leisure travelers are canceling conventions, planned 
business trips and family vacations. The numbers are staggering (see 
attachments).
    As you prepare to investigate the large-scale economic impact on 
the travel and tourism industry, please know that we are here and 
willing to help with any solutions you propose to the industry.
    Respectfully, on behalf of TBR's 55 members, I request this letter 
and the attachments be submitted for the Subcommittee's official record 
on the hearing.
            Sincerely,
                                             Jonathan Tisch
                                                           Chairman
Attachments
                                 Travel Business Roundtable
                                                    October 5, 2001
The Honorable Edolphus Towns
U.S. House of Representatives
2322 Rayburn House Office Building
Washington, DC 20510
    Dear Congressman Towns: On behalf of the Travel Business Roundtable 
(``TBR''), I am writing to alert you to the crisis now confronting the 
U.S. travel and tourism industry and to outline several concrete steps 
that the Administration and Congress can take to help the industry 
recover from the crushing blow it received as a result of the September 
11th terrorist attacks on our country.
    Comprised of more than 60 corporate, labor, and trade association 
members, the TBR is proud to represent the broad diversity of the U.S. 
travel and tourism industry. During the past decade, travel and tourism 
has emerged as one of our nation's most productive engines of economic 
growth. As of last January, more than 17 million Americans were 
employed in travel and tourism-related jobs, with an annual payroll of 
$159 billion. Travel and tourism was the first, second, or third 
largest industry in 28 states and the District of Columbia. And last 
year, travel and tourism generated an annual trade surplus of $17 
billion as well as nearly $100 billion in tax revenues for Federal, 
state, and local governments.
    Unfortunately, the September 11th attacks have crippled our 
industry as public confidence in the safety of travel has been severely 
undermined, if not shattered. Hard data as well as anecdotal experience 
suggest that meetings are being postponed; all but critical corporate 
travel is being delayed; and individuals are canceling or postponing 
personal travel plans within the U.S. and abroad. These disturbing 
trends are all occurring against the backdrop of an overall U.S. 
economy that is in decline.
    Let me be even more specific: Since September 11, hundreds of 
thousands of travel and tourism jobs have been lost across the country; 
major U.S. cities are already reporting tens of millions of dollars in 
tourism-related losses; airlines, having drastically reduced their 
flight schedules are filling less than 60 percent of their seats on 
most flights; hotels stand to lose more than $2 billion in room 
revenue; more than 25% of meetings and conventions scheduled to take 
place by the end of the year have been canceled; and travel agencies 
are reporting tens of millions of dollars in sales losses each day. To 
stop and reverse these alarming trends, we need your help and we need 
it now.
    As an immediate step, we urge you to speak out in as many forums as 
possible about the continued safety of travel and its importance to the 
U.S. economy. The message to the American people must be clear--to 
change our way of life is a capitulation to the terrorists. We applaud 
President Bush's recent public comments about the importance of travel 
as well as his decision to reopen Reagan National Airport.
    We also understand that Congress and the Administration are 
developing a package of tax relief and other initiatives designed to 
stimulate economic growth. As you review the range of options available 
to you, we hope you will consider the following proposals that will be 
particularly helpful to the U.S. travel and tourism industry in the 
near term as the industry tries to get back on its collective feet. 
These proposals are designed to achieve three goals: 1) to assist the 
hundreds of thousands of workers within the travel and tourism industry 
who have been displaced since September 11th; 2) to encourage people to 
travel again for both business and leisure purposes; and 3) to increase 
liquidity for travel and tourism-related businesses, both large and 
small, that are currently confronting severe cash flow problems. 
Accordingly, we propose:
Helping Displaced Workers
 Direct assistance by the Federal government to those states 
        that may be overwhelmed with worker compensation and 
        unemployment claims resulting from the September 11th attacks.
 Assurance by the Federal government that health benefits will 
        be continued for displaced workers.
Encouraging People to Travel Again
 Full restoration of the business meal and entertainment 
        deduction.
 Restoration of the tax deduction for travel expenses of a 
        spouse accompanying an employee on a business trip to 100%.
 Support for a Federal tax credit to encourage people to travel 
        or make travel plans by December 31, 2001. Amounts and 
        effective dates to be determined by Congress.
Liquidity
 Payroll tax relief for employers and employees.
 Extension of eligibility for the Small Business 
        Administration's Economic Injury Disaster Relief Program to 
        otherwise qualified small businesses across the country that 
        are unable to meet necessary financial obligations as a result 
        of the September 11th attacks.
 Granting discretionary authority to the SBA Administrator to 
        adjust size standards for eligibility to ensure that firms 
        falling outside the SBA's definition of ``small'' are not 
        inadvertently left behind.
    On a longer-term basis, two additional steps should be taken. 
First, a top priority for the TBR has been the creation of a 
Presidential Advisory Council on Travel and Tourism. We envision the 
Advisory Council, whose members would hail from the public, private and 
non-profit sectors, as the fulcrum for tourism policymaking and 
implementation within the Executive Branch. The Advisory Council should 
be established as quickly as possible. Second, the Federal government, 
in partnership with the private sector, should help finance an 
advertising campaign that promotes the United States as a travel 
destination of choice for the foreign tourist and stimulates greater 
travel within the United States. The TBR strongly believes that such a 
campaign, if properly conceived, can pay substantial dividends in the 
form of increased tourism throughout our country.
    As more governors and mayors speak out about the damaging 
consequences of September 11th for state and local governments, both in 
terms of lost revenues and spiraling unemployment claims, one salient 
truth emerges: Travel and tourism is a nationwide industry whose 
enormous economic presence in all 435 Congressional Districts must not 
be ignored.
    Thank you for giving me this opportunity to share my thoughts with 
you. If you have any questions or suggestions, please contact me 
directly or call Chuck Merin, TBR's Washington representative, at (202) 
530-4829. For your review, I have also attached TBR's membership list 
and a snapshot summary of the devastating impact that September 11th 
has had on our industry.
    Those of us at the TBR wish you every success as you undertake your 
important responsibilities during these difficult times. Our thoughts 
and prayers are with you.
            Sincerely,
                                          Jonathan M. Tisch
                                                           Chairman
Attachments
cc: TBR membership
The Effects of the September 11 Attacks On the U.S. Travel and Tourism 
                                Industry
    Analysts project tourism in the U.S. could drop by nearly one-third 
in the coming months.
    Hundreds of thousands of U.S. airline, hotel and other travel 
industry workers have lost their jobs.
    U.S. airlines are flying with 40 percent to 50 percent of their 
seats empty, even after drastically reducing their scheduled flights.
    Across the U.S., 25 % of conventions and meetings scheduled before 
the end of 2001 have been cancelled.
    Per-room revenue is projected to decline between 3.5 percent and 5 
percent this year--the largest decrease in room revenue in 33 years.
    Hotels could lose $2 billion in room revenue and other associated 
income. Specifically, cities around the country are already 
experiencing tremendous losses:

 In New York, the overall occupancy rate is at 45 percent, 
        where it would normally be at 75 percent, and 3,000 employees 
        have been laid off;
 In Washington, D.C., room occupancy plummeted from 80 percent 
        to less than 20 percent, and experts say more than 50,000 
        hospitality jobs in the region are at risk;
 In Central Florida, many hotels are at less than 25 percent 
        capacity, where they would normally more than 50 percent full;
 In Seattle, where downtown hotels are typically 90 percent 
        occupied in September, occupancy is as low as 30 percent; and
 In Hawaii, where many hotels normally have 80 to 85 percent 
        occupancy, many occupancy rates are at 40 percent or lower.
    Travel agencies are losing an estimated $51 million per day in 
sales.
    Corporate travel is projected to fall by 50 percent by January 
2002.
    One estimate states our economy will decrease by 1.8 percent of 
total GDP, directly resulting in a loss of 1.1 million U.S. jobs.
                               Membership
Larry Alexander Detroit Metro Convention and Visitors Bureau; Steven C. 
Anderson National Restaurant Association; Sean Anderson WH Smith USA 
Travel Research; Richard A. Anderson, Carey International Limousine; 
Adam M. Aron Vail Resorts, Inc.; Gloria Bohan Omega World Travel, Inc.; 
Christopher Bowers United Airlines; Melinda Bush HRW Holdings, LLC; 
Sila M. Calderon Sol, Commonwealth of Puerto Rico; Thomas J. Corcoran 
Jr. FelCor Lodging Trust; Manuel Cortez Las Vegas Convention and 
Visitors Bureau; John F. Davis, III Pegasus Systems, Inc.; Roger J. Dow 
Marriott Lodging; William H. Friesell Diners Club International; 
Michael Gehrisch International Association of Convention and Visitors 
Bureaus; Laurence S. Geller Strategic Hotel Capital Incorporated; Vicki 
Gordon Six Continents Hotels Inc.; Michael W. Gunn American Airlines; 
Bjorn Hanson PhD PricewaterhouseCoopers LLP; Wolf H. Hengst Four 
Seasons Regent Hotels & Resorts; Stephen P. Holmes Cendant; Dieter H. 
Huckestein Hilton Hotels Corporation; Robert E. Juliano Hotel Employee 
and Restaurant Employee International Union; Jacki Kelley, USA Today; 
Thomas A. Kershaw The Hampshire House Corporation; George D. Kirkland 
L.A. Convention & Visitors Bureau; Fred Kleisner Wyndham International; 
Jonathan S. Linen American Express Company; Joseph A. McInerney, 
American Hotel & Lodging Association; David Meyer Business Travel News; 
Sandy Miller Budget Group Inc.; Scott D. Miller Hyatt Hotels 
Corporation; Marc Morial Mayor of New Orleans; Patrick Moscaritolo 
Greater Boston Convention and Visitors Bureau; Curtis Nelson Carlson 
Hospitality Worldwide; Cristyne Nicholas NYC & Company; Howard C. 
Nusbaum, American Resort Development Association; Michael S. Olson CAE 
American Society of Association Executives; William J. Overend The 
Coca-Cola Company; Paul S. Pressler, Walt Disney Attractions; Lalia 
Rach, Center for Hospitality, Tourism & Travel; Barbara J. Richardson, 
Amtrak; John T. Riordan International Council of Shopping Centers; 
Lamar Smith Visa USA, Inc.; Randell A. Smith Smith Travel Research; 
Barry Sternlicht Starwood Hotels & Resorts; Paul Tagliabue National 
Football League; William Talbert Greater Miami Convention & Visitors 
Bureau; Robert S. Taubman, Taubman Centers, Inc.; Jonathan M. Tisch, 
Loews Hotels; Tom Williams, Universal Studios; Scott Yohe, Delta Air 
Lines, Inc.; and Tim Zagat, Zagat Survey, LLC.

    Mr. Stearns. I thank the gentleman.
    Now the distinguished chairman of the full committee, the 
gentleman from Louisiana, Mr. Tauzin.
    Chairman Tauzin. Thank you, Chairman Stearns. Let me thank 
you for holding this important hearing.
    As the committee with primary jurisdiction over travel and 
tourism, it is our job to examine the state of the industry and 
to focus America's attention once again on how critical and 
important this industry is and how much it does for this 
country in terms of jobs and economic effect and balance of 
trade. For the last decade this has been one of the shining 
lights in our balance of trade portfolio. Americans need to 
think about that.
    And I want to welcome the distinguished members joining us 
today, Ms. Berkley of Nevada. You, I know, will excuse me when 
I leave quickly to go downstairs because we are marking up your 
bill on the regulatory reform of the Center for Medicare and 
Medicaid Services in our country. It is a very important bill 
that we are going to try to get to the floor as soon as we can, 
and I want to thank you for working with our committee and not 
only putting together what I think is an excellent package but 
I think making a great difference for all the Medicare and 
Medicaid providers and, most importantly, the patients in 
America who are going to benefit from that very important 
effort you are making.
    I want to welcome Mr. Abercrombie of Hawaii, my dear 
friend, and Mr. Underwood of Guam, my dear friend, from the 
Resources Committee. We worked together daily on areas of 
interest to this committee because we worked together in 
preserving America's great resources on that committee, many of 
which are the things America travels to see and be a part of. 
While we encourage foreign travel, we always remind Americans 
we have got a great country. If you haven't seen it all, you 
are missing out. You ought to see it all before you decide to 
go anywhere else.
    And, of course, Mr. Keller from Florida, who joins Mr. 
Stearns in reminding all of us that if any committee is going 
to put a favorable light upon all the efforts to rejuvenate 
travel and tourism in this country, it is one that is chaired 
by the gentleman from New Orleans and the subcommittee chaired 
by the gentleman from Florida. Of course, New Orleans and 
Florida are great tourists sites.
    And I want to tell my friend from New York I love New York. 
I have a son who works there, and I agree that we ought to 
encourage travel in New York. We ought to rebuild New York. 
That is part of what I think our Nation needs to do, not just 
the great folks in New York.
    But two comments about it. I have never seen New Yorkers be 
more pleasant in all my life, and I want to thank you for all 
the folks in New York for the incredible way in which New York 
is remaking itself.
    And, by the way, that is also true in the airlines in 
America. Travelers are telling us that all the time now. People 
are being nicer to one another. They are paying attention to 
one another a little more, obviously, but they are also being 
nicer to one another. We are seeing a great attitude in travel. 
Travel has never been the easiest because you have got to go 
through the lines and get your baggage checked and there is 
more inconvenience than before, but the bright side is people 
are being nicer and kinder to one another and more caring for 
one another.
    So our country is going through something pretty nice that 
New York is experiencing and travelers are experiencing and in 
the face of all this ugly atrocity and terror at the same time 
our country is refinding--finding again I should say--a part of 
its character and a part of its good side, its good nature, and 
I think that is maybe a plus here.
    Today the Speaker announced, by the way, that we are 
probably going to adjourn session early today and allow a full 
sweep of all the buildings and all the offices to make sure 
that our staff and all the Members and our guests who come here 
to work on important issues like this are safe when they come 
to work in the Capitol. So we are taking this very seriously.
    The incident on the Senate side in Mr. Daschle's office was 
a very profound incident. About 20 people I think have been 
affected by it.
    In yesterday's leadership meeting, Mr. Chairman, I can tell 
you that everyone spoke with a common mind, one, that we were 
going to continue to do our business calmly and responsibly for 
the American people but at the same time we were going to act 
very responsibly to make sure that our staffs and the folks who 
come up here to testify and work with us are assured of their 
safety, just as we are working to make sure that travel and 
tourism is safe again in this country.
    The President was asked about sacrifice as we enter this 
new kind of war against terrorism in the world. He was asked 
what has he asked Americans to sacrifice, and he gave a great 
answer, I think the best answer anyone can give. He said, well, 
what is it if it isn't sacrifice when you lose a part of your 
soul?
    We can't win back everything we lost on September 11. We 
can't win it all back. We did lose a part of our soul. We lost 
something sacred in this country on September 11, and we are 
going to have to fight to bring this country back to a sense of 
itself and sense of security and a sense of peace and calm 
again. But that is all our job, and that is the sacrifice he is 
asking all of us to make.
    He is asking this industry to pick itself up by its 
bootstraps, and he is asking us to help where we can to make 
sure it is revitalized. But he is also asking all Americans I 
think to understand that in our very special, personal way we 
have to win back much of what we lost on September 11, and that 
means going back to business and hugging our children, going 
back to work and doing the things that make our country great 
and special, and part of that is indeed spending time with each 
other, with families and gathering together in special places 
in this country of beauty and calm and places where we can 
entertain and enjoy the incredible blessings that God has 
bestowed upon our country. And so travel and tourism are 
critical parts of that.
    Thank you, ladies and gentleman, for coming from all parts 
of America to remind us of that this morning. Thank you in the 
industry for being with us today. How important you are and how 
important this industry is to the country.
    Most importantly, Mr. Chairman, I think our message today 
is to all Americans that this country will come through this. 
We will be okay as long as every American does his and her 
part. And part of it is just that, experiencing the blessings 
of this great country in the way in which we conduct our lives 
and our businesses and again reminding each other how important 
we all are to one another and renewing that new spirit in New 
York and on the airlines, in the travel houses and destinations 
and the cruise ships and all the different parts and parcels of 
this industry that we are coming back and we are coming back 
strong.
    There is a revitalization going on in the industry. To the 
extent this committee can help, I know the chairman is 
dedicated to doing that and so am I.
    [The prepared statement of Hon. W.J. ``Billy'' Tauzin 
follows:]
 Prepared Statement of Hon. W.J. ``Billy'' Tauzin, Chairman, Committee 
                         on Energy and Commerce
    First, let me thank Chairman Stearns for holding what promises to 
be a very informative hearing this morning on the state of the U.S. 
tourism industry. I also would like to thank the distinguished 
Members--Mrs. Berkley of Nevada, Mr. Abercrombie of Hawaii, Mr. 
Underwood of Guam, and Mr. Keller of Florida--for taking the time to 
come and speak to us on the first panel this morning. We appreciate how 
important this issue is to you and your constituents. And, I welcome 
the industry representatives, who will testify on the second panel. 
Thank you all for participating in this hearing.
    The travel and tourism industry is an important component of the 
American economy that is sometimes under-appreciated. It doesn't grab 
the headlines like the high tech industry does; yet it provides 
millions of jobs and accounts for billions of dollars in services each 
year. The industry directly employs an estimated 8 million workers. It 
accounts for approximately 5% of our nation's Gross Domestic Product. 
And, as one of our largest service exports, it has run a trade surplus 
every year for the past decade. These statistics help underscore just 
how vital this industry is to the American economy and the American way 
of life.
    September 11th significantly effected the travel and tourism 
industry, perhaps more than any other sector of our economy. The 
industry already had been facing many of the same challenges of a 
slowing economy that were confronting other sectors before the attacks. 
However the direct financial impact from the two days of grounded 
flights, and the phase in of flights after that, were just the 
beginning of its problems.
    After flight service resumed, according to numbers recently 
released by the Air Transport Association, one of our witnesses here 
today, passenger loads were cut nearly in half when compared to pre-
September 11th travel. Passengers are slowly returning, but flight 
schedules have been cut back. What had previously been a problem of 
fewer travelers due to concerns about the family budget has been 
compounded by all the caution and worry about travel stemming from the 
attacks--and the whole of the country is experiencing the impact of 
these added concerns.
    The reduction in travel has produced a quick and severe domino 
effect. Hotels, restaurants and entertainment destinations have felt 
the impact, as have the industries that support the tourism industry.
    Although it is difficult to determine how much of this reluctance 
to travel is related to economic concerns and how much is related to 
September 11th, we must address both. The President has developed a 
stimulus package to help aid the slowing economy. The federal 
government has also worked with industry groups to increase security 
and ease public concern. Meanwhile, recent statistics and forecasts 
suggest air travel and the rest of the tourism industry are slowly and 
steadily recovering.
    We will not get back what was lost on September 11th. However, we 
can and must learn from the tragedies. Our response to these events 
will help determine the future of this great country and ensure we 
preserve our way of life as we move forward. I urge those here today 
and others in the industry to keep up the good work strengthening 
confidence in travelers. I also want to let you know that Congress will 
continue to seek to do what is necessary to assist you in those 
efforts.

    Thank you, Mr. Chairman.
    Mr. Stearns. Thank you for your spirited opening statement.
    The gentleman from Louisiana, Mr. John, is recognized for 
an opening statement.
    Mr. John. Thank you, Mr. Chairman. I will be very brief. I 
have a statement that I will enter into the record.
    I want to thank the chairman and also the ranking member, 
Mr. Towns, for holding this important hearing.
    The events of September 11 have adversely, and to 
dimensions that we could never have imagined, affected tourist-
dependent States and obviously the State of Louisiana--the 
great State that I represent is one of those States. It is the 
second largest economy of Louisiana. It employs about 120,000 
people. It is important to our economy.
    Some estimates through the Lieutenant Governor's Office--
which handles all tourism for Louisiana--say that we have lost 
$100 million up to this point in time, and for a State the size 
of Louisiana that is significant. In particular, some of the 
events that have been hardest hit are conventions, corporate 
conventions that come into New Orleans and other cities in our 
great State, and they are very dependent on flying in and 
flying out traffic. I think that type of tourism is very, very 
important, and that has been the sector that has been impacted 
the most.
    But I think that Louisiana has stepped up to the plate. 
Local convention centers and visitors bureaus are committed and 
started a campaign of a million dollars that began I think this 
week trying to get people back to Louisiana under the guise of 
the Louisiana Purchase. So it is important that the State and 
local governments play their role, and they are doing that, and 
I think that shows a commitment of how important this industry 
is to our great State.
    Louisiana is preparing for three very massive events in the 
coming months--the Super Bowl; Mardi Gras, that draws people 
from all over; and if the Saints continue to win, maybe an NFL 
playoff game in the Superdome, which will be great. But I 
believe the economic success of these events, which are really 
the bellwether--they are the golden eggs of our tourist events 
of the whole year. Mardi Gras obviously is something that is 
there annually and the Super Bowl which New Orleans will host 
this year.
    The success of these very major events that are attended by 
people from all over the world I think are going to be 
contingent upon how comfortable and secure we can make 
travelers feel that come not only to New Orleans and Louisiana 
but to other States that are so dependent on tourism. I am very 
comforted that this committee is playing a part to start 
opening the dialog toward that end, and I look forward to the 
testimony from four of my distinguished colleagues that have 
similar situations to the State of Louisiana with Nevada and 
Hawaii and Florida and Guam. I mean, those are very tourism-
dependent States.
    So thank you for holding this hearing, and I look forward 
to the testimony.
    [The prepared statement of Hon. Chris John follows:]
  Prepared Statement of Hon. Chris John, a Representative in Congress 
                      from the State of Louisiana
    Thank you Mr. Chairman, I appreciate the opportunity to comment on 
today's hearing and will be brief with my remarks so that we may 
proceed with our two witness panels.
    Mr. Chairman, the September 11 terrorist attacks have affected 
every tourism-dependent state. In Louisiana, tourism is the second-
largest industry and employs over 120,000 people. It is estimated that 
we have lost $100 million so far as a result of the September 11 
tragedy. In particular, tourism markets in the state that are dependent 
on fly-in and corporate convention business have felt the largest 
impact. The state and our local convention and tourism bureaus have 
responded with a variety of promotions, including a $1 million 
advertising campaign to attract visitors.
    Mr. Chairman, Louisiana is preparing to host two massive events in 
the coming months--the Super Bowl and Mardi Gras--that draw visitors 
from all over the world. The economic success of these events will 
largely be determined by how secure Americans and international 
visitors feel heading into next year. I look forward to the testimony 
of our witnesses here today to help define the role our federal 
government can play in making tourists feel more secure so that we can 
continue to grow America's tourism industry.
    With that Mr. Chairman, I will conclude my remarks by welcoming our 
witnesses and thanking them for their appearance before our 
subcommittee.

    Mr. Stearns. I thank my colleague and recognize the 
gentleman from New Hampshire for an opening statement, Mr. 
Bass.
    Mr. Bass. Thank you, Mr. Chairman. I, too, appreciate this 
hearing, and I would like to lend my support to what I think 
are really great comments by our full committee chairman.
    These are not easy times for any of us and what we are 
going to do this week is going to be quite a bit out of the 
ordinary, but it is going to make working here a lot safer, and 
I think it is the right decision. I also feel that although all 
of us are going to have to make sacrifices and some of them may 
be quite significant, not only will our country, as he said, be 
okay, I think we are going to come out of this experience 
stronger and more vital than ever before because we are unified 
in our objective to root out and end this cancer we call global 
terrorism, state-sponsored terrorism.
    I could be sitting there with you four today because my 
home State of New Hampshire, which has no sales or income tax, 
is obviously very dependent upon revenues it receives from room 
and meals, from business profits and business enterprise taxes. 
We have a flourishing tourist industry right now in foliage 
viewing, and the ski industry is coming up, and then of course 
all the summer activities, and we are probably--I am not sure 
what the statistics are for New Hampshire--having as much 
trouble as any other State in this area.
    Mr. Chairman, I think it might be more appropriate, 
however, for us to make this a field hearing in the four 
localities. I have never been to Guam before. Just to see for 
ourselves.
    Mr. Towns. Will the gentleman yield?
    Mr. Bass. Yes, sir.
    Mr. Towns. I support that.
    Mr. Abercrombie. Mr. Chairman, you have to come through 
Hawaii in order to hit Guam.
    Mr. Bass. All I can say, I was on an important mission with 
you once and you wanted to stop in Iceland on the way home 
because you figured that nobody in Hawaii would worry if they 
knew you had stopped in Iceland.
    But this is an important issue and in my home State it 
ripples down through all kinds of different industries, through 
every town and city. I am looking forward to hearing the 
testimony you bring forward today and hope that if there is any 
role for Congress to play in revitalizing tourism that we will 
be leading the way from this subcommittee in reaching that 
objective, and I yield back.
    Mr. Stearns. I thank the gentleman.
    [Additional statements submitted for the record follow:]
 Prepared Statement of Hon. John Shadegg, a Representative in Congress 
                       from the State of Arizona
    I want to thank the Chairman for holding this important hearing.
    As America moves forward following the unspeakable terrorist 
attacks of September 11th Congress is considering ways to help our 
economy recover. Talk has centered on an economic stimulus package that 
focuses on pro-growth policies that keep and create jobs. As one 
element of that package we should include legislation that will jump-
start the ailing travel and tourism industry.
    No sector of our economy has been more damaged. And, few industries 
in our country have such far-reaching impact on the U.S. economy as 
travel and tourism. In fact, it is America's third largest retail 
industry with $582 billion of total expenditures, generating nearly 
$100 billion in tax revenue for local, state, and federal governments. 
Without this revenue, each U.S. household would need to pay an 
additional $964 in total taxes.
    The catastrophic events of September 11th have had a 
disproportionately negative impact on the U.S. travel and tourism 
industry. Not only have airline, hotel, car rental, restaurant, and 
other travel and tourism businesses suffered, but the attacks have had 
a dramatic ripple effect that has damaged businesses only indirectly 
related to the travel and tourism industry.
    We need to get Americans traveling again. That is why I, along with 
my colleague, Mr. Abercrombie, have introduced H.R. 3041, the Travel 
America Now Act.
    The incentive is simple and modest. It will encourage Americans to 
resume recreational travel and tourism, as well as provide a much-
needed stimulus to the entire American economy. It would provide a $500 
tax credit per person ($1,000 for a couple filing jointly) for personal 
travel expenses for travel originating and taken within the U.S.
    The tax credit would cover travel expenses associated with personal 
automobiles, airplane, cruise, train, and bus tickets; hotel and motel 
accommodations; restaurant meals; and rental cars. It would also 
restore full deductibility for business entertainment expenses, 
including meals, that are now subject to a 50 percent limitation. In 
addition, the measure expands (from two years to five years) the 
``carry back'' period to allow travel-related businesses to 
retroactively apply post-September 11th losses against tax liabilities 
incurred in previous years.
    Every tax paying American can take advantage of this incentive 
provided: (1) the travel is taken, or paid for, after the date of 
enactment of the legislation and before the end of the year: (2) he or 
she travels at least 100 miles from his or her residence, and (3) his 
or her trip involves an overnight stay at a commercial lodging 
facility.
    The goal of an economic stimulus should be job preservation and 
creation, and there is no better stimulus than one directed at the 
travel and tourism industry. It is one of America's largest employers--
7.8 are million people directly employed and 11.5 are million 
indirectly employed in the U.S. travel and tourism industry (19 million 
total jobs amounts to one out of every seven people employed in the 
U.S. civilian labor force).
    While there are some media reports that the industry is coming 
back, these stories are misleading. Travel and tourism is far from pre-
September 11th levels. Thousands of baggage handlers, cab, limousine 
and shuttle bus drivers, hotel maids, bellhops, industrial laundry 
workers, airplane manufacturing employees, flight attendants, pilots 
and countless others have lost their jobs. An extension of unemployment 
benefits, even with supplemental healthcare, will not get these people 
their jobs back. Virtually every business in this sector is reducing 
staff and operating at restricted levels merely to stay afloat.
    For instance, as of October 5th the nation's airlines have cut 
nearly a 100,000 jobs, slashed flights by 20 percent and even those are 
one-third empty. Hotel occupancy is 30 percent below normal levels, and 
the highly popular Smithsonian Museums, which usually get 70,000 
visitors a week, are down to 32,000.
    The downturn in the travel and tourism industry is having a domino 
effect on other economic sectors and in some cases has come full 
circle. Take for example Joe Barner, a beverage manager for a catering 
company in Florida. Shortly after the attacks he was warned that the 
company was cutting hours and pay for managers for ``the good of the 
company.'' But, a week later he lost his job, even though October 
business was promising.
    Though Mr. Barner is looking for another job in the hospitality 
business, he's worried that the slowdown in tourism will narrow or 
eliminate his prospects. Preparing for the long haul, he cancelled his 
newspaper, pared back his cable service and traded in his car for lower 
payments on the same day he was laid off. And, he might not be able to 
enjoy one luxury he has already paid for--tickets to a football game in 
Wisconsin--because he and his wife can't afford to travel.
    The TAN Act would help people like Joe Barner and serve as a timely 
response to the job losses and business downturn affecting millions of 
working families in every part of the country.
    As a complement to the enhanced safety measures that are being 
implemented, Congress should include in the economic stimulus package a 
temporary incentive to travel. It would be an important step to help 
maintain a vibrant travel and tourism industry, keep working people 
working, and stimulate economic growth.
    Once again, Mr. Chairman, I commend you for holding this hearing 
and sincerely hope that we come to some real conclusions.
                                 ______
                                 
Prepared Statement of Hon. Ed Bryant, a Representative in Congress from 
                         the State of Tennessee
    The September 11th tragedies have had an impact on many various 
sectors of our nation's economy.
    However, the effect of the attacks on the United States tourism 
industry has been particularly strong. For weeks following September 
11th, I didn't see one constituent darken the door of my Washington, DC 
office.
    The impact of the 11th on the tourism industry has been felt at 
home in my district in Tennessee as well.
    As you all know Memphis is the birthplace of rock and roll and the 
home of the blues--we have Elvis, Graceland, Beale Street, and the 
mighty Mississippi River.
    It is no wonder that the city's second greatest industry is 
tourism. Elvis impersonators obviously aren't the only people who flock 
to Memphis. Many others from this country and from around the world 
visit Memphis every year.
    However, since the eleventh, tourism revenue has dropped 
significantly.
    The Memphis Convention and Visitors Bureau estimates that the city 
has lost about $20 million in economic impact from tourism revenues. 
With hotel occupancy levels in Memphis down 14.8%, it is reported that 
these hotels have lost about $1 million a week in room revenues.
    I look forward to hearing from our panelists today. It is important 
to look at the changes that have occurred in our nation's economy and 
try to distinguish how much is a result of the attacks on the 11th and 
how much is a part of the economic downturn that we were experiencing 
prior to the 11th.
    I believe President Bush has done a good job renewing Americans' 
confidence in flying.
    The President has strengthened security at our airports in the 
short term and we are working with the President on legislation to make 
permanent changes in this area. I look forward to hearing from our 
witnesses today on how these changes have made Americans more secure 
about flying.
    I also would like to hear from you about any recommendations you 
may have for federal involvement and more specifically suggestions for 
ways that this committee can be of assistance.
    Finally, I thank the witnesses for coming today and I thank the 
chairman for holding this important hearing.
                                 ______
                                 
Prepared Statement of Hon. Lee Terry, a Representative in Congress from 
                         the State of Nebraska
    As the representative of Omaha, I take great pride on behalf of the 
city in recognizing outstanding businesses that are friends of the 
community. Marriott Hotels is one such friend, and a loyal one at that. 
Many of us in this room have reserved rooms at a Marriott Hotel 
recently; we did so by calling the Marriott Reservation Center, 
headquartered in Omaha, Nebraska. Marriott is an important player in 
the Omaha economy, employing hundreds of hardworking Nebraskans and 
contributing heavily to the community by way of product donations, 
employee volunteerism, and financial contributions for community 
projects. It can be honestly said that without Marriott's presence in 
the Omaha community, the city would not be as enjoyable of a place to 
live.
    Recently, the City of Omaha broke ground on a new convention 
center, which will house, among other things, a hotel that will be a 
central component of the building. With my deepest regrets, the 
contract was awarded to a Marriott competitor. It was an ugly battle, 
filled with questionable politics that filled the local paper's front 
page. It is not a decision of which the people of Omaha should be 
proud, and were I still an Omaha City Councilman instead of a U.S. 
Congressman, I hope the decision would have gone the other way.
    Nevertheless, Mr. Marriott, you can be certain that the people of 
my district hold a few things close to their hearts: Nebraska football, 
Offutt Air Force Base, and Marriott Hotels. No matter what hotel's name 
is atop our city's convention center, I join many Omahans when I say 
that Marriott is my hotel of choice.

    Mr. Stearns. At this point, we will take the opening 
statements from our colleagues. We will start with 
Congresswoman Shelley Berkley from the First District of 
Nevada.
    Your opening statements will all be made is the part of the 
record. We are trying to keep it under 5 minutes. We have eight 
witnesses on the second panel, but we thought it was important 
to hear from you firsthand, so we welcome you for your opening 
statement.

     STATEMENT OF HON. SHELLEY BERKLEY, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF NEVADA

    Ms. Berkley. Thank you very much, Mr. Chairman and Ranking 
Member Towns, for holding this very important hearing today.
    I just returned from New York City, and I can't encourage 
people to go there more than you. I had a wonderful time. The 
atmosphere is terrific. People are very enthusiastic, and they 
want tourists to come and see New York.
    But after they go to New York, I can't encourage them 
enough to come to Vegas. Because not only when you come to 
Vegas can you see Paris, Venice, the Roman Empire, Egypt, New 
Orleans, the Middle Ages, you could also see New York, New York 
as well. While I can't offer a World Series, I can certainly 
offer great shows, great restaurants and wholesome family 
entertainment.
    Tourism is the No. 1 industry in the Las Vegas Valley. 
Tourism drives the economic train of my community. People's 
livelihood depend on it. Indeed, the entire community depends 
on one industry. That is all we have. The effects of the 
September 11 attacks have been devastating on Las Vegas.
    Before September 11, the Las Vegas economy was one of the 
strongest in the Nation. You have all heard me brag about it 
since I came to Congress. Unemployment was virtually 
nonexistent. Smaller businesses were flourishing, and millions 
of people were visiting. Last year, 38 million people visited 
southern Nevada.
    Now, Las Vegas is experiencing economic upheaval. A week 
after the attacks, hotel occupancy rates dropped from 100 
percent to nearly 40 percent; and 240 conventions were canceled 
immediately. While the weekend hotel occupancy rates have 
improved, the midweek rates remain terribly depressed, and my 
district will likely lose 20 percent of its convention business 
in the coming months. Revenues from casino entertainment, 
shopping, showrooms, lodging and dining have plunged. The 
hotels have laid off more than 15,000 workers and reduced the 
hours, often voluntarily by the workers, for many, many more. 
For each displaced hotel worker another worker is laid off in a 
related industry. Unemployment, which was virtually nonexistent 
before September 11, has now reached 7 percent and rising.
    Last week, I hosted two displaced hospitality workers--and 
``displaced'' is the nice word for saying they don't have a 
job. Jewel Jackson and Lucy Cedeno told their stories.
    Jewel is a single mother of two teen-aged girls. She worked 
at the Four Seasons Hotel as a laundry valet worker and was 
laid off 2 days after the attack--2 days. Her unemployment 
benefits amount to $243 a week. Her rent alone is $739 per 
month. When her electric and food bills are included, her 
monthly expenses amount to more than $1,100. This does not 
include health care, clothes for herself and her children, and 
other daily expenses.
    She told the panel that she just doesn't know what she is 
going to do now. She is looking for a job but so is everybody 
else, and we don't have another industry where she could be 
retained to go to work.
    Lucy Cedeno and her husband have both been laid off by the 
hotel industry. In my town most people are working in the 
hotels; and if there are two breadwinners in the family, they 
are both working in the hotels.
    When both women were asked what they needed the most, both 
emphatically stated that the health insurance was the most 
important. They are scared to death.
    Las Vegas was one of the best metropolitan areas to start a 
new business. However, at this point, small businesses 
throughout southern Nevada are experiencing a dramatic decline 
in business. One third of small companies cited a decrease in 
business of a minimum of 25 percent in the last month. These 
businesses are being forced to take drastic measures such as 
hiring freezes, delaying payments to vendors, which of course 
has a terrible ripple effect, and laying off workers. If the 
current situation continues, businesses will close and 
unemployment will go up dramatically.
    Congress must move quickly on legislation to turn the 
economic tide. We must extend unemployment compensation and 
COBRA. Health insurance is the workers' biggest worry. It can 
cost up to $500 a month for health insurance for families. 
Small businesses that have experienced losses as a result of 
the attacks must receive relief.
    General aviation businesses have lost revenue while 
grounded by the FAA. Air tour operating companies in Las Vegas 
have experienced losses ranging from $25,000 to $700,000 as a 
result of airport closures. Small Business Administration loans 
should be expanded to help businesses in areas hard hit by the 
ripple effect of September 11.
    Full deductibility--and I can't emphasize this enough. My 
workers want it. My casinos want it. My restaurants want it. 
Full deductibility for business meals must be included in the 
economic stimulus package. Allowing for full deductibility of 
business meals will encourage business to increase travel by 
making travel less expensive. A business meals tax deduction 
benefits the entire economy.
    Confidence in air travel must be restored. Forty-six--not 
55 percent but 46 percent of Las Vegas tourist business arrives 
by air.
    The Senate has overwhelmingly passed a security package. I 
implore the House to do the same. We can talk about confidence. 
We can talk about people going their own way and enjoying their 
lives as they did before September 11. They are scared to death 
to get on a plane, and it is getting worse instead of better. 
Serious consideration should be given to a $500 tax credit for 
people traveling within North America. This credit would give 
people an incentive to get back on the planes, trains and in 
cars to travel.
    I urge quick passage of legislation that will enable areas 
such as Vegas to rebound, putting people back to work and 
restoring the economic health of our country with vast and 
expanding unemployment. How are we going to restore consumer 
confidence? They can have all the confidence in the world. If 
they haven't got any money to spend, they are not going to be 
in the stores; and we have got, needless to say, a big shopping 
time coming up with the holidays. I urge us to move as quickly 
as possible on this package.
    Thank you, Mr. Chairman.
    [The prepared statement of Hon. Shelley Berkley follows:]
    Prepared Statement of Hon. Shelley Berkley, a Representative in 
                   Congress from the State of Nevada
    Thank you, Mr. Chairman and Ranking Member Towns for holding this 
very important hearing today. Tourism is the Number 1 industry in the 
Las Vegas Valley. Tourism drives the economic engine of my community. 
People's livelihoods depend on it.
    The effects of the September 11th attacks have been devastating on 
Las Vegas. Before September 11th, the Las Vegas economy was one of the 
strongest in the nation. Unemployment was low, small businesses were 
flourishing and millions of people were visiting. Last year, 38 million 
people visited southern Nevada. Now, Las Vegas is experiencing economic 
upheaval.
    A week after the attacks, the hotel occupancy rates dropped from 
100 percent to nearly 40 percent and 240 conventions canceled. While 
the weekend hotel occupancy rates have improved, the midweek rates 
remain depressed. And, my district will likely lose 20% of its 
convention business in coming months. Revenues from casino 
entertainment, shopping, showrooms, lodging and dining have all 
plunged.
    The hotels have laid off 15,000 workers and reduced the hours for 
many more. For each displaced hotel worker, another worker is laid off 
in a related industry. Unemployment has reached 7 percent. Before 
September 11th, this rate was just 4.8 percent.
    Last week, I hosted two displaced hospitality workers from Nevada. 
Jewel Jackson and Lucy Cedeno told their stories to a House panel. 
Jewel is a single mother of two teenaged girls. She worked at the Four 
Seasons Hotel as a laundry valet worker and was laid off two days after 
the attack. Her unemployment benefits amount to $243 per week. Her rent 
alone is $739 per month. When her electric and food bills are included, 
her monthly expenses amount to more than $1,100. This does not include 
health care, clothes for herself and her children and other daily 
expenses. She told the panel that she just doesn't know what she is 
going to do now. She is looking for a job, but there is not much out 
there now.
    Lucy Cedeno and her husband have both been laid off by the hotel 
industry. When both women were asked what they needed, both 
emphatically stated that health insurance was the most important.
    Las Vegas was one of the best metropolitan areas to start a new 
business. However, at this point, small businesses throughout southern 
Nevada are experiencing a decline in business. One third of small 
companies cited a decrease in business of 25 percent. These businesses 
are being forced to take drastic measures such as hiring freezes, 
delaying payments to vendors and laying off workers. If the current 
situation continues, businesses will close and unemployment will go up 
dramatically.
    Congress must move quickly on legislation to turn the economic 
tide. We must extend unemployment compensation and COBRA. Health 
insurance is the workers' biggest worry. It can cost upward of $500 per 
person per month. Displaced workers collecting only unemployment 
insurance cannot afford these costs and still pay for other 
necessities.
    Small businesses that have experienced losses as a result of the 
attacks must receive relief. General aviation businesses have lost 
revenue while grounded by the Federal Aviation Administration. Air tour 
operating companies in Las Vegas have experienced losses ranging from 
$25,000 up to $700,000 as a result of airport closures. Small Business 
Administration loans should be expanded to help businesses in areas hit 
hard by the ripple effect of September 11th.
    Full deductibility for business meals must be included in the 
economic stimulus package. Allowing for full deductibility of business 
meals would encourage business to increase travel by making travel less 
expensive. A business meal deduction benefits the entire economy.
     Confidence in air travel must be restored. 46 percent of Las 
Vegas' tourists arrive by air. The Senate has overwhelmingly passed its 
security package. I implore the House to do the same.
    Serious consideration should be given to a $500 tax credit for 
people traveling within North America. This credit would give people an 
incentive to get back on planes, trains and in cars and travel.
    I urge quick passage of legislation that will enable areas such as 
Las Vegas to rebound, putting people back to work and restoring the 
economic health of our country.

    Mr. Stearns. I thank my colleague.
    The gentleman from Hawaii Congressman, Neil Abercrombie.

    STATEMENT OF HON. NEIL ABERCROMBIE, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF HAWAII

    Mr. Abercrombie. Thank you, Mr. Chairman.
    I will in fact submit a statement.
    I would like as well, Mr. Chairman, in conjunction with 
what I am about to say, to submit--I have got a bunch of copies 
here which actually, if I can get some help from the staff, I 
would like to pass along to you right at this moment.
    Some of you maybe didn't have an opportunity to see the 
paper this morning. The headline here is, United Chief Says 
Head Airline Could Fail. The Chairman of United Airlines has 
sent a letter to company employees yesterday warning the 
carrier will perish sometime next year--that is a direct 
quote--unless it stops the financial losses that have 
accelerated dramatically since the September 11 terrorist 
attack.
    Mr. Chairman, I want to follow up on what Shelley had to 
say by starting out a little by stating the obvious. Everybody 
has a story here, but I think it is important to establish this 
perspective for what I have to say that follows.
    Tourism obviously, in Hawaii, it is more than a third of 
our income. We are affected by international travel as well--
not just going out, coming in. New York City, New Orleans, 
wherever it happens to be, Florida, I am sure you do a 
tremendous amount of business. Mr. Keller, I know, does a 
tremendous amount of business in Orlando from international 
travel.
    Our international travel is down 47 percent right now, and 
it has a tremendous effect immediately on the bottom line, on 
the immediate bottom line for us. This was--it is now 47 
percent. That is an improvement for what it was the rest of the 
September, which was 78 percent. You just cannot continue to do 
business under these circumstances when you are taking that 
kind of a hit. Some of the hotels are reporting they are only 
down 20 percent or 40 percent in terms of their occupancy. That 
is because they closed down whole sections of buildings and 
simply laid people off.
    In Hawaii last week things are improving in the headlines 
of the newspaper because we only have 3,600 people applying for 
unemployment when it was 5,000 2 weeks previous. That is an 
improvement for us simply because the numbers are going down.
    I will be speaking shortly about the bill that Mr. Kyl and 
Mr. Miller and Mr. Shadegg and myself have on the $500 tax 
credit. You can get from New York to Hawaii for $400 round 
trip. That is one of the reasons that United is having the 
trouble. And, you know, I see people smiling and saying that 
sounds good, let us go. You have to have a job and confidence 
to do it. But they are not going to make money with that. They 
simply can't keep up that kind of a so-called bargain, 8 full 
package days from San Francisco for $359. I mean, that is how 
desperate we are trying to get people out there.
    The Los Angeles Times has a story here: Hawaii takes a big 
hit waiting for tourists to come flying back. These are two 
kids from the Hilton Hawaiian Village Hotel down in my district 
with their two children there. Between them they make good 
money. I have always been a big fan of the tourist industry 
because it does give people an opportunity, men and women. 
There is no glass ceiling in this industry. You produce, you 
compete, you can rise in it. They make $60,000 between them, 
$60,000 income between them. They are both out of work.
    It isn't so much whether people are doing all right at the 
end of the month. It is what happens 45 days from now. They 
have got mortgage payments to make and bills to pay. They can't 
go out Christmas shopping.
    And one of the great things about being a Member of 
Congress, as opposed to--you know, Mr. Greenspan is speaking 
somewhere on the Hill today. That is great for him. Greenspan 
will have a paycheck at the end of the month. Greenspan will 
have a paycheck next month and the month after, and when he 
retires he is not worried about whether he and his family are 
going to be able to take care of themselves and pay their 
bills.
    These folks and our folks--one of the things about being a 
Member of Congress, we add votes up one at a time here and one 
at a time at home. If there is anybody in the country that 
understands what it is, it is the Members of the House of the 
Representatives. As my wife says to me all the time, you don't 
get elected every 2 years. It is every other year. We have to 
renew our licenses every other year. If there is anybody in 
this country that understands what individual pain is all about 
and what individual problems are that need solutions, it is the 
Members of the House of Representatives.
    So I am very happy to be here in that sense, Mr. Chairman, 
today because I know that you and the members of your committee 
can help us with that. And I want to get directly to what that 
is. We have got to take up the question of legislation. It is 
one thing to try to save the airlines, and we have tried to do 
that. It is another thing to try to get confidence in air 
safety, and we are struggling with that, and I know you are 
working on it. But then we have to get legislation that get 
these tax credits going, that will get the spousal travel back 
into effect and will allow for business net operating loss 
carry-backs to come in.
    If we put that combination in and you can prevail upon Mr. 
Thomas and the leadership and we can in the Democratic Caucus 
to come in with a travel and tourism package that is going to 
address individual families in this country, then we can 
succeed. Absent that, I think we are going to face a worse 
crisis 45 or 60 or 90 days from now than we could prevent if we 
take action now. That is why your hearing today is vitally 
important, and we are very grateful to you for it.
    Thank you, Mr. Chairman, and aloha.
    [The prepared statement of Hon. Neil Abercrombie and the 
article follow:]
   Prepared Statement of Hon. Neil Abercrombie, a Representative in 
                   Congress from the State of Hawaii
    Chairman Stearns, Ranking Democrat Towns and Members of the 
Subcommittee: Thank you very much for affording me the opportunity to 
testify before you here today on the state of the travel and tourism 
industry. As you well know, it is not a pretty picture. The toll of the 
terrorist attacks continues, not just in New York and here in 
Washington but across the nation, much to the undoubted satisfaction of 
the attackers. I hope to be able to give you a clearer picture of the 
industry's condition and some solutions.
    Hawaii is one of the most desirable tourist destinations in the 
world. While it has delivered economic blessings, it is also highly 
vulnerable to disruption. Tourism now dwarfs all other sectors of our 
economy. Over $12.0 billion in revenue comes to Hawaii through travel 
and tourism, 25% of the state economy, according to the Bank of Hawaii.
    When a downturn occurs, it has a serious and immediate impact, as 
is the case today. As of October 14, international arrivals have 
declined 47%, and the key Japanese arrivals have declined 36%. Arrivals 
from the mainland have declined``only'' 20%. These figures, as bad as 
they are, represent improvements from late September when international 
travel was down by 78%.
    The Hawaii Hotel Association reported lately that hotel occupancy 
is down 40% in up market resort areas, such as Waikiki Beach which I 
represent and the Kona-Kohala area on the Big Island of Hawaii.
    Hawaii's travel and tourism industry is responding. You can find 
round-trip airline tickets from New York to Hawaii for $400. From Los 
Angeles or San Francisco, you can get an eight day Hawaii vacation, 
including hotel, airfare and most expenses for $359 per person.
    But good deals are not worth a nickel if people do not get on 
airplanes to go places, whether Hawaii, Orlando, Las Vegas, New 
Orleans, Chicago or New York. It takes people willing and confident to 
travel by air to occupy the hotels, attend the theater, fill the 
restaurants, take the cabs and tip the waitresses, the sky caps, the 
doormen and the hotel maid service. While Hawaii is an integral part of 
the United States, there are no alternatives to getting there other 
than flying.
    That makes apparent the fundamental and most important steps we in 
Congress can take: making air travel safe, and communicating air travel 
security to the public. Nothing short of re-establishing that 
confidence will succeed in getting the industry hardest hit by the 
terrorist attacks back on its feet.
    We've gotten assistance quickly and generously to the airlines. Now 
Congress must put two more legs on the three-leg stool. We must move 
equal speed to pass airplane and airport safety and security laws. 
Although I favor federalizing the baggage checking and security system, 
I am open to other solutions if they can provide comparable protection. 
If it requires National Guard troops in the interim, this is a 
legitimate use of personnel in a national emergency. Clearly, trained 
security personnel must be put on board and airline employees, flight 
attendants and pilots given appropriate equipment and training. Cockpit 
safety is essential. Although these may seem elementary steps, they 
must be accomplished and we're not there yet.
    After assuring essential safety and security, there must to be a 
stimulus or incentive to encourage people to travel. There are a number 
of proposals that have been brought forth, but having been a proponent 
of the travel industry since elected to Congress eleven years ago, I'd 
like to focus on a couple of ideas that would succeed in boosting 
travel.
    First, Congressman John Shadegg and I have introduced the Travel 
American Now Act (H.R. 3041) in response to the crisis. It consists of 
a temporary income tax credit of $500 for Americans to travel by plane, 
train, bus or auto to destinations at least 100 miles from home. 
Reasonable expenses, such as meals, lodging, entertainment and 
recreation within the U.S. would qualify for this credit for expenses 
between enactment and December 31 of this year. Group tour fees and 
agent fees would be covered.
    Another provision would allow a 100 percent business meals and 
entertainment deduction through December 31. Some have projected that 
business travel has been the hardest hit segment of the industry, 
especially with some sectors of the economy clearly softening before 
September 11. This would help get business travelers back moving 
throughout the country.
    Lastly, it would allow Net Operating Loss carryback for taxes paid 
by travel-related industries adversely affected by the attacks for an 
additional 3 years. Companies that were profitable before September 11 
would be able to recover at least some of their losses.
    Separate from H.R. 3041, I have introduced legislation in each of 
the last Congresses to re-establish the spousal business travel 
deduction, allowing a spouse who materially participates in business 
activities to claim a legitimate business-associated deduction. This 
will greatly help tour packagers to offer even more attractive 
combinations of air fares, lodging, meals and other travel-related 
items. Not only will this encourage individuals businesspersons to 
travel, but it will be a great boost to convention and trade show 
destinations. It is pro-family, encouraging spouses to travel together, 
and will often allow them, perhaps with children, to spend an extra day 
or two at their destination.
    And speaking of families and children, the real tragedy of the 
results of the terrorist attacks has been hundreds of thousands of jobs 
lost, and many more working people have had work levels and hours 
reduced. The impact on hundreds of thousands of American's families is 
only now being felt. For many, there are little or no financial 
reserves, and people could be homeless in Hawaii in another 4 weeks. 
Unemployment compensation pays only a fraction of normal expenses. 
These benefits are less than rent and mortgages, and they does not 
count food, medicine and utilities. Congress must act speedily to 
increase and extend unemployment compensation. Even though it is only a 
temporary and inadequate cushion, it is better than no safety net at 
all.
    A portion of the COBRA health insurance benefits premiums should be 
provided. Currently, an unemployed person must pay 102 percent of the 
costs. Job training needs to be provided to those permanently affected. 
Employers should assure full benefits and seniority be provided to 
those who return to work.
    Chairman Stearns, these are practical, attainable and effective 
measures we can move on quickly. I have spoken to the House leadership 
on these matters in an effort to move them forward. I very much 
encourage you and the members of the Commerce Committee to do so as a 
result of the testimony you have solicited and receive today. I am 
encouraged by your attention to the crisis in the industry that is so 
vital to Hawaii and my constituents, as well as to millions of others 
in the industry across American. This is one of the perhaps few actions 
taken since September 11 that have the potential for reviving this 
industry.
                                 ______
                                 

           [Wednesday, October 17, 2001--The Washington Post]

                  United Chief Says Airline Could Fail
             By Frank Swoboda, Washington Post Staff Writer
    The chairman of United Airlines sent a letter to Company employees 
yesterday warning that the carrier ``will perish sometime next year'' 
unless it stops the financial losses that have accelerated dramatically 
since the Sept. 11 terrorist attacks.
    ``Today, we are literally hemorrhaging money,'' James Goodwin wrote 
in the letter. ``Clearly this bleeding has to be stopped--and soon--or 
United will perish sometime next year.''
    United would not comment on the letter, but a source at the airline 
confirmed it and said it had gone to the company mailroom to be sent to 
the airline's 100,000 employees.
    The letter's existence and contents were first reported yesterday 
on the Web site of Air Transport World, a monthly trade publication.
    Some analysts have projected that United, the nation's second-
largest airline, could lose more than $1 billion this quarter. United 
had been experiencing heavy losses even before the attacks because of a 
sharp drop in business travel and labor problems.
    United, US Airways, America West and possibly Continental are 
generally regarded as being in the most precarious financial positions, 
all for different reasons. United is heavily dependent on business 
travel, which fell off at the beginning of the year and hasn't come 
back. Southwest and Delta are financially strongest among the major 
airlines.
    Company officials would not speculate on whether Goodwin's letter 
might be part of a campaign to pressure its unions into a new round of 
contract concessions.
    The fourth quarter is expected to be significantly worse for almost 
all the airlines than the quarter just ended--which is projected to be 
the third-worst in industry history.
    Michael Linenberg, an airline analyst for Merrill Lynch & Co., 
predicted yesterday that the industry would lose $2.1 billion in the 
third quarter and $3.5 billion in the fourth quarter. The largest 
quarterly loss ever for the airline industry was $3.7 billion in the 
fourth quarter of 1990.
    Glenn Engel, an analyst for Goldman Sachs Group Inc., said he would 
be ``shocked if United perishes a year from now,'' according to the 
Associated Press. But another analyst, Helane Becker of the Buckingham 
Research Group, said Goodwin's scenario rings true for United and 
probably every major U.S. airline. ``The numbers they're going to 
report in this quarter are going to be ridiculously horrible,'' she 
said.
    Since terrorist hijackers attacked the Pentagon and the World Trade 
Center, passengers have been staying away from the airlines by the 
thousands. Those who are flying are mostly being lured by low fares 
that the airlines cannot afford to continue indefinitely. Although 
several airlines have reported that the number of passengers on their 
flights has increased recently, since dropping off dramatically after 
the attacks, the financial yields--the revenue--from each ticket sale 
has dropped significantly, according to industry officials.
    Almost all the airlines have cut flights, some by as much as 23 
percent, since the attacks. United has already announced plans to cut 
20,000 workers.
    In his letter, Goodwin said: ``Before September 11 we were not in a 
comfortable financial state, with costs exceeding our revenue on a 
daily basis. Today the situation is exacerbated with costs exceeding 
revenues four times the pre-September 11 rate.''
    Goodwin said that in the aftermath of the attacks ``we are in 
nothing less than a fight for our life.'' He added: ``Never in our 75-
year history have we faced an economic challenge of this magnitude, 
when the drop-off in air travel has been so unexpected and prolonged. 
In the past we struggled to make a profit. Now we're in a struggle just 
to survive.''

    Mr. Stearns. Thank you.
    I welcome my colleague from Florida, the congressman from 
Orlando, Mr. Ric Keller.

   STATEMENT OF HON. RIC KELLER, A REPRESENTATIVE IN CONGRESS 
                   FROM THE STATE OF FLORIDA

    Mr. Keller. Good morning, and I want to thank you, Chairman 
Stearns, and the other subcommittee members for allowing me to 
brief you today.
    I can tell from looking at some of the empty chairs that 
one of you must have leaked the word that I would be speaking 
today.
    I represent Orlando, Florida, the world's No. 1 tourist 
destination, and I can tell you that we have been uniquely 
impacted by the events of September 11. Specifically, because 
people are afraid to fly, our tourism-based economy has been 
devastated. It has hurt us in two ways, in terms of job losses 
and decreased local tax revenues.
    First, I will address the issue of job losses. One in four 
people in my district is employed by the tourism industry. I 
have personally spoken with theme park workers, hotel workers, 
convention workers and cabdrivers that have lost their jobs. 
From September 12 until today, there has been a 55 percent 
increase in the number of daily unemployment claims, and the 
majority of these unemployed workers are linked to tourism.
    Following the terrorist attacks of September 11, the 
Governor of Florida conducted an industry-wide survey to 
estimate the economic impact on tourism-related businesses in 
Florida, and let me tell you what the survey indicated.
    Hotel occupancy rates, which normally average about 75 
percent this time of year, are only 40 percent.
    Florida's major tourist attractions experienced a 50 to 70 
percent drop in attendance.
    Rental car companies have seen a 50 percent drop in 
business.
    Airlines had to lay off thousands of employees as a result 
of plane loads averaging only 35 percent of capacity in the 
period after September 11. The lack of passengers traveling to 
Florida will continue to impact tourism since over 50 percent 
of all tourists arrive in Florida by air.
    The second way the tourist attacks have impacted central 
Florida is by a dramatic decrease in local tax revenues. Since 
Florida does not have a State income tax, we are dependent in 
large part upon sales tax revenues to fund our government. In 
fact, visitors generated approximately 48 percent of the $1.5 
billion in sales tax collected in Orange County in 2000. 
Without these tourist tax revenues, every household in Orange 
County would have to pay an additional $551 a year in taxes to 
receive the same level of service they currently enjoy.
    I believe that increased consumer spending on travel and 
tourism is absolutely critical to revitalizing central 
Florida's tourism-based economy. For this reason, I strongly 
support giving travelers a $500 tax credit if they book a trip 
before December 31, 2001. This $500 tax credit is also 
supported by major employers in my district, tourism leaders 
and our local political leaders. In fact, in just a few minutes 
you will hear directly from one of our major employers. Mr. 
Fred Lounsberry is the senior executive with Universal Studios. 
You will hear directly from him.
    I want to conclude by thanking the committee again for 
giving me the opportunity to brief you on the state of the 
tourism industry in central Florida. Thanks.
    [The prepared statement of Hon. Ric Keller follows:]
  Prepared Statement of Hon. Ric Keller, a Representative in Congress 
                       from the State of Florida
    I want to thank Chairman Cliff Stearns and the Subcommittee members 
for allowing me to brief you today.
    I represent Orlando, Florida--the world's number one tourist 
destination--and I can tell you that we've been uniquely impacted by 
the events of September 11th.
    Specifically, because people have been afraid to fly, our tourism-
based economy has been devastated. It's hurt us both in terms of job 
losses and decreased local tax revenues.
    First, I'll address the issue of job losses. One in four people in 
my district are employed by the tourism industry.
    I have personally spoken with theme park workers, hotel workers, 
convention workers, and cab drivers that have lost their jobs. From 
September 12th, until today, there has been a 55% increase in the 
number of daily unemployment claims. The majority of these unemployed 
workers are linked to tourism.
    Following the terrorist attacks of September 11th, the Governor of 
Florida's Office of Tourism and Economic Development conducted an 
industry wide survey to estimate the economic impact on tourism related 
businesses in Florida. The survey indicated:

 Hotel occupancy rates, which normally average about 75% this 
        time of year, are only 40%.
 Florida's major tourist attractions experienced a 50% to 70% 
        drop in attendance.
 Rental car companies have seen a 50% drop in business.
 Airlines have had to layoff thousands of employees as a result 
        of planeloads averaging only 35% of capacity in the initial 
        period after September 11th. The lack of passengers traveling 
        to Florida will continue to impact tourism since over 50% of 
        all tourist have arrived by air in the past years.
    The second way the terrorist attacks have impacted Central Florida 
is by a dramatic decrease in local tax revenues. Since Florida does not 
have a state income tax, we are dependent in large part upon sales tax 
revenues to fund our government. In fact, visitors generated 
approximately 48% of the $1.5 billion in sales tax collected in Orange 
County in 2000.
    Without tourism tax revenues, every household in Orange County 
would have to pay an additional $551.00 in taxes each year to receive 
the same level of service they currently enjoy.
    I believe that increased consumer spending on travel and tourism is 
absolutely critical to revitalizing Central Florida's tourism based 
economy. For this reason, I strongly support giving travelers a $500 
tax credit if they book a trip before December 31, 2001. This $500 tax 
credit is also supported by major employers in my district, tourism 
leaders, and local political leaders.
    I thank the committee for giving me the opportunity to brief you on 
the state of the tourism industry in Central Florida. Thank you.

    Mr. Stearns. I thank my colleague.
    The gentleman from Guam, Congressman Bob Underwood, 
welcome.

 STATEMENT OF HON. ROBERT A. UNDERWOOD, A DELEGATE IN CONGRESS 
                   FROM THE TERRITORY OF GUAM

    Mr. Underwood. Hafa Adai and good morning, Mr. Chairman and 
members of the subcommittee. I am very happy to have the 
opportunity to testify on the case of Guam, and for all the 
reasons that have been outlined I certainly support any and all 
legislation which will help the tourist industry as well as 
directly the workers that are affected.
    It is important to understand that, for Guam in particular, 
the focus on international tourists is vital. We also want to 
be included in any and all initiatives, and I will just give 
you a couple of examples of problems that we have had as a 
territory.
    Simple oversights include the Travel and Tourism 
Congressional District Economic Impact Study issued by the 
Travel Industry of America, which was alluded to earlier by Mr. 
Towns, does not include Guam or any of the territories. 
Recently, the Postmaster General unveiled the greetings from 
American's stamp series in order to encourage tourism and 
travel, and it included only the 50 States. The territories 
were not included. I guess we are not part of America in the 
stamp series. Incredibly, even the District of Columbia was not 
included in that.
    Now, as background to understanding the state of tourism in 
Guam, it is important to know where we are located. We are on 
the other side of the international dateline. It takes me 19 
hours just to get home. So, as a consequence, I can't invite 
you to spend a weekend in Guam but more likely a week in Guam. 
But it is important to understand how vital tourism is 
important to our economy. It drives our economy.
    Sixty percent of government of Guam revenues are derived 
directly and indirectly from travel and tourism. Forty percent 
of our island's workforce works in tourism. And, unlike the 
Continental United States, Guam is heavily dependent on 
tourists from Asia, with 80 percent coming from Japan. We 
contribute enormously to the balance of trade situation for 
this country.
    After September 11 the loss of consumer confidence to 
travel has cost the government of Guam millions of dollars in 
revenue. Japanese travel agents report a 50 percent 
cancellation rate after September 11 and anticipate a 30 
percent reduction in travel to Guam by December. Taiwan and 
Hong Kong travel will be down 50 percent in the next 3 months 
and a 35 percent decline from Korea is anticipated.
    I believe that one way the Federal Government can assist 
Guam and other U.S. areas dependent upon international 
travelers is to encourage U.S. officials, particularly the 
State Department, to promote international traveling, whether 
it be international travelers coming to the U.S. or Americans 
traveling abroad. This is why I want to commend President Bush 
for taking the step to go to Shanghai today to indicate his 
confidence in our capacity to continue to be engaged overseas.
    More than 50 million international visitors spent over $100 
billion in the U.S. in 2000. Fortunately, the countries that 
generate the most international travelers to the U.S. come from 
our strongest allies. In descending order of travelers they 
include Canada, Mexico, Japan, the U.K., Germany, and France. 
The top 10 U.S. destinations affected by international 
travelers, excluding travelers from Canada and Mexico, are, in 
descending order, California, Florida, New York, Hawaii, 
Nevada, Massachusetts, Illinois, Guam, Texas, and New Jersey.
    Given our size, we are very highly dependent on 
international tourists. While Guam may have the smallest 
population and land size on this list, it is important to 
understand that disproportionate impact that any disruption in 
tourism has on our economy. Prior to September 11, Guam's 
economy was already struggling as a result of the Asian 
economic crisis. Our unemployment rate was already 15 percent. 
For 2001, our unemployment rate continues to increase and has 
dramatically increased as a result of the September 11 
terrorist attacks and including not just people losing their 
jobs but hours being cut back dramatically, threatening health 
insurance and other matters pertinent to the health and safety 
and stability of the families that work in the travel and 
tourism industry. It is important to understand that these 
things indicate that the Federal Government needs to help 
directly the travel and tourism industry and to provide a 
package that provides assistance directly to the workers.
    For the record, I would like to introduce also a report by 
the Guam Hotel and Restaurant Association.
    Mr. Stearns. Without objection, so ordered.
    Mr. Underwood. I also want to point out that I support 
Senator Boxer's legislation, S. 1505, the Rediscover America 
Act of 2001. The bill seeks to temporarily re-establish the 
U.S. Travel and Tourism Promotion Bureau within the Department 
of Commerce, and I am intending to introduce companion 
legislation today.
    Thank you, Mr. Chairman.
    [The prepared statement of Hon. Robert A. Underwood 
follows:]
Prepared Statement of Hon. Robert A. Underwood, a Delegate in Congress 
                               from Guam
    Good morning Mr. Chairman and members of the subcommittee. I am 
very grateful for the opportunity to testify on the state of the 
tourism industry since the September 11 terrorist attacks on our 
nation, particularly in my home island of Guam.
    This hearing is timely in light of the various economic stimulus 
proposals being considered by the Administration and the Congress and I 
am glad that the needs and concerns of the travel and tourism industry 
are being heard in this debate.
    Clearly, the travel and tourism industry has a large impact on our 
economy by adding nearly 5 percent to the GDP, generating more than 
$578 million in revenues, supporting more than 17 million jobs, and 
providing a $14 million trade surplus for the country. It is critical 
to assist our businesses and our workers affected in the industry, 
particularly since 95 percent or more businesses in travel and tourism 
are small to medium size firms. That is why I support Senator Boxer's 
legislation, S. 1505, the Rediscover America Act of 2001. The bill 
seeks to temporarily reestablish the U.S. Travel and Tourism Promotion 
Bureau within the Department of Commerce to assist the travel and 
tourist industry and to help restore consumer confidence. I intend on 
introducing a companion measure to S. 1505 today.
    inclusion of u.s. territories in travel and tourism initiatives
    As Congress considers these important policy initiatives, it is 
equally important that federal policy makers ensure that the U.S. 
territories are included in any proposed initiatives that would bring 
economic relief to our communities. Any relief package is particularly 
vital to Guam and other U.S. territories, whose geographical isolation 
and distance from the U.S. mainland makes air service costly and 
challenging to begin with and that much more vulnerable to cutbacks and 
downsizing in times of difficulty. The other areas include the 
Commonwealth of the Northern Mariana Islands, American Samoa, the 
Virgin Islands, and the Commonwealth of Puerto Rico.
    Simple oversights include the Travel and Tourism Congressional 
District Economic Impact Study issued by the Travel Industry 
Association of America, in conjunction with the Commerce and 
Transportation Departments. The report excludes the U.S. territories 
from its study. Another example includes the recent announcement by the 
Post Master General who unveiled the ``Greetings from America'' stamp 
series covering the 50 states. Its purpose is to generate tremendous 
pride in each state and to help raise awareness of their efforts to 
promote and facilitate increased travel to and within the U.S. Once 
again, Guam and the U.S. territories were left out of this very 
important initiative to assist the travel and tourism industry. What is 
more disappointing is that our nation's capitol--Washington, D.C.--was 
also left out.
                        guam's tourism industry
    As background to understand the State of the Tourism Industry in 
Guam, it is important to know where we are located. Guam is the 
furthest U.S. jurisdiction from Washington D.C., and we are on the 
other side of the international dateline. Although flying time between 
D.C. and Guam is about 19 flying hours, it usually takes me a full day 
to get home. Yet Guam is only three to four hours away from major Asian 
countries, including Japan, Taiwan, and the Phillippines. Due to Guam's 
small size and geographical isolation, Guam's private sector economy is 
minimally diversified and heavily dependent upon tourism, particularly 
from international travelers.
    Tourism drives our economy. Sixty percent of Government of Guam 
revenues are derived directly and indirectly from the travel and 
tourism industry and accounts for close to 40% of the island's 
workforce. In 1997, the retail trade division, gift, novelty and 
souvenir shops sold $415.6 million in merchandise, reporting nearly 
one-quarter of the total $1.8 billion in service industry receipts. 
Within the service division, hotels and motels were the leading 
industry with $460 million in receipts and passenger transportation 
arrangement industries, including travel agencies and tour operators, 
reported receipts totaling $143.1 million.
    Unlike the continental United States, Guam is heavily dependent on 
tourists from Asia, with 80% coming from Japan. After September 11, the 
loss of consumer confidence to travel has cost the Government of Guam 
millions of dollars in lost revenues. Japanese travel agents report a 
50% cancellation rate after September 11 and anticipate 25%-30% 
reduction in travel to Guam in December. Taiwan and Hong Kong travel 
will be down 50% in the next three months and a 20% to 35% decline of 
travelers from Korea is anticipated. The hotel industry reports 
occupancy levels at a low of 20-30% and foresee a constant decline in 
the months to come. The projected losses for the hotel industry alone 
is approximately $30 million in gross revenues since September 11.
                        international travelers
    I believe that one way in which the federal government can assist 
Guam and other U.S. jurisdictions dependent on international travelers 
is to encourage U.S. officials, particularly the State Department, to 
promote international traveling, whether it be international travelers 
coming to the United States or Americans traveling abroad. That is why 
I want to commend President Bush for traveling to Shanghai, China, for 
the Asian Pacific Economic Cooperation meeting. This is the kind of 
signal that U.S. leaders must send to other countries.
    More than 50 million international visitors spent $103 billion in 
the United States in 2000. Fortunately, the countries that generate the 
most international travelers to the United States come from our 
strongest allies. In descending order of travelers, they include 
Canada, Mexico, Japan, the United Kingdom, Germany, and France. I would 
encourage that U.S. leaders take advantage of every diplomatic 
opportunity available to send a message to the leaders and citizens of 
these countries that the tourism and travel industry in America is 
alive and well.
    The top ten U.S. destinations affected by international travelers, 
excluding travelers from Canada and Mexico, include California, 
Florida, New York, Hawaii, Nevada, Massachusetts, Illinois, Guam, 
Texas, and New Jersey. These destinations include the largest and most 
populous states in the nation, whose economies are greatly impacted by 
the travel and tourism industry. While Guam may have the smallest 
population and land size on this list, it is important to understand 
the disproportionate impact that any disruption in tourism has on our 
economy.
    Prior to September 11, Guam's economy was already struggling as a 
result of the Asian economic crisis. During 1999 and 2000, Guam's 
unemployment rate was 15.2% and 15.3% respectively. For 2001, Guam's 
unemployment rate is already over 15%, and is anticipated to increase 
by the end of the year. This rate is more than three times the national 
average.
    It is for all of these reasons, that I ask that Guam and the other 
U.S. territories not be forgotten in any travel and tourism initiatives 
being considered by this Congress.
    Once again, I wish to thank the Chairman for giving me the 
opportunity to testify and to tell Guam's story.
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    Mr. Stearns. I thank my colleague.
    I think hearing the opening testimony of our colleagues 
gives real evidence to what this impact has been, and I think 
for members and citizens alike who are out there and can see 
people suffering through either being laid off or perhaps 
trying to meet their mortgage payments, their rental, it is a 
huge impact; and as long as this continues, the worse it gets. 
So I thank my colleagues for coming very much.
    Mr. Underwood. Thank you.
    Mr. Stearns. We will now have the second panel, which we 
have eight separate witnesses. The second panel would come to 
the table if they would.
    We have Linda Conlin, the Assistant Secretary for Trade 
Development from the Department of Commerce. We have William 
Norman, Travel Industry Association, CEO and President. We have 
Robert Warren, the General Counsel and Secretary for the Air 
Transport Association of America. We have here the Chairman and 
CEO of Marriott International Corporation, J.W. Marriott. We 
have the President and CEO of New York City and Company, 
Cristyne Nicholas. We have the Universal Studios Recreation 
Group Senior Vice President, Fred Lounsberry. We have the 
President of the International Cruise Lines Council, Michael 
Crye. And then we have the President and CEO, Terrell Jones, of 
Travelocity.Com. So this is a very important hearing to hear 
from industry.
    We have heard from Members of Congress who talk to their 
constituents and know about the small businesses, but now we 
have a unique opportunity to hear from industry.
     I thought we would start from my left to the right.
    Ms. Conlin.
    Mr. Deutsch. If I can ask for unanimous consent.
    Mr. Stearns. For unanimous consent, the gentleman from 
Florida, Mr. Deutsch, is recognized.
    Mr. Deutsch. I apologize. You are probably aware the 
building is going to be evacuated at 3 o'clock. I haven't 
figured out why we are not evacuating now. We are evacuating at 
3 o'clock.
    But as someone who represents South Florida, we are as 
affected maybe as other areas in the country. There may be 
other areas like Hawaii and Las Vegas that might be a little 
bit proportionally affected. Almost on a daily basis we are 
seeing the impact, and literally anything this Congress can do 
to make sure that the continuation of tourism is able to work I 
am supportive of.
    Thank you.
    Mr. Stearns. I thank my colleague who, again, is in a very 
tourist-oriented area like myself and Florida.
    So we are most appreciative of all of you taking your time. 
We know how valuable your time is. You are just as busy if not 
more than any of us in Congress.
    Mr. Stearns. Ms. Conlin, the Assistant Secretary of Trade 
Development, Department of Commerce, if you would start out 
with an opening statement, we would appreciate it.

   STATEMENTS OF LINDA M. CONLIN, ASSISTANT SECRETARY, TRADE 
    DEVELOPMENT, DEPARTMENT OF COMMERCE; WILLIAM S. NORMAN, 
PRESIDENT AND CEO, TRAVEL INDUSTRY ASSOCIATION; ROBERT WARREN, 
   SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY, AIR 
  TRANSPORT ASSOCIATION OF AMERICA, INC.; J.W. MARRIOTT, JR., 
  CHAIRMAN AND CEO, MARRIOTT INTERNATIONAL, INC.; CRISTYNE L. 
 NICHOLAS, PRESIDENT AND CEO, NYC & COMPANY; FRED LOUNSBERRY, 
 SENIOR VICE PRESIDENT OF SALES, UNIVERSAL STUDIOS RECREATION 
 GROUP; J. MICHAEL CRYE, PRESIDENT, INTERNATIONAL CRUISE LINES 
   COUNCIL; AND TERRELL B. JONES, PRESIDENT AND CEO, TRAVELO-
                            CITY.COM

    Ms. Conlin. Thank you, Mr. Chairman.
    Mr. Chairman, Ranking Member Towns, members of the 
subcommittee, I am honored to be invited to provide testimony 
this morning regarding the impact of the tragic events of 
September 11 on the travel and tourism industry and U.S. 
Government efforts being made toward supporting the industry's 
recovery.
    I have provided, Mr. Chairman, a more detailed written 
account for the record, and I will summarize its key points 
this morning.
    Undoubtedly, the terrorists have caused a terrible loss of 
life and created concern among many Americans about basic 
safety and security across all walks of life, but I have to 
tell you that during these times I have never felt more proud 
to be an American and to have the privilege of serving as a 
member of this administration. I have faith in our great 
country and in our strong leadership, and I feel fortunate to 
be in the Department of Commerce as the Assistant Secretary for 
Trade Development where I can call upon close to 20 years 
experience in the travel and tourism industry to help in the 
efforts for this industry's recovery. It is my honor to have 
the opportunity to work together with President Bush, Secretary 
Evans and Under Secretary Aldonas in this effort.
    I want to begin my testimony by providing a few key facts; 
and, Mr. Chairman, you have already mentioned some of them. But 
I think they bear repeating to demonstrate the importance of 
the travel and tourism industry to the U.S. economy.
    According to the Travel Industry Association of America and 
the U.S. Department of Commerce, total spending in calendar 
year 2000 by domestic and international travelers in the United 
States reached beyond $582 billion. Spending by these travelers 
supported some 19 million jobs, and certainly the distinguished 
member from Hawaii gave a very human face to those 19 million 
jobs. Total tax revenues generated by travel and tourism 
amounted to almost $100 billion.
    As a former small businesswoman in the travel and tourism 
industry, I fully appreciate that 95 percent of the travel and 
tourism industry is comprised of small- and medium-sized 
businesses. International travel to the United States is this 
country's top services sector export. In 2000, international 
travelers to the United States pumped some $103 billion into 
the economy, supporting nearly 1 million jobs, and for the 11th 
year in a row international travel contributed positively to 
the balance of trade, generating a $14 billion trade surplus.
    So the administration is therefore aware that restoring 
consumer confidence in travel is a key factor to help generate 
recovery for the economy as well as travel and tourism overall. 
Preserving our citizens' ability and freedom to travel is 
pivotal to generating economic recovery.
    With the support of key industry trade associations and 
leaders such as the Travel Industry Association and the Travel 
Business Roundtable, on September 25 Secretary Evans organized 
a business leaders roundtable with 15 CEOs from the travel and 
tourism industry. Some of them join me here today. These 
individuals represented companies in the hotel and resort, 
rental car, theme park, travel agent, rail, bus tour operator 
and airline businesses. This discussion allowed Secretary Evans 
to learn firsthand from each representative about the impact of 
the terrorist attacks on their individual industry sectors as 
well as hear perspectives on the role that the U.S. Government 
should play in helping to revitalize this vital sector of the 
U.S. economy.
    Two days later, Secretary Evans continued this dialog, 
speaking with representatives from the National Restaurant 
Association; and, in turn, they similarly conveyed their 
concerns and perspective on appropriate responses.
    Since the attack, I have also personally met and spoken 
with a number of travel and tourism industry leaders to learn 
more about the impact of these events and to hear additional 
suggestions for government action. As a result of these 
meetings and conversations, Secretary Evans determined that a 
restoration of confidence in leisure and business travel can be 
assisted and helped through stronger government coordination 
and greater partnership with the private sector.
    Specifically--and I would just like to comment on some of 
these measures if I may, Mr. Chairman--one of these measures is 
Secretary Evans' decision to reconvene regular senior level 
meetings of the Tourism Policy Council, known as the TPC. The 
TPC's overall function is to serve as the primary forum to 
coordinate Federal policies and regulations affecting travel 
and tourism. Let me tell you why that is so important.
    By bringing together the key departments and agencies that 
oversee policies affecting travel and tourism, the TPC provides 
the appropriate framework for addressing short-term recovery 
support and preparedness. Over the medium to long term, the TPC 
also provides a mechanism to ensure that the national interest 
in tourism is fully considered in Federal decisionmaking. The 
Council has been enthusiastically endorsed by the White House 
Domestic Consequences Policy Council and will hold its first 
meeting at the Department of Commerce next week, 1 week from 
today, on October 24.
    I have outlined the membership of this Council in my 
written testimony. However, I think it is important to note 
that Secretary Evans will chair the Council, which will include 
senior representatives from a broad range of departments and 
agencies, including the State Department, the Department of 
Transportation, Customs, the Immigration and Naturalization 
Service, the FAA, and the newly created Office of Homeland 
Security. In addition, to ensure coordination with Congress, 
the Secretary has extended invitations to the co-chairs of the 
Senate and congressional tourism caucuses.
    The second key initiative in Secretary Evans plan to 
support recovery----
    Mr. Stearns. I need you to summarize.
    Ms. Conlin. Yes--will be to further public sector and 
private sector cooperation through an ad hoc roundtable.
    Overall, Mr. Chairman, in concluding, let me say that it is 
absolutely essential that the Federal Government play a key 
role in restoring public confidence in not only our air 
transport system but also travel and tourism in general. We 
believe that the measures that we are now undertaking will help 
to do that.
    I thank you once again, Mr. Chairman, for allowing me to 
inform you about the measures that we are taking. Thank you.
    [The prepared statement of Hon. Linda M. Conlin follows:]
  Prepared Statement of Hon. Linda M. Conlin, Assistant Secretary for 
               Trade Development, Department of Commerce
    I am honored to be invited to provide testimony before the House 
Committee on Energy and Commerce, Subcommittee on Commerce, Trade and 
Consumer Protection, regarding the impact of the tragic events of 
September 11, 2001, on the travel and tourism industry as well as on 
industry recovery efforts. The terrorists have caused a terrible loss 
of human life and created concern among many about basic safety and 
security across all walks of life. During these times, I have never 
felt more proud to be an American and to have the privilege of serving 
as a member of this Administration. I have faith in our great country 
and in our strong leadership, and I feel fortunate to be in the 
Department of Commerce serving as the Assistant Secretary for Trade 
Development where I can use the expertise I have in the travel and 
tourism industry to be of help in bringing about this industry's 
economic recovery. It is my privilege to be working to support 
President Bush, Secretary Evans and Under Secretary Aldonas in this 
endeavor.
    I want to begin by emphasizing that the travel and tourism industry 
is extremely important to the U.S. economy. According to the Travel 
Industry Association of America and the U.S. Department of Commerce, 
total spending in calendar year 2000 by domestic and international 
travelers in the United States was $582 billion. Total direct and 
indirect employment supported by travel spending was 19 million people. 
Total federal, state and local tax revenues generated by spending on 
travel and tourism in 2000 was almost $100 billion. The vast majority 
(95 percent) of the travel and tourism industry is comprised of small 
and medium enterprises. International travel to the United States is 
the top services sector export for the country. In 2000, the total 
impact of international travel (the sum of travel and passenger fares 
exports) on the United States was $103 billion, and it generated a $14 
billion trade surplus. The international travel export sector supported 
nearly one million jobs, generating $14 billion in tax revenue in 2000.
    The Administration is aware that restoring consumer confidence in 
travel is a key factor to help generate recovery for the travel and 
tourism industry as well as the overall economy. Preservation of our 
citizens' ability and freedom to travel is pivotal to ensuring a rapid 
economic recovery. With the support of key industry trade associations 
and leaders such as the Travel Industry Association of America and the 
Travel Business Roundtable, Secretary Don Evans organized and hosted a 
business leaders roundtable on September 25, 2001, with fifteen CEOs 
from the travel and tourism industry. These executives represented 
companies with operations in the hotel and resort, rent-a-car, 
amusement, travel agent, rail, bus, and airline businesses. The 
discussion gave Secretary Evans first-hand information from each 
participant on the impact of the terrorist attacks on their individual 
industry sectors as well as perspectives on how the U.S. Government 
could be involved in revitalizing this important sector of our economy.
    ``The fundamentals of our economy remain sound,'' observed 
Secretary Evans following that meeting. He added, ``A reinvigorated 
U.S. travel and tourism industry is important to economic vitality at 
home and abroad. International travel represents one of the top exports 
for our country, generating over $103 billion in revenue last year, and 
supporting nearly one million jobs.''
    On September 27, 2001, Secretary Evans conducted a conference call 
with six key representatives from the restaurant industry and the 
National Restaurant Association. Each participant similarly conveyed 
their business concerns and perspectives on appropriate responses from 
government. Since that time, I have personally met and spoken with a 
number of other travel and tourism industry leaders to learn more about 
the impacts of these events on the industry and gather additional 
suggestions for governmental action.
    As a result of the meetings and discussions taking place, Secretary 
Evans has determined that a restoration of confidence in leisure and 
business travel can be accomplished through stronger governmental 
coordination and new partnerships with the private sector. I am here to 
present what we view as a response that can be accomplished rapidly 
without new funding requirements.
    First among these measures is Secretary Evans' decision to 
reconvene regular, senior-level meetings of the Tourism Policy Council 
(hereafter referred to as the TPC). This proposal has been endorsed 
enthusiastically by the White House Domestic Consequences Policy 
Council, and the Secretary will be holding the next meeting at the 
Department of Commerce on October 24. The TPC was originally 
established in 1981 and re-authorized by the U.S. National Tourism 
Organization Act of 1996 (22 U.S.C. 2124). The TPC's overall function 
is to serve as the primary forum to coordinate federal policies and 
regulations affecting travel and tourism. This must be done in a manner 
that preserves overriding safety and security considerations. We seek 
to support a restoration of confidence while also supporting 
convenience where possible in order to help stimulate a renewed 
appetite to travel by individuals and businesses. By bringing together 
the key agencies that oversee policies affecting travel and tourism, 
the TPC currently provides an appropriate forum for short-term recovery 
support and preparedness. Over the medium to long-term, the TPC also 
provides a continuing forum for coordinating U.S. Government efforts on 
behalf of travel and tourism.1The Secretary serves as the chair of the 
Council. According to the statute, other regular members of the TPC 
include the Director Office of Management and Budget, the Secretary of 
State, the Secretary of the Interior, the Secretary of Labor, the 
Secretary of Transportation, the Commissioner of the United States 
Customs Service, and the Commissioner of the Immigration and 
Naturalization Service. The Act also allows the Secretary of Commerce 
to include representatives of other federal agencies as needed, and as 
a result he has expanded his invitee list to include the Administrator 
for the Federal Aviation Administration, the Secretary of the Treasury, 
the Attorney General of the United States, the Secretary of Housing and 
Urban Development, the Administrator of the Small Business 
Administration, and the Assistant to the President for Homeland 
Security. In order to ensure that we are also coordinating with the 
Congress as effectively as possible, the Secretary also has extended 
invitations to the Co-Chairs of the Senate and Congressional tourism 
caucuses.
    Secretary Evans also is looking at instituting ad hoc meetings 
between government and private sector representatives to coordinate 
implementation of an effective public relations strategy to help 
restore confidence in travel and tourism. The mandate for this 
roundtable would include sharing and disseminating government and 
private data on travel and tourism to monitor recovery efforts and 
learning from industry about specific communications plans and 
activities for restoring consumer confidence in the safety and security 
of travel.
    There are various promotional activities that the Federal 
Government can institute to more actively support the industry, both 
over the short term to aid recovery as well as over the long term. 
Messages are important. The President's statements at Chicago O'Hare 
Airport, as an example, were enough to buoy the bookings of future 
British travelers to the United States. In addition, the Secretary of 
Commerce took a flight with his peers to Kansas City, Missouri, and had 
lunch in a local establishment to underscore the safety of travel and 
the need to ``get back to business.'' As you may know, nine Governors 
took trips on commercial airlines as well to convey the safety message. 
Mayors of large cities, in particular Mayor Williams of Washington, 
D.C., and Mayor Giuliani of New York City, have extended invitations to 
the public to come to their cities and support the industry by taking 
in the wealth of entertainment and attractions available to tourists. 
Outgrowths of these invitations even resulted in nearly 1000 Oregonians 
taking a Flight to Freedom trip to enjoy New York City. Certainly, 
Congressional members have participated in this intrinsic way to convey 
first-hand that every effort is being make to provide for traveler 
safety.
    We are aware of the involvement of Congress in various other 
hearings that have given the travel and tourism industry the prominence 
and attention needed at this crucial time. I applaud the Congress for 
passing the Air Transportation Safety and Systems Stabilization Act to 
provide economic assistance to airlines and to bolster confidence 
within the industry, in financial circles, and among the flying public.
    The travel and tourism industry differs from many others in that 
the product is generally considered expendable. Once the day is gone, 
you can not recover the loss of the hotel room not sold or the airline 
ticket not purchased. These are not inventory to be sold at a later 
date. Let me share some of the short-term projections from various 
components of the industry.
    According to the Travel Industry Association of America, projected 
total U.S. domestic travel will be down 5 percent in 2001. The growth 
in 2002 is forecasted at only around 1 percent, keeping it below 2000 
levels.
    The U.S. Commerce Department's revised forecast on international 
travel indicates that this segment of the industry will experience a 13 
percent decline for 2001, but shows signs of recovery by the end of 
2002 (up 4 percent ) and over the next few years (this travel is 
projected by 2005 to be 12 percent above 2000 levels, reaching an 
estimated 57.2 million international travelers).
    According to the Air Transport Association forecasts released at a 
recent Travel Marketing Outlook Forum in Atlanta, revenue passenger 
miles are projected to decline around 12 percent. Growth for calendar 
year 2002 will be less than 5 percent over 2001.
    According to Smith Travel Research, the hotel industry will see its 
overall 2001 occupancy down 2.4 percent to 60.7 percent with revenues 
per room at a lower 4.7 percent than 2000. Although less than 
projected, the industry is still estimated to make a $16.7 billion 
profit level in 2001. Weak growth in room demand (1.2 percent increase) 
and flat growth in revenue per room is projected for 2002, suggesting 
that it will take at least nine months for the industry to recover from 
the September 11 attacks.
    According to the American Society of Travel Agents, the 2001 travel 
agent revenue will decline by 26 percent to less than $10 billion. They 
expect revenues to dramatically decline again in 2002 to less than half 
the 2001 level.
    Not everyone is forecasting declines for 2001. The National 
Restaurant Association is projecting a 5 percent increase in total 
restaurant industry sales for 2001. The American Automobile Association 
has stated that auto travel will most likely increase in 2001. Amtrak 
has seen increased ridership and Greyhound has seen an increase in 
revenues.
    The impact of the September 11 attacks on the travel and tourism 
industry is significant, but the industry can and will recover. The 
individuals whom I know well and respect who make up the travel and 
tourism industry are hard-working, dedicated, resilient and 
resourceful. They are committed to working together to reassure the 
public in the safety of travel. The Administration, the Secretary of 
Commerce and I all share your appreciation for the importance of the 
travel and tourism industry to our country and the economy. I am 
grateful to have had this opportunity to inform you of the steps we are 
taking to facilitate the industry's recovery.

    Mr. Stearns. I thank you.
    Mr. Norman, your opening statement.

                 STATEMENT OF WILLIAM S. NORMAN

    Mr. Norman. Mr. Chairman, Ranking Member Towns and members 
of the subcommittee, thank you for the opportunity to appear 
before you today to comment on the current state of the U.S. 
travel and tourism industry.
    The Travel Industry of America, or TIA, represents some 
2,600 organizations that encompass every segment of the $582 
billion travel industry in the United States. TIA's mission is 
to represent the whole of the travel industry to promote and 
facilitate increased travel to and within the United States.
    I am also pleased to represent a broad coalition of travel 
industry members who comprise the travel industry recovery 
coalition. These two dozen travel industry organizations are 
working in a unified fashion to support marketing and 
legislative proposals that will get the travel industry back to 
business as usual.
    The tragedies experienced by our Nation on September 11 
have had a disastrous impact on our Nation's travel and tourism 
industry. You will hear from a number of industry leaders this 
morning who will detail the impact of these recent events on 
their particular segments of travel and tourism. But overall, 
Mr. Chairman, U.S. travel in the fourth quarter of 2001 is 
expected to drop significantly, causing travel for all of 2001 
to experience an average drop of 5 to 10 percent.
    We are also experiencing and expect the travel to remain 
soft in the first half of 2002 before returning to normal 
levels later in the year, but that would still be below the 
2000 record, year of 2000. While business travel was already 
slightly down for the year, prior to September 11, it came to a 
virtual standstill in the first 2 weeks following the attack. 
Business travel is now showing some signs of recovery. But the 
trend is fragile. While personal travel is not down as 
significantly as business travel, many States and cities across 
this Nation have experienced major declines in visitation.
    As you can imagine, destinations such as Washington, DC, 
and New York City have been especially hard hit. But so have 
places such as Florida and Hawaii and California and many other 
States as well. Because of the significant declines in travel, 
a number of States have already announced major budget cuts. 
For some States, Florida and Hawaii in particular, this is a 
direct result of lost tourism. While in other places it is a 
combination of lost tourism revenue and a general slowdown in 
the economy. But why have some Americans stopped traveling or 
changed their plans? There are currently some concerns about 
traveling by air or traveling to certain major urban areas. 
However, our recent surveys show that adults not planning trips 
in the next 6 months are driven primarily by financial 
concerns. While we commend all levels of government for the 
extraordinary efforts that have been made to provide improved 
security for travelers, much work remains to be done.
    We urge the Congress and the administration to reach 
agreement soon on an aviation security package and come to a 
quick agreement on an economic stimulus package. A matter of 
days after the attacks of September 11, TIA developed a 
comprehensive recovery plan on behalf of the entire U.S. travel 
industry. With significant input from industry leaders, we 
initiated various efforts aimed at helping the industry get 
back to business as usual.
    On behalf of the unified travel and tourism industry, we 
have two major objectives that guide our recovery program. Our 
first objective has been and remains to work with the 
government to insure that travel in the United States is safe 
and secure. Our second major objective remains rebuilding 
confidence among travelers. Travel is one of our most cherished 
freedoms, and a return to travel is a return to normalcy. TIA 
and two dozen other national travel and tourism organizations 
have joined in a coalition effort to support a six-point plan.
    We believe this should be included in an economic stimulus 
package. We believe this plan is very workable since its impact 
will be immediate, it is truly stimulative and its provisions 
are short-term. This plan would provide incentives for personal 
and business travel and improve cash-flow for ailing travel 
companies and establish a private public sector travel 
promotion campaign. It would also extend benefits for 
unemployment or unemployed workers and assist small businesses 
with expanded loans.
    A complete description of all six provisions is included in 
the written testimony which we provided to the subcommittee. I 
am also pleased to report, Mr. Chairman, that H.R. 3140, which 
was introduced last evening by Representatives Patrick Kennedy 
and Alcee Hastings, includes all six provisions endorsed by the 
Travel Industry Recovery Coalition. We thank both of those 
representatives for their strong support during these 
challenging times. Also, three of our six provisions are tax 
related and are included in H.R. 3041, and S. 1500, supported 
by Representative John Shadegg of this committee and Heather 
Wilson and Senators Jon Kyl and Zell Miller.
    We thank these members for their leadership for introducing 
these bills and urge all Members of Congress to support these 
bills.
    In closing, I would like to say once again that the U.S. 
travel industry intends to do all it can to get back to 
business as usual, and during this time of national testing, 
travel may best symbolize the normalcy of our Nation's leaders 
have called for us to restore.
    We thank you for the opportunity to tell our industries 
story and our current plans for recovery.
    [The prepared statement of William S. Norman follows:]
Prepared Statement of William S. Norman, President and Chief Executive 
            Officer, Travel Industry Association of America
    Mr. Chairman, Ranking Member Towns, and Members of the 
Subcommittee, on behalf of our 2,600 member organizations and a broad 
coalition of travel industry members, I want to thank you for the 
opportunity to testify about the current state of the U.S. travel 
industry.
    The Travel Industry Association of America (TIA) is the national, 
non-profit organization representing all components of the $582 billion 
U.S. travel and tourism industry. TIA's mission is to represent the 
whole of the travel industry to promote and facilitate increased travel 
to and within the United States. Our 2,600 member organizations 
represent every segment of the industry, and I am pleased to be joined 
on this panel today by several TIA members. We are also pleased to 
represent a broad coalition of industry members, who are listed in the 
attachment to my testimony.
    The tragedies experienced by our nation on September 11 have had a 
disastrous impact on this nation's travel and tourism industry. While 
the most immediate and dramatic impact was felt by the nation's 
airlines, many other companies and organizations that cater to business 
and personal travel have been affected as well. Airline capacity and 
load factors are down, hotel occupancy is down, while many meetings and 
conventions have been canceled or deferred. Car rentals at airports 
have declined, tour bus bookings are off, and there are fewer guests 
visiting amusement parks and attractions. Because a number of these 
industry segments are represented at this hearing today, I will defer 
to them in providing the subcommittee with details about the current 
state of affairs in their sectors.
    Overall U.S. travel in the fourth quarter of 2001 is expected to 
drop significantly, and travel for all of 2001 will experience a modest 
drop. We are also expecting travel to remain soft in the first half of 
2002 before returning to year 2001 levels later in the year. All of 
this assumes, of course, there are no additional incidents.
    With a softening economy in 2001, corporate travel was already 
slightly down for the year prior to September 11. In the first few 
weeks following the attacks, business travel came to a near standstill. 
While many companies declared themselves open for business and said 
they were allowing their employees to travel, the simple truth is that 
many employers significantly cut back on business travel. While these 
``road warriors'' are flying and driving again to conduct the nation's 
business, travel in this segment is still off significantly.
    While most association meetings and conferences are continuing, 
dozens of major corporate meetings and conventions have been canceled 
or postponed. Shortly after September 11, for example, the Orlando 
Convention and Visitors Bureau announced it had experienced a nearly 
$200 million loss in convention business. Right after the attacks it 
was said by one industry executive that you could roll a bowling ball 
right down International Drive in Orlando and not hit anything. While 
cancellations have slowed, major convention facilities across the 
country have experienced hundreds of millions of dollars in lost 
revenue from dropped meetings.
    While personal, or leisure, travel is not down as significantly as 
business travel, states and cities across the nation have experienced 
major declines in visitation. Because travel and tourism is one of the 
top industries in terms of jobs and revenue in so many states, business 
revenue is way off, employees are being laid off, and sales tax 
collections are down dramatically. Many state governments already have 
announced the need to make major budget cuts.
    Two examples are particularly illustrative. Visitation to the state 
of Florida is down dramatically, and it is expected the state could 
lose as much as $3 billion in sales through the end of this year. 
Hawaii Lt. Governor Mazie Hirono reported to the Senate Commerce 
Committee last week that overall visitation to Hawaii is down by 40%, 
with their largest overseas travel segment--Japan--down by 50%. The 
downturn in Japanese travel alone to Hawaii has caused the state to 
lose $4 million each day.
    Every state and city has a similar story to tell about the falloff 
in visitation to their destinations. And because the travel industry is 
a top 3 employer in 28 states, the downturn in this industry has caused 
a great deal of hardship throughout the nation. One out of every seven 
Americans is directly or indirectly employed in the business of travel 
and tourism. The livelihood of these 19 million Americans depends on 
travelers having the confidence to travel.
    Why have some Americans stopped traveling, or changed their plans? 
There is certainly concern about getting on airplanes or traveling to 
major urban centers such as New York City or Washington, DC. We commend 
all levels of government (local, state and federal) for the 
extraordinary efforts that have been made to provide safety and 
security for travelers, whether flying or driving around this great 
country. We must continue to be vigilant in our security efforts to 
prevent further acts of violence, which will only cause Americans to 
hunker down and abandon their normal way of life--including travel for 
business or personal reasons.
    Others are not traveling, or have altered their plans, out of 
concern over the nation's softening economy and their own financial 
security. Still others have delayed making travel plans because they 
question the viability of the company they would buy a ticket or tour 
package from. They wonder if the travel company they deal with will be 
in business weeks or months from now and how they would collect a 
refund if the company went bankrupt.
    Government and travel industry leaders must work in partnership to 
reassure the American people that both their physical security and the 
nation's economic security will be protected in this time of crisis. 
Congress and the Administration must act expeditiously to approve an 
aviation security bill, and also devote resources and planning to 
provide for safety in all modes of travel. Congressional leaders and 
the White House must also come to a quick agreement on an economic 
stimulus package to keep the nation's economy from slipping into a 
major recession.
    Restoring confidence in Americans to travel through their country 
is also critical if we are to lure back international travelers, who 
spend nearly $100 billion in the U.S. each year, and account for 1 
million direct U.S. jobs. Travel and tourism is big business and a 
major services export, and until these recent events the industry was 
actually producing a $14 billion positive balance of trade in 
international tourism.
    A matter of days after the attacks on September 11, TIA developed a 
multi-faceted recovery plan on behalf of the U.S. travel industry. With 
significant input from industry leaders, TIA has instituted various 
efforts and programs in areas such as marketing and public relations, 
research, and government affairs--all aimed at helping the industry get 
back to business as usual.
    TIA, on behalf of the unified travel and tourism industry, has two 
major objectives that guide its recovery program. Our first objective 
has been, and remains, to ensure that travel in the United States is 
safe and secure. The travel industry pledges to work with our nation's 
political leaders to support policies to enhance the nation's security 
in all areas of travel and tourism. We have also called on all travel 
companies to do a thorough review of their security procedures and make 
any necessary changes or enhancements to protect their guests and 
customers.
    Our second major objective remains rebuilding confidence among 
travelers. Travel is one of our most fundamental freedoms and a return 
to travel is a return to normalcy. TIA and its member companies and 
organizations have already dedicated millions of dollars in resources 
to get Americans traveling again. We also support a public-private 
sector campaign to promote travel that will tell the industry's story 
and help to restore consumer confidence in travel. In addition, there 
is much the industry is doing in the area of public relations and 
research to support our recovery efforts.
    Most importantly for Members of this Subcommittee, and the U.S. 
Congress, TIA and more than twenty other national travel and tourism 
organizations that have joined in our coalition effort, have developed 
a six-point plan we believe should be included in an economic stimulus 
package to restore the U.S. travel industry to its pre-September 11 
condition. We believe this plan is very workable since it its impact 
will be immediate, it is truly stimulative, and its provisions are 
short-term.
    This plan would provide incentives for personal and business 
travel, improve cash flow for ailing travel companies, and establish a 
public-private sector travel promotion campaign. In addition, it would 
extend benefits for workers who are unemployed or under-employed, and 
would broaden loan programs for small businesses in travel and tourism 
harmed as a result of the September 11 tragedies.
    The following is a brief description of all six provisions:

 Provide substantial federal funding, with private-sector 
        support and input, for advertising campaigns to encourage 
        travel to and within the United States.
 Provide a workforce tax credit for training, retention, and 
        hiring of travel and tourism industry workers; financial 
        assistance to help employees meet COBRA payments and maintain 
        their health insurance; and payroll tax relief for employers 
        and employees.
 Expand the SBA loan program to small businesses that would not 
        otherwise qualify for the Economic Injury Disaster Loan 
        Program, with loans to be available at the lowest possible loan 
        rate.
 Provide for a $500 tax credit ($1000 for taxpayers filing 
        jointly) for enumerated personal travel expenses for travel 
        originating and occurring within North America (airplane, 
        cruise, train and bus tickets, hotel and motel accommodations, 
        and rental cars, but not meals) through the end of 2002.
 Restore full deductibility for those business entertainment 
        expenses, including meals, that are now subject to a 50% 
        deduction through the end of 2002. (The average business meal 
        is less than $20 and does not include any alcoholic beverages 
        at lunchtime.)
 Expand the allowance for the carry back of net operating 
        losses for taxpayers in the travel and tourism industry beyond 
        the current two-year limit for losses attributable to the 
        period 9/12/01-12/31/02.
    The three tax provisions are included in H.R. 3041 and S. 1500 
sponsored by Representatives John Shadegg, Neil Abercrombie, and 
Heather Wilson, and Senators Jon Kyl and Zell Miller. We thank these 
Members for their leadership in introducing these bills, and urge all 
Members of Congress to support these bills. We are pleased that the 
Ways and Means Committee has included the net operating loss proposal 
in its economic stimulus package, and hope that the proposed tax credit 
and business entertainment provisions can be included in the final 
package sent to the President.
    As Senator Kyl stated so correctly in testimony before the Senate 
Commerce Committee just last week, the U.S. travel industry has taken a 
major ``body blow'' as a result of the September 11 tragedies. Few 
industries have been so directly and negatively impacted, and now we 
are looking to the Congress and Administration for leadership in 
providing safety and security and helping to restore consumer 
confidence in travel once again.
    In closing, I would like to say once again that the U.S. travel 
industry intends to do all it can to get back to business as usual. 
During this time of national testing, travel may best symbolize the 
normalcy our nation's leaders have called on us to restore. Please join 
with us in reminding the American people at every opportunity to defy 
international terrorists by exercising America's precious freedom to 
travel. Work with us create the conditions that will once again allow 
Americans to begin traveling again, so we can put America's workers 
back to work, and help to restore the nation's economy to its fullest 
potential. Thank you for the opportunity to tell our industry's story 
and our current plans for recovery. I would be happy to answer any 
questions you may have.
           members of the travel industry recovery coalition
Air Transport Association; American Association of Museums; American 
Bus Association; American Recreation Coalition; American Society of 
Travel Agents; Association of Retail Travel Agents; Association of 
Travel Marketing Executives; Carlson Companies; Hospitality Sales & 
Marketing Association International ; International Association of 
Amusement Parks & Attractions; International Association of Convention 
& Visitors Bureaus; International Council of Cruise Lines; National 
Association of RV Parks and Campgrounds; National Business Travel 
Association; National Council of Attractions; National Council of 
Destination Organizations; National Council of State Tourism Directors; 
National Tour Association; Receptive Services Association; Recreation 
Vehicle Industry Association; Society of Government Travel 
Professionals; Travel Goods Association; Travel Industry Association of 
America; US Tour Operators Association.

    Mr. Stearns. I thank the gentleman.
    Mr. Warren, the general counsel for Air Transport 
Association of America.

                   STATEMENT OF ROBERT WARREN

    Mr. Warren. Thank you. Mr. Chairman, Ranking Member Towns, 
members of the committee. I am Robert Warren, senior vice 
president, general counsel of the Air Transport Association of 
America. And on behalf of our members, I want to say thank you 
very much for holding these very important hearings today. This 
morning I want to talk about the current conditions of the 
airline industry and its effect on tourism. More importantly, I 
want to talk about what we, those in the airline business and 
all of us in the tourism industry can do to improve that 
condition.
    We first, however, need to follow, I think, President 
Bush's clear admonition to return to our daily lives and not 
let the terrorists win. And part of this return to normal lives 
involves travel for both business and pleasure. We face a long 
and difficult climb back to a robust economic well-being and we 
recognize that our industry is not alone in dealing with 
economic woes brought on largely by the rippling effects of the 
terrorist actions of September 11 and thereafter. And when 
business in America hurts, the airlines and all facets of the 
tourism industry feels the pain even more acutely.
    For every airline employee, 16 jobs are provided by 
business that depend all or in large part on the airlines for 
their existence. This total adds up to nearly 10.5 million jobs 
and accounts for 4 percent the gross domestic product. The 
President and the Congress have not only recognized our 
problems, but also have recognized a national need for a viable 
and vigorous airline industry and have taken steps to help us 
deal with our predicament, and we in the airline industry are, 
of course, very grateful.
    The $15 billion in loans and grants for which Congress has 
voted will enable the airline industry to continue to be a 
vital part of the tourism industry in the United States. The 
only permanent cure for what ails our industry is to get 
America flying again, to get people and products back on board 
our planes for business, for vacation to visit relatives, and 
for all the reasons that Americans and visitors alike have 
chosen to fly.
    Currently, we are flying close to 30 percent fewer 
passengers each day than we were a year ago. We need to get 
back to where we were and until that happens, hotel rooms, 
restaurants, cruise ships remain substantially and adversely 
affected. When we do get back to where we were, it will also 
help travel and tourism and it will increase needed State and 
local tax revenues. And this can only happen by convincing the 
American people as well as businesses and industry that flying 
today is safer and more secure than it ever has been. We need 
to restore the confidence of the American people in the safety 
and convenience of air travel.
    President Bush certainly contributed mightily in this 
effort by his personal involvement in a national campaign to 
get Americans off the ground and onto our planes and back to 
business. As well, confidence in aviation security is also a 
key to our recovery. As you know, the airlines and the 
government have already taken steps to increase security and 
are communicating that information to the traveling public 
through a variety of channels.
    So I want to assure you of three things: First, our job, 
our responsibility in the airline industry, is to remind people 
that flying is a safe way to travel and that safety and 
security of our passengers and crew is always our first 
priority. Second, we will work very hard in our efforts to 
enforce the FAA's new security procedures so as not to 
unnecessarily delay or inconvenience passengers, but at the 
same time, to make them feel secure throughout their travels. 
And third, with every step we take, we are going to work with 
the flying public to help them understand the importance of 
improving safety and security, and at the same time educating 
them as to the need for each step and the time it may take to 
accomplishing these goals.
    In closing, let me assure you that we in the airline 
industry are absolutely committed to achieving these goals and 
encouraging all of America to get back to business as President 
Bush did when he urged us to get on board. In the long run, it 
is up to us in the airline industry and the entire tourism 
industry to renew and invigorate this important segment of the 
Nation's economy. Working together, we will keep America 
flying, and I urge everyone to get on board and join us in 
promoting travel and tourism in this great country.
    Mr. Chairman, this concludes my prepared remarks and I 
would be happy to answer any questions that you have.
    [The prepared statement of Robert Warren follows:]
  Prepared Statement of Robert Warren, Senior Vice President, General 
   Counsel and Secretary, Air Transport Association of America, Inc.
    Mr. Chairman, members of the Committee, I am Robert Warren, Senior 
Vice President, General Counsel and Secretary of the Air Transport 
Association of America, Inc. On behalf of our member airlines, and, 
indeed, I would venture to say on behalf of all aviation consumers, 
thank you for holding today's important hearing on the state of the 
tourism industry.
    This morning, I want to talk about the current condition of the 
airline industry and its effect on tourism. And, more importantly, I 
want to talk about what we--those in the airline business and all of us 
in the tourism industry--can do to improve that condition.
    Sadly, I have no easy answers and I have no magic wand. But we need 
to follow President Bush's admonition to return to our daily lives and 
not let the terrorists win--and part of this return to normal involves 
travel for both business and pleasure.
    Even in the best case, we face a long and difficult climb back to 
economic stability. It is small solace to know that our industry is not 
alone in dealing with economic woes.
    Wherever we look across our land, we see that the businesses that 
propel America, indeed, the industries that propel the world--are 
hurting--largely because of the ripple effects of the terrorist actions 
of September 11th. And when business in America hurts the airlines and 
all facets of the tourism industry hurt as well.
    For every airline employee, 16 jobs are provided by businesses that 
depen--all or in large part--on the airlines for their existence. The 
total adds up to nearly ten-and-a-half million jobs and accounts for 
four percent of the gross domestic product.
    While you may find these statistics interesting, when I look at 
them today, I find them alarming. Because they are not holding up under 
today's conditions. Too many jobs are being lost. Too many schedules 
are being cut back. Too many planes are no longer are flying. And too 
many employees are being furloughed.
    The President and the Congress have not only recognized our 
problems, but also recognized the national need for a viable and 
vigorous airline industry, and have taken action to help us deal with 
our predicament. And, we in the airline industry are, of course, 
grateful. The $15 billion in loans and grants--for which Congress has 
voted--will enable the airline industry to continue to be a vital part 
of the tourist trade in the United States.
    The only permanent cure for what ails our industry is to get 
America flying again. To get people and products back onboard our 
planes--for business, for vacation, to visit relatives--for all the 
reasons that Americans and visitors alike have always chosen to fly.
    Currently, we are flying close to 30 percent fewer passengers each 
day than we were a year ago. We need to get back to where we were. And, 
until that happens, hotel rooms and restaurants and cruise ships will 
remain substantially and adversely affected. When we do get back to 
where we were, it will also help local travel and tourism, and it will 
increase needed state and local tax revenues.
    So, how do we make it happen?
    Again, there are no easy answers.
    First, we have to convince the American people, as well as business 
and industry, that flying today is safer and more secure than it has 
ever been. We need to restore the confidence of the American people in 
the safety and convenience of air travel. We need to tell them again 
and again. And, we need to show them that flying is safe, and that we 
are making it safer all the time.
    When the public sees members of the President's Cabinet flying, as 
six of them did last month; and when the public sees members of 
Congress flying every week, we hope they will too.
    President Bush's personal involvement in a national campaign to get 
Americans off the ground, onboard our planes and back to business is a 
very important development.
    Communication is also a key component of our recovery and, as you 
know, the airlines and the government have already taken a number of 
steps to increase security, and are communicating that information 
through a variety of channels.
    For instance, only ticketed passengers--with special exceptions for 
minor children and persons with disabilities--are allowed in boarding 
areas. Curbside parking and curbside check-in have been reinstated at a 
number of airports that meet certain FAA criteria, and everything is 
being evaluated for what works and what should be changed. Airports 
have added more police. And, as President Bush directed, the state 
governors are supplying armed and trained National Guard troops for 
increased security at airports. This additional law enforcement 
presence should also give passengers a greater sense of confidence.
    In addition, the Air Transport Association has called on the 
government to re-institute the use of air marshals and to federalize 
airport security.
    Additionally, the President announced an aggressive security 
package including:

 $3 billion in funding to improve security of airplanes and 
        airports
 $500 million in grant funding to make cockpits and pilots more 
        secure
 a dramatic increase in the number of federal air marshals on 
        airplanes and
 management of all airport security and screening services by 
        the federal government
    Needless to say, improving airport and airplane safety and security 
are not new approaches for the airline industry. As far back as 1996, 
following the TWA Flight 800 accident, the ATA presented a far-reaching 
security plan to the White House Commission on Aviation Safety and 
Security, chaired by then Vice President Gore.
    At that time, we warned that ``terrorism has come to our shores and 
we need aggressively to combat the threat to our nation.''
    We promised then to do everything in our power to assist the 
government in improving aviation security. Our plan then included a 
recommendation that the FBI dedicate a significant amount of its 
resources to the problem of aviation terrorism.
    That, of course, included keeping careful track of persons coming 
from nations known to harbor terrorists, as well as persons believed to 
have ties to terrorist organizations.
    Other recommendations included:

 the use of air marshals and of bomb-sniffing dogs,
 the deployment of explosive-detection devices and,
 U.S. government certification of companies contracting to 
        provide airport passenger screening
 The use of effective computer-assisted passenger screening 
        technology and techniques, known as CAPS.
    And so, I want to assure you of four things:

First, our job and our responsibility in the airline industry is to 
        remind people that flying is so safe that even the most timid 
        should not be afraid to fly. The safety and security of our 
        passengers and crews is always our first priority.
Second, we are doing everything in our power to bring that about. Among 
        other things, we are taking another look at the proposals we 
        made five years ago to the Gore Commission, to update them and 
        come back and push for the implementation of those that have 
        not been adopted.
Third: We will work very hard in our efforts to enforce these new 
        security precautions, so as not to unnecessarily delay or 
        inconvenience our passengers.
And Fourth: With every step we take, we are going to work with the 
        flying public to help them understand the importance of 
        improving safety and security. And, at the same time, educating 
        them as to the need for each step and the time it may take to 
        accomplish these goals.
    In closing let me assure you we in the airline industry are 
absolutely committed to achieving these goals and to encouraging all of 
America to get back to business--as President Bush did when he urged us 
to ``Get Onboard.''
    In the long run, it is up to those of us in the air transport 
industry and the entire tourism industry to renew and reinvigorate this 
segment of the nation's economy.
    Government must do its part. I know you are doing your part. And I 
assure you that we in the airline industry are doing and will continue 
to do ours.
    Working together, we will keep America flying. I urge all of you to 
``Get Onboard'' and join us in promoting travel and tourism in our 
great country.
    This concludes my prepared remarks. I would be happy to answer any 
questions you may have.

    Mr. Stearns. I thank the gentleman.
    We have been called for a vote and we have just about 10 
minutes left. And I want to be sure that members come back, so 
I think we are going to adjourn right now, vote, and I will be 
right back. And Mr. Towns will be right back and we will 
continue. And I think other members will too. But I would say 
to all of you, most of us didn't even know about the Kyl bill 
or the Shadegg bill. We got the ``dear colleague,'' but we get 
``dear colleague'' letters all the time. But the fact that this 
hearing has come about, it certainly spread across the House 
that we now know about Shadegg's bill. We know about Senator 
Kyl's bill. And as chairman 2 days ago, I didn't even--I mean, 
until late last week I didn't know about Congressman Shadegg's 
bill.
    So by you coming here, you are impacting the Members of 
Congress to look at these bills. And now Congressman Patrick 
Kennedy's bill I heard about today for the first time. So we 
are going to vote. We will be right back. You are very 
important to be here to spread the word so the other Members of 
Congress know about it and we can get this stimulus package 
going.
    So with that I will adjourn and we will be right back.
    [Brief recess.]
    Mr. Shimkus [presiding]. Let me be so bold to call this 
hearing back into order. And our desire is to try to move as 
expeditiously as we can. We want to make sure we get the 
opening statements on record, and I will be presumptuous in 
taking the chair until the chairman gets back. We now would 
like to hear from Mr. Marriott, Chairman and CEO of Marriott 
international. Welcome. Your full statement is in the record 
and you are recognized for 5 minutes.

                 STATEMENT OF J.W. MARRIOTT, JR.

    Mr. Marriott. Thank you. Mr. Chairman and members of the 
committee, I thank you very much for this invitation. These 
past 5 weeks have been the most difficult weeks for the travel 
and tourism industry that I have ever experienced in the 45 
years I have been in the business. When the weapon of choice 
for a terrorist attack is four airlines filled with fuel and 
passengers, it is bound to have a devastating effect on all of 
us.
    Immediately following the attack our net reservations 
dropped 94 percent. Our room revenues were already down about 
10 percent prior to September 11. Business has come back, but 
only part way. In the past 3 weeks, in September, we were about 
off about 40 percent in revenue. In the first week of October, 
we are 25 percent below last year in combined occupancy and 
room rate, what we call rev par. And we seem to have plateaued 
at that level. So we are running about 20 to 25 percent below 
last year in sales. Our big city and resort and convention 
hotels have been hit the hardest with massive group 
cancellations. Business and vacation travel are far below what 
they should be.
    September and October are the very best months for business 
and convention travel. Our industry has lost a lot of the 
profit, almost all the profit that these months usually 
provide. The hotel industry itself employs over 2 million 
people. Today, about half of these employees either have been 
laid off or are working 1 or 2 days a week. While some 
conventions have been rebooked for next year, the airlines are 
running an 80 percent schedule, planes are half full. Big 
travel agencies continue to report future bookings are very 
soft and now we are coming in for what is the very slow season 
for the hotel business. December is the worst hotel month and 
January is the next worse. The lodging industry is quite 
capital intensive with over $150 billion in mortgage debts, and 
many hotels will not make their debt service payments.
    We are not asking for a bailout, just your leadership in 
recognizing a major problem and its tremendous impact on our 
economic stability and jobs. Your immediate action is needed to 
help us resolve the situation before it completely erodes not 
only the U.S. economy, but also the global one. We in the 
industry are doing everything possible to act responsibly, both 
with labor and management. We have a massive advertising 
campaign. We have lowered our room rates. We are offering one 
of the most attractive travel packages we have ever offered. We 
have waived the minimum hours required for our benefits-
eligible employees so they can keep their medical coverage for 
themselves and their families during this emergency period. We 
have frozen and reduced executive salaries. We are looking at 
every conceivable possibility to build back our business. We 
ask our government to do the same. To join us, labor and 
management, as partners in solving our travel and tourism 
crisis.
    In bipartisan meetings with Members of Congress, we have 
been challenged to make recommendations. Of those measures 
which provide an immediate stimulus to our economy for a 
temporary period, I believe that one of the best proposals 
which Congress should consider, because it will provide an 
immediate shot in the arm for travel and do more to save jobs, 
is a travel tax credit. The Congress should enact as part of an 
economic stimulus plan a temporary, and I stress temporary 
business travel tax credit targeted and limited in time and 
cost. The Travel America Now Act of 2001 has been introduced in 
both the House and the Senate.
    The House legislation is H.R. 3041, introduced by 
Representative Shadegg of Arizona, Abercrombie of Hawaii, and 
Wilson of New Mexico. We strongly support their proposal. Let 
me quote from a recent issue of Newsweek, ``Business Trips 
Among the Terrorist Victims.'' the article goes on to state in 
this post attack period, 58 percent of American business 
corporations have plans to curtail travel. I know a lot of 
Members of Congress don't like tax credits, but we believe they 
can be used effectively. We use them effectively in getting 
people back to work and getting them off the welfare payrolls, 
and this small investment has saved a lot of money both for 
employees and employers.
    Our company has employed 3,000 former welfare recipients 
through our pathways to independence program. Now is the time 
for Congress and the administration to be creative by using the 
tax credit process to get us traveling again. There is nothing 
that will get business back to normal faster and more 
effectively than a travel tax credit. You must do something 
immediately to get our people traveling, or the consequences 
for our economy could be disastrous. Labor and management are 
united in this effort. Just as labor supports our efforts to 
stimulate the economy through a travel tax credit, we support 
their efforts to assist workers who have been laid off as a 
result of the events of September 11. This is a big industry. 
It is an important industry. I hope you will help us get 
America moving again. Thank you very much.
    [The prepared statement of J.W. Marriott, Jr. follows:]
Prepared Statement of J.W. Marriott, Jr., Chairman and Chief Executive 
                 Officer, Marriott International, Inc.
    Mr. chairman and members of the subcommittee, I'm Bill Marriott. 
Thank you for the invitation to testify this morning.
    These past four weeks have been the most difficult weeks for the 
travel and tourism industry that I have experienced in the 45 years I 
have been in the hotel business.
    On september 11 we had our World Trade Center Hotel completely 
destroyed and our Financial Center Hotel, one-and-a-half blocks away, 
severely damaged. Hopefully, we will be able to reopen it in four or 
five months. Tragically, two of our managers were killed at wtc as they 
stayed behind trying to make sure that our guests had been evacuated.
    Between the two hotels we successfully evacuated over 2000 people.
    When the weapon of choice for a terrorist attack is four airliners 
filled with fuel and passengers, it is bound to have a devastating 
effect on all of us.
    Immediately following the attack, our net reservations dropped 94%. 
Our room revenues were already down about 10% prior to September 11. 
Business has come back. But only part way. In the last three weeks in 
september we were off about 40% in revenue. In the first week of 
October we are 25% below last year in combined occupancy and room 
rate--or what we call revpar.
    Our big city and resort convention hotels have been hit the hardest 
with massive group cancellations. Business and vacation travel are far 
below what they should be. September and October are the best months 
for business and convention travel. Our industry has lost all of the 
profit that these months usually provide.
    The hotel industry employs over two million people in the U.S. 
Today, one half of these employees either have been laid off--or are 
working one or two days per week.
    While some conventions have rebooked for next year, the airlines 
are running an 80% schedule and planes are half full. The big travel 
agencies report future bookings are very soft and now we are coming 
into the slow season. December is the worst hotel month and January is 
the second worst.
    The lodging industry is very capital intensive, carrying $150 
billion of mortgage debt. Many hotels will not make their debt service 
payments.
    We are not asking for a bailout--just your leadership in 
recognizing a major problem and its tremendous impact on our economic 
stability and jobs. Your immediate action is needed to help us resolve 
this situation before it completely erodes not only the U.S. economy, 
but also the global one.
    We in the travel and tourism industry are doing everything within 
our power to act responsibly in doing our part--both labor and 
management. We are embarking on a massive advertising campaign to ``get 
America traveling again''.
    We have lowered our rates and are offering the most attractive 
travel packages ever.
    We have waived the minimum hours required for our benefits eligible 
employees so that they can keep their health coverage for themselves 
and their families during this emergency period. And we have frozen or 
reduced executive salaries.
    We are looking at every conceivable possibility to build back our 
business in this difficult time.
    We ask our government to do the same--join us, labor and 
management, as partners in solving our travel and tourism crisis. We 
need your leadership as never before.
    In bipartisan meetings with Members of Congress, we have been 
challenged to make recommendations of those measures which would 
provide an immediate stimulus to our economy for a temporary period.
    The one best proposal I think Congress should consider, because it 
will provide an immediate shot in the arm for travel and do more to 
save jobs now is a travel tax credit.
    The Congress should enact, as part of any economic stimulus plan, a 
temporary--and I stress temporary--business travel tax credit, targeted 
and limited in time and cost.
    The ``Travel America Now Act of 2001'' has been introduced in both 
the House and Senate. The House legislation is H.R. 3041 introduced by 
Representatives Shadegg of Arizona, Abercrombie of Hawaii, and Wilson 
of New Mexico. We support their proposal.
    Let me quote from a recent issue of Newsweek: ``Business trips are 
among the terrorists' victims''. The article goes on to state that in 
this post-attack period 58% of American business corporations have 
plans to curtail travel.
    I know that many Members of Congress do not like tax credits--but 
they can be effective when used prudently and cautiously.
    A great example is the work opportunity tax credit, in which our 
government and business have worked in partnership to get many of our 
citizens off the welfare rolls and onto payrolls where they want to be 
and deserve to be. All of you know how this small investment has saved 
money, helping both employee and employer. Our company alone has been 
able to train and put 3,000 former welfare recipients on our payroll 
through our ``Pathways to Independence'' program.
    Now is the time for the Congress and the administration to be 
creative by using the tax credit process to get us traveling again. 
There is nothing that will get businesses ``back to normal'' faster--
and more effectively--than a travel tax credit.
    We must do something immediately to get people traveling again--or 
the consequences for our economy could be disastrous.
    Let me also stress that labor and management are united in this 
effort. Just as labor supports our efforts to stimulate the economy 
through a travel tax credit, we strongly support their efforts to 
assist our workers who have been laid off as a result of the events of 
September 11.
    Travel and tourism is the first, second, or third most important 
industry in 28 states and the District of Columbia. It employs 18 
million Americans, and pays over $100 billion per year in federal, 
state and local taxes.
    Last year it generated a $17 billion trade surplus.
    I hope you will help us get America moving again.
    Thank you, and I request that my entire testimony be included in 
the record.

    Mr. Shimkus. Thank you, Mr. Marriott.
    Now we will turn to Ms. Nicholas, president and CEO of NYC 
and Company. Thank you. Your full oral statement is in the 
record. You have 5 minutes.

                STATEMENT OF CRISTYNE L. NICHOLAS

    Ms. Nicholas. Thank you, Mr. Chairman and ranking members. 
NYC & COMPANY Company is New York City's official tourism and 
convention marketing organization. We are a private not-for-
profit organization representing more than 1,400 tourism-
related businesses, including museums, hotels, restaurant, 
retail stores, theaters, tour operators and attractions. I 
would like to thank the subcommittee for this opportunity to 
testify about the current state of New York City's tourism 
industry. Tourism is a vital component of the city's economy. 
It generates $25 billion in spending. It equals 3,100 for every 
man, woman and child in our city. The more than 37 million 
visitors who we welcomed to New York last year had a tremendous 
and positive impact throughout all five boroughs.
    First, they supported 282,000 New York City jobs from the 
hotel bellhop to the executive director of the Metropolitan 
Museum of Art. Tourism offers a career opportunity for 
individuals from all walks of life. Our visitors generated $936 
million in safety tax revenues, 882 million in State tax 
revenues, and $1.3 billion in Federal tax revenues. Tourism is 
one of the largest job producers in New York City with a growth 
rate that has been among the most stable of the city's major 
industries. And in addition, the tourism industry has been a 
key employer in the Nation's welfare-to-work initiatives.
    The tragic events of September 11 have been devastating to 
our city's tourism industry. In the first 4 weeks following the 
attacks, we estimate that $271 million were lost in New York 
City visitor spending. New York City's hotels have experienced 
a tremendous drop in activity, during what is traditionally 
their strongest quarter. In the weeks following the attacks, 
the city's hotels lost an estimated $6 to $10 million a day in 
room revenues. And while hotel activity has picked up to some 
extent, it is nowhere near normal levels. The number of hotel 
room nights sold down 29 percent from originally forecast. And 
occupancies are currently hovering around 67 percent, compared 
to the 84 percent the same period last year.
    To date, an estimated 6,000 New York City hotel union 
employees, 25 percent of the entire union membership have been 
laid off. A figure that includes 1,000 jobs lost due to the 
destruction of our downtown hotels. New York City restaurants, 
a $9 billion industry, employ more than 160,000 people. Since 
September 11, more than 30 restaurants have closed permanently 
and an additional 40 temporary closed. According to the New 
York State Restaurant Association, restaurant sales among their 
New York city members declined 47 percent between September 10 
and September 30. To date, these restaurants have laid off 12 
percent of their employees and anticipate further layoffs up to 
25 percent of the entire work force.
    New York City theater community has also sustained 
significant losses. Broadway ticket sales are down 26 percent 
since September 11 compared to the year 2000. In addition to 
immediate revenue shortfalls, the advanced ticket sales which 
sustain cash-poor Broadway are virtually nonexistent, making it 
increasingly difficult to forecast future activity. As for the 
city's cultural institutions and attractions, the combined 
attendance at the Metropolitan Museum of Art and the Museum of 
Modern Art and the Bronx Zoo is down 47 percent over a 
comparable period in 2000.
    Citywide the cost associated with the destruction of the 
World Trade Center is enormous. New York City is expected to 
lose 110,000 jobs. And we will lose an estimated $1 billion in 
tax revenues, including $86 million in hotel tax revenues and 
$270 million in sales tax revenues. Tourism industries, the 
travel research agency for the U.S. Department of Commerce 
expects international visitorship to the United States to 
decline 13 percent. While these valuable international 
travelers make up only 18 percent of New York City's annual 
visitors, or 6.8 million people, they are responsible for 41 
percent of all visitor spending, which means New York, which is 
the country's number 1 destination for international visitors, 
stands to be disproportionately hurt.
    New York City & Company joins the Nation's tourism industry 
and Travel Industry Association of America in supporting 
immediate legislative efforts to stimulate travel and tourism. 
Specifically we encourage Congress to restore the full 
deduction for all business meals and entertainment expenses now 
subject to a 50 percent limitation, institute a temporary 
Federal tax credit of 1,000 per person and 2,000 for a couple 
filing jointly for personal travel expenses for travel within 
the United States and restore the spousal travel deduction to 
100 percent.
    We support the recommendation of the travel business 
roundtable for the creation of a Presidential advisory counsel 
on travel and tourism. We urge the Federal Government to fund 
national and international tourism marketing efforts as they do 
in other countries. And finally, we ask the Federal Government 
to lift the NEA funding caps on New York City cultural 
institutions. These legislative efforts are important, 
immediate and necessary steps to maintain a vibrant tourism 
industry, generate much needed jobs, and drive economic growth 
now and into the future. With the help of our friends in this 
room and around the Nation, together we can act immediately to 
spur this country, the vitally important tourism economy, 
create jobs and generate taxes. And as Mayor Giuliani has been 
saying for weeks now, and also Congressman Towns, the best way 
that people can help New York City is to come to the city, eat 
out in the restaurants, stay in a hotel, go to a Broadway show, 
a museum, take a tour. We will be happy to help you with that. 
It is also the best way that I know of that can also show the 
world that in the wake of this tragic event of September 11, 
both our city and Nation will emerge stronger than ever. Thank 
you for your time.
    [The prepared statement of Cristyne L. Nicholas follows:]
  Prepared Statement of Cristyne L. Nicholas, President & CEO, NYC & 
                                Company
    Good Morning, Chairman Stearns and members of the Subcommittee.
    My name is Cristyne L. Nicholas, President & CEO of NYC & Company, 
New York City's official tourism organization. A private, non-profit 
organization, NYC & Company represents more than 1,400 tourism-related 
businesses, including museums, hotels, restaurants, retail stores, 
theaters, tour organizations, and attractions. It has a current budget 
of $12 million and is the leading force in attracting visitors and 
visitor revenue to New York City.
    I would like to thank the Subcommittee for its invitation to 
testify about the state of New York City's tourism industry following 
the events of September 11.
    Tourism is a vital component of New York City's economy. A $25 
billion industry (equivalent to $3100 for every man, woman and child in 
the city), tourism's economic impact from its more than 37 million 
visitors is extensive:

 Tourism supports 282,000 NYC jobs directly and indirectly. 
        From the hotel bellhop to the Executive Director of the 
        Metropolitan Museum of Art, tourism offers career opportunities 
        for individuals from all walks of life.
 Taxes generated by NYC tourism in 2000:
      $936 million city tax revenues
      $882 million state tax revenues
      $1.3 billion federal tax revenues
    And even more impressive is the growth the industry has experienced 
in the last five years: visitor spending is up 34%; city and state tax 
revenues rose 35% and 33%, respectively; federal taxes also rose during 
this time period, up 30%.
    And most importantly, the number of jobs supported by tourism has 
increased 26% since 1996. Tourism is currently one of the top five 
largest providers of jobs in New York, with a job growth rate that has 
been one of the most stable and sustaining year after year among the 
city's major industries including health services, business services 
and Wall Street. In addition, tourism has long been an active 
participant in the nation's Welfare-to-Work programs and initiatives.
    The events of September 11th have been devastating to the city and 
its tourism industry. In the time period of September 11th through 
October 6th, we estimate that $270.8 million dollars has been lost in 
New York City visitor spending.
    And the losses continue. Tourism is greatly dependent on the 
consumer's sense of well-being and financial security. The events 
following those of September 11, many of which are heightening consumer 
anxiety, are challenging the industry's ability to reassure the 
consumer, and probably decelerating the nation's economic recovery 
period.
    Tourism is not recession-proof. In addition to well-known names 
such as Marriott, the Empire State Building and Circle Line, the city's 
tourism industry is a community of small businesses, many of whom will 
not be able to sustain long-term declines in activity.
    The following explain how individual segments of the city's tourism 
industry are faring:
NYC Hotels
    New York City's hotels experienced a tremendous dropoff in activity 
during what is traditionally one of the strongest visitor months for 
the city. In the first few weeks since September 11th, the city's 
hotels lost an estimated $6-$10 million daily in room revenues. While 
hotel activity has picked up to some extent, it is nowhere near where 
it was forecast to be. Specifically, in terms of the percentage of 
hotel rooms occupied since September 11th:

    9/11/01-9/15/01: 63.1% NYC hotel rooms occupied
    9/16/01-9/22/01: 45.4%
    9/23/01-9/29/01: 59.3% (comparable 2000 period: 86.2%)
    9/30/01-10/6/01: 67.5% (comparable 2000 period 83.7%)
    (Source: Hotel RevMax)
    An estimated 6000 NYC hotel union employees (25% of the entire 
union membership) have already been laid off (includes 1000 jobs lost 
due to destruction of downtown hotels). In addition, the remaining 
employees have voluntarily reduced the number of days in their work 
week from five to three or four to prevent any further layoffs.
NYC Restaurants
    The NYC restaurant industry is a $9 billion industry, employing 
over 160,000 individuals.
    More than 30 restaurants have permanently closed following the 
events of September 11th with an additional 40 temporarily closed. 
(Source: Zagat Survey)
    According to the New York State Restaurant Association, restaurant 
sales among their New York City members declined 47% in the period 9/
10-9/30 compared to same period in 2000. Furthermore, these members 
have, so far, laid off 12% of their employees and anticipate that 
further layoffs up to 25% of the workforce may be necessary.
Broadway and Attractions
    NYC's theater community also sustained significant losses due to 
the events of September 11. Immediately following that morning's 
events, Broadway cancelled its Tuesday evening and Wednesday matinee 
and evening performances. And while the theaters reopened on Thursday, 
September 13th, the performances played to considerably smaller 
audiences than is normal in September. In terms of weekly ticket sales, 
for the weeks ending:

    9/16: down 65% over same 2000 period (three performances cancelled)
    9/23: down 24%
    9/30: down 10%
    10/07: down 9%
    (Source: League of American Theatres and Producers)
    All told, Broadway ticket sales were down a cumulative 26% for this 
period over the comparable period in 2000. The challenge now facing 
Broadway is that advance ticket sales are not at previous levels, 
making it increasingly difficult to forecast future activity and 
respond accordingly.
    The city's cultural institutions and attractions continue to feel 
the impact of last month's events. For the time period of September 11 
to October 1, the combined attendance at the Metropolitan Museum of 
Art, the Museum of Modern Art and the Bronx Zoo is down 47% over the 
comparable period in 2000.
Overall NYC Economy--Estimated Impact
    The costs associated with the destruction of the World Trade 
Center, the damage to Lower Manhattan, the disruption of business, the 
decline of consumer confidence and a deeper-than-previously-expected 
recession are staggering.
    NYC Office of Management & Budget reports:

 Total loss of 110,000 NYC jobs
 Estimated loss of $1 billion in tax revenues including over 
        $100 million in hotel tax revenues and $270 million in sales 
        tax revenues
    NYC Comptroller Office reports:

 Retail/Wholesale: $1.7 billion in losses and 17,500 lost jobs
 Hotel/Restaurants/Theaters: $2.3 billion in losses. Job 
        losses: 8000 restaurant jobs, 6000 hotel jobs
 Airlines: 7000 job losses
Travel Forecasts for 2001 and 2002
    While it is too soon to forecast the specific long-term impact of 
September 11th and subsequent events on NYC's tourism industry, it is 
important to understand the national tourism picture in which NYC 
operates. The Travel Industry Association of America, the trade 
association for the nation's tourism industry, has forecast the 
following for domestic travel within the US:

    3rdQ 2001 volume: 5% decline over same period 2000
    4thQ 2001 volume: 10% decline over same period 2000
    x2001volume: 5% decrease over 2000
    2002 volume: 1% increase over 2001
    2002 will remain below 2000 levels
    The international travel picture is even more grim. This is 
particularly troubling to the tourism industry in New York City, given 
our position as the number one US destination for international 
visitors. More importantly, while international visitors represent 18% 
of all NYC visitors, they generate 41% of all NYC visitor spending.
    As for the outlook for international travel to the US, Tourism 
Industries, the travel research agency for the US Department of 
Commerce, anticipates that:

2001 volume, already declining due to a economic slowdown, will see an 
        accelerated drop in 2001, resulting in double-digit declines 
        for almost all international markets
2002 will see steady recovery, more likely in the latter half of the 
        year. Volume will not, however, reach 2000 levels
With the exception of the United Kingdom and Canada, most international 
        markets will not fully reach 2000 levels until 2004/2005. 
        Especially troubling is Japan, which may not fully recover 
        until 2006.

                    Forecast of International Travel to the US--Top Visitor Producing Markets
----------------------------------------------------------------------------------------------------------------
                                                                   % chg                 % chg    When this will
                                              2000       2001       over       2002       over      match 2000
----------------------------------------------------------------------------------------------------------------
Total....................................      50.9m      44.5m       -13%      46.4m        +4%            2004
Canada...................................      14.6m      13.4m        -8%      14.0m        +5%            2003
Japan....................................       5.1m       4.0m       -21%       4.1m        +4%     beyond 2005
UK.......................................       4.7m       4.1m       -13%       4.3m        +5%            2003
Germany..................................        1.8      m1.3m       -25%       1.4m        +6%            2005
France...................................       1.1m    878,000       -19%    917,000        +5%            2004
Brazil...................................    737,000    650,000       -12%    680,000        +5%            2004
South Korea..............................    662,000    547,000       -17%    579,000        +6%            2004
Italy....................................    612,000    495,000       -19%    522,000        +6%            2005
Argentina................................    534,000    438,000       -18%    419,000        -5%     beyond 2005
----------------------------------------------------------------------------------------------------------------

NYC Tourism Industry's Immediate Response to September 11th Events
Tuesday, September 11
    The first concern was for the thousands of visitors who found 
themselves stranded in a city that was virtually shut down. NYC & 
Company made the immediate decision to keep NYC's Official Visitor 
Information Center open throughout the day and reached out to the media 
to alert travelers in need that the Center was ready to assist them.
    A list of hotel room availability was immediately posted to NYC & 
Company's website, www.nycvisit.com, and updated on a 24-hour basis 
throughout the week to reflect the visitor industry's quickly changing 
status. This list was supplemented with a list of which businesses were 
open and what services they were providing.
    Meanwhile, the Convention Sales, Convention Services, and 
Conference Express departments began reaching out to meetings and 
conventions scheduled in New York this fall to update them on events 
and to reassure them that we were working closely with the city's 
hotels and event venues to minimize any possible disruptions of their 
plans.
Wednesday, September 12
    NYC & Company began to coordinate the efforts of the hundreds of 
city restaurants in order to feed emergency workers--a massive, 
complex, and unprecedented undertaking.
    At the same time, NYC & Company joined forces with Hotel 
Association of New York City to begin canvassing the city's hotels 
regarding the free and deeply discounted rooms available for the rescue 
workers and the victims' family members who would be coming into the 
city.
Thursday, September 13
    NYC & Company brought a cross-section of industry leaders to Mayor 
Rudolph Giuliani's temporary command center to communicate the entire 
industry's willingness to help and to begin the important process of 
coordinating our broader actions and messages with those of the city.
Friday, September 14
    NYC & Company established a toll-free New York City Visitor Hotline
    (888/805-4040 domestic, 860/496-5972 international) as a resource 
for travelers in New York City and for those with plans to visit. NYC & 
Company's professional staff of multilingual visitor information 
counselors--available on the phone through the hotline and in-person to 
walk-in visitors--were joined by NYC & Company staff volunteers to 
extend the hours of NYC's Official Visitor Information Center. NYC & 
Company staff also established a help desk at the Mayor's Office of 
Operations at the piers to assist emergency workers and the families of 
the victims with housing and general information.
NYC Tourism Industry's Short-term and Long-term Responses
Meetings and Conventions
    In an overwhelming show of support for New York City, significant 
meetings, conventions and tradeshows have rescheduled so they could 
meet in NYC, including:

 The American Society of Travel Agents' (ASTA) World Travel 
        Congress will bring its 2,500 attendees to New York's Jacob K. 
        Javits Convention Center on November 4-7, 2001.
 The American Society of Association Executives (ASAE), 
        representing the nation's top trade associations and hundreds 
        of millions of dollars of potential convention business, will 
        hold its 150-person Board of Directors meeting on November 16-
        18, 2001.
 The American Federation of State, County and Municipal 
        Employees (AFSCME), AFL-CIO is bringing the 1,500 attendees of 
        its biennial Women's Conference on November 16-18. The meeting 
        will be dedicated to union member Father Mychal Judge and seven 
        people who remain missing.
 The Magazine Publishers of America (MPA) will bring the 600 
        attendees of the annual American Magazine Conference on October 
        21-24.
 Meeting Planners International (MPI) will bring the MPI 
        Foundation Meeting on October 27.
    Major organizations reaffirmed their choice of New York City for 
their high-profile events, including:

 Microsoft will hold the official kickoff for the new Windows 
        operating system XP in Times Square and Rockefeller Center on 
        October 25, 2001; events will include a free concert by a major 
        popular music act and a high-profile media event featuring 
        Chairman Bill Gates.
 The Audio Engineering Society is bringing its 15,000 to 20,000 
        attendees to New York from November 30 to December 3, 2001.
 The International Engineering Conference and Exposition is 
        bringing 2,500 attendees to New York City from November 11 to 
        16, 2001.
I Love NY
    New York State and the Port Authority of New York and New Jersey 
each contributed $20 million to a greatly enhanced I Love NY 
advertising campaign to encourage business travelers and tourists to 
come back to New York in the wake of the World Trade Center attack. The 
$40 million ad campaign features the ``I Love New York'' theme and 
well-known New Yorkers from entertainment, news, sports and government.
    The tourism outreach campaign will initially feature a television 
ad with notable New Yorkers including Yankee shortstop Derek Jeter, 
Regis Philbin and Kelly Ripa, CNBC's Maria Bartiromo, Ben Stiller, 
Governor Pataki and Mayor Rudolph W. Giuliani. The television ad began 
airing last week. In addition to the new television ad, the multi-media 
tourism outreach campaign will also feature radio and print ads in 
newspapers, magazines, and travel trade publications as well as outdoor 
advertising, Internet ads and direct mail in ensuing weeks.
Consumer Marketing Efforts
    NYC & Company has renamed its Paint the Town Red: NYC's Winter 
Celebration promotional campaign Paint the Town Red, White & Blue, 
adding travel package options, and moving up the start date to November 
5 to drive immediate business to New York City.
    A special Restaurant Week promotion to drive business for the New 
York restaurant community has been launched. From Monday, October 15 
through Sunday, October 21, 2001, almost 150 of the city's best 
restaurants are offering prix-fixe, three-course lunch menus for just 
$20.01 and prix-fixe dinner menus for $30.01--a fraction of their usual 
cost. For the first time ever, this Restaurant Week includes a dinner 
option and extends through a weekend.
    NYC & Company just signed a multi-year agreement with Delta 
Airlines to provide added tools with which to jump-start New York City 
visitorship. As part of Delta's commitment to New York City's efforts 
to revitalize travel, they have committed 10,000 free domestic tickets 
for use in targeted promotions and are waiving the normal rapid 
redemption fees charged to travelers wishing to redeem their frequent 
flyer miles to travel to New York City in the near future.
    NYC & Company aggressively pursued pro-bono advertising space from 
local, national, and international newspapers and magazines for a print 
advertising campaign. The ad, which tells people ``New York City Would 
Like to Thank You. In Person,'' has run in the New York Post, USA 
Today, The Boston Globe, Chicago Tribune, WHERE Magazine, Travel + 
Leisure, several Conde Nast titles, and in British publications.
    NYC & Company will also be repositioning our own television ad 
campaign, originally scheduled to run this fall, to address the current 
situation and promote immediate, short-term business.
Support for Legislative Efforts to Encourage Tourism to NYC
    NYC & Company joins the nation's tourism industry and the Travel 
Industry Association of America in supporting those legislative efforts 
that would provide immediate relief for U.S. travel and tourism by 
allowing for:

 restoration of full deductibility for all business meals and 
        entertainment expenses that are now subject to a 50 percent 
        limitation
 instituting a temporary federal tax credit of $1000 per person 
        ($2000 for a couple filing jointly) for personal travel 
        expenses for travel within the United States
 restoration of spousal travel deduction to 100% to encourage 
        spousal travel to meetings and conventions
    We also support the recommendation of the Travel Business 
Roundtable for the creation of a Presidential Advisory Council on 
Travel & Tourism.
    Furthermore, we urge the federal government to fund national and 
international tourism marketing efforts, thus joining those countries 
that understand the value of tourism and the importance of maintaining 
presence in the global marketplace. And finally, we ask the federal 
government to remove the NEA funding caps on New York City's cultural 
institutions, a group who has been greatly impacted.
    We feel all these legislative efforts are important steps in 
helping to maintain a vibrant travel and tourism industry, to keep 
working people working, and to stimulate economic growth.
    New York City absolutely, positively needs a strong, flourishing 
tourism industry. As Mayor Giuliani has been saying for weeks now, the 
best way people can help New York City is to come to the city, eat out 
at a restaurant, stay in a hotel, go to a Broadway show, a museum, an 
attraction; take a tour. And it is the best way I can think of to show 
to the world that in the wake of the tragic events of September 11th, 
our city and nation will emerge stronger than ever.
    Thank you.

    Mr. Stearns. I thank you.
    Senior vice president, Mr. Fred Lounsberry, Universal 
Studios.

                  STATEMENT OF FRED LOUNSBERRY

    Mr. Lounsberry. Thank you, Mr. Chairman, and thank you for 
the opportunity to be here today. I wear three hats before you 
today: Senior VP of Sales for Universal Theme Parks in 
Hollywood and Florida, the incoming national Chair of the 
Travel Industry Association of America, and the current 
Chairman of the Visit Florida public-private partnership 
responsible for the promotion of tourism in Florida.
    I want to just focus on some of the key points in my 
testimony which has been submitted for the record. Tourism has 
taken a direct hit and the impact is now cascading throughout 
our economy. We are now seeing the full impact of how far the 
absence of tourism has impacted many facets of our economy. 
When you and your constituents think about tourism, the first 
thing that probably comes to mind is the annual family 
vacation, a trip by air or auto to a hotel or resort or to 
visit friends and relatives, visit attractions, renting a car 
and dining out.
    However, it is also critical to recognize how tourism 
impacts our economy far beyond these travel businesses which 
first come to mind. All of these businesses have hundreds of 
suppliers, food and beverage suppliers, paper products and 
services. In addition, there are hundreds of peripheral 
businesses which support tourism and the convention industry, 
transportation companies, catering, gasoline, services, tour 
operators and travel agencies. As we see retail sales drop, it 
is also important to note that one of the top activities when 
Americans travel is to shop.
    Tourism is the first, second or third largest industry in 
29 of our States. In Florida that represents 20 percent of 
Florida's economic engine, employs 850,000 Floridians and 
generates $3 billion in State sales tax, and those taxes 
generated by tourism in Florida and elsewhere fund critical 
social needs. Sales tax, hotel bed taxes and gasoline taxes 
fund highway construction, convention centers and other 
infrastructure projects as well as schools. We must restore 
confidence in travel and get tourism back on its feet. We urge 
the Federal Government to provide funding and create a national 
advertising and marketing campaign to encourage travel to and 
within the United States. This can best be accomplished by 
establishing a public-private partnership through Federal 
matching funds to support State tourism campaigns as well as 
support for a national marketing effort through TIA, which is 
ideally positioned to fulfill such a role. We urge the Federal 
Government to raise the public-private partnerships, such as 
the one which exists in Florida, to a national level.
    Visit Florida, which is a unique public-private 
partnership, is responsible for marketing tourism in Florida. 
Last week, Florida Governor Jeb Bush unveiled an economic 
stimulus package proposing an additional $20 million for Visit 
Florida on top of the existing $20 million budget which would 
be matched and leveraged into a $100 million plus campaign to 
promote Florida tourism. I would like to show you the 30-second 
public service announcement which kicked off the Florida 
campaign to Floridians, which was produced by Universal on 
behalf of Florida tourism and is now airing throughout the 
State.
    Mr. Stearns. Is this airing throughout the United States or 
through----
    Mr. Lounsberry. Just in Florida, in all the key markets 
through the Florida Association of Broadcasters, and it is 
being put on the air by the stations in support of tourism.
    Mr. Stearns. And is that part of this $20 million effort?
    Mr. Lounsberry. Rebuilding tourism will not be a quick fix. 
It will take time and a concentrated effort on all fronts of 
our industry to rebuild consumer confidence and get Americans 
traveling again. We need your support and help. Thank you very 
much.
    [The prepared statement of Fred Lounsberry follows:]
Prepared Statement of Fred Lounsberry, Senior Vice President of Sales, 
    Universal Studios Recreation Group, Chairman, Visit Florida, & 
         Chairman-Elect, Travel Industry Association of America
    Mr. Chairman and Members of the Subcommittee, thank you for the 
opportunity to be with you today. My name is Fred Lounsberry, and I 
come before you wearing several hats. One for my role as Senior Vice 
President of Sales for Universal Studios Recreation Group. One for my 
role as Chairman of Visit Florida--the public-private partnership that 
promotes tourism in Florida. And one for my role as incoming Chairman 
of the Travel Industry Association of America.
    As Chairman of Visit Florida, I have spent the weeks since the 
September 11th tragedy working with our state's unique coalition of 
tourism leaders to develop a recovery plan. As I will detail a bit 
later, Florida is taking bold and innovative steps to revitalize its 
most valued asset. It is imperative that we do this on a national level 
as well, and the federal government has a significant role to play. We 
will ask you to provide critical leadership and resources, and to 
partner with state and local governments and the private sector to help 
get the American people traveling again.
    Many of us remember piling into the family station wagon to head to 
our favorite destinations. As the Chairman knows very well, the great 
state of Florida which we both call ``home,'' is blessed with that 
incredible aura and sense of ``getting away from it all'' that inspires 
so many families and businesses to plan their vacations and meetings 
there. It has become a way of life--a habit--simply ``routine'' for so 
many Americans. And that translates into a $50 billion a year industry 
for Florida.
    But on September 11, that all changed. Our nation is still sorting 
out the crippling effects of the most horrific act of terrorism we have 
ever witnessed. And even as our men and women in uniform go after an 
enemy so many of us don't fully understand beyond its sheer evil, we 
are still realizing the incredible ripple effect of that fateful day.
    Perhaps nowhere has the economic ripple effect been more evident 
than within the tourism industry. When terror struck New York, 
Washington, DC and Pennsylvania, it struck the heart of America and the 
spirit of its people. That newfound fear and jolt to consumer 
confidence scored a direct hit on the tourism industry.
    Are we struggling? Yes. It's no secret that airline travel is down, 
hotels are at record low capacities, rental car companies are hurting 
and theme parks are being forced to reduce operations. An already 
fragile economy prior to September 11 has now plummeted below where 
anyone could have imagined.
    Will we recover? The answer is also a resounding yes. Just as we 
are witnessing the resilience of Americans and courage of ordinary 
people performing heroic acts, I am here to tell you the tourism 
industry will thrive again.
    As our country enjoys being the number one tourist destination, our 
competitors throughout the world are watching to see what actions we 
take--and they have been swift. New York is investing $40 million; Las 
Vegas, $13 million; and California has stepped in with $10 million. In 
Florida, Governor Jeb Bush has taken to the airwaves at the industry's 
request, and has pledged to do ``whatever it takes'' to help rebuild 
the state's economy. I'd like to take this opportunity to show you a 
30-second public service announcement that was produced by Universal on 
behalf of Florida's tourism industry and is now airing throughout the 
state.
    Florida's efforts do not stop with the PSA. Even when faced with a 
budget shortfall no one could have anticipated, Governor Bush has 
committed to set aside critical funds to help tourism recover. Last 
Friday, the Governor unveiled an economic stimulus package that 
includes an additional $20 million for Visit Florida to help promote 
tourism. These initiatives include targeted advertising to Florida and 
out-of-state markets to encourage tourists to visit the state by 
automobile, national marketing campaigns, and partnerships with 
tourism-related businesses throughout the state to create special 
discount programs and other incentives to attract visitors to Florida.
    But if the efforts of Governors Bush, Davis, Pataki and others are 
to succeed, they must be supplemented with federal resources. We urge 
the federal government to raise public-private partnerships like the 
one that exists in Florida to the national level. The federal 
government should partner with the states, local Convention and 
Visitors Bureaus and private sector partners to create a national 
advertising and marketing campaign to encourage Americans to travel 
again.
    In order to succeed, this must be funded at a level sufficient to 
reach all traveling Americans. Experts in the tourism and 
communications industries estimate that such a campaign would cost $50-
$60 million, leveraged additionally with our national broadcast 
partners. The commitment of federal funds would supplement spending by 
state and local governments and private sector partners I mentioned 
earlier. Other incentives such as a travel tax credit, a return to full 
deductibility of business entertainment expenses and aid to displaced 
workers are also of great importance.
    We need your assistance and leadership, and most of all your 
continued confidence in our industry to know how and when any recovery 
plan should be implemented. Just as our military effort is strategic, 
methodical and calculated to have long-term impact, the tourism 
recovery plan must follow suit. The world is watching to see how we 
take action, and we must set the bar high during this vulnerable time.
    In the short term, we need you to continue being ambassadors of 
good will whose mission is to rebuild consumer confidence. Never before 
has your ability to use the bully pulpit to impact those you represent 
been more critical. We implore you to talk with your constituents and 
to the media--encourage travel, tout all our many destinations have to 
offer, reinforce safety measures and reassure Americans that a return 
to ``reasoned normalcy'' is in our best interests.
    Make no mistake, while we will put a timeframe on this recovery, 
this is a long-term effort. Yes, there have been and may continue to be 
blips of positive news for the tourism industry. But the reality is, 
we've been hit hard. Ground zero of the horror on September 11th was 
also ground zero for a great deal of our nation's economic health.
    As evidenced by this panel before you today, every faction of the 
tourism industry has been adversely affected, and is now putting its 
collective mind together to come up with a solution. Yes, we are 
competitors, but we are also partners in an industry that is absolutely 
vital to our nation's livelihood.
    It will take a sustained, concerted effort on all fronts to rebuild 
consumer confidence and get Americans traveling again. I can say with 
confidence that the entire industry stands ready and united for that 
challenge. With your support we will succeed.
    Thank you.

    Mr. Stearns. Thank you.
    Michael Crye, President of International Cruise Lines. 
Welcome.

                  STATEMENT OF J. MICHAEL CRYE

    Mr. Crye. Good morning, Mr. Chairman, Mr. Towns, Mr. 
Bryant. My name is Michael Crye. I am the President of the 
International Council of Cruise Lines. I am honored to appear 
before the subcommittee today to highlight the measures that 
the cruise industry is taking to restore the confidence of the 
traveling public and to assure passengers that it is safe to 
travel on cruise vacations. I have a written statement that I 
would request to be entered into the record of this hearing.
    Mr. Stearns. By unanimous consent, so ordered.
    Mr. Crye. While the tragic events of September 11 have had 
a tremendous impact on the entire tourism industry, I wish to 
reassure the subcommittee that the cruise lines are taking 
every safety precaution, as their highest priority has always 
been the safety and security of all their passengers and 
cruise. Within hours after the terrorist attacks, members of 
the International Council of Cruise Lines had implemented the 
highest security measures, known as Level III, even before it 
was ordered by the U.S. Coast Guard and the Department of 
Transportation. We have since that day been working with all 
appropriate Federal agencies to ensure that traveling Americans 
are protected to the maximum extent possible.
    The International Council of Cruise Lines is a nonprofit 
trade association that represents the interests of 16 of the 
largest cruise lines operating in the North American cruise 
market and over 73 associated members companies that are cruise 
industry business partners and suppliers. ICCL member cruise 
lines serve major ports in the United States and call on more 
than 1,800 ports around the world. Last year ICCL member lines 
carried more than 7 million passengers on 95 vessels.
    The passenger cruise industry is an exciting, modern and 
rapidly expanding global industry. According to the World Trade 
Organization, world demand reached 9.8 million passengers last 
year. With the North American market representing two-thirds of 
this global volume by the year 2010, total cruise passengers 
worldwide are forecasted to grow to 20.7 million passengers. 
Before the attacks of September 11, the North American market 
was projected to rise from 7 million to 12 million and mainland 
Europe was expected to grow from 1.3 million to 5.3 million. 
These numbers reflect the cruise industry's dynamic 
contribution to the global economy.
    The U.S. economic impact in the North American market. U.S. 
citizens were the dominant source of cruises, accounting for 82 
percent of all passengers. As a result, the cruise industry has 
developed into a significant economic contributor to the United 
States economy. Since 1990, cruise ship embarkations from North 
American ports have increased by almost 70 percent. The major 
U.S. ports of call are located in Florida, Alaska, California, 
Louisiana, New York, Texas and Massachusetts. Last year, the 
total economic benefit generated by the cruise industry was 
approximately $17 billion. Of this, the cruise industry 
contributed $9.4 billion in direct spending for the products 
and services of U.S. companies.
    The industry's extensive economic relationships include 
high tech equipment, travel services, banking and insurance, 
textiles, technical services, dry-docking and ship repair. 
Other major U.S. industries that benefit from the cruise 
business are the airlines, travel agents, food and beverage 
suppliers, and the business and service sectors. As a result of 
these economic partnerships, the cruise industry is able to 
create employment for approximately 257,000 Americans and 
support for State and local economies in all 50 States. Total 
wages generated by the industry in 2000 were approximately $8.7 
billion in the United States.
    Clearly these numbers demonstrate that the industry is a 
significant contributor to the U.S. economy and any negative 
economic downturn it experiences has a ripple effect on jobs 
and other related industries. In recent days the industry has 
had a cautiously optimistic view of prospects despite reporting 
a precipitous drop in bookings since September 11. On September 
12, cruise line reservation offices were overwhelmed by 
requests for cancellations and new bookings were nearly 
nonexistent. Since that time, the trend in future passenger 
bookings is at 60 to 70 percent of pre-attack levels and is 
increasing slowly but steadily over the weeks. Industry 
executives are exercising every available marketing and 
communications measure to stimulate travel and believe that 
occupancy levels will eventually return to normal. Our major 
members have just increased to 20 percent the commissions paid 
to travel agents in an effort to incent them and provide 
additional compensation to this very hard hit segment of the 
industry.
    The cruise industry is the second largest purchaser of 
airline tickets, spending over $2.1 billion on airline tickets 
every year. Over 65 percent of cruise passengers arrive at the 
port city via air travel, spending an average roundtrip airfare 
of $450 per passenger. With the impact that recent events have 
had on the airline industry, the cruise industry in particular 
has been disproportionately impacted since we are dependent on 
the airlines for our passengers. Therefore, both the airline 
and cruise industries are taking additional steps to reassure 
passengers that it is safe to travel.
    In a move to reassure consumer confidence and travel, the 
individual cruise lines and their associations have been 
actively communicating the safety and security procedures in 
place to protect passengers and crew by media interviews, Web 
sites, direct communications with travel agents and 
governmental forums such as this. The cruise industry is proud 
to highlight our environmental safety record and to detail the 
heightened measures in place today. In 2 weeks the industry 
will conduct a media tour in six major media markets, and today 
the prices on a cruise vacation are so good that the consumer 
will find it is less expensive to go cruising than to stay at 
home. The cruise lines are rerouting itineraries to move ships 
away from danger spots in the world. They are bringing the 
ships closer to home, where it is more in expensive to be able 
to come and enjoy a cruise.
    Our security measures, both on and off the vessel are, as I 
said before, our highest priority and we--I believe I am about 
to over run my time here. So I am sorry. I will go to the 
conclusion paragraph.
    Mr. Stearns. If you just summarize.
    Mr. Crye. Mr. Chairman, in conclusion, we believe that the 
cruise industry has taken the appropriate additional steps to 
restore the public's confidence. In the short term cruise lines 
are rerouting itineraries. In the long term we will continue to 
be proactive in developing additional security measures. These 
are challenging times, but our industry pledges its cooperation 
and working as partners to maintain the outstanding safety 
record and to reassure the traveling public.
    Thank you.
    [The prepared statement of J. Michael Crye follows:]
Prepared Statement of J. Michael Crye, President, International Council 
                            of Cruise Lines
    Mr. Chairman, my name is Michael Crye, and I am the President of 
the International Council of Cruise Lines (ICCL). I am pleased to 
appear before the Subcommittee today to highlight the measures that the 
cruise industry is taking to restore the confidence of the traveling 
public and to assure passengers that it is safe to travel on cruise 
vacations. While the tragic events of September 11th has had a 
tremendous impact on the entire tourism industry, I wish to reassure 
the Subcommittee that the cruise lines are taking every safety 
precaution, as their highest priority has always been the safety and 
security of all of their passengers and crew. Within hours after the 
terrorist attacks, ICCL member operators had implemented the highest 
security measures, known as Level III, even before it was ordered by 
the US Coast Guard (USCG), and have since that day been working with 
all appropriate federal agencies to ensure that traveling Americans are 
protected to the maximum extent possible.
    ICCL is a non-profit trade association that represents the 
interests of l6 of the largest cruise lines operating in the North 
American cruise market and over 73 Associate Member companies that are 
cruise industry business partners and suppliers. ICCL member cruise 
lines serve major ports in the United States and call on more than 400 
ports around the world. Last year, ICCL's member lines carried more 
than 7 million passengers on 95 vessels. Our efforts to communicate and 
reassure the traveling public is a coordinated effort, involving sister 
cruise industry organizations such as Cruise Lines International 
Association. This coordinated effort permits us to provide information 
and reassurance to many audiences including the public, government 
officials, the media and over 19,000 travel agencies across North 
America.
         global economic dimension of the cruise line industry
    The passenger cruise industry is an exciting, modern and rapidly 
expanding global industry. During the current decade, the cruise 
industry has continued to expand its capacity and develop new cruising 
opportunities for vacationers. According to the World Trade 
Organization (WTO), world demand reached 8.7 million passengers in 
1999. The North American market covers \2/3\ of the global volume, 
primarily due to the renaissance of the cruising destinations in the 
Caribbean. By 2010, total cruise passengers worldwide are forecasted to 
grow from 9.8 million last year, to 20.7 million. Within these figures, 
the North American market is projected to rise from 6.8 million to 11.9 
million and mainland Europe will grow from 1.3 million to 5.3 million, 
demonstrating that the cruise industry is a dynamic sector of the 
global economy. The cruise industry brings a burgeoning tourism economy 
to American ports and over 1800 port destinations around the world. The 
importance of the social and economic opportunities cannot be 
understated. It has an effect on all sectors in the port city and 
country. The cruise lines' presence in port cities, even on a seasonal 
basis, strengthens the economy for many local elements. In addition to 
local port user fees and head taxes and surcharges, cruise ships 
purchase supplies and services such as pilots, tugboats, food and 
beverage, waste disposal services, fuel and fresh water at ports of 
call worldwide. In addition, the guest and crew purchases at port 
destinations provide a major contribution to the local economies 
including lodging, restaurants, attractions, retail shops, tour 
operators and other businesses. It is estimated that a typical cruise 
ship generates $260,000 in passenger and crew expenditures during a 
port of call visit.
 contribution of the north american cruise industry to the u.s. economy
    In the North American market, the United States is the dominant 
source of cruise passengers. Comparing 1998 to 1990, cruise ship 
embarkations from North American ports increased by almost 70 percent. 
The major U.S. ports of call are located in Florida, Alaska, 
California, Louisiana, New York, Texas and Massachusetts. In Florida 
alone, over 3.2 million passengers embarked last year. An additional 
1.1 million passengers also boarded in San Juan, Puerto Rico and non-
U.S. ports, primarily Vancouver and Montreal, Canada. As a result, the 
cruise industry has developed into a significant economic contributor 
to the United States economy.
    Last year, the total economic benefit by the cruise industry and 
cruise-related activities was approximately $17 billion. Of this, the 
cruise industry contributed $9.4 billion in direct spending for the 
products and services of U.S. companies. The industry's extensive 
economic relationships include high-tech equipment, travel services, 
banking and insurance, textiles, technical services, dry-docking and 
shipyard repair. Other major U.S. industries that benefit from the 
cruise business are the airlines, travel agents, food and beverage 
suppliers and the business and service sectors. As a result of these 
economic partnerships, the cruise industry is able to create employment 
for thousands of U.S. citizens and support for state and local 
economies in all 50 states. Total wages generated for U. S. employees 
in 2000 were $8.7 billion and the industry generated jobs for 257,067 
Americans.
    Clearly, the cruise industry is a significant contributor to the 
U.S. economy and any negative economic downturn it experiences has a 
ripple effect on jobs and other related industries. In recent days, the 
industry has had a cautiously optimistic view of prospects for the 
cruise industry despite reporting a precipitous drop in bookings since 
September 11th. On September 12th, cruise line reservation offices were 
overwhelmed by requests for cancellations and new bookings were nearly 
non-existent. Since that time, we have experienced a positive trend in 
passenger bookings with many lines reporting reservation volume at 70-
80% of the pre-attack levels. Industry executives are exercising every 
available marketing and communications measure to stimulate travel and 
believe that occupancy levels will eventually return to normal. A key 
variable in this forecast is the continuation of consumer confidence in 
travel.
    The cruise industry is the second largest purchaser of airline 
tickets, spending over $2.1 billion in airline tickets purchases last 
year. With the impact that recent events have had on the airline 
industry, the cruise industry, in particular, has been 
disproportionately impacted, since we are so dependent on the airlines 
for our passengers. Therefore, both the airline and cruise industries 
are taking additional steps to reassure passengers that it is safe to 
travel.
    In a move to reassure consumer confidence in travel, the individual 
cruise lines and their associations have been actively communicating 
the safety and security procedures in place to protect passengers and 
crew. Via media interviews, our web sites, direct communication with 
travel agencies and governmental forums such as this, the cruise 
industry is proud to highlight our enviable past history and to detail 
the heightened measures in place today. In addition, cruise lines are 
now in the process of re-routing itineraries to move ships away from 
the Eastern Mediterranean, northern Europe, and the Middle East as a 
short term measure to meet an anticipated trend for U.S. passengers 
wanting to sail closer to home. Ships will still be cruising in Europe, 
but instead of cruising the Eastern Mediterranean, they will sail the 
Western Mediterranean and the Baltic. Most cruise lines are re-
positioning their ships to the Caribbean and other North American 
ports. And, of course, the cruise industry is implementing aggressive 
marketing initiatives to further stimulate demand for travel. Cruise 
pricing, which is always viewed as a good value, now features a variety 
of promotional fares designed to get America traveling again. Many 
cruise lines have also implemented travel agency incentives to motivate 
cruise sales and to show support for a distribution system that is 
suffering terribly in the wake of this national tragedy.
                           security measures
    As I mentioned at the outset, the cruise industry has heightened 
its security measures both on and off the vessel in order to provide 
the most secure environment for its passengers and crew. A cruise ship 
is unique in that it is inherently secure because it is a controlled 
environment with limited access. However, in order to maintain this 
secure environment, cruise lines have established strict and highly 
confidential ship security procedures that cannot, for obvious reasons, 
be discussed in detail. These procedures are, in part, outlined in 
measures set forth by the International Maritime Organization (IMO), 
and the regulations established by the U.S. Coast Guard (USCG). In the 
United States, the USCG oversees the enforcement of these security 
measures. Regulations address both passenger ship and passenger 
terminal security and outline methods to deter unlawful activities 
onboard passenger vessels.
    In l986, the IMO adopted Measures to Prevent Unlawful Acts Against 
Passengers and Crew. These measures address restricting access to 
authorized personnel onboard the ship and at the passenger terminal, 
and monitoring the flow of materials and consumable supplies brought 
onboard a ship. Security procedures within these measures include 
inspection of all carry-on baggage and the use of metal detectors for 
embarking passengers. Strict passenger screening to prevent 
unauthorized entry or carriage of weapons onboard is only one component 
of the security procedures implemented to deter unlawful acts on board 
and to provide for the safety of all passengers.
    In l996, the USCG implemented an Interim Final Rule on Security for 
Passenger Vessels and Passenger Terminals, which was finalized in 
October of l999. This rule sets three levels of security (low, medium, 
and high) based on the nature of the threat received and requires 
vessel operators and port terminal operators to adjust security levels 
accordingly. These regulations also require ship operators to submit 
Comprehensive Security Plans to the USCG for review and acceptance. All 
ICCL member lines have submitted the required security plans. These 
plans have been accepted by the USCG and are audited annually. The 
security plans, which are sensitive law enforcement documents and 
therefore not available to the public, include the following major 
components:

 Identification of three levels of security and specific 
        procedures to follow at each level
 Prevent unlawful acts on board
 Prevention and deterrence of weapons and other unauthorized 
        items onboard
 Prevention and deterrence of unauthorized access to vessels 
        and restricted areas
 A security officer onboard every passenger vessel
 Security training for all crew members
 A security plan that is coordinated with the terminal security 
        plan
 Reporting of violations and unlawful acts
 Annual security audits for each ship and reviews by the USCG
    Passenger vessel security plans and their amendments are reviewed 
by the USCG National Maritime Center and inspections are conducted by 
the Captain of the Port to verify that all security practices and 
procedures are effective and up-to-date.
    The U.S. Department of Transportation Office of Intelligence and 
Security and the USCG Commandant direct the implementation of 
nationwide and local security levels. Domestic threat advisories are 
provided to the industry summarizing the nature of the security threat 
and specifying changes to security levels both locally and nationally. 
As a result of the attacks in September, implementation of Level III 
security was directed by the U.S. Coast Guard at U.S. ports.
    Security Level III is the highest level of security set by Coast 
Guard Passenger Vessel Security regulations. At U.S. cruise terminals, 
passenger vessel security measures include passenger screening 
procedures similar to those found at airports. This includes l00% 
screening of all passenger baggage, carry-on luggage, ship stores and 
cargo, and also includes higher levels of screening of passenger 
identification. Official passenger lists are carefully reviewed and 
proper identification is ensured before anyone is allowed to board the 
vessel. Even before the attacks of September 11, all passenger lists 
were made available to the INS and Customs for screening. Passenger 
identification is now subject to even stricter scrutiny and the 
industry is working closely with the INS and other federal agencies to 
ensure that those passengers suspected of being on the INS ``Prevent 
Departure'' list are reported to the federal authorities for further 
action.
    Another component of Level III Security requires ship operators to 
restrict access to authorized personnel and to identify restricted 
areas on the vessel that require positive access control such as 
intrusion alarms, guards, or other measures to prevent unauthorized 
entry. Restricted areas on a vessel will include the bridge, the engine 
room, and other areas throughout the ship where operations are 
conducted. Other onboard security measures, not generally discussed for 
obvious reasons, are employed to maximize shipboard security and to 
deter unauthorized entry and illegal activity. Every vessel has a 
trained security staff responsible for monitoring activities and 
responding to any suspicious activity that may jeopardize the safety of 
the passengers and crew.
    For many years, the cruise industry has been pro-active in 
developing effective security measures and has looked for ways to 
increase passenger safety. In fact, most ICCL member lines now utilize 
advanced technologies to control access to our vessels. The Passenger 
Access Control System, that has been installed on most of our member's 
vessels, utilizes a passenger identification card that takes a picture 
of the passenger at the time of boarding and scans the picture into an 
onboard computer. During the course of a cruise, the identification 
card is presented each time a passenger departs or boards the vessel. 
The picture appears on a computer screen that is matched against the 
person's face for identification purposes before they are allowed to 
board the ship. This new technology is part of an overall onboard 
security system that further enhances the proper identification of all 
passengers and crew boarding the vessel.
    Since l998, ICCL and its member operators have been members of the 
U.S. Interagency Task Force on Passenger Vessel Security. This group 
meets every 60 days to discuss emerging security issues, receive 
updated threat information, and address specific security concerns. 
Since September 11, the ICCL Security and Operations Committee members 
have efficiently communicated and resolved problems in daily conference 
calls with all of the appropriate federal agencies. This information 
exchange has proven to be valuable both to our member lines and the 
federal agencies involved as we mutually address matters impacting both 
ship operations and security. We are committed to providing the highest 
levels of security for our passengers and to working with appropriate 
federal agencies to address additional security measures that may 
become necessary.
                               conclusion
    Mr. Chairman, in conclusion, we believe that the cruise industry is 
taking the appropriate additional steps to restore the public's 
confidence that it is safe to travel. In the short term, cruise lines 
are rerouting itineraries to move away from the Mediterranean, northern 
Europe, and the Middle East so that U.S. passengers will be able to 
sail closer to home. In the long term, we will continue to be pro-
active in developing effective security measures to increase passenger 
safety as well as maintain close working relationships with federal 
regulatory agencies. We are cautiously optimistic that occupancy levels 
will return to normal, as the consumer is increasingly reassured that 
the tourism industry is actively working with all appropriate federal 
agencies to ensure that traveling Americans are protected to the 
maximum extent possible. Of course, all of the additional security 
measures that we have put in place are consuming resources and money at 
a rapid pace. I would urge you to ensure that there is adequate funding 
that comes with any additional mandates that you place on agencies, 
ports or industry in any legislation you may consider. These are 
challenging times, but our industry pledges its cooperation in working 
as partners to maintain the outstanding safety record of the cruise 
industry. As I stated before, the highest priority of the cruise 
industry is to provide a safe and secure vacation experience for our 
passengers. The cruise industry will do everything possible to protect 
those who choose this outstanding and safe vacation option.
    Thank you for the opportunity to appear before you today.

    Mr. Stearns. I thank you.
    Mr. Jones, President and CEO of Travelocity.com, your 
opening statement

                 STATEMENT OF TERRELL B. JONES

    Mr. Jones. Mr. Chairman and members of the subcommittee, 
thanks for the opportunity to testify this morning. Travelocity 
is the leading travel Web site with more than 30 million 
registered members. Like all travel and tourism participants 
represented here today, Travelocity was profoundly impacted by 
the event of September 11. This morning I would like to share 
some thoughts about how we have been affected, what we have 
been hearing from many of our members in recent surveys and 
what the government can do to help stimulate travel and 
tourism.
    Here are some key statistics about our company's 
experience. Travelocity air ticket sales were down 75 percent 
in the days following the tragedy in September, but have since 
trended upward to be at about 70 to 80 percent of expected 
October levels. This is an encouraging rebound, but these 
levels remain below what we would expect for October, normally 
the busiest traveling purchasing month of the year. And I would 
like to point out to the subcommittee that we are kind of a 
leading indicator, because most of our customers book about 45 
days in advance. So we are kind of a picture of what could be 
happening some months from now.
    We have laid off employees for the first time in our 5-year 
history. We have reduced our management head count by 10 
percent and announced we will close one of our call centers at 
the end of the year, affecting a further 300 people. These were 
painful decisions for us to make. As challenging as the last 5 
weeks have been for us, I know they have been as bad or worse 
for others.
    Steps must be taken to reassure the American people that 
our transportation system is effective and to stimulate their 
interest in travel spending. In the last few weeks I have heard 
from many people who are reluctant to travel. Some are afraid 
to fly. Others want no part of the hassles and the 
inconsistencies they believe await them at the Nation's 
airports. And still others are worried about their personal 
financial future in an uncertain world, foregoing vacations 
until they feel more confident about their jobs and the 
economy.
    There are initiatives that Congress can take to get these 
people traveling again. Our industry needs you and your 
colleagues to make it a national priority in the weeks ahead. 
In a recent random survey of Travelocity members, nearly 3,000 
people participated. Here is what they told us. 83 percent are 
frustrated by the lack of consistency in security procedures at 
the Nation's airports. Some passengers have complained that 
they are waiting in extremely long lines and encountering 
screeners who seem to be enforcing inconsistent rules. Others 
have complained that they are waved through checkpoints without 
appropriate screening. Over half the people traveling through 
Baltimore, San Francisco and Denver since September 11 have had 
to spend at least 1 additional hour or more due to enhanced 
security at the airports. Sometimes the wait at the airport is 
more than the time in the air. However, at other airports, such 
as O'Hare, Dallas, Ft. Worth and Newark, many travelers said 
they are experiencing waits of 30 minutes or less. So 
inconsistency is an issue.
    Surprisingly, 71 percent of those who have traveled five or 
more times in the last year told us they were likely to apply 
for a voluntary national travel ID card if it would speed up 
their wait at airports. Above all, security must be executed by 
professional workers who are properly trained and properly 
compensated for the critical work that they do. Higher pay, 
higher benefits and training are critical. In Europe, for 
example, screeners receive an average of five times the amount 
of training that screeners in the U.S. are given. No matter who 
ultimately signs the screener's paycheck the Federal Government 
must use its oversight to insist on turning this unacceptable 
state of affairs around, and I urge the Congress to pass 
security legislation quickly.
    In addition, I believe that Congress as part of an economic 
stimulus package must take specific targeted action to convince 
Americans to travel again. As many companies and individuals 
reduce or eliminate their spending on travel the downward 
spiral begins. Airlines flew fewer flights and laid off 
employees. Out of work employees cut back on their spending. 
And in addition to those, others that depend on airlines and 
hotels for tourist dollars, including car rental companies and 
cruise lines and travel distributors like Travelocity, react 
similarly. That is why it is so essential that Congress act 
quickly to stimulate travel purchases and stop the spiral.
    What should Congress do? I urge you to support the Travel 
America Now Act sponsored by Congressman Shadegg. This 
legislation provides immediate relief through a targeted 
temporary tax credit for personal vacation travel, among other 
things. This measure is designed to rebuild the vibrant travel 
and tourism industry to keep working people working and to 
stimulate economic growth.
    I commend Congressman Shadegg and Congressman Abercrombie 
for their leadership on this issue. We at Travelocity feel so 
strongly about this bill that over the weekend we contacted 
millions of Travelocity members across the country urging them 
to contact their Senators and Representatives to urge them to 
cosponsor this legislation, and you will undoubtedly be hearing 
from them soon.
    A few weeks ago Congress took steps to provide relief to 
the airline industry, an important and necessary first step. 
But that package does not address the underlying problem, which 
is demand. If we want to get Americans flying again, we should 
spend money on revenue stimulating activities.
    Mr. Chairman, this is a tough time for our Nation and its 
people. It is a particularly tough time for the travel and 
tourism industry. With carefully considered government help I 
believe we will come through with the traveling public feeling 
a greater sense of security and a renewed passion for travel. 
Travelocity.com looks forward to working with you and your 
colleagues and with our colleagues in the industry to help make 
this happen.
    Thank you, Mr. Chairman.
    [The prepared statement of Terrell B. Jones follows:]
 Prepared Statement of Terrell B. Jones, President and Chief Executive 
                        Officer, Travelocity.com
    Chairman Stearns, Congressman Towns, Members of the Subcommittee, 
thank you for the opportunity to testify before you this morning. My 
name is Terry Jones, and I am President and Chief Executive Officer of 
Travelocity.com. Travelocity is the leading travel website in the 
world, with more than 30 million registered members. Like all travel 
and tourism companies represented here today, Travelocity was 
profoundly impacted by the events of September 11. While our business 
has been slowly coming back, some major hurdles remain to getting 
Americans traveling again in healthy numbers. This morning, I'd like to 
share some thoughts about how we've been impacted, what we've been 
hearing from many of our members in recent surveys, and what the 
government can do to help stimulate travel and tourism.
    When we launched in 1996, Travelocity was the 33,000th largest 
travel agency in the United States. Today, we are the sixth largest. We 
have sold more than 18 million airline tickets, as well as millions of 
hotel room nights and car rental days. We are already a top-10 agent 
for many cruise lines and a leading seller of vacation packages. In the 
generally dismal world of e-commerce since the dot-com crash last year, 
online travel has been one sector that has thrived on the Internet. 
Travel is a virtual product well suited for distribution online--there 
are no products to ship, and the popularity and wide acceptance of 
electronic tickets mean a customer may purchase an airline ticket on 
her computer, print the itinerary and (in most cases) head straight to 
the gate. In all, our business doubled last year and was expected to 
grow as much as 60% this year.
    Yet even with our momentum and the resiliency of our category and 
our business, we have faced a tough downturn since September 11. Since 
much of the travel purchased on Travelocity is booked far in advance, 
we consider our business to be a strong leading indicator of the health 
of our country's travel and tourism industry. Here are some of the key 
statistics about our company's experience:
    Travelocity's sales were down 75% in the days following the tragedy 
in September. Air ticket sales have since trended upward at 80% to 90% 
of pre-September 11 levels and at 70% to 80% of expected October 
levels. This is an encouraging rebound, but these levels remain far 
below what we would expect for October, normally the busiest travel 
purchasing month of the year.
    We have aggressively reduced our costs and have laid off employees 
for the first time in our five-year history. We have reduced management 
headcount by 10%, and we have announced that we will close our call 
center in Rancho Cordova, California in December, further reducing our 
workforce by 285 employees. These were painful decisions for us to 
make, as they have affected many of our employees and their families, 
and I sincerely hope that the steps we have already taken will enable 
us to weather whatever remains of the downturn in the travel business.
    Of course, online travel is only one part of the travel and tourism 
industry, and as challenging as the last five weeks have been for us, I 
know it has been as bad or worse for others. Travelocity is an 
industry-leading company with a strong balance sheet, more capable than 
most of staying on course despite a slower economy and the impact of 
the events of September 11. However, I regularly speak with people in 
the vacation, cruise, hotel, car rental, convention and airline 
businesses, and I continue to hear troubling, pessimistic predictions 
from them about the future of their sectors. The Los Angeles Times 
reported on October 15 that by the end of the year, travel experts are 
predicting that one out of five of the country's 37,000 travel agencies 
will be out of business. In addition, countless communities around the 
country that rely heavily on tourism dollars to fuel their economies 
are suffering today because of a lack of travel demand.
    Steps must be taken to reassure the American people about our 
transportation system and to stimulate their interest in travel 
spending. In the last five weeks, I've heard from many people who are 
reluctant to travel. Some of them are afraid to fly and are looking to 
the government to enhance aviation security at the nation's airports 
and on commercial aircraft to restore their confidence. Others want no 
part of the hassles and inconsistencies that they believe await them at 
some of the nation's airports, which can turn even short flights into 
long nightmares. They want the government to help streamline the travel 
process. And still others are worried about their personal financial 
futures in an uncertain world, deciding to skip their vacations until 
they feel more confident about their jobs and the economy.
    There are initiatives Congress can take to help get all of these 
people back into the air--and onto cruises and into hotels and rental 
cars as well. Our industry needs you and your colleagues to make this a 
national priority in the weeks ahead.
    We recently conducted a random sample survey of Travelocity 
customers, asking them about their opinions and experiences following 
the events of September 11. Nearly 3,000 respondents participated. The 
results underscore the need for Congress and the Administration to act 
quickly to put a comprehensive air travel security plan into action.
    The biggest frustration that our travelers mention is lack of 
consistency--specifically, lack of consistency in security procedures 
at the nation's airports. I can also tell you from my own experience--
I've been on several flights in recent weeks--that these standards 
throughout U.S. airports vary greatly, and travelers do not know what 
to expect.
    Over four in five--83 percent--of Travelocity customers who 
traveled since September 11 said that security between airports was 
either ``not at all'' or only ``somewhat'' consistent. Some passengers 
have complained that they are waiting in extremely long lines and 
encountering screeners who seem to be enforcing arbitrary rules; others 
have complained that they are waived through checkpoints without 
appropriate screening. Security procedures can vary greatly from 
departure airport to arrival airport. Indeed, security procedures at a 
single airport can vary on a daily or weekly basis and among security 
checkpoints at that airport. This creates anxiety for those afraid to 
fly, and frustration for those who count on the air transportation 
system to get them where they need to go reliably and conveniently. Our 
customers tell us that they are willing to invest more time at the 
airport in order to ensure greater safety and security, but they are 
not willing to put up with uncoordinated, inefficient procedures.
    Based on our survey, over half the people travelling through 
Baltimore-Washington International Airport (BWI), San Francisco 
International Airport (SFO), and Denver International Airport (DEN) 
since September 11 have had to spend AT LEAST an additional hour or 
more at the airport because of new security procedures. Sometimes the 
time at the airport is more than the time in the air.
    At other major airports, however, security clearance has been much 
more manageable. At Chicago O'Hare International Airport (ORD), Dallas-
Fort Worth International Airport (DFW), and Newark International 
Airport (EWR), about half of travelers said they experienced security 
waiting time of thirty minutes or less.
    Unharmonized standards throughout the country translate into long 
lines at some airports, short lines at others, and questions throughout 
about the effectiveness of the system at a time when American travelers 
really need reassurance. This is neither good for travelers nor for 
security. We must make the security experience more uniform and 
dependable, and it must be executed by professional workers who are 
properly trained and properly compensated for the critical work they 
do. Screeners in Europe receive on average five times the amount of 
training that screeners in the U.S. are given. The yearly turnover rate 
at many U.S. airports can exceed 140%. No matter who ultimately employs 
the screeners, the federal government must use its oversight to insist 
on turning this unacceptable state of affairs around--and quickly.
    Our survey suggests that those who travel most would look favorably 
on some form of voluntary travel identification system that could 
streamline air travel for those who choose to participate. Seventy-one 
percent of those who have traveled five or more times in the last year 
told us that they are likely to apply for a national travel ID card if 
it were implemented. Our customers are telling us that they are willing 
to make reasonable tradeoffs regarding privacy if they can expect a 
streamlined travel process in return. Biometric technologies, such as 
fingerprints and iris scans, could be part of such an ID card solution.
    Security is not only confined to airports, it also involves the 
airplanes. Of the more than half dozen actions that we listed, 
Travelocity customers said that the two measures that would have the 
greatest impact on improving security on U.S. flights were reinforcing 
cockpit doors and deploying sky marshals, measures that are in fact 
being implemented today.
    In addition to passing meaningful security legislation as soon as 
possible, I believe Congress, as part of an economic stimulus package, 
must take specific, targeted action to convince Americans to travel 
again. Travel and tourism is not only one of the largest industries in 
the United States, it is also a linchpin to the economy as a whole. We 
have already seen countless stories in the newspapers about the ripple 
effects from the dramatic slowdown in travel spending.
    As many companies and individuals reduce or eliminate their 
spending on travel, the airlines now fly fewer flights, and because 
they have fewer passengers, they must lay off employees. Those out of 
work employees take steps to cut back their own spending. But it 
doesn't end there. The airports that now have fewer flights must in 
turn curtail retail operations, and the employees of these stores cut 
back spending in their own lives. The taxis that serve the airport have 
fewer riders. Hotels and resorts receive many fewer visitors and host 
fewer conventions and events, causing them to cut back on their own 
staffing levels and the services they sell to their customers. And 
those that depend on airlines and hotels for tourist dollars--including 
car rental companies and cruise lines--react similarly.
    The trouble for us is that all travel services are perishable. The 
new car or truck that is not purchased today can still be purchased 
tomorrow. But the hotel room, airline seat or available rental car that 
goes empty represents a permanent loss to the economy, and the 
compounding nature of these losses for the rest of the economy should 
be of the highest concern to Congress. That is why it is essential that 
Congress act quickly to stimulate travel purchases. Unless things 
change, there will be dramatically less choice for those who want to 
travel.
    We support the Travel America Now Act, H.R. 3041, sponsored by 
Congressman Shadegg. This bill provides much needed incentives to get 
America traveling again. Most importantly, this legislation provides 
immediate relief through a targeted temporary tax credit ($500 for 
individuals; $1000 for couples) for personal vacation travel. In 
addition, it would temporarily restore the full tax deductibility of 
meals and entertainment expenses and help travel and tourism companies 
sustain losses that occurred since September 11. This measure is 
designed to rebuild a vibrant travel and tourism industry, to keep 
working people working and to stimulate economic growth. I commend 
Congressman Shadegg for his leadership on this issue.
    I believe this is the right way to proceed. Rather than giving 
direct aid to companies and putting the government in an awkward 
position of deciding who deserves aid and who does not, a tourism tax 
credit puts money into the hands of consumers who will choose who 
deserves their support. It makes economic sense to stimulate travel and 
tourism now, before the ripple effects of this downturn grow wider and 
the travel and tourism sector plunges the economy into a deep and 
costly recession.
    We at Travelocity feel so strongly about this bill that over the 
weekend we contacted millions of Travelocity members across the 
country, urging them to contact their Senators and Representatives to 
urge them to cosponsor and support this legislation. These are your 
constituents, and if you haven't heard from them already, I expect you 
will soon. And in the meantime, I hope you'll consider my request to 
support this critical measure.
    A few weeks ago Congress took steps to provide relief to the 
airline industry--an important and necessary first step. But that 
relief package, which provided direct aid and facilitated loans to 
airlines, did not address the underlying problem of a lack of demand. 
Such packages have only the effect of making up losses or, in some 
instances, forestalling bankruptcy. If we want to get America flying 
again, we should spend the money on revenue stimulating activities.
    Mr. Chairman, this is a tough time for our nation and its people. 
It's a particularly tough time for the travel and tourism industry. 
With carefully considered government help, I believe we will come 
through it with the traveling public feeling a greater sense of 
security and a renewed passion for travel. Travelocity.com looks 
forward to working with you and your colleagues, and with our 
colleagues in the industry, to help make this happen.
    I look forward to answering your questions.

    Mr. Stearns. I thank you for your opening statement. I will 
start with my questions. And Mr. Marriott, just to commend you 
and your employees for your commitment to having the Marriott 
Center, which was severely damaged on September 11, opened in 
the next 4 or 5 months, and I think you are trying to send a 
message to the rest of America that we are going to try to 
continue business as usual. I guess a question is, when do you 
think the new Marriott World Trade Center will sort of be a 
Phoenix and rise from the ashes?
    Mr. Marriott. Well, we don't know. As soon as the Port 
Authority decides what they are going to do with the land, I 
guess, and as soon as there is a master plan developed for the 
property, including office buildings as well as hotels. I would 
hope the sooner the better.
    Mr. Stearns. I think in your opening statement you said 
that if something is not done immediately to get people 
traveling again, the long-term consequences for our economy are 
disastrous and that sort of goes in with what the CEO of United 
Air Lines said, that he might, his company might vanish next 
year if we don't get this going. And we mention, all of us, Mr. 
Shadegg's bill. If you were President of the United States, can 
you just tell me what you would do, beyond maybe what, 
including the Shadegg bill and Senator Kyl's, what would you do 
to get this economy going so that long term the consequences 
are not disastrous?
    Mr.  Marriott. Well, we need an immediate stimulus, and I 
think the Shadegg bill gives that immediate stimulus. We need 
to get through the sound barrier here. There are a lot of 
people holding back from travel because of the reasons that 
have been stated by so many here about fear, about long lines 
at airports, just a general malaise. Let's stay home this year. 
Let's not get out and travel. We need to encourage people to 
travel and it needs to be immediate. We can't wait for a year 
or 2 years for some drawn out program. We don't need to have a 
lot of meetings. We really need to get an individual tax credit 
passed so that business travel can get a tax credit for 
encouraging their people to travel and we can also get the 
personal travel started again because we really have got to get 
this started.
    If we don't, we are going into the worst time of the year 
for the hotel business. December, January and February months 
are just really really bad months, and usually all the money 
you make in September, October and November gets you through 
December, January and February, and we are not making any money 
in September, October or November. So we really have to spike 
this and get it moving.
    Mr. Stearns. I think a lot of businesses are not as much 
dependent as the hotel business on the capital that you have to 
pay the debt service on, and so when a lot of people realize 
that a lot of the hotel industry and many other businesses are 
leveraged out because of the mortgage payment, that when this 
amount of money is not provided in the busy season then this 
has a huge impact on paying that capital expense.
    In your opinion, Mr. Marriott, do you think that the people 
that you are laying off part-time, or full-time--will some of 
these jobs be lost permanently? Or do you think, assuming that 
we had an economic tax package, including one that includes a 
$500 tax credit for airlines, do you think then these jobs 
would come back then?
    Mr.  Marriott. I do. I think that if we can get people 
flying again and traveling again and get back to normal. Right 
now we are running 20 percent below where we should be in 
occupancy, and if we could get those people traveling back 
again to get up to a normal occupancy rate the jobs would be 
filled and people would be put back to work. Now, there would 
be some jobs probably that would be eliminated, but I think 
they would be a small number compared to what they are now.
    Mr. Stearns. Mr. Norman, the puzzling question I have is, 
you explained that business travel is down more than leisure 
travel. Are businesses cutting travel for economic reasons or 
because of security concerns?
    Mr. Norman. I think it is a combination of both, but we 
have started to see some recoveries, as I indicated earlier. 
But we think that is very, very fragile in terms of what is 
happening now. If you bear in mind that leisure travel, which 
may not be as much, but it is depended upon in filling the 
airlines and the biggest quantity of yield is coming from that. 
And we have seen the difference, as Mr. Marriott has indicated, 
in some of the upscale hotels versus the lower ones, but the 
overall effect of all of it is that we have started to see some 
recovery. But the net effect is that they are going to have a 
disastrous fourth quarter and it is probably going to be by the 
middle of next year before we start seeing some recovery done. 
And with that recovery it still will be below the record levels 
of 2000.
    Mr. Stearns. Mr. Crye, what ports and States are 
experiencing the biggest impact from cancellation in the cruise 
lines industry?
    Mr. Crye. Mr. Chairman, the long distance air carriage 
exotic locations are experiencing the most adverse impact. The 
further away you are from the customer, the more difficult it 
is.
    Mr. Stearns. And Mr. Jones, with Travelocity.com, you are 
probably--what you are saying is because people book 45 days in 
advance that you can see it. What are you doing besides laying 
off employees? Are you advertising more? I mean, like some of 
the bargains that have been mentioned here by the Members of 
Congress, I mean the fact that for $395 I could go on an 8-day 
package to Hawaii from San Fransisco. I mean that is the first 
I heard about it. And I think if somehow, like Governor Bush 
did with his package in Florida, if somehow, not saying the 
government or the Commerce Department, but somehow all these 
packages could be made known, I think people would say, by 
golly, I am going off to Hawaii for 8 days for $400.
    Mr. Jones. Well, that is important, and our advertising is 
back and we are also talking to our 30 million members through 
e-mail. We communicated with 11 million last week, telling them 
about these bargains. But I think in addition, you know our 
surveys showed that infrequent travelers, 58 percent, are most 
worried about security. So people are on the edge, and pricing 
will help. Advertising will help and I think an industrywide 
program will be good. But I think also a stimulus has to be 
there, and we have to get the security bill passed because it 
is the infrequent traveler, the leisure traveler, who is kind 
of on the edge about this whole thing and they have to believe 
it is safe.
    Mr. Stearns. When I am back in my district talking to 
different people, what they say is it looks like a hassle to 
me, Cliff. I don't want to go on the airlines. This is on the 
leisure side.
    Mr. Jones. Right.
    Mr. Stearns. I don't want to stand in line and it is just 
too much of a hassle. I will go when things calm down. So, 
speeding up airline security would be a big plus. Is that 
possible?
    Mr. Jones. Yeah, I think it is. I think if we have 
consistent procedures--it varies wildly from airport to 
airport. I flew seven times last week. It was different every 
time. Sometimes I needed a boarding pass, sometimes I didn't, 
and that wasn't because of an enhanced security. Obviously we 
should have random checks and we shouldn't be exactly the same. 
But I think today because it is up to the individual airport 
and airline to decide that it is not efficient everywhere and 
it could certainly be made more efficient through effective 
application of national policy.
    Mr. Stearns. Your survey showed that the travel I.D. Card 
or something on the order of that, some travel identification 
system, would expedite; and I don't think Americans have taken 
that approach before September 11, but now I am starting to 
hear more about people saying more than showing your license, 
which anybody can fraudulently alter.
    Mr. Jones. Apparently.
    Mr. Stearns. So how do you feel about that?
    Mr. Jones. I think this is something like the success the 
immigration services had with an INS pass. The INS pass is very 
difficult to get. When you use one, you use hand geometry, that 
is a good identifier; and I can't get an INS pass because I 
lost my passport once.
    That is good. It is hard to get. I think if we have 
something that is hard to get, but it does speed you through 
security and that leaves the security screeners time to perform 
good checks on the people who don't have that hard-to-get I.D. 
Card, I think it makes sense and so do our members.
    Mr. Stearns. I would be curious if anybody else on the 
panel has some feelings about this new I.D. Card that would 
replace identification for the airlines for people traveling. 
If anyone else----
    Mr. Crye. Mr. Chairman, in the Cruise Lines we have a 
system that most of our members are using now that has a card 
that you use to purchase goods on board the ship. This 
particular card is also used to go on and off the ship. When 
you first present it, there is a picture identification taken 
of you, and then every other time you present this card into 
the machine, the operator of the machine sees a picture of you, 
and that prevents anybody from obtaining that card and then 
using it to try to identify themselves otherwise.
    Mr. Stearns. We are down to, I think, less than 5 minutes 
on the vote, so I am going to temporarily adjourn. John Shimkus 
is going to come back and reconvene.
    I guess there are two votes, but we will have someone come 
back in a little over 15 minutes. So we appreciate your 
patience here while we temporarily adjourn and then the ranking 
member, Mr. Towns, will have questions.
    [Brief recess.]
    Mr. Stearns. We will have the committee reconvene here. I 
had finished up with my 5 minutes of questions, and we have our 
colleague John Shadegg from Colorado here.
    So, John, you are welcome with your questions.
    Mr. Shadegg. Thank you, Mr. Chairman. I presume--if the 
ranking member returns, I will be happy to stop and start 
again.
    Mr. Chairman, thank you for holding this hearing. I greatly 
appreciate it, as I am sure the witnesses do. I apologize that 
I was not able to be here in the beginning. I was in a markup 
downstairs in the Health Subcommittee, where I had an amendment 
of my own to carry. So that is the reason for my not arriving 
in a timely fashion.
    I also want to thank each of the witnesses for being here 
today and for their thoughtful testimony and for all of your 
efforts on behalf of the industry.
    I want to make comments about three different issues and 
ask a few questions going to each of them. The first, of 
course, is the Travel America Now Act. I will say that to the 
extent that some of you weren't consulted before it was 
introduced and to the extent that, Mr. Chairman, we didn't work 
closely with you before it was introduced, Senator Kyl and I 
moved very quickly between concept and introduction for 
various, obvious reasons.
    As Mr. Marriott has said, this is not something we need to 
do 6 months from now or a year from now; this is something we 
need to do right now. So whereas in the normal course of 
legislation we might have consulted further with people in the 
industry, we might have consulted further with other Members of 
Congress, we felt it was important to move very quickly. And 
there really were just four conversations that occurred, 
conversations between Senator Kyl and myself, those between 
myself and Mr. Abercrombie to get a bipartisan cosponsor on 
this side, and those between Senator Kyl and Senator Zell 
Miller from Georgia to make the bill bipartisan on his side.
    I am very pleased with the response we are getting from 
members, the cosponsorships that are coming in. Though I 
appreciate Travelocity and everyone else in the industry for 
urging their Congressional delegation to get on the bill, 
things around this place happen or don't happen based on the 
amount of velocity force you can build behind them.
    This is an issue where you are contacting, for example, at 
Travelocity, Mr. Jones, all of your members saying, Call your 
Member of Congress and tell him or her to get on this bill to 
give us a leg up.
    As you know, one thought, and the thought I prefer is that 
it be made a part of the economic stimulus package. There is 
some sentiment that there should be no, quote, ``industry-
specific legislation'' in that stimulus bill. Rest assured we 
will oppose that and try to get it in the stimulus package, 
notwithstanding other sentiments.
    But for those who oppose the idea, rest assured if we don't 
get it into the economic stimulus package, we will try to get 
it as a freestanding bill. And my commitment is not just from 
now until the economic stimulus package moves, but from now 
until we get this enacted, because I think in a brief period of 
time virtually every Member of Congress is going to realize 
this is a prudent step in the right direction, that it does 
affect their district, that it does affect the economy of their 
district; and the notion that this just goes to hotel or motel 
or aircraft or rental car companies and that it has some narrow 
focus is simply wrong.
    At our press conference, when we announced the introduction 
of the bill, Senator Kyl went at that issue by pointing out 
that he had the day before been speaking with Phelps Dodge 
industry representatives and had said to them, I assume with 
the war economy, you are feeling good about things going on. 
And I believe it was the CEO of Phelps Dodge, which as you know 
produces copper, said, No, quite frankly, we sell a huge amount 
of product to the Boeing Aircraft Company, and the downturn in 
the travel industry and the cancellation of those orders is 
having a huge impact on us.
    So it is not a narrow piece of legislation. It is intended 
to be an economic stimulus.
    I think it is important to focus on the fact that it is a 
tax credit, so it goes to everybody equally. It is not a 
deduction favoring people who will benefit by deduction because 
they are in a higher bracket; it is the same amount for 
everybody.
    I also want to talk about airport security. I am very 
aggressively working on the airport security issue. I think we 
do have to rebuild that confidence. Regrettably, Mr. Jones, 
that bill has some danger of being embroiled in a partisan 
fight over who pays the paycheck; and I debated one of the 
advocates on the other side of that issue last night on 
``Crossfire.'' and the reality is, the issue isn't who writes 
the paycheck; the issue is the competency of the people 
involved, their training--may well be their pay, their 
supervision.
    Of course, there should be law enforcement personnel at 
every single gate. The question is, is it necessary to make 
everyone at every gate and everyone in every baggage inspection 
facility a Federal employee. If we can't resolve that political 
divide quickly, then the President ought to move by executive 
order. We could then perhaps legislate in that area 6 months or 
a year from now when things are calmer.
    And so I do agree with you, there needs to be consistency, 
although I think things are improving, the changes you see in 
inconsistency, or the inconsistencies you see, are because they 
are trying to do two things--make the airports more secure and 
also more efficient.
    I have flown a lot since September 11. I have been in about 
half the airports you named, and you named a pretty good list, 
not just the airports in Phoenix or Washington. I have been in 
a number of airports across the country, including California 
and New York and Illinois and Texas. I noticed the first time I 
went to board a plane I had to present my I.D. To get my ticket 
and boarding pass, but when I went through security I did not 
have to re-produce a picture I.D. That gave me grave concern.
    The second time I went through, I noticed they had changed 
that, and now they are requiring that you show your I.D. Not 
only when you get the boarding pass, but when you go through 
security; and that gives me some level of confidence because 
obviously it would be fairly easy to get your boarding pass, be 
paid $1,000 or $2,500, get a boarding pass it and hand it off 
to somebody else, and a stranger goes on the plane.
    We have to do a great deal in that area, and I agree, 
consistency is an incredibly important part of it.
    I also want to talk about the airline relief package 
because I think that is certainly critical for the industry. I 
believe it will do grave damage if some of these airlines go 
under, and in that regard, Mr. Warren, I want to ask you--I 
applaud what has happened so far, but it is my understanding 
that at the Treasury Department we are getting a little bit of 
a slow walk in the processing of the loans, and that there is 
some sentiment that they have to wait until they hire a staff, 
even though the legislation says they should be using Treasury 
Department staff in the interim.
    And there is some resistance to the funding of the loans, 
and I would like to ask you if you heard that; and second, I 
would like to ask everybody on the panel, if they hear that or 
if they hear that in the near future, that we might all agree 
to pressure to get that job done. Because some of those loans 
are vitally important, and we can't stall and pass them out 6 
months or a year from now after the urgency of their need 
occurs.
    Mr. Warren.
    Mr. Warren. Yes. I agree with you 100 percent that they are 
vitally important for the industry and for every one of the 
carriers that ATA represents, as well as the regional airline 
association and others who are members of that organization.
    I am, as I sit here today, not privy to exactly how many 
members have applied or what particular obstacles they are 
encountering at the moment, but certainly if there is a 
problem, it should be brought to your attention.
    Mr. Shadegg. I would ask each of you to please monitor 
that, and if in fact we get a slow roll because the executive 
branch does not want to process those loans, perhaps everyone 
in the travel industry join us in trying to get that concluded.
    I am sure my time has run out, but with your indulgence, 
Mr. Chairman, I would like to ask one other question.
    Mr. Stearns. Sure.
    Mr. Shadegg. Mr. Warren, you made reference to the airline 
security package and I don't know if you looked at the Senate 
bill, but I see some problems with the Senate bill as passed 
and I was encouraged that the House member I debated last night 
was not urging us to just pass the Senate bill. One of the 
things that I have heard about the Senate bill, for example, is 
that it does not define the term ``screening,'' and so it is 
left uncertain whether screening meant just the people at the 
metal detector that we walk through or also baggage and also 
the question about what food goes on the airplanes and cleaning 
crews.
    Have you looked at that issue, Mr. Jones? Did I say Mr. 
Warren?
    Mr. Jones. Yes.
    Mr. Shadegg. I meant Mr. Jones.
    Mr. Jones. No. I have not looked at that issue and it is 
important that we define that. We need very good security 
everywhere in the airport--the perimeter, the food service, the 
baggage. We also need to understand that the screening 
positions are kind of a symbol to the traveler. That is what 
they see. So we need to understand there is a psychological 
impact of that that needs to be handled in addition to making 
sure that everything is correct in all of those places, 
including the doors. They are all important.
    Mr. Shadegg. I certainly agree with you that there needs to 
be Federal supervision of all aspects and there needs to be 
consistency.
    Another issue that I am concerned about with regard to the 
Senate is that the Sentate bill apparently draws a line between 
larger airports and smaller airports and perhaps imposes a 
different set of standards and a different supervision over 
those airports. I can tell you that in my home State of Arizona 
we have some large airports. Phoenix and Tucson would probably 
fit in that that category. But I can go to Flagstaff and 
Prescott and Page, I can get on an airline and then I fly into 
a secure area, that is, Sky Harbor, much as the terrorists did 
here and go from--once I am inside the secure area, go from 
that plane to a plane that is flying to Reagan or Baltimore or 
anywhere in the country, and I think that is another flaw in 
the Senate bill.
    Mr. Jones. Absolutely. We saw the photographs of the 
hijackers going through a small airport, and it is exactly 
that. So I think it is very clear that we shouldn't have 
different standards and it needs to be consistent.
    Mr. Shadegg. I would just conclude, Mr. Chairman, by noting 
that in Europe there are 16 major airports in Europe and 
virtually every country in Europe at one time an all-government 
employee staff and they have now gone to a mix of government 
and private sector employees, and that should not just be 
rejected out of hand as politics. We need to look at this issue 
seriously, and if we can't get the politics out of it, we need 
to encourage the President to act by executive order and 
legislate perhaps when emotions are a little calmer.
    With that I yield back my time.
    Mr. Stearns. I thank the gentleman.
    Just to comment, in the Ben Gurion Airport, Israel has 
taken the private/public approach with the work force for the 
airlines as well as in most of the airlines in Europe. In the 
1970's and 1980's, they had to change that, and they went to 
private because they found it a more suitable way to go.
    So I think the case can be made clearly for a public/
private work force in airlines, and experience has borne that 
out. I don't think we have any additional members----
    Mr. Shadegg. Mr. Chairman, apparently Mr. Shimkus could not 
be here, and a representative of the International Association 
of Amusement Parks and Attractions also could not be here, but 
they asked if we could offer--they did----
    Mr. Stearns. We will be glad to put that in, and all the 
opening statements will be obviously part of the record.
    Mr. Shadegg. Thank you, Mr. Chairman.
    Mr. Stearns. I would say to Ms. Conlin, from what you have 
heard today, is there something you could take back to your 
boss that you would communicate to him, based upon what you 
heard, where the administration could be creative and work out 
not only just tax credit but other ways to get us back to a 
normal situation with the airlines and in the long term make 
sure we don't have consequences that are disastrous for this 
economy?
    And the other thing is, is there something you could do 
without Congressional support that would expedite this without 
Congressional initiative; I mean, you could do on your own, 
sort of like an executive order that the White House has?
    Ms. Conlin. Thank you, Mr. Chairman.
    First of all, I compliment the members of the industry that 
have come forward not only to express their concern, but to 
share their ideas and recommendations. And I really feel--and 
this is something that Mr. Norman said earlier--the heart of 
this is making sure the system is safe and secure; making sure 
that travelers are aware that the system is safe and secure; 
and No. 3, make sure that people in the government, whether it 
is the Secretary of Commerce, whether it is Members of 
Congress, whether it is the President, that we all work 
together to convey the message that everything is being done to 
ensure passenger safety and to help restore consumer 
confidence.
    I also think that the work of the Tourism Policy Council, 
which is going to start a week from today, is very important to 
make sure that all Federal agencies and departments are 
coordinating Federal policy vis-a-vis travel and tourism. In 
response to your question, Mr. Chairman, that is something that 
can be done immediately to help short term and long term. And I 
invite the members of the industry to convey to me concerns 
that they have, whether it is issues with the Treasury 
Department, as Congressman Shadegg mentioned, so that these 
issues can be raised in that forum; and conversely, I will make 
every effort on behalf of the Secretary to make sure we convey 
the information that is shared in this forum to members of the 
industry.
    So in response to your question, that is something we are 
doing absolutely immediately that is very important and that I 
think will have real value.
    Mr. Stearns. Let me conclude by saying I think it has been 
very helpful to all of you to take your valuable time to speak. 
It is being put together in a package and it will be reviewed. 
Your time is very valuable, but I think you made an impact in a 
much broader way than you believe.
    The message is, we need to get back to normality, to 
business here in America. And, more importantly, in the 
disastrous effects to our economy, if we do not do this, the 
consequences thereof are something we want to mitigate and 
obviate.
    So I again thank you for your time and the hearing is 
adjourned.
    [Whereupon, at 12:32 p.m., the subcommittee was adjourned.]
    [Additional material submitted for the record follows:]
Prepared Statement of Hon. Mary Bono, a Representative in Congress from 
                        the State of California
    Thank you Mr. Chairman. I would like unanimous consent to have my 
complete opening statement included in the record.
    The events of September 11th have been felt throughout the Palm 
Springs region and Southern California. Although California is nearly 
3000 miles away from both the World Trade Center and the Pentagon, the 
impacts of this tragedy have been profound throughout the state.
    Tourism is the single largest industry in the greater Palm Springs 
desert resort community and a significant portion of the non-tourist 
businesses rely on the tourist industry for their well being.
    With over 500 restaurants, 300 hotels, and 100 golf courses, the 
Palm Springs area is the destination of over 3 million people a year.
    The warm and dry climate attracts people from all 50 states and 
over 100 countries throughout the world. In calendar year 2000, tourism 
accounted for more than $42,000,000 in spending into our local economy. 
In Palm Springs alone, it is estimated that tourism is down 25% since 
the events of September 11th. I have heard reports of hotels suffering 
anywhere from $100,000 to $1 million in cancellations immediately after 
the attacks.
    However, the biggest threat to the tourist industry in Palm Springs 
is the financial status of the Palm Springs International Airport. 
Without our local airport bringing tourists from across the country 
into Palm Springs, our tourist industry would collapse completely. In 
light of the recent financial problems with our nations' airline 
industry, secondary commercial airports such as Palm Springs are 
currently suffering severe revenue shortages.
    Immediately after the terrorist attacks on September 11, the 
Federal Aviation Administration (FAA) understandably required airports 
to deploy more law enforcement officers and spend more funds to improve 
security at our nation's airports. These new security requirements will 
cost airports across the country billions of dollars.
    However, smaller airports such as Palm Springs do not have the 
funds to pay for these increased security costs. Unlike America's major 
hub airports that have billions of dollars in reserve funds, secondary 
commercial airports do not have the funds to sustain themselves during 
a time of declining passenger taxes and reductions in airline landing 
fees.
    Therefore, I am encouraged that the Chairman of the House 
Transportation and Infrastructure Committee has been in conversations 
with smaller commercial airports, such as Palm Springs, and is aware of 
the recent financial shortfalls at these air facilities. I believe that 
for the financial well-being of this nation's smaller commercial 
airports, airport improvement program dollars should be used at the 
discretion of each airport for one year in order to cover much needed 
increases in operational costs.
    I am pleased that our President and Congress have done so much to 
revive our tourist economy. The passage of H.R. 2926, the ``Air 
Transportation Safety and System Stabilization Act'' is a great first 
step in keeping our nation's civilian airline system, and its tourism 
industry, running during a time of fiscal crisis. I would like to thank 
Chairman Stearns for this opportunity to study this issue in greater 
detail. Thank you.
                                 ______
                                 
Prepared Statement of International Association of Amusement Parks and 
                              Attractions
    The International Association of Amusement Parks and Attractions 
(IAAPA) thanks the Committee for holding this hearing focusing on the 
travel and tourism industry. IAAPA appreciates the opportunity to 
inform the Committee of the situation faced by its members following 
the tragic events of September 11, 2001. IAAPA is the world's largest 
association of permanently situated amusement parks, family 
entertainment centers, waterparks, attractions, and industry suppliers. 
IAAPA represents more than 5,000 members in 101 countries.
    Our members in the United States face both short-term and long-term 
consequences following the September 11 attacks. In the short term, the 
shut-down of America's air transportation system following the attacks 
resulted in a drastic reduction in attendance at destination parks, 
particularly in Florida and California. On September 28, the Orlando 
Sentinel had the following to say about the status of tourism in that 
city:
    ``The marketing campaigns can't come soon enough for many in the 
tourism industry.
    ``Immediately after the terrorist strikes, the number of tourists 
and business travelers flying to Central Florida fell swiftly.
    ``Hotel occupancy, ordinarily about 60 percent in September, 
plunged below 10 percent at some properties.
    ``Lines at popular theme-park attractions such as Space Mountain at 
Disney's Magic Kingdom practically disappeared.
    ``Since then, business has picked up, but only a little, and then 
mostly on weekends. Hotel occupancy has climbed to the 20 percent to 40 
percent range, but that still is far below the 55 percent innkeepers 
generally need to break even.
    ``And with business down, thousands of service- and hospitality-
industry workers had their work hours reduced or lost their jobs 
outright.''
    Because many IAAPA member facilities are closed for the season or 
operating only on weekends, the long-term effects of the impact of the 
events of September 11 on the industry are more difficult to determine. 
It is clear, though, that if potential guests are afraid to travel and 
this continues into 2002, the entire industry will be severely 
affected.
    With these considerations in mind, IAAPA makes the following 
recommendations:

 Make travel safe again. Most importantly, the federal 
        government should do whatever is necessary to make air, and all 
        other forms of travel safe for Americans and for those visiting 
        the United States. Air marshals and the highest security 
        precautions should be added to airports that serve major 
        tourist destinations.
 Restore confidence in travel safety. Once every effort is made 
        to ensure that travel is safe, the government needs to take a 
        leading role in informing the public that it is safe to travel. 
        Americans' confidence with the safety of travel has been so 
        shaken that we believe it will take the government's 
        credibility to bring confidence back to the public.
 Promote the travel and tourism industry. The federal 
        government should directly support promotional campaigns 
        overseas, urging travel to the United States. Within the United 
        States, federal-state matching grant program should be set up 
        to fund state-run travel and tourism promotional campaigns. A 
        matching grant program would provide the resources, scale, 
        encouragement and credibility needed to kick-start an effective 
        campaign to get Americans feeling good about traveling again.
Economic Stimulus Recommendations
    IAAPA commends Congress and the Administration on the work being 
done to pass legislation to stimulate the economy. The industry would 
greatly benefit by any legislation that encourages consumer and 
business spending and gets the economy back on its feet as quickly as 
possible.
    Temporary changes to tax law should include the following:

 Temporary payroll tax credit for both employees and employers 
        applied towards taxes paid this year. It is important that this 
        provision be either retroactive to the beginning of the year or 
        the total allowed be an average for 2001.
 Accelerated or bonus depreciation retroactive to January 2001.
 Extension of the work opportunity tax credit for an additional 
        year, through the end of 2002.
    Finally, we would like to lend our support to the proposals being 
promoted by the Travel Industry Association of America (TIA). Among 
those proposals, IAAPA would highlight the following:

 $500 tax credit per person ($1,000 for a couple filing 
        jointly) for personal travel expenses for travel originating 
        and within North America.
 Expanded allowance of carry back of net operating losses for 
        taxpayers in the travel and tourism industry beyond the current 
        two-year limit to five years for losses attributable to the 
        period between September 11, 2001 and December 31, 2002.
    Additionally, the industry supports any efforts the government may 
take to ensure that parks continue to be able to obtain their usual 
reinsurance coverage at rates that are not cost prohibitive and that 
acts of terrorism are not excluded from insurance coverage.
    IAAPA thanks you for inviting our comments as the United States 
House of Representatives continues its important work to move our 
country ahead.
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