[Senate Hearing 107-748]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 107-748

                  TERRORISM'S EFFECTS ON U.S. TOURISM

=======================================================================

                                HEARING

                               before the

     SUBCOMMITTEE ON CONSUMER AFFAIRS, FOREIGN COMMERCE AND TOURISM

                                 OF THE

                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION

                               __________

                            OCTOBER 12, 2001

                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                             Transportation




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                            WASHINGTON : 2003
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       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION

              ERNEST F. HOLLINGS, South Carolina, Chairman
DANIEL K. INOUYE, Hawaii             JOHN McCAIN, Arizona
JOHN D. ROCKEFELLER IV, West         TED STEVENS, Alaska
    Virginia                         CONRAD BURNS, Montana
JOHN F. KERRY, Massachusetts         TRENT LOTT, Mississippi
JOHN B. BREAUX, Louisiana            KAY BAILEY HUTCHISON, Texas
BYRON L. DORGAN, North Dakota        OLYMPIA J. SNOWE, Maine
RON WYDEN, Oregon                    SAM BROWNBACK, Kansas
MAX CLELAND, Georgia                 GORDON SMITH, Oregon
BARBARA BOXER, California            PETER G. FITZGERALD, Illinois
JOHN EDWARDS, North Carolina         JOHN ENSIGN, Nevada
JEAN CARNAHAN, Missouri              GEORGE ALLEN, Virginia
BILL NELSON, Florida
               Kevin D. Kayes, Democratic Staff Director
                  Moses Boyd, Democratic Chief Counsel
                  Mark Buse, Republican Staff Director
               Jeanne Bumpus, Republican General Counsel
                                 ------                                

          SUBCOMMITTEE ON CONSUMER AFFAIRS, FOREIGN COMMERCE 
                              AND TOURISM

                BYRON L. DORGAN, North Dakota, Chairman
JOHN D. ROCKEFELLER IV, West         PETER G. FITZGERALD, Illinois
    Virginia                         CONRAD BURNS, Montana
RON WYDEN, Oregon                    SAM BROWNBACK, Kansas
BARBARA BOXER, California            GORDON SMITH, Oregon
JOHN EDWARDS, North Carolina         JOHN ENSIGN, Nevada
JEAN CARNAHAN, Missouri              GEORGE ALLEN, Virginia
BILL NELSON, Florida


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on October 12, 2001.................................     1
Statement of Senator Boxer.......................................     3
Statement of Senator Dorgan......................................     1
Statement of Senator Fitzgerald..................................    51
Statement of Senator Inouye......................................     5
Statement of Senator Nelson......................................    27
Statement of Senator Smith.......................................     5

                               Witnesses

Clinton, Hon. Hillary Rodham, U.S. Senator from New York.........    34
Hirono, Hon. Mazie K., Lieutenant Governor, State of Hawaii......    15
    Prepared statement...........................................    17
Hurst II, O. Mason, ANC Rental Corporation.......................    59
    Correspondence and prepared statement........................    61
Kyl, Hon. Jon, U.S. Senator from Arizona.........................     6
    Prepared statement...........................................     8
Marriott, Jr., J. W., President and CEO, Marriott International, 
  Inc............................................................    37
    Prepared statement...........................................    38
Nelson, Marilyn Carlson, Chair and Chief Executive Officer, 
  Carlson Companies, Inc.........................................    53
    Prepared statement...........................................    55
Rosenbluth, Hal F., Chairman and CEO, Rosenbluth International...    40
    Prepared statement...........................................    42
Wilhelm, John W., President, Hotel Employees & Restaurant 
  Employees International Union..................................    46
    Prepared statement...........................................    49
Williams, Hon. Anthony, Mayor, District of Columbia..............    10
    Prepared statement...........................................    13

                                Appendix

American Hotel & Lodging Association, prepared statement.........    79
Boxer, Hon. Barbara, letter dated September 26, 2001, to Hon. 
  Donald L. Evans, Secretary, Department of Commerce.............    79
Evans, Hon. Donald L., Secretary, Department of Commerce, letter 
  dated October 10, 2001, to Hon. Barbara Boxer..................    78
Faberman, Edward P., Ungaretti & Harris, letter dated October 11, 
  2001, to Hon. Byron Dorgan.....................................    76
Gallagher, Frank P., Chairman, Coach USA, Inc., prepared 
  statement......................................................    81
Garback, Brent J., RADIUS Board Member and Chairman, Total Travel 
  Management, letter dated October 12, 2001, to Hon. Byron Dorgan    76
International Association of Amusement Parks and Attractions, 
  prepared statement.............................................    83
Payne, Michael, International Association of Airport Duty-Free 
  Stores (IAADFS), prepared statement............................    84
Roberts, Lawton, Owner, Uniglobe Country Place Travel, prepared 
  statement......................................................    85
Tisch, Jonathan M., Chairman, Travel Business Roundtable, letter 
  dated October 5, 2001, to Hon. Byron Dorgan....................    72
Tisch, Jonathan M., Chairman, Travel Business Roundtable, letter 
  dated October 10, 2001, to Hon. Byron Dorgan...................    73
Underwood, Hon. Robert A., U.S. Representative from Guam, 
  prepared statement.............................................    71

 
                  TERRORISM'S EFFECTS ON U.S. TOURISM

                              ----------                              


                        FRIDAY, OCTOBER 12, 2001

                                       U.S. Senate,
    Subcommittee on Consumer Affairs, Foreign Commerce and 
                                                   Tourism,
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 9:30 a.m. in 
room SR-253, Russell Senate Office Building, Hon. Byron L. 
Dorgan, Chairman of the Subcommittee, presiding.

          OPENING STATEMENT OF HON. BYRON L. DORGAN, 
                 U.S. SENATOR FROM NORTH DAKOTA

    Senator Dorgan. This hearing will come to order. Good 
morning to all of you, and welcome to the hearing of the 
Consumer Affairs, Foreign Commerce and Tourism Subcommittee of 
the Commerce Committee of the U.S. Senate. My name is Senator 
Dorgan. I am joined by Senator Boxer and Senator Inouye.
    Let me begin with a brief statement and then call on my 
colleagues for a statement, after which we will have the 
witnesses come forward. We have given a great deal of focus, 
and rightly so, to the impact of the terrorist attacks of 
September 11 on the airline industry, but there are other 
sectors of the economy that have been deeply affected as well, 
and this hearing seeks to understand the extent of the damage 
done to the tourism industry and the people who work in it so 
that we might determine what, if any, action is necessary to 
help bring about recovery from what appears to be a very 
substantial injury.
    The freedom to travel is one of our country's basic 
freedoms. The aviation security bill that we passed last 
evening around 10 or 11 will help preserve that freedom by 
securing Americans' safety when they travel by airplane. The 
airline assistance package we passed several weeks ago will 
help stabilize that industry, but the network of hotels, travel 
agencies, car rental companies, restaurants and the 
attractions, destination tour spots that make up the tourism 
industry and make it possible for us to travel conveniently and 
widely must also be preserved.
    In my part of the country we are familiar with disasters. 
We know what it is like when, through no fault of your own, the 
world falls out from under you as a result of a natural 
disaster. There was nothing natural, however, about the 
cowardly and deadly acts of September 11. They were certainly 
unpredictable, unexpected, and clearly beyond the control of 
anyone who was affected by them.
    Just as America has generously responded to farm disasters 
and natural disasters, we must now respond to this new disaster 
and help our fellow countrymen and women rebuild their lives 
and their livelihoods. The first step toward that end is 
understanding the size and the scope of the problem, and for 
that purpose we are gathered here today.
    I want to thank all of our witnesses for being here. I know 
that many of you and your organizations have been directly and 
personally affected, and you have my sincerest condolences. You 
also have my admiration for the ways in which you are carrying 
on and going forward despite all that has happened, and despite 
all of the burdens.
    This is an important hearing, because the U.S. travel and 
tourism industry is a huge segment of the American economy. It 
is the third largest retail industry, generating more than $580 
billion in revenue each year, directly and indirectly employing 
more than 19 million people. Our economy was already softening 
prior to September 11, and the attacks of September 11 made it 
that much worse. The impact of those losses is still growing. 
This hearing has been called to investigate the losses of the 
tourism industry and what steps are needed to revive it.
    In the aftermath of the tragedy, we acted quickly and 
responsibly to stabilize the airlines with a financial package 
of grants and loan guarantees. As I mentioned earlier, just 
last night we passed an aviation security bill that will 
dramatically increase the number of sky marshals, strengthen 
cockpit doors, federalize the screening of passengers and 
luggage at airports, and more.
    I am disappointed, however, that we did not add Senator 
Carnahan's amendment to extend the unemployment benefits and 
help dislocated workers cover their medical bills. We were 
right to act to stabilize the airlines so they could keep 
flying and hopefully the new security measures will increase 
everyone's sense of confidence in our aviation system. Earlier, 
I mentioned the unemployment issue. In addition to that, 
reports about huge losses in revenue to the travel and tourism 
industry require us to address and consider these issues.
    North Dakota is a long, long way from Ground Zero in New 
York City or from the Pentagon in Virginia, or from that lonely 
farm field in Pennsylvania, but the violence that took place at 
each and every one of those locations continues to be felt a 
half a continent away, in my State of North Dakota, in our 
hearts and, yes, in our state's tourism industry as well.
    Let me just share two reports with this Subcommittee. Randy 
Hatzenbuhler, Executive Director of the Theodore Roosevelt 
Medora Foundation, one of our wonderful tourist destinations in 
the Badlands of North Dakota, says his organization now has 
great concern about their 2002 season. They are preparing 
business plans to anticipate significant decreases in 
visitation.
    Catherine Satrom, a friend of mine from Satrom Travel & 
Tour in Bismarck, says that the week of September 11 and the 
week of September 17 their company's revenue was 25 percent of 
what it normally is at best. The following weeks have been 50 
percent of anticipated revenue. That is an example of how far-
reaching the economic problems are now ripping through the 
tourism industry, and those problems grow. It reaches every 
state, every city, every region.
    I want to thank the witnesses today who will join us to 
discuss these issues. We had many requests for testimony. We 
were unable to accommodate all of them, but I think we have a 
group of witnesses that will give us a good idea of what this 
industry is facing, and give us an opportunity to think through 
what some of these challenges might require us to do.
    The American economy is a very strong, resilient economy, 
but it has taken a huge hit. A soft economy has already, on 
September 11, taken a much larger hit, and we have to analyze 
and work through these issues to evaluate what we can do to 
give lift to this economy and to help those who have suffered 
this enormous shock to their businesses and their industries. I 
am appreciative of my colleagues being here.
    We are going to have opening testimony from Senator Clinton 
and Senator Kyl, and then we will have two panels.
    Joining me today is Senator Boxer from California. I am 
pleased to recognize her for her statement.

               STATEMENT OF HON. BARBARA BOXER, 
                  U.S. SENATOR FROM CALIFORNIA

    Senator Boxer. Thank you so much, Mr. Chairman, for your 
leadership. I am very pleased to be here. This issue of 
confronting the crisis of the travel and tourism industry is 
very important to me and, I know, to a number of our 
colleagues. I want to say that California has been deeply 
affected by this, and I want to say that so far 49 people from 
California have been confirmed dead in the attacks. We mourn 
for them and for all of the victims, and now we must rebuild, 
rebuild New York, rebuild the Pentagon, and rebuild our sense 
of normalcy, which includes rebuilding our tourism and travel 
industry.
    Mr. Chairman, I want to give you the California perspective 
and why this is so important to me, and I know my friend and 
colleague, Senator Inouye, feels very strongly about this 
issue. More than 1 million Californians work in tourism-related 
fields. They are concerned for their jobs because, since the 
attacks, the travel and tourism industry has been hemorrhaging 
money and cutting jobs by the thousands. For example, the Hotel 
Coronado, that magnificent landmark in San Diego, laid off 225 
employees. Wyndham International laid off 1,600 employees, and 
the MGM Mirage laid off 3,000 employees.
    Those who have been laid off will need us to help create 
jobs and get them working again. Those who still have their 
jobs are counting on us to make sure they do not lose them, and 
I join Senator Dorgan in expressing deep regret that we were 
not able to pass the Carnahan amendments. As our leader said 
yesterday, we will be back with other packages that deal with 
the working people of this country.
    I have talked to Commerce Secretary Don Evans in the hopes 
that he would have a plan to assist the travel and tourism 
industry. Although he is extremely sympathetic to this issue, 
what I have received from him so far is really not a plan. I 
think many of us in Congress do have a plan, and I am going to 
talk about that today in a bipartisan way.
    I know that Senators Clinton and Kyl will come forward. I 
wanted to tell you about a bill that I have offered along with 
Senators Allen, Inouye, and Kerry, called the Rediscover 
America Act, and it will help promote travel and tourism. The 
act would establish a two-year Travel and Tourism Promotion 
Bureau. We say two years because we feel it should sunset. If 
we still need it, we can reauthorize it within the Department 
of Commerce. The idea is to implement a public-private campaign 
to encourage people to rediscover America.
    Again, the bill is designed to be temporary and 
nonbureaucratic in its implementation. It directs the Secretary 
of Commerce to appoint up to three existing Department of 
Commerce employees to work on this two-year project to create 
advertising to promote tourism, and we want to move that 
advertising forward quickly.
    We envision celebrities and national leaders participating 
in the ads that will tout the beauty of the nation and 
encourage people here and abroad to tour our country. The ads 
also will educate people on the important new travel safety 
initiatives that are being put in place.
    Mr. Chairman, let me say, yesterday I was so proud that 
with Senator Hollings' and McCain's leadership we passed a very 
strong air safety bill. It gives the FAA everything it needs. I 
hope they will move quickly. People will not get into planes 
until they feel safe. We gave them what they need, and now they 
need to move forward. There should be no excuses. We want air 
marshals in those planes, we want the screeners to be 
professional, and what I envision is this promotion bureau 
letting the folks know that it is safe to travel. What we 
passed, if it is implemented, will restore confidence in air 
travel.
    Promoting travel and tourism is critical to the economy. 
The industry adds nearly 5 percent to the GDP, generates more 
than $578 billion in revenue, supports more than 17 million 
jobs, and provides a $14 billion trade surplus for this 
country. Mr. Chairman, I know you were always interested in 
those numbers, and getting this industry back on its feet will 
be central to restoring the health of the economy.
    In closing, I want to say that this bureau that we envision 
creating would be overseen by a number of people as volunteers, 
one member representing the aviation industry, one member 
representing the airline workers, one member representing the 
hotel industry, one member representing hotel workers, one 
member representing the restaurant industry, one member 
representing restaurant workers, one member representing 
amusement parks, and one member of the Rural Tourism 
Foundation.
    The bureau will be authorized at a spending level of $60 
million to carry out its responsibilities. That is less than 
the U.S. Travel and Tourism Agency had before it was eliminated 
in 1996. I want to say I voted against doing away with it.
    I want to thank Senator Inouye because he had a lot to do 
with the way this legislation looks. I look forward to working 
with the Committee on this important issue.
    Thank you.
    Senator Dorgan. Senator Boxer, thank you very much.
    We are very pleased to be joined by a senior Member of this 
Committee, Senator Inouye, and I know the Lieutenant Governor 
of his State of Hawaii is testifying today. Senator Inouye, do 
you have a statement?

              STATEMENT OF HON. DANIEL K. INOUYE, 
                    U.S. SENATOR FROM HAWAII

    Senator Inouye. Mr. Chairman, first I would like to commend 
you for holding this hearing. As you pointed out, the retail 
industry of the United States is the No. 1 employer of people. 
Second to that, and a close second, is the tourism industry, 
and if this industry goes down under, then the economy of the 
United States is gone, and so I commend you for what you are 
doing today.
    Sometime later this morning, I will have the great 
privilege of presenting to this Subcommittee the coordinator of 
all airport and economic recovery programs in the State of 
Hawaii, our Lieutenant Governor Hon. Mazie Hirono. She is the 
expert, so I will not try to suggest to you what our problems 
are. She knows all of them. So if I may be permitted later on 
to present her to the Subcommittee, I would be most pleased, 
sir.
    Senator Dorgan. Thank you very much.
    We are also honored to be joined by Senator Smith from 
Oregon, a Member of the Commerce Committee. Senator Smith, 
thank you for joining us.

                STATEMENT OF HON. GORDON SMITH, 
                    U.S. SENATOR FROM OREGON

    Senator Smith. Thank you, Mr. Chairman. Thank you for 
holding this hearing today on an industry that is critical, I 
think, to every State.
    I wanted to say very briefly how proud I am of some 
Oregonians who wanted to help the people of New York. Mayor 
Katz of Portland and a businessman named Sho Desono decided the 
best way they could help was to go to New York and go to plays, 
stay at hotels and eat good food, so they established what they 
called a ``Flight for Freedom.'' It was just a few Oregonians, 
but it was publicized, and before they boarded the airplanes, 
over 1,000 Oregonians from every corner of the State went last 
weekend to New York City, and I salute them.
    I think that what they were saying with their feet and with 
their dollars, is that part of patriotism is helping in ways 
that count, and our State has a long tradition of barn-raising, 
something of a residual from the Oregon Trail, that neighbors 
help neighbors, and that is the spirit that I think we need to 
revive in America. These terrorists have revived in America, 
and I simply want to highlight this particular incident, where 
people of my State acted in a very patriotic way.
    I salute them. I thank them. I think Mayor Giuliani would 
thank them as well, and I note that tourism is about a $6 
billion industry in a little State like Oregon, so I can only 
imagine what it is in Hawaii, so thank you, Mr. Chairman. I 
thank our witnesses, and I am pleased to be here this morning.
    Senator Dorgan. Senator Smith, thank you very much. I am 
going to ask Senator Kyl to come forward, and with his 
permission I am also going to ask Hon. Anthony Williams, the 
mayor of the District of Columbia, Lieutenant Governor Hirono 
of the State of Hawaii, and Senator Clinton to join him as the 
first panel.
    I will ask Senator Kyl for his statement. I believe he is 
going to be cochairing another hearing very soon, at 10, so let 
me thank all of you for coming. I will call on Senator Inouye 
at the appropriate time to introduce the Lieutenant Governor, 
but let me say, Senator Kyl, how pleased we are for you to be 
here today, and we appreciate your joining us, and we would 
welcome your testimony.

                  STATEMENT OF HON. JON KYL, 
                   U.S. SENATOR FROM ARIZONA

    Senator Kyl. Thank you very much, Mr. Chairman. You are 
right, at 10:00, Senator Feinstein and I are holding a hearing 
on immigration aspects of the terrorist issue. As you know, a 
lot of the terrorists had immigration problems, and it might be 
that we can do a better job of screening the people who either 
come here illegally or stay illegally, so that is what that is 
about.
    I really appreciate the hearing that you are holding here 
this morning, and in view of the fact that you have a lot of 
real experts who are going to be testifying about the specific 
impacts, and you alluded to that in your opening statement, I 
will not discuss the need for help here. I think almost 
everybody can stipulate to that, and the experts will be able 
to tell you the size of the industry and the impact on the 
industry in this first month following September 11, so I will 
simply describe to you what I think would be one good policy 
prescription for what ails us here, and let me begin by 
providing an analogy, Mr. Chairman.
    You said it yourself, before September 11, our economy was 
ailing, and certainly as a result of the impacts after 
September 11, all of the economy has suffered even more. But, 
we also know that one specific segment of the economy took a 
body blow, and that is the travel and tourism segment of the 
economy. That particular portion of the economy is dragging 
down much of the rest of the economy.
    All the way from the maid that makes the bed in the hotel 
to the worker that helps to build a Boeing aircraft which is 
not being bought any more because not as many people are 
flying, everything in between, and much, much more is affected. 
The ripple effect of this body blow to the tourism industry is 
just incredible. I was talking to the CEO of Phelps Dodge 
Company in Arizona, and I said, well, during times of war you 
all do a little better, do you not? He said, no. He said, we 
had a huge contract with Boeing for some special metal alloy 
that we do, and they are not building planes, so we lost all of 
that.
    I think it is impossible for us to realize the true impact 
of the body blow to the travel and tourism industry. People 
think of it as a vacation thing. In Senator Inouye's State and 
my State, the leading industry is tourism, but that is not all 
of what this is about. It is about travel generally and all of 
the different aspects of the economy that are suffering from 
it.
    So here is the analogy. You had a patient that had, I would 
say, a case of pneumonia, and we were getting ready to treat it 
with some antibiotics, and we knew the patient, the economy, 
would recover eventually, but then an accident occurred, an arm 
is severed, it is bleeding profusely, and this patient is going 
to bleed to death if we do not do something immediately about 
the specific problem that is most current.
    What is the most specific problem? Everybody knows it is 
this body blow to the travel and tourism industry, so we have 
got to focus our attention immediately on this industry, and 
what we have come up with as a piece of legislation that I hope 
will be included as a part of the economic stimulus package, 
and which could receive good support from this Committee, if 
you would, is a bill cosponsored in the House by Representative 
Shadegg from Arizona, and the colleague of Senator Inouye, 
Representative Abercrombie from Hawaii, and my colleague Zell 
Miller here in the Senate, and there are a lot of Democrats and 
Republicans who are signing on as cosponsors.
    The Travel America Now Act, we call it. It is immediate, 
specific, quick, and then it goes away, too, just as Senator 
Clinton's proposal does. It says that if you travel, or if you 
pay for the travel or the hotel reservation, or whatever it 
might be, prior to the end of this year, you get a tax credit 
for this year's taxes of $500, or if a couple files jointly, up 
to $1,000. It is that simple.
    What it is designed to do, obviously, is get people to make 
that reservation now even if you do not travel until next 
January, or even perhaps next Easter. As long as you make the 
financial commitment, that qualifies for the tax credit. You 
get it as a tax credit. Obviously it applies to everybody. It 
is not just--I mean, we specifically did not make it a 
deduction which would only help a certain segment of the 
society.
    There are two additional features of it. One has to do with 
meals. Given the fact that we already have a business travel 
expense deduction, what we do is to restore a full 100 percent 
deduction for those travel expenses up until the end of the 
year, or expenses that are committed by the end of the year, 
and also there is a provision providing tax relief to those 
travel-related businesses most hurt, so-called ability to carry 
back their losses incurred after September 11 for a temporary 
additional period of 3 years. It is very simple, and as I said, 
the whole idea of it is to provide a very quick incentive for 
people to get back to traveling again.
    Now, the folks from the industry have told us they could 
even help us craft a more specific provision, which we are 
working on now, which would ensure that it does not cover 
travel that was already anticipated, or that would have 
occurred anyway, and there is a way that they can do that, as a 
result of which virtually all of the travel that would occur 
that would be subject to this would be new travel that 
otherwise would not have occurred, very much like the travel 
that Senator Smith alluded to from those great Oregonians who 
decided to do their part and travel. That is what we are trying 
to get people to do, and because it is so quick and is over 
with after the end of this year, I do not think that anybody 
can contend that this is a big subsidy for the industry, or 
anything like that.
    A final point. This is not a case where the Government is 
picking winners and losers and saying, we will give you money 
if you go spend it on this or that or the other thing. What we 
are saying is, Americans can keep $1,000 of their own money, 
and they make the choice of where to go, what to spend it on. 
All they have to do is go travel. That is all we are asking. It 
could be airplane, it could be ship, it could be car, whatever, 
but the idea is to get them traveling again, and I hope that my 
colleagues will--understanding, as the Senator from North 
Dakota said, every State has tourist destinations, so everybody 
can benefit from this, that you will consider helping us try to 
get this included in the economic stimulus package. The cost 
should be relatively modest, given the very short timeframe 
with respect to its applicability.
    Mr. Chairman, with that, I ask unanimous consent to put my 
statement in the record, which contains more of the details.
    Senator Dorgan. Without objection.
    [The prepared statement of Senator Kyl follows:]

     Prepared Statement of Hon. Jon Kyl, U.S. Senator from Arizona

    Chairman Dorgan and Ranking Member Fitzgerald, thank you for 
holding this hearing on the State of the Tourism Industry and for 
allowing me the opportunity to discuss my proposal to help restore 
confidence in our country's ailing travel and tourism industry and at 
the same time stimulate our economy in general.
    As recent economic data have confirmed, our economy was ailing 
before the terrorist attacks on September 11, but few were talking 
about emergency measures to get it going again. What is different after 
September 11 is the downward spiral of the economy, led by the travel 
and tourism industry.
    Proposals for getting the economy moving have centered on 
traditional arguments as to whether we stimulate business investment, 
consumer demand, or infrastructure. Eager for a bipartisan approach, 
members of Congress and President Bush appear agreeable to splitting 
the difference and doing a little of each. To me, that's a political 
solution and it ignores the emergency created in the aftermath of 
September 11.
    I believe that we need to rethink what has happened to our economy 
to arrive at the stimulus legislation that treats the major problem, 
and, therefore, will do the most overall good.
    Before September 11, our economy was ailing for precisely the 
reasons Federal Reserve Chairman Alan Greenspan articulated--a lack of 
business investment. The terrorist attacks have made the general 
situation worse and caused an absolute emergency in certain sectors of 
the economy. Although I certainly agree that Congress should stimulate 
business investment and shore up consumer expectations (for example, by 
making our recent tax law permanent, cutting capital gains taxes, 
eliminating corporate AMT, and accelerating our outdated cost recovery 
periods), I contend that our first focus should be directly on the 
sector hardest hit by these events.
    To illustrate my point, an analogy is useful. Our economy had a bad 
case of the flu before September 11. Reducing interest rates, providing 
tax relief, and cutting regulatory burdens were all part of the 
antibiotic medicine needed to get the economy healthy again. During the 
economy's rehabilitation period, however, it sustained a major trauma. 
Under these circumstances, what should be a first priority--another 
dose of flu medication, or treatment applied directly to the wound?
    I believe that we must focus an emergency economic stimulus on the 
sector that has been most harmed: travel and tourism. If we are to 
prevent thousands of bankruptcies, hundreds of thousands of lost jobs, 
as well as numerous indirect consequences to the rest of the economy, 
it is essential that we provide some immediate help to this industry.
    Some facts and figures are illustrative of the alarming condition 
of travel and tourism in the United States. Hotels around the country 
are reporting reservation cancellations and severely reduced occupancy 
rates. Industry experts predict that, overall, hotels could lose $2 
billion in room revenue and other associated income. Moreover, a 
projection by PricewaterhouseCoopers shows revenue per room declining 
between 3.5 percent and five percent this year--the largest decrease in 
room revenue in 33 years.
    Business travel has plummeted. The Business Travel Coalition 
projects that U.S. corporate travel in January 2002 will be about half 
what it was in January 2001, and the International Association of 
Convention and Visitors Bureaus reports that 25 percent of conventions 
and meetings that were scheduled before the end of this year have been 
canceled in the last few weeks.
    The downward spiral of the travel and tourism industry is adversely 
affecting our economy. According to statistics provided to me by the 
Travel Business Roundtable, economists are projecting a decrease of 1.8 
percent of total GDP as a result and the loss of 1.1 million jobs in 
the travel and tourism sector.
    For an industry that directly or indirectly employs one out of 
every seven people in the civilian labor force, this is alarmingly grim 
data. To make matters worse, many industry analysts are predicting that 
tourism in the U.S. could continue to drop by one-third in the coming 
months.
    Accordingly, I have introduced legislation with Senator Zell Miller 
that seeks to treat this emergency economic situation. Elements of my 
legislation, the ``Travel America Now Act of 2001,'' S. 1500, include:

   Providing a temporary $500 tax credit per person ($1,000 for 
        a couple filing jointly) for personal travel expenses for 
        travel originating in and within the United States. This will 
        help encourage Americans to resume their normal travel habits. 
        Unlike general rebate checks to taxpayers, a tax credit 
        conditioned on travel expenses ensures that the money is spent 
        on a specific activity--in this case an activity that will 
        generate positive economic ripples throughout the entire 
        American economy. It will also help create confidence and 
        encourage Americans to get back on airplanes.

   Since business travel expenses are already deductible, 
        temporarily restoring full deductibility for all business 
        entertainment expenses, including meals, that are now subject 
        to a 50 percent limitation, will help bring back the backbone 
        of the travel industry--the business traveler.

   Finally, in order to provide tax relief to those travel-
        related businesses most hurt by the terrorist attacks, Congress 
        should allow these companies to ``carry back'' their losses 
        incurred after September 11, for a temporary period of three 
        additional years (a total, temporary, ``carry back'' period of 
        five years). This will allow companies that had been profitable 
        until September 11, but then lost money in excess of the past 
        two years' amount of profit, to offset previous years' profit. 
        Without this relief, many companies will go bankrupt, solely 
        due to the terrorist attacks.

   To be temporary and take effect soon, the credit would be 
        available for expenses incurred before December 31, 2001. (The 
        travel could occur later.)

    This legislation meets the criteria set forth by President Bush and 
the Chairman of the Finance Committee. By definition, the relief would 
be temporary. The revenue loss attributable to this legislation for 
2001 should occur no later than 2002 and so there would not be a long-
term, negative drag on our federal budget. In fact, I believe that it 
would help ensure a positive, long-term budgetary position by getting 
America moving and doing business again. As for the need to stimulate 
consumer spending, providing consumers with incentives to travel is 
clearly a demand-driven idea. I also contend that it will help stem the 
retrenchment in business investment that the economy is experiencing in 
the travel industry and many related industries. Finally, travel and 
tourism is not a partisan issue, it is one of the most bipartisan of 
all issues.
    As Secretary O'Neill said before the Finance Committee on October 
3, ``The medicine has to work and be worth the cost.'' Without travel, 
collateral consequences to related industries will be substantial. Of 
all the competing proposals I can think of, none more directly affects 
the major cause of the problem in our economy.
    So there it is. Our economy has sustained a specific trauma. We 
need a quick and focused response to this emergency condition. I 
believe that the ``Travel America Now Act'' provides the right medicine 
for the most acute problem. I hope that the members of this Committee 
will join with me to advocate its inclusion in economic stimulus 
legislation.
    Thank you for giving me the opportunity to speak to you on the most 
important and immediate issue affecting our economy at this moment. 
This hearing highlights the importance of this industry to our economy 
and the need to immediately address its emergency condition.

    Senator Dorgan. Your suggestion is one of the series of 
suggestions, many of which have great attraction. The purpose 
of this hearing is to think through with our witnesses and 
others on how to proceed in a way that provides a jumpstart to 
this important part of our economy as we try to provide lift to 
the entire economy during a difficult time, and we appreciate 
your testimony. I know you have a 10:00 hearing. Do either of 
my colleagues have questions for Senator Kyl?
    Senator Inouye. Senator Kyl, may I request that I be added 
as your cosponsor?
    Senator Kyl. Absolutely, and I thank you very much, Senator 
Inouye, and of course I will be available for your questions. 
As I indicated to Senator Inouye, we are working on this 
provision to make sure that every dollar here is a new dollar 
of travel, and I will share that information with all of the 
members of this Committee as we get that prepared as well.
    Senator Dorgan. Senator Kyl, thank you very much for 
joining us today, and we appreciate your willingness to stop by 
before your other hearing.
    Senator Clinton I understand will be here about 10:30, so 
we will take her out of order when she does arrive, with the 
permission of other witnesses.
    We are very pleased today to have the Mayor of the District 
of Columbia with us, Anthony Williams. I know and I think all 
of my colleagues know, because we are required to be in the 
District of Columbia much of the year while the Senate is in 
session, that after September 11, in the intervening days and 
weeks, this was a town that had a very different look to it. 
The streets seemed fairly empty. Hotels had very few guests. 
Very few people were coming to town, very little tourism, and 
we thought it was important to invite Mayor Williams to speak, 
as the Mayor of one of the country's major cities, and 
America's capital city, on what September 11 has done to one of 
the major tourist destinations in our country.
    So Mayor Williams, thank you for joining us. Why don't you 
proceed.

          STATEMENT OF HON. ANTHONY WILLIAMS, MAYOR, 
                      DISTRICT OF COLUMBIA

    Mayor Williams. Thank you, Mr. Chairman. Thank you for 
having us to testify on the impact, as Senator Kyl put it, of 
the body blow to an important industry in our Nation's Capital 
and our national capital region.
    I want to begin by thanking you for having this hearing, 
because while symbolic gestures and acts like my trip with six 
Governors to New York City and to Washington, D.C., to boost 
tourism are important, substance is what really counts, and I 
congratulate and commend the Committee for its important work 
in a vital area to many of our local jurisdictions.
    In the weeks following the September 11 attack, the 
nation's attention has been focused on caring for the victims 
and their families and ensuring the physical security of our 
country, and certainly here in Washington, D.C. This is of 
prominent importance as we continue to make substantial 
progress in these areas. We have to also address the issue of 
our nation's security and to conquer the terrorist attacks 
around the world. The U.S. must ensure that we maintain our 
economic strength at home.
    The September 11 attack on our country dealt a major 
economic blow to our economies, many of which were already 
facing pressures of a looming recession. My testimony today 
will focus on how the Washington, D.C. region is uniquely 
affected by that attack. Now, while the damage to the 
District's economy is much smaller than the damage to the New 
York City economy and that regional economy, and while many 
other regional economies depend heavily on travel-related 
industries, witness Arizona and Hawaii, these attacks have had 
a uniquely injurious, damaging effect on the District's economy 
for a number of key reasons.
    The first reason pertains to our airport. Reagan National 
Airport, which is a lifeline for our economy, remained closed 
for several weeks longer than any other major airport, and is 
expected to operate at reduced capacity going forward.
    The second reason is that we are uniquely dependent on the 
hospitality industry. People think of the District and this 
region as a federal procurement center, and certainly it is, as 
a technology center, and certainly it is, but tourism is a 
major industry here. Hospitality companies are the District's 
major employer, second only to the federal government. I must 
note, however, that the hospitality industry pays local taxes, 
whereas the federal government does not, and I know Bill 
Marriott knows how much taxes they pay. As such, our dependence 
on tourism makes reduced airport travel and other restrictions 
uniquely problematic for our economy.
    During a typical year, for example, our area has hotel 
occupancy rates of more than 80 percent. In the months of 
September and October, at present--and I want to emphasize 
this--our hotel occupancy rate is at 30 percent. This is also 
expressed in job loss. Our hotel restaurant workers are 
suffering job losses of 60 to 80 percent, and I am sure that 
John Wilhelm will have a lot to say on that.
    The third reason why the District's economy is especially 
challenged is a heightened terrorist threat associated with 
being the Nation's Capital. Here in the District, we are one of 
perhaps the greatest targets for terrorism activity in America. 
This extra exposure requires greater security measures at the 
airport, on the streets, and at major gatherings, which creates 
greater concern among people who may decide to live, work, or 
start a business here.
    On the issue of street closings, for example, I understand, 
I definitely understand the need to protect our federal 
installations, properties, and personnel, but as we do so we 
must also acknowledge that by closing more and more major 
thoroughfares in the District we are constricting the lifelines 
that keep a local economy viable. This is a conflict that we 
have to be constantly cognizant of.
    The fourth impact here in the District is that, our unique 
characteristic is that our government has always faced the 
challenge of providing many services to federal agencies 
without compensation, resulting in a substantial structural 
imbalance in our budget.
    To make this challenge even greater, the September 11 
attacks have diminished our local government revenue and 
increased expenditure pressure for service. To give you an 
example, we have got a major emphasis, now, on providing police 
protection for what we call civil disturbance for what we call 
the federal enclave. We were just getting to the point of where 
we were restoring an adequate, not to say optimal, but just 
adequate level of service out in our neighborhoods. We had 
turned homicide around in this city over the years, and this 
year we were on track to produce a 30-percent reduction in 
homicide. Now we are in danger of backtracking on that 
substantially, because of that loss of police presence in the 
neighborhoods occasioned by federal responsibility, all driven 
by the revenue picture, which is substantially, again, driven 
by this change in tourism.
    The final reason why the District's economy is especially 
challenged pertains to another major issue, and that is the 
major issue of, I think, how we move forward to very 
importantly have an open city and a safe city, and I think we 
think a lot about safety, but I would urge this Committee and I 
would urge all of us in the warning business to be constantly 
cognizant of the fact that while these warnings may have merit 
from a safety and security point of view, we have to be 
cognizant of their impact on the tourism business.
    These multiple reasons explain why the District is 
experiencing an exceptionally difficult economic impact in the 
wake of the September 11 attacks, and having reviewed these 
reasons, I want to present some data. According to economic 
projections, the D.C. economy will lose $750 million in only 
the first 6 months following the September 11 attack. At least 
10,000 small businesses are at risk and, as we know, small 
business is the engine that generates economic growth.
    As a result of the economy's problems, the District 
government could lose as much as $200 million in revenue over 
the next 18 months, and this is a city that is just getting 
back on its feet financially.
    These numbers are even more concerning when put in human 
terms. The District is projected to lose up to 24,000 jobs at 
some point over the next 6 months, and these jobs are held not 
only by District residents, but also by residents in Maryland 
and Virginia. At least half of these jobs are in the hotel and 
restaurant business, and right now, approximately half of the 
members of the local Hotel & Restaurant Employees Union are 
unemployed. Worse yet, this industry is experiencing setbacks 
at a time when they usually experience their highest incomes. 
This revenue typically provides the funds with which their 
employees, suppliers, and owners tide themselves over the less 
busy portions of the year, so there is a ricochet effect.
    Now, to respond to these challenges we are taking a number 
of steps:

   First, we have developed a $100 million loan 
        guarantee program to assist small businesses in the 
        District that have failed or would fail without special 
        assistance.

   Second, we have requested that the Washington 
        Metropolitan Area Transportation Authority, which runs 
        Metro and Metrobus, provide free transportation to and 
        from the District on October 13 and 14 so that people 
        can come to the District, enjoy our restaurants, enjoy 
        our neighborhoods, and enjoy all the amenities we 
        provide.

   Third, we have established a one-stop service office 
        to assist affected residents and businesses in finding 
        needed services such as unemployment compensation, 
        rent, and subsidies during these economically 
        challenging times.

    To truly stem the tide of the coming economic challenges, 
we want to partner more effectively with the federal 
government, and to that end we are developing a series of 
proposals for targeted support to residents and businesses in 
need, and they are going to include the following:

   Expanded unemployment benefits to displaced workers, 
        that those affected by this crisis may receive 
        temporary focused support until our economy recovers;

   Loans and grants to small businesses are mentioned;

   Extension of temporary assistance to needy families, 
        benefits to needy families and individuals who have 
        been knocked out of work. One of the tragedies of this 
        is that you have many families who have moved from 
        welfare to work, now to be thrown back onto welfare 
        because of this crisis; and

   Infrastructure investments to enhance the general 
        security of our city, while at the same time 
        stimulating the local economy.

    Through these and other investments based on our own local 
initiative and our local self-help effort, and I am confident 
in partnership with the federal government can go a long way to 
addressing the peculiar, unique concerns here in the District, 
but I could not overemphasize, in the same way that Senator Kyl 
emphasized, the importance of this Congress and specifically 
this Committee acting in the ways that you have discussed to 
address a particularly acute need, not only in the general 
national economy, but certainly in the national capital region.
    Mr. Chairman, thank you once again for your invitation to 
be here to provide this testimony, which we have submitted for 
the record.
    Senator Dorgan. Without objection, the entire testimony 
will be made a part of the record, Mayor Williams. Thank you 
very much. That is very interesting testimony, and also 
alarming in many ways.
    [The prepared statement of Mayor Williams follows:]

    Prepared Statement of Hon. Anthony Williams, Mayor, District of 
                                Columbia

    Good morning Chairman Dorgan, Ranking Member Fitzgerald, and 
members of the Committee. I want to begin by thanking you for calling 
this important hearing on the economic impacts of the September 11 
terrorist attacks.
    In the weeks following those attacks, the nation's attention has 
been appropriately focused on caring for the victims and their families 
and ensuring the physical security of our country. As we continue 
making substantial progress in those areas, we must also address the 
issue of our nation's security.
    To conquer the terrorist threats around the world, the U.S. must 
ensure that we maintain our economic strength at home. The September 11 
attacks dealt a major economic blow to local economies, many of which 
were already facing recessionary pressures. My testimony today will 
focus on how the Washington, D.C. region is uniquely affected by these 
attacks.
    While the damage to the District of Columbia's economy is much 
smaller than the damage in New York, and while many other regional 
economies also depend heavily on travel-related industries, the 
September 11 attacks have had a uniquely damaging effect on the 
District economy. This is true for several key reasons:

   The first reason pertains to our airport. Reagan National 
        Airport, which is a lifeline for the District economy, remained 
        closed for several weeks longer than any other major airport, 
        and is expected to operate at reduced capacity going forward.

   The second reason is that we are especially dependent on the 
        hospitality industry. Hospitality companies are the District's 
        major employer, second only to the federal government. I must 
        note, however, that the hospitality industry pays local taxes, 
        whereas the federal government does not. As such, our 
        dependence on tourism makes reduced airport travel and other 
        restrictions uniquely problematic for our economy. During a 
        typical year, for example, our area has a hotel occupancy rate 
        of more than 80 percent in the months of September and October. 
        At present, our hotel occupancy rate is at 30 percent.

   The third reason why the District's economy is especially 
        challenged is the heightened terrorist threat associated with 
        being the Nation's Capital. Here in the District, we are home 
        to perhaps the greatest targets for terrorist activity in 
        America. This extra exposure requires greater security measures 
        at the airport, on the streets, and at major gatherings, which 
        creates greater concern among people who may decide to live, 
        work, or start a business here. On the issue of street 
        closings, for example, I understand the need to protect federal 
        properties and personnel; but as we do so, we must also 
        acknowledge that by closing more and more major thoroughfares 
        in the District, we are constricting the lifelines that keep 
        the local economy viable.

   The fourth unique characteristic of the District is that our 
        government has always faced the challenge of providing many 
        services to federal agencies without compensation, resulting in 
        a substantial structural imbalance in our budget. To make this 
        challenge even greater, the September 11 attacks have 
        diminished our local government revenue, and increased 
        expenditure pressures for service.

   The final reason why the District's economy is especially 
        challenged pertains to the local protection we must provide to 
        the federal government. During threats to federal properties 
        and employees, the District frequently must deploy police and 
        fire resources by diverting them from neighborhood patrols. 
        Even when the District is compensated for the associated costs, 
        the emergency redeployment still leaves our neighborhoods 
        underserved during these all-too-frequent occurrences. This 
        exposure leaves the District with insufficient resources to 
        respond to crime and other emergency calls, and thereby makes 
        the District appear to be a less desirable place for residents 
        and businesses to locate.

    These multiple reasons explain why the District of Columbia is 
experiencing an exceptionally difficult economic impact in the wake of 
the September 11th attacks. Having reviewed these reasons, I will now 
present some data on just how severe we expect this challenge to be.
    According to economic projections, the D.C. economy will lose $750 
million in only the first six months following September 11. At least 
10,000 small businesses are at risk; and as we all know, small business 
is the engine that generates economic growth. As a result of the 
economy's problems, the District government could lose as much as $200 
million in revenue over the next 18 months.
    These numbers are even more concerning when put in human terms. The 
District is projected to lose up to 24,000 jobs at some point over the 
next six months, and these are jobs held not only by District 
residents, but also by residents of Maryland and Virginia. At least 
half of these jobs are in the hotel and restaurant business. Right now, 
approximately half the members of the local hotel and restaurant 
employees union are unemployed. Worse yet, this industry has 
experienced these setbacks at a time when they usually experience their 
highest incomes. This revenue typically provides the funds with which 
their employees, suppliers, and owners ``tide themselves over'' the 
less busy portions of the year. This year, those revenues will not 
appear.
    To respond to these economic challenges, the District has taken 
several steps.

   First, we are developing a $100 million loan guarantee 
        program to assist businesses that are likely to fail without 
        that assistance. The mechanics of this program, which would 
        supplement Federal Small Business Administration loans, are 
        being worked out between the District and local lending 
        institutions.

   Second, we have requested that the Washington Metropolitan 
        Area Transportation Authority, which runs the Metro and 
        Metrobus, provide free transportation to and from the District 
        on October 13 and 14. This will encourage the District's 
        neighbors and visitors to visit our parks, monuments, and 
        museums, and to dine in District restaurants.

   Third, we have established a ``one-stop-service'' office to 
        assist affected residents and businesses in finding needed 
        services such as unemployment compensation, rent and subsidies 
        during these economically challenging times.

    To truly stem the tide of the coming economic challenges, however, 
the District will need to partner more effectively with the federal 
government. To that end, we are developing a series of proposals for 
targeted support to residents and businesses in need. These proposals 
will include the following:

   Expanded unemployment benefits to displaced workers, so that 
        those affected by this crisis may receive temporary support 
        until our economy recovers;

   Loans and grants to small businesses, because we recognize 
        that small businesses are key to restarting a stalled economy;

   Extension of TANF benefits to needy families and 
        individuals; and

   Infrastructure investments to enhance the general security 
        of the city, while at the same time stimulating the local 
        economy.

    Through these and other investments, the federal government would 
provide critical assistance to ensure the District can recover 
economically from the attacks on September 11. Not only will this 
assistance help support the residents, visitors, and businesses of the 
District, but it will also allow for our continued support of the 
critical federal operations that sustain the security and vitality of 
the entire nation.
    In closing, I thank you for this opportunity to testify, and I look 
forward to our ongoing discussions about federal assistance to the 
District. I will now be happy to answer any questions you may have.

    Senator Dorgan. With Senator Nelson's permission, I am 
going to go to the Lieutenant Governor from Hawaii, then we 
will ask for a statement from Senator Nelson of Florida, who 
has just arrived.
    Let me call on my colleague, Senator Inouye, for the 
introduction of the Lieutenant Governor.
    Senator Inouye. Mr. Chairman, I thank you very much. It is 
my great pleasure to present to the Committee Hawaii's 
coordinator of airport security and economic recovery programs, 
our Lieutenant Governor, ladies and gentlemen, Hon. Mazie 
Hirono.

              STATEMENT OF HON. MAZIE K. HIRONO, 
              LIEUTENANT GOVERNOR, STATE OF HAWAII

    Lt. Governor Hirono. Thank you very much, Chairman Dorgan, 
Senator Inouye, other Members, Hon. Senators, Members of the 
Consumers Affairs, Foreign Commerce and Tourism Subcommittee. 
On behalf of the people of the State of Hawaii, I extend to 
each of you my warmest aloha. We appreciate the opportunity to 
testify this morning on Hawaii's tourism industry and how our 
island State has been impacted by the wake of the tragedy on 
September 11.
    After 10 years of economic stagnation, the last 3 years in 
Hawaii represented a turning around of our economy. September 
11 changed all of that and put Hawaii in a serious economic 
crisis. Hardest hit has been our $11 billion tourism industry, 
which accounts for approximately 25 percent of our economy and 
provides jobs for nearly 200,000 people, almost one-third of 
the State's total civilian work force.
    Normally, about 20,000 passengers arrive in Hawaii per day, 
with about 5,000 to 6,000 arriving from Japan. Four weeks after 
September 11, our average daily Japanese visitor count has been 
cut by over 50 percent. Total average daily passenger counts 
have decreased nearly 40 percent. Sharp declines in travel to 
Hawaii have led to employment losses. More than 95 percent of 
these losses are in tourism-dependent industries.
    In the 2 weeks following September 11, 3,607 workers in 
hotel-related industries filed for unemployment benefits. In 
the same period only 1 year ago, there were only 184 
applicants. Decreases in tourism have immediate negative 
effects on Hawaii. A 30-percent downturn for the remainder of 
the year could result in layoffs exceeding 25,000 workers, and 
as much as $1 billion loss in gross state product for our 
State.
    Therefore, our State must rapidly pursue initiatives and 
assistance at all levels of government to curb continued 
losses. Federal programs that will assist in the promotion of 
travel and tourism, including promotions of programs that will 
attract foreign visitors, are needed. We need federal 
assistance programs that will provide federal dollars to offset 
State efforts and tourism promotion for Hawaii, especially in 
the area of international tourism, and federal tax incentives 
for travelers would be a plus.
    Our State response has included the creation of the 
Governor's Emergency Tourism Marketing Task Force. 
Additionally, Hawaii's Governor Benjamin Cayetano led a 
delegation on an aloha mission to Japan this past week to 
address their safety concerns. Since visitors cannot drive to 
Hawaii, we are absolutely dependent on air travel. Efforts to 
restore public confidence in air travel are absolutely 
critical. A special legislative session has also been called to 
address ways to stabilize our tourism industry, assist 
displaced workers, provide aid to small business, and stimulate 
the economy through capital improvement projects.
    At the federal level, Economic Development Administration 
disaster grants must be made available to the States in this 
crisis. These grants would assist Hawaii in rebuilding areas 
like Waikiki, and diversifying our economy through science and 
technology initiatives on our neighbor islands. Conventions, 
meetings, and special events are another integral part of our 
tourism industry. In a typical year, almost 7 million visitors 
come to Hawaii from all over the world. Over 500,000 of these 
visitors attend symposiums, forums, and trade shows in Hawaii.
    Our meeting and convention industry has been seriously 
impacted by the events of September 11. Let me give you one 
example. A Japanese meeting scheduled at our brand-new, state-
of-the-art convention center, representing 5,000 attendees and 
$26.6 million in visitor spending, was recently canceled. This 
is where the U.S. Government can help Hawaii immediately. 
Bringing federal government meetings and conventions to the 
State of Hawaii will have an immediate positive effect on our 
economy in all sectors. Hawaii could face its steepest economic 
decline in our modern history. Swift action is needed by 
Congress. We urge your support, and thank you for the 
opportunity to describe for you the gravity of Hawaii's 
situation.
    Mr. Chairman, I would like to have my full remarks entered 
into the record, which include comments from all of our Mayors 
and others for the record.
    Senator Dorgan. Without objection, the record will include 
all of that information.
    [The prepared statement of Lt. Governor Hirono follows:]

   Prepared Statement of Hon. Mazie K. Hirono, Lieutenant Governor, 
                            State of Hawaii

    Chairman Dorgan and Members of the Subcommittee on Consumer 
Affairs, Foreign Commerce and Tourism, on behalf of the people of the 
state of Hawaii, I extend my warmest aloha. We appreciate the 
opportunity to testify this morning on Hawaii's tourism industry and 
how our island state has been impacted in the wake of the events of 
September 11, 2001.
    As our nation moves to resume operations following the terrorist 
attack on America, we face the second wave of their attack--the 
consequences on our economy.
    After ten years of economic stagnation, the last three years 
represented a turning around of our economy. September 11th changed all 
that and put Hawaii in a serious economic crisis. Hardest hit has been 
our $11 billion visitor industry, which accounts for approximately 25 
percent of our economy and provides jobs for nearly 200,000 people--
nearly one-third of the state's total civilian work force.
    For the first three days after the attacks, almost no air traffic 
moved in or out of Hawaii. Normally, about 20,000 passengers arrive in 
Hawaii per day, with about 5,000-6,000 from Japan. Four weeks after 
September 11th, our average daily Japanese visitor count has been cut 
by over 50 percent (from 5,856 on September 10 to 2,453 on October 
8th). Total average daily passenger counts have decreased nearly 40 
percent (from 19,206 on September 10th to 11,501 as of October 3).
    Sharp declines in travelers to Hawaii have led to employment 
losses. More than 95 percent of employment losses are in tourism 
dependent industries. Hotel jobs account for 50 percent of the 
increased jobless claims, with retail taking up 23 percent, 
transportation 13 percent and eateries 9 percent.
    Unemployment filings in the air transportation industry are at 
seven times the typical levels and retail unemployment filings are at 
eight times last year's numbers. Most disturbing is the number of hotel 
workers filing for unemployment benefits--20 times the number a year 
ago.
    Hawaii unemployment claims by industries including transportation, 
food, retail and hotels totaled 11,750 for the month of September. The 
total number of unemployment claims when compared to the same period in 
2000 rose 447.2 percent.
    In the two weeks following September 11th, 3,607 workers in hotel-
related industries filed for unemployment benefits. In the same period 
one year ago, there were only 184 applicants.
    Decreases in tourism have immediate negative effects on Hawaii. 
Economists estimate that if visitor losses average 13 percent for the 
rest of 2001, as experienced during the Gulf War, our state can expect 
potential job layoffs nearing approximately 11,000 and a decline in the 
Gross State Product (GSP) of nearly $500 million. (Gross state product 
is considered real income, after costs.)
    A 30 percent downturn for the remainder of the year could result in 
layoffs exceeding 25,000 workers and as much as a $1 billion loss in 
gross state product for the State of Hawaii.
    Therefore, our state must rapidly pursue initiatives and assistance 
at all levels of government to curb continued losses.
    Federal programs that will assist in the promotion of travel and 
tourism, including programs that will attract foreign visitors, are 
needed. We need federal assistance programs that will provide federal 
dollars to offset our state efforts in tourism promotion, for Hawaii, 
especially in the area of international tourism. And, promotion of tax 
incentives for travelers would be a plus.
    International travelers account for one-third of all visitors to 
Hawaii. And, Japanese tourists have accounted for about a quarter of 
all visitor spending in our state. That equates to $2.4 billion 
annually or about 6 percent of the state's $39 billion gross state 
product.
    Since the September 11th terrorist attacks, the decrease in 
Japanese tourists has robbed our state of about $4 million a day in 
spending, contributing to thousands of layoffs in the tourism industry. 
Hawaii has a special appeal in Japan and often tops the list of 
overseas destination for Japanese tourists. Last year 1.6 million came; 
of those, 60 percent were repeat visitors.
    Our state response has included the creation of a Governor's 
emergency tourism marketing task force. This task force will execute a 
plan to attract tourists back to Hawaii. Additionally, Hawaii's 
Governor, Benjamin Cayetano led a delegation on an Aloha Mission to 
Japan this past week to address safety concerns. Since visitors cannot 
drive to Hawaii, we are absolutely dependent on air travel. Efforts to 
restore public confidence in air travel are absolutely critical.
    A special legislative session has been called to address ways to 
stabilize the tourism industry, assist displaced workers, provide aid 
to small business and stimulate the economy through capital improvement 
projects.
    At the federal level, Economic Development Administration disaster 
grants must be made available to the states in this crisis. These 
grants would assist Hawaii in rebuilding areas like Waikiki and 
diversifying our economy through science and technology initiatives on 
our neighbor islands. As Hawaii stands ready to support our nation's 
military efforts through technology development we are hopeful for 
defense-related job creation.
    As noted, Hawaii is experiencing an unprecedented increase in the 
number of displaced workers in the wake of September 11th. Therefore 
our state needs assistance from Congress in the area of worker relief. 
I urge you to support bills to assist our displaced workers introduced 
in both the House and Senate that supplement unemployment compensation 
and encourage your support of fully reimbursing all unemployed workers 
for health care premiums under COBRA law.
    Conventions, meetings and special events are another integral part 
of our tourism industry. In a typical year, almost seven million 
visitors from around the world come to our islands. On average over 
500,000 attend conferences, forums, and trade shows in Hawaii. Hawaii's 
meeting and convention industry has also been seriously impacted by the 
events of September 11th. Let me give you one example--a Japanese 
meeting scheduled at our brand new, state-of-the-art convention center 
representing 5,000 attendees and $26.6 million in visitor spending was 
recently cancelled.
    This is where the U.S. government can help Hawaii immediately. 
Bringing federal government meetings and conventions to the State of 
Hawaii will have an immediate positive effect on our economy in all 
sectors.
    Hawaii could face its steepest economic decline in modern history. 
Swift action is needed by Congress. We urge your support and thank you 
for the opportunity to share with you the gravity of our situation.
    I have attached the following and request that they be included in 
the record:

     1. Letter from The Honorable Harry Kim, Mayor, County of Hawaii
     2. Letter from The Honorable Jeremy Harris, Mayor, City & County 
of Honolulu
     3. Letter from The Honorable Maryanne W. Kusaka, Mayor, County of 
Kauai
     4. Letter from The Honorable James ``Kimo'' Apana, Mayor, County 
of Maui
     5. Letter from Murray Towill, President, Hawaii Hotel Association
     6. Table 1. Hawaii Average Daily Passenger Count *
---------------------------------------------------------------------------
    * Source: State of Hawaii, Department of Business, Economic 
Development & Tourism, October 2001.
---------------------------------------------------------------------------
     7. Table 2. Hawaii Unemployment: Initial Claims by Industry *
     8. Table 3. Hawaii GSP and Investment: 1990-2000 *
     9. Table 4. Economic Impact of 9-11 on Hawaii's Economy: CY 2001 
*
    10. Chart 1. Total Hawaii Domestic Passenger Count *
    11. Chart 2. Total Hawaii International Passenger Count *
    12. Chart 3. Hawaii Initial Unemployment Claims Weekly *
                                                       Attachment 1

                                         County of Hawai`i,
                                    Hilo, Hawaii, October 10, 2001.

Hon. Byron L. Dorgan,
Chairman,
Subcommittee on Consumer Affairs, Foreign Commerce and Tourism,
Senate Committee on Commerce, Science, and Transportation,
Washington, D.C.

Subject: Impact of Terrorist Attacks on Tourism in Hawai`i

Dear Chairman Dorgan:

    The tourism industry in Hawai`i has been devastated by the fallout 
from the recent terrorist attacks in New York. Statewide, the incoming 
passenger count is down an average 36% since September 11. Also 
statewide, initial claims for unemployment from employees of hotels and 
resorts for the last week of September were 1,936, up 2232% from 83 
claims filed for the same period in September 2000. Unemployment claims 
from employees of restaurants are up 668%, and from the transportation 
sector, up 574% from the prior year. In the County of Hawai`i alone, 
overall unemployment claims for the last week of September are up 574% 
from the same time last year.
    The economy of Hawai`i is heavily dependent on tourism, and the 
entire state is suffering from this downturn in the visitor industry. 
We welcome any and all assistance that the federal government can 
provide to help us during these difficult times.
        Aloha,
                                                 Harry Kim,
                                                             Mayor.

                                                       Attachment 2

                                       Office of the Mayor,
                               City and County of Honolulu, Hawaii,
                                                  October 12, 2001.

Hon. Byron L. Dorgan,
Chairman,
Subcommittee on Consumer Affairs, Foreign Commerce and Tourism,
Senate Committee on Commerce, Science, and Transportation,
Washington, D.C.

Dear Senator Dorgan:

    Although we did not suffer a direct assault, the attack on our 
nation last month dealt a major economic blow to the City and County of 
Honolulu. It sharply increased the costs to safeguard both our citizens 
and the millions of visitors who come here each year. At the same time, 
the attacks radically curtailed our major source of revenue, tourism. 
The war on terrorism promises to be lengthy, and its chilling effects 
on travel and the costs of added security will remain with us for the 
duration of the conflict.
    Honolulu was better prepared than most cities. Three years ago, we 
began the process of developing a Terrorism Response Plan. It was a 
collaborative effort among our emergency response agencies (police, 
fire, emergency medical and civil defense). We also worked closely with 
the appropriate state and federal agencies (to include the military) 
based here. The plan was in place earlier this year. It was exercised 
during the Asian Development Bank meeting in May of this year, and is 
now being used as a model for other cities.
    In response to the attacks of September 11, 2001, additional police 
now protect our key infrastructure and public places. But the overtime 
costs continue to mount, and there is no relief in sight. Added 
equipment is on order to help us detect biological attacks during their 
early stages. These are costs that we cannot defer. It will be a major 
challenge to support the added costs brought on by the attacks--a 
challenge compounded by bleak revenue projections.
    The visitor industry accounts for about a third of the jobs in 
Hawaii. They are distributed among hotels, airlines, cruise lines, 
restaurants, ground transportation, attractions and the retail sector. 
The industry normally generates over $7 billion in revenue that also 
makes its way into every other sector of our economy. About 60 percent 
of that is generated in one square mile of our city--Waikiki. Across 
the State, revenue is projected to drop by $1 billion before the year 
ends, and most of that loss will be felt by Honolulu.
    Clearly, we are engaged in a new and pervasive form of warfare, and 
much of the defense of our nation will rest with municipal governments. 
If we are to win this war, it is vital that cities--our first line of 
defense--receive federal support. I strongly recommend that you 
consider that as these hearings proceed.
    Thank you.
        Sincerely,
                                             Jeremy Harris,
                                                             Mayor.

                                                       Attachment 3

                                       Office of the Mayor,
                        County of Kaua`i, Hawaii, October 10, 2001.

Hon Byron L. Dorgan,
Chair,
United States Senate Committee on Commerce, Science, and 
Transportation,
Subcommittee on Consumer Affairs, Foreign Commerce and Tourism,
Washington, D.C.

Re: Economic summary for the County of Kaua`i

Honorable Chair Dorgan and Subcommittee members:

    Allow me to express my aloha and gratitude to our Congressional 
leaders for your steadfast action in the face of a crisis which is 
unprecedented in our nation's history. Your display of leadership has 
helped to inspire our island community to work diligently through these 
challenges, toward a renewed sense of normalcy and a prosperous 
economy.
    Like many cities and counties across the nation, the events of 
September 11 have slowed our major commercial engine: tourism. Tourism 
and related businesses account for nearly 75% of our economy on Kaua`i, 
and prior to September 11, we were experiencing a sustained economic 
resurgence following a rebound from Hurricane Iniki in 1992.
    After experiencing an exceptional year for the visitor industry in 
2000, the current year was seeing visitor arrivals only slightly lower. 
Since September 11, Kaua`i's hotel occupancies are reported to as much 
as 30% below earlier annual projections.
    Interisland flights into Lihue Airport are at or near full 
capacity. Daily direct flights from the U.S. mainland to Lihue have 
held passenger loads at 85%.
    Reports from our island businesses indicate a drop off of 20% to 
30% of business sales. Most businesses are responding by reducing store 
and/or employee hours, with the intent to preserve as much capital as 
possible for the long run. Employees are encouraged to submit for 
unemployment claims to bridge over the loss in income, while companies 
are attempting to sustain employee benefits for as long as possible.
    Surprisingly, because of our heavy dependence on tourism--with an 
estimated 11,500 visitor-industry related jobs representing nearly 45% 
of our workforce--less than 5% have filed for unemployment claims since 
September 11. Still, 73% of claims for unemployment on Kaua`i have been 
received from residents employed by the visitor industry.
    The fall months are generally a slower period for visitor arrivals, 
so many businesses were already prepared for a slight decline. However, 
a sustained or severe economic downturn could have devastating effects 
on certain sectors of our economy.
    Additionally, a downturn in the visitor industry impacts the County 
directly. Our Finance Department is projecting that transient 
accommodation tax revenue for the period June through December 2001 
will be $900,000 less than was expected prior to September 11.
    Hopefully, this brief synopsis will assist you in further decision-
making as it relates to economic matters. Your attention to these 
critical issues at this early stage will no doubt help to stabilize our 
economy even in the face of uncertainty.
    Please call upon me if I can be of any further assistance.
        Aloha pumehana,
                                        Maryanne W. Kusaka,
                                           Mayor, County of Kaua`i.

                                                       Attachment 4

                                       Office of the Mayor,
                          County of Maui, Hawaii, October 12, 2001.

Hon. Byron L. Dorgan,
Chairman,
Subcommittee on Consumer Affairs, Foreign Commerce and Tourism,
Senate Committee on Commerce, Science, and Transportation,
Washington, D.C.

Dear Mr. Chairman:

    On behalf of the people of Maui County which includes the islands 
of Maui, Molokai, Lanai and Kahoolawe, I appreciate the opportunity to 
comment on the state of the tourism industry in my county in the 
aftermath of the September 11 attack on America.
    The visitor industry is Maui County's main economic driver. 
Spending by visitors accounts for approximately 80 percent of our 
county's economic activity, both direct and indirect effects. As a 
result of the terrorist attacks, the number of visitors to our County 
has dropped dramatically.
    Before September 11 we expected modest economic growth for 2001. 
``A respectable if-not-good year for Hawaii businesses and consumers'' 
was how one of our leading economists described our economic outlook. 
Now we expect to end the year in negative numbers and are projecting a 
15 percent decease in visitor arrivals.
    We're already seeing the ripple effects throughout the County with 
double digit increases in the number of individuals filing unemployment 
claims. Retail, restaurant, activities, hotel and other visitor-related 
businesses have suffered losses in sales and revenue. Some smaller 
businesses have closed down altogether; others have cut employee hours 
or laid off staff to preserve cash.
    Hawaii's visitor industry relies mainly on air travel. If consumer 
confidence does not rebound or is future eroded, our County's economy 
will face an even greater impact including more business failures and 
more jobs lost. Although we are taking measures to help ourselves, we 
do not have the resources to do this alone.
    We support our State Administration's efforts under the leadership 
of Governor Benjamin Cayetano and Lt. Governor Mazie Hirono to seek 
Congressional assistance for the visitor industry in our State. We 
greatly appreciate the assistance provided to the airline industry but 
the overall visitor industry needs additional help at this time.
    We thank you for the leadership you and your Committee are 
providing in this area and appreciate the opportunity to comment. We 
look forward to welcoming you to Maui in the near future to experience 
the special aloha and magic of Maui County.
    Best wishes.
        Sincerely yours,
                                      James ``Kimo'' Apana,
                                                             Mayor.
                                                       Attachment 5

                                  Hawaii Hotel Association,
                                Honolulu, Hawaii, October 10, 2001.

Hon. Byron L. Dorgan,
Chairman,
Subcommittee on Consumer Affairs, Foreign Commerce and Tourism,
Senate Committee on Commerce, Science, and Transportation,
Washington, D.C.

Dear Senator Dorgan:

    I want to thank you for the opportunity to provide a letter in 
support of the testimony provided by Lt. Governor Mazie Hirono of 
Hawaii. I am Murray Towill, President of the Hawaii Hotel Association. 
Our Association represents over 180 properties, including all of the 
major hotels in Hawaii. Our members include over 75% of the visitor 
accommodation units in Hawaii as well as over 400 businesses that 
service or supply Hawaii's hotels. Our Association is in strong support 
of the efforts being undertaken by Lt. Governor Hirono and Governor 
Cayetano and their administration, to deal with the crisis facing us 
all. We also appreciate your efforts and those of your colleagues, 
especially our hard working delegation led by Senators Inouye and Akaka 
in leading our country through these difficult times.
    Nationally, travel and tourism is a $650 billion dollar industry, 
which generates $99 billion in tax revenues and produces a $14 billion 
dollar trade surplus. Our industry also involves 1 in every 17 American 
jobs.
    In Hawaii, travel and tourism is our number one industry 
representing 26% of our gross state product. Hawaii is also unique in 
this great nation of ours as the only state where, except for limited 
cruise ship arrivals, one has to fly to visit or return home. The 
safety of our airlines and their economic vitality along with continued 
lift isn't a matter of convenience for 1 million Hawaii residents; it 
is absolutely essential for our way of life. I will try and highlight a 
few of the factors that indicate how hard hit Hawaii has been in this 
crisis and how important federal assistance can be in the challenging 
times ahead of us.
    Since visitors cannot drive to Hawaii, we are absolutely dependent 
on air travel. Efforts to help the airline industry and restore public 
confidence in air safety are absolutely critical. While we have seen 
increase in air travel in recent days, total visitor arrivals to Hawaii 
are still 30% below what they were last year at this time. The decline 
in international arrivals has been even more dramatic. In recent days, 
international arrivals have been down between 30% and 44% compared to 
last year. The Japanese market (our largest international market) has 
been especially hard hit with arrival decreases often well above that 
of other international travelers.
    This dramatic downtown in arrivals has had a significant impact on 
the occupancy rates at our member hotels and resort condominiums. In 
our survey of members, we have learned that their occupancy rates vary 
between 20 to 40 percentage points below what they were at this time 
last year. While these occupancies are somewhat better than they were 
two weeks ago, the lost existing and projected revenue has created 
severe cash flow problems. The result has been reduced hours and 
layoffs for workers. In fact, initial unemployment filings for the last 
2 weeks in September totaled over 3600 hotel workers. This was more 
than 19 times higher than the comparable period last year for hotel 
workers. Unfortunately, unemployment claims in other sectors of the 
travel and tourism industry are also up dramatically.
    Some of the other effects we are seeing in our industry are 
substantial reductions in purchases, halting of improvement and upgrade 
projects, as well as stopping of new investments. All of these actions 
are terribly detrimental to our industry and our community. We must 
find ways to quickly get our industry back on its feet or the economic 
impact to Hawaii will be devastating.
    We have already begun to see the impacts in increased unemployment 
claims, many workers and families losing their medical coverage, 
reduced tax revenue and severe pressure on human service organizations 
like the Hawaii FoodBank and agencies dealing with the increasing 
number of homeless.
    We are proposing some specific ideas that can help us through this 
crisis. Our proposals will fall into 2 areas: Assisting People and 
Assisting Business Travel and Tourism (as well as other Business).
1) Assist People

        OBJECTIVE: Help people personally affected by this crisis.

   Extend unemployment benefits and ensure affordability of 
        Cobra-extended health benefits.

   Federal support of retraining programs to enhance skills/
        future marketability

   Consider use of surgical approach to aid like the Earned 
        Income Tax Credit to assist families who may have fallen behind 
        on mortgage payments/rent, have difficulty paying for 
        utilities, or other ordinary household expenses.

2) Assist Business

        OBJECTIVE: Stimulate the economy with an initial focus on 
        travel and tourism.

   Implement an across-the-board, 100% tax deduction on travel 
        and related expenses for both corporations and consumers.

   Extend tax incentives for capital improvements and new 
        construction to all industries to encourage companies to 
        invest.

   Expand ``carry back'' provisions to allow businesses to 
        soften the impact of huge current operating losses.

   Accelerate federal capital improvement projects especially 
        those that will enhance the visitor/resident experience and 
        infrastructure on all islands.

    We need to stimulate the economy and get Hawaii moving. In order to 
get Hawaii moving we must get Americans moving.
        Sincerely,
                                             Murray Towill,
                                                         President.

                                                       Attachment 6

                                  Table 1. Hawaii Average Daily Passenger Count
                                                (Excludes Canada)
----------------------------------------------------------------------------------------------------------------
                         Passengers                                2001            2000       Percent difference
----------------------------------------------------------------------------------------------------------------
All Passenger Arrivals
  Sept 1-10                                                   19,206          19,158           0.3%
  Sept 11-Oct 3                                               11,501          18,770         -38.7%
  Latest 7 days (Sep 27-Oct 3)                                14,647          19,910         -26.4%
  Latest 3 days (Oct 1-Oct 3)                                 14,439          18,922         -23.7%
----------------------------------------------------------------------------------------------------------------
Domestic Arrivals
  Sept 1-10                                                   12,974          12,521           3.6%
  Sept 11-Oct 4                                                9,113          12,901         -29.4%
  Latest 7 days (Sep 28-Oct 4)                                11,636          13,921         -16.4%
  Latest 3 days (Oct 2-Oct 4)                                 11,013          12,696         -13.3%
----------------------------------------------------------------------------------------------------------------
International Arrivals
  Sept 1-10                                                    6,232           6,637          -6.1%
  Sept 11-Oct 8                                                2,804           5,970         -53.0%
  Latest 7 days (Oct 2-Oct 8)                                  3,847           6,188         -37.8%
  Latest 3 days (Oct 6-Oct 8)                                  4,097           6,475         -36.7%
----------------------------------------------------------------------------------------------------------------
Japan Arrivals
  Sept 1-10                                                    5,856           6,041          -3.1%
  Sept 11-Oct 8                                                2,453           5,496         -55.4%
  Latest 7 days (Oct 2-Oct 8)                                  3,486           5,750         -39.4%
  Latest 3 days (Oct 6-Oct 8)                                  3,755           6,004         -36.7%
----------------------------------------------------------------------------------------------------------------
State of Hawaii, Department of Business, Economic Development & Tourism, October 2001.


                                                       Attachment 7

                            Table 2. Hawaii Unemployment: Initial Claims by Industry
                                    (Percent change from same period in 2000)
----------------------------------------------------------------------------------------------------------------
  Period       Transportation         Eat & Drink           Retail              Hotels               TOTAL
----------------------------------------------------------------------------------------------------------------
 Week End                                       %                   %                   %                   %
   Date       Number   %  Change   Number    Change    Number    Change    Number    Change    Number    Change
----------------------------------------------------------------------------------------------------------------
 1-Sep       76         43.4%      50       -19.4%    108        -7.7%      134      17.5%    1,135      15.1%
 8-Sep       62          1.6%      53        26.2%    113        20.2%      177      53.9%    1,112      19.4%
15-Sep       84          3.7%      43       -12.2%     98        -5.8%      209      69.9%    1,220      24.0%
22-Sep      380        493.8%     214       269.0%    431       278.1%    1,671     1554%     3,654     299.3%
29-Sep      535        710.6%     369       668.8%    915       815.0%    1,936     2233%     4,629     447.2%
----------------------------------------------------------------------------------------------------------------
State of Hawaii, Department of Business, Economic Development & Tourism, October 2001.


                                                       Attachment 8

              Table 3. Hawaii GSP and Investment: 1990-2000
                          (in current dollars)
------------------------------------------------------------------------
                                 Gross Private      State Government CIP
                            --------------------------------------------
     Year       GSP ($mil.)     Value      % share     Value     % share
                               ($mil.)     of GSP     ($mil.)    of GSP
------------------------------------------------------------------------
1990            29,091.0     4,722.4      16.2%       995.2     3.4%
1991            30,729.8     5,857.2      19.1%     1,027.2     3.3%
1992            32,504.3     5,688.7      17.5%     1,323.5     4.1%
1993            33,532.0     5,420.7      16.2%     1,188.3     3.5%
1994            34,354.6     4,553.2      13.3%     1,214.5     3.5%
1995            34,526.4     4,776.9      13.8%       822.3     2.4%
1996            34,893.6     4,355.3      12.5%       720.6     2.1%
1997            35,797.9     3,569.0      10.0%       898.5     2.5%
1998            36,465.2     3,703.4      10.2%       818.2     2.2%
1999            37,395.1     3,834.9      10.3%       627.4     1.7%
2000            39,394.3     5,318.6      13.5%       612.6     1.6%
------------------------------------------------------------------------
Source: DBEDT GSP Account

State of Hawaii, Department of Business, Economic Development & Tourism,
  October 2001.


                                                       Attachment 9

                          Table 4. Economic Impact of 9-11 on Hawaii's Economy: CY 2001
----------------------------------------------------------------------------------------------------------------
                                                                    Scenario I      Scenario II    Scenario III
----------------------------------------------------------------------------------------------------------------
Assumptions
  Visitor growth rate, September-December                        -13.0%           -20.0%          -30.0%
    2001
  Visitor growth rate, January-August 2001                       -1.0%            -1.0%           -1.0%
  % reduction in visitor arrivals, CY 2001                       -4.8%            -7.0%           -10.2%
Reduction in number of visitors from Actual                      -286,441         -440,678        -661,017
  CY 2000
Reduction in GSP ($mil.)                                         -471.0           -724.6          -1,086.9
Reduction in jobs (incl. self employed)                          -10,849          -16,690         -25,035
----------------------------------------------------------------------------------------------------------------
State of Hawaii, Department of Business, Economic Development & Tourism, October 2001.


                                                      Attachment 10



                                                      Attachment 11



                                                      Attachment 12



    Senator Dorgan. Senator Inouye.
    Senator Inouye. I would like to commend our Lieutenant 
Governor, and add a footnote to that. Although we are 5,000 
miles away, and far away from New York, the people of Hawaii 
gave more blood during the first week after September 11 than 
we did during the same period after December 7. We contributed 
more money for use in New York during the first week after the 
disaster than we did all of last year.
    I think the people of Hawaii, though far away, felt the 
pain and misery of the folks in New York. We are trying our 
best to help ourselves, but we need help, and I am glad that 
this Committee is doing whatever it can. I appreciate it very 
much.
    Senator Dorgan. Senator Inouye, thank you very much.
    I am sure I will embarrass Senator Inouye by pointing out 
that the September 11 attack on this country by terrorists was 
certainly an act of war, and as a member of this panel we have 
a Medal of Honor winner with us today. Senator Inouye is a real 
hero in my judgment, and has served this country in so many 
ways, and now continues to serve us here in the U.S. Congress 
by legislating good public policy to lift this country. I am 
honored to serve with him, as are all of my colleagues.
    Let me call on my colleague from Florida, Senator Nelson, 
and then if the two of you would be available for a few 
questions, we would appreciate it, then we will have the next 
panel.
    Senator Nelson.

                STATEMENT OF HON. BILL NELSON, 
                   U.S. SENATOR FROM FLORIDA

    Senator Nelson. And your comments, Mr. Chairman, cause me 
to reflect to the time that I wore the uniform of this country, 
and what a great treat it was for me to go to Honolulu and how 
Honolulu was this wonderful tourist mecca that was always just 
such a delight to go to.
    And at the time that I was a lieutenant, there was an area 
around the place called Orlando, Florida, that was a lot of 
orange groves and cow pastures, and is now the No. 1 tourist 
destination in the world. What you all are suffering in Hawaii 
is being suffered not only in Orlando, but Tampa, Miami, many 
of our other areas that are major tourist destinations. Tourism 
is a $50 billion per year industry in the State of Florida.
    So as we look at what we are going to do to get people back 
into the airplanes, and try to get that industry back on a 
footing which will produce the traffic for the hotels, the 
tourist attractions, the restaurants and so forth, we need to 
think outside of the box in finding solutions to this vexing 
problem. With the upcoming consideration of the stimulus 
package, I approach with a bit of trepidation when I see things 
being talked about in the Finance Committee like increasing 
depreciation. That may be good for the long term, but that is 
not going to be good for the short term that we need as a 
stimulus.
    So maybe we ought to seriously consider in the stimulus 
package things that would directly help the travel and tourism 
industry, such as--and I am just throwing ideas off the top of 
my head--a tax credit for a couple to go out and travel so that 
there would be a direct incentive for someone to take a trip 
now, and to stay in a place of public accommodation. Maybe that 
is one thing. Maybe another thing is that, allow that kind of 
tax credit that it would apply to the accompanying spouse as 
well, and as you look on down the road, we can take as a 
deductible expense if we go to a convention under the present 
IRS rules and regulations, but if we have our spouse accompany 
us we cannot. Maybe that is something that we ought to 
encourage, which interestingly has an implication of keeping 
families together as well, so there are a lot of things, and I 
think that this stimulus thing is going to get drug out, 
because there is so much controversy, but now is the time for 
us to have our voice heard on what will help this travel and 
tourism industry, which is one of the largest industries in 
America, and which so vitally affects constituencies of states 
such as all of ours, and let us make this stimulus package 
something that will really work, and work immediately and help 
these industries that are hurting.
    Thank you, Mr. Chairman.
    Senator Dorgan. Senator Nelson, thank you very much and, of 
course, in addition to all of the things you have discussed, 
there are issues such as loan guarantees, which also could be 
employed. We did that with the airlines, and so there are many 
ideas we can discuss, and I think you have touched on several 
good ones. I think we will hear from witnesses about them as 
well, as we hear additional witnesses today.
    Senator Nelson. By the way, Mr. Chairman, can I say one 
other thing?
    Another thing I think we ought to think about, I never 
understood, when I was in the House and was the chairman of the 
U.S. Congressional Travel and Tourism Caucus, that the Reagan 
Administration was absolutely hell-bent that it was going to 
get rid of that little tourism office in the Department of 
Commerce, which was promoting America all over the world very 
successfully. The Reagan Administration appointee was doing a 
very good job, but there was this mind set that this was part 
of bureaucracy that we had to get rid of, and they got rid of 
it.
    All right, what we ought to be thinking about, if not a 
USTTA, something in the Department of Commerce that would be a 
focal point for travel and tourism, and a promotion of America 
outside of America to get people to come and visit in America, 
and so I would put that on the table as we talk about what 
ought to be done.
    Senator Dorgan. Thank you very much.
    Let me ask both witnesses just a couple of questions, and 
my colleagues likely will have questions.
    Both Washington, D.C. and, I assume, Hawaii experienced 
prior to September 11 a softening of the economy, a more 
difficult set of circumstances with regard to tourism, and you 
saw diminished tourism, I assume, leading up to September 10, 
and then the tragic events of September 11 happened and it 
changed dramatically, but can you describe the difference pre-
September 11 and post-September 11, because both periods 
represent a decline, what I suspect are sharp or not-so-sharp.
    Mayor Williams.
    Mayor Williams. Actually, Mr. Chairman, the District prior 
to September 11 was enjoying a record economy, a record level 
of unemployment, a record level of occupancy, both in our 
office economy and in our hospitality industry, and so we 
actually were doing very, very well in rebuilding the city, and 
getting the city to the kind of national standing that our 
Nation's Capital should enjoy, and that is why the impact of 
September 11, the closure of Reagan National Airport, the 
overall loss of consumer confidence in the tourism business, 
has had such a big effect on our industry.
    If you have hotels and we are operating at around 80 
percent occupancy, and now they are operating in some cases 
down as low as 20 percent, or where you are opening up a new 
restaurant every week, practically, and now there is a 
situation where after September 11 the restaurant business is 
struggling, it calls for some type of action. For example, 
there was a waitress over at the Occidental who was saying that 
she took in a week the receipts she normally took in in a 
couple of hours in an afternoon, before September 11. It is 
anecdotal, but it gives you a kind of sense of the impact that 
it has had, and the delta between pre- and post-September 11.
    Senator Dorgan. With respect to the District, have you seen 
any substantial change with the opening of Reagan National in 
just the last few days?
    Mayor Williams. It is too early to tell the actual figures 
as we are getting from our business industry, but there has 
been some uptick in some establishments, but in general we are 
still operating way too slowly. If I could just add, one of the 
problems, is the gradual phasing in of operations at Reagan 
National. I do not think anyone is talking about full recovery 
for the airport, and so it will not be operating at 100 percent 
of its pre-September 11 capacity, and that is going to have an 
effect on us. I welcome the re-opening of Reagan National and I 
salute the President for his bold move.
    Senator Dorgan. Lt. Governor, would you tell me about pre-
September 11 and post-September 11, and perhaps also reflect on 
the similar circumstance, but perhaps less dramatic, in the 
period of the Gulf War, a decade ago?
    Lt. Governor Hirono. Yes. Generally, our economy was 
actually in a third year of an economic rebound, and for next 
year we were looking at a growth of about 5 percent. That has 
all been changed. We were looking at tourism from the West 
Coast in particular, and from Japan. As we follow very closely 
the national economy as well as the Japanese economy, things 
were actually looking very bright for us. Hawaii had already 
set aside $60 million for tourism promotion, and we were moving 
toward promoting Hawaii tourism in new markets, because our 
West Coast market, our mainland market, and the Japanese 
market, while we were watching it, seemed to be holding.
    Of course, it all came to a screeching halt, and so pre-
September 11 our economy was in a growth path. Our unemployment 
had come down after a decade of economic stagnation.
    Senator Dorgan. You indicated that a substantial amount of 
tourism in Hawaii is international.
    Lt. Governor Hirono. Yes.
    Senator Dorgan. Can you describe, whether there is a 
difference between U.S. citizens and international travelers 
coming to Hawaii at this point, post-September 11? Has one 
changed more than the other?
    Lt. Governor Hirono. Certainly the Japanese tourism picture 
has dropped by 50 percent. In terms of arrivals about one-third 
of our international tourism consists of Japanese tourists. 
They do spend more, on average, than tourists from other 
places. Our tourism from Europe was relatively small. It has 
gotten even smaller, and so there are differences in the kind 
of travelers who come to Hawaii. We are very, very dependent on 
international travelers, especially from Japan, which is why 
Governor Cayetano embarked on a special mission to Japan from 
which he is returning to Hawaii only today.
    Senator Dorgan. Mayor Williams, you said the District of 
Columbia is developing a $100 million loan guarantee for 
businesses in the District affected by this. With respect 
especially to the tourism and travel industry, we have already 
provided loan guarantees, rather significant loan guarantees 
for the airline industry. Do you think they could be 
successfully employed, if targeted properly as one of the 
devices to address this issue with respect to tourism and 
travel at the federal level?
    Mayor Williams. Yes, I do, Mr. Chairman. I would join with 
Senator Kyl about the patient on the operating table. If, for 
example, the arm of the patient is hemorrhaging, and I think 
the arm of the patient that is hemorrhaging right now is travel 
and tourism, it needs quick, dramatic, concentrated attention.
    Senator Dorgan. Senator Inouye.
    Senator Inouye. I would like to commend the Mayor for his 
statement. As he correctly pointed out, this is not just a 
city, it is our Nation's Capital, and I commend you for your 
leadership in making this an open city, albeit a secure one, 
and I wish to congratulate you on your leadership in reopening 
Reagan National, because how can we tell the world that 
everything is fine in the United States and open up all the 
airports but one, our Nation's Capital?
    So your leadership has been most important here. I commend 
you, sir.
    Mayor Williams. Thank you, Senator. I appreciate that. My 
dad was a big fan of yours. He was in World War II.
    Senator Inouye. Thank you very much.
    Mr. Chairman, the statement made by my Lieutenant Governor 
is a profound one. It may sound strange to some when she 
recommended among other things that our government send 
delegates and people to Hawaii for meetings and conferences. 
Most Americans do not realize this, but in many departments and 
bureaus Hawaii is considered overseas and, therefore, travel to 
Hawaii is considered a special luxury, as though you are going 
to Hong Kong, so even Members of Congress are reluctant to go 
to Hawaii, because their constituents may criticize them for 
going to some exotic watering place.
    That is not the case, and keep in mind, we are one of the 
50 States of the Union, and I would hope that after 50 years, 
nearly 50 years of Statehood, Hawaii would be considered a 
full-fledged State and not an overseas foreign destination, and 
so I hope that the Government of the United States would 
consider Hawaii as a site for meetings. No one fusses when they 
have a meeting in Los Angeles, or Pittsburgh, or South Dakota, 
or any other place, but Honolulu they will say, uh-oh, this is 
playtime. Well, it is a good place to go.
    Lt. Governor Hirono. But we also do business.
    Senator Inouye. I should point out, according to the 
Internal Revenue Service, the attendance at meetings and 
conferences in Hawaii are the very best.
    [Laughter.]
    Senator Inouye. When a man says, honey, I am going to 
Hawaii for a conference, she says, you go if I go.
    [Laughter.]
    Senator Inouye. And if she goes, he attends the morning 
breakfast meeting.
    [Laughter.]
    Senator Inouye. Mr. Chairman, what my Lieutenant Governor 
pointed out is very important. I think we should consider 
Hawaii one of the States of the Union.
    Lt. Governor Hirono. If I may remark, I did wish to address 
just briefly your question about the impact of the Gulf War, 
and we did see a downturn, very sharp, but that recovery was 
about six months in the making, and we were able to come back 
to our normal levels.
    We certainly expect this crisis to last a lot longer than 
that, and I would like to add my kudos to our great Senator 
Inouye for mentioning that we do need the people to come from 
the federal government and other states to come to Hawaii as a 
place not only for relaxation, but for business and, in fact, 
in early April of the year 2002 we are expecting a Department 
of Commerce Economic Development Administration Regional 
Conference that will bring 2,000 people to the State of Hawaii, 
and I certainly hope that that conference will come.
    Senator Dorgan. Governor, thank you very much.
    I might say, Senator Inouye, you are not at all denying 
that Hawaii is exotic.
    Senator Inouye. Not at all.
    [Laughter.]
    Senator Dorgan. We would not want the record to reflect 
that.
    Let me call on Senator Smith.
    Senator Smith. I would like to begin my questioning by 
telling my colleague, Senator Inouye, that it may be that many 
public officials are reluctant to go to Hawaii, but I have 
overcome that reluctance many times.
    [Laughter.]
    Senator Smith. And I will continue to do so.
    Mr. Mayor, and Lieutenant Governor, the fact that you are 
here indicates that every level of the Government-local, State, 
and Federal-would like very much to help and very much to 
respond to this national emergency while helping this most 
vital industry.
    I think we have done a commendable and quick job of trying 
to send the signal that it is safe to travel. In fact, it has 
never been as safe as it is now. I wonder, though, if you might 
have a concern that I am beginning to have. When you go to 
nearly any airport in this country, even my little home town of 
Pendleton, Oregon, our airports are beginning to look like 
military fortresses, and they are safe, but they send, it seems 
to me, psychologically the message that this is dangerous.
    Do you think we need to be thinking about how we might 
perhaps provide that security but in a less threatening way, 
and I wonder, Ms. Hirono, how you might do that in Hawaii, or 
do you have any concern with the imagery of cement bunkers and 
people in military fatigues with automatic weapons?
    Lt. Governor Hirono. I think that is an image we need to be 
concerned about nationally, and Hawaii, of course being the 
Aloha State, that that is a kind of a contradictory message. I 
think we should really spend a lot of our resources in bringing 
to bear technological development so that our airports can have 
the kind of security that would be of a technological nature in 
terms of how we can process people through the security 
checkpoints, and Hawaii has been at the forefront where a lot 
of these new technologies have been used and tested, and we 
would like to have continuing support for those initiatives.
    Senator Smith. Mayor Williams, do you have any thoughts 
about that?
    Mayor Williams. Yes, Senator. I think Washington, D.C., I 
mean, unique among cities, or certainly along with world 
capitals, financial capitals such as New York City, has always 
faced the question of maintaining a safe city but also an open 
city. We should be a living, breathing example of democracy, 
and democracy is about openness.
    We recognize in our form of government it is more difficult 
to do certain things, and security is one of them. I think that 
we really tread along a fine line of putting in security 
precautions and measures, and doing it in a way that reinforces 
folks' confidence, as opposed to eroding folks' confidence. 
Certainly the danger here, if left unattended, is a situation 
where we potentially could have Capitol Hill sealed off, the 
White House is sealed off, all the major monuments are sealed 
off, Reagan National Airport is closed, and then I am standing 
here, another official saying come on down to Washington, we 
are an open city, and yet all the visible symbols and signs and 
signals are to the contrary.
    Senator Smith. It says that it is dangerous.
    Mayor Williams. Absolutely. No one would begrudge the need 
to take strong security measures. I wholeheartedly support what 
our country is doing and what our President is doing, and I do 
not want to be in the business of second-guessing.
    I just want to say we have to be very, very careful that 
the threat assessments we are doing, the messages we are 
sending, and the signals we are sending reinforce people's 
confidence, and I would think in my humble estimation that the 
measure that the Senate took to federalize airport security 
goes a long way toward that, and to put good control over 
airport security, lessen the need for National Guard troops and 
everything else at airports, I think helps to do that.
    Senator Smith. I agree with you, and I really think we need 
to think about sending the message of security without being 
threatening.
    Senator Ensign, who is a member of this Committee from Las 
Vegas, shared with me a few days ago that after the September 
11 attack, tourism to Las Vegas dropped to 20 percent, and his 
home town seemed virtually empty. Two weeks later, it was 
nearly at 100 percent again, but that the wait to pass through 
security at the airport there was taking in some cases up to 5 
hours. I would think that is a very retarding message to people 
to travel.
    I think we need to understand no longer can you catch a 
plane like you catch a cab, but clearly we ought to be focusing 
more on efficiency on getting people through. Are you doing 
anything in that regard?
    Lt. Governor Hirono. We have done things such as make sure 
that there are more people who are at our security points, that 
we have reconfigured lines, and we have made sure that 
especially our international travelers, who tend to have to 
wait longer, and it takes longer to process them, that they get 
the kind of assistance they need to know which lines to stand 
in, et cetera, and so we are doing everything we can.
    Most people are going to the airport about 3 hours ahead. 
There have been delays, and this is why I think we really need 
to look at those ways that will be the least intrusive, but 
safe way of having people go through the checkpoints.
    Senator Smith. But do not abandon efficiency.
    Finally, Mr. Chairman, I took note of Ms. Hirono's outreach 
to Japan, and I think many of our allies need to understand 
they can help us and we can help them, but this is how they do 
it. I assume that is one of the messages your Governor took, 
and I want to specifically say, as a Foreign Relations 
Committee member, I hope we do not forget the Nation of Britain 
as a tourist destination, just as I hope Japan does not forget 
us. Britain is going the extra mile every time there is an 
international conflict that involves us, and we need to say 
thank you by remembering to go to Britain.
    So thank you, Mr. Chairman.
    Senator Dorgan. Senator Smith, thank you very much.
    Senator Nelson.
    Senator Nelson. Thank you, Mr. Chairman. I just wanted to 
make a statement of compliment to the Mayor. Just to tell him 
that what a privilege it is for me to be here in our Nation's 
Capital, which is also the capital of the world. It is the No. 
1 sought assignment if you are a foreign diplomat, and it is 
one of the most beautiful cities that I could ever imagine, and 
I do not have to imagine, because I have had the good fortune 
of seeing most of the great cities of the world, and this is 
one of the most beautiful.
    We have in the midst of us people that are poor and that 
are hungry, and I have had the privilege of participating in 
some of those efforts, but we have got to do a lot more, so 
now, with all of this tension, you know, it is just 
extraordinary that the FBI would release the statement that 
they did yesterday afternoon at 4, but I think it is a sign of 
the times to come, and yet in the midst of that, we have got to 
go on about our normal lives, and this city, the one that is 
considered one of the targets, has got to function as normal as 
possible, so as you offer the leadership to this city, as we go 
through this transition, I wish you Godspeed.
    Mayor Williams. Thank you, Senator, for your kind comments. 
I appreciate that, and all of the citizens of our city 
appreciate it as well, and I think that your many gestures, 
large and small, out in our community, really mirror those that 
are not only active in their congressional capacities but 
personal capacities, and I appreciate that.
    Senator Dorgan. Mayor Williams, let me add to that to say I 
am really proud of your leadership. We have had some very 
uneven times in leadership in this city, but I am heartened by 
what you are doing for our Nation's Capital, and let me also 
thank you, and thank Lieutenant Governor Hirono for being with 
us today and presenting the testimony, so you are excused. 
Thank you very much.
    Next, I indicated Senator Clinton would be with us. Senator 
Clinton, if you would like to take a chair at the witness 
table, you are welcome to testify. Senator Clinton, I believe, 
is on her way to the airport, perhaps going to New York this 
weekend. In any event, she represents New York, as all of us 
know, in the U.S. Senate, and front and center on all of these 
issues dealing with the tragedy of September 11, but also the 
economic circumstances and especially relating to travel and 
tourism, are the issues related to New York State and New York 
City.
    Senator Clinton, thank you very much for being here, and 
you may proceed.
    Senator Nelson. Mr. Chairman, may I ask Senator Clinton 
what she traded with Senator Breaux in order to get to the 
Super Bowl?
    Senator Clinton. There are some things I cannot reveal 
except in top secret classified briefings, Senator.
    [Laughter.]
    Senator Dorgan. Senator Clinton, there are not many of 
those any more. At least, there are not any secrets. Senator 
Clinton, you may proceed.

           STATEMENT OF HON. HILLARY RODHAM CLINTON, 
                   U.S. SENATOR FROM NEW YORK

    Senator Clinton. Mr. Chairman, thank you very much, and 
thanks to all of my colleagues who are focusing on this very 
important issue.
    One of the devastating effects of the terrorist attacks on 
September 11 has been the dramatic downturn in the travel and 
tourism industry, and I know that every one of the Members of 
this Subcommittee, as well as all of our colleagues, are 
concerned by the statistics that we are seeing and the stories 
we are being told by people in our own states, as well as 
national and international travel and tourism industry 
representatives. I am very proud to be here representing New 
Yorkers, who have, as I think everyone recognizes, been 
extraordinarily brave and resilient in the wake of these 
horrific attacks on New York City.
    It is apparent to all of us that these attacks were meant 
not only to kill innocent Americans and damage physical 
structures that symbolized our country's strength and wealth, 
but also to intimidate us, to test our courage, to undermine 
our values, and our freedom, our diversity, our joy of life is 
something that we cannot possibly ever allow to be undermined 
by those who attempt to impose their own views and ways of life 
on others.
    It is my sincere hope that, as we continue to respond to 
the emergencies, the removal of debris, the fires unfortunately 
still smoldering below ground, as we tend to the many human 
losses that are stalking our land, that we also focus on 
rebuilding the confidence and the energy and the optimism, and 
the positive can-do spirit of the American people, and 
particularly of those who would and should under any other 
circumstances travel.
    I know there are still some concerns in people's minds, but 
I was in the Columbus Day Parade last Monday, and we have 
parades for everything in New York, and it was one of the best 
parades we have had. There was a huge outpouring. I was talking 
to Mayor Giuliani. He has marched in the parade for a decade or 
more. I have marched the last couple of years, and we had never 
seen such large crowds, and as I was going down the street 
people were yelling, ``I am from Oregon, I came to show my 
support,'' or I am from somewhere else, and I think that it was 
a great uplifting moment, certainly for New York City.
    But we know we have got to do more. The New York travel and 
tourism industry has been greatly harmed. In New York City 
alone, tourism is a $25 billion industry, including $17 billion 
in direct visitor spending, like going to the theater, going to 
restaurants, going to concerts, going shopping. Last year, New 
York welcomed 37.4 million visitors. That number supported 
282,000 jobs in New York City alone, and generated $936 million 
in the city, $882 million in the State, and $1.3 billion in 
federal tax revenues.
    All told, it really adds up to about $3 billion, when you 
look at all the sources, the dollars that come directly to the 
federal treasury from New York's tourism and travel industry.
    Now, the statistics are grim. In the first weeks following 
September 11, New York City hotels lost an estimated $6 to $10 
million daily in room revenues. Even now, weeks after September 
11, occupancy rates are down 20 percent. To date, an estimated 
4,000 New York City hotel employees have already been laid off, 
including 1,000 jobs due to lost construction of downtown 
hotels.
    In the period between September 11 and September 30, New 
York restaurant sales were down 47 percent, compared with last 
year, and 12 percent of the restaurant work force has already 
been laid off, and layoffs may rise to 25 percent.
    On Broadway, the ticket sales the week of the attacks were 
down 65 percent. There has been some improvement, but sales are 
still down 24 percent, and we know that part of what is keeping 
the theaters open are people in the city and in the surrounding 
suburbs almost seeing it as their duty to come in and support 
those who really they identify with, and who give so much joy 
and energy to our city.
    We believe that the sustained losses by the hotel, 
restaurant, and theater industry combined, according to the New 
York City Comptroller's Office, were more than $2 billion 
collectively, and that probably more than 8,000 total jobs in 
New York City alone have been lost.
    We are also concerned because of the slowdown in 
international travel. Last year, for example, New York City had 
5.1 million visitors from Japan. We do not know when we will 
ever see that number again. The same is true for people from 
other parts of the world who used to come to the city, but it 
is not just the city that is suffering. We have had an impact 
on the entire State. Upstate New York this time of year is so 
beautiful. The leaves are turning. It is a breathtaking sight. 
People drive our windy roads, they go up into the Adirondacks, 
they go the Finger Lakes, they go to Western New York, and very 
few people are coming as they usually do.
    We often had big tourist groups. Just a few weeks ago, in 
fact just a week before the attacks, my husband and I were in 
the Finger Lakes region and going to some of the wineries 
there, and there were tour buses filled with people from 
Pennsylvania and Ohio and other nearby States. That has also 
been severely impacted.
    So I hope that as we look at potential solutions we will 
think not only about New York City, which is most dramatically 
affected, but the entire State, and I would be remiss if I did 
not at least recite our 800 number, 1-800-ILOVENY, or 800-456-
8369.
    Now, may I just say, too, that the concerns we have are not 
only for the owners of these establishments, but for the 
workers, the thousands and thousands of workers who have been 
laid off, or are on the brink of being laid off. I have talked 
to a lot of business owners, both very large chains as well as 
small kind of mom and pop operations that do not want to let 
their employees go, but they are facing some very difficult 
choices.
    The kind of impact that we are looking at means that we 
should take action quickly. We should not only act to try to 
provide some incentives to the travel and tourism industry to 
get us traveling again, but we have to help support these 
employees to get them through what all of us hope and pray is a 
rough patch.
    As we consider an economic stimulus package, I hope we will 
revisit Senator Carnahan's amendment to help the laid-off 
workers from the airline industry. I hope that we will put 
together an aid package that will take care of unemployment 
insurance, and I know that members of this panel have proposed 
some incentives, some tax credits that I think should be looked 
at favorably and quickly, because we have to encourage people 
to get out and enjoy themselves again.
    And in the spirit of that, my husband and I are going out 
to dinner in New York City tonight. We are going to a play. We 
hope we have lots of company and that many, many people will 
join us not only here, but throughout our country, and that is 
something that I think deserves the attention that you are 
giving it, and I thank you so much, Mr. Chairman, for focusing 
on this particular consequence of the devastating attacks.
    Senator Dorgan. Senator Clinton, thank you so much for 
joining us. You know from the expressions of our colleagues and 
all Americans that New York is not alone. This country reaches 
out to New York, and our thoughts and prayers have been with 
the folks in New York during this difficult period, and this 
subject is a particularly acute one, as we deal not only with 
the security issues and the recovery from the tragedy, we also 
have to worry about the economy, and because New York is such a 
significant tourist destination, this has had a significant 
impact.
    I know that you have to travel, and I think we will not ask 
questions, but we thank you very much for contributing your 
thoughts to this hearing.
    Senator Clinton. Thank you very much.
    Senator Dorgan. Next, we will hear from a panel of 
witnesses, if they would come forward: Mr. J. W. Marriott, Jr., 
President and CEO of Marriott International; Mr. Hal 
Rosenbluth, Chairman and CEO of Rosenbluth International; Mr. 
John Wilhelm, President of Hotel Employees & Restaurant 
Employees International Union; and Ms. Marilyn Carlson Nelson, 
Chair and Chief Executive Officer of Carlson Companies, Inc., 
and let me ask Mr. Mason Hurst to come forward, as well. We 
will get another chair.
    I have a couple of things to put in the record. One is from 
the Travel Business Roundtable from Jonathan Tish. Without 
objection, we will include this as a permanent part of the 
record, with his views, and views on behalf of the Travel 
Business Roundtable [refer to Appendix]. I have also 
information from Alamo National Car Rental [refer to Appendix] 
and ANC Rental Corporation that we will put in the record, but 
inasmuch as Mason Hurst, the author of this, is here, I will 
ask him to come forward and summarize briefly for us with this 
panel, as well.
    Senator Dorgan. Let me begin by welcoming the entire panel. 
Mr. Marriott, I will ask you to begin. Mr. Marriott, of course, 
all of us know is President and CEO of Marriott International 
in Washington, D.C. I guess almost everyone around the world 
knows about Mr. Marriott, and I think adding your voice to this 
hearing is very important. We appreciate having you join us. 
Why don't you proceed.

 STATEMENT OF J. W. MARRIOTT, JR., PRESIDENT AND CEO, MARRIOTT 
                      INTERNATIONAL, INC.

    Mr. Marriott. Thank you, Mr. Chairman. I am delighted to be 
here, and thank you for the invitation, and to your Members. 
These past 4 weeks have been the most difficult weeks for the 
travel and tourism industry that I have ever experienced in 45 
years in the business. On September 11, we had our World Trade 
Center Hotel completely destroyed. Our financial center hotel, 
1\1/2\ blocks away, was severely damaged. Hopefully, we will be 
able to reopen that hotel within the next 3 to 4 months.
    Tragically, two of our managers were killed at the World 
Trade Center, as they stayed behind trying to make sure that 
our guests had been evacuated. Between the two hotels, we 
successfully evacuated over 2,000 people.
    When the weapon of choice for a terrorist attack is 
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 for our company in the United 
States dropped 94 percent. Our room revenues were already down 
about 10 percent prior to September 11. Some business has come 
back, but only part-way.
    In the past last three weeks in September we were off about 
40 percent in revenue. In the first week of October, we were 
still 25 percent below last year in combined occupancy and room 
rate, or what we call revpar. Our big city convention resort 
hotels have been hit the hardest, with massive group 
cancellations. Business and vacation travel are far below what 
they should be.
    As was mentioned earlier, September and October are the 
very best months of the year for business and convention 
travel, and our industry lost all the profit that these good 
months usually provide.
    The hotel industry employs 2 million people in the United 
States. 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 percent schedule. Planes are half-full. The 
bigger travel agencies report future bookings are very soft, 
and now we are coming into the worst part of the year. December 
is the absolute worst hotel month, and January is the next 
worst hotel month, and we do not know how we are going to get 
through these months.
    The lodging industry is very capital-intensive, carrying 
about $150 billion of mortgage debt, and many hotels will not 
make their debt service payments. We are not asking for a bail-
out, 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 our U.S. economy, but also 
the global economy.
    We in the travel and tourism industry are doing everything 
within our power to act responsibly in doing our part, both 
labor and management together. We are embarking on a massive 
advertising campaign to get America traveling again. We have 
lowered our room rates, and are offering 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 health coverage for themselves and their 
families. We have frozen or reduced executive salaries, and we 
have laid off about 10 percent of our people at headquarters.
    We are looking at every conceivable possibility to build 
back our business in this difficult time. We ask our government 
to do the same, to 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 the jobs now, is a tax credit for travel. 
Congress should enact as part of an economic stimulus plan a 
temporary, and I stress temporary business travel tax credit 
and leisure travel tax credit targeted and limited in time and 
cost.
    Senators Kyl and Miller have introduced similar 
legislation, S. 1500. We support their proposal wholeheartedly.
    Let me quote from this week's issue of Newsweek. ``Business 
trips are among the terrorist victims.'' The article goes on to 
state that in this post-attack period, 58 percent of American 
business corporations have plans to curtail the travel of their 
employees. 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 ever get business 
back to normal faster and more effectively than a targeted 
travel tax credit. We must do something immediately to get 
people traveling again, or the consequences for the economy 
could be disastrous.
    The travel and tourism is first, second or third most 
important industry in 28 states, and here in the District of 
Columbia. It employs 18 million Americans, pays over $100 
billion a year in federal, state, and local taxes, and 
generated $17 billion in trade surplus last year.
    I hope you will help us get America moving again. I ask 
that you include my entire testimony in the record. Thank you.
    [The prepared statement of Mr. Marriott follows:]

     Prepared Statement of J. W. Marriott, Jr., President and CEO, 
                      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 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, 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. We are, through yesterday, 
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. We have lost all of the revenue 
that these months usually provide.
    The hotel industry employs over two million people in the U.S. 
Today, one half of these employees 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 we are coming into 
the slow season. December is the worst hotel month and January is the 
second worst.
    The industry is very capital intensive, carrying $200 billion of 
mortgage debt. Most hotels will not make their debt service payments--
this year or next.
    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.
    Many of the major hotel chains are waiving the charges or providing 
other relief to franchisees for participation in frequent stay awards' 
programs.
    We are looking at every conceivable possibility to help our 
employees, our customers, our owners and franchisees to weather this 
storm.
    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. We know that we can count on you.
    There are three proposals we think Congress should consider. I want 
to emphasize the first because it will provide an immediate shot in the 
arm for travel and do more to save jobs now.
    The Congress should enact, as part of any economic stimulus plan, a 
temporary--and I stress temporary--business travel tax credit, limited 
in time and cost.
    Let me quote from this week's 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. It must be targeted and limited by time and cost.
    Secondly, we propose increasing the deduction for meals and 
entertainment to 100% from 50% and a re-inclusion of the deduction for 
spousal travel. This would be a one year program.
    Finally, we propose a six-month holiday on payroll taxes for 
employees and employers in the hospitality industry. This would provide 
much needed money for employees whose hours have been cut as well as 
provide liquidity for their employers.
    We must do something immediately to get people traveling again--or 
the consequences for our economy could be disastrous.
    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.

    Senator Dorgan. Mr. Marriott, thank you very much.
    Senator Smith. Mr. Chairman, I wonder if--and I have to 
regrettably head to the West Coast as well. Could I indulge my 
colleagues to ask a question out of turn?
    Senator Dorgan. Of course.
    Senator Smith. Bill, if I may call you that, can you give 
us a sense of what kind of inventory the hotels are coming onto 
the market, either in your own or the industry generally, and 
what the multiplier effect will be as to new construction, and 
the impact on the construction industry?
    Mr. Marriott. Well, the construction has been slowed down 
considerably. We estimate that immediately there has been about 
a 20 to 25 percent drop in new construction following the 
September 11 attack.
    Senator Smith. Are there many new hotels coming online 
right now, or plans that are being shelved?
    Mr. Marriott. The plans for things that are not in the 
ground now have been shelved.
    Senator Smith. Thank you.
    Senator Dorgan. Senator Smith, thank you. Again, Mr. 
Marriott, thank you for your contribution and your leadership.
    Next, I will call on Mr. Rosenbluth, and I am going to do 
it in order of the schedule here. My colleague, Senator Conrad 
was going to be here to help introduce Mr. Rosenbluth. He is 
not able to be here.
    Let me just say, Mr. Rosenbluth, Hal Rosenbluth is Chairman 
and CEO of Rosenbluth International, one of the world's largest 
travel agencies. He is a very, very special friend to the State 
of North Dakota for a lot of reasons. He has discovered one of 
the great secrets of our country, and that is, there is an 
outstanding labor force in the middle of America, in America's 
heartland, and he has created a large number of jobs in our 
state, and for that we are grateful, but he is also a 
remarkable citizen of North Dakota, I guess citizen of the 
world, given what his corporation does, but Hal, thank you very 
much for joining us today, and he and I have had an opportunity 
to visit last week about these issues, and I appreciate your 
willingness to share them with our Subcommittee.
    Why don't you proceed.

 STATEMENT OF HAL F. ROSENBLUTH, CHAIRMAN AND CEO, ROSENBLUTH 
                         INTERNATIONAL

    Mr. Rosenbluth. Thank you, Chairman Dorgan, Senator Smith, 
and Senator Inouye. I am going to add a little bit different 
perspective to some of the testimony you have heard today, and 
some of the additional testimony that you will hear following 
my remarks.
    I think that it is very important that Congress recognize 
the critical role that the travel agency industry plays in 
making it possible to facilitate travel that would take 
advantage of any tax credits or any other stimuli for travel in 
general. Eighty percent of all airline reservations are made by 
travel agencies. There are 30,000 travel agencies across the 
United States, which I am here to represent today. Imagine what 
it would be like if 80 percent of all reservations for 
airlines, hotels, and car rentals were to cease as a result of 
the travel agency community becoming a nonentity as a result of 
the effects of the tragedy of September 11.
    There have been tremendous layoffs in the industry. The 
industry has done its part to, in fact, cut back on salaries. 
Our company alone reduced executive pay by 20 percent, 
eliminated bonuses. We were forced to furlough 1,200 of the 
finest, most wonderful, dedicated people that any company could 
be blessed with. We have cut our GNA by 55 percent, and I am 
sure that all other agencies have done something of a similar 
nature to recalibrate themselves.
    However, the 30,000 travel agencies are not in good shape, 
and we are not talking about months or years here, we are 
talking about days and weeks. These agencies have gone for the 
most part with virtually little or no revenue for sometime now. 
The airline aid package was absolutely critical, and I thank 
the Government for putting that in place, but if people have no 
means for making a reservation, then it does not matter how 
much fuel or how many planes there are that can lift off in the 
sky, there will be nobody to make reservations for them.
    The airlines have laid off over 100,000 people already. The 
travel agency community is expected to lay off a similar number 
in the coming weeks ahead. There is no other infrastructure 
that exists in travel to facilitate reservations for airlines, 
hotels, and car rental companies, other than the 30,000 travel 
agencies in the United States.
    During the period between September 11 and September 17 of 
this year, the agency community lost an estimated $364 million 
due to the virtual cessation of new sales as a result of the 
decision to ground flights and to close airports, which was 
absolutely the right thing to do as a result of the attack on 
America. However, agencies are also losing today $26 million a 
day in airline sales revenue, and agencies will lose $25 
million per day in hotel sales, $6 million in car rental sales, 
$10 million in cruises, and $6 million in other related 
industries, so I think it is absolutely critical that if we are 
to take advantage of any of the stimulus packages that are put 
in place, that there be the agency community, an active and 
vibrant agency community to facilitate any travel whatsoever.
    We have talked a lot about tourism today, but think about 
the major corporations, in fact, almost every corporation in 
America that depends on a travel agency to do business. We 
alone service the three largest banks in the United States, the 
largest semiconductor company, the largest application software 
company, the largest chemical companies and automotive 
companies, et cetera. These people need travel agencies, and 
are totally dependent on them for commerce. They must be able 
to travel from one place to another to conduct commerce, or, in 
fact, we will see this nation be negatively affected to an even 
greater degree than it is today.
    So I have reviewed the federal aid plan that has been 
requested by the American Society of Travel Agencies, and have, 
in fact, attached it to my written prepared remarks. However, I 
would like to talk about two items which I feel are absolutely 
critical, as a minimum, for the travel agency as we know it 
today to survive and to keep America flying and traveling. One 
is the loan guarantees structured similar to the airlines in 
their relief package and, given the capital characteristics of 
the industry, loans should be on the ability to repay, and not 
collateral. Agencies do not have tangible or hard assets. They 
have people.
    Second, a grant in the amount of $364 million to offset the 
damages incurred by the travel agency community during the week 
of September 11 to September 17, which was a result, once 
again, of planes being grounded and airports being closed.
    I have a lot more to say, but I would like to just end with 
this, that there are 300,000 people in the travel agency 
community that make reservations today. The airlines have 
closed a number of their reservation centers. They have laid 
off over 100,000 people.
    If you remove the travel agency community from its ability 
to make reservations for the traveling public, whether it be 
for pleasure or for business, we will find that the airlines 
will not be able to get off the ground and take people to 
hotels or to car rental companies or to restaurants or to any 
other vital parts of our commerce and economy that is involved 
with travel and tourism.
    Thank you very much, and I would ask to put my remarks in 
the record.
    Senator Dorgan. Without objection.
    [The prepared statement of Mr. Rosenbluth follows:]

      Prepared Statement of Hal F. Rosenbluth, Chairman and CEO, 
                        Rosenbluth International

    Mr. Chairman and Members of the Committee on Commerce, Science, and 
Transportation, my name is Hal F. Rosenbluth, Chairman and CEO of 
Rosenbluth International. I am pleased to have the opportunity to speak 
with you today. Founded in 1892, Rosenbluth International, the world's 
third largest travel management company, has been servicing people with 
their travel plans for over 100 years. I offer this testimony to 
demonstrate the impact the attacks of September 11, 2001 have had on 
the travel agency community and to outline my proposed federal aid 
package. In addition, I will illustrate how the agency community is a 
vital force in the airline distribution network.
    I have included with this testimony, (see Exhibit A), The American 
Society of Travel Agents' (ASTA) plan for federal travel agency relief. 
I have carefully reviewed their plan and recommend, at minimum, that 
the federal relief package be designed as such:

   Loan Guarantees--Structured similarly to those made 
        available to airlines in their relief package. Given the 
        capital characteristics of the industry, loans should be based 
        on the ability to repay, not collateral.

   Grants--In the amount of approximately $364 million to 
        offset the damages incurred by the travel agency community 
        during the week of September 11, 2001 through September 17, 
        2001 when virtually all commercial aircraft were grounded. This 
        period resulted in essentially no recognizable revenue for the 
        travel agency community.

    The recommended package will give agencies the liquidity to keep 
business moving and to keep people employed. ASTA estimates that job 
losses will hover in the 100,000 range if immediate action is not 
taken. Additionally, I have had numerous discussions with travel 
agencies that are seeking bank loans during this troublesome time. 
Agencies that have longstanding relationships with banking institutions 
of all sizes are being declined for extended lines of credit because of 
the unpredictability of the industry.
    While Rosenbluth International is thankful that the United States 
government has offered aid to the airlines, we are fearful that if aid 
is not extended to travel agencies, the travel industry will not 
rebound from the tragic events of September 11, 2001. The airlines are 
currently dependent on travel agencies as a major facet of the overall 
distribution channel and we seek to prove that the airlines will not 
and cannot handle the current volume of bookings that travel agencies 
facilitate. If agencies cannot succeed in the current industry climate, 
the U.S. economy would suffer a major hit.
    The air travel business facilitated by travel agencies, including 
the hybrid Internet-based firms, continues to increase despite reduced 
commission structures imposed by the airlines through the years. Travel 
agencies currently facilitate reservations and ticket issuance of over 
75 percent of all airline bookings.
    The airline community is dependent on agencies as their primary 
distribution channel and has, in essence, become the outsource entity 
for airline reservation and ticket fulfillment.
    If the agency community became unavailable to corporations and the 
traveling public at large, the airline industry would need to hire 
approximately 300,000 reservationists to maintain the same volume of 
bookings.
    Hiring approximately 300,000 reservationists would be a challenging 
endeavor for airlines, which have already had to close numerous 
reservation centers and lay off over 130,000 people due to the impact 
of the September 11 attacks. The distribution infrastructure does not 
exist within the framework of the airline industry and if they were to 
replicate it they would be forced to petition government for additional 
funding. The airlines would also be forced to ground their planes until 
a new reservation and distribution system could be created.
    The traveling public continues to demand the services of travel 
agencies rather than other modes of purchasing. We have found that our 
clients have relied on us now more than ever before. The American 
people need us to reassure them of airline and airport safety and they 
rely on us, knowing that someone will help them get home if they are 
stranded.
    In the days following September 11, agents across the country 
helped tens of thousands of people stranded by the nationwide airport 
closure. Agencies performed these services because they were the only 
people that could. The failure of travel agencies to keep their doors 
open could further reduce the number of people willing to travel.
    To use Rosenbluth International as an example, we suffered through 
10 days where we did not generate any perceivable revenue whatsoever 
while fielding close to 500% more calls as clients requested 
information on airport openings, flight schedules, arrival times, 
cancellations, etc., which increased our costs of service considerably.
    On the days following the attacks, we issued a handful of tickets--
normally we process 20,000 North America bookings per day. Today, we 
are hovering at around 12,000 bookings per day, 40 percent less than we 
were doing last year at this time.
    This impact has caused us to furlough 20% of our North America 
workforce and reduce associate benefits and salaries significantly. Not 
only are we the third-largest travel agency in the world but 
fortunately, also one of the most financially stable. However, I'm not 
here today to talk on behalf of Rosenbluth International, but to 
explain the plight of the travel agency community in general.
    The stories of the struggles of smaller agencies abound, many 
agencies reporting that their gross earnings for the week of September 
11 were less than just $50.00 (see Exhibit B).
    Some statistics on the financial problem facing travel agencies 
include (data supplied by ASTA):

   Between September 11 and September 17, 2001, agencies lost 
        an estimated $364 million due to the virtual cessation of new 
        sales.

   Agencies are losing about $26 million in airline sales-
        related revenue per day.

   Agencies lose about $25 million per day in revenue from 
        hotel sales ($6.3 million), car rentals ($4.3 million), cruises 
        ($10.2 million), tours, rail and other miscellaneous sales 
        ($4.6 million).

   For the four weeks following the attacks, it is estimated 
        that total losses for all product lines are approximately $1.36 
        billion.

   For the period through the end of 2002, estimated total loss 
        for all product lines will exceed $4 billion (see Exhibit C).

    There are 28,939 ARC (Airlines Reporting Corporation) approved 
retail agency locations in the United States. Under normal times, these 
businesses handle an enormous volume of air travel. Through July of 
this year, travel agencies sold $47 billion in airline tickets, 
averaging $297 million per day. Travel agencies have processed over 113 
million airline sales transactions so far this year. But few agencies 
will survive these kinds of losses.
    I feel that it's imperative that Congress provides travel agencies 
with financial relief. Given the magnitude of the short-term losses and 
the uncertainty of near-term recovery, I am recommending an industry 
loan guarantee package structured similarly to the one made available 
to airlines. In addition, I recommend that grants be given in the 
amount of $364 million to offset the damages incurred during the period 
of September 11, 2001 through September 17, 2001 when virtually all 
commercial aircraft were grounded. This federal relief package, I 
believe, will ensure the liquidity and viability of the agency 
community to prevent further employee layoffs and also ensure the 
vitality of the United States' economy.

                                                          Exhibit A
Excerpt from:
     Important Points Regarding Disaster Relief for Travel Agencies
            From The American Society of Travel Agents, Inc.
. . . Travel agencies need immediate cash infusions with a plan that 
includes these elements:

   Immediate cash to stabilize businesses, which may not be 
        there by the time a more elaborate stimulus package is debated.

   Economic disaster loans that are industry-based not 
        regional- or size-based.

   No-interest or low-interest loans below the current disaster 
        loan level of 4% for SBA qualifying businesses.

   Loans should be based on the ability to repay, not 
        collateral.

   Loan forgiveness for agencies on the verge of bankruptcy.

   Loan abatement on both interest and principal to help travel 
        agencies get back on their feet for SBA qualifying businesses.

                                                          Exhibit B
       Travel Agencies Impacted by Aftermath of Terrorist Attacks
(Excerpts of messages from various travel agencies reported to ASTA. 
ASTA reported these messages to the House of Representatives on 
September 25, 2001)

    AGENCY spent most of last week servicing clients who needed travel 
rearrangements. Our net air income for the week was 38.97 USD. We have 
five front line agents and a small supporting staff. Our clients seem 
to appreciate all the work we are doing for them.
    AGENCY employs three full time agents. Last week my net income from 
air sales were 32.21 USD. We have written one air ticket since Monday . 
. . a ground operator for incentive groups . . . yesterday, they had 
all of their fall groups cancel. . . . Another ground operator here . . 
. has had nine incentive groups cancel . . .
    AGENCY had a net revenue stream of 154 USD last week in an office 
of four full time people. Monday, September 17 we sold one airline 
ticket and no sales to Europe (our primary destination). Normally we 
receive 20 to 30 leads for European travel over the weekend . . . this 
week we have two leads. On Monday we also cancelled six passengers on 
escorted tours to China, representing more than 5,000 USD in lost 
commission income for October.
    AGENCY will be laying off at least two people at the end of this 
week. Normal ARC week 100,000, last week less than 7,000 or gross 
income of 600. Lost in excess of 50,000 in tours prepaid and ready to 
go. Have waived fees for reaccommodations of people stranded. 12 full 
time people with one part time person. I figure it cost me about 9,000 
loss to operate last week. Out of last week's business, over 60 percent 
of what we did transaction wise was refunds. 75 percent of the call 
volume were from stranded passengers or calls from the emergency bank. 
We are taking calls daily from people who are [squeamish] about 
traveling. This is having a significant impact on our agency and if 
things do not change within 30-45 days, we will need to reduce hours 
and layoff agents to help us get through. This normally is our booking 
season for fall break and the holidays and as all agencies December 
traditionally is our slowest month.
    AGENCY fared better than we did--we gave back more than we made 
resulting in a negative of 90.49 USD! Arc Report Ending Sep. 16, 2001, 
26 sales and 17 refunds; in addition, 9,000.00 USD paid in full on a 
tour on Monday, canceled on Tuesday. Several other trips cancelled for 
travel in October and even for Christmas. Unfortunately, the phone 
isn't ringing for new business to compensate for the cancellations.
    AGENCY spent most of last week and the first part of this week 
assisting clients who could not get through to the airlines. Since 
September 11, 2001, we have processed 31,098.32 USD worth of air 
refunds and 19,889.00 USD in tour and cruise cancellation refunds. 
Since a large portion of the tour bookings were for inbound tourism, 
our commission income losses are approximately 13,400.00 USD for last 
week alone.
    We see very little confidence with consumers in our area, as we are 
having people cancel their travel plans for December, January and 
February. We are trying to change their minds, but everyone seems to be 
too depressed to think about travel right now.
    AGENCY's agents spent 98 percent of their time last week servicing 
clients affected by this incident. We charge a processing fee for 
refunds and decided not to make an exception in this case. The only 
income we had last week was due to our processing fees, which totaled 
1398.00 USD. Any other commission income was negated by commission 
given back on refunds.
    Bottom line is that we lost money last week. That was not enough 
money to support one part-time and four full-time agents. This week 
will be even worse. There's very little income being generated and we 
will lose a lot of income due to the many tours that people have 
cancelled. Our agency has reduced all employees to \1/2\ their regular 
hours (three full time & two part time employees). Owners will work 
without pay. Bill must be paid and there is no income. . . . Cancelled 
trips this week along amount to over 50,000 USD. If I have to close my 
businesses, eight people will lose their jobs and the service we have 
provided to over 10,000 local residents and businesses over the last 
six years will cease.
    AGENCY is a family operated agency . . . Air sales for the past 
week were down over 60 percent. Air cancellations equaled sales leaving 
us with air sales almost equal to zero. Leisure bookings have come to a 
virtual halt with 15,000 USD in cancellations for packages under 
deposit. All calls this morning have centered about canceling ticketed 
air and canceling leisure travel scheduled to depart in the next few 
weeks. Total income for this office since September 11 has been 
negative. All activity has centered about getting clients home, 
rescheduling and canceling. No sales for future. . . . Since the Sept. 
11, we have sold only two airline tickets. No tours and no cruises . . 


                                                          Exhibit C


    This data was collected by The American Society of Travel Agents. 
All air data is based on ARC statistics. All other data is based on 
2000 Travel Agency survey, Travel Weekly and ASTA's Service Fee Survey.

    Senator Dorgan. Mr. Rosenbluth, thank you very much. We 
would like to ask all of you to stay for questions when we 
finish the panel.
    Next, we are to hear from Mr. John Wilhelm, President of 
Hotel Employees & Restaurant Employees International Union, and 
we appreciate you being here.
    Let me say to Mr. Marriott that we grieve for the employees 
you lost, and similarly, Mr. Wilhelm, I know that a number of 
the employees of your union lost their lives in the terrorist 
attacks on September 11, and we grieve for them as well, and we 
are very pleased that you are here.
    Might I ask, I understand that you are joined by some 
members of the Hotel Employees & Restaurant Employees 
International Union. Is that the case, and if so, might I ask 
some of those employees to stand up and be recognized?

  STATEMENT OF JOHN W. WILHELM, PRESIDENT, HOTEL EMPLOYEES & 
            RESTAURANT EMPLOYEES INTERNATIONAL UNION

    Mr. Wilhelm. Thank you very much, and I will comment 
briefly on these folks in the course of my testimony.
    Senator Dorgan. Thank you very much for joining us. We 
appreciate that. Mr. Wilhelm, why don't you proceed.
    Mr. Wilhelm. Thank you. Mr. Chairman, Members of the 
Subcommittee, it is an honor to appear before you, and I want 
to thank you very much for focusing on the dire straits that 
face us in the hospitality industry, and I might say it is a 
particular personal privilege to appear before the senior 
Senator from Hawaii, our friend and champion of our industry, 
along with the whole Subcommittee.
    As you noted, Mr. Chairman, our union lost 43 of our 
members who were working at the Windows on the World Restaurant 
on the top of Building 1 of the World Trade Center that 
morning, and who had no chance. For us, that makes this a 
particularly personal tragedy, but I am here to talk about the 
aftermath of the horrific events of September 11, because that 
tragedy has created an unprecedented crisis in the American 
hospitality industry.
    At least one-third of the members of our entire 
international union across North America are laid off, many 
more are on reduced hours, and the same proportions are true of 
the nonunion workplaces in our industry. The nongaming hotel 
industry alone estimates that at least 1 million workers are 
being laid off, and there are many more being laid off in 
gaming and restaurants and in food service. In addition, our 
airport food and beverage workers, including those who prepare 
in-flight meals, are very hard hit.
    I want to stress, Mr. Chairman, this is not just a New 
York-Washington problem, although those cities have certainly 
been hit very hard. This is a national crisis. One-third of our 
members in San Francisco and Seattle have been laid off, 27 
percent in Minneapolis, 30 percent in Las Vegas, one-third in 
Boston, 25 percent in Hawaii, and so on. Many others are on 
reduced hours, and if I may, Mr. Chairman, I have submitted for 
the record more details in terms of these kinds of statistics.
    This is not, unfortunately, getting better, and I would 
urge the Subcommittee not to be misled by anecdotal suggestions 
that the picture is getting better in Las Vegas, for example. 
Senator Smith referred to this. Television has reported the 
last 2 weekends were much busier. That is true in terms of the 
weekend, but business is disastrous during the week in Las 
Vegas, and lay-offs are accelerating in that community, not 
slowing down, and the same unfortunately is true in many other 
places. Lay-offs will be accelerating over the next several 
weeks in our industry.
    I want to stress that there is no labor-management division 
in this crisis. All of us, the companies, our union, the 
employees, all of us are on the same ship, and the ship is 
sinking. This is a crisis not just for our members, but I 
believe a crisis for America. The hospitality industry is the 
largest employer of welfare-to-work people, the largest 
employer of single parents, the largest employer of immigrants. 
Our industry has driven the economic recovery of cities in 
America over the last decade.
    In this country, we told the poor to go to work, and they 
did that, and that is a good thing. The hospitality industry is 
an industry of the working poor, but now those jobs are gone, 
and regrettably so is most of the safety net. In particular, 
what is left of the American public health system in most 
communities cannot possibly absorb these laid-off workers.
    Our union strongly supports the call by Bill Marriott and 
by our industry for short-term temporary stimulus aimed at 
getting people traveling again. Without that, there is no 
prospect for the restoration of these desperately needed jobs. 
At the same time, the workers also need immediate help. These 
workers are paycheck-to-paycheck people, literally. Many of 
them will be homeless within a few weeks.
    I was accused by a Member of the other House earlier this 
week of being hysterical or alarmist when I said that, but that 
is the literal truth. Their unemployment checks are less than 
$300 per week, and in many cases a lot less than that, because 
unemployment is based on income. On that kind of money, laid-
off workers will be hard-pressed to pay the rent and feed the 
kids, and in particular, the possibility that they will be able 
to pay for continuing health care coverage is nonexistent.
    We support extended federal unemployment assistance, but I 
believe that the most important single thing that Congress and 
the Administration can do for these workers is to provide 100 
percent federal payment of COBRA health care continuation cost 
for a defined period of time. The COBRA system is an existing, 
simple, efficient, well-defined private sector mechanism to 
accomplish federal payment to health plans, both corporate and 
union plans, which agree to cover laid-off workers for a 
defined period of time. It does not require any new entitlement 
or any new bureaucracy, and when the defined period of time is 
over, the program simply ends.
    We desperately need your help. This will be a crisis not 
just for the hospitality industry, it will be a crisis for 
America, and I believe it will most fundamentally be a crisis 
for our message in this country to everyone that if you work 
hard and play by the rules and go to work every day, your 
family will be secure.
    I would like to conclude, Mr. Chairman, if I may, by 
briefly introducing a few of our union's laid-off members and 
telling you a little bit about what faces each of them.
    First, Johannes Gezu. Johannes Gezu is a room service 
waiter at the Chicago Sheraton Hotel and has worked there since 
1995. He has had just 2 days of work since September 11. He is 
40 years old, married, with a 1-year-old child. His wife is 
employed at American Eagle Airlines, and has also lost her job.
    He came to the United States as a political refugee from 
Ethiopia, after being jailed there for over two years because 
of his political beliefs. Two days of work since September 11.
    Marie Alcina is a guestroom attendant at the Boston Park 
Plaza Hotel. She emigrated to this country from Haiti in 1998. 
She is the single mother of four children. Her 11-year-old son 
has a serious heart condition. Before September 11, she made 
$461.20 per week with full family health insurance. After the 
11th, she is without work and still waiting to receive 
unemployment benefits. Her monthly rent is $650, her medical 
insurance cuts off in one more month. Her COBRA cost, if she 
were able to pay it out of her own pocket, would be $966 per 
month.
    Lucy Cedeno works in the change department at the Riviera 
Hotel Casino in Las Vegas. She has worked in the Las Vegas 
casino industry for 20 years. In spite of that length of 
seniority, she was laid off after the September 11 attacks. She 
is married, and her husband also is unemployed. This is the 
first time in her 20 years in the casino industry that she has 
been laid off for economic reasons. Her unemployment check is 
$275 per week. She has a mortgage, $768 a month, her gas bill 
is $25, her electric bill is $130 a month, and she has not 
bought food yet. She will be unable to afford the cost of 
continuing medical insurance after her insurance eligibility 
expires.
    Jewel Jackson is also from Las Vegas. She works in the Four 
Seasons Hotel as a laundry valet. She was laid off after the 
September 11 attacks. She is an African American, a single 
mother of two teenage daughters. She moved to Las Vegas from 
Los Angeles five years ago.
    Like thousands of others, she came to Las Vegas to have a 
better life for herself and her family. She is laid off. Her 
unemployment check is $243 per week. Her rent is $739 a month, 
her minimal food budget for herself and her family is $300 a 
month, her electric bill is $122 a month. She also will be 
unable to afford the cost of continuing medical insurance after 
her eligibility expires.
    Hyacinth van Rial works as a guestroom attendant also at 
the Boston Park Plaza Hotel. She has not been called in to work 
since September 11. She is a single mother of four children 
under the age of 17. Before she got her job at the Boston Park 
Plaza Hotel she was on welfare. She has worked steadily at the 
Boston Park Plaza Hotel since leaving welfare. She earned 
$11.53 an hour in that hotel. She will not be able to meet her 
COBRA insurance payment of $966 a month when she loses her 
insurance in a few weeks. She has been getting groceries for $1 
a bag at the Union Hall since getting laid off.
    Mary Wise is a room service cashier at the Capital Hilton 
Hotel over here in Washington, D.C. She has worked there 
continuously since 1984. She was laid off on September 13. Her 
husband, who is a construction worker, was also laid off. She 
supports her two grandchildren. Her unemployment check is $280 
a week, her rent is $550 a month, utilities are $300 a month, 
food budget, including grandchildren, is $300 a month. She will 
not be able to pay her health coverage.
    Finally, Paul Tombs, who lives in Arlington, Virginia. Paul 
works at the Hilton Crystal City in Arlington, Virginia. He has 
been a bartender-server there for 22 years. He is the most 
senior person in that area of the hotel. He has not had any 
work since September 11. He just was notified that he is going 
to get two days of work, but will likely once again be fully 
laid off in the next week or so. No one else in his department 
is working at all.
    We could have filled the room, Mr. Chairman. Regrettably, 
we could have filled the room with examples just like these, 
but we wanted to try to give the Subcommittee some sense of the 
human tragedy that we are talking about here, and we again are 
very grateful for your focus on this terrible crisis.
    Thank you so much.
    [The prepared statement of Mr. Wilhelm follows:]

  Prepared Statement of John W. Wilhelm, President, Hotel Employees & 
                Restaurant Employees International Union

    The aftermath of the horrific events of September 11 has created an 
unprecedented crisis in the American hospitality industry.
    At least one-third of the entire membership of our International 
Union is laid off. Many more are on reduced hours. The same proportions 
are true of the non-Union workplaces in our industry. The non-gaming 
hotel industry alone estimates that at least one million workers will 
shortly be laid off, and there are many more in gaming, restaurant, and 
food service. Our airport food and beverage workers, including those 
who prepare in-flight meals, are especially hard hit.
    This is not just a New York-Washington problem, although those 
cities have been very hard hit. One-third of our members in San 
Francisco and Seattle are laid off--27% in Minneapolis--30% in Las 
Vegas--one-third in Boston, and so on.
    This is not getting better. September and October are, in normal 
times, the busiest period of the year for our industry. That busy 
period has been demolished. November begins the traditional slower 
period, extending into January, February, and March. Travel agencies 
report extremely low bookings for months out, and that is our 
industry's early warning system.
    Don't be misled by anecdotal suggestions that the picture is 
getting better. In Las Vegas, for example, television news has reported 
that the last two weekends were much busier. That's true, but business 
is disastrous during the week, and layoffs are accelerating in Las 
Vegas, not slowing down.
    There is no labor-management division in this crisis. All of us--
the companies, our Union, the employees--are on the same ship, and the 
ship is sinking.
    This is a crisis not just for our members, but for America. The 
hospitality industry is the largest employer of welfare-to-work 
people--the largest employer of single parents--the largest employer of 
immigrants. Our industry has driven the economic recovery of American 
cities over the last decade.
    We told the poor in America to go to work. They did that. The 
hospitality industry is an industry of the working poor. Now their jobs 
are gone, but so is the safety net. In particular, what's left of the 
American public health system can't possibly absorb these laid-off 
workers.
    Our Union strongly supports the call by Bill Marriott and our 
industry for short-term, temporary stimulus to get people traveling 
again. Without that, there is no prospect for the restoration of these 
desperately needed jobs.
    There is also a great need, as part of the airline bail-out, to 
help the companies in the in-flight feeding and airport terminal food 
and beverage and retail industries.
    At the same time, the workers also need help. These workers are 
paycheck to paycheck people. Literally, many of them will be homeless 
within a few weeks. Their unemployment checks are less than $300 per 
week, in many cases a lot less, because unemployment is based on 
income. On that kind of money, laid-off workers will be hard-pressed to 
pay the rent and feed the kids.
    The possibility that they will be able to pay for continuing their 
health care coverage is non-existent.
    We support extended Federal unemployment assistance.
    But the most important thing Congress and the administration can do 
for these workers is to provide Federal payment of COBRA health care 
continuation costs for a defined period of time--we suggest 12 months.
    The COBRA system is an existing, simple, efficient, well-defined, 
private-sector mechanism to accomplish Federal payment to health 
plans--both corporate and Union plans--which agree to cover laid off 
workers for a defined period of time. It doesn't require any new 
entitlement or bureaucracy. When the defined period of time is over, 
the program simply ends.
    We desperately need your help. This will be a crisis not just for 
the hospitality industry, but for America, and for our message to 
everyone in our society that if you work hard and play by the rules, 
your family will be secure.
    I'd like to conclude by briefly introducing a few of our Union's 
members, and telling you a little bit about what faces each of them.

                                                         Attachment
               September 11 and the Hospitality Industry

1. The events of September 11th have created a crisis for the nation, 
the economy, and America's workers, especially those employed in the 
hospitality industry.

2. This calamity, while most evident and painful in New York City and 
Washington, DC, has now spread to every corner of the United States.

3. HERE members everywhere are being laid off. We estimate that more 
than one third of our membership is laid off with many more on reduced 
work weeks. Similar percentages have been reported by industry experts 
in the non-union hospitality sector.

4. For example, we have surveyed our major Local Unions across the 
country and found the following:


------------------------------------------------------------------------
                        City                              % Laid Off
------------------------------------------------------------------------
Washington                                                          41%
New York                                                            37%
San Jose                                                            35%
San Francisco                                                       34%
Seattle                                                             33%
Boston                                                              32%
Los Angeles                                                         30%
Las Vegas                                                           30%
Minneapolis                                                         27%
Honolulu                                                            25%
Miami                                                               25%
------------------------------------------------------------------------


5. The hospitality industry is a leading employer of our nation's most 
vulnerable workers.

   More welfare to work participants are employed in the 
        hospitality sector than any other,

   The hospitality industry is one of the largest employers of 
        single mothers

   The hospitality industry is a major employer of new 
        Americans:

------------------------------------------------------------------------
                        City                            % new American
------------------------------------------------------------------------
Los Angeles                                                         75%
New York                                                            68%
San Francisco                                                       60%
Las Vegas                                                           50%
------------------------------------------------------------------------


6. According to the National League of Cities, the hospitality 
industry is cited by city leaders more than any other industry as 
critical to the economic development and well-being of their city.

7. It is imperative that the Congress and the President address this 
crisis by targeting financial relief to the workers in this industry.

8. Hospitality workers subsisting on unemployment have no chance of 
paying for continued health care coverage. Families will lose health 
care coverage if there is no federal payment to health plans of COBRA 
continuation costs. The public health system cannot absorb these 
workers.

             Necessary Hospitality Industry Relief Measures

1. For laid-off workers, Federal payment of 100% COBRA health care 
continuation is the most important priority.

2. Supplemental federal unemployment insurance should both extend and 
increase unemployment benefits.

3. Temporary tax relief for hospitality employers to restore the 
industry to health and put employees back to work. Appropriate steps 
might include a temporary payroll tax holiday for employers and 
workers.

4. Equal treatment for airport in-flight feeding and airport 
concession companies and workers under airline industry relief 
measures.

    Senator Dorgan. Mr. Wilhelm, thank you for providing, in a 
gripping way, a better understanding of the consequences of all 
of this. This is not just economic theory, it is small 
businessmen and women who are losing their dreams and their 
investments and their opportunities. It represents the men and 
women who find a job and hold that job dear, and work hard, and 
do the best they can, to be caught up in this web of 
uncertainty and the downward spiral of an economy that we need 
to find a way to provide lift to at this point.
    But again, it is very important for us to act, and to act 
boldly. I feel very strongly with respect to this economy that 
it is important that if we are going to make a mistake, make 
the mistake of doing something rather than make the mistake of 
doing nothing. It would be unforgivable for us to sit around 
here and do nothing to respond to what clearly is a serious, 
serious challenge posed to us and posed to this economy in the 
aftermath of September 11.
    I am going to call on Mason Hurst, but before I do, we are 
joined by Senator Fitzgerald from the State of Illinois. He is 
the Ranking Member on this Subcommittee. I am delighted that he 
is here, and I know he was delayed for other Senate business. 
Senator Fitzgerald.

            STATEMENT OF HON. PETER G. FITZGERALD, 
                   U.S. SENATOR FROM ILLINOIS

    Senator Fitzgerald. Thank you, Mr. Chairman. I appreciate 
your having this hearing. We are all very concerned about the 
hospitality and tourism industry. As the only Member of the 
U.S. Senate to vote against the airline bail-out, I want to say 
just a couple of words here. The reason I voted against the 
airline bail-out is that I thought it set a very troubling 
precedent.
    We did not compensate the airlines for the 3 or 4 days they 
were shut down. Their lost revenues each day they were shut 
down were $340 million. $340 million times four, if you give 
them a 4-day shutdown, is $1.36 billion, not the $15 billion 
Congress gave them. I guess I am hampered in my job as a 
Senator in that I had a lifelong career in banking, and I might 
not be a very good Senator, but I can read numbers, and I have 
to tell you that the pay-outs to the airline industry in my 
judgment were grossly excessive.
    I think other industries are not going to get the kind of 
treatment--and I will be very blunt with you. The other 
industries do not have the raw political clout that the airline 
industry has. They had 6-some lobbyists on that bill. They were 
in almost immediately following the September 11 attacks, and 
they had commitments by the weekend after the attacks to get a 
massive, gargantuan infusion of taxpayer dollars, and it was an 
odd infusion, too, because it really, in my judgment, was a 
misnomer to call it an industry bail-out. The only people who 
got bailed out were the shareholders of airlines. They were 
protected, but the other stakeholders in airlines, the 1 
million employees of airlines, were left twisting in the wind. 
They got nothing. There was no bail-out for the sky caps or the 
baggage handlers or the mechanics.
    So I thought it was a very, very troubling precedent 
Congress set, and I thought that since the bill we wrote 
actually said we were going to compensate the airline industry 
for their losses through December 31 of 2001, not just the 
period they were shut down, and the troubling precedent is, of 
course, if we are to compensate that one industry, what about 
all the others?
    What about travel agencies? There are 25,000 brick-and-
mortar travel agencies in the country. Where is their bail-out? 
What about the hotels? They are not getting a bail-out. The car 
rental companies, they are not being bailed out.
    So I thought it was very unfair that we just picked out the 
one industry that had the most raw political clout and gave 
them a bail-out, and I think it was in many ways very unfair to 
you, and I think we are seeing that just bailing out the 
shareholders of airlines did not solve the problems in your 
industry.
    The claim was made by the airlines that if they got bailed 
out, all of you folks would naturally be taken care of, but by 
bailing out creditors and equity investors in airlines, and 
restoring the balance sheets for the airlines, we are finding 
that that does not restore your balance sheets or prevent lay-
offs in your industry.
    In any case, I hope there is something Congress can do. I 
want to compliment Mr. Marriott on your approach. I know you 
are not asking for a bailout. I think the CEO of Hilton Hotels, 
Steven Bollenback, said ``I think it would be improper for us 
to get in line for Government subsidies. It would be kind of 
unseemly, and if I were the Government, I would not give us 
anything.'' So, I do appreciate the attitude, at least of some 
in the tourist industry that they do not want to take advantage 
of the American citizens, because I think there is nothing 
worse than somebody at a time of crisis like this preying upon 
the generosity of the American people.
    With that, I look forward to working with you all, and 
hopefully, the next time we have you before this Committee 
testifying, it will be on a happier subject, and there will not 
be so much doom and gloom in the economy at the time. Thank you 
all for being here.
    Senator Dorgan. Senator Fitzgerald, thank you very much. As 
you all can see, respectful disagreement still lives in the 
U.S. Senate, and it is important for us to get ideas from every 
sector, and every corner of the Senate, and I think we will 
work our way through all of these issues in a thoughtful way, 
and Senator Fitzgerald makes a significant contribution to 
that.
    Next, we will hear from Ms. Marilyn Carlson Nelson, who is 
the Chair and Chief Executive Officer of Carlson Companies, 
Inc., and she represents the Travel Industry Association, for 
which she is the past national chair. I had an opportunity to 
visit with Ms. Nelson yesterday, I believe it was, and we 
appreciate your being here. Why don't you proceed.

STATEMENT OF MARILYN CARLSON NELSON, CHAIR AND CHIEF EXECUTIVE 
                OFFICER, CARLSON COMPANIES, INC.

    Ms. Nelson. Thank you, Mr. Chairman, for this opportunity, 
and hello to the other Members of the Subcommittee. These are 
extraordinary times. They are about difficult choices, and I 
know that that is what you are about to make. They are about 
fighting two wars, one against the terrorists and the other an 
economic one. Your response in each case draws on the same pool 
of resources, and we understand that. We must be as accurate 
with our stimulus as we are with our weapons.
    To win, the great American people must maintain their 
energy and their indomitable spirit. We must not, by putting 
millions of Americans out of work, weaken our resolve and our 
ability to resist. We must not allow an already somewhat 
traumatized people to become prisoners of fear, fear not only 
of the enemy, but now as recent research is clearly indicating, 
fear of loss of financial security and loss of jobs.
    I was deeply moved a moment ago, concerned that I was going 
to have to speak too quickly after John's presentation, because 
you cannot imagine what it is to be the CEO of a very large 
global corporation and make decisions that have the impact on 
the lives as you have just witnessed.
    I come before you this morning urging you to take immediate 
short-term and significant steps to prevent further job loss, 
to stimulate the American economy, and to begin what I think is 
part of the healing process that Americans so desperately need.
    I come on behalf of the Travel Industry Association of 
America, representing all of the travel industry, 1 in 17 jobs 
directly across the nation, as we have heard over and over, the 
impact on every congressional district. I submit that in all 
the discussion about helping industries, that travel is much 
more than an industry. Travel is a way of life.
    I come as well on behalf of Carlson Companies, of which I 
am the CEO. We are one of the world's largest travel, 
hospitality, and marketing companies. Our owned and franchised 
organizations employ 125,000 people in the United States, 
190,000 around the world. We embrace every aspect of the 
lodging, dining, travel industries, other than air and ground 
transportation.
    At this moment, we recognize as never before our 
interdependence. We recognize our interdependence on our 
franchisees, on their employees, and on the employees and 
owners of businesses across this great nation, and indeed 
increasingly across the world, who are depending upon us. We 
sink or swim together, and unfortunately right now, we, all of 
us, are at a tremendous risk of drowning.
    On September 11, necessary but unprecedented shutdown of 
the air travel and resultant consumer inertia have impacted far 
more than the airline industry. We have impacted all travel-
based businesses. At Carlson, our travel-based businesses are 
off 35 percent. The entire industry has suffered similar if not 
greater declines, and this could be tremendously significant 
for the country, because, as has been mentioned, this industry 
is the second largest employer nation-wide.
    Let us not forget that we are no longer an industrial 
society. We are, in fact, a service economy, and we are 
discussing an industry that is the largest, the heart of that 
service sector. This is not simply an industry issue, it is an 
entire service economy issue, and we are the third largest in 
terms of revenue.
    We are confident, of course, that this disastrous 35-
percent fallout is not going to continue. We all read each day 
about the cautious steps the American public is taking, but if 
we are to improve to a simple decline of 20 percent, which is 
clearly what you are hearing from this panel and others, if we 
were to improve to simply a decline of 20 percent, it has been 
calculated that that 20 percent decline in travel and tourism 
would put more than 2.2 million people out of work, many of 
them, like these people here, in the next 60 to 90 days.
    It could, as Hal said, bankrupt up to half of the 30,000 
travel agencies, affecting over 100,000 travel agents, indeed, 
the very sales force upon which we are all relying to renew the 
industry, and it could reduce the U.S. GDP by 3.6 percent.
    We are franchisees. Our employees and their employees need 
three things immediately: an immediate, focused and significant 
short-term stimulus package that is focused on travel and 
tourism, that will get Americans traveling and keep people 
employed, we need help for the industry's displaced workers 
and, of course, we need liquidity.
    In this connection, I want to reemphasize what Senator Kyl 
has said. The most crucial is the immediate stimulus, and thank 
you, Senator Inouye, for signing onto that bill. This is not a 
bail-out. It is not a bail-out for business. I emphasize that, 
because we have a privately held company that is very 
entrepreneurial, and we have never, ever asked for anything but 
our chance to compete.
    This is a unique moment. We need a stimulus that is going 
to treat this crisis that has suddenly arisen like a tidal 
wave, and not just its symptoms, immediately. This will keep 
people employed, will be a benefit to consumers, will reduce 
costs for business, and enable travel agents, restaurants, 
hotels, and resorts to survive, or at least to bridge to a 
better time.
    I urge you to support S. 1500, introduced by Senators Jon 
Kyl and Zell Miller as part of the economic package. I urge you 
to support Senator Boxer's package to improve the articulation 
of the importance of travel and tourism to our economy today 
and, indeed, our positioning in the future as a global 
competitor.
    This bill contains three important tax proposals that will 
provide travelers with an immediate incentive to travel, which 
means Americans will receive a stimulus to get out of the 
house, to see each other again, to bond and to heal, and it is 
also going to help provide liquidity to our industry. Most 
importantly, the legislation provides a $500 tax credit to 
encourage individuals to book travel by the end of the year, 
and it provides a stimulus for corporations to rebook 
conventions, meetings, and to reinstate travel.
    One of Carlson's businesses is a $1 billion marketing 
business. We understand incentives. We understand that this 
incentive would release all kinds of marketplace forces that 
would help to drive the recovery, to speed the recovery. 
Without this kind of legislation, we fear a recession in our 
industry. While we do not have final revenue estimates yet in 
hand, it is clear that without incurring this cost of enacting 
the legislation, that federal, state, and local governments 
will incur great losses in forgone tax collections and 
increased payments to help these displaced workers.
    I realize that economists are debating tax reduction versus 
the stimulus of government spending. However, one thing they 
agree on is that this is an urgent problem, an emergency 
requiring significant immediate and short-term solutions. This 
proposal accomplishes these objectives, plus it is focused on 
the travel industry.
    In this proposal, there is no relief unless there is the 
desired consumer spending. It works within the existing 
infrastructure. It releases market forces. It is immediately 
effective, and it is easily communicated. Without this kind of 
legislation, a deepening recession is a certainty, and 
government costs will increase as tax revenues at federal, 
state, and local levels decline.
    I want to thank you so much for giving me the opportunity 
to discuss with you our people, our industry, our country, and 
what must be done to provide a travel stimulus, get Americans 
moving, minimize the harm to all resulting from the September 
11 tragedy, and I would respectfully hope you would submit my 
testimony for the record.
    Senator Dorgan. Without objection, that will be done, Ms. 
Nelson. Thank you very much.
    [The prepared statement of Ms. Nelson follows:]

Prepared Statement of Marilyn Carlson Nelson, Chair and Chief Executive 
                    Officer, Carlson Companies, Inc.

Mr. Chairman and Members of the Subcommittee:

    On behalf of the 124,000 U.S. employees of Carlson Companies, Inc., 
and the Travel Industry Association of America, I want to thank you for 
providing us with this opportunity to share our perspective on the 
state of our industry.
    In a word, as a result of the tragic events of September 11, the 
state of the industry is ``desperate.'' We need to get travelers 
traveling to keep working people working, and we need your help to do 
it now.
    As you may know, our privately held company is one of the world's 
largest, global travel and hospitality companies. TIA is the national, 
non-profit organization representing all components of the $582 billion 
travel industry. TIA's mission is to represent the whole of the U.S. 
travel industry to promote and facilitate increased travel to and 
within the United States. We hope that we can count on you to work with 
the entire industry to restore it to health.
Summary
    Before September 11, the U.S. travel industry was experiencing a 10 
percent decline in business. By the end of September, Carlson travel 
businesses were off 35 percent. If this were to continue and were to 
hold true across the nation's travel and tourism industry, it would 
represent a potential loss of as many as 3.8 million jobs nationwide.
    Under ordinary circumstances, we are and have to continue to be 
highly efficient to survive in a business affected by powerful market 
forces and characterized by fierce competition. Today, however, we are 
not confronting ordinary circumstances--these are extraordinary times 
for all of us. The market simply cannot handle such an unforeseeable, 
catastrophic, and dislocating externality.
    We at Carlson are private and fiercely independent. We have never 
sought government assistance, but our employees, our franchisees, and 
we have suffered and will continue to suffer tremendous harm from this 
totally unforeseen calamity without short-term, immediate assistance 
from the federal government.
    Simply put, Americans are not traveling. In our experience, 
Americans initially were staying at home primarily out of concern for 
their own safety. Now, however, they are concerned about a possible 
recession, the loss of their jobs, and the perceived need to conserve.
    Unchecked, this crisis has the potential to put more than 2.2 
million (3.8 million if the present falloff were to continue) Americans 
out of work in the next 60-90 days and to trigger a 3.6 percent 
decrease in GDP.
    Mr. Chairman, we are not asking for a bailout for our business or 
our industry. Nor are we asking for measures that would only treat the 
symptoms and not the cause of the affliction we confront. Our industry 
desperately needs short-term and significant financial incentives to 
get Americans on planes, in hotels, and dining and using our great 
entertainment facilities. This will keep people employed, be a benefit 
to consumers, reduce costs for business, and enable travel agents, 
restaurants, hotels and resorts, and entertainment providers to 
survive.
    We, our franchisees, our employees, and our industry desperately 
need three things:

    1. An immediate, focused and significant short-term stimulus 
package that will encourage the American public to travel and thus will 
help keep people employed,

    2. Economic assistance for workers who already have been 
displaced, and

    3. Liquidity to give our businesses a chance to regain their 
economic footing.

    We urge you and your colleagues on the Finance Committee to support 
S. 1500, introduced by Senators John Kyl and Zell Miller, as part of 
the economic stimulus package. This bill contains three important tax 
proposals that will provide travelers with an immediate incentive to 
travel and will help provide liquidity to our industry. Most 
importantly, this legislation provides a $500 tax credit to encourage 
people to book travel by the end of the year. In addition, this 
Committee should consider implementing a comprehensive national 
promotional campaign to encourage visitors to travel to and throughout 
the United States. The Committee should also take steps to help small 
businesses and to provide a helping hand to displaced workers.
    Without this kind of legislation, we fear a recession in our 
industry and a catastrophic loss of jobs. It seems clear that the cost 
of enacting the legislation will be far less than the cost that will be 
borne by federal, state and local governments in foregone tax 
collections and increased payments to help displaced workers if our 
industry collapses.
Background on Industry
    Prior to September 11, more than 19,000,000 Americans were employed 
directly and indirectly in travel and travel-related jobs, with an 
estimated annual payroll of $171,500,000,000. In recent years, the 
travel and tourism industry has grown to be the second largest industry 
in terms of the number of people directly employed and the third 
largest industry in the United States as measured by retail sales, with 
over $582,000,000,000 in expenditures, generating over $99,600,000,000 
in federal, state, and local tax revenues in 2000. Moreover, the travel 
and tourism industry last year created a $14,000,000,000 balance of 
trade surplus for the United States.
    Today, the efforts of the travel and tourism industry and all 
levels of government--working together to restore confidence among 
travelers--have largely succeeded. While those efforts will continue, 
we believe the American public needs a major financial stimulus, an 
incentive, to travel, because it is no longer fear for personal safety, 
but primarily concerns about a recession, unemployment and the need to 
save and conserve that is keeping people at home. If we can provide 
this stimulus, it means keeping working people working and generating 
cash flow that can help stimulate a rebound in the Nation's economy.
    How do we know what would help the industry? Let me tell you about 
our company, which is in virtually every segment of the business.
Carlson People and Companies
    We and our franchisees employ approximately 124,000 people 
throughout the United States and 192,000 people worldwide. We also are 
a major supplier of the services that fuel hundreds of related 
businesses and provide many times the number of jobs we create, both in 
our home state of Minnesota and throughout the United States. We 
recognize that we sink or swim together. Our fates and theirs are 
intertwined.
    We operate and franchise 1,205 travel agency businesses throughout 
the United States, under the Carlson Wagonlit Travel, Results Travel 
and Cruise Holidays brands.
    Our 540 owned, operated and franchised domestic hotels include 
Radisson Hotels & Resorts, Country Inns and Suites By Carlson, Regent 
hotels, Park Plaza and Park Inn Hotels.
    Our Carlson Marketing Group is one of the worlds largest marketing 
companies, providing incentive travel for over 200,000 people a year.
    We own and franchise a total of 749 restaurants in 47 states and 52 
countries. These include 671 T.G.I. FRIDAYS, 53 PICK UP STIX, and 25 
other concepts.
    Our Radisson Seven Seas Cruise line, headquartered in Miami, 
Florida, is the world's premiere cruise line, operating 6 top of the 
line cruise ships.
    In short, we embrace every aspect of the travel, lodging and dining 
industry (other than air and ground transportation services).
    And our employees are among the best, hardest working people in the 
world. Notwithstanding the severity of what we all experienced on and 
after September 11, our people persevered to get the job done. I want 
to note with a great deal of pride that the owners and employees of our 
travel agencies worked night and day following the grounding of the 
airlines to assist stranded travelers with lodging and to rebook 
flights for them. In almost all cases, we did this without any 
additional compensation, at the same time that we were experiencing a 
45% decline in business.
    In particular, I want you to know of the extraordinary efforts of 
the staff at our Regent Hotel in downtown Manhattan, our Carlson 
Wagonlit people in the Pentagon who supported our government travelers, 
our airport Fridays restaurant people who served hungry passengers, and 
our hotel staffs in Canada and Europe, as well as here in the U.S., who 
accommodated stranded passengers. They are a credit to our industry and 
to our nation.
Impact on Our People and Carlson
Travel
    Overall, our business travel in the U.S. is down an average of 35% 
since September 11.
    Before September 11, all of our travel agency businesses were 
severely impacted by the airline commission cutbacks.
    Most of our franchisees are small, family owned businesses, 
employing 3 to 4 people at each location. They rely heavily on small 
business travelers and leisure travelers. Due to the discretionary 
nature of leisure travel, that segment of the business, alone, is down 
more than 45%.
    All of these businesses operate in tremendously competitive 
markets, operating on razor thin margins of 1-2%. A sustained sales 
decline of only a few percent over a few months doesn't just represent 
an operating loss, it often means closing their doors.
    If something isn't done quickly, I unfortunately can predict with 
confidence that many of our small travel agent franchisees will be 
closing their doors due to this unprecedented reduction in travel 
stemming from this disaster.
Hotels
    Our hotels which are primarily dependent on business air travel 
have experienced a similar 35% decline.
    While the numbers of hotels are great, consider a single hotel and 
its value to people. Here is the break down at a typical 300 room 
Radisson hotel which employs on average 200 people:


Management                                     15%         (60% female)
Food/Beverage                                  50%         (50% female)
Housekeeping                                   15%         (90% female)
Front Office                                   10%         (60% female)
Maintenance                                     2%          (1% female)
Accounting/Purchasing/                          7%         (50% female)
  Store Room
Sales                                           1%         (90% female)



    We have a large, hard-working immigrant population in housekeeping 
and in our food and beverage division. Most employees in those 2 groups 
(which represent 65% of total hotel workers) are female, at the lower 
end of the wage scale, some are sole wage earners, and some are single 
mothers. Many have had little opportunity to have prepared financially 
for a lay off situation.
    Furthermore, our ``Typical Hotel'' writes 500-600 checks per month 
to outside suppliers for various products and services. Among these are 
transfer suppliers (limo services/cab drivers); food suppliers; non- 
and alcoholic beverage suppliers; linen suppliers; uniform suppliers; 
laundry suppliers; furniture, carpet, and drapery suppliers; fixture 
suppliers (lamps/sinks/tubs/showers/toilets); cable TV and movie 
channel suppliers; china/glass/silverware suppliers; amenities 
suppliers (soaps, lotions, shower caps, shoe shine mitts, ashtrays, 
matches, etc.); office supply companies; IT suppliers; utility 
companies (electric/gas/water); waste removal suppliers; chemical 
suppliers; air conditioning/electrical/plumbing suppliers; pest control 
suppliers; and gift shops (and their suppliers, including t-shirt 
vendors, candy bars, aspirin, magazines, books, and souvenirs).
Restaurants and Cruise
    If things do not rapidly change, our restaurants expect losses 
stemming directly from this crisis in excess of 10 million dollars by 
the end of the year and we estimate that our Cruise business will 
suffer in excess of 7 million dollars in losses. If these losses 
continue, the economic fallout to our employees, small business 
franchisees and their employees will be staggering.
What Next?
    Without the kind of stimulus measures we have advocated, even if 
the current 35% falloff were to ``improve'' to a minus 20% long-term 
decline, such a calamitous fall-off would:

   Put more than 2.2 million Americans out of work, many of 
        them in the next 60-90 days. (Compared to the 100,000 airline 
        workers who have already lost their jobs.)

   Cause failure of and foreclosure on many hotels, sending a 
        shock wave through the banking sector.

   Cause the loss of more than 100,000 U.S. travel agents (who 
        write 80% of airline tickets), thus exacerbating the problem.

   Compound the loss of U.S. restaurant worker jobs, already 
        estimated to exceed 90,000 in September alone.

   Cost federal, state, and local governments more than $20 
        billion in tax revenues.

   Reduce the U.S. GDP by 3.6%.
What Can Congress Do To Help?
    As I noted at the outset, we hope Congress will adopt an immediate, 
significant and focused, short-term stimulus package. We're not seeking 
a bail out. TIA and our coalition partners support a six-part program 
that will help keep people working and will be good for all affected by 
this crisis. We ask Congress to--

    1. 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.

    2. 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.)

    3. 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.

    4. Provide substantial federal funding, with private-sector 
support and input, for advertising campaigns to encourage travel to and 
originating within the United States.

    5. 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.

    6. 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.

    In short, we need short-term financial incentives to get Americans 
on planes, in hotels, dining, and using our great entertainment 
facilities. This will keep people employed, be a benefit to consumers, 
reduce costs for business and enable travel agents, restaurants, hotels 
and resorts and entertainment providers to survive.
    Without this, we fear a recession and deficits at all levels of 
government as tax revenues decrease and the cost of helping displaced 
workers increases.
    We look forward to working with you and your colleagues to get 
legislation enacted quickly to restore our industry to good health.
    Thank you.

    Senator Dorgan. Finally, Mr. Mason Hurst. I have included 
the statement you have given the Subcommittee in the record 
[located after Mr. Hurst's oral remarks]. Inasmuch as you are 
here, I would ask that you summarize that statement for us 
discussing the car rental business.

                STATEMENT OF O. MASON HURST II, 
                     ANC RENTAL CORPORATION

    Mr. Hurst. Thank you very much, Mr. Chairman Dorgan, 
Members of the Subcommittee. In particular, Senator Inouye, I 
would like to recognize you in light of the huge market that 
Hawaii represents for car rental and for Alamo Rental Car in 
particular, which is one of the companies that ANC Rental 
Corporation owns. I am here speaking on behalf of ANC Rental 
Corporation, which owns National Car Rental and Alamo Rental 
Car, and also on behalf of independent car rental companies 
from around the country that have been impacted by the terrible 
events of September 11.
    The independent car rental industry in airports is 
inextricably tied to airline travel, perhaps more than any 
other industry. We are one of the few major industries that is 
actually located on the airport properties themselves. In the 
case of ANC, 90 percent of our business is derived from 
airplane deplaning passengers.
    We support the Airline Relief Act that was passed. We would 
submit, however, that we need relief as well, in light of the 
extent to which we are intertwined with airline travel, we are 
really part of the air trip, a continuation of it when the 
customer lands. We are pleased that bipartisan legislation has 
been filed in the House by Representatives Shaw and Brad 
Carson.
    That legislation provides for 1.5 billion in loan 
guarantees to the car rental industry. It does not provide for 
a handout. It does not provide for grants, loan guarantees 
only. In light of Senator Fitzgerald's comments, I would also 
like to point out that we are willing to contribute our fair 
share as part of that legislation, and one proposal is that we 
would pay 50 cents per car rental day into a fund to pay for 
security at airports and airline entry points, and at car 
rental locations on the airports, and we believe that would 
provide a fund in excess of $100 million per year for that 
security.
    We are an integral part of the transportation system, when 
a customer lands and rents a car, he does not just go to one 
single point for meetings. He has to travel throughout an area.
    When it is a tourist, he is able to travel to all of the 
attractions in the area. If he lands, for example, in Honolulu, 
he does not just take a cab or a shuttle directly to Waikiki 
and stay in a hotel there. He is able to visit the Pauli 
Overlook, the North Shore, to visit Pearl Harbor, to spend 
money throughout the island and travel to other islands and 
travel throughout that area. That happens all around the 
country with car rentals, and it spreads the impact of tourism 
and business travel throughout a region, not just to a 
particular point.
    We are a critical part of the auto manufacturers' 
distribution. Just ANC alone purchases nearly 5 percent of 
General Motors' new car production. Budget Rent-a-Car, another 
independent car rental company, purchases 3 percent of Ford's 
production, and Dollar Thrifty Group purchases 6 percent of 
Chrysler's production. Combined, the car rental industry 
purchased 1.2 million new cars last year. Those purchases are 
threatened. General Motors noted in their statement for the 
fourth quarter that the single biggest threat that they face is 
loss of car rental sales.
    Airports are extremely dependent on car rental companies. 
We are the second largest concessionaire in most airports, 
second only to the airlines. In one airport, Orlando 
International, we are the largest concessionaire. Airport 
bonds, general revenue bonds are dependent on the stream of 
revenue from concessionaires, including most prominently car 
rental, and they have recently been placed on credit watch by 
Standard and Poor's. They are special facility bonds issued 
throughout the country that are directly paid for only from 
collections from car rental customers.
    Those special facility bonds are threatened with default if 
there is a collapse of the independent car rental industry. 
Vehicle rentals have plummeted for us since September 11. The 
markets have dried up, the capital markets. That is our biggest 
problem. We are unable to obtain the financing we need to 
weather this storm. That also threatens cities around the 
country that have special car rental taxes to fund various 
types of construction or general revenue.
    For instance, Multnomah County, Oregon, which is Portland, 
Oregon, has a 12 percent rental car tax that goes into general 
revenue, Hawaii has a $2 daily rental surcharge that goes into 
general revenue, transportation, and tourism promotion. There 
are special taxes in place in Dallas, for example, to fund the 
construction of an arena for the Mavericks. There are taxes in 
place in Seattle that are rental car taxes for construction of 
a stadium there as well, and there is a Chicago Convention 
Center rental tax that funds the debt for the bonds that were 
issued to build that facility.
    We need relief, and unfortunately we need it right away. We 
are not in a position to weather the storm that is occurring. 
We cannot afford to weather an unprecedented downturn on the 
level that we have now, and what we are looking for is loan 
guarantees, not a grant, not a handout, but loan guarantees.
    Thank you very much.
    [The correspondence and prepared statement of Mr. Hurst 
follow:]

                                National Car Rental, Alamo,
                                                  October 12, 2001.

Hon. Byron Dorgan,
Chairman,
Subcommittee on Consumer Affairs, Foreign Commerce and Tourism,
United States Senate,
Washington, D.C.

Dear Chairman Dorgan:

    Attached is testimony I would have delivered orally before your 
Subcommittee at today's hearing, if time permitted. Understanding the 
limitations on the Subcommittee's time, I request that it be submitted 
for the record.
    The rental car industry is an integral part of our Nation's 
transportation system, and is inextricably tied to the passenger 
airline industry. Almost all airport car rental reservations are made 
coincidentally with airline bookings. Further, the rental car industry 
is the only major U.S. industry, other than airlines, operating 
directly on airport property and are the second largest contributor to 
airport revenues, approximately.
    The devastating impact of the events on September 11, 2001 have 
affected the car rental industry to the same degree the airline 
industry's airport operations are impacted. The independent rental car 
companies, including Alamo, National, Budget, and Dollar-Thrifty have 
suffered a dramatic decline in airport car rentals since the terrorist 
attack.
    Therefore, Federal assistance is essential to maintain the economic 
viability of both the airline industry and the car rental industry. The 
independent rental car industry is in need of $1.5 billion in loan 
guarantees. The economic damage to the industry has been dramatic and 
we will not be able to weather a gradual increase in air traffic; hence 
the need for the financial assistance in the short term. We are working 
with Senators from heavily impacted States to seek introduction of 
legislation and passage of relief.
    Thank you for support and we look forward to working with you in 
the coming days.
        Sincerely,
                                         O. Mason Hurst II,
                                                 Vice President and
                                  Associate Deputy General Counsel,
                                            ANC Rental Corporation.

    Prepared Statement of O. Mason Hurst II, ANC Rental Corporation

    Chairman Dorgan and Members of the Subcommittee, my name is Mason 
Hurst, Vice President and Associate Deputy General Counsel of ANC 
Rental Corporation which owns and operates Alamo Rent A Car and 
National Car Rental. I am here speaking to you today on behalf of the 
independent car rental companies that have been impacted by the 
terrible occurrences one month ago yesterday.
    The level of air travel, perhaps more than any other industry, 
directly affects the car rental industry. For example, over 90% of 
ANC's business is derived from airport deplanements.
    The nation has recognized the substantial losses that are being 
incurred by U.S. airlines and the federal government has responded 
appropriately with passage of Public Law 107-42, the Air Transport 
Safety and System Stabilization Act. However, similar losses are being 
incurred by the car rental industry, an industry that is a fundamental 
component in the nation's air transportation system.
    Therefore, Federal assistance is essential to maintain the economic 
viability of both the airline industry and the car rental industry.
    We are pleased that bi-partisan legislation in the House of 
Representatives, H.R. 3055, has been introduced by Representatives Clay 
Shaw and Brad Carson that would provide $1.5 billion in loan guarantees 
for the car rental industry. We are seeking champions in the Senate.
    Let me explain the importance of our business in the transportation 
system.
    Rental cars are an integral part of our nation's transportation 
system. They enable businesspersons to connect on the ground from 
airports to their offices, customers and clients. In essence, they are 
a continuation of the business flight. In addition, rental cars enable 
vacationers to travel throughout the region in which their air travel 
terminated rather than just a single tourist attraction, further 
stimulating the economy.
    Car rental companies are inextricably tied to airlines and are one 
of the only major U.S. industries operating directly on airport 
properties. The companies are uniquely linked; car rentals reservations 
are routinely booked at the same time that airline flights are 
reserved.
    The car rental industry purchased over 1.2 million cars from 
American manufacturers in 2000. For example, an estimated 5% of General 
Motors output is purchased by ANC, and an estimated 3% of Ford's output 
is purchased by Budget, and an estimated 6% of Chrysler's output is 
purchased by Dollar and Thrifty.
    Airports are dependent upon the substantial fees paid by car rental 
companies. In many locations the revenue stream provided to the airport 
by car rental concession fees is second only to those from the 
airlines. Should car rental companies not be able to generate revenue 
for the airports, airlines themselves may have to make these payments. 
Thus, the financial health of the airlines is directly linked to our 
industry.
    Our airports' operating budgets are based upon two broad categories 
of revenue--aviation and non-aviation. If the financial contribution 
received by an airport from non-aviation sources (of which car rental 
is a primary example) is inadequate to meet the needs of the airport, 
the deficit must be made up via one of two sources: (1) the airlines 
under the provisions of a residual cost recovery agreement, or (2) from 
the general funds of the airport itself under a ``compensatory'' 
operating procedure. Approximately one-half of the country's principal 
airports operate under each agreement. Under either arrangement, the 
fact remains that an airport's finances constitute a ``zero-sum'' 
system, resulting in economic burden normally carried by a rental car 
company. This economic burden is shifted either to the airlines or to 
the airport itself in the event that that car rental company cannot or 
does not make the contribution the airport had anticipated.
    Rental car company revenues from ``at airport'' operations are down 
dramatically since September 11. Moreover, most companies are 
estimating that even barring any further disruptions, revenues for the 
next year will be down dramatically. The economic impact of this 
reality has been dramatic, not only for the rental car companies, but 
also for the airports which have relied upon them for revenues. Since 
September 11, the debt instruments of several companies have been 
downgraded, as well as the bonds from all airports in the nation. It is 
essential to the companies, as well as the airports that action be 
taken to restore the markets' confidence in these entities.
    Despite the importance of the rental car industry to the American 
economy, the industry structure is not well positioned for economic 
shock waves, much less the impact of a major terrorist attack. The 
closure of U.S. airports and the subsequent security regulations 
following the attack have and will continue to have a major impact on 
air traffic for the foreseeable future. Some of the effects of the 
catastrophe are as follows:
    Vehicle rentals have plummeted and continue to remain down after 
the terrorist attack a month ago today.
    Capital markets have dried up, particularly for this industry, 
because the finance sources know how closely we are tied to aviation.
    A loss of the rental car industry would likely have a major and 
dramatic effect on the business environment and overall economy of the 
U.S.
    Airport bonds could be forced into default if airports lose 
significant car rental concession revenue. Not only is it common for 
airport general revenue bond issues to reference the revenue stream 
from airports but several airports including for example, Dallas-Ft. 
Worth, Houston and Denver have issued special facility loans to fund 
airport rental facilities with funding for the bonds backed by a per 
rental collection from car rental customers. Also, many major municipal 
projects are tied to special taxes on rental cars such as the San 
Antonio Spur Arena, the Atlanta Hawks Arena, the Convention Center in 
Milwaukee and minor league baseball parks in Phoenix and Tucson. This 
financing stream is also in jeopardy.
    The auto manufacturing market would be severely affected. If car 
rental companies go out of business, not only will those companies 
cease to make fleet purchases from car manufacturers, but also their 
creditors would flood the used car markets with hundreds of thousands 
of nearly new vehicles, further depressing an already strapped new car 
sales market. The volume of major car purchases by car rental companies 
is staggering. For example, ANC alone purchased approximately 300,000 
new cars in 2000.
    As I have stated above, many in the industry, particularly those 
that are independently owned and operated cannot weather the financial 
trauma of this national catastrophe without temporary government 
assistance.
    We, therefore, are requesting that Congress pass legislation that 
would allow our industry to qualify for $1.5 billion in loan guarantees 
modeled after the legislation that was passed for the air carriers a 
few weeks ago.
    Thank you.

    Senator Dorgan. Mr. Hurst, thank you very much. I want to 
thank all of you for your testimony. It represents perspectives 
from different parts of the economy and the travel and tourism 
industry. It is, I suppose, a circumstance where travel is 
particularly elastic in demand, and I was curious, yesterday, 
mid-afternoon, our government, through the FBI, issued a 
warning that credible evidence existed for them to say that 
there was an imminent threat of a terrorist attack somewhere in 
this country or internationally in the next several days.
    That caused a great deal of consternation, I know, in the 
cloakroom of the U.S. Senate when that warning came across the 
screen, and my office has since received a large number of 
calls about, what does that mean and so on. I am just curious, 
Mr. Nelson or Mr. Rosenbluth, have you had any reaction to that 
in the travel industry in just a few hours?
    Mr. Rosenbluth. Absolutely. As a matter of fact, last 
night, following the issuance of the warnings, and watching a 
number of the shows that were talking about not only the 
President's address and press conference with the nation, but 
remarks following it, where a number of people suggested that 
most people will stay home over the weekend, I placed a call to 
our in-route emergency 24-hour service and asked them what kind 
of calls they were getting and they responded that they were 
getting scores of cancellations, where people were canceling 
flights for today and for over the weekend, and this is part of 
the emotional and psychological roller coaster that is going on 
within the travel industry.
    I wanted to respond--we do not have a lot of lobbyists. I 
am here representing travel agencies. I am a rookie at this. 
The only time I have been in Washington, other than last week, 
was to come to the Million Man March, and to come to my 
daughter's soccer game, so I do not have lobbyists. I am 
representing travel agencies, 3,000 of them, that only two are 
publicly held, the rest are family-owned single 
proprietorships. They are not looking for a handout. The loan 
guarantee that has been requested is based on an ability to 
pay, and I think that is absolutely critical. The grants that 
they are looking for are a result of just the business that was 
lost during the 7-day period following September 11 that wiped 
out the profitability of most of those agencies.
    Once again, if the agency community is not there for the 
traveling public, it does not matter what kind of federal 
relief package is going to the airlines. There simply is no 
other infrastructure in place today to get people onto those 
planes. They will sit there parked at the gates, and that is 
not going to help commerce, it is not going to help tourism, it 
is not going to help anybody here, and it is not going to help 
any of the tourism for the states, which are very dependent 
upon it.
    Senator Dorgan. It is the case, I expect, that Mr. 
Marriott, your company, for example, which runs one of the most 
successful hotel chains in history, you are linked to the 
workers at every single level.
    I heard Mr. Rosenbluth speak about having to lay off some 
workers, and he describes his workers in a wonderful way, 
understanding that the company is really the workers in many 
ways, and so the workers who have come today with Mr. Wilhelm, 
having lost their jobs, they are tied directly to all of the 
larger economic questions of economic stimulus, the success of 
our ability to get the economy moving again, to give people 
some feeling of security with respect to travel, and then to 
the other issue dealing with individual needs at a time when 
the economy is in trouble.
    You cannot really just say we will deal with one without 
the other, and so we have a series of things we have to connect 
here, because all of these are linked, and you indicated that 
the hotels are running 30, 40 percent occupancy. Is that across 
the system at this point?
    Mr. Marriott. They are running about 60 percent overall, 
when they should be running 85 percent.
    Senator Dorgan. I guess I was thinking of Mayor Williams 
talking about----
    Mr. Marriott. In Washington they are running in the 
thirties.
    Senator Dorgan. And is there a significant difference here, 
mainland, versus Hawaii?
    Mr. Marriott. Well, Hawaii has been severely impacted.
    Senator Dorgan. The Lieutenant Governor testified that a 
significant difference between cities that are largely host to 
business travel versus destination tourism sites, Las Vegas, 
for example.
    Mr. Marriott. No, they both have been hurt. Orlando has 
been hurt severely, Las Vegas, Hawaii, Florida, South Florida. 
When you see a CNN come and ask a doctor in Florida if it is 
safe to visit South Florida because there is an anthrax 
breakout, you begin to wonder if people in this country have 
lost their mind.
    Senator Dorgan. Mr. Wilhelm, we are going to do a stimulus 
package of some type. We are going to construct a stimulus 
package to try to lift the economy. We have that need, and at 
the same time we have a responsibility to deal with the 
security issues, because if people are afraid to move, 
especially in a service economy, and afraid to travel, that is 
a lodestone on the economy, so we are going to do a lot of 
these things.
    I assume that your organization believes that uplifting the 
economy is going to be helpful to all of your workers, but even 
as we do that, if we simply try to elevate the economy, the 
assumption is that you believe that it will have a trickle-down 
effect maybe at some point. We also have to concurrently 
provide some help for laid-off workers. Do you agree with that?
    Mr. Wilhelm. Yes, sir, absolutely. I believe quite strongly 
that we need to do both ends of that equation. As I said in my 
testimony, our union strongly supports the kind of proposal Mr. 
Marriott and others have put forward, because ultimately we 
need to stimulate demand in our industry in order for the jobs 
to return, but at the same time, as you indicate, and as the 
stories of these workers who are here indicate, there is a 
genuine emergency.
    We do not have a safety net in this country that is 
remotely up to the challenge of this unprecedented set of 
events, so I believe, as you indicate, that we need to do both 
of those things, in addition, as you say, to addressing the 
security issues so that people will feel more comfortable about 
traveling, and I think it is fortunate that our government has 
put itself over the last decade or so into a sound fiscal 
position.
    To me it is like a family that saves for a rainy day. Well, 
this is not a rainy day, this is a deluge, and I believe it is 
appropriate for the government to do whatever is necessary on a 
temporary, time-limited basis in order not to bail out 
companies and workers, but to stimulate demand in the industry, 
and to extend a helping hand to the workers who did what we 
asked them to do.
    We said, in this country, from now on what you do every day 
is, you go to work, and if you are a single parent, you have 
got to go to work anyway, and I think in the long run that is a 
good thing, but we cannot forsake these folks when, through no 
fault of their own, having followed what the society told them, 
they now have no opportunity to do that work, so I agree with 
you that we need to do both ends of this equation, and if we do 
not, I think the impact on our society is going to be very 
long-lasting, and it is not just going to be on the employees 
in our industry and their families, it is going to be on the 
communities they live in, and I think, as I said in my 
testimony I think it is going to be a very damaging blow to the 
concept that if you work hard and show up to work every day and 
do what you are asked to do in this country, that your family 
will be OK.
    Senator Dorgan. The point you made in your testimony needs 
repeating, and that is, we did welfare reform and a range of 
other reforms at a time when this economy was expanding, in a 
very substantial way providing opportunities for people to get 
trained and go to work. That is changing quickly, and I think 
poses a series of challenges for us, and I appreciate that 
point as we try to deal with both ends of this difficult 
problem.
    Let me just ask Mr. Rosenbluth and Ms. Nelson, because you 
both run some of the largest travel agencies in the world, what 
if nothing happens at the moment? What if we did the airline 
piece? We did the security piece last evening, but we really do 
not get much agreement on the stimulus and so nothing much 
happens, and we kind of limp along here for the next month. 
Tell me the consequences from your perspective, Ms. Nelson.
    Ms. Nelson. In the first place, we serve, as does 
Rosenbluth and American Express, the corporate travel industry. 
Corporations at the present time have either eliminated 
business travel, or are traveling on an as-needs basis only. 
This accounts for well over 50 percent of the hotel rooms in 
the country. It also accounts for over 50 percent of the white 
tablecloth restaurant business, and I do not know but what 
exactly the percent of the car rental business.
    We need a story. We need to be able to go back to those 
corporations--I salute you for what has happened in terms of 
last evening's steps in terms of airline security. That is 
absolutely essential. I also recognize what Senator Smith spoke 
about, the fact that the airports right now are a bit ominous, 
but we need time.
    This is about time, because we are a great nation. We will 
figure out how to secure the airports, and we actually in the 
travel agency business, when we ticket people and can perhaps 
be a part of a process, working with corporations and 
individuals who travel regularly, to find some ways to improve 
that process and facilitate regular travelers who are 
recognized and known, differentiate, so that we can reduce some 
of that congestion, but we need time.
    So it will literally, I believe, change the infrastructure 
of this nation in such a way that to recover would be very 
difficult. It not only will put--the first step is putting 
hotels--we own 600, or under our flags we have 600 hotels. We 
do not own them all, but many of them are owned, in fact, by 
franchisees. Not only is new hotel business, or new hotel 
building being slowed and halted, but there are airport hotels 
that will go out of business, there are airport restaurants 
going out of business. It will take a long time for this nation 
to reabsorb that.
    We went through the resolution trust time, where it took a 
long time to get these properties back into the system and 
functioning, and contributing. I think that some kind of stop-
gap and bridge is absolutely essential, and I like the double 
approach, taking care of those who we have had to let go, 
because we cannot compete. We are actually incentivizing people 
to travel at less than it cost us to provide those services. 
That is a death wish.
    I mean, we are incentivized, and we are doing all we can to 
provide pricing that will not allow us to stay in business, and 
so it could not be a more severe situation.
    Senator Dorgan. Mr. Rosenbluth.
    Mr. Rosenbluth. Senators, once again I speak not on behalf 
of Rosenbluth International per se, but the 30,000 travel 
agencies that make up the ranks of 300,000 people who take 
airline and hotel and car rental reservations every day. I can 
certainly understand where there might be some disagreement 
when it comes to the airline relief package. However, to 
protect that investment, that was made for the airlines. You 
need also to protect the viability of the agency industry, 
because without it the airlines simply will not get off the 
ground.
    There is no other infrastructure in place in America today 
to take those reservations and issue those tickets. These are 
the same 300,000 people who spent days and nights on the phone 
with hundreds of thousands of stranded Americans throughout the 
country and overseas, getting them back home, answering their 
questions as to which airplanes were flying, what schedule 
changes, what airports have opened.
    The airlines could not handle that capacity. They do not 
have that capacity today. They have closed their reservation 
centers for the most part. Without the travel agency community 
and without something being done for the members of it, 
airlines once again will not be able to fly, and that will have 
an absolutely dramatic effect.
    I am not asking on behalf of the travel agency industry for 
shareholders to benefit. There are no shareholders. There are 
only two publicly held corporations, or publicly held travel 
agencies in the United States. Every other one is privately 
held, family-owned. These are made up of people who work day 
and night on behalf of the public in an unbiased way, providing 
information. They did so for one week solid without any revenue 
whatsoever, and all I am asking for on behalf of those agencies 
is to get them back on their feet, because without them there 
will be hundreds of thousands of additional losses.
    I have talked to many CFO's and CEO's of agencies of all 
sizes. They have gone to their banks, the banks have said, 
travel-related industries are kind of taboo right now. You 
cannot get the loans and lines extended if you are in the 
travel industry for the most part, and as a result of that, 
there is only one other place to turn for an infusion, and that 
is the government, and I am vitally concerned about the 
commerce of our company if corporations and people who travel 
on vacations cannot get around, and that is why I believe it is 
critically important that we do something as immediately as 
possible for those agencies, because we are talking weeks and 
months, and in some cases they already have closed.
    I have taken many an e-mail, many a call from agencies 
saying, I have already shut down. It is a very people-intensive 
business. They do not have anything to collateralize. They do 
not have planes. They do not have buildings. All they have are 
Americans that are working hard every day to get other 
Americans around this country to facilitate commerce and 
tourism, and keeping this country alive, and not falling prey 
to the terrorist attacks of September 11.
    Thank you.
    Senator Dorgan. Senator Fitzgerald.
    Senator Fitzgerald. I have a question for both Mr. 
Rosenbluth and Ms. Nelson. The online travel agency Orbitz is 
now providing pretty stiff competition for the 25,000 bricks 
and mortars travel agencies in the country. Do bricks and 
mortars, mom and pop travel agencies think it is unfair that 
Orbitz just now has a huge infusion of Government cash because 
it is owned by the Nation's five airlines? Is that unfair to 
those mom and pops that they have to compete with Orbitz, which 
is subsidized by the Federal Government? What do you think 
about that?
    Ms. Nelson. I think you have answered your own question, 
but one thing that I think we would all want to emphasize, I 
mean, obviously we are trying to be as positive as we can be, 
and we are trying to do what we can do and what we can control. 
That particular piece of legislation has been passed, and it 
has kept the airlines in business.
    Senator Fitzgerald. How could Orbitz get money and you will 
not?
    Ms. Nelson. We came to ask those questions, but what we are 
asking right now, I do not want people to be confused that 
because we are mom and pop agencies, some of them, that we are 
not using the most sophisticated electronic methods for serving 
our customers, because we are, so I do not want for some 
reason, and I do not think Hal would want anyone to think that 
any of us, whether it is our hotels, or our restaurants, or our 
small agencies, that we are not applying technology to improve 
the efficiency and effectiveness of the process.
    We believe that this country is built on a fair market. I 
think that it is possible that if, indeed, it becomes unfair, 
that will undermine not only people's interests in working, but 
people's interest in innovating and investing, and that would 
be a serious problem with much longer implications than what we 
are facing now.
    Mr. Rosenbluth. Senator Fitzgerald, this table here 
invented e-commerce. For 27 years we have been doing business 
completely electronically. Every transaction that takes place 
between our companies and the car rental and hotel and airline 
industry is completely electronic. We provide electronic 
procurement systems to corporations in order to buy better so 
that they in fact have an advantage over an Orbitz. We provide 
optimal buying strategies, both of our companies, for 
corporations and the public to be able to get a better deal 
than they can get from an online agency, or whatever you would 
refer to Orbitz, since it is owned by the airlines.
    I think it is critical that you look at what the airlines 
do with their dollars not to create undue competition, or 
unfair competition for the travel agency community. I think 
that is something that needs looking into.
    But what Marilyn said is absolutely true. We are working 
with the most sophisticated technology databases that will pull 
up information databases, that pull up information that has 
helped the FBI track down the money stream of some of the 
hijackers, where they came from, where they went to, where they 
flew before. These are very sophisticated companies, and we all 
compete very nicely with the Orbitzes of the world.
    Senator Dorgan. Senator Inouye.
    Senator Inouye. First, Mr. Chairman, I want to commend you 
for gathering these five leaders of the industry. My only 
regret is that my colleagues are not here, because we should 
focus the stimulus bill on the industries that they represent.
    As pointed out by some of us here, it is not just airlines. 
Yes, that is an important part of the industry, but without 
you, I do not know if we can do it, and I do not know how you 
did it, but this is the most impressive and articulate group I 
have ever had the privilege of listening to in all the years I 
have been here, and I have been here for a long time.
    I have been here long enough to remember the glorious days 
of the Hot Shoppes Drive-in on Connecticut Avenue. I was at the 
opening of the J. W. Marriott Hotel, and this is a symbol of 
can-doism of America. This is a success story of America, so we 
are going to do everything to see that this is not the end of 
your success story.
    I have learned a lot from this panel. I had no idea that 
the travel agencies sold 80 percent of all the reservations 
tickets for airlines. I do not think America knows that. And I 
had no idea about the impact that the car rental business will 
have on General Motors, that without you they may go out of 
business. Now, these are the facts that I am sorry my 
colleagues may not know unless we take it upon ourselves to 
publicize this.
    Mr. Wilhelm, I congratulate you for bringing to our 
attention the impact your industry, your union has on taking 
people out of welfare. We do not realize what it takes to do 
this, and the thing that really impresses me, and I hope 
America can see this, is the way all of you are working 
together. This does not happen all the time, but here we have 
five people who represent the most important segment of our 
industry working together, and I think America should see this.
    Although it is important, we have only one camera here. We 
have had hearings here of less important matters and we have 
had this place filled with cameras. I am really sorry that my 
colleagues are not here. They should have been here, and I will 
do my best to see that the transcript of this hearing is shared 
with my colleagues.
    Mr. Chairman, I congratulate you.
    Senator Dorgan. Senator Inouye, thank you very much.
    As all of us know, many of our colleagues are traveling 
today, on Friday, and Senator Inouye and I are privileged to 
participate in this entire hearing, and we certainly will make 
available all of the information of this hearing to our 
colleagues. This is a step, just one step, but an important 
step in working to try to find ways on a bipartisan basis to 
pass legislation that we think will in various methods and by 
various means provide a lift to this country's economy.
    This industry was hit very hard. The terrorists who 
murdered thousands of Americans not only committed those 
heinous acts of murder on September 11, they also shot an arrow 
directly into the heart of the American economy, and we are 
feeling significant effects of that. The question for all of us 
in public policy and in the private sector is, what do we do 
together to try to overcome this shock to our economic system? 
We were already going through a contraction phase of the 
economy. I studied economics, and actually taught some 
economics in college for a while, and was able to overcome 
that, however.
    [Laughter.]
    Senator Dorgan. But when I taught economics, I taught, as 
all instructors did, that there is an inevitable business cycle 
of expansion and contraction in our economy. We were going 
through a contraction phase, with a weak economy, on September 
10, and September 11 dealt, as my colleague said, a body blow 
to this economy, so the question is, what do we do together? 
The ideas discussed here today by one segment of the economy, 
but a segment that was perhaps hit more than others, will 
contribute to our ability to make those judgments.
    Senator Inouye.
    Senator Inouye. Mr. Chairman, the Congress has made many 
attempts to respond to September 11. We have done our best to 
strengthen our military, our intelligence community, our 
airlines, but to me the most important response and the most 
powerful response we can make to the tragedy of September 11 is 
the stimulus bill, and this panel represents that stimulus 
bill, and I am really sorry my colleagues are not here.
    Senator Dorgan. Senator Inouye, let me again, as we 
conclude, say that I expect that the folks who accompanied Mr. 
Wilhelm today who have lost their jobs and who provided such 
gripping evidence of the human cost and the human toll here as 
a result of a weak economy and the terrorist attack of 
September 11, I expect that none of them, the person who is 
with us from Chicago would have on the morning of September 11 
watching this terrible tragedy unfold, have expected that, 
well, there goes my job in Chicago, or someone in Las Vegas, or 
someone in Boston, having watched this horrible act of 
terrorism, would not likely have said, well, there goes my job, 
because people on that morning would not necessarily have felt 
the connection of what this means to the economy.
    It meant first and foremost that September 11 was a massive 
tragedy for so many Americans, and we all grieve for them, but 
it meant much more than that. It meant that it cut a hole in 
this economy, and it meant that all of us have to think a 
little differently now about how we try to provide a lift to 
this economy, and as I indicated when I started, we are going 
to have to do this together.
    Last evening, we worked until midnight here in the U.S. 
Senate. We passed an antiterrorism bill, and we passed an 
aviation security bill.
    Senator Kyl is one voice, an important voice who, along 
with Senator Miller, has introduced a piece of legislation, and 
I intend to be a cosponsor of that legislation as well. It is 
one idea. There will be other ideas that develop, including 
loan guarantees, for example, and in the area of stimulus, the 
stimulus package that the President talked about, and that we 
talked about.
    We have to do these things. We have to do them right, but 
we have to do them soon, because this is not a circumstance 
where we can sit around and thumb our suspenders and whittle 
away some time. This is a time for action, and as I said 
earlier in this hearing, I would much prefer, if we make a 
mistake, to have made a mistake by taking action than to make a 
mistake by doing nothing.
    It is very important that we recognize what is happening to 
the Asian economies, and what is happening in the global 
economy, and especially what has happened to us as a result of 
September 11 and the interconnection of all of that.
    So let me thank you, Senator Inouye, for being here for the 
entire hearing, and I pledge to those who have come as 
witnesses today to work with Senator Inouye and our colleagues 
to find common ground on legislation to take, we hope, 
effective action to respond to all of these issues.
    And let me also say thanks to those of you who came today 
from the union, accompanying Mr. Wilhelm. It is not easy, I 
expect, to come to a committee room in Congress and stand up 
and have someone say publicly that you lost your job. You lost 
your job, but it is not your fault, and Congress intends to do 
everything humanly possible to restore these jobs and restore 
the hope that you might have good-paying jobs that give you an 
opportunity for a good future and the optimism that this 
country will grow and expand and provide opportunity for you 
and for your families again.
    So thanks for being here and being willing to stand up and 
be a part of this hearing, and I hope as a result of your trip, 
be a part of a solution that will be divined by this Congress 
to respond to all of these issues. Your trip will make a 
difference.
    This hearing is adjourned.
    [Whereupon, at 12:08 p.m., the Subcommittee adjourned.]

                            A P P E N D I X

            Prepared Statement of Hon. Robert A. Underwood, 
                     U.S. Representative from Guam

    I am pleased to submit testimony on the state of the tourism 
industry in my home district of Guam since the September 11 attack on 
our nation. In the aftermath of this catastrophic event there has been 
much focus on the financial condition of our nation's commercial 
airline industry, and while the stability and continuity within the 
industry is of the utmost importance, we must also look to secure and 
stabilize other sectors of our economy that are dependent upon the 
airline industry and which are on the verge of a crisis if we do not 
act now. This hearing is timely as the work of this committee is 
important to ensure that the needs of the travel and tourism industry 
is addressed.
    It is critical to assist our businesses and our workers affected in 
the tourist industry during this national crisis. As Congress considers 
policy to address these issues, it is equally important that federal 
policy makers include the U.S. territories 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. 
Furthermore, unlike the U.S. mainland, Guam's economy is minimally 
diversified and heavily dependent upon tourism.
    On Guam, 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 mainland United States, Guam is heavily dependent on 
tourists from Asia. 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.
    I implore the members of this Subcommittee not to forget Guam and 
the other U.S. territories as you work to consider possible legislation 
to assist the travel and tourism industry. The impact of the September 
11 attack has also been felt in our region, and since then we have been 
left out of many of the discussions on relief initiatives to this vital 
industry. On October 16th the Travel Industry Association of America, 
in conjunction with the U.S. Department of Transportation, Bureau of 
Transportation Statistics, will be releasing a report on the economic 
impact on travel and tourism in the United States for federal policy 
makers. This report does not include Guam or any of the other U.S. 
territories. Neither does their ``See America'' campaign. Most 
recently, the Post Master General 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.
    The lesson to be learned is that we in the territories seem to have 
to fend for ourselves over and over again. This is not right. With our 
economies heavily dependent on tourism, the U.S. territories need to be 
a part of any initiative to help the tourist industry. Please do not 
forget the territories.
                                 ______
                                 
                                Travel Business Roundtable,
                                 Washington, D.C., October 5, 2001.

Hon. Byron Dorgan,
United States Senate,
Washington, D.C.

Dear Senator Dorgan:

    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.*
---------------------------------------------------------------------------
    * The information referred to was not available at the time this 
hearing went to press.
---------------------------------------------------------------------------
    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.
                                 ______
                                 
                                Travel Business Roundtable,
                                Washington, D.C., October 10, 2001.

Hon. Byron L. Dorgan,
United States Senate,
Washington, D.C.

Dear Senator Dorgan:
    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 for focusing on the plight of the travel and tourism industry in 
your hearing this week in the Senate Commerce Subcommittee on Consumer 
Affairs, Foreign Commerce and Tourism.
    As you are well aware, 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.
    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 official record.
        Sincerely,
                                            Jonathan Tisch,
                                                          Chairman,
                                        Travel Business Roundtable.

                                                        Attachments
 Before and After: The Economics of the U.S. Travel and Tourism in the 
                       Wake of September 11, 2001
    Travel and tourism is one of our nation's most important and 
dynamic industries. From hotels to car rental agencies, theme parks and 
resorts to credit card companies, family-run restaurants to large 
convention centers, the industry is far more than the sum of its very 
diverse parts.
    Consider these impressive facts about the travel and tourism in the 
United States:

   In the last decade, travel and tourism has emerged as 
        America's second largest services export and the third largest 
        retail sales industry.
    (Tourism Industries, U.S. Dept. of Commerce; Travel Industry 
        Association of America)

   The industry generated a balance of trade surplus of $17 
        billion and is a vital job-creation engine for our nation's 
        economy.
    (Tourism Industries, U.S. Dept. of Commerce; Travel Industry 
        Association of America)

   Travel and tourism is expected to have a direct and indirect 
        domestic economic impact of more than $582 billion in 2000.
    (Tourism Industries, U.S. Dept. of Commerce)

   Global tourism generated $3.5 trillion in economic activity 
        in 2000, representing 12 percent of total economic activity.
    (Travel Industry World 2000 Yearbook)

   International visitors spent an estimated $106.5 billion in 
        the U.S. in 2000.
    (Tourism Industries, U.S. Dept. of Commerce)

   More than 17 million Americans are employed in travel and 
        tourism-related jobs, with an annual payroll of $159 billion.
    (Tourism Industries, U.S. Dept. of Commerce; Travel Industry 
        Association of America)

   The industry is the first, second or third largest industry 
        in 28 states and the District of Columbia.
    (Tourism Industries, U.S. Dept. of Commerce; Travel Industry 
        Association of America)

   It is estimated that in 2000, travel and tourism generated 
        $99.5 billion in tax revenue for federal, state and local 
        governments.
    (Tourism Industries, U.S. Dept. of Commerce; Travel Industry 
        Association of America)

    The unprecedented terrorist attacks on New York City and 
Washington, D.C. are already threatening the vitality and strength of 
the domestic and international tourism industry. Travel and tourism, 
long a shining star in a static economy, needs policy focus more than 
ever at this crucial time of the nation's healing and economic growth.
    Below are some examples of the reverberations the industry is 
feeling around the country in the wake of the September 11 attacks:

   Analysts predict tourism in the U.S. could drop by nearly 
        one-third in the coming months.
   In Florida, overall tourist spending has fallen by one-
        third, or $20 million per day, since the attacks. Washington, 
        D.C. officials estimate they could lose $80 million in sales 
        and income taxes in the next six months if tourists do not 
        return in large numbers. Las Vegas officials estimate the city 
        is losing $30 million per day.

   U.S. airlines lost an estimated total of $5 billion in the 
        days they remained grounded following the attacks, and continue 
        to lose millions of dollars a day. Even after drastically 
        reducing their scheduled flights, on average their planes are 
        less than 50 percent full. More than 130,000 airline employees 
        have been laid off as a result, and one airline has folded.

   Hotels around the country are reporting reservation 
        cancellations and severely reduced occupancy rates. Industry 
        experts predict that, overall, hotels could lose $2 billion in 
        room revenue and other associated income. Moreover, a 
        projection by PricewaterhouseCoopers shows revenue per room 
        declining between 3.5 percent and 5 percent this year--the 
        largest decrease in room revenue in 33 years.

    --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;
          (Los Angeles Times, 10/6/01)

    --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;
          (The Washington Post, 09/19/01)

    --In Central Florida, many hotels are at less than 25 percent 
            capacity, where they would normally more than 50 percent 
            full;
          (The Washington Post, 09/19/01; Smith Travel Research)

    --In Seattle, where downtown hotels are typically 90 percent 
            occupied in September, occupancy is as low as 30 percent; 
            and
          (Associated Press, 09/25/01)

    --In Hawaii, where many hotels normally have 80 to 85 percent 
            occupancy, many occupancy rates are at 40 percent or lower.
          (Associated Press, 09/19/01)

   The International Association of Convention and Visitors 
        Bureaus reports that 25 percent of conventions and meetings 
        that were scheduled before the end of this year have been 
        cancelled.
    (International Association of Convention and Visitors Bureaus)

    --In Las Vegas, more than 50,000 conventioneers cancelled in the 
            week following the attack alone, representing a $61.3 
            million loss for the city in non-gaming revenues.
          (Associated Press, 09/19/01)

    --In Boston, more than 10,000 conventioneers canceled in the days 
            following the attacks.
          (Greater Boston Convention and Visitors Bureau)

    --In New Orleans, four upcoming conventions were immediately 
            cancelled in the wake of the attacks, at an estimated cost 
            of $37 million to the city.
          (Louisiana Department of Culture, Recreation and Tourism)

   It is predicted that hotel construction, which reached 
        105,000 rooms this year, will drop to half that level by 2003.
    (Washington Post, 9/16/01)

   The American Society of Travel Agents is reporting that 
        travel agencies are losing about $51 million per day in sales.
    (American Society of Travel Agents)

   The Business Travel Coalition projects that U.S. corporate 
        travel in January 2002 will be about half what it was in 
        January 2001.
    (The Business Travel Coalition)
                                 ______
                                 
                                        Ungaretti & Harris,
                                                  October 11, 2001.
Hon. Byron Dorgan,
United States Senate,
Washington, D.C.

Dear Senator Dorgan:

    Attached is a statement from Brent Garback, Chairman of Total 
Travel Management, Inc., on behalf of RADIUS Travel for the hearing on 
Friday, Oct. 12, 2001, before the Commerce, Science, and Transportation 
Consumer Affairs, Foreign Commerce and Tourism Subcommittee of the 
Senate Commerce Committee on state of the tourism industry. It is an 
important hearing for all involved in the travel industry.
    We would appreciate it if you would place the statement in the 
hearing record.
    In the statement, RADIUS asks that the following two actions be 
taken to preserve the industry:

        1. All airline fares (including Internet-only fares) should be 
        available to all channels of distribution. Give the consumer 
        choice; let the consumer decide how they would like to buy 
        their travel.

        2. Restoring a 10% commission level with $50 domestic and $100 
        international caps on all tickets issued through travel 
        agencies for the duration of the war on terrorism.

    The proposal to restore the commission caps would only be in place 
during the war on terrorism. Both of these proposals can be implemented 
without new legislation.
    On behalf of RADIUS Travel, we thank you for addressing these 
critical issues and for giving us the opportunity to present this 
statement. Please let us know if you need any additional information on 
these issues.
        Sincerely,
                                        Edward P. Faberman.
Attachment
                                 ______
                                 
                                                    RADIUS,
                              Bethesda, Maryland, October 12, 2001.

Hon. Byron Dorgan,
United States Senate,
Washington, D.C.

Dear Senator Dorgan:

    I am submitting this written statement to the Commerce, Science, 
and Transportation Consumer Affairs, Foreign Commerce and Tourism 
Subcommittee of the Senate Commerce Committee on behalf of RADIUS--the 
global travel company, and other travel companies as both a shareholder 
and a board member of RADIUS. RADIUS is one of the country's largest 
travel management companies. RADIUS has 9,500 employees in shareholder 
agencies in 45 states. As a result of the tragic events of September 
11, we have as a group furloughed 2,000 of our fellow travel 
representatives, many of whom have been in this industry since they 
started working. Many of these furloughed individuals are from small 
towns.
    We appreciate the significant attention the committee is giving the 
state and well-being of the travel and tourism industry. It is an 
important hearing for all involved in the travel industry because it 
demonstrates your committee's support of the travel and tourism as we 
endeavor to restore consumer confidence in travel, the vitality of the 
industry, and the health and safety of our country.
    RADIUS and our shareholder agencies supported the financial relief 
provided to the airlines by Congress and the President. The airline 
industry is definitely an engine of commerce for our country and, as a 
first step, getting the fleet back into the air and protecting the 
short-term viability of the airline industry was vital.
    Unfortunately, the events of September 11, 2001 have significantly 
impacted all of us involved in the travel industry, particularly travel 
agencies. Travel agencies, which are the legal ``agents'' of the 
airlines, represent the consumer. They distribute 75% of airline 
inventory--or three out of every four airline tickets. American 
consumers and corporations prefer travel agents because they provide 
consumers and corporations with convenient, unbiased fare and schedule 
comparisons, seat selection, destination consulting, passport and visa 
services, safety and security advice, information on travel health 
requirements, insurance, travel and entertainment management reports, 
and even consumer advocacy.
    The importance of the travel agent's role in finding the best fares 
and accommodations was illustrated in a story in the October 8, 2001 
USA Today that noted that ``William McCormick says the cheapest round-
trip fare he could find online from Greensboro, NC to Dallas was 
$1,600. A travel agent found one for $631.00.'' This is what we do 
every day.
    If travel agencies continue to face financial turmoil, consumers, 
businesses, and communities will suffer. As one of the nation's 
strongest advocates for increased travel options and the relationship 
between state and community economic development and available travel 
options, you know the importance of maintaining all parts of the travel 
industry.
    In order to help preserve our part of the industry, RADIUS asks 
that the following two actions be taken:

    1. Give the American consumer a choice--all airline fares should 
be available to all channels of distribution

      All airline fares (including internet-only fares) should be 
available to all channels of distribution. Give the consumer choice; 
let the consumer decide how they would like to buy their travel. Travel 
agencies are the preferred channel of distribution for airline tickets 
to the American consumer and corporations. Travel agents sell 75% of 
all airline tickets, 95% of all cruises, 90% of all tours and packages, 
40% of all car rentals and about 25% of all hotels (source--ASTA).

      One-reason consumers prefer travel agencies are that we 
represent the only practical consumer protection. How many letters has 
your office received from constituents that have registered letters of 
complaint with the airlines, the FAA, their Attorney General and 
yourself? The consumer understands that they have very little ability 
to resolve matters of dispute that arise with the airlines. Their 
selection of a travel agency is based upon our ability to help 
arbitrate and resolve consumer affairs issues. This does not make us 
popular with the airlines. However, this does represent an essential 
consumer service.

      Further, we are the ``shopper'' for the consumer, even when 
compared to the various automated/internet reservation systems on 
average travel agents offer fares that are $90 less than even when a 
traveler spends their time and effort ``surfing'' the Internet 
(source--Topaz International).

      Moreover, when flights are canceled due to bad weather or 
mechanical problems, most travelers call their travel agent instead of 
waiting in long lines at airline counters. We are able to present the 
consumer with options, which are convenient and cost effective, for 
them not for the airline. Many more of our customers since September 11 
now seek our advice, wanting to know when we ``feel that it will be 
safe to travel'' and ``which destinations will be the safest''. One 
could argue that our newest role is that of crisis management and 
security advisor.

      Without travel agencies, people will continue to be afraid to 
travel not only because of the recent terrorist acts but also due to 
reduced service levels in reservation processing. Airlines offer poor 
en-route traveler assistance and certainly do not represent one-stop 
access to all segments of the travel industry. Today, not all fares are 
accessible to all parties. Americans without Internet access should not 
be denied airfares by airlines. Fair accessibility to all airfare is 
the first pro-consumer step that Congress can demand. We ask that all 
published fares be made available to travel agencies to market and 
sell.

    2. Institute a 10% but capped commission level during the war on 
terrorism

      Restoring a 10% commission level with $50 domestic and $100 
international caps on all tickets issued through travel agencies for 
the duration of the war on terrorism can be effected without new 
legislation. Airlines have reduced commissions six times since 1995 
with the most recent commission cut occurring in August of this year. 
American consumers and corporations view these actions as back-door 
price increases. When those cuts were made, fares did not drop!

      We propose a pro-employment program, which reinstates a 10% 
commission level, capped at $50 domestic and $100 international caps on 
all tickets issued through travel agencies. This will enable our travel 
agencies to keep their doors open and provide the services that 
consumers and corporations want. For example, on a domestic ticket of 
$600, agencies would make $50 to cover their costs and make a small 
profit. This commission level is below what carriers used to pay travel 
agencies. Considering the amount of federal funds being paid to the 
airlines under the Airline Stabilization Act, this is a negligible 
amount in total.

      More importantly, this will help build traffic and tourism. This 
is a temporary measure that would disappear after the ``war on 
Terrorism'' is completed. This small commission increase could be 
quickly implemented with the cooperation of the airlines with no impact 
on the federal treasury.

    Both the Department of Transportation and the Airline Review Board 
that will be facilitating the loan guarantees could implement both of 
these proposals. Hopefully, this will not affect the necessary 
cooperation. We hope that the Committee will urge the Department to 
immediately take these steps.
    The majority of travel agencies are small, independently owned 
companies, 55% of agencies have an annual income of $2 million or less. 
A large proportion of travel agents (85%) are women and minority 
employees. RADIUS agencies are middle-sized businesses that employ over 
two hundred people, on average. Unfortunately, that makes us too big to 
derive any assistance from the Small Business Administration or the 
newly introduced ``American Small Business Emergency Relief and 
Recovery Act of 2001.'' At the same time, we are too small to have any 
access to the capital markets. Travel agencies exist in a business with 
razor thin margins but have helped create meaningful employment for 
local citizens across the nation who provide valuable services to 
consumers and corporations. As you know, each job lost will ultimately 
create unemployment for 2.5 additional workers! The cascading effect of 
layoffs and closures in the travel agency industry will clearly roll 
through the entire economy.
    RADIUS is supportive of the positions advocated by other travel 
agency groups. We urge your committee to continue its review of the 
situation and provide the guidance and measures necessary to restore 
consumer confidence and improve the health of all the segments of the 
strategically vital travel and tourism industry.
        Respectfully submitted,
                                          Brent J. Garback,
                                               RADIUS Board Member,
                                 Chairman, Total Travel Management.
                                 ______
                                 
                                 The Secretary of Commerce,
                                Washington, D.C., October 10, 2001.

Hon. Barbara Boxer,
United State Senate,
Washington, D.C.

Dear Senator Boxer:

    Thank you for your letter regarding the issue of travel and 
tourism. We appreciate your efforts to help revitalize this important 
industry. In light of the impact the attacks have had on the industry, 
it is important now to ensure that measures are implemented to restore 
consumer confidence in travel and in this economy.
    While safety and security, of course, are of utmost importance, 
preserving our citizens' ability and freedom to travel is also key. I 
fully recognize the strength and breadth of the travel and tourism 
industry's contribution to the U.S. economy. That sector alone 
contributes nearly 5 percent to the gross domestic product, generating 
over $578 billion in revenues, supporting over 19 million jobs, and 
providing a $14 billion trade surplus for the country. In addition, 95 
percent of the businesses in travel and tourism are small- to medium-
sized companies. It is important to take immediate measures to help 
ensure their viability. On September 25, I hosted a roundtable with 14 
Chief Executive Officers (CEOs) from the travel and tourism industry. 
During that session, we discussed various issues ranging from the 
extent of the damage to the industry to recommendations for the U.S. 
Government's involvement in revitalizing this vital sector of our 
economy. I later spoke directly with representatives from the 
restaurant industry, who conveyed their concerns and sought guidance 
for a government role.
    As a result of the CEO roundtable, we are considering several 
immediate steps, keeping in mind that our efforts must be prioritized, 
effective, and realistic. First, we are examining the creation of an 
interagency task force to coordinate federal policies and programs 
related to the travel and tourism industry. One possible option, which 
you have also proposed, is the revival of the Tourism Policy Council, 
which had a similar mandate when it was active a few years ago. This 
Council could be an important forum to coordinate and discuss the 
impact of new and existing agency regulations, policies, and other 
measures on travel and tourism.
    Second, we are also exploring the establishment of a small task 
force of representatives from the private sector. The purpose of this 
group would be to coordinate and implement comprehensive strategies to 
boost consumer confidence and public relations efforts. They would also 
help with the collection, assessment, and dissemination of current data 
to assist in the recovery efforts.
    Finally, I am asking the Commerce Department's field offices across 
the United States and overseas to monitor the impact of these events on 
international travel to the United States, including the perceptions of 
travel safety in the United States, and to raise travel and tourism as 
a priority sector in their portfolios.
    I have asked the Department's Assistant Secretary for Trade 
Development, Linda M. Conlin, who oversees our Office of Tourism 
Industries, to fully explore these options and to strengthen our 
communications with key travel and tourism organizations and companies.
    If you have any further questions, please feel free to contact me 
or have your staff contact Brenda Becker, Assistant Secretary for 
Legislative and Intergovernmental Affairs.
        Warm regards,
                                           Donald L. Evans.
                                 ______
                                 
                                                September 26, 2001.

Hon. Don Evans,
Secretary,
Department of Commerce,
Washington, D.C.

Dear Mr. Secretary:

    I am writing to follow-up on my suggestion that we put into place a 
Travel and Tourism Promotion Bureau within the Department of Commerce. 
I want to again express my interest in working with you to assist the 
travel and tourism industry in the wake of the September 11, 2001 
terrorist attacks on the United States.
    I am concerned that those attacks have shaken consumer confidence 
to a degree that threatens to decimate jobs in travel and tourism 
related sectors. As you know, the travel and tourism industry is a 
source of more than a million jobs in California and more than 17 
million jobs nationwide.
    As we discussed, I will introduce legislation to establish a 
temporary Travel and Tourism Promotion Bureau within the Department of 
Commerce. I hope that you will support this proposal.
    The two-year mission of the Bureau would be to help restore 
consumer confidence in travel and tourism through public service 
announcements and advertising designed in coordination with industry 
and workers. Funds will be provided for the Bureau to promote tourism 
in a number of ways, including promoting the benefits of the new safety 
initiatives the airline industry and government will have initiated or 
is in the process of initiating.
    I believe that if the public knows that their government is working 
with industry and its employees to secure their safety, then their 
confidence in traveling will be restored relatively quickly. I would be 
happy to discuss with you any other initiatives you think such a Bureau 
could undertake.
    I look forward to working with you on this initiative and hearing 
any feedback you might have.
        Sincerely,
                                             Barbara Boxer,
                                             United States Senator.
                                 ______
                                 
     Prepared Statement of The American Hotel & Lodging Association
    First and foremost, we would like to thank you for your leadership 
during our national emergency. It has been gratifying and inspiring to 
see Members of Congress from both chambers and both sides of the aisle 
come together for the good of our country.
    On behalf of the American Hotel & Lodging Association (AH&LA) and 
its 13,000 members, we would like to offer some suggestions to help our 
industry, our economy, and our country recover from the barbarous 
attacks of September 11.
    The lodging industry is a vital component of the U.S. economy. The 
industry is composed of 53,500 properties with 4.1 million rooms 
located in every state and congressional district across the country. 
In 2000, the tourism sector directly supported more than 7.8 million 
jobs and directly or indirectly employed one of every seven Americans. 
Also in 2000, the tourism sector paid $171.5 billion in travel-related 
wages and salaries and $99.5 billion in federal, state, and local 
taxes.
    Smith Travel Research, an independent research firm, estimates that 
the lodging industry lost $700 million in revenue in the 10-day period 
following the terrorist attacks. From September 12-18, lodging 
properties lost $70 million a day, and from September 19-24, they lost 
$40 million a day. Although we are currently seeing occupancy rates 
slowly climbing in some sectors of the industry and in certain regions 
of the country, the overall negative economic impact of the September 
11 attacks continues throughout our industry and will be felt into the 
foreseeable future.
    While the lodging industry has been negatively impacted to a severe 
degree, AH&LA realizes that the country's needs as a whole greatly 
outweigh the needs of any one specific industry. Right now, the country 
needs bipartisan leadership from the Congress. Accordingly, we offer 
these suggestions, which we believe have a legitimate level of 
bipartisan support in Congress based upon discussions with many of your 
colleagues and staff
    Further, AH&LA has narrowed the scope of its recommendations for a 
possible economic stimulus package to those that would STIMULATE the 
entire economy, as well as the lodging industry. Our industry is at the 
vanguard of all efforts to have Americans return to normal by getting 
the public traveling again. Our main concerns are encouraging people to 
travel, ensuring the liquidity of our businesses, and aiding our 
employees. We believe accommodating these concerns is both economically 
feasible and politically viable and ask Congress to implement these 
suggestions for one year or permanently.

Travel Incentives
    Spousal travel
        Restore the deduction for travel expenses of a spouse 
        accompanying an employee on a business trip to 100 percent.
    Business meals and entertainment
        Restore the deduction allowed for business meals and 
        entertainment to 100 percent.

Liquidity
    Payroll tax reform
        Temporarily cut or defer federal payroll tax payments equally 
        affecting the employer and employee contributions.
    Small Business Administration loans
        Extend the eligibility requirements for the Small Business 
        Administration's Economic Injury Disaster Relief Program.

Workforce Assistance
    State assistance
        Aid states that have difficulty processing and paying 
        unemployment and worker compensation claims resulting from the 
        attacks.
    Health benefits
        Extend health benefits for displaced workers.

    A further long-term step Congress may consider to stimulate travel 
is to set up a temporary fund to promote travel within the U.S. and 
encourage international visitors to come to America. To achieve this, a 
new bureaucracy need not be created; states, cities, and convention and 
visitors' bureaus already have begun marketing efforts. A program 
disbursing federal matching funds to such entities would significantly 
leverage these efforts.
    Others in our industry and some of our colleagues in certain 
sectors of the travel and tourism business may make different 
recommendations or may make no recommendations at this time. We respect 
their positions.
    Thank you for allowing us the opportunity to submit this testimony 
and for your consideration of AH&LA's proposals, but, most of all, 
thank you for your service to our country.

                                 ______
                                 
  Prepared Statement of Frank P. Gallagher, Chairman, Coach USA, Inc.

    My name is Frank P. Gallagher and I am Chairman of Coach USA, Inc. 
While I am sorry that I cannot appear before the Committee in person 
today, I want to express my gratitude to the Committee for inviting me 
to testify. I also want to express my appreciation to you for your 
interest in addressing the current crisis in tourism in this nation 
following the events of September 11, and in giving me the opportunity 
to discuss the special concerns of the motorcoach industry.
    Coach USA, which is based in Houston, is not itself a motorcoach 
operator, but rather owns and manages over 100 separate motorcoach and 
taxicab firms that operate around the nation. These companies together 
employ 11,000 persons and operate over 6,700 motorcoaches, making Coach 
USA the largest operator of motorcoaches in the nation. Coach companies 
function in all sectors of the multi-faceted motorcoach industry. Some 
Coach companies provide scheduled, intercity services; some provide 
commuter services in metropolitan areas; many provide charter, tour and 
sightseeing services. Many of our companies operate in each of the 
above sectors, relying on revenues from one type of service to support 
other types of service. Charter and tour services, however, constitute 
the bulk of Coach's operations. Our companies, for example, transport 
conventioneers and sightseers in Chicago and San Francisco, among many 
other major cities, as well as at other popular destination points such 
as Orlando and Branson. We also operate services linking our nation's 
largest cities with major tourist destinations, including Las Vegas and 
points throughout California and Florida. We also operate the largest 
sightseeing operation in New York City, Gray Line of New York, which 
transports passengers from around the world via specially designed 
double-decker tourist buses. This is in addition to the approximately 
1,500 commuter and other buses that we operate in the New York 
metropolitan area daily.
    Needless to say, the September 11 attacks, and the public 
uneasiness about travel that has followed in their wake, have had a 
substantial adverse impact on the motorcoach industry, and as most 
relevant to this Subcommittee's concerns, the large segment of our 
industry dependent on tourism and leisure travel. Indeed, Coach USA's 
Northeast/New England area has been particularly hard hit by the 
fallout from the terrorist attacks, with an immediate revenue loss of 
30%.
    The fall is among the busiest seasons for the bus industry, given 
school trips, numerous conventions, autumn color tours and other forms 
of tourist travel. This fall, however, will probably be among the worst 
in our industry's experience. While I cannot offer you hard data yet, I 
can tell you that the impact to our business will likely be material. 
Our Gray Line tours of New York City, for example, are running at only 
a fraction of the capacity at which they were operating prior to 
September 11. School trips and conventions have been cancelled 
throughout the nation, and each cancellation represents to us a loss of 
revenues on which our industry is highly dependent. These cancellations 
come at a time when, historically, our industry earns the revenues it 
needs to withstand the slower, winter months.
    Many of our charter and other tourist trips are geared to seniors, 
who prefer bus trips to travel by air. Seniors, however, are perhaps 
among the groups most fearful of traveling in these trying times, 
exacerbating our industry's problem. Also, many of our charter and tour 
trips, particularly in the nations' biggest cities, are heavily 
dependent on foreign tourists who arrive by air at JFK, LAX and O'Hare, 
among other gateway airports. Those tourists are simply not coming any 
longer, and trips planned over the next several months have largely 
been cancelled.
    Further, we have no reason to believe that our industry's problems 
will quickly improve in the coming months. Even trips and meetings 
scheduled for the spring of next year are being cancelled now by 
schools and other groups. The continued uncertainty in the world 
situation, and the threat of further attacks discussed regularly by our 
nation's leaders, offer little solace to those, like our industry, so 
heavily dependent on tourism. The American Bus Association reports that 
customers have cancelled up to an estimated 500,000 motorcoach trips/
day, and that perhaps somewhere between 20,000 to 40,000 jobs have been 
lost or idled in our industry.
    We recognize that the motorcoach sector of the tourism industry is 
not the only sector facing serious problems. Obviously, our business is 
tied to that of hotels, car rental firms, travel agencies and airlines, 
each of which sectors is also suffering. However, on top of all of the 
bad economic news for the motorcoach industry, we must now focus on 
appropriate security measures for our passengers, a subject that was 
addressed at a hearing of the Surface Transportation Subcommittee of 
this Committee just two days ago. Appropriate security measures might 
include a variety of measures, including more intensive screening of 
drivers for criminal records, all of which will be expensive to 
implement.
    Given this background, I would like to offer the Subcommittee some 
thoughts on how we believe Congress can help our industry weather these 
extraordinary times and stimulate economic recovery. Our specific 
proposals are as follows:

   A temporary exemption from the 7.4 cent federal fuel tax on 
        diesel for motorcoaches. Our industry provides not only the 
        safest, but a highly fuel efficient means of transporting large 
        numbers of passengers. An exemption will put us on a par with 
        school buses and transit buses, and yield savings of over $26 
        million for our industry. Which will allow industry to reduce 
        costs and continue to offer affordable transportation. Economic 
        benefits to the entire travel sector will follow.

   Reestablish a government agency that would promote U.S. 
        tourism, both domestically and by encouraging foreigners to 
        visit the U.S. Until a few years ago, the U.S. sponsored 
        advertising campaigns to promote tourism, which of course is 
        one of the largest industries in our nation today. The time to 
        reestablish this agency, and to persuade people to travel once 
        again, has come in the wake of the September 11 attacks. 
        Further, this agency should be invested with funds sufficient 
        to provide or guarantee loans to travel-related businesses for 
        use in helping them weather the current crisis, advertise their 
        own services and thus promote more travel business and jobs.

   Provide a 10% tax credit for the purchase of new or used 
        commercial motorcoaches. This credit will result in lower lease 
        payments for most carriers that will in turn facilitate the 
        industry's ability to acquire new equipment buses at a time 
        when capital needs are significant, particularly for new 
        commuter services designed to ease congestion and line-haul 
        operations that serve as an alternative to air transportation. 
        With more affordable equipment, our industry will generate more 
        jobs.

   Establish programs to help our industry pay the costs of the 
        security measures that are appropriate to the situation, 
        including more intensive background checks for drivers and 
        technological improvements such as GPS. In this regard, we 
        favor vesting the Federal Motor Carrier Safety Administration 
        with authority to dispense $50 million in security grants to 
        carriers on a competitive basis, as well as another $50 million 
        in grants to allow for the development and demonstration of new 
        security technologies designed to enhance security nationwide 
        and formula grants to localities to allow them to ``harden'' 
        from a security perspective some of the major motorcoach 
        destinations in the country.

   The Americans with Disabilities Act has imposed expensive 
        new requirements on our industry to purchase wheelchair lift-
        equipped buses. These relatively new requirements for our 
        industry are in effect now, at a time when we can least afford 
        the significant extra expense. The existing federal grant 
        program to allow our industry to defray these costs covers only 
        a small fraction of the costs for a very small number of bus 
        operators. That program either needs to be made more robust 
        with the infusion of new funds, or replaced with a tax credit 
        program that would allow companies to claim a credit for a 
        portion of the costs associated with compliance with the ADA. 
        The relief we propose here would be consistent with public 
        funding that the transit sector and Amtrak have received to 
        defray similar accessibility costs.

   Our industry also needs other forms of assistance. This 
        includes liberalizing the availability of low interest, 
        economic injury disaster loans administered through the Small 
        Business Administration to include companies not located within 
        designated disaster areas. We also need to be protected from 
        subsidized competition from transit agencies that provide 
        charter services in competition with the private motorcoach 
        sector in which we operate. Congress should strengthen the 
        existing prohibitions in the law against such subsidized 
        competition, prohibitions that are not today being adequately 
        enforced by the Federal Transit Administration.

    I thank you again for the opportunity to offer these views. I am 
confident with your assistance we can help stimulate full economic 
recovery, and create new jobs, in the travel and tourism sector.

                                 ______
                                 
Prepared Statement of the 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 85 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 Senate continues 
its important work to move our country ahead.

                                 ______
                                 
   Prepared Statement of Michael Payne, International Association of 
                   Airport Duty-Free Stores (IAADFS)

    The International Association of Airport Duty-Free Stores (IAADFS) 
would first like to express our heartfelt sympathies to those who have 
suffered as a result of the tragedies of September 11. Our hearts and 
prayers go out to those who mourn the loss of loved ones--families, 
friends and colleagues.
    The IAADFS is an international trade association with approximately 
500 company members worldwide, including many with both duty-free and 
standard retail concessions in airports around the United States. We 
are testifying today to request federal financial assistance for hard-
pressed airport duty-free concessionaires. The U.S. Conference of 
Mayors also recognizes the importance of airport concessionaires to the 
airport industry and supports a federal aid package that includes 
airport concessionaires hit by a decline in airport passengers. (See 
article attached).*
    The origins of the duty-free industry go back almost 100 years. The 
ability of the international traveler to make duty-free and tax-free 
purchases has its origins in the nineteenth century, when passengers on 
transatlantic ocean liners took lawful advantage of the tax-free status 
of ships in international waters. Over the past fifty years in 
particular, the international community has recognized duty-free sales 
through a series of formal treaties such as the Chicago Convention of 
1944, the 1954 New York Convention on International Travel and the 1974 
Kyoto Convention on the Simplification and Harmonization of Customs 
Procedures. In fact, Congress has expressly recognized the importance 
of duty-free sales enterprises in the Omnibus Trade and Competitiveness 
Act of 1988:
    The Congress finds that--

        (1) duty-free sales enterprises play a significant role in 
        attracting international passengers to the United States and 
        thereby their operations favorably affect our balance of 
        payments;

        (2) concession fees derived from the operations of authorized 
        duty-free sales and enterprises constitute an important source 
        of revenue for the State, local and other governmental 
        authorities that collect such fees. . . .

    Duty-free concessions are truly an integral part of the U.S. travel 
industry and are important to the financial well-being of America's 
airports. In the United States, for example, duty-free concessions pay 
over $200 million in airport fees. However, duty-free trade has been 
severely impacted by the well-documented reduction in air travel caused 
by the September 11 terrorist attack. Moreover, strict security 
measures and restrictions on ticketed passengers allowed through 
security checkpoints have severely reduced the number of potential 
customers for all airport concessionaires. As a result, duty-free and 
other retailers have experienced a drastic downturn in business. 
Airports Council International--North America (ACI-NA) estimates that 
concessions could lose over $300 million in revenue over the next year. 
(See article attached).* ACI-NA also reports that concessionaires are 
``in the process of'' laying off 9,600 employees, or a third of their 
workforce. We believe the industry will continue to suffer as the 
United States begins to retaliate against terrorists, and as the 
uncertainties created by this new type of conflict cause travelers to 
continue to defer air travel.
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    * The information referred to was not available at the time this 
hearing went to press.
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    It is the uncontrollable uncertainty of this new type of conflict 
that causes us deep concern over future sales. The duty-free industry 
expects its sharpest and most prolonged downturn since the Gulf War, 
when global sales fell by approximately 30%. Industry reports indicate 
that in the last week, concessionaires have reported sales declines of 
30%-40%. We have seen reports that tourists from some countries have 
cancelled their trips to the United States at a rate of 80% in the next 
month. It is unknown what cancellation rates for October and beyond may 
be, as travelers wait to see what the United States will do in response 
to terrorist activities.
    The most serious issue facing airport concessionaires is the 
payment of their monthly rent, or Minimum Annual Guarantee (MAG). Not 
only are duty-free stores experiencing severely reduced sales and 
profits, the stores are dangerously close to being unable to pay their 
MAG to the airports in which they are located. Most duty-free 
concessionaires lease their retail space either as a percentage of 
sales or on a minimum fixed rent (the MAG), whichever is greater. 
Currently, sales are so low that in most cases the MAG will apply. The 
concessionaires are not generating enough revenue to pay this fixed 
rent and their rent obligations may range from 50 to 100 per cent level 
of sales. Clearly, these circumstances demand relief.
    Allowing concessionaires to pay lower rents based on sales (rather 
than the MAG minimum) is only a partial solution. Airports, concerned 
about revenue streams to secure bond payments or to finance long-term 
construction projects and other obligations, would be forced to 
increase revenues by raising landing fees, for example. This would then 
force a rise in ticket prices which in turn would continue to depress 
air travel. The airports would be even further damaged if they were 
forced to solicit bids for new concessions in the current uncertain 
market. This combination of circumstances creates a vicious downward 
economic spiral for all of these inter-related entities.
    The losses experienced by duty-free stores and their airport 
landlords cannot be recouped without federal assistance which replaces 
revenue lost to the system. The matter is particularly acute given the 
fact that all indications are the situation will continue to decline in 
the next few months. As you have seen, airlines have laid off thousands 
of employees as a result of the crisis facing air travel and related 
industries. Large and small duty-free entities are facing a similar 
crisis. These companies are considering layoffs, potentially numbering 
in the thousands.
    The IAADFS believes we are all in this together. To provide 
stability, we believe the immediate solution involves either providing 
emergency funds directly to the concessionaires to pay their fixed 
rent, or to provide money directly to the airports in lieu of the rent 
due. In this way, airports and concessionaires can continue to work 
together to ensure their mutual economic survival through this current 
crisis.
    Thank you for your time and your dedicated service to assist the 
airline and travel industries. We are happy to answer any additional 
questions you may have.

                                 ______
                                 
             Prepared Statement of Lawton Roberts, Owner, 
                     Uniglobe Country Place Travel

    Mr. Chairman and Members of the Committee. Thank you for the 
opportunity to testify to the critical needs of the Travel Agent 
Industry portion of the Travel and Tourism Industry, particularly the 
critical needs of small mom-and-pop travel agencies that comprise the 
vast majority of the 20,000+ travel agencies in America. Unlike the 
airlines who have substantial resources to weather the current industry 
storm, or even the very large corporate travel agencies such as 
American Express, Carlson or Rosenbluth for example who employ 
thousands of agents and have sales in the billions of dollars each 
year, the mom-and-pop portion of The Travel Agent Industry is in a 
crisis state financially, and is imploding before our very eyes 
throughout the country. While the events of September 11th, 2001 
certainly contributed significantly to an overall depressed travel and 
tourism industry at this time, the travel agent portion of the travel 
and tourism industry was already in a severely weakened state prior to 
September 11th due to years of attack by the same airline industry that 
recently petitioned this Congress for immediate financial assistance. 
In my testimony, I will present the specific airline practices that 
collectively weakened and threatened the financial viability of the 
travel agent industry before September 11th. I further will present the 
outrageous airline actions taken against travel agents in the days 
since they received federal financial assistance in the airline bailout 
which are causing travel agencies to close in record numbers and thus 
threaten an entire industry previously employing between 200,000 and 
300,000 taxpayers nationwide. And finally, I will offer specific 
remedies to these airline practices directed toward travel agencies 
that if adopted will not only provide immediate assistance in providing 
travel agencies at least a fair chance to both survive in today's 
marketplace and thrive in the promising marketplace of tomorrow, but 
would also assist the airlines in filling empty seats on airplanes, 
assist consumers in shopping for the best airline/airfare option in a 
complex airfare marketplace, and very importantly for the American 
taxpayer, would assist the airlines in reducing their fixed overhead 
costs and thus reduce the likelihood of any further airline requests 
for taxpayer bailout. And let me hasten to add that these proposed 
remedies if adopted will be at no cost to the American taxpayer!!!
Provisions of Proposed Travel Agent Consumer Protection Act of 2001:
        Problem #1: Price discrimination by the airlines in the airfare 
        marketplace is running travel agencies out of business: The 
        airlines are driving consumers away from travel agencies and 
        toward airline-owned retail distribution outlets such as 
        individual airline-owned or joint airline-owned websites such 
        as Orbitz by withholding their lowest fares from traditional 
        travel agencies and CRS Computer Reservations Systems which the 
        airlines developed and require travel agencies to use. The 
        price discrimination is blatant, is often advertised in full-
        page ads in regional and national newspapers and in broadcast 
        media, is often a difference of 10% to 20% across the board, 
        and is widespread to the extent that consumers have now come to 
        learn through advertising that travel agencies are no longer 
        the source of the best airfare. By withholding the lowest fare, 
        even if only by as little as 5% across the board, travel 
        agencies might as well not have access to any fares at all, 
        because by the very nature of the product we are selling, a 
        seat on a plane, since there is no difference in the actual 
        product once the passenger sits in the seat, there is no 
        marketplace reason for any consumer to pay 20% more, 10% more 
        or even as little as 5% more for the same product from any 
        distributor. Consequently, airlines are starving travel 
        agencies to death by no longer letting travel agencies sell 
        their product at the same price the airlines offer it to the 
        same customer themselves. This is a violation of the Clayton 
        Antitrust Act of 1914, wherein Section 2 so states: ``That it 
        shall be unlawful for any person engaged in commerce, in the 
        course of such commerce, either directly or indirectly, to 
        discriminate in price between different purchasers of 
        commodities which different commodities are sold for use, 
        consumption, or resale within the United States or any . . . 
        other place under the jurisdiction of the United States, where 
        the effect of such discrimination may be to substantially 
        lessen competition or tend to create a monopoly in any line of 
        commerce.'' This one widespread airline practice which surfaced 
        with the advent of airline websites has had the single greatest 
        adverse impact on the travel agent industry in recent years. At 
        a time when airlines are asking for taxpayer bailout, flights 
        are being cancelled due to insufficient loads, and airline 
        employees (especially reservations agents and entire 
        reservations centers) are being laid off in the tens of 
        thousands, it would seem to be in the airlines' own best 
        interests to make all of their product available for sale 
        through all distribution channels, especially that distribution 
        channel that carries absolutely no cost to the airlines when 
        the phones don't ring, commissioned travel agents. And as for 
        the commission cost to the airlines when a travel agent does 
        make a sale, the airlines have cut travel agent commissions six 
        times on domestic fares to the extent that now the actual 
        average commission is well below the cost of the airline's own 
        in-house reservations department if they were to issue the same 
        ticket. Travel agent commissions now average less than 3% of 
        the cost of the average ticket price. This isn't rocket 
        science. Just do the math. If an airline loses 10% revenue in 
        order to save 3% commission `expense' to a travel agent, there 
        is obviously an additional motive for having a net loss of 7% 
        revenue in the case of a 10% lower fare than offered to travel 
        agents, or having a net loss of 17% revenue on each ticket in 
        the case of a 20% lower fare which is also sometimes offered by 
        airlines only to the consumer and not to travel agents. It is 
        clear to me that this practice of blatant price discrimination 
        is intended to drive travel agents out of business by driving 
        consumers to airlines, now the only source of the truly lowest 
        fares. There isn't sufficient time to allow enforcement of 
        existing antitrust laws to remedy this imbalance in the 
        marketplace. That can take years. There must be a new statute 
        introduced in the current session with significant penalties 
        imposed upon each instance of price discrimination.

        Solution #1: Make it illegal for airlines to discriminate in 
        price between different distribution channels for airfares, 
        whether airline-owned website `stores' or independently-owned 
        travel agency website `stores' or independently owned travel 
        agency brick & mortar `stores.' The one exception will continue 
        to be contract and/or government fares. Under no circumstances 
        shall contract or government fares be construed to apply to the 
        general public or be interpreted to be published fares which 
        are accessible to the general public. The penalty for 
        violations by the airlines of this air fare price 
        discrimination statute shall be a fine of no less than 
        $1,000,000 for each incident of air fare price discrimination.

        Problem #2: Airlines are billing travel agencies to return 
        commissions for ticket sales lost during the September 11-13 
        shutdown and immediately following (and for which the federal 
        government has already made the airlines whole), are forcing 
        travel agencies to close in record numbers: By billing travel 
        agencies for tens of millions of dollars in commissions on 
        airline ticket sales lost to cancellations during the shutdown, 
        revenue which has already been reimbursed to the airlines in 
        the federal government's good faith attempt to make the 
        airlines whole following the September 11-13th shutdown, the 
        airlines are dealing thousands of travel agencies with a final 
        crushing blow, which when combined with the effects of an 
        already weakened travel agent industry prior to September 11th 
        from predatory and discriminatory pricing practices by the 
        airlines plus the effects of an overall depressed consumer 
        travel marketplace, travel agencies are closing or laying off 
        employees in record numbers all across America. While small 
        mom-and-pop agencies are often closing, large regional or 
        national travel agencies are laying off thousands of employees, 
        in large part due to the sudden necessity to return airline 
        commissions on tickets cancelled during the shutdown and 
        immediately following.

        Solution #2: Require the airlines to suspend all recalls on 
        commissions (bills to return previously earned commissions) for 
        all airline tickets issued for travel through the rest of 2001. 
        This includes the reimbursement by the airlines to any travel 
        agency so billed thus far, by no later than October 30, 2001.

        Problem #3: Discrimination by the airlines in unequal 
        enforcement of airfare tariffs is resulting in airlines billing 
        travel agencies as much as hundreds of dollars on an individual 
        ticket, (for which the maximum agency commission possible is no 
        greater than $20.00), for so-called tariff violations, but 
        these same so-called tariff violations are not enforced by the 
        airline when the consumer purchases these same fares direct 
        from an airline, whether via an airline-owned website or an 
        airline reservationist. An example is a pair of tickets that is 
        commonly known as a back-to-back ticket wherein only the first 
        segment of each ticket is used by the traveler in order to save 
        as much as $1,000 or more off the cost of a single ticket. 
        While this practice is not permitted by the airlines by travel 
        agencies as per their airfare tariffs (tariffs that still exist 
        post deregulation but without any consumer oversight like in 
        other industries), it is overlooked by the airlines when 
        consumers purchase the same identical ticket combinations 
        direct from the airlines. This practice is costing agencies 
        hundreds or thousands of dollars. A typical example of a single 
        incident might cost a travel agency $1,000 or more. When 
        multiple incidents occur, the financial impact can be 
        devastating. This is but one additional example of how the 
        airlines are attempting to drive travel agencies out of 
        business by forcing consumers to buy these types of tickets 
        direct from the airlines.

        Solution #3: Require the airlines to suspend the issuance of 
        bills to travel agencies (debit memos) for so-called air fare 
        tariff violations that are not being uniformly enforced. 
        Violations of each incident brought to the attention of the 
        department of transportation in the form of consumer records 
        shall result in a fine to the airline of not less than $100,000 
        per incident, and triple damages to the travel agency for all 
        debit memos so billed.

    In summary, it should be no surprise that the airline industry 
would like to eliminate independent retail sellers of their product, 
namely travel agents. This natural tendency in any retail marketplace 
is usually guarded against through the many provisions of our nations' 
antitrust and Federal Trade Commission statutes. Unfortunately, the 
airline industry was singled out and separated from the enforcement arm 
of the Federal Trade Commission some time ago. This error in federal 
enforcement jurisdiction needs to be corrected at some time in the 
future, perhaps in the next session. Perhaps then, both consumers and 
retailers alike in the airline industry would begin to enjoy the same 
protection from predatory monopolistic airline suppliers that our 
citizens now enjoy from other major industry suppliers such as the oil 
industry which also at one time saw an opportunity to eliminate 
independent retailers in order to reduce competition, raise prices and 
thus profits. Thanks to the Clayton Antitrust Act, the Robinson Patman 
Act, and various Federal Trade Commission statutes (which the airlines 
are apparently exempt from), other retail industries and their 
consumers have protections from the types of problems I have testified 
to today. But it appears travel agents and their customers do not. With 
the enactment of these new statutes that I have proposed today in the 
form of a few simple quick-fix solutions to specific problems of market 
imbalances in the crumbling travel agent industry, the United States 
Congress will have provided immediate and significant financial 
assistance to the well-being of thousands of travel agencies and tens 
of thousands of travel agency employees all over America, and I might 
add without spending a single taxpayer dollar!!! Additional and equally 
important travel agent concerns of dwindling airline compensation with 
no rights on the part of travel agents to collectively negotiate for 
better compensation, federal preemption for the airlines from local or 
state court access by consumers or travel agents who have disputes with 
airlines, and many other far-reaching issues of marketplace imbalance 
such as slot control, gate control, the proliferation and exchange of 
agency customer data among airlines, etc. need to be addressed in a 
more comprehensive and future effort to bust up the airline oligopoly 
and return a fair balance of control of this marketplace to the 
consumer. But time does not permit these issues to be addressed in this 
session, and time is not on the side of 20,000+ travel agencies or 
200,000+ travel agents. The above three issues if remedied in this 
session will provide a much needed stopgap non-financial bailout for 
travel agents now, and I point out once again, at NO COST TO THE 
TAXPAYER!!!

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