[House Hearing, 108 Congress]
[From the U.S. Government Publishing Office]



                  TRAVEL AND TOURISM IN AMERICA TODAY

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

                                HEARING

                               before the

                            SUBCOMMITTEE ON
                COMMERCE, TRADE, AND CONSUMER PROTECTION

                                 of the

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED EIGHTH CONGRESS

                             FIRST SESSION

                               __________

                             APRIL 30, 2003

                               __________

                           Serial No. 108-15

                               __________

      Printed for the use of the Committee on Energy and Commerce


 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 house


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                    COMMITTEE ON ENERGY AND COMMERCE

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

MICHAEL BILIRAKIS, Florida           JOHN D. DINGELL, Michigan
JOE BARTON, Texas                      Ranking Member
FRED UPTON, Michigan                 HENRY A. WAXMAN, California
CLIFF STEARNS, Florida               EDWARD J. MARKEY, Massachusetts
PAUL E. GILLMOR, Ohio                RALPH M. HALL, Texas
JAMES C. GREENWOOD, Pennsylvania     RICK BOUCHER, Virginia
CHRISTOPHER COX, California          EDOLPHUS TOWNS, New York
NATHAN DEAL, Georgia                 FRANK PALLONE, Jr., New Jersey
RICHARD BURR, North Carolina         SHERROD BROWN, Ohio
  Vice Chairman                      BART GORDON, Tennessee
ED WHITFIELD, Kentucky               PETER DEUTSCH, Florida
CHARLIE NORWOOD, Georgia             BOBBY L. RUSH, Illinois
BARBARA CUBIN, Wyoming               ANNA G. ESHOO, California
JOHN SHIMKUS, Illinois               BART STUPAK, Michigan
HEATHER WILSON, New Mexico           ELIOT L. ENGEL, New York
JOHN B. SHADEGG, Arizona             ALBERT R. WYNN, Maryland
CHARLES W. ``CHIP'' PICKERING,       GENE GREEN, Texas
Mississippi                          KAREN McCARTHY, Missouri
VITO FOSSELLA, New York              TED STRICKLAND, Ohio
ROY BLUNT, Missouri                  DIANA DeGETTE, Colorado
STEVE BUYER, Indiana                 LOIS CAPPS, California
GEORGE RADANOVICH, California        MICHAEL F. DOYLE, Pennsylvania
CHARLES F. BASS, New Hampshire       CHRISTOPHER JOHN, Louisiana
JOSEPH R. PITTS, Pennsylvania        TOM ALLEN, Maine
MARY BONO, California                JIM DAVIS, Florida
GREG WALDEN, Oregon                  JAN SCHAKOWSKY, Illinois
LEE TERRY, Nebraska                  HILDA L. SOLIS, California
ERNIE FLETCHER, Kentucky
MIKE FERGUSON, New Jersey
MIKE ROGERS, Michigan
DARRELL E. ISSA, California
C.L. ``BUTCH'' OTTER, Idaho

                  David V. Marventano, Staff Director

                   James D. Barnette, General Counsel

      Reid P.F. Stuntz, Minority Staff Director and Chief Counsel

                                 ______

        Subcommittee on Commerce, Trade, and Consumer Protection

                    CLIFF STEARNS, Florida, Chairman

FRED UPTON, Michigan                 JAN SCHAKOWSKY, Illinois
BARBARA CUBIN, Wyoming                 Ranking Member
JOHN SHIMKUS, Illinois               HILDA L. SOLIS, California
JOHN B. SHADEGG, Arizona             EDWARD J. MARKEY, Massachusetts
  Vice Chairman                      EDOLPHUS TOWNS, New York
GEORGE RADANOVICH, California        SHERROD BROWN, Ohio
CHARLES F. BASS, New Hampshire       JIM DAVIS, Florida
JOSEPH R. PITTS, Pennsylvania        PETER DEUTSCH, Florida
MARY BONO, California                BART STUPAK, Michigan
LEE TERRY, Nebraska                  GENE GREEN, Texas
ERNIE FLETCHER, Kentucky             KAREN McCARTHY, Missouri
MIKE FERGUSON, New Jersey            TED STRICKLAND, Ohio
DARRELL E. ISSA, California          DIANA DeGETTE, Colorado
C.L. ``BUTCH'' OTTER, Idaho          JOHN D. DINGELL, Michigan,
W.J. ``BILLY'' TAUZIN, Louisiana       (Ex Officio)
  (Ex Officio)

                                  (ii)
?



                            C O N T E N T S

                               __________
                                                                   Page

Testimony of:
    Edwards, William H., Jr., Vice President and General Manager, 
      Hilton Washington & Towers.................................    16
    Lundberg, Rolf, Senior Vice President, Congressional and 
      Public Affairs, U.S., Chamber of Commerce..................     8
    May, James C., President, Air Transport Association..........    13
    Robinson, J. Clark, President, International Association of 
      Amusement Parks and Attractions............................    21
    Ruden, Paul M., Senior Vice President for Legal and Industry 
      Affairs, American Society of Travel Agents.................    28
    Sternberg, Michael, Chief Executive Officer, Sam & Harry's, 
      The Caucus Room............................................    25
    Walker, Matthew S., General Vice President, Hotel Employees & 
      Restaurant Employees International Union...................    32
Additional material submitted for the record:
    Porter, Hon. Jon, a Representative in Congress from the State 
      of Nevada, prepared statement of...........................    43
    Travel Business Roundtable, prepared statement of............    47
    Travel Industry Association of America, prepared statement of    44

                                 (iii)

  

 
                  TRAVEL AND TOURISM IN AMERICA TODAY

                              ----------                              


                       WEDNESDAY, APRIL 30, 2003

              House of Representatives,    
              Committee on Energy and Commerce,    
                       Subcommittee on Commerce, Trade,    
                                   and Consumer Protection,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 1:07 p.m., in 
room 2123, Rayburn House Office Building, the Hon. Cliff 
Stearns (chairman) presiding.
    Members present: Representatives Stearns, Shadegg, Bass, 
Issa, Otter, Tauzin (ex officio), Schakowsky, Brown, Green, and 
Strickland.
    Staff present: Kelly Zerzan, majority counsel; Ramsen 
Betfarhad, majority counsel; Jill Latham, legislative clerk; 
and Jonathan J. Cordone, minority counsel.
    Mr. Stearns. Good afternoon. Welcome to the Subcommittee on 
Commerce, Trade, and Consumer Protection.
    The subcommittee will come to order, and without objection 
the subcommittee will proceed pursuant to Committee Rule 4(e).
    So ordered.
    The Chair recognizes himself for an opening statement.
    Good afternoon and welcome to the Subcommittee on Commerce, 
Trade, and Consumer Protection hearing on travel and tourism in 
America today. I want to thank sincerely the witnesses for 
appearing before the committee. I know how busy you are.
    This is our first hearing on this subject in the 108th 
Congress, but I am confident this will not be our last.
    Beginning with our hearing less than a month after the 
horrific, terrible events of September 11, 2001, myself and our 
staff have been examining the state of the U.S. travel and 
tourism industry as it continues to recover from the downturn 
in travel since September 11. During this recovery period, the 
industry has faced other challenges, such as the war in Iraq 
and most recently the SARS epidemic.
    I noted the U.S. News & World Report. On the cover of their 
issue it says, ``SARS Hits Home: How it spreads, where it came 
from and how to fight it.'' This type of publicity is not good 
for the tourist industry.
    So at a time when the industry faces serious challenges, 
most not of its own doing, we are holding this hearing first to 
highlight the significance of the industry to our economy so 
that Americans understand.
    Second, I hope that the hearing creates a good record as to 
what are the problems in the industry today and what, of 
course, specifically needs to be done to cure these ills. I 
hope to learn what we as Federal policymakers can do to make 
the United States a travel destination of choice for 
international travelers.
    Now, permit me to cite some sobering facts that clearly 
underline why this industry is very significant and, as such, 
worthy of careful consideration by Federal policymakers like 
ourselves. The travel and tourism industry employs both 
directly and indirectly nearly 1 in every 7 Americans, some 18 
million people. It generates over $5 billion in economic 
activity every year.
    Travel and tourism is one of the top 3 industries in 29 
States, including my home State of Florida. In fact, the more 
than 40 million visitors a year to Florida generate about $40 
billion, the single largest source of income from our State.
    Making the United States a travel destination of choice for 
international tourists is extremely important. One fact 
illustrates the significance of international travel best. In 
the United States, an international visitor spends four times 
as much as a domestic traveler. That is one reason we have a 
balance of trade surplus in travel and tourism.
    While the trade deficit of the United States has steadily 
risen to where it is in 2002, the imbalance reached an all time 
high of $435 billion. The travel and tourism industry has 
consistently been the largest sectorial contributor to our 
balance of trade surpluses in services.
    Yet our balance of trade surplus for travel and tourism, 
indeed, has fallen from the high of $26 billion in 1996 to $8.6 
billion in the year 2001, still representing 12.5 percent of 
the total services surplus.
    The fact that the industry generates a balance of trade 
surplus, yet we see a 70 percent decline in that surplus in a 
period of just 5 years is a very telling story, underscoring 
the need for the serious attention I believe by Members of 
Congress.
    The bottom line is that international visitors are a key to 
the health of the industry and, indeed, our balance of trade. 
The United States is now the third most visited travel 
destination in the world, behind France and Spain. There is no 
reason, my colleagues, why it cannot be the first.
    Just this session of Congress, we appropriated $50 million 
to the Department of Commerce for a comprehensive international 
destination marketing campaign. In my view this is an important 
first step. If those funds are used effectively with an input 
from industry through the legislatively mandated United States 
Travel and Tourism Promotion Advisory Board, I think that 
Congress should make the one time appropriation an annual one.
    Spain, just for example, in 1997 spent 3 times as much, 
$150 million, promoting itself as an international travel 
destination. As the Spanish economy is less than 5 percent of 
our economy, I think if well spent, $50 million is a small sum 
to pay for touting the natural beauty, cultural richness of our 
country to these international travelers.
    And finally, my colleagues, I think we need greater 
coordination at least at the Federal level with respect to the 
development and execution of a national tourism policy. 
Therefore, I have written to the Commerce Secretary Evans in 
support of the creation of a Presidential Advisory Council on 
Travel and Tourism. The council would be comprised of experts 
from the private, public, and nonprofit sectors, and would 
serve in an advisory capacity to the Secretary and the 
President on national tourism policy and development.
    The council's key role, in my view, should be fostering a 
cohesive tourism policy at the Federal level. The experience of 
my own State of Florida in developing cohesive tourism 
promotional policies has been most instructive.
    So I want to thank the witnesses again and look forward to 
their testimony, and with that I recognize the distinguished 
Ranking Member from Illinois for an opening statement.
    Mr. Schakowsky. Thank you, Mr. Chairman.
    I appreciate your convening this hearing today to examine 
one aspect of the faltering U.S. economy, the travel and 
tourism industry. The workers who depend on this industry for 
their livelihood and the consumers who depend on this industry 
for their business and personal travel needs justify the 
serious attention of the Congress to this important issue.
    I come from Chicago, and it is an area and a city that 
welcomes tourists from all over the world, and we certainly 
want to see a strong travel and tourism industry.
    I am disappointed that we do not have a witness here to 
specifically address the impact of the current economy on 
consumers. I am looking forward to hearing from each one of you 
who is here today.
    I believe there are several factors contributing to the 
decline in business and tourism travel in the United States and 
the downturn in the U.S. economy in general. Clearly, September 
11 had a dramatic impact on the travel industry. SARS has had a 
chilling effect on travel. The war in Iraq has also had an 
impact on the flying public and the traveling public. 
Understandably, many Americans believe that our preemptive 
military action in Iraq has added to the resolve of those who 
wish to harm us.
    I have heard from constituents who have found the courage 
to return to the skies after 9/11, but are again fearful of the 
potential response to our military action in the Middle East.
    Many of us oppose the administration's war against Iraq 
because we did not believe that America would be better off in 
many respects as a result. As the Chairman indicates, 
international tourists in the United States spend 4 times the 
amount domestic travelers spend.
    It is not entirely surprising to me that residents of some 
countries are not eager to come to the United States today, 
one, because of the widely perceived idea that the United 
States disrespected world opinion and, two, because of the 
assault on civil liberties and immigrants and visitors from 
certain foreign countries that have been initiated by this 
administration.
    One of the casualties, I believe, of the Iraq war and other 
Bush administration policies appears to be the travel and 
tourism industry. While 9/11 and the war in Iraq have hurt the 
U.S. economy, the one single factor that has led to the 
economic decline, in my view, is the President's tax cut.
    I realize that the tax cut is not the subject of today's 
hearing, and I will not belabor the point, but I do want to say 
that I think any complete discussion of factors contributing to 
our current economic conditions should include a discussion of 
the negative impact the President's tax policy has had on our 
economy and outlook for a strong recovery, including the 
industry that we are focusing on today.
    I appreciate the opportunity to hear from our witnesses. I 
am eager to discuss ways that we can help the workers and 
consumers who rely on the travel and tourism industry for their 
livelihood and other important needs.
    Thank you, Mr. Chairman.
    Mr. Stearns. I thank you.
    And the gentleman from New Hampshire, Mr. Bass, is 
recognized.
    Mr. Bass. Thank you very much, Mr. Chairman, and I 
appreciate your holding this hearing, which I think is the 
second one that we have had since I have been on the 
subcommittee, and it is a very relevant and important topic.
    I recall in the last hearing a discussion about the impact 
of 9/11 on tourism in various parts of the country, and I noted 
at that time that my home State of New Hampshire actually was 
doing possibly better as a result because there were few people 
flying longer distances. New Hampshire is a destination for 
people who do not have to fly or move great distances, and our 
tourism is doing pretty well.
    And as I mentioned then, New Hampshire's economy ranked 7th 
in our reliance on travel and tourism, and it brings in close 
to $9 billion a year. So certainly this is an important and 
relevant subject for me.
    However, I do believe that the SARS epidemic or the 
potential to have one is going to be quite different in its 
impact on various regions of the country. It may hurt us all 
the same, but I hope that we as policymakers and those of you 
who are testifying today could be very sensitive to the fact 
that this is an issue that is going to affect every sector of 
the economy potentially in this country if we cannot move 
together with a unified plan to deal with it, and the tourism 
industry may be hurt first more than anybody else.
    So thank you for holding this hearing, Mr. Chairman. I look 
forward to hearing the words of our witnesses.
    I yield back.
    Mr. Stearns. I thank my colleague.
    The gentleman from Ohio is recognized.
    Mr. Brown. Thank you, Mr. Chairman, for scheduling today's 
hearing.
    Thanks to our witnesses for joining us.
    I share the sentiments of our Ranking Member, Ms. 
Schakowsky, and her concerns that the President's tax cut is 
causing even larger budget deficits. Tax cuts that go 
overwhelmingly to the wealthiest of our citizens while cutting 
vital programs can have a negative impact on travel and 
tourism, as on much of the rest of the economy.
    Tourism provides in my own State of Ohio hundreds of 
thousands of jobs. Travelers spend billions of dollars in Ohio 
every year. That is one reason I share the concern of the 
Chairman and our witnesses today about the condition of 
America's travel and tourism industries.
    Another reason is because many of the issues that have 
become critical to the economic health of tourism and travel 
are also critical to public health and public safety. I am 
thinking here of issues like homeland security and infectious 
diseases and bioterrorism and food safety and security.
    Mr. Sternberg, I was pleased to hear the comments that you 
are raising in your testimony about food safety and food 
security on behalf of the National Restaurant Association. As 
the ranking Democrat on the Health Subcommittee, I work closely 
with the Majority in bipartisan bioterrorism legislation. I 
consider food security provisions an essential component of the 
public health security in the Bioterrorism Preparedness and 
Response Act.
    Like many advocates of effective food safety, I was 
troubled to learn that some of America's food companies had 
been working to actually weaken food security rules proposed by 
the U.S. Food and Drug Administration, characterizing them as 
proposals for efficiency and flexibility.
    Some in the food industry have recommended that shipments 
of imported foods be welcomed into the United States with 
practically no advanced notice and with no assurance at all 
that a shipment's contents match the manifest provided to 
Federal officials, in direct contradiction to legislation this 
subcommittee, the full committee, and the House and Senate 
passed last year.
    That does not sound to me like the sort of food security 
system that would give visiting diners or American families 
traveling or American homes very much confidence.
    This committee has a responsibility to insure that 
Americans are protected by an effective food security system, 
and unlike tax proposals and other remedies recommended by some 
of our witnesses, insuring an effective food security system is 
something that this committee can do.
    Mr. Chairman, I think the Energy and Commerce Committee 
needs to take a close look at the implementation of the 
bioterrorism law's food safety provisions. I hope you will join 
me in calling for oversight hearings on this important issue.
    I yield back the balance of my time.
    Mr. Stearns. I thank my colleague.
    And the distinguished vice chairman of the subcommittee, 
the gentleman from Arizona, Mr. Shadegg.
    Mr. Shadegg. Mr. Chairman, in deference to our witnesses 
and having complimented you for holding an important hearing, 
and a hearing I talked about this morning on television, 
talking about the impact on this industry and its importance to 
our Nation, as well as my State of Arizona, I will waive an 
opening statement.
    Mr. Stearns. I thank my colleague.
    And the gentleman, Mr. Green.
    Mr. Green. Thank you, Mr. Chairman.
    I would like to get on to the witnesses, and I would like 
to put a statement into the record. I appreciate you calling 
this hearing, and our Ranking Member, because of the concern I 
think all of us have not only nationally, but locally.
    Thank you.
    [The prepared statement of Hon. Gene Green follows:]

  Prepared Statement of Hon. Gene Green, a Representative in Congress 
                        from the State of Texas

    Thank you Chairman Stearns and Ranking Member Schakowsky for 
holding this hearing and giving us the opportunity to discuss the 
situation facing America's travel and tourism industry.
    The travel and tourism industry has historically been one of the 
stronger sectors of our economy, creating an $8.6 billion annual 
surplus in the balance of trade.
    This industry also employs nearly 18 million Americans and provides 
about $100 billion in federal, state and local tax revenues.
    In my state of Texas alone, travel and tourism generate 
approximately $40 billion in direct spending, which accounts for more 
than 5 percent of the state's GSP.
    In fact, Texas currently ranks third among all states in total 
domestic spending on travel and tourism, trailing only California and 
Florida.
    It is difficult to overemphasize the importance of travel and 
tourism to our economic health, since effects on the industry 
reverberate throughout the nation's economy.
    When visitors travel less, our transportation systems certainly 
feel a shock, but our restaurants, hotels, parks, small businesses and 
their employees also take a huge hit.
    Unfortunately, the travel and tourism industry is still reeling 
from the economic consequences associated with September 11th.
    That tragic event created tremendous uncertainty in the minds of 
Americans--a feeling that has only been exacerbated by a weakened 
economy, a war in Iraq and now the outbreak of Severe Acute Respiratory 
Syndrome, or SARS.
    The result has been a dropoff in travel by Americans and 
international visitors alike, who have chosen to postpone their trips 
for better times.
    We in Congress have responded by granting the airlines financial 
relief, both after September 11th and, more recently, in the 
supplemental appropriations bill passed earlier this month.
    That bill also contained funding to market the United States as a 
premier travel destination.
    But more needs to be done.
    The United States continues to be a world-class destination for 
travel.
    No other country can boast the diverse set of attractions that we 
are so fortunate to possess.
    From our coasts to our mountain ranges, from our national parks to 
our first-rate metropolitan cities, America has it all.
    And America is safe.
    Our task now is to determine how best to lure visitors to our 
country's tourist attractions and get this industry moving again.
    I thank each of you for appearing today before the subcommittee to 
inform us of your experiences and suggestions for recovery, and I look 
forward to hearing your testimony.
    I yield back the balance of my time.

    Mr. Stearns. I thank my colleague.
    [Additional statement submitted for the record follows:]

Prepared Statement of Hon. Barbara Cubin, a Representative in Congress 
                       from the State of Wyoming

    Thank you, Mr. Chairman, for holding this timely hearing.
    I would like to welcome the distinguished panel of witnesses. Your 
insight today will be a valuable contribution to the ongoing 
examination of our country's tourism industry and efforts to continue 
to remedy the situation.
    Our country is operating under never before seen circumstances. The 
impact of recent events has been felt in every realm of life as we know 
it. Necessary steps have been taken in response to these events; now 
further action of a proactive and stimulative nature is needed.
    Every state can identify specific ways in which they have felt the 
strain on their economies due to a decline in travel and tourism. This 
issue is something that unites the diverse demographics of our country.
    In my home state of Wyoming, the easy-going lifestyle and wide-open 
beautiful spaces are attractive to travelers who seek a respite from 
the hectic daily live that so many lead. Once they cross the state line 
into Wyoming there are numerous options available for recreation, 
entertainment and accommodation. Getting here is where patrons tend to 
encounter difficulties.
    While many travelers take to the open road when visiting Wyoming, 
there are those who prefer to fly. We are all aware of the tumultuous 
state of affairs in the airline industry. Allow me to briefly shed some 
light on the tremendous hurdles patrons of and residents in my home 
state continually face.
    The limited availability of carriers who even operate in Wyoming is 
the first hurdle encountered. Finding a seat on these few flights is 
the second and compounding all of these factors is the outrageous price 
one must pay for the ``convenience'' of flying.
    Another area of particular concern to me involves members of 
Wyoming's small business communities--travel agencies. In general, 
small businesses are the backbone of so many rural communities in my 
state. The devastating affect that declines in both international and 
domestic tourism have had on them deserves our attention and commitment 
to remedy.
    It is my hope that today's hearing will shed some light on ways the 
entire country can encourage international and domestic travelers alike 
to visit our many attractions.
    Thank you, Mr. Chairman and I yield back the remainder of my time.

    Mr. Stearns. I think what I would like to do before I 
introduce the panel is the Travel Business Roundtable has put 
together a little commercial which is geared toward encouraging 
Americans to take domestic travel. I would like to play this 
commercial for the benefit of my colleagues and the witnesses, 
who probably have already seen it.
    If we can, let's play this, and the people you will see are 
the Lone Star Band. It is a country and western band who is 
introducing this. So without further ado, we will have this 
small commercial before we start.
    The Lone Star Band is one of President Bush's favorite 
groups.
    [A video was shown.]
    Mr. Stearns. Well, that was very nice. I think most of us 
were looking to see if our State was adequately represented.
    I want to thank staff for having this to work so well. 
Sometimes when you start these movies they do not work for some 
reason. So I want to thank staff.
    Now we will go to our panel here, and we are going to go 
from my right to my left. So I welcome Mr. Rolf Lundberg, who 
is Senior Vice President, Congressional and Public Affairs for 
the U.S. Chamber of Commerce.
    I want to welcome my good friend, Mr. Jim May, who is 
President of Air Transport Association, his new position.
    Mr. Bill Edwards, Jr., Vice President and General Manager 
of the Washington Hilton and Towers. He is also chair of the 
Government Affairs Committee of the American Hotel and Lodging 
Association.
    Mr. Clark Robinson, President, International Association of 
Amusement Parks and Attractions.
    Mr. Michael Sternberg, Chief Executive Officer of Sam & 
Harry's, the Caucus Room. All of us know where that is and have 
been to those facilities here in Washington. He is also 
representing the National Restaurant Association.
    And Mr. Paul Ruden, Senior Vice President for Legal and 
Industry Affairs, the American Society of Travel Agents.
    And Mr. Matthew Walker, General Vice President, Hotel 
Employees and Restaurant Employees International Union.
    Let me welcome all of you, and we will start with you, Mr. 
Lundberg, for your opening statement.

      STATEMENTS OF ROLF LUNDBERG, SENIOR VICE PRESIDENT, 
 CONGRESSIONAL AND PUBLIC AFFAIRS, U.S., CHAMBER OF COMMERCE; 
JAMES C. MAY, PRESIDENT, AIR TRANSPORT ASSOCIATION; WILLIAM H. 
   EDWARDS, JR., VICE PRESIDENT AND GENERAL MANAGER, HILTON 
      WASHINGTON & TOWERS; J. CLARK ROBINSON, PRESIDENT, 
 INTERNATIONAL ASSOCIATION OF AMUSEMENT PARKS AND ATTRACTIONS; 
MICHAEL STERNBERG, CHIEF EXECUTIVE OFFICER, SAM & HARRY'S, THE 
CAUCUS ROOM; PAUL M. RUDEN, SENIOR VICE PRESIDENT FOR LEGAL AND 
   INDUSTRY AFFAIRS, AMERICAN SOCIETY OF TRAVEL AGENTS; AND 
 MATTHEW S. WALKER, GENERAL VICE PRESIDENT, HOTEL EMPLOYEES & 
            RESTAURANT EMPLOYEES INTERNATIONAL UNION

    Mr. Lundberg. Thank you, Mr. Chairman, Ranking Member 
Schakowsky, members of the subcommittee.
    My name is Rolf Lundberg. I am Senior Vice President for 
Congressional and Public Affairs at the U.S. Chamber of 
Commerce.
    The U.S. Chamber of Commerce would like to thank the 
subcommittee for holding this important hearing, and we are, 
indeed, pleased to have the opportunity to testify. If I may 
submit my full statement for the record, I will just summarize.
    Mr. Stearns. By unanimous consent, so ordered.
    Mr. Lundberg. Thank you, Mr. Chairman.
    The U.S. Chamber is the world's largest business 
federation, representing over 3 million businesses of every 
size, sector, and region across the country.
    Just this past April 9, the U.S. Chamber of Commerce co-
hosted with the Travel Business Roundtable, who produced the 
video that we just saw, a major travel and tourism summit 
entitled ``Reigniting Growth in Travel and Tourism.'' It was an 
effort to focus a very bright spotlight on one of the most 
urgent economic issues of our time, the revitalization and 
growth of travel and tourism within the United States and 
around the world.
    That summit, which was the largest of its kind in nearly a 
decade included participants from all over the various sectors 
of the travel and tourism industry and brought together more 
than 200 CEO, senior level executives, along with 3 cabinet 
members, congressional leaders, mayors from cities across the 
country, and senior administration officials.
    The U.S. Chamber will continue to devote significant 
resources in this way to finding a solution for the travel and 
tourism industry's difficulties because travel and tourism is 
an indispensable component of the overall U.S. economy. Indeed, 
the stakes are high and the challenge is very clear.
    The travel and tourism industry, which includes airlines, 
hotels, restaurants, resorts, theme parks, museums, rental car 
companies, travel agencies, on and on, contributes nearly $100 
billion in tax revenue at the Federal, State, and local 
government level and, as you noted, Mr. Chairman, employs 
nearly 18 million persons in the United States.
    Additionally, the U.S. economy realized an annual balance 
of trade surplus from travel and tourism of $8.6 billion in 
2001, which as you noted also, Mr. Chairman, declined 
significantly from the surplus that was recorded in 1996, which 
was as high as $26 billion, which is a 70 percent decline.
    It is, however, one of the few industries that consistently 
generates multibillion dollar surpluses for this country in the 
balance of trade account.
    As the travel and tourism industry faces unprecedented 
challenges in the wake of September 11, economic uncertainty, 
the war in Iraq, and most recently the outbreak of SARS, the 
serious difficulties facing the various sectors of travel and 
tourism are obvious.
    Another victim of the sluggish travel and tourism industry 
is the small business sector, which is directly and indirectly 
affected from the lull in travel and tourism. Small businesses, 
those with under 100 employees, account for more than 96 
percent of the membership of the U.S. Chamber of Commerce.
    With the contributions of the small business sector to the 
economy, the Chamber wishes to note the dramatic impact that 
the decline of travel and tourism has had on small businesses 
that service and supply the travel and tourism industry. When 
travel slows, small businesses suffer the most because they do 
not have the ability to weather a long decline in business.
    Let me just summarize some of the recommendations, Mr. 
Chairman, that the U.S. Chamber would make.
    First of all, we believe that the first step to 
revitalizing the slowed travel and tourism industry is simply 
to restore confidence in American travel and confidence in 
people to travel.
    Second, the Chamber supports an increase in the promotion 
of America in other countries. The Chamber applauds the 
Congress and President Bush for the appropriation of that $50 
million to the Department of Commerce for fiscal year 2003 for 
the comprehensive international destination marketing campaign.
    We look forward to the work of the Advisory Board at the 
Department of Commerce, and we also support the establishment 
of a separate Presidential advisory council on travel and 
tourism.
    And we thank you, Mr. Chairman, for your letter to 
Secretary Evans on that subject.
    Yet another factor that will assist the recovery of the 
travel and tourism industry is the strengthening of the 
American work force. We are supportive of legislation signed by 
President Bush reauthorizing the work opportunity tax credit 
through the end of this year. Doing so continues to help 
employers provide work for unskilled and disadvantaged workers.
    And then another means of encouraging travel within the 
United States would be the passage of legislation in this 
Congress that would fully restore the business meal and 
entertainment tax deduction, which currently sits at 50 
percent. The reduction of this tax deduction has negatively 
affected the restaurant and entertainment industries and travel 
and tourism overall and has been particularly punitive to the 
small business community.
    So in conclusion, Mr. Chairman, the Chamber remains 
committed to working with the Congress, with all sectors of the 
travel and tourism industry in an effort to revitalize the 
industry as a whole. We would like to thank the subcommittee 
for focusing attention, again, on the economic impact of the 
industry, the United States, and we want to work with the 
subcommittee as it continues to examine issues related to the 
growth of the industry and considers policies to stimulate the 
revival of travel and tourism.
    And I would, of course, be happy to answer any questions, 
Mr. Chairman.
    Thank you.
    [The prepared statement of Rolf Lundberg follows.]

      Prepared Statement of Rolf Lundberg, Senior Vice President, 
       Congressional and Public Affairs, U.S. Chamber of Commerce

                                OVERVIEW

    Good afternoon Chairman Stearns and Ranking Member Schakowsky, and 
members of the Subcommittee on Commerce, Trade, and Consumer 
Protection. My name is Rolf Th. Lundberg, Jr., and I am Senior Vice 
President for Congressional and Public Affairs at the U.S. Chamber of 
Commerce. The U.S. Chamber of Commerce would like to thank the 
Subcommittee for holding this important hearing, and we are pleased to 
have the opportunity to testify on the current state of the U.S. travel 
and tourism industry.
    The U.S. Chamber of Commerce is the world's largest business 
federation representing over three million businesses of every size, 
sector and region. Our member companies and their millions of employees 
have suffered the burden of a weakened economy. Since the events of 
September 11, that burden has been particularly felt in the travel, 
tourism, and hospitality sectors, many of which are small businesses.
    The stakes are high and the challenge is clear. Few domestic 
industries generate jobs and economic growth like travel and tourism. 
One out of every seven people (or nearly 18 million people) in the U.S. 
private-sector workforce is employed directly or indirectly in travel 
and tourism related jobs. On April 9, 2003, the U.S. Chamber of 
Commerce co-hosted, with the Travel Business Roundtable, a major travel 
and tourism summit titled Re-Igniting Growth in Travel and Tourism. We 
used the summit to bring people together to help focus a very bright 
spotlight on one of the most urgent economic issues of our time: the 
revitalization and growth of travel and tourism in the U.S. and around 
the world. The summit--the largest of its kind in almost a decade--
included participants from all sectors of the travel and tourism 
industry and brought together more than 200 CEO and senior level 
executives along with three Cabinet Secretaries, congressional leaders, 
mayors from cities across the country and senior Administration 
officials. Our summit helped all of us recognize and highlight the fact 
that drop offs in travel and tourism are affecting broader elements of 
our economy. State and local governments are losing tax revenue, small 
businesses are hurting, and our balance of trade is suffering.
    The travel and tourism industry includes airlines, hotels, 
restaurants, resorts, theme parks and museums, rental car companies, 
travel agencies, and other industries and contributes nearly $100 
billion in tax revenue to federal, state, and local governments. With 
states and localities suffering their worst budget deficits in half a 
century, travel and tourism-generated funds are critical for providing 
essential services such as health care, education, and transportation 
system improvements.
    Additionally, the U.S. economy realized an annual balance of trade 
surplus from travel and tourism of $8.6 billion in 2001, however that 
surplus was a 70 percent decline from a $26 billion trade surplus in 
1996. It is one of the few industries that consistently generate multi-
billion dollar trade surpluses.
    As the travel and tourism industry faces unprecedented challenges 
in the wake of the September 11 tragedy, economic uncertainty, the war 
in Iraq, and most recently the outbreak of the Severe Acute Respiratory 
Syndrome (SARS), the serious difficulties facing the airlines, hotels, 
cruise lines, and theme parks are obvious.
    Another victim of a sluggish travel and tourism industry is the 
small business sector directly and indirectly affected from a lull in 
travel and tourism. Small businesses represent more than 96 percent of 
the U.S. Chamber's membership. In fact, 75 percent of these companies 
have fewer than 50 employees. Small businesses play a crucial part in 
the United States' economy, as there are roughly 22.4 million non-farm 
firms in the U.S. representing more than 99 percent of all employers. 
Additionally, they employ 51 percent of private-sector workers, and 38 
percent of workers in high-tech jobs. Small businesses account for 
nearly all of the self-employed, produce sixty to eighty percent of all 
the net new jobs and they account for 44.5 percent of total U.S. 
payroll. They are the fastest growing segment within this economy and 
women and minority entrepreneurs head many of these.
    With the contributions of the small business sector to the economy, 
the Chamber would like to point out the dramatic impact the decline of 
travel and tourism in the United States has on small businesses that 
service and supply the travel and tourism industry. When travel slows, 
small businesses suffer the most because they often do not have the 
ability to weather a long decline in business. Small businesses such as 
independent hotel owners and operators, taxi cab drivers, and local 
restaurants are immediately impacted by a slowed travel and tourism 
economy. When small businesses directly impacted by the travel and 
tourism industry are in decline, the flow of downstream revenues to 
other small businesses in a community, such as dry-cleaners and local 
retailers, are negatively impacted as well.
    The impact on communities is illustrated by the significance of 
small business to the communities that surround and serve our National 
Parks. At the Chamber's Travel and Tourism Summit, Secretary of the 
U.S. Department of the Interior Gale A. Norton, told the audience that 
in 2002, the National Park System attracted nearly 280 million visitors 
with 40 million of those visitors coming from foreign countries. 
Additionally, the Bureau of Land Management drew 54 million visitors 
while the National Wildlife Refuge System hosted more than 35 million 
visitors.
    Those millions of visitors were responsible for significant 
economic support of the local communities surrounding those tourist 
destinations. A survey conducted in the mid-1990s by the Fish and 
Wildlife Service found that Americans spend more than $100 billion a 
year on wildlife-related recreation including hunting, fishing, and 
hiking. Such activities are supported by local small businesses that 
cater to those activities. Thus, when travel and tourism is slowed, so 
is business for numerous small businesses in local communities.

                            RECOMMENDATIONS

    The Chamber believes that the first step to revitalizing our slowed 
travel and tourism industry is to restore confidence in American 
travel. We fully support the President's initiatives within the 
Department of Homeland Security to secure our nation's borders and 
protect our citizens. Simultaneously, we believe it imperative that our 
borders remain open to legitimate visitors.
    Secondly, the Chamber supports an increase in the promotion of 
America in other countries. Currently, the United States does not do 
enough to promote itself as a travel destination for international 
visitors. As other countries are promoting their countries, the United 
States continues to lose market share to foreign competitors for 
international tourists. According to the World Tourism Organization, 
travel and tourism economic activity represented 11.7 percent of world 
GDP in 1999 with global tourism receipts reaching $463 billion in 2001. 
With such staggering figures, it is clear that competition for tourist 
dollars is on the rise and the United States must promote itself in 
order to compete.
    The Chamber applauds President Bush, the Congress, and Senator Ted 
Stevens (R-AK) in particular, for the appropriation of $50 million to 
the United States Department of Commerce in fiscal year 2003 for a 
comprehensive international destination marketing campaign. These funds 
will allow the Secretary of Commerce, advised by the United States 
Travel and Tourism Promotion Advisory Board, to begin a campaign to 
promote the United States globally as a tourist destination.
    While the appropriation to the Department of Commerce is an 
excellent first step in organizing a Travel and Tourism advisory board 
for the Administration, the U.S. Chamber also supports establishment of 
a separate Presidential Advisory Council on travel and tourism. The 
Council would be created by Executive Order as a federal advisory 
committee under the Federal Advisory Committee Act (FACA) and should be 
comprised of members from the private, public and non-profit sectors.
    Over 130 countries have assigned cabinet-level tourism officials or 
created some form of government-sponsored tourism office. These nations 
have recognized the essential need for organization and promotion of 
their countries as travel destinations as they compete for the global 
tourist market. If we are to effectively compete, the creation of a 
Presidential Advisory Council is imperative to both cultivate policy 
development within the federal government as well as to measure tourism 
policy success.
    Yet another factor that will assist the recovery of the travel and 
tourism industry is the strengthening of the American workforce. 
President Bush signed legislation reauthorizing the work opportunity 
tax credit (WOTC) through December 31, 2003 and in doing so continues 
to help employers provide work for unskilled and disadvantaged workers. 
As the WOTC gives employers a federal income tax credit of up to $2,400 
for each WOTC-eligible employee they hire, approximately one-fourth of 
the restaurants in the United States are reaping the benefit of the tax 
credit while providing jobs for needy employees.
    Another means of encouraging travel within the United States would 
be passage of legislation in the 108th Congress that would fully 
restore the business meal and entertainment tax deduction. In the 
Omnibus Budget Reconciliation Act of 1993, the allowable deduction for 
business meals and entertainment expenses was reduced to 50 percent. 
The reduction of this tax deduction has negatively affected the 
restaurant and entertainment industries and has been particularly 
punitive to the small business community. Research completed in 1998 by 
some members of the Travel Business Roundtable showed that one-fifth of 
business meal users were self-employed with more than two-thirds of 
business meal users having incomes of less than $60,000 and 37 percent 
having incomes below $40,000. As such, to assist small business owners 
as well as boost the travel and tourism economic industry, the Chamber 
supports an increase in the level of deductibility of business meals 
and entertainment expenses.

                               CONCLUSION

    The U.S. Chamber of Commerce remains committed to working with all 
sectors of the travel and tourism industry in an effort to revitalize 
the industry as a whole. We will continue working with the industry, 
Congress and the administration until we are once again the number one 
global travel destination.
    The U.S. Chamber of Commerce would like to thank the Subcommittee 
for focusing attention on the economic impact of the travel and tourism 
industry to the United States. We appreciate the Subcommittee's review 
of our recommendations for re-igniting travel and tourism in the U.S. 
We look forward to working with the Subcommittee as it continues to 
examine issues related to the growth of the industry and considers 
policy to stimulate the revival of travel and tourism.

    Mr. Stearns. I thank the gentleman.
    Before we go the chairman of the full committee, the 
distinguished Chairman, Mr. Tauzin, has arrived, and I would 
certainly welcome any comments that the Chairman has.
    Chairman. Tauzin. I thank the gentleman. I appreciate the 
indulgence of the committee.
    I simply wanted to stop by and welcome you all and thank 
you for agreeing to come and testify. I particularly wanted to 
welcome Jim May in his new role representing a whole new 
industry and yet one that has just as much importance for New 
Orleans as does broadcasting and music and all of the good 
things he represented before.
    I do not have to tell you how critical it is that we keep a 
vibrant and strong tourist economy in our country, and travel 
has seen some tough times since 9/11, and tourism in various 
parts of our country has seen, you know, its ups and downs as a 
result of some of the concerns we have had.
    But it is still a uniquely clean, vibrant, great source of 
economy. I know Florida, and the Chairman has a great interest 
in it from a personal standing, the Florida standing with 
tourism, but you know, we do not take second place to anybody. 
Jazz Fest is going on right now in New Orleans. It is the best 
time in the world to be in New Orleans right now.
    And I talked to my son and daughter who were there 
celebrating this last weekend, and the weather was beautiful 
and the crowds were as big as ever.
    We sometimes forget how critical it is to the health of the 
economies that, like ours in Louisiana, is sometimes up and 
down with the oil and gas industry. There are times when we are 
really down in the ditch, and yet tourism is as strong or 
stronger than ever, and it provides incredible jobs and support 
for families and to small businesses across my State and across 
the country.
    And the fact that we are going to make an international 
push to remind people about the great places in America to see 
and to come and visit is something that there is a great 
interest in, Mr. Chairman, and I want to help you make sure 
that we do everything possible to build this country up to the 
status it once enjoyed as the No. 1 tourist landing spot in the 
world.
    There is no reason why France ought to be ahead of us at 
anything right now, and this is one good example of why we 
ought to be leading from a position of strength again.
    Thank you all for coming. Know that you are in a friendly 
room here. This room supports the travel industry. It supports 
tourism, and anything we can do to make this industry more 
vibrant and add to its strength and growth in the years to come 
we take very personal, and we will do everything we can for 
you.
    Welcome, again, Jim, in your new assignment and new role. 
As I said, know that you are in good hands when you come to 
this committee, and we wish you well.
    And, Mr. Chairman, thank you for letting me speak.
    Mr. Stearns. I thank the distinguished Chairman for his 
encouragement, and I appreciate his participation.
    And, Mr. May, you are next with your opening statement.

                    STATEMENT OF JAMES C. MAY

    Mr. May. Thank you, Mr. Chairman, and thank you to the 
Chairman of the full committee for his kind words.
    It is a delight for me to appear before this committee in a 
very different capacity than I am used to. I am here 
representing 22 member carriers of the Air Transport 
Association who carry 95 percent of the Nation's passengers and 
cargos.
    Before addressing the broader state of the industry issues, 
I think it is very appropriate for me to begin by thanking this 
committee and, in fact, the entire Congress for the refund of 
airline security expenses and revenues foregone in the recently 
passed cost-of-war supplemental appropriation.
    While the question of how these costs are appropriately 
allocated in the future remains to be addressed, this short-
term cash infusion has given this industry a very essential 
boost to help preserve air service and jobs.
    Now, the Nation's airlines are clearly a key component of 
travel and tourism and the travel and tourism industry and, of 
course, the overall economy. The importance of civil aviation 
was made very readily apparent by the events of 9/11. Layoffs 
and financial losses in civil aviation, its supplier industries 
and the tourism industry and the broader economy rose sharply.
    In fact, half of the jobs lost in the economy since 9/11 
have been in the travel and tourism sector.
    The prolonged effect of high fuel prices, escalating 
security and insurance costs, spiraling labor expenses, among 
others, have combined with a particular vengeance in an under 
performing economy exacerbated by the aftermath of 9/11. The 
war in Iraq and the outbreak of SARS have worsened that 
situation.
    U.S. airlines lost an estimated $18 billion in 2001-2002, 
leaving them very vulnerable to further shocks and sustained 
economic weakness. To continue operations, most airlines have 
taken on a staggering debt load leaving them, on average, more 
than 90 percent leverage. Several large carriers have sought 
Chapter 11, as many of you in this room are well aware. Others 
are teetering on the edge.
    In 2003, the industry is expected to record another 
multibillion dollar loss, despite the cost-of-war supplemental 
relief. Profits industry wide are not expected until at least 
2005.
    The pricing environment is particularly weak. The industry 
has experienced 20 consecutive months of double digit yield 
declines, and nominal domestic fares are at their lowest levels 
since 1987.
    Now, despite these prices, traffic remains roughly 10 
percent below 2000 levels. Pacific traffic, in particular, has 
plummeted 40 percent below last year's already depressed 
levels, and we know the reason why, and the trend line remains 
down.
    Atlantic traffic is not too far behind at a negative 25 
percent. Now, to cope with the smaller revenue pool now running 
below 1995 levels, carriers have reduced their work force by 
over 111,000 positions. We have parked nearly 13 percent of our 
overall industry fleet. Thousand more furloughs are expected. 
Orders for airlines are down sharply as planned retirements 
accelerate.
    Consumer and CEO confidence indices have sunk in recent 
months leaving projections for summer and business travel 
gloomy.
    Now, these traffic declines undermine the traditional 
relationship between passenger demand and the U.S. economy. 
Avoidance of air travel on this scale suggests that classical 
forecast models need to be recalibrated and that a robust 
return of even modestly growing traffic levels should not be 
expected within the near future.
    The airline industry does not operate in isolation. Most 
certainly air transportation powers our national economy. It 
links communities together. It delivers vital, high value 
goods. It produces jobs across the spectrum, including our 
largest sector of employment, travel, and it drives just-in-
time delivery, which is vital to our productivity.
    There is quite literally no aspect of life in these United 
States that does not benefit from aviation, and unfortunately, 
when aviation experiences economic difficulties, those 
difficulties reverberate across the economy. When aviation 
thrives, it enhances other sectors of the economy 
significantly.
    Now, since the advent of airline deregulation, air 
travelers have enjoyed a 38 percent decline in real average 
fares through 2000 and nearly 80 percent more service. That is 
as measured by departures concurrent with increase in revenue 
passenger miles of a couple of hundred percent. Civil 
aviation's total impact in the year 2000, the last full 
measured year amounted to about 9 percent of GDP. Directly $343 
billion and 4.2 million jobs were produced in civil aviation or 
in industries related to civil aviation, such as travel and 
tourism.
    Indirectly $255 billion and 3.2 million jobs are created in 
other industries in the civil aviation supply chain and related 
industries. For every job in the aviation industry, airlines 
industry an estimated 15 jobs are produced in the broader 
economy.
    The airline industry recognizes its importance not only to 
travel and tourism, but to this national economy. It is 
evidenced by the tremendous growth in the industry prior to 9/
11 when service was expanded and fares were cut. The industry 
continues to seek ways to emerge from current struggles. We 
have undertaken extraordinary self-help measures and are 
working closely with the Federal Government concerning matters 
of taxation, security, and funding for infrastructure 
enhancements.
    We want passengers to again embrace air travel as the 
preferred mode of transportation instead of being fearful of 
potential dangers. Vacations should be enjoyed, not dreaded. 
Passengers should have several options from which to choose, 
and air travel should be welcomed as efficient and economical, 
not laborious and expensive. And most importantly, traveling by 
air should be safe.
    The travel and tourism sector depends on the air 
transportation system for its economic vitality. The ATA and 
its member airlines are committed to meeting demands placed on 
our industry by virtue of its importance to the national 
economy and, therefore, are committed to fulfilling our role as 
the engine that drives travel and tourism.
    In doing so, we look forward to working with both the 
Congress and the administration to establish policies that 
foster critical economic growth.
    Thank you, again, Mr. Chairman, for the opportunity to 
appear.
    [The prepared statement of James C. May follows:]

 Prepared Statement of James C. May, President and CEO, Air Transport 
                      Association of America, Inc.

    Mr. Chairman and members of the Subcommittee, thank you for 
inviting me here today to discuss the state of the travel and tourism 
industry. I appear before you representing the 22 member carriers 
1 of the Air Transport Association, who carry 95 percent of 
the nation's passengers and cargo.
---------------------------------------------------------------------------
    \1\ ATA member airlines include: Airborne Express, Alaska Airlines, 
Aloha Airlines, America West Airlines, American Airlines, ATA Airlines 
(formerly American Trans Air), Atlas Air, Continental Airlines, Delta 
Air Lines, DHL Airways, Emery Worldwide, Evergreen International 
Airlines, Federal Express, Hawaiian Airlines, JetBlue Airways, Midwest 
Airlines, Northwest Airlines, Polar Air Cargo, Southwest Airlines, 
United Airlines, United Parcel Service, and US Airways. Associate 
members are: Aerovias de Mexico, Air Canada, Air Jamaica, KLM-Royal 
Dutch Airlines, and Mexicana de Aviacion.
---------------------------------------------------------------------------
    Before addressing the broader state of the industry issues, let me 
begin by thanking this Committee, and the entire Congress, for the 
refund of airline security expenses and revenues foregone in the recent 
cost of war supplemental appropriations. While the question of how 
these costs are appropriately allocated in the future remains to be 
addressed, this short-term cash infusion has given the industry an 
essential boost to help preserve air service and jobs.
    The nation's airlines are a key component of the travel and tourism 
industry, and of the overall economy. The importance of civil aviation 
was made readily apparent by the events of 9/11. Layoffs and financial 
losses in civil aviation, its supplier industries, the tourism industry 
and the broader economy rose sharply. In fact, half of the jobs lost in 
the economy since 9/11 have been in the travel and tourism sector.
    The prolonged effect of high fuel prices, escalating security and 
insurance costs and spiraling labor expenses, among other things, have 
combined with a particular vengeance in an underperforming economy 
exacerbated by the aftermath of 9/11. The war in Iraq and the outbreak 
of SARS have worsened the situation. U.S. airlines lost an estimated 
$18 billion in the 2001-2002 period, leaving them extremely vulnerable 
to further shocks or sustained economic weakness. We have had both.
    To continue operations, most airlines have taken on a staggering 
debt load, leaving them on average more than 90 percent leveraged. 
Several large carriers have sought Chapter 11 bankruptcy protection, 
and another is teetering. In 2003, the industry is expected to record 
another multi-billion dollar loss, despite the cost of war supplemental 
relief. Profits industry-wide are not expected until at least 2005.
    The pricing environment is particularly weak. The industry has 
experienced 20 consecutive months of double-digit yield declines, and 
nominal domestic fares are at their lowest levels since 1987. Despite 
those prices, traffic remains roughly 10 percent below 2000 levels. 
Pacific traffic has plummeted to 40 percent below last year's already 
depressed levels--and the trend line remains down. Atlantic traffic is 
not too far behind at a negative 25 percent. To cope with the smaller 
revenue pool, now running below 1995 levels, carriers have reduced 
their workforce by 111,000 positions and parked 13 percent of the 
industry's fleet. Thousands more furloughs are expected. Orders for 
airplanes are down sharply as planned retirements accelerate. Consumer 
and CEO confidence indices have sunk in recent months, leaving 
projections for summer and business travel gloomy in 2003.
    These traffic declines undermine the traditional relationship 
between passenger demand and the U.S. economy. Avoidance of air travel 
on this scale suggests that classical forecast models must be 
recalibrated and that a robust return of even modestly growing traffic 
levels should not be expected within the near future.
    The airline industry does not operate in isolation. Most certainly, 
air transportation powers our national economy. It links our 
communities together. It delivers vital, high-value goods. It produces 
jobs across the spectrum--including our largest sector of employment, 
travel and tourism. And, it drives just-in-time delivery vital to our 
productivity. There is quite literally no aspect of life in the United 
States that does not benefit from aviation. When aviation experiences 
economic difficulties, those difficulties reverberate across the 
economy. But, when aviation thrives, it enhances other sectors of the 
economy significantly.
    Since the advent of airline deregulation, air travelers enjoyed a 
38 percent decline in real average fares through 2000 and 79 percent 
more service, as measured by departures, concurrent with an increase in 
revenue passenger miles of 200 percent. Civil aviation's total impact 
in 2000 amounted to about 9 percent of GDP. Directly, $343 billion and 
4.2 million jobs were produced in civil aviation or in industries 
related to civil aviation, such as travel and tourism. Indirectly, $255 
billion and 3.2 million jobs arose in the other industries in the 
supply chain to civil aviation and related industries. For every job in 
the airline industry, an estimated 15 jobs are produced in the broader 
economy.
    The airline industry recognizes its importance not only to travel 
and tourism, but also to the national economy. This is evidenced by the 
tremendous growth in the industry prior to 9/11, when service was 
expanded and fares were cut. The industry continues to seek out ways to 
emerge from current struggles, undertaking self-help measures and 
working closely with the federal government concerning matters of 
taxation, security and funding for infrastructure enhancements. We want 
passengers to again embrace air travel as the preferred mode of 
transportation, instead of being fearful of potential dangers. 
Vacations should be enjoyed, not dreaded. Passengers should have 
several options from which to choose. Air travel should be welcomed as 
efficient and economical, not laborious and expensive. And, most 
importantly, traveling by air should be safe.
    The travel and tourism sector depends on the air transportation 
system its for economic vitality. The Air Transport Association and its 
member airlines are committed to meeting the demands placed on the 
industry by virtue of its importance to the national economy, and 
therefore are committed to fulfilling our role as the engine that 
drives travel and tourism. In doing so, we look forward to working with 
both the Congress and the Administration to establish policies that 
foster critical economic growth.
    Mr. Chairman, I again thank you for the opportunity to appear 
today.

    Mr. Stearns. I thank the gentleman.
    Mr. Edwards.

              STATEMENT OF WILLIAM H. EDWARDS, JR.

    Mr. Edwards. Thank you, Mr. Chairman, Ranking Member 
Schakowsky, members of the committee.
    My name is Bill Edwards. For the record, my title is the 
Area Vice President of the Mid-Atlantic of Hilton Hotels 
Corporation in Washington, DC.
    I would first like to thank you, Mr. Chairman, for your 
opening statement. It hit every point right on the head. I 
think it was an outstanding summary.
    As per the request, I am not going to go through a long 
written document. I am going to do bullet points to possibly 
present our position, generate questions and answers should 
that be necessary at the end of the day.
    I am also here as the chairman of the Government Affairs 
Committee representing the American hotel and lodging industry.
    I think what you are going to hear redundantly today is 
that if you look across this table as connecting the dots, 
where the economy goes goes the airlines. Where the airlines 
go, hotel guests go. Where the hotel guest goes, amusement 
parks go. Where our hotel guests and amusement parks go, so do 
restaurants.
    And at the end of the day, down the road we have the unions 
and other employing agencies that are all tied together. So 
this is a set of dominos in the industry.
    We are representing today more than 43,000 lodging units 
throughout the country. We represent over 2 million employees 
working in every congressional district.
    The interesting point and probably the warming point I 
should bring across is if I take just the Hilton Washington 
that you have all been in, that represents 800. About 80 
percent of our employees are unskilled. Thirty-eight different 
languages. We are usually the first front line employers for 
new immigrants to our country or people who need skill 
training.
    So when we talk about layoffs and devastation in the 
industry, we are talking about individuals, not the MBAs from 
Harvard. We are talking about individuals who the day they are 
laid off, the next day they are hungry. They do not pay rent or 
bills.
    So I would like to emphasize that as being critical in this 
discussion.
    What is the state of the industry? I am going to give you 
bullet points. I think you have the statistics, and your staff 
would say all that we would say here, but so far I can tell you 
we have already cut 100,000, 130,000 jobs. And again, remember 
the people I said to focus with.
    Why? Because we have fewer people traveling. Since 2000 
domestic travel to us is down 9 percent; international at least 
17; and those numbers are still falling.
    If I take a peek at New York, I am looking at 36 percent 
drop since the year 2000 in daily rate. That is a 100 percent 
flow through to profit line, depreciation of profit line. I'm 
looking at occupancy of 83 percent to 69. That is individuals. 
We say heads in beds. That is employment; that is jobs.
    If I go to the other side of the ocean, as far away as 
Hawaii, I can look at 30 percent drop over there, and Hilton 
has a major presence, and it is still dropping, obviously tied 
into the SARS issue.
    What I would like to do for the entire committee and staff 
is focus on something that I think is important for a hotel, 
and that is measurement. Someone will say, ``Oh, occupancy is 
up.'' Well, that may be the case, but that is not a measuring 
device of success in hotels.
    If they look at our portfolio, we own Hampton Inns, 
Doubletrees, Embassy Suites, Hilton Hotels, whatever. We own 
Bally's, Caesars, all of this stuff. The measuring device is 
RevPAR, revenue per available room, and you have to look at 
that in its total picture. If I sell a room for $10, I will 
have 100 percent occupancy, especially in Washington. I will 
not make any money.
    You want to look at the total package of revenue per 
available room, which is what your hotel corporations look at, 
which is what your developers look at.
    So if we talk RevPAR, everyone says that while leisure 
destinations are up or suburban State or rural States are up in 
occupancy, well, fine, but they are also heavily discounting to 
obtain that occupancy.
    I think we have to be very cautious about discounting, 
which does not necessarily produce RevPAR, which definitely 
does not produce profits. So I think the occupancy argument in 
any discussions in this committee should be guarded, and the 
question should be asked: what about RevPAR, revenue per 
available room?
    If we look at profits, if we take it back to the year 2000, 
we are down easily a third. The average in the industry this 
year, for example, is we dropped 19.4 percent in 2001 and 
another 9.6 percent in 2002. And as you very eloquently stated 
in your opening comments, 2003 is not exactly headed in the 
right direction.
    This is the first time in 2001 and 2002, by the way, that 
this industry has showed consecutive year depreciation of 
business since 1982 or 1983. One of the spinoffs of this 
situation is the delinquency rate in hotels and the lack of 
development of jobs in many of our inner cities.
    For example, I had the privilege of growing up in the great 
city of Chicago. My home as a child was the 17th floor of the 
Farmer House. This is a plug.
    But growing up there, I understand that Chicago, in fact, 
is the convention capital of the United States. We can argue 
that between New York and Washington and other cities, but 
let's face it. That is where the life blood is. That industry 
goes down; that city goes down.
    So when we start talking about hotel development, you can 
take Washington, DC. We have a brand new Convention Center. 
Guess what. We do not have a hotel down because they cannot get 
finance. What is going to happen to this new Convention Center? 
It is going to be a longer haul.
    So what happens when profits go down? What do managers of 
units usually do? Well, they start closing restaurants. They 
start cutting staff. They start looking at marketing efforts at 
secondary or discounted markets, which depresses RevPAR 
further.
    I can tell you right now my brother works for a major 
competing firm I will not mention here. They are on a 4-day 
work week for executives. I just announced for the Mid-
Atlantic, which covers from Pittsburgh down, that they are 
going to forced vacation starting in May. These are the 
executive branch.
    Do not think for a minute that we are putting on the 
shoulders of all of our team members these layoffs. It is going 
right from the management on down.
    But profits are not just down on rooms division. You know, 
you have banquets in the big hotels, be it Chicago, the Chicago 
Hilton, the Palmer House, in Washington this one, the Marriott 
Wardman, all of these big banquets. I got a call 4 days in 
advance of the radio and television correspondents that they 
had to cancel it as a result of the war. Four days for a dinner 
of 2,800 people that is worth over $200,000. That is 210 
waiters, 80 chefs, again, not working that night.
    So this is the kind of action/reaction we have.
    The other element that is of concern is the cities and 
States and local governments want to increase taxes for their 
own benefit. That is a dangerous task. So we want two things. 
We want to endorse your efforts with the $50 million. We also 
want to work together as a team to open doors, to bring people 
to this country, and help Americans travel easier.
    [The prepared statement of William H. Edwards, Jr. 
follows:]

 Prepared Statement of William H. Edwards, Jr. Chairman, Governmental 
 Affairs Committee, American Hotel & Lodging Association and Area Vice 
   President, Hilton Hotels Corporation and General Manager, Hilton 
                               Washington

                              INTRODUCTION

    Mr. Chairman, Ranking Member Schakowsky, members of the 
Subcommittee, thank you for the opportunity to testify on travel and 
tourism in America today, particularly on the state of the U.S. lodging 
industry. In many ways, these are the most difficult and unpredictable 
times we have seen in more than a generation so this hearing and this 
opportunity to testify is critically important.
    I am here in my capacity as Chairman of the Governmental Affairs 
Committee of the American Hotel & Lodging Association (AH&LA). AH&LA 
represents the nation's $100 billion lodging industry. Nationwide, 
there are more than 43,000 lodging properties. These properties 
represent roughly 2,000,000 employees and voters in every Congressional 
District.
    Now, let me tell you a bit about my background. I have been a hotel 
general manager for 25 years, in the industry for over 30 years, and in 
my present position as Vice President with Hilton Hotels for eight 
years. In addition to my long involvement with AH&LA, I am a past 
President and Chairman of the Hotel Association of Washington, D.C. and 
the Washington Convention & Visitors Association as well as similar 
positions in San Diego.

                     STATE OF THE LODGING INDUSTRY

    As I mentioned earlier, the lodging industry is facing very 
challenging times. The poor economy, traveler fears, post-9/11 security 
measures, SARS, and other factors have played a part. Here are some 
basic statistics to support my characterization:
    We have had to cut approximately 130,000 jobs since mid-2001. This 
figure masks the efforts made by many hoteliers to retain employees by 
shifting some to part-time work until business improves.
    Fewer people are staying at our hotels. As has been noted, since 
2000, domestic business travel is down almost 9% and international 
arrivals are down 17%, so it is not surprising that some properties 
have fared differently than others. In general, drive-to destinations 
have done better than fly-to destinations, and leisure destinations, 
better than business destinations. For example:

 The average room rate in NYC has fallen 36% from 2000, while 
        occupancy has dropped from 83% to 69%.
 Visitors to Hawaii are down 30% from last year.
    For the year 2002, occupancy, average room rate, and Revenue Per 
Available Room or RevPAR were all down from 2001, and we experienced 
more of the same trend during the first quarter of this year: 
occupancy, average room rate, and RevPAR all were down.
    I should note that RevPAR is a better gauge of the health of the 
industry than occupancy rates, which seem to get more play in the 
media. I could get to 100% occupancy quite quickly if I charged $10 a 
night. I also would lose my job. RevPAR factors in the rate at which 
I'm selling my rooms, which gives you and the hotel's owner a much 
better idea if the property is profitable or not.
    One of the main reasons leisure destinations are doing as well in 
occupancy is that hotels and airlines have been cutting prices. That 
has helped boost occupancy, but has not helped RevPAR. So please don't 
assume that all is well when you hear that ``occupancy is up'' in a 
certain city or hotel.
    Speaking of profits, overall, the industry is profitable, but those 
profits have fallen considerably and not all hotels are profitable. 
Industry profits are down one third since 2000 and are projected to 
fall again this year.
    At the individual property level, the operating profit of the 
average US hotel dropped 9.6% in 2002 after dropping 19.4% in 2001. 
This is the first time profits have dropped in two consecutive years 
since 1982-83.
    What profitability our industry is enjoying is not being enjoyed by 
all. Hotel loan delinquencies are at their highest since the early 
1990s. Perhaps this explains why the number of hotel development 
projects that started construction in the first quarter of 2003 was the 
lowest quarterly total since the early 1990s, following Operation 
Desert Storm.
    To stay in the black, the industry has taken some extraordinary 
measures, for example: closing restaurants, cutting staff, shifting 
marketing efforts, and getting control of the Internet market, which 
has driven down rates to alarming levels. In their cutbacks, hotel 
operators have tried mightily to focus on areas that the guest will not 
notice and to a large degree we have succeeded. But there is little 
left to cut that would not affect guest service.
    It is not just the room rate. Hotels derive income from much more 
than the rate charged for a night's sleep. There are restaurants and 
shops in the lobby, in-room movies and mini-bar, and resort activities 
to name a few. When the number of guests declines, the number of 
customers for these activities declines as well.
    Further, many hotels do considerable banquet business as part of 
conventions or as a stand-alone event. This business too has dropped. 
In some instances, this is due to the weak economy, but in others there 
is a direct correlation to changes in the Department of Homeland 
Security Advisory System's terror threat level. Obviously, we feel this 
acutely here in Washington.
    In addition to these issues, we are beginning to face another 
challenge: cash strapped state and local governments are looking for 
ways to raise money and some of them are looking at the travel 
industry.
    Some governments are seeking to raise their occupancy taxes. Anyone 
who travels can tell you that hotels are not undertaxed. Others are 
cutting their state tourism promotion budgets, a self-defeating act if 
ever there was one. Still others are getting more creative in taxing 
such items as phone service, parking, and mixed drinks.

                            RECOMMENDATIONS

    Rather than give you a long list of measures that the industry 
would like to see enacted, let me focus on two recommendations.
    America needs a sustained international marketing campaign 
supported by the federal government.
    As I noted earlier, international arrivals are down 17% since 2000. 
The international economy is partly to blame, but we also must 
acknowledge that steps taken since 9/11 to make America more secure 
have given many potential foreign visitors the impression that America 
is not a welcoming destination.
    Keeping out those who wish us harm is critical to the health of the 
travel industry. No sector was hurt more by the terrorist attacks and 
none would be damaged as much by a second strike. But it is imperative 
that we also work hard to facilitate the flow of legitimate travelers 
to the US. A sustained US marketing initiative can help.
    As we all know, Congress has appropriated $50 million for such an 
effort. First of all, thank you.
    Secondly, we at AH&LA pledge to do what we can to ensure that this 
money is well spent: that it will demonstrate that marketing can 
significantly increase the number of visitors to the US, generating 
more jobs for American workers, more income for domestic businesses, 
and more tax revenue for all levels of our government. We are working 
closely with the Department of Commerce to achieve these goals. As a 
team--the hotel industry, the Department of Commerce, and the Congress 
can turn this around.

Grow the Economy
    No single factor has a greater impact on the health of the lodging 
industry than the current state of the economy. When times are tough, 
companies tighten up their travel policies: limiting attendees at a 
meeting, cutting per diems, or banning travel entirely. Some industry 
analysts are predicting that the combination of 9/11 and the recession 
have permanently changed business travel, with more and more companies 
turning to videoconferencing and other alternatives.
    The health of the economy also has significant impact on leisure 
travel. People worried about their jobs cut back on their vacation, 
that is if they take vacations at all.
    AH&LA supports a tax cut package big enough to grow the economy, 
create jobs, and therefore stimulate travel. The President has a broad 
plan that AH&LA supports, but it is clear that both the House and 
Senate have ideas of their own. We are less concerned about the 
specifics of the bill than about its impact. We have expressed this 
viewpoint consistently and lobbied for it during our recent legislative 
conference. We urge Congress to approve a substantial measure that will 
achieve significant economic growth.

                               CONCLUSION

    Again, Chairman Stearns, Representative Schakowsky, thank you for 
this opportunity to testify at the important hearing. I would be happy 
to answer any questions you may have.

    Mr. Stearns. I thank the gentleman.
    Mr. Robinson.

                 STATEMENT OF J. CLARK ROBINSON

    Mr. Robinson. Thank you, Mr. Chairman, Ms. Schakowsky, and 
other members of the committee.
    Mr. Stearns. Just pull it a little closer maybe if it 
reaches there. Good. Thanks.
    Mr. Robinson. There we go.
    In behalf of the members of the International Association 
of Amusement Parks and Attractions, also known as IAAPA, I 
would like to thank you for this opportunity to testify today.
    Also, if I may, Mr. Chairman, I would like to submit the 
full written testimony to the committee.
    Mr. Stearns. By unanimous consent, so ordered.
    Mr. Robinson. Thank you.
    IAAPA is the largest international trade association for 
amusement parks worldwide. In fact, we represent more than 
5,000 amusement and theme parks, attractions, and suppliers 
from over 85 countries.
    Now, let me turn to the state of the industry. Overall the 
U.S. travel and tourism industry has been adversely affected by 
the reduction of visitors from overseas. The U.S. share of 
international travel has declined 30 percent over the last 10 
years while worldwide outward tourism has increased by 50 
percent.
    Additionally, the travel and tourism industry accounts for 
6 percent of all U.S. employment. However, 30 percent of all 
post 9/11 job losses were in the travel and tourism industry.
    From September 2001 through December 2002, 387,000 jobs 
have been lost. The tragic events of September 11, have had an 
immediate and continuing impact on destination parks that were 
still open in the fall of 2001. The post 9/11 drop in 
international visitors led to an overall attendance decrease of 
6 to 8 percent in the Orlando theme park market during 2002.
    Total international arrivals in the U.S. declined 7 percent 
in 2002. Overseas guests are among the most valuable customers 
for destination facilities. Visitors spend more, stay longer, 
and return often. The average overseas visitor to Orlando stays 
10 nights compared to 5 for domestic visitors.
    In Los Angeles, the average overseas visitor stays 6 and 7 
nights versus the average domestic visitor's stay of less than 
4 nights.
    While the impact of a decrease in overseas visitors is felt 
to varying degrees in other types of parks and attractions, 
attendance in regional parks in 2002 was mixed, and attendance 
at local parks has generally increased.
    At year's end, America's amusement parks and attractions 
played host to over 300 million visitors and generated revenues 
of more than $9 billion. Attendance growth in the industry has 
averaged 2 to 3 percent annually for the past 2 decades, while 
revenues have increase 5 to 6 percent annually on average 
during the same period.
    In terms of wider economic impact, studies have determined 
that for every $1 spent inside a park or attraction, another $2 
to $4 are spent outside its gates. Thus, last year $18 to $36 
billion was spent in related communities across the United 
States.
    IAAPA joins other segments of the travel and tourism 
industry in gratitude to Congress for appropriating $50 million 
for United States Travel and Tourism Promotion Advisory Board. 
We believe this appropriation should be used for a 
comprehensive international destination marketing campaign to 
bring overseas travelers back to the United States. The funds 
should not be broken up and used in several projects, but 
rather applied to a measurable, unified campaign.
    And to move even further in promoting tourism, a 
Presidential advisory council should be considered to provide 
additional guidance to the Federal Government on tourism 
issues.
    IAAPA and its members of the travel and tourism industry 
support the need for secure U.S. borders. At the same time, we 
urge you that all steps be taken to ease the entry into this 
country for visitors who wish to experience the United States. 
IAAPA members, along with many other segments of the travel and 
tourism industry make extensive use of the J-1 visa program, as 
well as other visa programs. While international students 
provide a valuable work force, they also return home with a 
better understanding of the values and cultures of America.
    IAAPA joins others in the travel industry in encouraging 
the Department of Homeland Security to partner with industry to 
find ways to protect our borders against those who would do us 
harm, while not making access to the U.S. overly difficult for 
those who want to visit.
    Efforts to market the U.S. internationally will be for 
naught if we make it too difficult for visitors to enter our 
country.
    In conclusion, we believe our success is our own, but we 
ask the government to support us by helping promote our Nation 
as the wonderful destination that it is.
    Thank you for this opportunity share our concerns, and I 
would welcome any questions.
    [The prepared statement of J. Clark Robinson follows:]

   Prepared Statement of J. Clark Robinson, President, International 
             Association of Amusement Parks and Attractions

    Mr. Chairman, Ranking Member Schakowsky, and Members of the 
Subcommittee, on behalf of the members of the International Association 
of Amusement Parks and Attractions, also known as IAAPA, I want to 
thank you for the opportunity to testify on the current state of our 
industry.
    Let me begin with a brief description of IAAPA. IAAPA is the 
largest international trade association for permanently situated 
amusement facilities worldwide. In fact, we represent over 5,000 
amusement and theme parks, attractions, and suppliers from over 85 
countries. While 40% of our amusement facility members are amusement 
and theme parks, the rest is a mix of family entertainment centers 
(35%), waterparks (7%), zoos and aquariums (5%), and other attractions 
(13%).
    The IAAPA annual convention and trade show is the largest event in 
the amusement industry. More than 30,000 attendees experience all 
elements of the amusement and attractions industry. International 
exhibitors make up approximately 20% of the show, and 19% of the 
attendees are international. International visitors come from as far 
away as Dubai and Korea, or from as close as Mexico and Canada. In 
2002, exhibitors came from China, Saudi Arabia, Australia, Italy, 
Scotland, and many other countries.
    IAAPA's goal is to help our members improve their safety, 
efficiency, marketing, and profitability while at the same time, 
maintaining the highest possible professional standards in the 
industry.

                              2002 SEASON

    Now, let me turn to the state of the industry today.
    Travel and Tourism Industry: Overall, the U.S. travel and tourism 
industry has been adversely affected by the reduction in visitors from 
overseas. The U.S. share of international travel has declined by 30% 
over the last ten years, while worldwide outbound tourism has increased 
by 50%. According to the Travel Industry Association of America, the 
travel and tourism industry accounts for 6% of total US employment. 
However, 30% of all post-9/11 job losses were in the travel and tourism 
industry. The travel and tourism industry has lost 387,000 jobs from 
September 2001 through December 2002.
    Amusement Parks and Attractions: Amusement parks and attractions, 
national landmarks, historic sites, and many other tourist destinations 
in our country are major drivers in the travel and tourism industry. 
They provide incentives for families and travel groups, both domestic 
and international, to board airplanes, cruise lines or trains, or jump 
into their cars and stay in hotels. When attendance at our facilities 
and the other wonderful tourist destinations around the country begins 
to decline, a ripple effect is felt throughout the economy.
    The tragic events of September 11, 2001, had an immediate and 
lasting impact on our destination parks that were open in the fall of 
2001. Destination parks are typically facilities where a sizeable 
portion of business is derived from guests who travel considerable 
distances specifically to visit the park and stay for several days, 
enjoying a facility's additional offerings, such as a second park or 
waterpark, hotels, restaurants, or shopping in the region. Destination 
parks include numerous facilities within the Disney, Universal, and 
Anheuser-Busch park companies. The post-9/11 drop in foreign visitors 
led to an overall attendance decrease of 6-8 percent in the Orlando 
theme park market during 2002. Total international arrivals in the U.S. 
declined 7 percent to 41.9 million in 2002 compared to 2001, according 
to figures just released by the Department of Commerce, Office of 
Travel and Tourism Industries.
    Overseas guests are among the most valuable customers for these 
facilities. They spend more, stay the longest, and come back often. The 
average overseas visitor to Orlando stays ten nights, compared to five 
for domestic visitors. In Los Angeles, the average overseas visitor 
stays between six and seven nights versus the average domestic 
visitor's stay of less than four nights. 72% of overseas visitors to 
Orlando and 66% of overseas visitors to Los Angeles are repeat 
visitors. Events of the past 19 months have had the biggest impact on 
these overseas visitors and have increased the awareness of the 10-year 
trend in market share decline in overseas visitors to the U.S.
    While the impact of a decrease in overseas visitors is felt to 
varying degrees in other types of parks and attractions, attendance at 
regional parks in 2002 was mixed and attendance at local parks was 
generally increased. Regional parks are those whose guests are drawn 
from within a 150-200 mile radius of the park, and local parks draw 
their guests mostly from a particular community and its immediate 
surroundings. In some cases, attendance declines have been offset by an 
increase in average customer spending. At year's end, despite the 
decline in overseas visitors, America's amusement parks and attractions 
hosted over 300 million visitors and generated revenues of more than $9 
billion.
    Summary: Attendance growth in the U.S. amusement parks and 
attractions industry overall has averaged 2-3% annually for the past 
two decades, while revenues have increased 5-6% annually on average 
during the same period. We want to continue or increase this growth 
trend with the accompanying benefits that will result for local 
economies in which facilities are located.
    The size of this growing industry makes its economic health of 
interest to more than just the owners and operators of these parks and 
attractions. Recent industry analyses have forecast that, without 
unusual events such as the terrorist attacks of September 11, steady 
attendance and revenue growth will continue at U.S. parks and 
attractions over the next five years.
    In terms of wider economic impact, studies have determined that for 
every $1 spent inside a park or attraction, another $2-4 is spent 
outside its gates. Thus last year, at least $18 to $36 billion were 
spent in communities of which these facilities are members. In 
addition, the U.S. amusement industry employs upwards of half a million 
people, including the manufacturer base and seasonal park employment. A 
lower growth rate in the industry will have a seriously negative impact 
on the many local economies around the country that include an 
amusement park or attraction.

   GOVERNMENT EFFORTS THAT WOULD AID THE TRAVEL AND TOURISM INDUSTRY

    As I have already noted, the U.S. travel and tourism industry has 
not yet recovered from the impact of the September 11 tragedy. The 
lingering effects of the economic downturn and the war have exacerbated 
an already difficult situation. Government assistance similar to that 
provided to travel and tourism by other governments around the world 
can play an important part in the industry's recovery.

United States Travel and Tourism Promotion
    IAAPA joins other segments of the travel and tourism industry in 
gratitude to Congress for appropriating $50 million to promote the 
United States as a destination for foreign travelers. The United States 
Travel and Tourism Promotion Advisory Board will advise the Department 
of Commerce on these efforts. As I have already noted, visitors from 
overseas constitute an important portion of the guests at destination 
parks. These visitors travel to other parts of the country, as well, 
visiting other attractions. These are difficult times for the U.S. 
travel and tourism industry, and it is heartening to see the federal 
government step in and allocate these funds to assist the industry.
    We believe this appropriation should be used for a comprehensive 
international destination marketing campaign to bring overseas 
travelers back to the United States. We feel it is important that the 
use of these funds is timely, targeted, and focused on a limited number 
of foreign markets where the return is likely to be the greatest. The 
campaign should utilize and promote a national brand.
    The funds should not be broken up into several small projects, but 
rather applied to a unified campaign whose results are measurable. 
Demonstrated success can show the need, which we believe exists, for a 
long-term authorization of the program, along with an appropriate level 
of funding. IAAPA and its members look forward to working with the 
Department of Commerce as this important project gets underway.

Presidential Advisory Council on Travel and Tourism
    To move even further in promoting tourism, an advisory council 
should be established to provide guidance to the federal government on 
tourism issues. Much has been accomplished by the Commerce Department's 
reactivation of the inter-agency Tourism Policy Council. While we are 
also delighted that the Department of Commerce is in the process of 
forming a Travel and Tourism Promotion Advisory Board, we believe that 
a need remains for the establishment of an advisory council composed of 
members of the private, public, and non-profit sectors. Such a council 
would be able to assist with development and coordination of tourism 
policy, as well as developing appropriate benchmarks to measure tourism 
policy success. The amusement industry is a driving force in tourism, 
as it bridges various sectors of the broader travel and tourism 
industry and therefore would be a strong asset on such a panel.

Visa and Immigration Issues
    IAAPA and all members of the travel and tourism industry support 
the need for secure U.S. borders. At the same time, we would urge that 
all steps possible be taken to continue to facilitate entry into our 
country for legitimate visitors who want to come enjoy all that the 
U.S. has to offer. Striking the right balance is difficult, yet 
essential.
    IAAPA's members, along with many other segments of the travel and 
tourism industry, make extensive use of the J-1 summer travel/work visa 
program, as well as other visa programs.
    International students come to experience our culture, improve 
English skills, learn job skills and earn wages. Parks and attractions 
play a prominent role in this program and, in turn, these students 
provide a valuable workforce--especially in August, when many of our 
American summer employees return to school. Even more important, the 
students who participate in this program learn the true nature of the 
United States. They are then able to explain to others in their own 
countries the values and culture of America. Firsthand knowledge goes 
far toward overcoming misperceptions. Changes to the State Department 
summer work/travel regulations that would limit the number of students 
coming into the country or eliminate the students' ability to build on 
their learning experience by participating more than once would be 
detrimental to the industry and to our country.
    We believe the government should focus on unwanted visitors rather 
than casting too wide of a net that would adversely affect the many 
businesses that rely on international visitors and student workers 
without noticeably increasing our nation's security. We have similar 
concerns regarding any possible changes to visitor visas.
    IAAPA joins others in the travel industry in encouraging the 
Department of Homeland Security to partner with the industry to find 
ways to protect our borders against those who would do us harm, while 
not making access to the U.S. excessively difficult for those who 
legitimately want to visit our country. We are finding that in Europe 
and elsewhere, the perception exists that it is already more difficult 
to enter the U.S. Efforts to market the U.S. internationally will be 
for naught if we make it too difficult for visitors to enter our 
country, or even if the perception spreads that such difficulty exists.

                               CONCLUSION

    We believe our success is in our own hands, but we ask that the 
government support us by helping promote our nation as the wonderful 
destination it is, and by not imposing regulatory constraints that will 
deter us from maximizing our potential. This unwavering commitment to 
our businesses, our communities, and our country has allowed the 
amusement parks and themed attractions industry to thrive for more than 
a century, and will ensure that it continues to provide safe and fun 
family entertainment for many years to come.
    I thank you for the opportunity to share my remarks with you and 
would welcome any questions.

    Mr. Stearns. Well, thank you.
    Mr. Sternberg.

                 STATEMENT OF MICHAEL STERNBERG

    Mr. Sternberg. Thank you, Mr. Chairman and Ranking Member 
Schakowsky and members of the committee.
    My name is Michael Sternberg, and I am the founder and CEO 
of Sam & Harry's, Sam & Harry's Tysons Corner, the Caucus Room, 
and the soon to open Harry's Taproom in Arlington, Virginia.
    I'm testifying here today on behalf of the National 
Restaurant Association, which is the leading business 
association for the restaurant industry, and, Ms. Schakowsky, I 
am also proud to say that I am a native Chicagoan, born in 
Edgewater Hospital and learned my trade at the feet of--oh, 
really?--and learned my trade at the feet of Arnie Morton, who 
was a master at understanding the importance of travel and 
tourism.
    Together with the National Restaurant Association 
Educational Foundation, the National Restaurant Association's 
mission is to represent, educate, and promote a rapidly growing 
industry that is comprised of 870,000 restaurant and food 
service outlets, employing 11.7 million people around the 
country.
    Consumers spend nearly $1.2 billion a day in the Nation's 
restaurants. Every $1 spent in the restaurants creates an 
additional $2.13 in sales for other industries throughout the 
economy.
    As a member of the board of directors of the association, I 
am proud to say that our Nation's restaurant industry is the 
cornerstone of the economy, careers and community involvement. 
Restaurants are vital components to the travel and tourism 
industry. That is why I am so pleased to be here today 
participating in this important discussion.
    It will probably not be a surprise to many of you in the 
room to hear that restaurateurs depend heavily on the tourism 
business, nor will it be a surprise to learn that more than two 
thirds of table service restaurants view tourists as an 
important component of their business, and here is why.
    About 40 percent of revenues as table service restaurants 
with higher check averages come from tourists. Spending by 
travelers accounts for roughly 15 to 30 percent of revenue at 
table service restaurants with average check sizes of less than 
$25.
    These figures give you some idea of the symbiotic 
relationship between restaurants and tourists. They also 
demonstrate why the events of September 11 and the continued 
threat of terrorism have been such a devastating blow to the 
restaurant industry, as they do for so many of the groups 
represented in this room.
    The economic repercussions of September 11 were great. As 
people holed up, glued to the television, the travel and 
tourism industry virtually came to a halt. In September 2001, 
38,000 restaurant jobs were eliminated. The following month, 
October, the number rose to 57,000 jobs. As of March 2003, 
restaurant employment is down 244,000 jobs since 2001.
    The hardest hit restaurant sector was fine dining 
establishments and tourist dependent restaurants, especially 
those in the Northeast.
    The top 100 travel destinations experienced the greatest 
total lost of tourism revenue, approximately $30 billion, and 4 
out of the 5 top spots are all located in the northeast.
    In 2002, my restaurant spent almost $120,000 in additional 
marketing funds just to maintain the same sales level that we 
saw in 2001. Most restaurants do not have the luxury of 
spending that type of money on marketing.
    But it also proves that marketing dollars do help and work.
    The National Restaurant Association worked hard to help an 
industry persevere through this difficult time. Through a major 
multimillion dollar public relations campaign we encouraged 
people to turn the tables and reminded them how vital the 
Nation's restaurants were to economic security. Innovative and 
entrepreneurial restaurants sought new ways to drive business 
and remind customers of how dining out could invigorate spirits 
and the economy.
    As a result, individuals and businesses continue to cut 
back on discretionary spending, including dining out and other 
travel related activities. In addition to sending a tremendous 
shock to our economy, the continued threats of terrorist acts 
and the conflict overseas also caused the Nation to focus on 
relatively new entity, homeland security.
    We would like to outline a few suggestions today that the 
restaurant industry thinks will both help restore travel both 
inside and to the United States. The National Restaurant 
Association urges Congress to increase the business meal and 
entertainment tax deduction and restore the spousal travel tax 
deduction. Now more than ever, this would provide an incentive 
for small businesses and corporations to authorize their 
employees to start traveling again.
    We also request Congress' support in urging the President 
to create the Presidential Advisory Council on Travel and 
Tourism. The council would advise the President on national 
tourism policies and would help insure that travel and tourism 
receives a more sustained and vigorous policy focus at the 
Federal level.
    And, finally, the National Restaurant Association applauds 
Congress and Senator Ted Stevens, in particular, and the 
President for appropriating $50 million to the Department of 
Commerce in fiscal year 2003 for the creation of a 
comprehensive United States destination marketing campaign. 
While these funds are an extremely important first step in 
promoting the United States as an attractive travel 
destination, it is our hope that Congress will consider a 
longer term authorization to capture these travelers that our 
economy desperately needs.
    Mr. Chairman and members of the committee, I thank you for 
this opportunity to be before you, and I thank you for your 
interest in the travel and tourism industry. I welcome any 
questions you might have.
    [The prepared statement of Michael Sternberg follows:]

Prepared Statement of Michael Sternberg, Chief Executive Officer, Sam & 
  Harry's, The Caucus Room, Washington, DC, on Behalf of the National 
                         Restaurant Association

    Thank you, Mr. Chairman. Chairman Stearns and members of the 
Committee, my name is Michael Sternberg, and I am the CEO and co-owner 
of three fine-dining restaurants in metropolitan Washington , Sam & 
Harry's, Washington D.C. , Sam & Harry's, Tysons Corner and The Caucus 
Room. I am testifying here today on behalf of the National Restaurant 
Association, which is the leading business association for the 
restaurant industry. Together with the National Restaurant Association 
Educational Foundation, the Association's mission is to represent, 
educate, and promote a rapidly growing industry that is comprised of 
870,000 restaurant and foodservice outlets employing 11.7 million 
people around the country. Consumers spend nearly $1.2 billion a day in 
the nation's restaurants. Every one dollar spent in a restaurant 
creates an additional $2.13 in sales for other industries throughout 
the economy. As a member of the Board of Directors of the Association, 
I am proud to say that our nation's restaurant industry is the 
cornerstone of the economy, careers and community involvement.
    Restaurants are a vital component of the travel and tourism 
industry. That is why I am so pleased to be here participating in this 
important discussion today. It will probably not be a surprise for many 
of you in the room to hear that restaurateurs depend heavily on tourism 
business. Nor will it be a surprise to learn that more than two-thirds 
of tableservice restaurants view tourists as an important component to 
their business. And here's why: About 40 percent of revenues at 
tableservice restaurants with higher check averages come from tourists. 
Spending by travelers accounts for roughly 15 to 30 percent of revenue 
at tableservice restaurants with average check sizes of less than $25. 
These figures give you some idea of the symbiotic relationship between 
restaurants and tourists. They also demonstrate why the events of 
September 11, and the current state of affairs have such a devastating 
blow to the restaurant industry--as they do for so many of the groups 
represented in this room.
    The economic repercussions of September 11 were great. As people 
holed up, glued to the television, the travel and tourism industry 
virtually came to a halt. In September 2001, 38,000 restaurant jobs 
were eliminated. The following month, October 2001, that number rose to 
57,000 jobs. As of March 2003, restaurant employment is down 244,000 
jobs since 2001. The hardest hit restaurant sector was fine dining 
establishments and tourist dependent restaurants, especially those in 
the Northeast. The top 100 travel destinations experienced the greatest 
total loss of tourism revenue--4 out of the top 5 spots are all located 
in the Northeast. The National Restaurant Association worked hard to 
help the industry persevere through this difficult time. Through a 
major multi-million dollar public relations campaign, we encouraged 
people to ``turn the tables'' and reminded them how vital the nation's 
restaurants were to economic security. Innovative and entrepreneurial 
restaurateurs sought new ways to drive business and remind consumers of 
how dining out could invigorate spirits and the economy. The restaurant 
industry is incredibly resilient and with the help of our Cornerstone 
Initiative Public Relations Campaign, the ingenuity of the restaurant 
industry and the American people, the industry rebounded.
    Today, this very same industry faces yet another wave of 
challenges. The uncertainty of the nation's economy, the war in Iraq, 
heightened concerns about possible terrorist threats on U.S. soil, and 
international health threats, all have slowed or reversed any recovery 
that was occurring in the travel and tourism industry. As a result, 
individuals and businesses continue to cut back on discretionary 
spending, including dining out and other travel-related activities. In 
addition to sending a tremendous shock to our economy, the events of 
September 11, and the conflict overseas also caused the nation to focus 
on a relatively new entity: homeland security. The nation's restaurants 
have long been committed to food safety, and have been leading efforts 
to ensure that employees are trained and certified in safe food 
handling practices. Since September 11, the nation's restaurants have 
been operating with a heightened sense of awareness and vigilance on 
food security issues. We are working closely with the Administration on 
this important issue--particularly as they implement the regulations on 
the recently passed bioterrorism legislation. From ensuring that food 
inside our borders is secure, we are also working to ensure that 
imported items that consumers have come to know, love, and expect on 
their favorite menu--remain on the menu.
    These changes will go a long way in helping to restore confidence 
among the American people, and will be tremendously helpful in 
encouraging normalcy and invigorating travel in this country. Other 
opportunities that will help restore travel both inside and to the 
United States are equally important: The National Restaurant 
Association urges Congress to increase the business meal and 
entertainment tax deduction and restore the spousal travel tax 
deduction. Now more than ever, this would provide an immediate 
incentive for small businesses and corporations to authorize their 
personnel to start traveling again. The reduction of the business meal 
and entertainment tax deduction from 100 percent to 50 percent and the 
elimination of the spousal travel tax deduction negatively affected the 
restaurant and entertainment industries and the business customers they 
serve even before September 11, particularly harming small businesses. 
We also request Congress' support in urging the President to create the 
Presidential Advisory Council on Travel and Tourism. The Council would 
advise the President on national tourism policies and would help ensure 
that travel and tourism receives a more sustained and vigorous policy 
focus at the federal level. It would also help coordinate the 
activities of the Administration and the many departments and agencies 
that impact travel and tourism. And finally, The National Restaurant 
Association applauds Congress, Senator Ted Stevens in particular, and 
the President for appropriating $50 million to the Department of 
Commerce in fiscal year 2003 for the creation of a comprehensive United 
States destination marketing campaign. With the continuing decline in 
international arrivals, the balance of trade surplus generated by 
travel and tourism has plummeted from $26 billion in 1996 to $8.6 
billion in 2001. While these funds are an important first step in 
promoting the United States as an attractive destination, the National 
Restaurant Association hopes that Congress will consider a longer term 
authorization to capture these travelers that our economy desperately 
needs.
    Mr. Chairman and members of the Committee, I thank you for this 
opportunity to appear before you today, and I thank you for your 
interest in the travel and tourism industry.

    Mr. Stearns. I thank the gentleman.
    Mr. Ruden.

                   STATEMENT OF PAUL M. RUDEN

    Mr. Ruden. Thank you very much, Mr. Chairman.
    I am not going to consume the committee's time repeating 
the horror stories that others have told, except to say that 
the travel agent industry, as most of you probably know, is 
mostly small business, down to the tiniest businesses of just 
one or two people. Even the big brand names that people are 
accustomed to hearing about are usually manifested in the 
marketplace through very small enterprises that are 
independently owned.
    Suffice it to say in statistics, the air component alone of 
what travel agencies sell, and they still sell most of the air 
that is sold in this country, between the year 2000 and the 
year 2002, sales declined $20 billion. That is just one segment 
of what they sell.
    If you want further dimensions of the horror story, I would 
refer the committee to the National Commission to Insure 
Consumer Information and Choice in the Airline Industry report, 
which issued last November, which summarizes the impact of the 
economy and airline practices and other factors that have 
devastated many, many small businesses in the travel agency 
sector of the economy.
    It is also true and needs to be understood that every 
horror story you hear from the airlines about how much money 
they are losing and the hotels and all of the stories they tell 
are correct. Most of that damage, that loss also flows down to 
travel agencies who are responsible for selling most of the 
business that goes into those airplane seats and much of the 
business that goes into those hotel rooms and even down to the 
restaurant level.
    The public has been devastated by the four things you heard 
about: the economy, SARS, the war, terrorism. And the effects 
continue. People are buying later, making it very difficult for 
anyone in our industry to plan anything because consumers are 
holding back their commitments to the very last minute in many, 
many cases, and they're traveling a lot closer to home than 
they used to and spending less.
    The uncertainty and fear run throughout the economy and run 
very deeply. When it is all said and done, there is not going 
to be any bailouts for our part of the industry. We are doing 
everything we can, however, independently to stimulate travel, 
and I think that ultimately, while we share all of these 
recommendations in common with everyone in this panel, and I 
have got another one to talk about in a minute; all of those 
things are good things to do, but at the end of the day we have 
to conquer SARS. We have to get confidence back that way in 
order for people not to be afraid.
    We have done advertising programs. We put together a public 
service announcement with Jim Lovell, the commander of Apollo 
13, who if anyone knows about trouble traveling, he does, and 
that public service announcement was seen by over 100 million 
people so far, and the radio exposure is probably another 100-
plus million people.
    We have got an ad campaign in USA Today every Friday 
afternoon featuring cruises and tours, encouraging people to 
travel, running contests.
    There is a real interesting story of a travel agency just 
up the road outside Philadelphia that is holding a museum like 
exposition of travel photographs in its agency and inviting the 
public in to come in and see these local photographers, who are 
not national brand names, but who take pretty good pictures. 
They are having contests. Suppliers will be present to talk to 
the people who are interested and so forth. Everybody is doing 
everything they can at a local level, which is where all of 
these travel agencies are best known, to try to stimulate 
interest in travel.
    We are working with Sandals Resorts. Once again, that 
company has come forward with a $2 million program of free 
travel opportunities to their resorts for people, men and women 
in the Service.
    All of these things are being done around the country. We 
will continue to do them as long as the resources exist to do 
it.
    Our view, I think, is that the thing that is hurting us 
that is an example of how we hurt ourselves, is that our 
government sometimes takes actions in the name of security 
which always has to be first, I suppose, without apparent 
regard for the impact on the travel and tourism sector, and the 
alerts that have no apparent reason, none that is given anyway, 
have frightened people away from traveling. You can see it in 
what happens in the immediate aftermath of these announcements, 
and then the alerts are taken down with no apparently 
explanation of why things have changed.
    I am not suggesting the government has to reveal its 
security information. What we are suggesting is that the 
Department of Homeland Security should have an office that acts 
as a filter, at least an opportunity to comment on the impact 
on the travel and tourism business of new regulations and new 
pronouncements that the department is considering making before 
those things are made so that if a decision is made that we 
have to harm tourism again, at least it is made knowingly and 
not inadvertently.
    With that I thank the committee for the opportunity to 
speak today and ask that my full statement, which has a great 
deal more information in it, be admitted to the record.
    Thank you.
    [The prepared statement of Paul M. Ruden follows:]

  Prepared Statement of Paul M. Ruden, Senior Vice Presidentl Legal & 
       Industry Affairs, American Society of Travel Agents, Inc.

    The American Society of Travel Agents (``ASTA'') offers this 
testimony on the Subcommittee's deliberations on the state of travel 
and tourism in the United States. We will offer some background and 
some thoughts about what travel agencies can and are doing to stimulate 
travel in the near term future. ASTA much appreciates the opportunity 
to present its views, and remains at the Subcommittee's disposal to 
assist in any way it can on these subjects that are so vital to the 
national economy.
    It is a fair statement, and no surprise in light of the ubiquitous 
news reports, that the condition of the travel industry overall is 
dismal. Prior to the SARS outbreak, there were some bright spots, and 
one or two may yet remain, but in general, for most industry 
participants, and in most sectors, the picture is bleak.
    There are four factors involved: (1) the economy is unhealthy, 
resulting in impaired consumer confidence and a reduced willingness to 
spend money on leisure and many business travel pursuits; (2) the 
terrorist attacks of September 11, 2001, and the government's response 
to them have left long-lasting marks on the national state of mind, (3) 
the war in Iraq has created additional uncertainty and fear in the 
mindset of the traveling public in all sectors, and (4) finally, but by 
no means least, the outbreak and spread of the Severe Acute Respiratory 
Syndrome (SARS) has resulted in anti-travel measures that are 
unprecedented in modern times. In order to induce people to travel, 
most sectors of the industry have reduced prices, with the result that 
such revenue as there is does not cover costs. As a result, firms are 
exiting in all sectors.
    Each of these considerations would, by itself, have been enough to 
severely impact travel practices, but all four together have been 
simply overwhelming. The effects of all four are still active and in 
the case of the economy and SARS may be worsening.
    The dollar volume of air sales by travel agencies, who considering 
traditional and on-line agencies together, still account for a 
significant majority of sales, is in serial decline. The chart attached 
to this testimony shows the details. For present purposes it is enough 
to observe that agency sales of air travel have declined from almost 
$77 billion in 2000 to $57 billion in 2002. First quarter results 
indicate that the free fall is continuing. If we don't get some good 
news about SARS soon, the decline can be expected to deepen materially. 
It took about 18 months for air travel to recover from the effects of 
the first Gulf War and the 1991 recession, so recovery this time could 
be considerably longer.
    The news on other fronts is similar. The National Tour Association, 
for example, had seven member companies fail in 2002, with similar 
expectations for this year. You will hear directly from the hotel and 
other sectors about the revenue problems they face.
    The cruise industry, uniquely, reports steadily increasing 
embarkations from North America, but at significantly diminished 
yields. One of the successful initiatives was to reposition ships at 
new homeports within driving distance of major population centers, 
thereby making cruising possible without the need for air travel. New 
ship introductions are planned for 2003, as the cruise industry has 
successfully made the point that cruising is safe, affordable and 
available.
    Those actions are consistent with the changed travel patterns of 
American consumers in the aftermath of the forces described earlier. In 
all sectors we are seeing travelers booking much later than before and 
traveling closer to home. ASTA's semi-annual surveys of traveler ``hot 
spots'' continue to show Orlando, Las Vegas, New York City as the three 
most popular domestic destinations booked by travel agencies. There 
appears to be a decided movement in favor of Mexico and Caribbean 
destinations for travelers on international vacations, though London, 
Paris and Rome occupy three of the top four international destinations 
identified by travel agents and two of the top five spots selected by 
consumer visitors to our web site.
    So, with the notable exception of the cruise lines, the overall 
industry picture is very disturbing. Some major airlines are in or on 
the verge of bankruptcy. Services have been curtailed and tens of 
thousands of workers have lost their jobs. Travel agencies are affected 
in exactly the same manner by the same causes that have depressed the 
airlines and other tourism institutions, because travel agencies, 
traditional and online, account for most of the airlines business and 
for substantially all of the tour business. One bright light for us was 
the action of the House and Senate small business committees and the 
Small Business Administration (SBA) in the wake of September 11 to 
expand nationwide the SBA Economic Injury Disaster Loan program. That 
action saved the businesses of at least 500 agencies, who are now in 
repayment, with interest, on those loans.
    That said, our part of the industry is not standing still and 
taking it. Since immediately after the September 11 attacks, we have 
been using every resource at our and anyone else's disposal to try to 
stimulate travel to safe destinations. Travel agencies as a group are 
very small businesses and typically lack the capital that larger 
tourism enterprises often possess. Nonetheless, they are long on 
creativity, and they have been busy, working through ASTA and on their 
own.
    In March of last year a working group of travel agent organizations 
and airlines, in a program managed by ASTA on behalf of the Airlines 
Reporting Corporation, launched the Flight Plan for America campaign, a 
nationwide public interest program designed to reassure the traveling 
public about the commitment made to improve air travel security and 
convenience. Representatives of the Association of Retail Travel 
Agents, Southwest Airlines and Delta Air Lines, worked together to 
educate the public about travel in the new security environment, to 
encourage Americans to travel, and to promote the use of professional 
travel resources. United Airlines provided important assistance as 
well.
    The centerpiece of Flight Plan for America was a public service 
announcement (PSA) featuring Captain Jim Lovell, Commander of Apollo 
13, helping travelers understand what had been done to ensure their 
safety, what they could expect and what they could do to make their 
trips comfortable. A speakers bureau of travel industry leaders was 
made available to address travel industry topics in the news from the 
informed perspective of industry professionals. A Web site was created 
for travel professionals to help those in the travel industry use their 
expertise to educate their clients and the general public. Finally, a 
brochure was produced, entitled Tips for Today's Air Traveler, for 
travel professionals to distribute to their clients, with tips on what 
to pack and how to navigate the airport.
    Our latest information shows that the Flight Plan PSA has been seen 
by about 100 million Americans and the radio exposure exceeds another 
100 million persons.
    Travel agents have united with other industry groups to promote 
National Tourism Week, and the SeeAmerica Program which starts next 
week. Agents have access to promotional materials on ASTA's web site 
and are encouraged to plan programs with others in their communities, 
including hotels, restaurants, and the local convention and visitors 
bureau to promote travel.
    In addition, agents are independently planning events to help 
generate interest in travel and tourism. For example, one travel agency 
outside of Philadelphia is teaming up with a group of local 
photographers. Over a 3-week period travel-related photographs will be 
displayed at the agent's office. The agency will prepare a compendium 
on the artists and offer some door prizes. The public is invited to 
view the display which the agency is promoting through local 
advertising. Travel suppliers (cruise lines and tour operators) will be 
present to explain products and promote destinations. The beneficiary 
of the project is a local historic association--participants in the 
drawings get extra chances if they join the association.
    ASTA is evaluating the feasibility of using this concept in a 
national promotion or contest to help agencies share their promotional 
ideas with each other, with hoped for multiplier effects in stimulating 
travel from communities around the country.
    This summer, ASTA will be encouraging consumers to plan family 
reunions in domestic and international locations through a media 
campaign that includes video and audio news releases to consumer media. 
The program will suggest that families travel to interesting 
destinations for the best reunions.
    ASTA's national advertising campaign in USA Today continues to 
promote cruise, vacation and travel opportunities. It has reached many 
millions of consumers during its two-year life. The latest development 
is that ASTA and Sandals and Beaches Resorts are teaming up in USA 
Today advertisements which encourage consumer travel by offering an 
unusual incentive: complimentary vacations for service men and women. 
Sandals, through travel agents, is giving away vacations valued at $1 
million to those who are serving in the armed forces. If consumers book 
a 6-day vacation, the travel agent will be allowed to sponsor a 4-day, 
3-night vacation for two among the military personnel in their 
community. Sandals will directly contribute another $1 million to 
service families for travel.
    ASTA has continued to make the latest public relations and 
advertising tools available to travel agent members on ASTA's website, 
www.astanet.com. At no charge, ASTA member agents can download press 
releases, as well as black and white and color ads which encourage 
travel. The website now includes a Selling Center in which suppliers 
share with agencies the keys to selling effectively the particular 
products and promotions that are needed in these difficult times.
    In closing, I want to return to the issue of government response to 
terrorism. Clearly the government must do everything reasonably in its 
power to assure the safety of the public and of travelers. To that end 
a new Department of Homeland Security has been created. We have worked 
in support of the National Tour Association and other industry 
organizations to urge the creation within DHS of an office to provide 
review and comment on the potential for serious travel disruptions 
arising from pending DHS rules and regulations. We believe it is vital 
to the recovery effort that, prior to the adoption of new rules, a full 
assessment of their effect on travel be made. In the end, of course, 
security considerations will prevail, but we want to be sure we don't 
create a system so sterile that no one is willing to use it.

                                    Travel Agency Sales of Air Transportation
                                            (In Billions of Dollars)
----------------------------------------------------------------------------------------------------------------
                                                                                                         Prior
                                             2000      2001    % Change    2002    % Change   Mar-03     Mar. %
                                                                                                YTD      Change
----------------------------------------------------------------------------------------------------------------
Domestic Air Fares.......................        51        42       -19        35       -16         9         -7
International Air Fares..................        25        22       -13        22         1         5        -14
Total Air Fares..........................        76        64       -17        57       -10        14        -10
----------------------------------------------------------------------------------------------------------------


    Mr. Stearns. By unanimous consent, so ordered.
    And, Mr. Walker, you are last but not least, and we welcome 
you.

                 STATEMENT OF MATTHEW S. WALKER

    Mr. Walker. Thank you, Mr. Chairman.
    Mr. Stearns. Move this over here.
    Mr. Walker. And thank you, Ranking Member Schakowsky, and 
members of the subcommittee.
    My name is Matthew Walker. I am a General Vice President of 
the Hotel Employees and Restaurant Employees International 
Union, and I also ask if I might submit my full statement for 
the record.
    Mr. Stearns. By unanimous consent, so ordered, surely.
    Mr. Walker. We represent more than 265,000 members in the 
travel and tourism industry. The past 18 months have brought 
unprecedented hardship to this sector. Industry leaders have 
come to refer to the convergence of factors as a perfect storm 
In the wake of September 11, we saw at least one third of our 
international union's membership laid off and many thousands 
more forced to work drastically reduced hours, and while we had 
begun to see some signs of slow recovery, including healthier 
employment levels, that improvement has come to an end in the 
past few months.
    At present we would estimate that more than 10 percent of 
our membership is out of work, with many more working reduced 
hours.
    Moreover, layoffs in several markets appear to be 
intensifying. The reasons are well known. Operating profits in 
the hotel sector for 2003 are projected to come in slightly 
below the already discouraging performance in 2002. The only 
reason the downturn in profitability is not more severe is that 
the industry is engaged in unprecedented cost cutting.
    Our union's information from markets such as Boston, New 
York, Washington, DC, San Francisco, Los Angeles, Chicago, and 
Honolulu is that more than 10 percent of our members are laid 
off with no short-term prospect of recall. Again, thousands 
more are working on greatly reduced hours, and as a consequence 
in some cases are no longer qualifying for medical coverage.
    Let me also mention by way of sobering example what has 
happened this morning in Toronto as a consequence of the SARS 
outbreak there. Downtown hotels are 30 percent occupied on 
average. Typical this type of year they're running at 70 
percent occupancy rates.
    About one third of our unions' hotel work force has been 
laid off and many more are working short schedules. If the same 
crisis, heaven forbid, were to befall any number of major U.S. 
cities where tourism is the top or second ranking source of 
employment, the consequences would be equally horrific.
    The decline in travel and tourism is a critical national 
problem. The hospitality industry is the largest employer of 
welfare to work program participants, the largest employer of 
single parents, the largest employer of new immigrants. This 
has driven the economic recovery of American cities over the 
last decade.
    Our union supports the calls from industry leaders for a 
stimulus to get people traveling again, and we certainly 
applaud the appropriation of the $50 million for marketing the 
U.S. as a destination of choice for international travelers.
    We join with those industry representatives who call for 
the restoration of the business meal and entertainment tax 
deduction, and we would also agree with the idea of restoring 
the spousal travel deduction.
    We would point out, by the way, that these two measures 
taken together would cost less than 5 percent of the 
President's proposed tax cut, but at the same time, the 
industry's workers need help. These workers are one paycheck 
away from having hungry children, and two paychecks away from 
homelessness.
    And most importantly, laid off hotel workers simply cannot 
afford health insurance. Medicaid is not positioned to absorb 
the burden, and given the dire physical condition of the 
States, there are no remaining viable alternative sources of 
coverage.
    Therefore, the most important thing in our view that 
Congress and the administration could do for these workers is 
to provide Federal payment of COBRA health care continuation 
costs for a defined period, and we would suggest 12 months.
    We also support extending and improving on the Federal 
unemployment assistance program so that more workers are 
covered and that those benefits do not start to expire next 
month.
    And finally, we would support a temporary holiday from 
payroll taxes for employers and employees in this industry.
    The Federal response to the travel and tourism industry's 
crisis post September 11 was woefully inadequate. Nothing was 
done about health care for the hundreds of thousands of 
displaced workers. As a result, huge numbers of newly 
unemployed were dumped into the already precarious public 
health system.
    The temporarily extended unemployment compensation program 
established in March of last year offered only 13 weeks of 
extended benefits for the vast majority of workers, and it will 
start to expire next month at a time when the need will be as 
urgent as ever.
    We told the poor in America to go to work, and they did in 
significant numbers. The hospitality industry is an industry of 
the working poor. Now their jobs are disappearing and so is 
their safety net.
    Our message has to be that if you work hard and you play by 
the rules your family will be secure. Right now the message 
appears to be if your industry is suffering, you will suffer 
just as much, if not more so.
    Thank you very much for the chance to testify.
    [The prepared statement of Matthew S. Walker follows:]

Prepared Statement of Matthew S. Walker, General Vice-President, Hotel 
          Employees & Restaurant Employees International Union

    Thank you, Mr. Chairman, Ranking Member Schakowsky and members of 
the Subcommittee. My name is Matthew Walker and I am a General Vice 
President of the Hotel Employees and Restaurant Employees International 
Union. We represent more than 265,000 workers in various parts of the 
travel and tourism industry. The past 18 months have brought 
unprecedented hardship to this sector. Industry leaders have come to 
refer to the convergence of factors as a ``Perfect Storm.'' In the wake 
of September 11, we saw at least one third of our International Union's 
membership laid off and many thousands more forced to work drastically 
reduced hours. While we had begun to see some signs of slow recovery, 
including healthier employment levels, the past few months have brought 
such improvement to an end. At present we would estimate that more than 
10% of our membership is out of work with many more working a much 
shortened work week. Moreover, layoffs in several markets appear to be 
intensifying.
    The reasons are well known. The overall state of the US economy, 
the war in Iraq, the fear of subsequent terrorist attacks and finally 
the alarm concerning SARS has slowed travel dramatically. Business 
travel, which is among the most lucrative for the hotel industry, is 
markedly down as is spending on banquets and food and beverage 
generally. As a consequence, operating profits in the hotel sector for 
2003 are projected to come in slightly below the already discouraging 
performance in 2002. The only reason the downturn in profitability is 
not more severe is that the industry has been engaged in unprecedented 
cost cutting.
    For example, Interstate Hotels the nation's largest independent 
hotel management company announced this month that it has eliminated 
15% of its 38,500 jobs in response to the industry-wide downturn. Our 
Union's information from markets such as Boston, New York, Washington, 
DC, San Francisco, Los Angeles, and Honolulu is that more than 10% of 
our members are laid off with no short term prospect of recall. Again, 
thousands more are working substantially reduced hours.
    Let me also mention by way of sobering example what has happened 
this month in Toronto as a consequence of the SARS outbreak there. 
Downtown hotels are 30% occupied on average when typically they are 70% 
full this time of year. About one third of our Union's hotel workforce 
has been laid off with many more working short schedules. If the same 
crisis, heaven forbid, were to befall any number of major US cities 
where tourism is the top or second ranking source of employment, the 
consequences would be equally horrific.
    The decline in travel and tourism is a critical national problem. 
The hospitality industry is the largest employer of welfare-to-work 
program participants--the largest employer of single parents--the 
largest employer of immigrants. 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.
    Our Union supports the calls from industry leaders for stimulus to 
get people traveling again and certainly applauds the passage of the 
$50 million marketing package to position the US as a destination of 
choice for international travelers.
    We join with those industry representatives who call for the 
restoration of the business meal and entertainment tax deduction. We 
would also agree with the idea of restoring the spousal travel 
deduction. We would point out that these two measures taken together 
would cost less than 5% of the President's proposed tax cut plan.
    But at the same time, the industry's workers need help. These 
workers are one paycheck away from having hungry children and two 
paychecks from being homeless.
    Most importantly, laid off hotel workers simply cannot afford to 
continue their health care coverage. Medicaid is not positioned to 
absorb this burden and, given the dire fiscal condition of the states, 
there are no remaining viable sources of coverage.
    Therefore, 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 does not require any new 
entitlement or bureaucracy. When the defined period of time is over, 
the program simply ends.
    We also support extending and improving on the Federal unemployment 
assistance program so that more workers are eligible for federal 
benefits and those benefits do not start to expire next month.
    Finally, we would support a temporary holiday from payroll taxes 
for employers and employees in this hard hit industry. If such a 
holiday were implemented, we would include two caveats. Such relief 
should be accompanied by a substitute appropriation so as not to 
further jeopardize the already vulnerable Social Security Trust Funds. 
Also, such a holiday does not address the dire needs of the already 
unemployed and should not be seen as a substitute for measures aimed at 
helping those currently out of work.
    The federal response to this industry's crisis post September 11 
was woefully inadequate. Nothing was done about health care for the 
hundreds of thousands of displaced workers. As a result, huge numbers 
of newly unemployed were dumped onto the already precarious public 
health system. The Temporary Extended Unemployment Compensation (TEUC) 
program established in March of last year offered only 13 weeks of 
extended benefits for the vast majority of workers and it will start to 
expire next month at a time when the need will be as urgent as ever.
    We told the poor in America to go to work and they did in 
significant numbers. The hospitality industry is an industry of the 
working poor. Now their jobs are disappearing and so is their safety 
net. Our message has to be that if you work hard and play by the rules, 
your family will be secure. The message that travel and tourism workers 
are getting at the moment is: ``If your industry is hurting, so are you 
. . . only moreso.''
    Thank you very much for the opportunity to testify before you this 
afternoon.

    Mr. Stearns. I thank you, Mr. Walker, and I think to all 
the folks who testified, it would probably be appropriate for 
them to know that Chairman Alan Greenspan is testifying in the 
Financial Services Committee today, talking about the economy. 
He perhaps should have been listening to you this afternoon. He 
would have had an even better and clearer picture of where the 
status is of this important industry.
    I think what I hear from all of you is that this letter 
that I've written to Secretary Evans asking for a Presidential 
Advisory Council on Travel and Tourism, that you agree, 
particularly in light of the fact that the United States was 
the No. 1 tourist attraction and now follows behind Spain and 
France.
    I think when I try to hear some of this bad news obviously 
that you folks are talking about, what is the one thing as a 
legislator we, my colleagues and I, could do? And going back to 
my opening statement, this international tourism provides so 
much more than the commercial. We want to spur on the tourism 
in America for people to go within the United States, but we 
would like to attract a lot of the international tourism 
because that provides much more, bigger impact for the buck.
    And so the idea of this $50 million being made permanent as 
part of the budget to help advertise the United States, and as 
I pointed out Spain is spending $150 million, and they have 5 
percent of our GDP. So certainly the United States certainly 
could spend $50 million to see how effective it would be.
    But Mr. Walker has talked about this perfect storm, the 9/
11, the economy being weak even before that, the terrorist 
threat that continues, the war with Iraq, homeland security, 
and all of the bothers that a lot of people perceive going to 
the airport. Mr. May knows from the number of airlines both for 
transportation as well as commercial includes all of the major 
airlines, American West, American Airlines, Delta, U.S. Air, 
Emory Freight. Even I guess you have some associate members 
from Canada and Mexico, Royal Dutch Airline.
    So the problem with the airports and waiting in line, the 
idea of homeland security, and then last, of course, to have 
SARS coming up, this has almost created the perfect storm.
    So now what can we as legislators and what can you as 
industry leaders do? And I would say that the concentration 
should be on that international tourism and bringing the people 
here to say, one, it is not going to be a hassle in the airport 
because we are going to have iris scans. We are going to have 
fingerprints. We are going to have anything to expedite. So the 
homeland security should expedite the whole process of getting 
people through the airlines quickly, and we have the technology 
to do it.
    Two, we have got to provide safety to the international 
travelers that come here that there is not a threat from SARS, 
there is not a threat from the terrorist attack, and that all 
can be gotten now through this $50 million that we do through 
the Presidential Advisory Council on Travel and Tourism.
    So there are lots of things we could do, I think, to 
attract more international tourists. Our immigration policy has 
perhaps dampened a little bit of people coming in here because 
it is a little bit of a hassle and all of the extra 
interrogation and things that go with it.
    So this international tourism, it seems to me, is an 
indispensable action or condition that perhaps would jump start 
this more quickly than anything else. So my question to you is: 
you're a policymaker. What one thing, and I will just go from 
my right to left; what one thing would you do if you could 
advise the Advisory Council or you had the power and you were 
President?
    Because, frankly, what we do in this travel and tourism 
industry affects the economy dramatically, and the fact that we 
had a $26 billion surplus when we had almost a $450 billion 
deficit in trade, to see this when we were the No. 1 and see 
now this surplus go down to $8.6 billion in the year 2001, it 
is so positive; it is so clean; it is so powerful on input that 
I think the President should realize that with not a lot of 
work we can jump start this and the international travel.
    So I guess I am asking for each of you to give the one 
thing you as President think we could be doing to help your 
industry.
    Mr. Lundberg. Well, from the standpoint of the U.S. 
Chamber, Mr. Chairman, not to diminish the importance of the 
$50 million appropriations to the Department of Commerce and 
the importance of----
    Mr. Stearns. No, I need your candid opinion, you know, 
whatever subject or whatever way you think.
    Mr. Lundberg. The No. 1 item that I perhaps would focus on 
is given the disparity of the travel and tourism industry as a 
whole, it covers, as you can see, just from the representation 
at this table such a broad diversity of sectors within the 
travel and tourism industry. I think the establishment of the 
Presidential Advisory Council is key to bringing together all 
of the various agencies that have some piece and some impact on 
travel and tourism and bring it together under one entity to 
vet issues, to vet policy, nd then to be able to go forward and 
implement that policy in a unified way from the standpoint of 
the administration.
    Mr. Stearns. Mr. May.
    Mr. May. Mr. Chairman, I think that certainly within the 
context of this overall economy we have to do whatever we can 
to strengthen the economy because that is going to add a lot to 
travel and, therefore, the domino effect that people have been 
talking about.
    I think we have to also as a part of that help people 
understand it has never been safer to fly, that our security 
measures are better today than they ever have been. We have to 
increase and take measures to increase consumer confidence.
    And finally, I would suggest, if I can be permitted a 
parochial moment, that we need to promote international travel 
on U.S. flag carriers.
    Mr. Stearns. I thank the gentleman.
    Mr. Edwards.
    Mr. Edwards. Thank you.
    Briefly I would suggest obviously the economy needs a jump 
start. There is no question that that has to be moved on on a 
unilateral basis, legislative and private sector.
    No. 2, I would have to endorse a team approach. I do not 
mean to sound like, you know, the NBA here, but a team 
approach, legislative, private sector, everyone.
    This Presidential Advisory Council on Travel and Tourism is 
established. It is there. It is functional. It is a universal 
entity, and I think your $50 million and other expenditures 
maybe in the future toward image making to bring the people to 
this country would be a primary step and using this as your 
vehicle would eliminate a lot of the ambiguities of all of the 
different pieces that are moving parts and moving targets.
    I think this would be the entity to use. I would pursue it 
very strongly and make sure you have the top CEOs that are 
involved in the industry as part of the left hand as advisors 
here to give direction.
    Mr. Stearns. Mr. Robinson.
    Mr. Robinson. Yes, thank you.
    I think I would like to comment on this $50 million. We 
appreciate that that expenditure has been allocated. It is 
terribly important, I believe, since this is an experimental 
phase this first year that it is used wisely and that we focus 
carefully on what it might be used for.
    And I agree entirely with you on the proposal to focus on 
international travel. However, historically it has been very 
interesting because the majority of visitors who come to this 
country that really return and spend larger dollars come from 
certain countries, and they are Great Britain, Mexico, Canada 
and Japan. And I think it is important if we can focus on a few 
countries and not try to, you know, cover the world, so to 
speak; that it will be a lot more effective in what we are able 
to bring to fruition.
    Thank you.
    Mr. Stearns. That is a good idea, to focus down on where 
experience-wise has shown us to be where the best source of 
money.
    Mr. Robinson. That is correct.
    Mr. Stearns. Yes. Mr. Sternberg.
    Mr. Sternberg. Well, Mr. Chairman, as I always tell my 
managers, action is always better than inaction. So now that we 
have appropriated this $50 million, let's do something with it.
    And I think the first step in that is establishing the 
Presidential Advisory Council so that the money can be well 
spent and used wisely, but having appropriated it is the first 
step. Using it is the second.
    Mr. Ruden. Mr. Chairman, I do not think I can help much on 
the $50 million because I think most of that, if not all of it, 
is going to be spent overseas, and that money will at best 
indirectly assist the travel agency sector of the economy.
    But I do think that, to go back to the point that I made at 
the end of my earlier testimony, it is most important here that 
we not do unto ourselves that which we are trying to stop 
coming from other places, and I do not think we have 
established an appropriate mechanism yet for fully evaluating 
all of the consequences of all the things that are proposed to 
be done about security and other related issues.
    Security will always be first. No one is suggesting 
otherwise. But I think the government, whether it is at the 
Presidential level or, in our view, probably closer to the 
ground, it should be at the Department of Homeland Security. 
This industry has got to work in a unified way with the 
government to take account of the consequences of some of these 
actions that the government takes.
    And as a passing thought, I would also say to my colleagues 
here at this table and anyone else who might listen in the 
future this industry is divided because of internal conflicts 
within it, and as long as we remain divided and not talking to 
each other about these things, having government places to go 
and talk is not going to solve the problem. We have to get over 
the fractionalization and fragmentation within our own house in 
order to truly solve these problems.
    Thank you.
    Mr. Walker. Thank you.
    We certainly support the appropriation of funds for interim 
promoting the United States as a destination of choice. I think 
there is no question that increased international travel will 
help to catalyze the recovery, as would some of the other 
restorations of tax deductions that we talked about.
    However, there is a crisis that befalls the workers in this 
industry, in particular, and the crisis that the travel and 
tourism sector is experiencing has been recognized by this 
subcommittee. I think I would reiterate that most importantly 
we need to figure out some way to have at least a short term 
measure for continuing health care benefits for the workers in 
this industry.
    The COBRA is an existing, simple, efficient, and well 
defined private sector mechanism for both corporate and union 
pension funds that agree to continue coverage. There could be 
an opportunity here for Federal coverage of those COBRA 
payments without any new entitlements or bureaucracy, and after 
a 12 month period, it would simply cease.
    And so I would ask the subcommittee consider this.
    Mr. Stearns. I think my time has obviously expired.
    The Ranking Member for questions.
    Ms. Schakowsky. Thank you, Mr. Chairman.
    And I thank each and every one of you for excellent 
testimony and agree with many of the proposals that have been 
laid out.
    I hope you'll forgive me by just noting that the incredible 
diversity of the industry that you represent may not be best 
reflected by this panel and to note that you do represent one 
industry which is most diverse, particularly when you're 
talking about employees at the lower level of perhaps any 
industry and certainly among consumers, people from all over 
the globe and almost all Americans here at home.
    And you will perhaps forgive me for this, too, but it seems 
to me we can spend $50 million, but when we do things like--oh, 
I do not know--rename french fries and engage in name calling, 
I think we will have to use some of that kind of money to make 
up some of the ground that we inflict on ourselves in some of 
the things that we do, and I want to further explore one of the 
other things that we do.
    But I also wanted to note that while, Mr. Walker, you are 
here representing HERE and your union membership, you are also 
here supporting the proposals that the entire industry, 
management and everyone, all of the different sectors support. 
What I am interested to know from the rest of you is the 
specific recommendations that Mr. Walker has mentioned for the 
workers in this hardest hit sector, Federal payments of COBRA 
health benefits, temporary holiday from payroll taxes, 
extension of temporary extended unemployment compensation; I am 
wondering if these are proposals that your organizations and 
member businesses could support.
    If I could hear from each of you. Mr. Lundberg.
    Mr. Lundberg. Yes, the Chamber has, of course, looked at 
all of the specific items mentioned by Mr. Walker, and we do 
support closely examining COBRA, and on payroll taxes, I do not 
think we have really come down on that issue yet.
    We did support the extension of unemployment compensation.
    Ms. Schakowsky. Thank you.
    Mr. May. ATA as an organization has not taken any formal 
positions. However, we did work actively with our union 
partners as part of the cost-of-war supplemental to extend 
unemployment benefits, and where it makes sense to do that in 
the future, we certainly would.
    Mr. Edwards. I can tell you that AH&LA, American Hotel & 
Lodging Association, has in the past and do now. We do support 
continuing unemployment benefits. As we experienced after 9/11, 
we tried to carry it privately ourselves in the case of my 
company. In others, we carried it for a number of months 
because of the sudden impact, but you will find that AH&LA 
will, in fact, continue to support unemployment benefit 
extension.
    Ms. Schakowsky. And what about the COBRA?
    Mr. Edwards. I can probably answer that that we would 
probably extend that also and support it.
    Mr. Robinson. As an association, we do not really establish 
positions with respect to those kind of issues. However, we are 
an industry that hires a great deal of young people and single 
people, and so I think we would want to benefit them in any way 
that we could.
    Thank you.
    Mr. Sternberg. With an industry of 11.7 million employees, 
obviously employees are the heart and soul of our industry, and 
it is an incredibly diverse work force that we represent. We 
obviously enthusiastically support anything that helps those 
employees.
    Mr. Ruden. Well, in the travel agency business, of course, 
we have also laid off an enormous number of workers, most of 
them women who are the dominant employees, and I think probably 
also the predominant owners in the business, and we have had a 
lot of the small businesses simply go out of business because 
they cannot make it in the current environment.
    So anything that would ease the impact of that we would 
certainly support. I cannot really as an association address 
the COBRA thing per se, but I think the principle is correct, 
that if you just leave those people to suffer the consequences 
without any focused attention on the unique circumstances that 
they face, whether they are former owners of small businesses 
or individual employees who have nothing to fall back on, I 
think you meet yourself coming the other way when you try to 
stimulate the economy. It is not going to work.
    So those kinds of recommendations need to be very 
thoroughly looked at.
    Ms. Schakowsky. Well, in terms of stimulating the economy, 
perhaps one of the most important things we could do in terms 
of bang for the buck is, in fact, extending unemployment 
insurance benefits, for example, which for each dollar 
generates about $1.73 back into the economy. So I think we 
could be doing the entire economy a bit of good when we help 
out the workers in all of your industries.
    If I could, Mr. Chairman, I had one other area I wanted to 
pursue briefly.
    On April 21, NPR had a story that I kind of live with every 
day and you do, too. The Commerce Department reports business 
and pleasure travel to the U.S. from abroad has declined 28 
percent over the past 2 years. In part, it is because of the 
slow international economy, but another factor and one that 
concerns the travel and tourism industry is that it is becoming 
increasingly difficult for foreign visitors or for foreigners 
to visit the United States.
    And several of you referred to that, and again, even if we 
were to spend $50 million, I spend a lot of my time on the 
telephone at very weird hours of the night and early morning 
calling embassies all over the globe, trying to help relatives 
or friends of constituents of mine, people who are hosting 
conferences in Chicago who would like foreign visitors to be 
able to come, and what I have found is particularly since 
September 11, that there has been a real culture of ``no'' from 
these embassies.
    And so what I am asking specifically is: would you support 
changes to our system that welcomes visitors, that decreases 
the time it takes to process a visa, and a culture where those 
who have been thoroughly screened are now welcomed into this 
country? And is that a priority for your organizations?
    Again, just quickly or if you don't have anything to say 
about it, fine, but if you do, I would like to hear it.
    Mr. Edwards. I guess I will start.
    Mr. Stearns. If you would, please.
    Mr. Edwards. We had an interesting experience this past 
fall. We run a trade show for the 30,000 attendees from over 
100 countries, and I know we spend a good deal of time on the 
phone trying to get visas to get not only attendees in, but 
manufacturers to bring equipment into the country for that very 
reason, and it is a difficult process. It is becoming more 
difficult, and we could use some help in that area, but very 
definitely.
    Mr. Lundberg. Anybody else?
    Mr. Ruden. I would offer the thought that anything that 
increases the actual out-of-pocket cost or the psychic cost of 
traveling is devastating, especially now when everyone is kind 
of fragile to begin with.
    And so I travel a lot around the world and in the United 
States by various methods. When you encounter the attitude of 
``I am here to block you, to test you,'' as opposed to the 
attitude of ``I am here to facilitate your going through, but 
first we have some things to do,'' those two differences in 
attitude make a huge difference in the psychic impact on the 
traveler.
    And when people feel that they are going to have to run a 
blockade and that there is an attitude of blockage as opposed 
to facilitation, many people will be turned away from it. They 
do other things with their time and other things with their 
money that will not be as helpful to the economy.
    It is very important for our government, both for Americans 
traveling internally and leaving the country and those who wish 
to come here, to solve that problem.
    Ms. Schakowsky. Thank you.
    That is all of my questions. If I could just end with this 
though, while all of us, I think, are dedicated to making sure 
that we protect the security of our people, there is a balance 
that needs to be struck, and it seems to me that that balance 
has not been achieved right now, and that we need to work to do 
that, to maximize the opportunity of people who just want to 
enjoy our great country and all that it has to offer, to be 
able to come here.
    Thank you.
    Mr. Stearns. I thank my colleague.
    The gentleman from Ohio, Mr. Strickland.
    Mr. Strickland. Thank you, Mr. Chairman, and I apologize 
that I have not been here for everyone's testimony because I 
have had some other responsibilities.
    But I represent an Appalachian rural area, and most of the 
small towns of my district are not considered tourism 
destinations, but I understand the value of this industry to 
our Nation and to our Nation's economy, and I understand that 
my colleague from Illinois raised this issue a little earlier, 
but I would just like a chance to speak to it as well.
    I am concerned about how we may be perceived as a nice 
place to visit, given some of the reactions that have occurred 
here in the Congress, which in my judgment have been, at best, 
immature.
    I a couple of years ago spent some time in Barcelona. Spain 
is a great place to visit. I can understand why people would go 
there. I have also been to Paris, and Paris is a great city. 
France has much to offer.
    But this country does as well, and I am wondering if we 
should do more to create a friendly face for the person who may 
choose to travel here.
    I also have had some experience as a Member of Congress 
interacting with some of our foreign embassies, and if the 
foreign tourist has had some of the interactions with the staff 
and some of our embassies that I have had, then I can 
understand why there could be some perceptions that are 
negative.
    But without a doubt, this is an important industry that you 
represent, and it is not, I think, a narrow interest that you 
are trying to describe today, but it is a problem that is a 
part of this larger economy, but a vital part of it, and I 
think we have to do whatever we can in a reasonable manner to 
help you.
    And, Mr. Walker, I was really struck by one phrase you 
used, that many of your members are one paycheck away from 
hungry children and two paychecks away from homelessness. I 
think what we are facing is a crisis.
    And other than what has already been discussed here by our 
good Chairman and others, I guess my only question would be, 
and it would be a final question: is there anything that has 
not been pointed out here today or you have not had an 
opportunity to say in regard to what you think we can do as a 
Congress to be helpful to you, or have you had your say and are 
you ready to call this to an end?
    [No response.]
    Mr. Strickland. Thank you, Mr. Chairman.
    Mr. Stearns. I thank my colleague.
    We have four votes. So we are going to close, and I think 
as a result of the hearing today, we are going to draft 
legislation to make a Presidential Advisory Council of Travel 
and Tourism sort of permanent, and I think that is one of the 
things that has come out of this hearing.
    But I just want to ask Mr. Edwards one question. I note he 
has 30 years of experience with economic climate in the hotel-
travel industry. Have you ever seen anything this bad or you 
have seen worse before?
    Mr. Edwards. Let's put it this way. I have had the same 
question from the president of my company. I said I never 
realized my job description between snipers, anthrax, wars, and 
I mean, I can go through the whole litany, has ever been this 
way.
    And the answer in all honesty is no. My father was with 
Hilton in Chicago for his entire life. You have recessions. I 
do not want to Osama bin Ladenize the economy. That was the 
final blow, but the economy needs a kick start.
    I personally have not seen a spiral of this nature, in all 
honesty, and a difficulty in managing the ambiguities. If it is 
coming from the left, you are getting hit from the right. I 
mean, it is kind of perpetual.
    And to answer your question, that is a long answer to say 
no. I have not personally experienced it.
    Mr. Stearns. I think that is what I sense, and Mr. Walker 
mentioned a perfect storm here, and so I think my colleagues 
should be very keenly aware of how important this industry is 
and anything we could do to help we will do it.
    I think this hearing is another step forward. So I want to 
thank all of you. I know how valuable your time is, and I want 
to thank the participation from my colleagues, and thank you 
again for coming.
    And the hearing is adjourned.
    [Whereupon, at 2:41 p.m., the hearing was adjourned.]
    [Additional material submitted for the record follows:]

  Prepared Statement of Hon. Jon Porter, a Representative in Congress 
                        from the State of Nevada

    Thank you Chairman Stearns for giving me this opportunity to submit 
a statement for the record. Tourism is one, two, and three in every 
state and I am glad to see this subcommittee focusing on its 
importance. We must develop a national approach, incorporating all 50 
states, to promote tourism globally. This is the beginning and not the 
end of many efforts to come and I am anxious to hear our witnesses' 
thoughts and ideas.
    Las Vegas is considered one of the most traveled to destinations in 
the world, earning its designation as the Entertainment Capital of the 
world long ago. Las Vegas has something to offer people of all ages. 
Everything from world class resort-casinos, to first class restaurants 
and shopping, and entertainment which includes concerts, production 
shows, and magic acts. Approximately 35 million people visited Las 
Vegas in just 2002 alone.
    Despite the slow economy and unprecedented challenges to the 
tourism industry, the commercial gaming industry in 2001 continued to 
be an important contributor to the U.S. economy, growing nearly 5 
percent, providing more than 364,000 jobs with wages of $11.5 billion 
and paying $3.6 billion in taxes to state and local governments.
    The tragic events of September 11th affected nearly every business 
sector in America, but they hit those in the hospitality industry 
particularly hard. We in Nevada have united and come a long way to 
overcome the devastating effects but we still have a long way to go. 
Nevada, the gaming industry's flagship, suffered the most of the 
commercial casino states, recording its first annual revenue decrease 
since 1981. Nevada's commercial casino industry is so vital to the 
health and wellbeing of the state's economy. In 2002, the commercial 
casino industry grossed $9.5 billion and paid $688 million in taxes 
just for the state of Nevada. This tax revenue helps provide critical 
support to the state, which include funding schools, social services, 
transportation needs, and parks and recreation programs.
    Despite popular belief, the commercial casino industry is not the 
only important money maker in town for the state's tax revenue. Las 
Vegas hosts the lion's share of Tradeshow Week's Top 200 largest 
conventions and rents more convention space than any other city in 
America. In 2001, 4 million convention and trade show delegates 
traveled to Las Vegas, generating $4.8 billion in non-gaming revenue. 
Currently, Las Vegas has more than 7.5 million square feet of 
convention and meeting space, including the Las Vegas Convention 
Center's 1.3-million-square-foot south hall expansion. Available 
convention space will increase significantly upon completion of 
Mandalay Bay's 1.8 million-square-foot conference center, which opened 
this year.
    Lastly, I would like to discuss the health of the nation's airline 
industry. As we all know, keeping America's airlines out of bankruptcy 
is critical to maintaining the health of the tourism industry. 
Historically, there has been a strong correlation between room 
occupancy and air service, especially to Las Vegas. Of the 35 million 
visitors to Las Vegas in 2002, nearly all of them traveled to Las Vegas 
by air. We must ensure we are doing everything we can to help the 
airlines stay out of bankruptcy.
    Again, Mr. Chairman, I appreciate this Subcommittee for having 
hearing and the opportunity to share my thoughts on this vitally 
important industry to my state, as well as the entire country.
                                 ______
                                 
    Prepared Statement of the Travel Industry Association of America

    The Travel Industry Association of America (TIA) appreciates the 
opportunity to present this testimony regarding the current state of 
the U.S. travel and tourism industry. Chairman Stearns, Ranking Member 
Schakowsky and members of the subcommittee, TIA applauds you for 
holding this important hearing to more closely examine where the travel 
industry stands as it strives to recover from terrorist attacks on our 
nation, a depressed economy and a war in Iraq.
    TIA is the national, non-profit organization representing all 
components of the $537 billion U.S. travel and tourism industry. TIA's 
mission is to represent the whole of the travel industry to promote and 
facilitate increased travel to and within the United States. Our 2,100 
member organizations represent every segment of the industry, and are 
dedicated to helping grow the U.S. economy and provide jobs and 
economic opportunity for individuals and communities all across 
America.
    During the past twenty months, our nation has experienced several 
historic events that have had a major impact on the overall economy, 
and the U.S. travel industry has been disproportionately affected. In 
2002, the U.S. travel industry generated $537 billion in visitor 
spending, far below the record $570.5 billion in expenditures in 2000. 
While the travel industry employs nearly 8 million people directly in 
the U.S., 387,000 jobs have been lost in the industry since September 
11, 2001. Stated more dramatically--the U.S. travel industry employs 6% 
of the American workforce, but 30% of all jobs lost since 9/11 have 
occurred in the travel industry.
    Fear of terrorist attacks, concern about traveling during wartime 
and a soft economy have all combined to drag down international travel 
to the U.S. and domestic business travel within the U.S. The only 
bright spot has been domestic leisure travel, which still lags behind 
record levels in 2000, but has shown some positive growth (1.7% 
increase in 2002 over 2001).
    Americans are flying less, driving more frequently to their 
destinations, and are now waiting until the last minute to book their 
trips. Americans are less likely to travel overseas due to terrorism 
and other concerns. Reduced outbound travel may help in some small way 
to boost domestic travel in the U.S., but this will not have a major 
impact since U.S. travel abroad rarely exceeds 5% of total U.S. visitor 
spending.
    With the short duration of the war in Iraq most economists expect 
the economy to gain momentum. Once the situation in Iraq stabilizes, 
businesses will likely resume spending and hiring, which will boost 
consumer confidence and economic growth, as well as consumers' 
willingness to spend, including for travel. In fact, on April 28 the 
Conference Board reported the single largest gain in consumer 
confidence in the U.S. since the end of the Gulf War in 1991. In the 
absence of terrorist attacks here in the U.S., Americans are likely to 
be anxious to resume leisure travel as soon as possible and may even 
boost their travel significantly because of pent-up demand.
    International travel to the U.S. remains a major concern since 
declines in visitation from major markets continues to be significant. 
Over the last decade, the U.S. share of worldwide travel has declined 
by 30%. The events of 9/11 have only served to reinforce this negative 
trend. Total international arrivals in the U.S. declined 7 percent to 
41.9 million in 2002 compared to 2001, according to figures just 
released by the Department of Commerce, Office of Travel and Tourism 
Industries.
    To highlight how dramatic the drop in international travel to the 
U.S. has been, consider the following figures. Over the last two years, 
travel to the U.S. from the United Kingdom has declined by nearly 19%, 
while Japanese travel has fallen off 28.3%. Our largest market in Latin 
America, Brazil, has seen a decline of 45% during this two-year time 
period. Total overseas arrivals (excludes Canada and Mexico) were 
reduced by 26.4% during this time period. As international travelers 
typically take longer trips and spend considerably more per trip than 
domestic travelers, this decline has had a dramatic economic impact on 
many cities and states in the U.S.
    We believe that several of the TIA's top public policy goals would 
greatly assist in moving the industry forward and helping to grow both 
international travel to the U.S. and domestic travel within the U.S.

               PROMOTING INTERNATIONAL TRAVEL TO THE U.S.

    TIA and its members are delighted that Congress has recognized the 
value of investing in inbound tourism and appropriated $50 million 
appropriation as part of the FY 2003 Omnibus Appropriations package for 
international tourism promotion. We believe this initiative is an 
important first step in creating a multi-year sustained and coordinated 
national campaign to promote the U.S. as the world's leading visitor 
destination. We are grateful to Congress for taking this important 
action.
    Other nations have long recognized the value of promoting 
themselves throughout the world under the banner of a single brand. 
Reaching out to global travelers through a unified promotional campaign 
is our industry's best hope for reversing this decade-long decline in 
our nation's share of worldwide travel. A long-term authorization and 
appropriation to fund a public-private partnership between industry and 
government to carry out this mission remains one of TIA's top 
priorities.
    In order to achieve real success and increase international visitor 
levels to the U.S., we believe such a promotion campaign should target 
a few select international markets, be invested in a way that will 
achieve the highest possible return on investment and should 
appropriately utilize a national brand to maximize industry 
participation. These principles apply to the initial campaign making 
use of the $50 million that has already been appropriated and any 
future campaigns that may be funded by the federal government, working 
in partnership with the U.S. travel industry.
 facilitating inbound international travel: a balanced policy approach
    Unfortunately, the most sophisticated and well-funded promotional 
campaigns will be for naught if the U.S. adopts policies and procedures 
that impede inbound international travel to the U.S. While TIA and its 
members have strongly supported reasonable measures to enhance homeland 
security, we also believe very strongly that U.S. government policy 
must strike a proper balance between national security and economic 
security. Additional scrutiny that weeds out those who would seek to 
enter to the U.S. to harm this nation is critical, but at the same time 
the federal government must proceed with caution and not adopt policies 
that deter legitimate international travelers from visiting the U.S. 
for leisure or business purposes.
    Retention of the Visa Waiver Program remains one of the 
cornerstones of TIA's travel facilitation agenda. This program permits 
visitors from 27 key nations to visit the U.S. for up to 90 days for 
business or pleasure without having to obtain a non-immigrant visitor 
visa, and encourages inbound travel from key markets in Europe and 
Asia. The General Accounting Office issued a report last year that 
concluded that elimination of the program would not guarantee greater 
national security, but would surely cost the industry billions in lost 
revenue and would require the federal government to spend large sums of 
money to restaff consulates and embassies in these 27 Visa Waiver 
program countries.
    A more streamlined visa issuance process is also needed to help 
facilitate international travel to the U.S. The number of non-immigrant 
visa applications worldwide fell by nearly 20% over the past 12 months, 
and while a soft world economy is chiefly to blame, the travel industry 
is also concerned that long delays in visa processing and issuance have 
also served to discourage visitors from trying to obtain a visa in 
order to travel to the U.S.
 funding for safe and efficient roads: federal highway reauthorization
    Another major priority for TIA and its members in 2003 is support 
for increased funding for the federal surface transportation program. 
Overall funding for highway improvements is our industry's number one 
priority for highway reauthorization. Approximately 83 percent of all 
person-trips take place on U.S. roads. This includes approximately some 
70 percent of business person-trips. It is critical for all types of 
travel that our nation's highways, bridges and tunnels be safe and 
efficient and that our nation's surface transportation system be able 
to handle increasing amounts of travel. National mobility is essential 
to ensure continued growth in travel and tourism.
    TIA also supports increased funding for several key highway 
programs, including the National Scenic Byways Program, Transportation 
Enhancements and the Federal Lands Highway Program. We are currently 
partnering with the Federal Highway Administration to promote increased 
travel along our nation's 20 All-American Roads and 75 National Scenic 
Byways through the SeeAmerica's Byways program.

                     VISITOR ACCESS TO PUBLIC LANDS

    As leisure domestic and international leisure travel continues to 
rebound in 2003, there may be renewed calls for limiting visitor access 
to national parks, forests and other public lands. These public places 
with their scenic and historic significance are important destinations 
for both U.S. and international visitors, and TIA will continue to work 
with other tourism and recreation organizations to ensure open visitor 
access to these important places in America.

                               CONCLUSION

    While recent economic and international developments provide a 
glimmer of hope for the U.S. travel industry, full recovery will not 
come for several years. Some industry leaders have even argued that 
September 11 and subsequent events have forever altered some aspects of 
travel--especially business travel. TIA will continue to lobby 
vigorously for policies that will permit the U.S. travel and tourism 
industry to recover, thereby providing additional jobs for Americans, 
economic opportunity for both urban and rural communities and tax 
revenues for all levels of government. We thank you for holding this 
hearing and look forward to continuing our work with this subcommittee 
and all of Congress to ensure we have the support necessary to face the 
challenges of rebuilding one of America's key industries.
    We respectfully request that the April 9, 2003 joint letter from 
TIA and TBR to Secretary of Commerce Donald L. Evans, concerning the 
$50 million appropriation for international tourism promotion, also be 
made a part of the record for this hearing.

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