[House Hearing, 115 Congress]
[From the U.S. Government Publishing Office]
TRAVEL AND TOURISM: A SMALL BUSINESS ANGLE
=======================================================================
HEARING
before the
SUBCOMMITTEE ON ECONOMIC GROWTH, TAX, AND CAPITAL ACCESS
OF THE
COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES
ONE HUNDRED FIFTEENTH CONGRESS
SECOND SESSION
__________
HEARING HELD
MAY 8, 2018
__________
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Small Business Committee Document Number 115-070
Available via the GPO Website: www.govinfo.gov
_________
U.S. GOVERNMENT PUBLISHING OFFICE
29-917 WASHINGTON : 2018
HOUSE COMMITTEE ON SMALL BUSINESS
STEVE CHABOT, Ohio, Chairman
STEVE KING, Iowa
BLAINE LUETKEMEYER, Missouri
DAVE BRAT, Virginia
AUMUA AMATA COLEMAN RADEWAGEN, American Samoa
STEVE KNIGHT, California
TRENT KELLY, Mississippi
ROD BLUM, Iowa
JAMES COMER, Kentucky
JENNIFFER GONZALEZ-COLON, Puerto Rico
BRIAN FITZPATRICK, Pennsylvania
ROGER MARSHALL, Kansas
RALPH NORMAN, South Carolina
JOHN CURTIS, Utah
NYDIA VELAZQUEZ, New York, Ranking Member
DWIGHT EVANS, Pennsylvania
STEPHANIE MURPHY, Florida
AL LAWSON, JR., Florida
YVETTE CLARK, New York
JUDY CHU, California
ALMA ADAMS, North Carolina
ADRIANO ESPAILLAT, New York
BRAD SCHNEIDER, Illinois
VACANT
Kevin Fitzpatrick, Majority Staff Director
Jan Oliver, Majority Deputy Staff Director and Chief Counsel
Adam Minehardt, Staff Director
C O N T E N T S
OPENING STATEMENTS
Page
Hon. Dave Brat................................................... 1
Hon. Dwight Evans................................................ 2
WITNESSES
Ms. Rita McClenny, President and CEO, Virginia Tourism
Corporation, Richmond, VA...................................... 3
Mr. Steve Shur, President, Travel Tech, Arlington, VA............ 5
Mr. Cam Brensinger, Founder and CEO, NEMO Equipment, Inc., Dover,
NH, testifying on behalf of the Outdoor Industry Association... 7
Ms. Jagruti Panwala, President and CEO, Wealth Protection
Strategies, Bensalem, PA, testifying on behalf of the Asian
American Hotel Owner's Association............................. 9
APPENDIX
Prepared Statements:
Ms. Rita McClenny, President and CEO, Virginia Tourism
Corporation, Richmond, VA.................................. 20
Mr. Steve Shur, President, Travel Tech, Arlington, VA........ 25
Mr. Cam Brensigner, Founder and CEO, NEMO Equipment, Inc.,
Dover, NH, testifying on behalf of the Outdoor Industry
Association................................................ 35
Ms. Jagruti Panwala, President and CEO, Wealth Protection
Strategies, Bensalem, PA, testifying on behalf of the Asian
American Hotel Owner's Association......................... 41
Questions for the Record:
None.
Answers for the Record:
None.
Additional Material for the Record:
None.
TRAVEL AND TOURISM: A SMALL BUSINESS ANGLE
----------
TUESDAY, MAY 8, 2018
House of Representatives,
Committee on Small Business,
Subcommittee on Economic Growth,
Tax, and Capital Access,
Washington, DC.
The Subcommittee met, pursuant to call, at 11:00 a.m., in
Room 2360, Rayburn House Office Building. Hon. Dave Brat
[chairman of the Subcommittee] presiding.
Present: Representatives Brat, Chabot, Kelly, Fitzpatrick,
Curtis, Evans, and Clarke.
Chairman BRAT. Good morning. I would like to call this
meeting to order.
Welcome to everyone for this great Committee meeting.
With the weather warming up and school is about to let out,
many American families will take to the road in the coming
weeks to go on vacation and explore the beautiful sights our
nation has to offer.
Although this has many Americans taking time off from work,
millions of Americans see the end of the school year and the
rising temperatures as a sign that their work is about to
significant pick up.
In 2017, domestic and international travelers spent over $1
trillion in the United States.
According to the U.S. Travel Association, an impressive 83
percent of businesses in the travel and tourism industries are
considered small businesses. Eighty-three percent. And while
small businesses are frequently the ones that take you from
destination to destination, or provide American families for a
place to stay on the road, the economic impact of the travel
and tourism industries positively impacts small businesses in
other industries as well.
For example, an estimated $1 of every $4 spent at
restaurants in this country are due to travel and tourism.
Small businesses in a variety of industries depend on travel
and tourism to keep the lights on and to pay their employees.
The recently enacted Tax Cuts and Jobs Act, which reduced
tax rates and complexity for businesses of all sizes, has
already positively impacted the travel and tourism industries.
According to the Department of Labor, the travel industry
created over 17,000 jobs just in the first 2 months of 2018,
which is 50 percent higher than the amount of jobs created by
the travel industry in the first 2 months of 2017.
Equally important, tax reform has provided small business
owners with the resources to hire new employees and reward
existing employees in the form of bonuses or raises, as well as
the opportunity to invest resources back into their businesses.
This week is National Travel and Tourism Week. Thus, you
are all here with us. Thank you for coming.
We have put together a distinguished panel to discuss the
economic impact of the travel and tourism industries and how
the private sector and the public sector can work together to
ensure the travel and tourism industries in the United States
continue to thrive.
I thank you all for being here this morning, and I yield to
the Ranking Member for his opening remarks.
Mr. EVANS. Good morning. Thank you, Mr. Chairman.
The travel and tourism sector plays a critical role in the
U.S. economy and is an indispensable part of the industry
ecosystem which makes up the nation's economic fabric. In 2017,
the tourism sector generated 2.4 trillion in economic output
and supported 15.6 million American jobs in a plethora of
industries. Tourism is also one of the few sectors operating a
multi-billion trade surplus.
Small businesses are an essential part of the travel and
tourism sector. Small companies in this sector are powerful job
creators providing livelihoods and pathways out of poverty for
millions across gender, age, and skill levels.
For instance, travel dependent leisure and hospitality is
the largest small business employer in the United States.
Furthermore, research indicates that tourism has almost twice
as many women employees as other sectors and employs young
people at roughly twice the rate of other industries.
Not only are small businesses companies or drivers of
tourism travel, they also reap major benefits from the
industry. The industry has grown significantly in the last 25
years, but when tourism stops flocking to the United States,
people flying, driving domestically, they also cease spending
money at hotels, restaurants, and small merchants.
The travel and tourism sector is one place where we can
invest and get significant returns for entrepreneurs for the
United States' economy.
Why are international travelers visiting the United States?
There are numerous potential reasons why they are. Besides our
immigration and visa policy, we must also invest in our
national transportation infrastructure and park system. Without
safe roads, bridges, rails, cars, few domestic trips will be
made to the uniquely American park and historical sites.
Promoting tourism is not only good for our people, it also
fosters business growth and social mobility and encourages
economic growth.
I might add that I represent the City of Philadelphia,
which includes Philadelphia Historical District, the birthplace
of the nation and the first World Heritage City in the United
States as designated by the Organization of World Heritage
Cities in 2015.
As if you need more reason to visit the City of Brotherly
Love and Sisterly Affection, experiencing our growth and
experiencing the small business economic system just adds
another.
I look forward to today's hearing and thank the witnesses.
And I yield back the balance of my time.
Thank you, Mr. Chairman.
Chairman BRAT. Thank you very much. I did not put a plug in
for my own state. You beat me to the punch on that. That is
pretty good.
I think you all probably know how the format works here.
If Committee members have an opening statement prepared, I
ask that it be submitted for the record.
I would like to take a moment to explain the timing lights
for you. You will each have 5 minutes to deliver your testimony
and then we will go through a round of questions or two.
The light will start out green. When you have 1 minute
remaining, the light will turn yellow. Finally, at the end of
the 5 minutes it will turn red. It is usually an indicator that
your time is coming close to an end. I ask you try to adhere to
that limit. If you go a little over that is fine today. And
with that, we will begin.
I think I will just introduce you one at a time, and we
will just go in the order of introduction, and your 5 minutes
will begin as soon as I am done with the introductions.
Our first witness today is Ms. Rita McClenny, President and
CEO of the Virginia Tourism Corporation. She oversees the
agency's annual budget and staff, which is responsible for
tourism promotion in the State of Virginia. Many of you may
know that Virginia Tourism Corporation through its famous
slogan ``Virginia is for Lovers,'' which has been attracting
tourists to Virginia for almost 50 years.
And so thank you very much, Rita, for being with us today.
And you may begin.
STATEMENTS OF RITA MCCLENNY, PRESIDENT AND CEO, VIRGINIA
TOURISM CORPORATION; STEVE SHUR, PRESIDENT, TRAVEL TECH; CAM
BRENSINGER, FOUNDER AND CEO, NEMO EQUIPMENT, INC.; JAGRUTI
PANWALA, PRESIDENT AND CEO, WEALTH PROTECTION STRATEGIES
STATEMENT OF RITA MCCLENNY
Ms. MCCLENNY. Chairman Brat, Ranking Member Evans, and
other Subcommittee members. I am pleased to testify before you
today representing Virginia Tourism Corporation, as Mr.
Chairman indicated, and we are delighted also to be here to
share with you the importance of this industry. I am also
representing U.S. Travel today, which is a trade association
representing all sectors of the national travel and tourism
industry.
And as you indicated, today is a part of National Tourism
Week, so it makes today extra special. And, in fact, this week
was put into law the legislation signed by President Reagan 34
years ago. The mission of U.S. travel is to increase travel to
the U.S. and within the U.S., which also yields another $2.4
trillion in economic output annually and supports one in nine
American jobs and makes travel the nation's top service export.
According to the Small Business Administration, the travel-
dependent leisure and hospitality sector is the top small
business employer. We are all on the same page as you guys have
indicated, all these wonderful statistics.
Some of our success in Virginia is legendary. Next year,
our signature ``Virginia is for Lovers,'' 50 years
commemorating, and one of the most highly recognized tourism
brands in the world.
The famed Inn at Little Washington and the Blue Ridge
Foothills opened during the worst snowstorm of the decade in
1978, and now is one of the crowned jewels of the lodging and
dining scene nationally.
Also nestled in an industrial neighborhood in Richmond,
Virginia, Hardywood Craft Brewery has played a pivotal role in
Virginia's boom of craft beer.
As you well know, small businesses face recurring headwinds
related to access to capital, attracting skilled employees, and
overregulation that particularly impacts a small enterprise. Of
particular interest to travel and tourism, small businesses is
America's share of a global travel.
Unfortunately, America's share of the global travel market
has been declining. In 2016, international arrivals to the U.S.
declined 2.1 percent. In order to reverse this decline, we
respectfully urge your support for five key areas.
Gentlemen, full funding of Brand USA, infrastructure
modernization, lifting the cap on the passenger facility charge
user fee, protecting U.S. open skies agreements, conveying a
clear message of welcome for international travelers to
America.
Brand USA was created to help market the U.S. in this
booming global travel market. Just last week, Oxford Economics
reported that since 2013, Brand USA's efforts are directly
responsible for increasing international travel by an
incremental 5.4 million travelers. Despite Brand USA's success,
we were concerned to learn that the recent budget agreement,
diverted STA fees after 2020 away from Brand USA promotional
opportunities.
The return on investment from Brand USA is clear,
especially for small businesses, and we hope you will join us
in our work to sustain this critical work for Brand USA and the
work of Brand USA.
Without reliable infrastructure, small businesses could not
operate, potential patrons will not visit. A key infrastructure
barrier to the travel industry's growth and future
competitiveness is the poor condition of our nation's airports.
Last year, our two international airports in Virginia
helped facilitate the travel of one million international
visitors who spent $1.7 billion during their travels. The
passenger facility charge is an indispensable tool for local
communities to maximize efficiency, reduce project costs, and
ensure fiscal responsibility. Adjusting the PFC ceiling would
allow each airport authority to tailor its own PFC rate to fit
local needs. We think this is really important.
Akin to our need to modernize our airport infrastructure,
we must also preserve more than 120 open skies agreements which
have yielded hundreds of thousands of American travel and
manufacturing jobs, billions of dollars in U.S. economic
growth, and lower fares for travelers. A great benefit.
We appreciate your leadership, Chairman Brat, on fostering
airline operations and competition. We appreciate all you do
for your constituents in Virginia. And at U.S. Travel, our
motto is simple, ``Without security, there can be no travel.''
America needs to convey a clear global message. And while we
aggressive pursue security, we still welcome overseas visitors
to relax on our beaches and to close deals in our boardrooms.
Finally, I would like to extend to you an invitation to all
members to please join us at the Visit USA Coalition Meeting
tomorrow at 11 a.m. in the Visitors Center. There, we will
discuss more and unveil a document to restore the declining
U.S. share of the global travel market. We hope you can partner
with us with this Subcommittee and with this Congress to
promote and advance America's travel and tourism industry. And
it is a delight to be here with you today. Thank you.
Chairman BRAT. Great. Thank you. Super.
Our next witness is Mr. Steve Shur, President of Travel
Tech in Arlington, Virginia.
Travel Tech represents a variety of travel-related
businesses, including short-term rental companies and travel
search engines. Mr. Shur has over 20 years of experience in
public affairs. And so thank you very much for being here with
us this morning. We look forward to your testimony. Thank you,
Mr. Shur.
STATEMENT OF STEVE SHUR
Mr. SHUR. Thank you, Mr. Chairman. Chairman Brat, Ranking
Member Evans, members of the Committee. It is a pleasure to be
here with you today, especially during National Travel and
Tourism Week.
I am Steve Shur, President of Travel Tech. We are the trade
association for online travel companies, short-term rental
platforms, global distribution systems, and travel management
companies.
Now, decidedly, my members are not small businesses, but I
recognize that today's Committee hearing is about the impact of
travel and tourism on small business. And each of our members
has a great story to tell with regard to how their contribution
to the travel and tourism ecosystem helps small businesses.
Our membership is really divided into three categories--
GDSs, online travel agents, and metasearch sites and short-term
rental platforms. And I would like to just briefly address each
of those categories and how they impact small businesses.
I will start with GDSs. Global distribution systems are
truly the unsung heroes of the travel and tourism marketplace.
They quite literally create the technology that allows
consumers and travel agents to comparison shop. To demonstrate
that, for example, there are over 700 commercial airlines in
the world, each with their own routes, schedules, fares. The
GDSs take that information and aggregate it and make it
available to travel agencies so that when they are serving
their clients, or you are shopping for a flight on an online
travel site, you are getting meaningful results in real-time.
These are technology titans that operate behind the scenes.
Many people have not heard of some of these brands, like Sabre,
Amadeus, and TravelPort, but you certainly have benefitted from
them if you have ever booked a flight via a travel agent,
whether online or in the community.
Speaking of travel agents, most travel agencies in the
United States are small businesses and are powered by these GDS
technologies. Travel agencies utilize the services of the GDSs
to serve their clients, to make sure that they have all the
information they need to make an informed choice. In fact, 98
percent of travel agencies are small businesses. And Mr.
Chairman, in Virginia, 70 percent of travel agencies have fewer
than five people, and 95 percent of them employ fewer than 20.
So truly small businesses that benefit from the great
technology that these GDSs deploy.
Without the GDS technology, these small business agents
would have trouble servicing their clients. They might not know
which flights are available on a particular route that their
client needs, or they would have to visit multiple websites or
make phone calls to multiple airlines to figure it all out. So
the GDS technology gives them the power and the opportunity to
make their business thrive. And so we are quite proud of how
our GDS members help the small business community, particularly
travel agencies.
Our online travel agent members and metasearch sites, like
Expedia and Priceline, Booking.com, Trip Advisor, Sky Scanner,
help small businesses in a variety of ways. And I would like to
just talk briefly about how that happens.
Particularly, online travel agents inspire people to
travel. They actually, with their marketing, advertising,
promotions, and deals--many of you probably are subscribing to
their emails and you see the pictures of the beaches and the
mountains--they are actually inspiring people to get off their
couches and book trips. Further, they are able to provide
consumers with package deals where they can save money. And the
research shows that when consumers book trips via online travel
agents, they tend to spend more money than those who choose to
book elsewhere. And the reason for that is that likely they
have saved money on their booking in the first place, and so
they have more disposable income to spend when they are on the
road. And oftentimes those expenditures benefit small
businesses in the localities where they visit.
The second way that online travel agencies and metasearch
sites benefit small businesses is really on behalf of
independent hotels, small motels, independently owned
properties. And in this dynamic, the small, independent
properties have to compete with the major brands that have huge
marketing budgets. And just by being listed on an online travel
site, that independent hotel, which may not have worldwide
marketing recognition, gets to compete with the major hotel
brands. And so they are benefitting these small, independent
hotels and small inns and bed and breakfasts by giving them the
exposure. They are quite literally marketing those properties
to the world.
And so in that regard, our online travel agent members and
metasearch members benefit those small businesses tremendously.
Our short-term rental platforms, Airbnb, HomeAway, VRBO,
Trip Advisor Vacation Rentals, is a relatively new environment.
While vacation renting is nothing new, these platforms are new,
and many people are taking advantage of the convenience and the
access to short-term rentals that they have never had before.
Not only do short-term rental visitors stay longer and spend
more money benefitting communities, what is important to note
about those travelers is they are often staying in areas that
are not the traditional downtown tourist areas or convention
center areas. They are benefitting small businesses in
communities that traditionally have not seen economic benefit
from travel and tourism. So they are expanding the circle of
where tourism dollars are being spread.
Secondly, they have created an entire new industry of
cleaning companies, property managers, and software companies
that are helping homeowners manage the process of renting out
their homes.
In conclusion, while our members are not small businesses,
we are certainly on the frontlines with consumers. Our members
benefit the travel and tourism ecosystem in a way that benefits
small businesses beyond just stimulating more travel, but
certainly giving them the tools that they need to thrive and
grow.
And with that, I am happy to answer any questions. Thank
you very much for your time.
Chairman BRAT. Thank you, Mr. Shur. Very good.
Next, I would like to introduce Mr. Cam Brensinger, the
Founder and CEO of Nemo Equipment, a 23 employee outdoor
equipment company based in Dover, New Hampshire. Mr. Brensinger
started Nemo after completing a degree in industrial design
from the Rhode Island School of Design. And so thank you for
being here with us today and for sharing your story.
STATEMENT OF CAM BRENSINGER
Mr. BRENSINGER. Chairman Brat, Ranking Member Evans, and
members of the Committee, thank you for having me here today.
I started my company when I was 25 years old and a senior
at the Rhode Island School of Design (RISD), studying
industrial design. I was also working part time at MIT, funded
by NASA, to develop a better space suit for human exploration
on Mars.
New England taught me to love outdoor adventures. When I
was a senior in high school in Manchester, New Hampshire, I got
permission to spend a month hiking the toughest sections of the
Appalachian Trail and write about it. At Middlebury College in
Vermont, I ran the rock climbing club and led countless trips
climbing, hiking, and cavings in the mountains of Vermont. When
I graduated from Middlebury, my only definitive plan actually
was to climb Denali in Alaska, which three friends and I
undertook in 1998.
My experiences in the outdoors and my passion for physics
and art ultimately led me to discover industrial design, and I
found myself going back to design school after college on a
mission to start my own company.
I incorporated my new company, Nemo Equipment, in April of
2002, and 3 days after graduation, opened our first office in
New Hampshire to be near the wonderful places that shaped me
passions.
Today, Nemo has grown to a well-known, award-winning,
international gear brand with 24 employees, actually, as of
Friday. Nemo products are sold in 19 countries around the
world, with significant market share in the U.S., Japan, South
Korea, and a growing presence in Europe. We own more than 50
pending and awarded patents and trademarks. We have been
featured on the Discovery Channel, named by Time Magazine as
among the best inventions of the year, and received
international awards for product design. Our products are used
by families for camping weekends, professional mountaineers
attempting first descents, and by the top echelon of American
Special Operation Forces.
I am very proud to be here also as a board member of the
Outdoor Industry Association. OIA is the leading trade group
for the outdoor industry, representing more than 1,300 member
companies, including manufacturers, suppliers, retailers,
guides, and outfitters. The outdoor industry represents a
recreation economy that includes $887 billion in annual
consumer spending, with 79 percent of that from trips, travel,
and tourism.
The outdoor recreation economy also supports 7.6 million
American jobs, and according to a recent study by the Bureau of
Economic Analysis, the outdoor industry represents 2 percent of
GDP. The BEA study also demonstrates that the outdoor
recreation economy is growing at 3.8 percent, 1 percent faster
than the U.S. economy as a whole.
According to OIA's recently released congressional district
level report, every community in every state in the country has
a viable outdoor recreation economy. Chairman Brat,
constituents in your district spend almost $1.5 billion on
recreation on alone each year. Ranking Member Evans, your
constituents spend nearly $900 million on recreation each year.
Both districts are made up of consumers focusing on camping,
trail sports, and fishing.
These economies, like any, need infrastructure. As you
know, the Land and Water Conservation Fund (LWCF) is due to
expire at the end of this fiscal year. We ask Congress to
please support reauthorization and full funding of the LWCF
since maintaining our public lands is vital to the health of
outdoor recreation, and LWCF benefits every county in the
country.
When people hear travel and tourism, they may not think of
the complex global supply chains that bring to market the
clothing and equipment that support travel. American businesses
like mine provide coveted and high-paying jobs in engineering,
design, marketing, advertising, financial, and sales, that
support adventure travel. Our American outdoor brands are some
of the most innovative and revered in the world.
Many of our industries' jobs in sewing and assembly have,
since the 1990s, moved abroad in search of an available and
willing labor force, which means companies like mine end up
paying high tariffs to bring out finished goods back into the
country. In fact, outdoor companies pay disproportionately high
tariffs. While average inbound tariff is less than 3 percent,
the average tariff on outdoor products is 14 percent, and can
be as high as 40 percent.
Outdoor product manufacturers pay approximately $750
million annually in import taxes to the U.S. Treasury. Duty
relief on outdoor products not manufactured domestically can
help lower costs, fuel innovation, and get more Americans
outdoors. We ask for your support of the U.S. Outdoor Act that
allows for more innovation by American companies, while
protecting our industry's domestic manufacturers.
Americans love the outdoors. Over half of all Americans
enjoy outdoor activities every year. Whether close to home or
at far away iconic places, the outdoor recreation economy is
resilient and is growing faster than the economy as a whole. My
business is just one example of thousands of companies that are
creating highly desirable American jobs with access to healthy
outdoor lifestyles and turning our shared love of being outside
into a driving force in the U.S. economy.
Thank you for the work that you do to support the people,
places, and infrastructure that make outdoor adventure possible
and allow it to be a major part of my life and a significant
component of our country's heritage, identity, and economy. I
hope this testimony will be of value to your Committee.
Chairman BRAT. It was. Thank you very much. Great
testimony.
I would just like to recognize our Chairman, my boss came
in the room, Chairman Chabot down at the end there. Welcome
him.
And then at this point I would like to now yield to our
Ranking Member, Dwight Evans, for the introduction of the final
witness.
Mr. EVANS. Good morning.
It is my pleasure to introduce Ms. Jagruti Panwala. I think
I got that right.
Ms. PANWALA. Yes.
Mr. EVANS. Okay. The President and CEO of Wealth Protection
Strategies in Bensalem, which my colleague who serves on this
Committee who represents that district, Congressman
Fitzpatrick.
She has been the recipient of numerous industries and
company awards, serves as the vice chairwoman of the Asian
American Hotel Owners Association. She is a graduate of East
Stroudsburg University in Pennsylvania, and she is testifying
on behalf of the Asian American Hotel Owners Association, the
largest hotel owners association in the world, nearly 18,000.
That is extremely impressive.
Again, you have the opportunity now to testify.
STATEMENT OF JAGRUTI PANWALA
Ms. PANWALA. Thank you very much.
Chairman Brat, Ranking Member Evans, and the members of the
Committee, it is an honor to appear before you today.
My name is Jagruti Panwala. My family and I are small
business owners from Pennsylvania. We are independent owners
and operators of five hotels in New York, New Jersey, and
Pennsylvania. I am also the President and CEO of a financial
planning company where we help small business owners reach
their development goals. I also chair as a vice chairwoman of
Asian American Hotel Owners Association, which is AAHOA.
As you mentioned, AAHOA represents 18,000 members, and our
members own one out of every two hotels in the United States.
We employ over 600,000 workers, accounting for nearly $10
billion in payroll annually. AAHOA proudly serves on the board
of directors of the U.S. Travel Association, and is a member of
the Visit U.S. coalition organizations that are leading the
effort to expand travel and tourism within and to the United
States.
I am here to tell you about the state of America's
wonderful travel industry, and it is fitting to have this
discussion during National Travel and Tourism Week. Our
industry drives economic expansion, job creation, and
prosperity in the United States. The travel and tourism sector
reaches nearly every corner of the country and is a top 10
industry in nearly every state.
There are four metrics I like to highlight to illustrate a
tremendous economic impact of our industry. In 2017, according
to U.S. Travel Association, the travel and tourism accounted
for $2.4 trillion in economic output and supported 15.6 million
American jobs. American workers directly employed in the travel
industry earn nearly $260 billion in wages and the Federal,
state and local government collected $165 billion in tax
revenues from our industry.
In the lodging sector, total U.S. room demand is higher
than it has ever been before. The leading economic metrics for
hoteliers, including occupancy, average daily rate, and revenue
per available room, are expected to increase through 2018.
For small business owners like me, and the vast majority of
our members, this is amazing news. Small businesses account for
83 percent of companies in the industry, and we are seeing the
benefits of a robust economy and thriving travel sector.
Travel and tourism sector small businesses contribute to
their communities by creating jobs, training employees, and
reinvesting in capital locally. In fact, the number one small
business employer in the United States is the travel dependent
leisure and hospitality sector. Forty percent of workers who
begin their career in travel ultimately achieve salaries over
$100,000. In addition, our industry provides a tremendous
foundation for employees with less formal education. And when
they are beginning their career in travel, achieve an average
career salary of nearly $70,000, which is 5 percent higher than
any other industry.
While good things are happening now, there are, of course,
some challenges. One of the biggest concerns we have is
increasing gas prices. Higher gas prices mean higher costs,
fewer travelers, and fewer trips. Another area we are watching
closely is the trends of international travelers to the United
States. These visitors spend nearly $4,500 and spend 18 nights
per visit, amounting to hundreds of billions of dollars on
travel and tourism.
Recently, the Department of Commerce announced that their
data in tracking international visitors may be wrong. I
encourage that we follow this development to make sure the
information we have is valuable so we as a business owner can
make a sound decision.
International visitors are critical for our national
economy, our workforce, and local communities.
Consequently, I ask us to review two important programs.
The first one is Brand USA, and the second one is the Visa
Waiver Program. Since 2013, Brand USA has encouraged millions
of people to come to the United States, which has generated
nearly $40 billion in revenues and supports over 50,000
American jobs. I am hopeful that it could be reauthorized in
its current form with the strong bipartisan support like it has
been in the past.
The Visa Waiver Program is also important. It enables
travelers to visit the United States without first obtaining a
visa. The trips are limited and include security measures to
protect against misuse by bad actors. I urge you and your
colleagues to enhance and expand the Visa Waiver Program.
Finally, the new tax law is important to small business
owners. Small business confidence is growing and we are
creating new jobs, increasing wages, and expanding our
businesses to help ensure a thriving outlook for America's
travel and tourism industry. Please make sure the tax relief
for small business is a permanent solution.
In conclusion, Chairman Brat, Ranking Member Evans, and the
members of the Committee, I thank you for your time today and
allowing me to share my story. And I wish you a happy National
Travel and Tourism Week. Thank you.
Chairman BRAT. Thank you very much.
With that, I think we will open up to questions. Anyone
have to leave? Anyone have pressing time constraints on them?
Why do you not go ahead? Why do you not lead us off?
Mr. Curtis, I yield to you for the first round of
questions.
Mr. CURTIS. Thank you, Mr. Chairman, and Ranking Member
Evans, and this distinguished panel.
Although I spent 8 years in Virginia and experienced many
of the things you discussed, my district is in Utah. And many
of you will know Utah for its amazing natural landmarks and
world-renowned recreational activities.
In my district, people travel from all over the world to
arches, to some of the greatest snow on earth. Just to make you
a little bit jealous, from my home, within 60 minutes, I can
reach 12 ski resorts. Several years ago, I wanted to make a
point. I traveled 15 minutes from my home in one direction and
snow skied. On the same day, traveled 15 minutes the other
direction and waterskied. So I welcome you all to come to Utah
and see what we have got there.
This kind of travel and tourism significantly impacts our
economy. Every year in my district, there is approximately $2
billion spent on outdoor recreation. We have 288 outdoor
companies in my district. And because of this, it is important
that we continue to support the state and local recreational
economies. And I am pleased to be part of this Committee today
and be here with you.
Mr. Brensinger, you mentioned in your testimony the high
import tariffs outdoor companies faced. I think you said as
high as 40 percent, which caught my attention, and the urgent
need for tariff relief. How does that impact your business? And
how would lower tariffs help fuel innovation and, specifically,
job growth?
Mr. BRENSINGER. Thank you very much, representative, for
the question. And I have spent quite a bit of time in Utah.
Twice a year for a long stretch for our retailer show and many
times personally to go to Zion and incredible places in your
state.
As far as tariffs go, our market is extremely competitive
at this point. A lot of the big famous brands in our industry
have grown into significant corporations and are seeking growth
as they move into larger markets of creation. And that makes a
very price competitive landscape. So for us, you know, we pay
between 4.5 and 9 percent tariffs on our particular goods. As
you mentioned, our industry in general pays as high as 20 or
even 40 percent on footwear and apparel. I would like to assure
you that a relief of tariffs would not end up in my pocket. It
would result in us being able to invest more in R&D, to make
our products more price competitive in the market. There are so
many forces at play today to be a successful business like
ours. Every basis point of margin makes a big difference, and
ultimately, outdoor equipment is expensive for the American
consumer to purchase, and good equipment is really essential,
as you know, to have great experiences in the outdoors. So I
think if we want to grow outdoor recreation in general,
lowering tariffs will translate into increasing participation.
Mr. CURTIS. And we could then assume job growth as well
locally?
Mr. BRENSINGER. Yes, sir.
Mr. CURTIS. Could you touch just a little bit on the global
supply chain impact on your industry and job growth as well?
Mr. BRENSINGER. Yes, thank you.
Yeah, so we, in my company, we have 24 employees that cover
a range of jobs from design, engineering, marketing, customer
service, operations. In the entire kind of global supply chain
of our business, from the folks who produce the yarns and weave
the textiles, all the way to the folks that sell the goods
ultimately, Americans represent the best, highest paying, most
innovation-focused jobs in that whole continuum. And so for us,
you know, I would say when I started the company I actually
really wanted to do our manufacturing in the U.S., partly for
reasons of patriotism and partly for reasons of pragmatism. I
wanted to be able to visit the factories and learn with them
and be part of the development process. So for the first few
years of Nemo, I spent a lot of time visiting with domestic
sewing manufacturers. And ultimately, I did learn to sew from a
couple cottage industry sewers in New Hampshire. But at the end
of the day, the sewing industry had compressed so much over the
decade since the `90s, I did not see a viable path for our
manufacturing in the states, and ultimately, kind of tapped
into the Pacific Rim supply chain for sewing, where really the
best sewing factories are.
And then a few years later, we met some Navy SEALs and
developed a military component to our business which, because
the Barry Amendment caused us going, searching again for
domestic sewing. And to be honest with you, what I found in
juxtaposing these two supply chains, is sewing in the U.S. is
about 80 percent the quality and twice the price. So the
reality is for us to be competitive in the market today,
although we do all of the most value-adding jobs in the states
as far as intellectual property and the creativity and
innovation, the sewing, per se, really has to come from abroad.
Mr. CURTIS. Thank you.
I am out of time, but let me just end with a comment that
it has been my experience that in Utah, your industry is
overflowing with innovation and it is pretty amazing and fun to
watch. Also, it has been my experience that some of our most
socially responsible companies are in your industry in my
district. So thank you very much.
Mr. BRENSINGER. Thank you, sir.
Chairman BRAT. Thank you, Mr. Curtis.
I will yield to our Ranking Member, Mr. Evans.
Mr. EVANS. Thank you, Mr. Chairman.
Ms. Panwala, I want to go something you said about a
challenge. And I sort of heard Mr. Brensinger say forces that
affect this whole industry. So you seem like you are both
saying the same. And you are talking about energy costs. And
obviously, today, the President is on the verge of nixing the
Iran deal. Obviously, that has huge implications. So talk to me
a little bit about the energy and the issue from your
perspective. You talk about gas costs, what kind of impact?
Ms. PANWALA. So I will give you my perspective, obviously,
as just a business owner. You know, whenever there is a cost of
anything which affects travel, it affects the hospitality
industry. So if the gas prices are rising, and people who are
flying into a local area or even going to Disney, it affects
them. So I think as a business owner, our concern is that
whenever there is a cost of travel, that it affects the tourism
as it would. And that certainly is a concern. If the gas prices
are increasing, then certainly domestic travel, which is almost
80 percent of what we depend on, is going to affect, besides
international travel.
Mr. EVANS. But the forces, why do you not speak a little on
that?
Mr. BRENSINGER. Yeah. Thank you, sir, for the question.
What I was referring to is it is a hypercompetitive
marketplace today. And for brands like ours to be successful,
we really have to be Omni channel businesses. We have to have
an online component. We have to have specialty retailers. We
have to have large specialty retailers. We have to do a lot of
things well so we can be wherever the customer wants to find
us. And that relates back to the tariff issue in that it is
difficult today. The way the world works, manufacturers can
distribute products straight through major online retailers,
some in particular, to the consumer, in a way that is making
being a high-end brand challenging. And so for us, it is
difficult to maintain the margin that you need to grow at 35
percent per year, and tariff reduction would make a big
difference in that.
Mr. EVANS. Mr. Shur, your testimony talked about AirHubs
and other short-term rental companies helping middle class
families get by, but a lot of reports have shown that AirHubs
in particular are driving up housing prices and making it
harder for families to make ends meet. So which is right?
Mr. SHUR. So the short-term rental industry, again, is not
new. These platforms are new, and travelers are finding that
short-term rental accommodations are more accessible than ever
before. The claim that short-term rentals are impacting housing
stock or housing prices is simply not the case. If you look at
the total number of housing units in any particular city and
compare that to the number of short-term rentals that are being
offered in that market, it is usually a very, very small
percentage of the total housing costs.
One of the examples I like to point out is in the San
Francisco area, for example, which has notoriously high housing
costs. Airbnb and the existence of the short-term rental
platforms were not the cause for high housing costs in San
Francisco. It has been that way for a very long time. In fact,
short-term rentals have enabled homeowners to earn a little
extra income so that they can afford to stay in their homes. So
we believe that the short-term rental industry is providing
great value and great benefit to these communities and not
impacting housing stock or affordable housing in any way.
Mr. EVANS. Ms. McClenny, can you speak to, you know,
particularly in your position as you look at the 50 states, the
issue about diversity and inclusion in the hospitality
industry? Can you talk a little bit about that? Because I will
tell you my background. Many years I spent on the board in
Philadelphia on the Convention Visitors Board for many years.
And there was a person in Philadelphia by the name of Ms.
Young, who used to run the convention center. So can you talk a
little bit about the aspect of inclusion and diversity in the
industry?
Ms. MCCLENNY. Yes, Congressman Evans. Thank you.
Tourism is America's best first job. So as Americans look
for employment, the tourism industry is very diverse, has a
wide range of opportunities in many industries that come as a
part of this service industry, like technology. Services to
small business that have to do with transportation, that have
to do with media production, planning. So every spectrum that
one can imagine. And our colleges now have tourism programs. So
we find that for a wide range of people, the tourism and
hospitality industry provides an entry into employment. And
from that, people are going on to get advanced degrees. They
are going on to have very wonderful salaries and the
opportunity to raise their families and live wherever in these
50 states in the United States that they choose to live because
tourism is located in every single state. And I am happy to say
that it is a growing industry. It is also an industry that
rebounds quicker than others back to post-recession times. So
it has a wide range of benefits, and it is a lot of fun.
Mr. EVANS. Thank you.
Mr. Chair, I yield back the balance of my time.
Chairman BRAT. Thank you, Dwight.
I would like to yield to my colleague from Pennsylvania,
Mr. Fitzpatrick.
Mr. FITZPATRICK. Thank you, Mr. Chairman. And welcome to
the panel.
Ms. Panwala, good to see you from business-friendly
Bensalem. Welcome to D.C.
Mr. Shur, I want to expand on a question of my colleague,
Dwight Evans. Interested to hear about the impact that
companies like Airbnb, like HomeAway, have on small business
hotels. Not on home prices, but on small business hotels.
Because it seems to me that the short-term rentals that are
offered by these companies are in many ways similar to hotels,
and yet they are not subject to the same regulations. Local
regulations, Federal, ADA regulations, how is that not unfair
competition?
Mr. SHUR. Thank you for your question, Congressman.
I will start by setting the stage. So the hotels are
experiencing the highest occupancy rates in history in the past
several years. What we are finding is that short-term rentals
are inspiring people to travel more and travel more often, and
sometimes that means they will stay in a hotel and sometimes
that means they will stay in a short-term rental. How short-
term rental platforms are impacting small hotels, I would say
they are impacting them very positively. Many small inns, bed
and breakfasts and actually listing their properties on short-
term rental platforms now because that is where consumers are
choosing to shop.
Regarding the regulatory environment for short-term
rentals, it is our belief that if someone chooses to rent out
their home, that it is still a private residence and it is not
a commercial entity that is subject to all the same conditions
as a commercial building, namely a hotel, and therefore, as far
as the negative impact on hotels, we do not believe that to be
the case. I think that from a competitive standpoint, the
hotels have tried to make more of that issue than actually
exists because, again, it is a private residence being made
available to travelers. It is not a hotel at the end of the
day.
Mr. FITZPATRICK. It is not a hotel, but if one is subject
to regulation and the other is not, and yet they are
essentially offering the same service, how is that not unfair
competition?
Mr. SHUR. Well, there are a couple of components to that.
On the issue of taxation, we believe that short-term rentals
are taxable, and that should be the responsibility of the
homeowner and they should pay the same occupancy tax that the
hotels do.
With regard to the regulatory environment, that is really
up to the locality, and it is fundamentally a zoning and
private property rights issue to determine if and how a
municipality chooses to deem someone's home a commercial
property. We do not believe that to be the case. A person's
residence is typically in a residentially zoned area, not a
commercial area. And so to apply commercial regulatory schemes
to residences we believe is not appropriate.
Mr. FITZPATRICK. How about the ADA?
Mr. SHUR. Well, again, I do not know if by just renting out
your home, whether it is a beach house, a lake house, or a
condo in the city, should require you to completely renovate
your home to make it compliant with the Americans with
Disabilities Act because, again, it is a home. And ADA
typically does not apply to residences. And therefore, just
because someone is staying in that home, whether they are
paying for it or whether it is your relative, does not
necessitate the need for ADA compliance.
Mr. FITZPATRICK. One other question, Mr. Shur. Looking my
notes here, we met with our staff. It is my understanding that
Expedia and Priceline, who control 95 percent or so of the
market for online travel agencies, charge their highest rates
to independent hotels. So is that true? You know, independent
hotels who are not part of a chain and are often small
businesses and family-owned businesses, we are being told that
these companies charge these small businesses 15 to 30 percent
more of each hotel room booked on their sites. Can you comment
on that?
Mr. SHUR. Well, I cannot speak directly to the terms of the
agreements between independent hotels and online travel sites.
But what I can speak to is the great benefit that small
properties get from being listed on an OTA. Cornell University
did a study commonly known as the Billboard Effect, and they
found that just by being listed on an online travel site, a
property, whether independent or a major brand, sees a 9
percent increase in direct bookings. What that means is people
are shopping for rooms on online travel sites, then leaving the
online travel site and going to book direct. So that exposure
that a small independent property gets is invaluable in terms
of their ability to compete with the major brands. And so I
would suggest that, again, I do not know the terms of the
agreements and whether the rates the online travel sites have
with the independent properties, but the benefit is absolutely
tremendous. They are literally marketing those properties to
the world where travelers typically would not have heard of
those properties when shopping for accommodations in a given
market.
Mr. FITZPATRICK. My time is expired.
Mr. Chairman, I yield back.
Chairman BRAT. A lot of you mentioned international
competition, and the decline, the relative decline of U.S.
share globally, et cetera. If you could all just comment. We
will start with Rita and work on down. If you could just all
comment. I mean, when I started teaching economics 25 years
ago, India and China, the average income per capital was 1,000
bucks. Right now it is growing through the roof. And so is that
loss in share just due to the fact that they are getting online
capabilities and they have got great sites and can market with
us. And so our relative share is going down. Or is it more
problematic, linked to infrastructure, something we are doing
wrong where we can make some inroads to compete better. Or both
of those, et cetera.
Rita?
Ms. MCCLENNY. Mr. Chairman, it is a combination of factors.
It is access to the skies. With the Open Skies Agreement, the
Visa Waiver Program. What we would like the landscape to look
like is greater access to smaller and regional airports for
flights to come in, whether they be domestic carriers or
foreign carriers. Also, in terms of the decline, it is a very
competitive landscape. So an organization like Brand USA,
really has an opportunity to have a high impact on promoting
travel in the United States. And a lot of countries have had
advertising programs for a number of years. So we are really
catching up, and we really are trying to stabilize that
opportunity for every city, community, destination, marketing
organization around the country, to have an equal access to
market through a lot of the co-ops and a lot of, frankly, the
buy downs that Brand USA's buying power gives them to have the
ability to market themselves to international visitors.
Mr. SHUR. I agree there is a combination of factors. I
think from a broad standpoint, our industry views this issue as
what type of message are we sending the world in terms of
America being a great place to visit and making sure that all
the security boxes are checked, and ensuring the traveling
public globally that America is still open for business and a
great place to visit with access to uncounted attractions and
opportunities for visitors to come and enjoy this country. So
it is about a global message and making sure that we are
continuing to be vigilant on security, but ensuring that the
message is being sent to the rest of the world that America is
still a great place to visit.
Mr. CHABOT. Is this a kind of constant, gradual decline
over a decade or two? Or in recent years has there been a sharp
drop off? Does anyone know the answer to that one? I mean, what
are we looking at timeframe here?
Ms. MCCLENNY. I would say it is recent. Yeah. Because up
until 2016, we were increasing our inbound travel from
international visitors.
Mr. CHABOT. What is the decline?
Ms. MCCLENNY. 2.1 percent.
Mr. CHABOT. Percent decline?
Ms. MCCLENNY. Yes.
Mr. CHABOT. And what was the growth rate prior?
Ms. MCCLENNY. I do not know the exact number but it was
closer to a 5 percent growth.
Mr. CHABOT. Growth rate that we were----
Ms. MCCLENNY. Yeah, that we were on a trajectory for. Yes.
So it has been a significant impact, as you can tell.
Mr. CHABOT. Ms. Panwala, do you want to----
Ms. PANWALA. I would say the same thing. It is a
combination of multiple things, but I think perception outside
the United States is that the United States does not welcome a
lot of visitors, which I think is a perception more than a
reality. So I think if we change our perception outside the
world, outside the United States, it would certainly help. But
yeah.
Mr. BRENSINGER. Chairman, thank you for the question. I
would say that I represent maybe a slightly different
perspective, which is maybe a diamond in the rough there. I
think outdoor participation in general has been steady. In some
categories it is growing. I think we should not forget that we
have incredible outdoor spaces in this country which are
tremendous assets and huge draws for tourism. In fact, we had
331 million people visit our national parks last year. I think
that is an important reminder that we need to continue to
invest in those spaces. And I noted that we have a $12 billion
backlog right now in maintenance of our national parks. I think
we should keep that in mind.
Another thing I wanted to just very quickly point out is
the interrelationship of gear to tourism, because I mentioned
that we represent $887 billion of consumer spending. About $700
of that is trips, travel, and tourism. The balance of that,
almost $200 billion, is around gear. And the good news is, as I
mentioned earlier, our American brands are dominant in that
global space.
Chairman BRAT. Great.
And open to anyone who knows the answer. Where has the
decline been? Has it been in any region more pronounced than
other regions, the drop-off? Any sectors more than others? From
any regional area globally that the drop-off is recognizable?
So there is a 1 or 2 percent decline. Where is it focused here?
Where is the decline coming from? Have we identified that?
Ms. MCCLENNY. Mr. Chairman, when travelers look at
potential vacation sites, they are looking at the globe,
really. So what we have seen is the increase in places like
Canada, Saudi Arabia, Spain, Australia, up 20-plus percent. So
on a very competitive landscape, to get the traveling families'
attention, it really is about where can I go that I feel
welcomed? Where can we go, because we are spending our precious
family dollars and this precious time? People do not want to
bring that stress or anxiety to a vacation experience. So we
have seen a decline in inquiries, and initially, when this
negative sentiment was happening, it did not impact the actual
travel. But now we see that it has impacted the actual
transactional retail side of the business where people are
making decisions to go to other countries. And that is why it
is so important that we remain competitive, that we keep our
foot on the pedal through Brand USA and through our airport
accessibility to stay welcoming and friendly, to have wait
times decreased through our Border Patrol, to have the latest
and greatest technology so that people have, again, easy
access. And it is an impression that people have, and it is
something that we can turn around. It is doable. And I think
that if we can just stay focused and we can, again, present
ourselves in the most positive light, that people will return
in droves.
Mr. EVANS. Like Virginia is for Lovers.
Ms. MCCLENNY. Like Virginia is for Lovers.
Mr. EVANS. That is right.
Chairman BRAT. And I just do not know the basic facts here,
so that is kind of why I am probing. Is this a decline of folks
coming here or a decline of folks coming here relative to us
going there? Or is it just an absolute decline in folks coming
here from abroad?
Ms. MCCLENNY. It is a decline of international travelers
from nondomestic, non-U.S. locations coming to the U.S. Yes.
Yes.
Chairman BRAT. Coming to the U.S. Okay, great. Great.
Dwight, did you have any follow-up?
Mr. EVANS. No.
Chairman BRAT. I will just close on this, because this is
the Small Business Committee. If you had to give us one
recommendation to try to incentivize small business to be more
helpful, et cetera, in your industry, what would it be?
Why do we not start at Ms. Panwala? I do not want to catch
you off-guard. If anybody wants to zip in.
Ms. PANWALA. No, I would say the tax reform that we are
working on currently right now, continue capital access to
small business owners. Continue promoting travel and tourism,
domestic and internationally. Because, like I said, the small
businesses comprise 83 percent of all the companies in the
industry. So as much as you can help small businesses, they
will always reinvest back into the economy by creating more
jobs, hiring more employees, and also reinvesting by building
and purchasing more of the hotels. So as much as we can make it
easier for small business owners to reinvest, that would be
something that I would urge that we consider.
Mr. BRENSINGER. Thank you, Chairman.
Pretty simple for us. Two parts. One is we have no outdoor
industry without public lands. So in general, supporting our
beautiful outdoor spaces is paramount. Renewal of LWCF is one
of many concrete ways to do that. The other is, and this really
hits home for me is, again, the tariff relief issue through
multilateral or bilateral trade agreements. MTBs, the GSP
program, or individual pieces of legislation, like the U.S.
Outdoor Act, that allows us to give consumers the best value in
outdoor gear and helps support innovative businesses like my
own.
Mr. SHUR. I think the benefits of the travel and tourism
economy on small businesses are clear. I would suggest that
anything we can do to invest in our travel and tourism economy,
whether it is Brand USA, whether it is airport infrastructure,
national parks, all those things contribute to stimulating the
travel and tourism economy, which is ultimately going to
benefit small businesses across the country.
Ms. MCCLENNY. Mr. Chairman, we have multiple drivers that
really move the needle, and really, Brand USA is power packed
because it is the multiplier effect of those dollars that are
collected that are invested into campaigns. Access to capital
for small businesses and job creation through small business is
the creator of a travel economy. And that travel economy
contributes so much to the USA.
Chairman BRAT. Great. Thank you very much.
Dwight, any? Grand slam, all right.
Thank you all very much for being with us. Very
informative. I learned a ton. Thank you for making the trip and
sharing your testimony with us. Thank you. Have a great week.
I ask unanimous consent that members have 5 legislative
days to submit statements and supporting materials for the
record.
Pause for objection.
Without objection, so ordered.
You like that? That was humor, if you did not get that.
Without objection, so ordered.
This hearing is now adjourned.
Thank you all very much.
[Whereupon, at 12:02 p.m., the Subcommittee was adjourned.]
A P P E N D I X
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