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