<DOC>
[107th Congress House Hearings]
[From the U.S. Government Printing Office via GPO Access]
[DOCID: f:76303.wais]
THE STATE OF THE U.S. TOURISM INDUSTRY
=======================================================================
HEARING
before the
SUBCOMMITTEE ON
COMMERCE, TRADE, AND CONSUMER PROTECTION
of the
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTH CONGRESS
FIRST SESSION
__________
OCTOBER 17, 2001
__________
Serial No. 107-66
__________
Printed for the use of the Committee on Energy and Commerce
Available via the World Wide Web: http://www.access.gpo.gov/congress/
house
__________
U.S. GOVERNMENT PRINTING OFFICE
76-303 WASHINGTON : 2002
_____________________________________________________________________________
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COMMITTEE ON ENERGY AND COMMERCE
W.J. ``BILLY'' TAUZIN, Louisiana, Chairman
MICHAEL BILIRAKIS, Florida JOHN D. DINGELL, Michigan
JOE BARTON, Texas HENRY A. WAXMAN, California
FRED UPTON, Michigan EDWARD J. MARKEY, Massachusetts
CLIFF STEARNS, Florida RALPH M. HALL, Texas
PAUL E. GILLMOR, Ohio RICK BOUCHER, Virginia
JAMES C. GREENWOOD, Pennsylvania EDOLPHUS TOWNS, New York
CHRISTOPHER COX, California FRANK PALLONE, Jr., New Jersey
NATHAN DEAL, Georgia SHERROD BROWN, Ohio
STEVE LARGENT, Oklahoma BART GORDON, Tennessee
RICHARD BURR, North Carolina PETER DEUTSCH, Florida
ED WHITFIELD, Kentucky BOBBY L. RUSH, Illinois
GREG GANSKE, Iowa ANNA G. ESHOO, California
CHARLIE NORWOOD, Georgia BART STUPAK, Michigan
BARBARA CUBIN, Wyoming ELIOT L. ENGEL, New York
JOHN SHIMKUS, Illinois TOM SAWYER, Ohio
HEATHER WILSON, New Mexico ALBERT R. WYNN, Maryland
JOHN B. SHADEGG, Arizona GENE GREEN, Texas
CHARLES ``CHIP'' PICKERING, Mississippi KAREN McCARTHY, Missouri
VITO FOSSELLA, New York TED STRICKLAND, Ohio
ROY BLUNT, Missouri DIANA DeGETTE, Colorado
TOM DAVIS, Virginia THOMAS M. BARRETT, Wisconsin
ED BRYANT, Tennessee BILL LUTHER, Minnesota
ROBERT L. EHRLICH, Jr., Maryland LOIS CAPPS, California
STEVE BUYER, Indiana MICHAEL F. DOYLE, Pennsylvania
GEORGE RADANOVICH, California CHRISTOPHER JOHN, Louisiana
CHARLES F. BASS, New Hampshire JANE HARMAN, California
JOSEPH R. PITTS, Pennsylvania
MARY BONO, California
GREG WALDEN, Oregon
LEE TERRY, Nebraska
David V. Marventano, Staff Director
James D. Barnette, General Counsel
Reid P.F. Stuntz, Minority Staff Director and Chief Counsel
______
Subcommittee on Commerce, Trade, and Consumer Protection
CLIFF STEARNS, Florida, Chairman
NATHAN DEAL, Georgia EDOLPHUS TOWNS, New York
Vice Chairman DIANA DeGETTE, Colorado
ED WHITFIELD, Kentucky LOIS CAPPS, California
BARBARA CUBIN, Wyoming MICHAEL F. DOYLE, Pennsylvania
JOHN SHIMKUS, Illinois CHRISTOPHER JOHN, Louisiana
JOHN B. SHADEGG, Arizona JANE HARMAN, California
ED BRYANT, Tennessee HENRY A. WAXMAN, California
STEVE BUYER, Indiana EDWARD J. MARKEY, Massachusetts
GEORGE RADANOVICH, California BART GORDON, Tennessee
CHARLES F. BASS, New Hampshire PETER DEUTSCH, Florida
JOSEPH R. PITTS, Pennsylvania BOBBY L. RUSH, Illinois
GREG WALDEN, Oregon ANNA G. ESHOO, California
LEE TERRY, Nebraska JOHN D. DINGELL, Michigan,
W.J. ``BILLY'' TAUZIN, Louisiana (Ex Officio)
(Ex Officio)
(ii)
C O N T E N T S
__________
Page
Testimony of:
Abercrombie, Hon. Neil, a Representative in Congress from the
State of Hawaii............................................ 18
Berkley, Hon. Shelley, a Representative in Congress from the
State of Nevada............................................ 15
Conlin, Linda M., Assistant Secretary, Trade Development,
Department of Commerce..................................... 41
Crye, J. Michael, President, International Cruise Lines
Council.................................................... 65
Jones, Terrell B., President and CEO, Travelocity.com........ 71
Keller, Hon. Ric, a Representative in Congress from the State
of Florida................................................. 22
Lounsberry, Fred, Senior Vice President of Sales, Universal
Studios Recreation Group................................... 63
Marriott, J.W., Jr., Chairman and CEO, Marriott
International, Inc......................................... 53
Nicholas, Cristyne L., President and CEO, NYC & Company...... 56
Norman, William S., President and CEO, Travel Industry
Association................................................ 45
Underwood, Hon. Robert A., a Delegate in Congress from the
Territory of Guam.......................................... 24
Warren, Robert, Senior Vice President, General Counsel and
Secretary, Air Transport Association of America, Inc....... 50
Material submitted for the record by:
Bono, Hon. Mary, a Representative in Congress from the State
of California, prepared statement of....................... 83
International Association of Amusement Parks and Attractions,
prepared statement of...................................... 84
(iii)
THE STATE OF THE U.S. TOURISM INDUSTRY
----------
WEDNESDAY, OCTOBER 17, 2001
House of Representatives,
Committee on Energy and Commerce,
Subcommittee on Commerce, Trade, and
Consumer Protection,
Washington, DC.
The subcommittee met, pursuant to notice, at 10:05 a.m., in
room 2322, Rayburn House Office Building, Hon Cliff Stearns
(chairman) presiding.
Members present: Representatives Stearns, Shimkus, Shadegg,
Pitts, Terry, Bass, Tauzin (ex officio), Towns, John, and
Deutsch.
Staff present: Brian McCullough, majority counsel; Ramsen
Betfarhad, majority counsel/policy coordinator; Kelly Zerzan,
majority counsel; Shannon Vildostegui, majority cunsel; Will
Carty, legislative clerk; Jon Tripp, deputy communication
director; and Bruce Gwinn, minority professional staff.
Mr. Stearns. Good morning. The Subcommittee on Commerce,
Trade, and Consumer Protection will come to order. I want to
welcome everybody this morning.
I represent a State that boasts one of the largest tourism
industries in the country, but it would be foolish to think
that only States with warm weather and beaches attract
tourists. Just the opposite is true. We have world-renowned
cities rich in tradition and culture, from New York to New
Orleans. Our diverse topography allows every activity
imaginable, whether it is skiing our mountains in the winter,
exploring the desert canyons, or sailing in the Great Lakes in
the summer. Every State and territory offers tourists something
unique, enhancing the United States as the destination of
choice for domestic and international tourists.
Because every State and territory maintains an interest in
our tourism industry, the health of this sector of our economy
has taken on increasing importance. While I could quote
impressive statistics demonstrating how important tourism is to
our economy, allow me to share just two.
The travel and tourism is a $600 billion industry,
representing a little over 5 percent of our GDP and employing
over 17 million Americans. In my home area of central Florida,
tourism brought in $21 billion in visitor spending to the local
economy last year and accounted for 211,000 jobs, with a total
amount wages earned of $5 billion.
That was last year. While the tourist industry is not
isolated from the economic slowdown, the attacks of September
11 have changed the dynamic immeasurably. Through no fault of
their own, tourism and tourist-dependent businesses large and
small that were already weathering economic challenges have
been thrust into a more serious dilemma that could not be
predicted.
My State of Florida is especially hard hit for two reasons.
First, Florida's economy is disproportionately dependent on
travel and tourism revenues; and, like Nevada, New Hampshire
and a few other States, Florida, not having an income tax, is
heavily dependent on sales tax revenue to meet its public
service obligation. An initial estimate puts the cost of the
attacks to Florida at $183 million just in lost sales tax from
tourists' spending by the end of the year.
Though the Commerce Department has recently issued
forecasts for a healthy return in the long-term outlook, the
short-term outlook is less optimistic. I don't know that any of
us could write a cure-all prescription, but the President's
call to our routine and our way of life seems to be an
excellent starting point. However, restoring the confidence to
do that appears to be the obstacle holding back a full and fast
recovery.
If we are to restore confidence in travel, it is natural
that we pay particular attention to the airline industry. The
subcommittee held a hearing earlier this year on airline
mergers, during which we received testimony highlighting the
importance of air travel to our economy. No one doubts those
claims now as we witness the struggles of every business
dependent upon air travelers.
Many Floridians' livelihoods are highly dependent on air
travelers visiting the State. Before the attack, 55 percent of
visitors to Florida arrived by air, so any substantial decrease
in the number of air travelers creates serious ripple effects
within Florida's economy. This is true of other parts of the
country, including Nevada, Hawaii and indeed our own
Washington, DC, where travel and tourism is the second-largest
employer behind the Federal Government.
Restoring the confidence in travel in general and air
travel in particular in the wake of the September 11 attacks is
one of the more difficult challenges we face today. Still, I am
confident we can restore confidence and businesses will again
flourish.
The Federal Government immediately implemented new security
measures for air travel and will continue to make any necessary
changes. There are no guarantees in this world, but given our
country's history of success we will find solutions that work.
I welcome our witnesses today and thank them for their
participation. I look forward to their insights so Congress can
accurately identify the public policy issues where it is
appropriate for the Federal Government to be involved. In that
light, I am carefully reviewing with my colleagues the
proposals offered on the Senate side by Senator Kyl and Senator
Miller and on the House side by my colleagues Congressmen
Shadegg, Abercrombie, and Ms. Wilson, including the $500 tax
credit bill that they support.
So, with that, I want to welcome our witnesses and also
have the ranking member, Mr. Towns--welcome him for an opening
statement.
[The prepared statement of Hon. Cliff Stearns follows:]
Prepared Statement of Hon. Cliff Stearns, Chairman, Subcommittee on
Commerce, Trade and Consumer Protection
I am proud to represent a state that boasts one of the largest
tourism industries in the country. But it would be foolish to think
that only states with warm weather and beaches attract tourists. Just
the opposite is true. We have world-renowned cities rich in tradition
and culture, from New York to New Orleans. And our diverse topography
allows every activity imaginable, whether it be skiing our mountains in
the winter, exploring the desert canyons, or sailing the Great Lakes in
the summer. Every state and territory offers tourists something unique,
enhancing the United States as the destination of choice for domestic
and international tourists.
Because every state and territory maintains an interest in our
tourism industry, the health of this sector of our economy has taken on
increasing importance. While I could quote impressive statistics
demonstrating how important tourism is to our economy, allow me to just
share two. The travel and tourism is a $600 billion industry
representing little over 5% of our GDP and employing over 17 million
Americans.
Specifically, in my home area of central Florida, tourism brought
some $20.9 billion in visitor spending to the local economy last year
and accounted for over 211,000 jobs with total annual wages earned of
$5 billion. That was last year. While the tourism industry is not
isolated from the economic slowdown, the attacks of September 11 have
changed the dynamic immeasurably. Through no fault of their own,
tourism and tourism dependent businesses large and small that were
already weathering economic challenges have been thrust into a more
serious dilemma that could not be predicted.
My state of Florida is especially hard hit for two reasons. First,
Florida's economy is disproportionately dependent on travel and tourism
revenues. And like Nevada, New Hampshire and a few other states,
Florida not having an income tax is heavily dependent on sales tax
revenues to meet its public service obligations. An initial estimate
puts the cost of the attacks to Florida at $183 million just in lost
sales taxes from tourist spending by the end of the year.
Though the Commerce department has recently issued forecasts for a
healthy return in the long-term outlook, the short-term outlook is less
optimistic. I don't know that any of us can write a cure-all
prescription, but the President's call to return to our routine and our
way of life seems to be an excellent starting point. However, restoring
the confidence to do that appears to be the obstacle holding back a
full and fast recovery.
If we are to restore confidence in travel, it is natural that we
pay particular attention to the airline industry. The Subcommittee held
a hearing earlier this year on airline mergers during which we received
testimony highlighting the importance of air travel to our economy. No
one doubts those claims now as we witness the struggles of every
business dependent on air travelers. Many Floridians' livelihoods are
highly dependent on air travelers visiting the state. Before the
attacks 55% of visitors to Florida arrived by air. So any substantial
decrease in the number of air travelers creates serious ripple effects
within Florida's economy. This is true of other parts of the country,
including Nevada, Hawaii and indeed our own Washington, DC, where
travel and tourism is the second largest employer behind the federal
government.
Restoring confidence in travel in general and air travel in
particular, in the wake of the September 11 attacks, is one of more
difficult challenges we face today. Still, I am confident we can
restore confidence and business will once again flourish. The Federal
government immediately implemented new security measures for air travel
and will continue to make any necessary changes. There are no
guarantees in this world, but given our country's history of success,
we will find solutions that work.
I welcome all our witnesses today and thank them for their
participation. I look forward to your insight so that Congress can
accurately identify the public policy issues where it is appropriate
for the Federal government to be involved. In that light, I am
carefully reviewing various proposals calling for direct federal
assistance, including the $500 dollar tax credit bill introduced in the
Senate by Senators Kyl and Miller and here in the house by my
colleagues Mess. Shadegg, Abercrombie and Ms.Wilson.
Mr. Towns. Thank you very much, Mr. Chairman.
I would like to thank the witnesses for appearing here
today to talk about the state of their industry. I would
especially like to thank my colleagues and Mrs. Nicholas, who
is the President and CEO of the New York City Travel and
Tourism Board, for being here to discuss the state of the
tourism industry in New York.
Mr. Chairman, I would like to submit a letter from the
Travel Business Roundtable which has compiled some statistics
on the tourism industry which I feel members of the committee
may find useful and, as a longstanding tradition, I would like
to move that this information become a part of the record.
Mr. Stearns. By unanimous consent, so ordered.
Mr. Towns. I would like to use the remaining time to
encourage all Americans to get out and travel this fall. There
is nothing better than a weekend away in your favorite
location, whether it is enjoying a golf weekend, relaxing on a
beach or at a resort.
My No. 1 suggestion, Mr. Chairman, is take a trip to New
York City. There is no better place to spend a weekend, and
there is certainly no better place to spend your money right
now. Come to New York and see that Broadway show you wanted to
see for the past year. Do your Christmas shopping a little
early. Come walk the streets and get a feeling of patriotism
rivaled by nowhere in America. Come see the baseball playoffs,
and let me inform you in advance, come to the World Series.
Come help rebuild New York City and get our economy moving
again.
Last, Mr. Chairman, I would urge all of my colleagues to
support H.R. 2940, the I Love New York Tax Deduction Act. This
bill would give tax deduction for meals, travel, entertainment
in New York City until the end of 2002. I think it is so
important that we do this and we do it now.
Once again, I look forward to the testimony today, and I
yield back my time.
[The prepared statement of Hon. Edolphus Towns and the
letter follow:]
Prepared Statement of Hon. Edolphus Towns, a Representative in Congress
from the State of New York
Thank you Mr. Chairman and I too would like to thank the witnesses
for appearing here today to talk about the state of their industry. I
would especially like to thank Cristyne Nicholas, who is President and
CEO of the New York City Travel and Tourism Board for being here today
to discuss the state of the tourism industry in New York.
Mr. Chairman, I would first like to submit a letter from the Travel
Business Roundtable. The T-R-B has compiled some statistics on the
tourism industry which I feel members of the committee may find useful
and I would like to move that this information be made part of the
record . . .
As everyone knows, my city along with the entire nation is still
reeling from the effects of the September 11th tragedy. Our psyche has
been damaged in many ways, but it has not been destroyed. We are a
resilient people and are bouncing back from this attack. To do this, we
need to start walking a little bit taller, keeping our chins held a bit
higher and lastly Mr. Chairman, we need to get back to traveling!
I would like to use my time today to encourage all Americans to get
out and travel this fall! There is nothing better than a weekend away
in your favorite location, whether it's enjoying a golf weekend
getaway, relaxing on a beach or at a resort in Las Vegas OR--and this
is my number one suggestion Mr. Chairman, take a trip to New York
City!!! There is no better place to spend a weekend and there is
certainly no better place to spend your money right now either!
Come to New York and see that Broadway show you've wanted to see
for the past year. Come do your Christmas shopping a little early! Come
walk the streets and get a feeling of patriotism rivaled by nowhere in
America today. Come see the baseball playoffs and hopefully, the World
Series!!! Lastly, come help rebuild New York City and get our economy
moving again.
Lastly Mr. Chairman, I would urge all of my colleagues to support
H.R. 2940, The I Love New York Tax Deduction Act. This bill would give
tax exemptions for travel, meals and entertainment in New York City
until the end of 2002. I think it is an important piece of legislation
and one that should be passed as quickly as possible.
Once again, I look forward to the testimony today and I yield back
the balance of my time.
______
Travel Business Roundtable
October 15, 2001
The Honorable Edolphus Towns
U.S. House of Representatives
2322 Rayburn House Office Building
Washington, DC 20510
Dear Congressman Towns: In my capacity as Chairman of the Travel
Business Roundtable (TBR), and on behalf of the thousands of small,
medium and large scale travel and tourism businesses around the United
States, I am writing to thank you and Chairman Cliff Stearns for
focusing on the plight of the travel and tourism industry in your
hearing this week in the House Energy and Commerce Subcommittee on
Commerce, Trade and Consumer Protection.
Travel and tourism is one of the few industries whose economic
reach touches upon each congressional district in all 50 states. In
2000, travel and tourism generated a trade surplus of $17 billion,
helped support more than 17 million domestic jobs, and created local
tax revenues of $99.5 billion. The industry is the first, second or
third largest employer in 28 states and the District of Columbia.
As you and Mr. Stearns have witnessed in your own states, since the
horrific acts of September 11, 2001, the travel and tourism industry
has been affected on a broad scale. Businesses are being forced to lay
off workers, hotel occupancy rates have plummeted in major metropolitan
areas and the uncertainty of future attacks is taking its toll, as both
business and leisure travelers are canceling conventions, planned
business trips and family vacations. The numbers are staggering (see
attachments).
As you prepare to investigate the large-scale economic impact on
the travel and tourism industry, please know that we are here and
willing to help with any solutions you propose to the industry.
Respectfully, on behalf of TBR's 55 members, I request this letter
and the attachments be submitted for the Subcommittee's official record
on the hearing.
Sincerely,
Jonathan Tisch
Chairman
Attachments
Travel Business Roundtable
October 5, 2001
The Honorable Edolphus Towns
U.S. House of Representatives
2322 Rayburn House Office Building
Washington, DC 20510
Dear Congressman Towns: On behalf of the Travel Business Roundtable
(``TBR''), I am writing to alert you to the crisis now confronting the
U.S. travel and tourism industry and to outline several concrete steps
that the Administration and Congress can take to help the industry
recover from the crushing blow it received as a result of the September
11th terrorist attacks on our country.
Comprised of more than 60 corporate, labor, and trade association
members, the TBR is proud to represent the broad diversity of the U.S.
travel and tourism industry. During the past decade, travel and tourism
has emerged as one of our nation's most productive engines of economic
growth. As of last January, more than 17 million Americans were
employed in travel and tourism-related jobs, with an annual payroll of
$159 billion. Travel and tourism was the first, second, or third
largest industry in 28 states and the District of Columbia. And last
year, travel and tourism generated an annual trade surplus of $17
billion as well as nearly $100 billion in tax revenues for Federal,
state, and local governments.
Unfortunately, the September 11th attacks have crippled our
industry as public confidence in the safety of travel has been severely
undermined, if not shattered. Hard data as well as anecdotal experience
suggest that meetings are being postponed; all but critical corporate
travel is being delayed; and individuals are canceling or postponing
personal travel plans within the U.S. and abroad. These disturbing
trends are all occurring against the backdrop of an overall U.S.
economy that is in decline.
Let me be even more specific: Since September 11, hundreds of
thousands of travel and tourism jobs have been lost across the country;
major U.S. cities are already reporting tens of millions of dollars in
tourism-related losses; airlines, having drastically reduced their
flight schedules are filling less than 60 percent of their seats on
most flights; hotels stand to lose more than $2 billion in room
revenue; more than 25% of meetings and conventions scheduled to take
place by the end of the year have been canceled; and travel agencies
are reporting tens of millions of dollars in sales losses each day. To
stop and reverse these alarming trends, we need your help and we need
it now.
As an immediate step, we urge you to speak out in as many forums as
possible about the continued safety of travel and its importance to the
U.S. economy. The message to the American people must be clear--to
change our way of life is a capitulation to the terrorists. We applaud
President Bush's recent public comments about the importance of travel
as well as his decision to reopen Reagan National Airport.
We also understand that Congress and the Administration are
developing a package of tax relief and other initiatives designed to
stimulate economic growth. As you review the range of options available
to you, we hope you will consider the following proposals that will be
particularly helpful to the U.S. travel and tourism industry in the
near term as the industry tries to get back on its collective feet.
These proposals are designed to achieve three goals: 1) to assist the
hundreds of thousands of workers within the travel and tourism industry
who have been displaced since September 11th; 2) to encourage people to
travel again for both business and leisure purposes; and 3) to increase
liquidity for travel and tourism-related businesses, both large and
small, that are currently confronting severe cash flow problems.
Accordingly, we propose:
Helping Displaced Workers
<bullet> Direct assistance by the Federal government to those states
that may be overwhelmed with worker compensation and
unemployment claims resulting from the September 11th attacks.
<bullet> Assurance by the Federal government that health benefits will
be continued for displaced workers.
Encouraging People to Travel Again
<bullet> Full restoration of the business meal and entertainment
deduction.
<bullet> Restoration of the tax deduction for travel expenses of a
spouse accompanying an employee on a business trip to 100%.
<bullet> Support for a Federal tax credit to encourage people to travel
or make travel plans by December 31, 2001. Amounts and
effective dates to be determined by Congress.
Liquidity
<bullet> Payroll tax relief for employers and employees.
<bullet> Extension of eligibility for the Small Business
Administration's Economic Injury Disaster Relief Program to
otherwise qualified small businesses across the country that
are unable to meet necessary financial obligations as a result
of the September 11th attacks.
<bullet> Granting discretionary authority to the SBA Administrator to
adjust size standards for eligibility to ensure that firms
falling outside the SBA's definition of ``small'' are not
inadvertently left behind.
On a longer-term basis, two additional steps should be taken.
First, a top priority for the TBR has been the creation of a
Presidential Advisory Council on Travel and Tourism. We envision the
Advisory Council, whose members would hail from the public, private and
non-profit sectors, as the fulcrum for tourism policymaking and
implementation within the Executive Branch. The Advisory Council should
be established as quickly as possible. Second, the Federal government,
in partnership with the private sector, should help finance an
advertising campaign that promotes the United States as a travel
destination of choice for the foreign tourist and stimulates greater
travel within the United States. The TBR strongly believes that such a
campaign, if properly conceived, can pay substantial dividends in the
form of increased tourism throughout our country.
As more governors and mayors speak out about the damaging
consequences of September 11th for state and local governments, both in
terms of lost revenues and spiraling unemployment claims, one salient
truth emerges: Travel and tourism is a nationwide industry whose
enormous economic presence in all 435 Congressional Districts must not
be ignored.
Thank you for giving me this opportunity to share my thoughts with
you. If you have any questions or suggestions, please contact me
directly or call Chuck Merin, TBR's Washington representative, at (202)
530-4829. For your review, I have also attached TBR's membership list
and a snapshot summary of the devastating impact that September 11th
has had on our industry.
Those of us at the TBR wish you every success as you undertake your
important responsibilities during these difficult times. Our thoughts
and prayers are with you.
Sincerely,
Jonathan M. Tisch
Chairman
Attachments
cc: TBR membership
The Effects of the September 11 Attacks On the U.S. Travel and Tourism
Industry
Analysts project tourism in the U.S. could drop by nearly one-third
in the coming months.
Hundreds of thousands of U.S. airline, hotel and other travel
industry workers have lost their jobs.
U.S. airlines are flying with 40 percent to 50 percent of their
seats empty, even after drastically reducing their scheduled flights.
Across the U.S., 25 % of conventions and meetings scheduled before
the end of 2001 have been cancelled.
Per-room revenue is projected to decline between 3.5 percent and 5
percent this year--the largest decrease in room revenue in 33 years.
Hotels could lose $2 billion in room revenue and other associated
income. Specifically, cities around the country are already
experiencing tremendous losses:
<bullet> In New York, the overall occupancy rate is at 45 percent,
where it would normally be at 75 percent, and 3,000 employees
have been laid off;
<bullet> In Washington, D.C., room occupancy plummeted from 80 percent
to less than 20 percent, and experts say more than 50,000
hospitality jobs in the region are at risk;
<bullet> In Central Florida, many hotels are at less than 25 percent
capacity, where they would normally more than 50 percent full;
<bullet> In Seattle, where downtown hotels are typically 90 percent
occupied in September, occupancy is as low as 30 percent; and
<bullet> In Hawaii, where many hotels normally have 80 to 85 percent
occupancy, many occupancy rates are at 40 percent or lower.
Travel agencies are losing an estimated $51 million per day in
sales.
Corporate travel is projected to fall by 50 percent by January
2002.
One estimate states our economy will decrease by 1.8 percent of
total GDP, directly resulting in a loss of 1.1 million U.S. jobs.
Membership
Larry Alexander Detroit Metro Convention and Visitors Bureau; Steven C.
Anderson National Restaurant Association; Sean Anderson WH Smith USA
Travel Research; Richard A. Anderson, Carey International Limousine;
Adam M. Aron Vail Resorts, Inc.; Gloria Bohan Omega World Travel, Inc.;
Christopher Bowers United Airlines; Melinda Bush HRW Holdings, LLC;
Sila M. Calderon Sol, Commonwealth of Puerto Rico; Thomas J. Corcoran
Jr. FelCor Lodging Trust; Manuel Cortez Las Vegas Convention and
Visitors Bureau; John F. Davis, III Pegasus Systems, Inc.; Roger J. Dow
Marriott Lodging; William H. Friesell Diners Club International;
Michael Gehrisch International Association of Convention and Visitors
Bureaus; Laurence S. Geller Strategic Hotel Capital Incorporated; Vicki
Gordon Six Continents Hotels Inc.; Michael W. Gunn American Airlines;
Bjorn Hanson PhD PricewaterhouseCoopers LLP; Wolf H. Hengst Four
Seasons Regent Hotels & Resorts; Stephen P. Holmes Cendant; Dieter H.
Huckestein Hilton Hotels Corporation; Robert E. Juliano Hotel Employee
and Restaurant Employee International Union; Jacki Kelley, USA Today;
Thomas A. Kershaw The Hampshire House Corporation; George D. Kirkland
L.A. Convention & Visitors Bureau; Fred Kleisner Wyndham International;
Jonathan S. Linen American Express Company; Joseph A. McInerney,
American Hotel & Lodging Association; David Meyer Business Travel News;
Sandy Miller Budget Group Inc.; Scott D. Miller Hyatt Hotels
Corporation; Marc Morial Mayor of New Orleans; Patrick Moscaritolo
Greater Boston Convention and Visitors Bureau; Curtis Nelson Carlson
Hospitality Worldwide; Cristyne Nicholas NYC & Company; Howard C.
Nusbaum, American Resort Development Association; Michael S. Olson CAE
American Society of Association Executives; William J. Overend The
Coca-Cola Company; Paul S. Pressler, Walt Disney Attractions; Lalia
Rach, Center for Hospitality, Tourism & Travel; Barbara J. Richardson,
Amtrak; John T. Riordan International Council of Shopping Centers;
Lamar Smith Visa USA, Inc.; Randell A. Smith Smith Travel Research;
Barry Sternlicht Starwood Hotels & Resorts; Paul Tagliabue National
Football League; William Talbert Greater Miami Convention & Visitors
Bureau; Robert S. Taubman, Taubman Centers, Inc.; Jonathan M. Tisch,
Loews Hotels; Tom Williams, Universal Studios; Scott Yohe, Delta Air
Lines, Inc.; and Tim Zagat, Zagat Survey, LLC.
Mr. Stearns. I thank the gentleman.
Now the distinguished chairman of the full committee, the
gentleman from Louisiana, Mr. Tauzin.
Chairman Tauzin. Thank you, Chairman Stearns. Let me thank
you for holding this important hearing.
As the committee with primary jurisdiction over travel and
tourism, it is our job to examine the state of the industry and
to focus America's attention once again on how critical and
important this industry is and how much it does for this
country in terms of jobs and economic effect and balance of
trade. For the last decade this has been one of the shining
lights in our balance of trade portfolio. Americans need to
think about that.
And I want to welcome the distinguished members joining us
today, Ms. Berkley of Nevada. You, I know, will excuse me when
I leave quickly to go downstairs because we are marking up your
bill on the regulatory reform of the Center for Medicare and
Medicaid Services in our country. It is a very important bill
that we are going to try to get to the floor as soon as we can,
and I want to thank you for working with our committee and not
only putting together what I think is an excellent package but
I think making a great difference for all the Medicare and
Medicaid providers and, most importantly, the patients in
America who are going to benefit from that very important
effort you are making.
I want to welcome Mr. Abercrombie of Hawaii, my dear
friend, and Mr. Underwood of Guam, my dear friend, from the
Resources Committee. We worked together daily on areas of
interest to this committee because we worked together in
preserving America's great resources on that committee, many of
which are the things America travels to see and be a part of.
While we encourage foreign travel, we always remind Americans
we have got a great country. If you haven't seen it all, you
are missing out. You ought to see it all before you decide to
go anywhere else.
And, of course, Mr. Keller from Florida, who joins Mr.
Stearns in reminding all of us that if any committee is going
to put a favorable light upon all the efforts to rejuvenate
travel and tourism in this country, it is one that is chaired
by the gentleman from New Orleans and the subcommittee chaired
by the gentleman from Florida. Of course, New Orleans and
Florida are great tourists sites.
And I want to tell my friend from New York I love New York.
I have a son who works there, and I agree that we ought to
encourage travel in New York. We ought to rebuild New York.
That is part of what I think our Nation needs to do, not just
the great folks in New York.
But two comments about it. I have never seen New Yorkers be
more pleasant in all my life, and I want to thank you for all
the folks in New York for the incredible way in which New York
is remaking itself.
And, by the way, that is also true in the airlines in
America. Travelers are telling us that all the time now. People
are being nicer to one another. They are paying attention to
one another a little more, obviously, but they are also being
nicer to one another. We are seeing a great attitude in travel.
Travel has never been the easiest because you have got to go
through the lines and get your baggage checked and there is
more inconvenience than before, but the bright side is people
are being nicer and kinder to one another and more caring for
one another.
So our country is going through something pretty nice that
New York is experiencing and travelers are experiencing and in
the face of all this ugly atrocity and terror at the same time
our country is refinding--finding again I should say--a part of
its character and a part of its good side, its good nature, and
I think that is maybe a plus here.
Today the Speaker announced, by the way, that we are
probably going to adjourn session early today and allow a full
sweep of all the buildings and all the offices to make sure
that our staff and all the Members and our guests who come here
to work on important issues like this are safe when they come
to work in the Capitol. So we are taking this very seriously.
The incident on the Senate side in Mr. Daschle's office was
a very profound incident. About 20 people I think have been
affected by it.
In yesterday's leadership meeting, Mr. Chairman, I can tell
you that everyone spoke with a common mind, one, that we were
going to continue to do our business calmly and responsibly for
the American people but at the same time we were going to act
very responsibly to make sure that our staffs and the folks who
come up here to testify and work with us are assured of their
safety, just as we are working to make sure that travel and
tourism is safe again in this country.
The President was asked about sacrifice as we enter this
new kind of war against terrorism in the world. He was asked
what has he asked Americans to sacrifice, and he gave a great
answer, I think the best answer anyone can give. He said, well,
what is it if it isn't sacrifice when you lose a part of your
soul?
We can't win back everything we lost on September 11. We
can't win it all back. We did lose a part of our soul. We lost
something sacred in this country on September 11, and we are
going to have to fight to bring this country back to a sense of
itself and sense of security and a sense of peace and calm
again. But that is all our job, and that is the sacrifice he is
asking all of us to make.
He is asking this industry to pick itself up by its
bootstraps, and he is asking us to help where we can to make
sure it is revitalized. But he is also asking all Americans I
think to understand that in our very special, personal way we
have to win back much of what we lost on September 11, and that
means going back to business and hugging our children, going
back to work and doing the things that make our country great
and special, and part of that is indeed spending time with each
other, with families and gathering together in special places
in this country of beauty and calm and places where we can
entertain and enjoy the incredible blessings that God has
bestowed upon our country. And so travel and tourism are
critical parts of that.
Thank you, ladies and gentleman, for coming from all parts
of America to remind us of that this morning. Thank you in the
industry for being with us today. How important you are and how
important this industry is to the country.
Most importantly, Mr. Chairman, I think our message today
is to all Americans that this country will come through this.
We will be okay as long as every American does his and her
part. And part of it is just that, experiencing the blessings
of this great country in the way in which we conduct our lives
and our businesses and again reminding each other how important
we all are to one another and renewing that new spirit in New
York and on the airlines, in the travel houses and destinations
and the cruise ships and all the different parts and parcels of
this industry that we are coming back and we are coming back
strong.
There is a revitalization going on in the industry. To the
extent this committee can help, I know the chairman is
dedicated to doing that and so am I.
[The prepared statement of Hon. W.J. ``Billy'' Tauzin
follows:]
Prepared Statement of Hon. W.J. ``Billy'' Tauzin, Chairman, Committee
on Energy and Commerce
First, let me thank Chairman Stearns for holding what promises to
be a very informative hearing this morning on the state of the U.S.
tourism industry. I also would like to thank the distinguished
Members--Mrs. Berkley of Nevada, Mr. Abercrombie of Hawaii, Mr.
Underwood of Guam, and Mr. Keller of Florida--for taking the time to
come and speak to us on the first panel this morning. We appreciate how
important this issue is to you and your constituents. And, I welcome
the industry representatives, who will testify on the second panel.
Thank you all for participating in this hearing.
The travel and tourism industry is an important component of the
American economy that is sometimes under-appreciated. It doesn't grab
the headlines like the high tech industry does; yet it provides
millions of jobs and accounts for billions of dollars in services each
year. The industry directly employs an estimated 8 million workers. It
accounts for approximately 5% of our nation's Gross Domestic Product.
And, as one of our largest service exports, it has run a trade surplus
every year for the past decade. These statistics help underscore just
how vital this industry is to the American economy and the American way
of life.
September 11th significantly effected the travel and tourism
industry, perhaps more than any other sector of our economy. The
industry already had been facing many of the same challenges of a
slowing economy that were confronting other sectors before the attacks.
However the direct financial impact from the two days of grounded
flights, and the phase in of flights after that, were just the
beginning of its problems.
After flight service resumed, according to numbers recently
released by the Air Transport Association, one of our witnesses here
today, passenger loads were cut nearly in half when compared to pre-
September 11th travel. Passengers are slowly returning, but flight
schedules have been cut back. What had previously been a problem of
fewer travelers due to concerns about the family budget has been
compounded by all the caution and worry about travel stemming from the
attacks--and the whole of the country is experiencing the impact of
these added concerns.
The reduction in travel has produced a quick and severe domino
effect. Hotels, restaurants and entertainment destinations have felt
the impact, as have the industries that support the tourism industry.
Although it is difficult to determine how much of this reluctance
to travel is related to economic concerns and how much is related to
September 11th, we must address both. The President has developed a
stimulus package to help aid the slowing economy. The federal
government has also worked with industry groups to increase security
and ease public concern. Meanwhile, recent statistics and forecasts
suggest air travel and the rest of the tourism industry are slowly and
steadily recovering.
We will not get back what was lost on September 11th. However, we
can and must learn from the tragedies. Our response to these events
will help determine the future of this great country and ensure we
preserve our way of life as we move forward. I urge those here today
and others in the industry to keep up the good work strengthening
confidence in travelers. I also want to let you know that Congress will
continue to seek to do what is necessary to assist you in those
efforts.
Thank you, Mr. Chairman.
Mr. Stearns. Thank you for your spirited opening statement.
The gentleman from Louisiana, Mr. John, is recognized for
an opening statement.
Mr. John. Thank you, Mr. Chairman. I will be very brief. I
have a statement that I will enter into the record.
I want to thank the chairman and also the ranking member,
Mr. Towns, for holding this important hearing.
The events of September 11 have adversely, and to
dimensions that we could never have imagined, affected tourist-
dependent States and obviously the State of Louisiana--the
great State that I represent is one of those States. It is the
second largest economy of Louisiana. It employs about 120,000
people. It is important to our economy.
Some estimates through the Lieutenant Governor's Office--
which handles all tourism for Louisiana--say that we have lost
$100 million up to this point in time, and for a State the size
of Louisiana that is significant. In particular, some of the
events that have been hardest hit are conventions, corporate
conventions that come into New Orleans and other cities in our
great State, and they are very dependent on flying in and
flying out traffic. I think that type of tourism is very, very
important, and that has been the sector that has been impacted
the most.
But I think that Louisiana has stepped up to the plate.
Local convention centers and visitors bureaus are committed and
started a campaign of a million dollars that began I think this
week trying to get people back to Louisiana under the guise of
the Louisiana Purchase. So it is important that the State and
local governments play their role, and they are doing that, and
I think that shows a commitment of how important this industry
is to our great State.
Louisiana is preparing for three very massive events in the
coming months--the Super Bowl; Mardi Gras, that draws people
from all over; and if the Saints continue to win, maybe an NFL
playoff game in the Superdome, which will be great. But I
believe the economic success of these events, which are really
the bellwether--they are the golden eggs of our tourist events
of the whole year. Mardi Gras obviously is something that is
there annually and the Super Bowl which New Orleans will host
this year.
The success of these very major events that are attended by
people from all over the world I think are going to be
contingent upon how comfortable and secure we can make
travelers feel that come not only to New Orleans and Louisiana
but to other States that are so dependent on tourism. I am very
comforted that this committee is playing a part to start
opening the dialog toward that end, and I look forward to the
testimony from four of my distinguished colleagues that have
similar situations to the State of Louisiana with Nevada and
Hawaii and Florida and Guam. I mean, those are very tourism-
dependent States.
So thank you for holding this hearing, and I look forward
to the testimony.
[The prepared statement of Hon. Chris John follows:]
Prepared Statement of Hon. Chris John, a Representative in Congress
from the State of Louisiana
Thank you Mr. Chairman, I appreciate the opportunity to comment on
today's hearing and will be brief with my remarks so that we may
proceed with our two witness panels.
Mr. Chairman, the September 11 terrorist attacks have affected
every tourism-dependent state. In Louisiana, tourism is the second-
largest industry and employs over 120,000 people. It is estimated that
we have lost $100 million so far as a result of the September 11
tragedy. In particular, tourism markets in the state that are dependent
on fly-in and corporate convention business have felt the largest
impact. The state and our local convention and tourism bureaus have
responded with a variety of promotions, including a $1 million
advertising campaign to attract visitors.
Mr. Chairman, Louisiana is preparing to host two massive events in
the coming months--the Super Bowl and Mardi Gras--that draw visitors
from all over the world. The economic success of these events will
largely be determined by how secure Americans and international
visitors feel heading into next year. I look forward to the testimony
of our witnesses here today to help define the role our federal
government can play in making tourists feel more secure so that we can
continue to grow America's tourism industry.
With that Mr. Chairman, I will conclude my remarks by welcoming our
witnesses and thanking them for their appearance before our
subcommittee.
Mr. Stearns. I thank my colleague and recognize the
gentleman from New Hampshire for an opening statement, Mr.
Bass.
Mr. Bass. Thank you, Mr. Chairman. I, too, appreciate this
hearing, and I would like to lend my support to what I think
are really great comments by our full committee chairman.
These are not easy times for any of us and what we are
going to do this week is going to be quite a bit out of the
ordinary, but it is going to make working here a lot safer, and
I think it is the right decision. I also feel that although all
of us are going to have to make sacrifices and some of them may
be quite significant, not only will our country, as he said, be
okay, I think we are going to come out of this experience
stronger and more vital than ever before because we are unified
in our objective to root out and end this cancer we call global
terrorism, state-sponsored terrorism.
I could be sitting there with you four today because my
home State of New Hampshire, which has no sales or income tax,
is obviously very dependent upon revenues it receives from room
and meals, from business profits and business enterprise taxes.
We have a flourishing tourist industry right now in foliage
viewing, and the ski industry is coming up, and then of course
all the summer activities, and we are probably--I am not sure
what the statistics are for New Hampshire--having as much
trouble as any other State in this area.
Mr. Chairman, I think it might be more appropriate,
however, for us to make this a field hearing in the four
localities. I have never been to Guam before. Just to see for
ourselves.
Mr. Towns. Will the gentleman yield?
Mr. Bass. Yes, sir.
Mr. Towns. I support that.
Mr. Abercrombie. Mr. Chairman, you have to come through
Hawaii in order to hit Guam.
Mr. Bass. All I can say, I was on an important mission with
you once and you wanted to stop in Iceland on the way home
because you figured that nobody in Hawaii would worry if they
knew you had stopped in Iceland.
But this is an important issue and in my home State it
ripples down through all kinds of different industries, through
every town and city. I am looking forward to hearing the
testimony you bring forward today and hope that if there is any
role for Congress to play in revitalizing tourism that we will
be leading the way from this subcommittee in reaching that
objective, and I yield back.
Mr. Stearns. I thank the gentleman.
[Additional statements submitted for the record follow:]
Prepared Statement of Hon. John Shadegg, a Representative in Congress
from the State of Arizona
I want to thank the Chairman for holding this important hearing.
As America moves forward following the unspeakable terrorist
attacks of September 11th Congress is considering ways to help our
economy recover. Talk has centered on an economic stimulus package that
focuses on pro-growth policies that keep and create jobs. As one
element of that package we should include legislation that will jump-
start the ailing travel and tourism industry.
No sector of our economy has been more damaged. And, few industries
in our country have such far-reaching impact on the U.S. economy as
travel and tourism. In fact, it is America's third largest retail
industry with $582 billion of total expenditures, generating nearly
$100 billion in tax revenue for local, state, and federal governments.
Without this revenue, each U.S. household would need to pay an
additional $964 in total taxes.
The catastrophic events of September 11th have had a
disproportionately negative impact on the U.S. travel and tourism
industry. Not only have airline, hotel, car rental, restaurant, and
other travel and tourism businesses suffered, but the attacks have had
a dramatic ripple effect that has damaged businesses only indirectly
related to the travel and tourism industry.
We need to get Americans traveling again. That is why I, along with
my colleague, Mr. Abercrombie, have introduced H.R. 3041, the Travel
America Now Act.
The incentive is simple and modest. It will encourage Americans to
resume recreational travel and tourism, as well as provide a much-
needed stimulus to the entire American economy. It would provide a $500
tax credit per person ($1,000 for a couple filing jointly) for personal
travel expenses for travel originating and taken within the U.S.
The tax credit would cover travel expenses associated with personal
automobiles, airplane, cruise, train, and bus tickets; hotel and motel
accommodations; restaurant meals; and rental cars. It would also
restore full deductibility for business entertainment expenses,
including meals, that are now subject to a 50 percent limitation. In
addition, the measure expands (from two years to five years) the
``carry back'' period to allow travel-related businesses to
retroactively apply post-September 11th losses against tax liabilities
incurred in previous years.
Every tax paying American can take advantage of this incentive
provided: (1) the travel is taken, or paid for, after the date of
enactment of the legislation and before the end of the year: (2) he or
she travels at least 100 miles from his or her residence, and (3) his
or her trip involves an overnight stay at a commercial lodging
facility.
The goal of an economic stimulus should be job preservation and
creation, and there is no better stimulus than one directed at the
travel and tourism industry. It is one of America's largest employers--
7.8 are million people directly employed and 11.5 are million
indirectly employed in the U.S. travel and tourism industry (19 million
total jobs amounts to one out of every seven people employed in the
U.S. civilian labor force).
While there are some media reports that the industry is coming
back, these stories are misleading. Travel and tourism is far from pre-
September 11th levels. Thousands of baggage handlers, cab, limousine
and shuttle bus drivers, hotel maids, bellhops, industrial laundry
workers, airplane manufacturing employees, flight attendants, pilots
and countless others have lost their jobs. An extension of unemployment
benefits, even with supplemental healthcare, will not get these people
their jobs back. Virtually every business in this sector is reducing
staff and operating at restricted levels merely to stay afloat.
For instance, as of October 5th the nation's airlines have cut
nearly a 100,000 jobs, slashed flights by 20 percent and even those are
one-third empty. Hotel occupancy is 30 percent below normal levels, and
the highly popular Smithsonian Museums, which usually get 70,000
visitors a week, are down to 32,000.
The downturn in the travel and tourism industry is having a domino
effect on other economic sectors and in some cases has come full
circle. Take for example Joe Barner, a beverage manager for a catering
company in Florida. Shortly after the attacks he was warned that the
company was cutting hours and pay for managers for ``the good of the
company.'' But, a week later he lost his job, even though October
business was promising.
Though Mr. Barner is looking for another job in the hospitality
business, he's worried that the slowdown in tourism will narrow or
eliminate his prospects. Preparing for the long haul, he cancelled his
newspaper, pared back his cable service and traded in his car for lower
payments on the same day he was laid off. And, he might not be able to
enjoy one luxury he has already paid for--tickets to a football game in
Wisconsin--because he and his wife can't afford to travel.
The TAN Act would help people like Joe Barner and serve as a timely
response to the job losses and business downturn affecting millions of
working families in every part of the country.
As a complement to the enhanced safety measures that are being
implemented, Congress should include in the economic stimulus package a
temporary incentive to travel. It would be an important step to help
maintain a vibrant travel and tourism industry, keep working people
working, and stimulate economic growth.
Once again, Mr. Chairman, I commend you for holding this hearing
and sincerely hope that we come to some real conclusions.
______
Prepared Statement of Hon. Ed Bryant, a Representative in Congress from
the State of Tennessee
The September 11th tragedies have had an impact on many various
sectors of our nation's economy.
However, the effect of the attacks on the United States tourism
industry has been particularly strong. For weeks following September
11th, I didn't see one constituent darken the door of my Washington, DC
office.
The impact of the 11th on the tourism industry has been felt at
home in my district in Tennessee as well.
As you all know Memphis is the birthplace of rock and roll and the
home of the blues--we have Elvis, Graceland, Beale Street, and the
mighty Mississippi River.
It is no wonder that the city's second greatest industry is
tourism. Elvis impersonators obviously aren't the only people who flock
to Memphis. Many others from this country and from around the world
visit Memphis every year.
However, since the eleventh, tourism revenue has dropped
significantly.
The Memphis Convention and Visitors Bureau estimates that the city
has lost about $20 million in economic impact from tourism revenues.
With hotel occupancy levels in Memphis down 14.8%, it is reported that
these hotels have lost about $1 million a week in room revenues.
I look forward to hearing from our panelists today. It is important
to look at the changes that have occurred in our nation's economy and
try to distinguish how much is a result of the attacks on the 11th and
how much is a part of the economic downturn that we were experiencing
prior to the 11th.
I believe President Bush has done a good job renewing Americans'
confidence in flying.
The President has strengthened security at our airports in the
short term and we are working with the President on legislation to make
permanent changes in this area. I look forward to hearing from our
witnesses today on how these changes have made Americans more secure
about flying.
I also would like to hear from you about any recommendations you
may have for federal involvement and more specifically suggestions for
ways that this committee can be of assistance.
Finally, I thank the witnesses for coming today and I thank the
chairman for holding this important hearing.
______
Prepared Statement of Hon. Lee Terry, a Representative in Congress from
the State of Nebraska
As the representative of Omaha, I take great pride on behalf of the
city in recognizing outstanding businesses that are friends of the
community. Marriott Hotels is one such friend, and a loyal one at that.
Many of us in this room have reserved rooms at a Marriott Hotel
recently; we did so by calling the Marriott Reservation Center,
headquartered in Omaha, Nebraska. Marriott is an important player in
the Omaha economy, employing hundreds of hardworking Nebraskans and
contributing heavily to the community by way of product donations,
employee volunteerism, and financial contributions for community
projects. It can be honestly said that without Marriott's presence in
the Omaha community, the city would not be as enjoyable of a place to
live.
Recently, the City of Omaha broke ground on a new convention
center, which will house, among other things, a hotel that will be a
central component of the building. With my deepest regrets, the
contract was awarded to a Marriott competitor. It was an ugly battle,
filled with questionable politics that filled the local paper's front
page. It is not a decision of which the people of Omaha should be
proud, and were I still an Omaha City Councilman instead of a U.S.
Congressman, I hope the decision would have gone the other way.
Nevertheless, Mr. Marriott, you can be certain that the people of
my district hold a few things close to their hearts: Nebraska football,
Offutt Air Force Base, and Marriott Hotels. No matter what hotel's name
is atop our city's convention center, I join many Omahans when I say
that Marriott is my hotel of choice.
Mr. Stearns. At this point, we will take the opening
statements from our colleagues. We will start with
Congresswoman Shelley Berkley from the First District of
Nevada.
Your opening statements will all be made is the part of the
record. We are trying to keep it under 5 minutes. We have eight
witnesses on the second panel, but we thought it was important
to hear from you firsthand, so we welcome you for your opening
statement.
STATEMENT OF HON. SHELLEY BERKLEY, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF NEVADA
Ms. Berkley. Thank you very much, Mr. Chairman and Ranking
Member Towns, for holding this very important hearing today.
I just returned from New York City, and I can't encourage
people to go there more than you. I had a wonderful time. The
atmosphere is terrific. People are very enthusiastic, and they
want tourists to come and see New York.
But after they go to New York, I can't encourage them
enough to come to Vegas. Because not only when you come to
Vegas can you see Paris, Venice, the Roman Empire, Egypt, New
Orleans, the Middle Ages, you could also see New York, New York
as well. While I can't offer a World Series, I can certainly
offer great shows, great restaurants and wholesome family
entertainment.
Tourism is the No. 1 industry in the Las Vegas Valley.
Tourism drives the economic train of my community. People's
livelihood depend on it. Indeed, the entire community depends
on one industry. That is all we have. The effects of the
September 11 attacks have been devastating on Las Vegas.
Before September 11, the Las Vegas economy was one of the
strongest in the Nation. You have all heard me brag about it
since I came to Congress. Unemployment was virtually
nonexistent. Smaller businesses were flourishing, and millions
of people were visiting. Last year, 38 million people visited
southern Nevada.
Now, Las Vegas is experiencing economic upheaval. A week
after the attacks, hotel occupancy rates dropped from 100
percent to nearly 40 percent; and 240 conventions were canceled
immediately. While the weekend hotel occupancy rates have
improved, the midweek rates remain terribly depressed, and my
district will likely lose 20 percent of its convention business
in the coming months. Revenues from casino entertainment,
shopping, showrooms, lodging and dining have plunged. The
hotels have laid off more than 15,000 workers and reduced the
hours, often voluntarily by the workers, for many, many more.
For each displaced hotel worker another worker is laid off in a
related industry. Unemployment, which was virtually nonexistent
before September 11, has now reached 7 percent and rising.
Last week, I hosted two displaced hospitality workers--and
``displaced'' is the nice word for saying they don't have a
job. Jewel Jackson and Lucy Cedeno told their stories.
Jewel is a single mother of two teen-aged girls. She worked
at the Four Seasons Hotel as a laundry valet worker and was
laid off 2 days after the attack--2 days. Her unemployment
benefits amount to $243 a week. Her rent alone is $739 per
month. When her electric and food bills are included, her
monthly expenses amount to more than $1,100. This does not
include health care, clothes for herself and her children, and
other daily expenses.
She told the panel that she just doesn't know what she is
going to do now. She is looking for a job but so is everybody
else, and we don't have another industry where she could be
retained to go to work.
Lucy Cedeno and her husband have both been laid off by the
hotel industry. In my town most people are working in the
hotels; and if there are two breadwinners in the family, they
are both working in the hotels.
When both women were asked what they needed the most, both
emphatically stated that the health insurance was the most
important. They are scared to death.
Las Vegas was one of the best metropolitan areas to start a
new business. However, at this point, small businesses
throughout southern Nevada are experiencing a dramatic decline
in business. One third of small companies cited a decrease in
business of a minimum of 25 percent in the last month. These
businesses are being forced to take drastic measures such as
hiring freezes, delaying payments to vendors, which of course
has a terrible ripple effect, and laying off workers. If the
current situation continues, businesses will close and
unemployment will go up dramatically.
Congress must move quickly on legislation to turn the
economic tide. We must extend unemployment compensation and
COBRA. Health insurance is the workers' biggest worry. It can
cost up to $500 a month for health insurance for families.
Small businesses that have experienced losses as a result of
the attacks must receive relief.
General aviation businesses have lost revenue while
grounded by the FAA. Air tour operating companies in Las Vegas
have experienced losses ranging from $25,000 to $700,000 as a
result of airport closures. Small Business Administration loans
should be expanded to help businesses in areas hard hit by the
ripple effect of September 11.
Full deductibility--and I can't emphasize this enough. My
workers want it. My casinos want it. My restaurants want it.
Full deductibility for business meals must be included in the
economic stimulus package. Allowing for full deductibility of
business meals will encourage business to increase travel by
making travel less expensive. A business meals tax deduction
benefits the entire economy.
Confidence in air travel must be restored. Forty-six--not
55 percent but 46 percent of Las Vegas tourist business arrives
by air.
The Senate has overwhelmingly passed a security package. I
implore the House to do the same. We can talk about confidence.
We can talk about people going their own way and enjoying their
lives as they did before September 11. They are scared to death
to get on a plane, and it is getting worse instead of better.
Serious consideration should be given to a $500 tax credit for
people traveling within North America. This credit would give
people an incentive to get back on the planes, trains and in
cars to travel.
I urge quick passage of legislation that will enable areas
such as Vegas to rebound, putting people back to work and
restoring the economic health of our country with vast and
expanding unemployment. How are we going to restore consumer
confidence? They can have all the confidence in the world. If
they haven't got any money to spend, they are not going to be
in the stores; and we have got, needless to say, a big shopping
time coming up with the holidays. I urge us to move as quickly
as possible on this package.
Thank you, Mr. Chairman.
[The prepared statement of Hon. Shelley Berkley follows:]
Prepared Statement of Hon. Shelley Berkley, a Representative in
Congress from the State of Nevada
Thank you, Mr. Chairman and Ranking Member Towns for holding this
very important hearing today. Tourism is the Number 1 industry in the
Las Vegas Valley. Tourism drives the economic engine of my community.
People's livelihoods depend on it.
The effects of the September 11th attacks have been devastating on
Las Vegas. Before September 11th, the Las Vegas economy was one of the
strongest in the nation. Unemployment was low, small businesses were
flourishing and millions of people were visiting. Last year, 38 million
people visited southern Nevada. Now, Las Vegas is experiencing economic
upheaval.
A week after the attacks, the hotel occupancy rates dropped from
100 percent to nearly 40 percent and 240 conventions canceled. While
the weekend hotel occupancy rates have improved, the midweek rates
remain depressed. And, my district will likely lose 20% of its
convention business in coming months. Revenues from casino
entertainment, shopping, showrooms, lodging and dining have all
plunged.
The hotels have laid off 15,000 workers and reduced the hours for
many more. For each displaced hotel worker, another worker is laid off
in a related industry. Unemployment has reached 7 percent. Before
September 11th, this rate was just 4.8 percent.
Last week, I hosted two displaced hospitality workers from Nevada.
Jewel Jackson and Lucy Cedeno told their stories to a House panel.
Jewel is a single mother of two teenaged girls. She worked at the Four
Seasons Hotel as a laundry valet worker and was laid off two days after
the attack. Her unemployment benefits amount to $243 per week. Her rent
alone is $739 per month. When her electric and food bills are included,
her monthly expenses amount to more than $1,100. This does not include
health care, clothes for herself and her children and other daily
expenses. She told the panel that she just doesn't know what she is
going to do now. She is looking for a job, but there is not much out
there now.
Lucy Cedeno and her husband have both been laid off by the hotel
industry. When both women were asked what they needed, both
emphatically stated that health insurance was the most important.
Las Vegas was one of the best metropolitan areas to start a new
business. However, at this point, small businesses throughout southern
Nevada are experiencing a decline in business. One third of small
companies cited a decrease in business of 25 percent. These businesses
are being forced to take drastic measures such as hiring freezes,
delaying payments to vendors and laying off workers. If the current
situation continues, businesses will close and unemployment will go up
dramatically.
Congress must move quickly on legislation to turn the economic
tide. We must extend unemployment compensation and COBRA. Health
insurance is the workers' biggest worry. It can cost upward of $500 per
person per month. Displaced workers collecting only unemployment
insurance cannot afford these costs and still pay for other
necessities.
Small businesses that have experienced losses as a result of the
attacks must receive relief. General aviation businesses have lost
revenue while grounded by the Federal Aviation Administration. Air tour
operating companies in Las Vegas have experienced losses ranging from
$25,000 up to $700,000 as a result of airport closures. Small Business
Administration loans should be expanded to help businesses in areas hit
hard by the ripple effect of September 11th.
Full deductibility for business meals must be included in the
economic stimulus package. Allowing for full deductibility of business
meals would encourage business to increase travel by making travel less
expensive. A business meal deduction benefits the entire economy.
Confidence in air travel must be restored. 46 percent of Las
Vegas' tourists arrive by air. The Senate has overwhelmingly passed its
security package. I implore the House to do the same.
Serious consideration should be given to a $500 tax credit for
people traveling within North America. This credit would give people an
incentive to get back on planes, trains and in cars and travel.
I urge quick passage of legislation that will enable areas such as
Las Vegas to rebound, putting people back to work and restoring the
economic health of our country.
Mr. Stearns. I thank my colleague.
The gentleman from Hawaii Congressman, Neil Abercrombie.
STATEMENT OF HON. NEIL ABERCROMBIE, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF HAWAII
Mr. Abercrombie. Thank you, Mr. Chairman.
I will in fact submit a statement.
I would like as well, Mr. Chairman, in conjunction with
what I am about to say, to submit--I have got a bunch of copies
here which actually, if I can get some help from the staff, I
would like to pass along to you right at this moment.
Some of you maybe didn't have an opportunity to see the
paper this morning. The headline here is, United Chief Says
Head Airline Could Fail. The Chairman of United Airlines has
sent a letter to company employees yesterday warning the
carrier will perish sometime next year--that is a direct
quote--unless it stops the financial losses that have
accelerated dramatically since the September 11 terrorist
attack.
Mr. Chairman, I want to follow up on what Shelley had to
say by starting out a little by stating the obvious. Everybody
has a story here, but I think it is important to establish this
perspective for what I have to say that follows.
Tourism obviously, in Hawaii, it is more than a third of
our income. We are affected by international travel as well--
not just going out, coming in. New York City, New Orleans,
wherever it happens to be, Florida, I am sure you do a
tremendous amount of business. Mr. Keller, I know, does a
tremendous amount of business in Orlando from international
travel.
Our international travel is down 47 percent right now, and
it has a tremendous effect immediately on the bottom line, on
the immediate bottom line for us. This was--it is now 47
percent. That is an improvement for what it was the rest of the
September, which was 78 percent. You just cannot continue to do
business under these circumstances when you are taking that
kind of a hit. Some of the hotels are reporting they are only
down 20 percent or 40 percent in terms of their occupancy. That
is because they closed down whole sections of buildings and
simply laid people off.
In Hawaii last week things are improving in the headlines
of the newspaper because we only have 3,600 people applying for
unemployment when it was 5,000 2 weeks previous. That is an
improvement for us simply because the numbers are going down.
I will be speaking shortly about the bill that Mr. Kyl and
Mr. Miller and Mr. Shadegg and myself have on the $500 tax
credit. You can get from New York to Hawaii for $400 round
trip. That is one of the reasons that United is having the
trouble. And, you know, I see people smiling and saying that
sounds good, let us go. You have to have a job and confidence
to do it. But they are not going to make money with that. They
simply can't keep up that kind of a so-called bargain, 8 full
package days from San Francisco for $359. I mean, that is how
desperate we are trying to get people out there.
The Los Angeles Times has a story here: Hawaii takes a big
hit waiting for tourists to come flying back. These are two
kids from the Hilton Hawaiian Village Hotel down in my district
with their two children there. Between them they make good
money. I have always been a big fan of the tourist industry
because it does give people an opportunity, men and women.
There is no glass ceiling in this industry. You produce, you
compete, you can rise in it. They make $60,000 between them,
$60,000 income between them. They are both out of work.
It isn't so much whether people are doing all right at the
end of the month. It is what happens 45 days from now. They
have got mortgage payments to make and bills to pay. They can't
go out Christmas shopping.
And one of the great things about being a Member of
Congress, as opposed to--you know, Mr. Greenspan is speaking
somewhere on the Hill today. That is great for him. Greenspan
will have a paycheck at the end of the month. Greenspan will
have a paycheck next month and the month after, and when he
retires he is not worried about whether he and his family are
going to be able to take care of themselves and pay their
bills.
These folks and our folks--one of the things about being a
Member of Congress, we add votes up one at a time here and one
at a time at home. If there is anybody in the country that
understands what it is, it is the Members of the House of the
Representatives. As my wife says to me all the time, you don't
get elected every 2 years. It is every other year. We have to
renew our licenses every other year. If there is anybody in
this country that understands what individual pain is all about
and what individual problems are that need solutions, it is the
Members of the House of Representatives.
So I am very happy to be here in that sense, Mr. Chairman,
today because I know that you and the members of your committee
can help us with that. And I want to get directly to what that
is. We have got to take up the question of legislation. It is
one thing to try to save the airlines, and we have tried to do
that. It is another thing to try to get confidence in air
safety, and we are struggling with that, and I know you are
working on it. But then we have to get legislation that get
these tax credits going, that will get the spousal travel back
into effect and will allow for business net operating loss
carry-backs to come in.
If we put that combination in and you can prevail upon Mr.
Thomas and the leadership and we can in the Democratic Caucus
to come in with a travel and tourism package that is going to
address individual families in this country, then we can
succeed. Absent that, I think we are going to face a worse
crisis 45 or 60 or 90 days from now than we could prevent if we
take action now. That is why your hearing today is vitally
important, and we are very grateful to you for it.
Thank you, Mr. Chairman, and aloha.
[The prepared statement of Hon. Neil Abercrombie and the
article follow:]
Prepared Statement of Hon. Neil Abercrombie, a Representative in
Congress from the State of Hawaii
Chairman Stearns, Ranking Democrat Towns and Members of the
Subcommittee: Thank you very much for affording me the opportunity to
testify before you here today on the state of the travel and tourism
industry. As you well know, it is not a pretty picture. The toll of the
terrorist attacks continues, not just in New York and here in
Washington but across the nation, much to the undoubted satisfaction of
the attackers. I hope to be able to give you a clearer picture of the
industry's condition and some solutions.
Hawaii is one of the most desirable tourist destinations in the
world. While it has delivered economic blessings, it is also highly
vulnerable to disruption. Tourism now dwarfs all other sectors of our
economy. Over $12.0 billion in revenue comes to Hawaii through travel
and tourism, 25% of the state economy, according to the Bank of Hawaii.
When a downturn occurs, it has a serious and immediate impact, as
is the case today. As of October 14, international arrivals have
declined 47%, and the key Japanese arrivals have declined 36%. Arrivals
from the mainland have declined``only'' 20%. These figures, as bad as
they are, represent improvements from late September when international
travel was down by 78%.
The Hawaii Hotel Association reported lately that hotel occupancy
is down 40% in up market resort areas, such as Waikiki Beach which I
represent and the Kona-Kohala area on the Big Island of Hawaii.
Hawaii's travel and tourism industry is responding. You can find
round-trip airline tickets from New York to Hawaii for $400. From Los
Angeles or San Francisco, you can get an eight day Hawaii vacation,
including hotel, airfare and most expenses for $359 per person.
But good deals are not worth a nickel if people do not get on
airplanes to go places, whether Hawaii, Orlando, Las Vegas, New
Orleans, Chicago or New York. It takes people willing and confident to
travel by air to occupy the hotels, attend the theater, fill the
restaurants, take the cabs and tip the waitresses, the sky caps, the
doormen and the hotel maid service. While Hawaii is an integral part of
the United States, there are no alternatives to getting there other
than flying.
That makes apparent the fundamental and most important steps we in
Congress can take: making air travel safe, and communicating air travel
security to the public. Nothing short of re-establishing that
confidence will succeed in getting the industry hardest hit by the
terrorist attacks back on its feet.
We've gotten assistance quickly and generously to the airlines. Now
Congress must put two more legs on the three-leg stool. We must move
equal speed to pass airplane and airport safety and security laws.
Although I favor federalizing the baggage checking and security system,
I am open to other solutions if they can provide comparable protection.
If it requires National Guard troops in the interim, this is a
legitimate use of personnel in a national emergency. Clearly, trained
security personnel must be put on board and airline employees, flight
attendants and pilots given appropriate equipment and training. Cockpit
safety is essential. Although these may seem elementary steps, they
must be accomplished and we're not there yet.
After assuring essential safety and security, there must to be a
stimulus or incentive to encourage people to travel. There are a number
of proposals that have been brought forth, but having been a proponent
of the travel industry since elected to Congress eleven years ago, I'd
like to focus on a couple of ideas that would succeed in boosting
travel.
First, Congressman John Shadegg and I have introduced the Travel
American Now Act (H.R. 3041) in response to the crisis. It consists of
a temporary income tax credit of $500 for Americans to travel by plane,
train, bus or auto to destinations at least 100 miles from home.
Reasonable expenses, such as meals, lodging, entertainment and
recreation within the U.S. would qualify for this credit for expenses
between enactment and December 31 of this year. Group tour fees and
agent fees would be covered.
Another provision would allow a 100 percent business meals and
entertainment deduction through December 31. Some have projected that
business travel has been the hardest hit segment of the industry,
especially with some sectors of the economy clearly softening before
September 11. This would help get business travelers back moving
throughout the country.
Lastly, it would allow Net Operating Loss carryback for taxes paid
by travel-related industries adversely affected by the attacks for an
additional 3 years. Companies that were profitable before September 11
would be able to recover at least some of their losses.
Separate from H.R. 3041, I have introduced legislation in each of
the last Congresses to re-establish the spousal business travel
deduction, allowing a spouse who materially participates in business
activities to claim a legitimate business-associated deduction. This
will greatly help tour packagers to offer even more attractive
combinations of air fares, lodging, meals and other travel-related
items. Not only will this encourage individuals businesspersons to
travel, but it will be a great boost to convention and trade show
destinations. It is pro-family, encouraging spouses to travel together,
and will often allow them, perhaps with children, to spend an extra day
or two at their destination.
And speaking of families and children, the real tragedy of the
results of the terrorist attacks has been hundreds of thousands of jobs
lost, and many more working people have had work levels and hours
reduced. The impact on hundreds of thousands of American's families is
only now being felt. For many, there are little or no financial
reserves, and people could be homeless in Hawaii in another 4 weeks.
Unemployment compensation pays only a fraction of normal expenses.
These benefits are less than rent and mortgages, and they does not
count food, medicine and utilities. Congress must act speedily to
increase and extend unemployment compensation. Even though it is only a
temporary and inadequate cushion, it is better than no safety net at
all.
A portion of the COBRA health insurance benefits premiums should be
provided. Currently, an unemployed person must pay 102 percent of the
costs. Job training needs to be provided to those permanently affected.
Employers should assure full benefits and seniority be provided to
those who return to work.
Chairman Stearns, these are practical, attainable and effective
measures we can move on quickly. I have spoken to the House leadership
on these matters in an effort to move them forward. I very much
encourage you and the members of the Commerce Committee to do so as a
result of the testimony you have solicited and receive today. I am
encouraged by your attention to the crisis in the industry that is so
vital to Hawaii and my constituents, as well as to millions of others
in the industry across American. This is one of the perhaps few actions
taken since September 11 that have the potential for reviving this
industry.
______
[Wednesday, October 17, 2001--The Washington Post]
United Chief Says Airline Could Fail
By Frank Swoboda, Washington Post Staff Writer
The chairman of United Airlines sent a letter to Company employees
yesterday warning that the carrier ``will perish sometime next year''
unless it stops the financial losses that have accelerated dramatically
since the Sept. 11 terrorist attacks.
``Today, we are literally hemorrhaging money,'' James Goodwin wrote
in the letter. ``Clearly this bleeding has to be stopped--and soon--or
United will perish sometime next year.''
United would not comment on the letter, but a source at the airline
confirmed it and said it had gone to the company mailroom to be sent to
the airline's 100,000 employees.
The letter's existence and contents were first reported yesterday
on the Web site of Air Transport World, a monthly trade publication.
Some analysts have projected that United, the nation's second-
largest airline, could lose more than $1 billion this quarter. United
had been experiencing heavy losses even before the attacks because of a
sharp drop in business travel and labor problems.
United, US Airways, America West and possibly Continental are
generally regarded as being in the most precarious financial positions,
all for different reasons. United is heavily dependent on business
travel, which fell off at the beginning of the year and hasn't come
back. Southwest and Delta are financially strongest among the major
airlines.
Company officials would not speculate on whether Goodwin's letter
might be part of a campaign to pressure its unions into a new round of
contract concessions.
The fourth quarter is expected to be significantly worse for almost
all the airlines than the quarter just ended--which is projected to be
the third-worst in industry history.
Michael Linenberg, an airline analyst for Merrill Lynch & Co.,
predicted yesterday that the industry would lose $2.1 billion in the
third quarter and $3.5 billion in the fourth quarter. The largest
quarterly loss ever for the airline industry was $3.7 billion in the
fourth quarter of 1990.
Glenn Engel, an analyst for Goldman Sachs Group Inc., said he would
be ``shocked if United perishes a year from now,'' according to the
Associated Press. But another analyst, Helane Becker of the Buckingham
Research Group, said Goodwin's scenario rings true for United and
probably every major U.S. airline. ``The numbers they're going to
report in this quarter are going to be ridiculously horrible,'' she
said.
Since terrorist hijackers attacked the Pentagon and the World Trade
Center, passengers have been staying away from the airlines by the
thousands. Those who are flying are mostly being lured by low fares
that the airlines cannot afford to continue indefinitely. Although
several airlines have reported that the number of passengers on their
flights has increased recently, since dropping off dramatically after
the attacks, the financial yields--the revenue--from each ticket sale
has dropped significantly, according to industry officials.
Almost all the airlines have cut flights, some by as much as 23
percent, since the attacks. United has already announced plans to cut
20,000 workers.
In his letter, Goodwin said: ``Before September 11 we were not in a
comfortable financial state, with costs exceeding our revenue on a
daily basis. Today the situation is exacerbated with costs exceeding
revenues four times the pre-September 11 rate.''
Goodwin said that in the aftermath of the attacks ``we are in
nothing less than a fight for our life.'' He added: ``Never in our 75-
year history have we faced an economic challenge of this magnitude,
when the drop-off in air travel has been so unexpected and prolonged.
In the past we struggled to make a profit. Now we're in a struggle just
to survive.''
Mr. Stearns. Thank you.
I welcome my colleague from Florida, the congressman from
Orlando, Mr. Ric Keller.
STATEMENT OF HON. RIC KELLER, A REPRESENTATIVE IN CONGRESS
FROM THE STATE OF FLORIDA
Mr. Keller. Good morning, and I want to thank you, Chairman
Stearns, and the other subcommittee members for allowing me to
brief you today.
I can tell from looking at some of the empty chairs that
one of you must have leaked the word that I would be speaking
today.
I represent Orlando, Florida, the world's No. 1 tourist
destination, and I can tell you that we have been uniquely
impacted by the events of September 11. Specifically, because
people are afraid to fly, our tourism-based economy has been
devastated. It has hurt us in two ways, in terms of job losses
and decreased local tax revenues.
First, I will address the issue of job losses. One in four
people in my district is employed by the tourism industry. I
have personally spoken with theme park workers, hotel workers,
convention workers and cabdrivers that have lost their jobs.
From September 12 until today, there has been a 55 percent
increase in the number of daily unemployment claims, and the
majority of these unemployed workers are linked to tourism.
Following the terrorist attacks of September 11, the
Governor of Florida conducted an industry-wide survey to
estimate the economic impact on tourism-related businesses in
Florida, and let me tell you what the survey indicated.
Hotel occupancy rates, which normally average about 75
percent this time of year, are only 40 percent.
Florida's major tourist attractions experienced a 50 to 70
percent drop in attendance.
Rental car companies have seen a 50 percent drop in
business.
Airlines had to lay off thousands of employees as a result
of plane loads averaging only 35 percent of capacity in the
period after September 11. The lack of passengers traveling to
Florida will continue to impact tourism since over 50 percent
of all tourists arrive in Florida by air.
The second way the tourist attacks have impacted central
Florida is by a dramatic decrease in local tax revenues. Since
Florida does not have a State income tax, we are dependent in
large part upon sales tax revenues to fund our government. In
fact, visitors generated approximately 48 percent of the $1.5
billion in sales tax collected in Orange County in 2000.
Without these tourist tax revenues, every household in Orange
County would have to pay an additional $551 a year in taxes to
receive the same level of service they currently enjoy.
I believe that increased consumer spending on travel and
tourism is absolutely critical to revitalizing central
Florida's tourism-based economy. For this reason, I strongly
support giving travelers a $500 tax credit if they book a trip
before December 31, 2001. This $500 tax credit is also
supported by major employers in my district, tourism leaders
and our local political leaders. In fact, in just a few minutes
you will hear directly from one of our major employers. Mr.
Fred Lounsberry is the senior executive with Universal Studios.
You will hear directly from him.
I want to conclude by thanking the committee again for
giving me the opportunity to brief you on the state of the
tourism industry in central Florida. Thanks.
[The prepared statement of Hon. Ric Keller follows:]
Prepared Statement of Hon. Ric Keller, a Representative in Congress
from the State of Florida
I want to thank Chairman Cliff Stearns and the Subcommittee members
for allowing me to brief you today.
I represent Orlando, Florida--the world's number one tourist
destination--and I can tell you that we've been uniquely impacted by
the events of September 11th.
Specifically, because people have been afraid to fly, our tourism-
based economy has been devastated. It's hurt us both in terms of job
losses and decreased local tax revenues.
First, I'll address the issue of job losses. One in four people in
my district are employed by the tourism industry.
I have personally spoken with theme park workers, hotel workers,
convention workers, and cab drivers that have lost their jobs. From
September 12th, until today, there has been a 55% increase in the
number of daily unemployment claims. The majority of these unemployed
workers are linked to tourism.
Following the terrorist attacks of September 11th, the Governor of
Florida's Office of Tourism and Economic Development conducted an
industry wide survey to estimate the economic impact on tourism related
businesses in Florida. The survey indicated:
<bullet> Hotel occupancy rates, which normally average about 75% this
time of year, are only 40%.
<bullet> Florida's major tourist attractions experienced a 50% to 70%
drop in attendance.
<bullet> Rental car companies have seen a 50% drop in business.
<bullet> Airlines have had to layoff thousands of employees as a result
of planeloads averaging only 35% of capacity in the initial
period after September 11th. The lack of passengers traveling
to Florida will continue to impact tourism since over 50% of
all tourist have arrived by air in the past years.
The second way the terrorist attacks have impacted Central Florida
is by a dramatic decrease in local tax revenues. Since Florida does not
have a state income tax, we are dependent in large part upon sales tax
revenues to fund our government. In fact, visitors generated
approximately 48% of the $1.5 billion in sales tax collected in Orange
County in 2000.
Without tourism tax revenues, every household in Orange County
would have to pay an additional $551.00 in taxes each year to receive
the same level of service they currently enjoy.
I believe that increased consumer spending on travel and tourism is
absolutely critical to revitalizing Central Florida's tourism based
economy. For this reason, I strongly support giving travelers a $500
tax credit if they book a trip before December 31, 2001. This $500 tax
credit is also supported by major employers in my district, tourism
leaders, and local political leaders.
I thank the committee for giving me the opportunity to brief you on
the state of the tourism industry in Central Florida. Thank you.
Mr. Stearns. I thank my colleague.
The gentleman from Guam, Congressman Bob Underwood,
welcome.
STATEMENT OF HON. ROBERT A. UNDERWOOD, A DELEGATE IN CONGRESS
FROM THE TERRITORY OF GUAM
Mr. Underwood. Hafa Adai and good morning, Mr. Chairman and
members of the subcommittee. I am very happy to have the
opportunity to testify on the case of Guam, and for all the
reasons that have been outlined I certainly support any and all
legislation which will help the tourist industry as well as
directly the workers that are affected.
It is important to understand that, for Guam in particular,
the focus on international tourists is vital. We also want to
be included in any and all initiatives, and I will just give
you a couple of examples of problems that we have had as a
territory.
Simple oversights include the Travel and Tourism
Congressional District Economic Impact Study issued by the
Travel Industry of America, which was alluded to earlier by Mr.
Towns, does not include Guam or any of the territories.
Recently, the Postmaster General unveiled the greetings from
American's stamp series in order to encourage tourism and
travel, and it included only the 50 States. The territories
were not included. I guess we are not part of America in the
stamp series. Incredibly, even the District of Columbia was not
included in that.
Now, as background to understanding the state of tourism in
Guam, it is important to know where we are located. We are on
the other side of the international dateline. It takes me 19
hours just to get home. So, as a consequence, I can't invite
you to spend a weekend in Guam but more likely a week in Guam.
But it is important to understand how vital tourism is
important to our economy. It drives our economy.
Sixty percent of government of Guam revenues are derived
directly and indirectly from travel and tourism. Forty percent
of our island's workforce works in tourism. And, unlike the
Continental United States, Guam is heavily dependent on
tourists from Asia, with 80 percent coming from Japan. We
contribute enormously to the balance of trade situation for
this country.
After September 11 the loss of consumer confidence to
travel has cost the government of Guam millions of dollars in
revenue. Japanese travel agents report a 50 percent
cancellation rate after September 11 and anticipate a 30
percent reduction in travel to Guam by December. Taiwan and
Hong Kong travel will be down 50 percent in the next 3 months
and a 35 percent decline from Korea is anticipated.
I believe that one way the Federal Government can assist
Guam and other U.S. areas dependent upon international
travelers is to encourage U.S. officials, particularly the
State Department, to promote international traveling, whether
it be international travelers coming to the U.S. or Americans
traveling abroad. This is why I want to commend President Bush
for taking the step to go to Shanghai today to indicate his
confidence in our capacity to continue to be engaged overseas.
More than 50 million international visitors spent over $100
billion in the U.S. in 2000. Fortunately, the countries that
generate the most international travelers to the U.S. come from
our strongest allies. In descending order of travelers they
include Canada, Mexico, Japan, the U.K., Germany, and France.
The top 10 U.S. destinations affected by international
travelers, excluding travelers from Canada and Mexico, are, in
descending order, California, Florida, New York, Hawaii,
Nevada, Massachusetts, Illinois, Guam, Texas, and New Jersey.
Given our size, we are very highly dependent on
international tourists. While Guam may have the smallest
population and land size on this list, it is important to
understand that disproportionate impact that any disruption in
tourism has on our economy. Prior to September 11, Guam's
economy was already struggling as a result of the Asian
economic crisis. Our unemployment rate was already 15 percent.
For 2001, our unemployment rate continues to increase and has
dramatically increased as a result of the September 11
terrorist attacks and including not just people losing their
jobs but hours being cut back dramatically, threatening health
insurance and other matters pertinent to the health and safety
and stability of the families that work in the travel and
tourism industry. It is important to understand that these
things indicate that the Federal Government needs to help
directly the travel and tourism industry and to provide a
package that provides assistance directly to the workers.
For the record, I would like to introduce also a report by
the Guam Hotel and Restaurant Association.
Mr. Stearns. Without objection, so ordered.
Mr. Underwood. I also want to point out that I support
Senator Boxer's legislation, S. 1505, the Rediscover America
Act of 2001. The bill seeks to temporarily re-establish the
U.S. Travel and Tourism Promotion Bureau within the Department
of Commerce, and I am intending to introduce companion
legislation today.
Thank you, Mr. Chairman.
[The prepared statement of Hon. Robert A. Underwood
follows:]
Prepared Statement of Hon. Robert A. Underwood, a Delegate in Congress
from Guam
Good morning Mr. Chairman and members of the subcommittee. I am
very grateful for the opportunity to testify on the state of the
tourism industry since the September 11 terrorist attacks on our
nation, particularly in my home island of Guam.
This hearing is timely in light of the various economic stimulus
proposals being considered by the Administration and the Congress and I
am glad that the needs and concerns of the travel and tourism industry
are being heard in this debate.
Clearly, the travel and tourism industry has a large impact on our
economy by adding nearly 5 percent to the GDP, generating more than
$578 million in revenues, supporting more than 17 million jobs, and
providing a $14 million trade surplus for the country. It is critical
to assist our businesses and our workers affected in the industry,
particularly since 95 percent or more businesses in travel and tourism
are small to medium size firms. That is why I support Senator Boxer's
legislation, S. 1505, the Rediscover America Act of 2001. The bill
seeks to temporarily reestablish the U.S. Travel and Tourism Promotion
Bureau within the Department of Commerce to assist the travel and
tourist industry and to help restore consumer confidence. I intend on
introducing a companion measure to S. 1505 today.
inclusion of u.s. territories in travel and tourism initiatives
As Congress considers these important policy initiatives, it is
equally important that federal policy makers ensure that the U.S.
territories are included in any proposed initiatives that would bring
economic relief to our communities. Any relief package is particularly
vital to Guam and other U.S. territories, whose geographical isolation
and distance from the U.S. mainland makes air service costly and
challenging to begin with and that much more vulnerable to cutbacks and
downsizing in times of difficulty. The other areas include the
Commonwealth of the Northern Mariana Islands, American Samoa, the
Virgin Islands, and the Commonwealth of Puerto Rico.
Simple oversights include the Travel and Tourism Congressional
District Economic Impact Study issued by the Travel Industry
Association of America, in conjunction with the Commerce and
Transportation Departments. The report excludes the U.S. territories
from its study. Another example includes the recent announcement by the
Post Master General who unveiled the ``Greetings from America'' stamp
series covering the 50 states. Its purpose is to generate tremendous
pride in each state and to help raise awareness of their efforts to
promote and facilitate increased travel to and within the U.S. Once
again, Guam and the U.S. territories were left out of this very
important initiative to assist the travel and tourism industry. What is
more disappointing is that our nation's capitol--Washington, D.C.--was
also left out.
guam's tourism industry
As background to understand the State of the Tourism Industry in
Guam, it is important to know where we are located. Guam is the
furthest U.S. jurisdiction from Washington D.C., and we are on the
other side of the international dateline. Although flying time between
D.C. and Guam is about 19 flying hours, it usually takes me a full day
to get home. Yet Guam is only three to four hours away from major Asian
countries, including Japan, Taiwan, and the Phillippines. Due to Guam's
small size and geographical isolation, Guam's private sector economy is
minimally diversified and heavily dependent upon tourism, particularly
from international travelers.
Tourism drives our economy. Sixty percent of Government of Guam
revenues are derived directly and indirectly from the travel and
tourism industry and accounts for close to 40% of the island's
workforce. In 1997, the retail trade division, gift, novelty and
souvenir shops sold $415.6 million in merchandise, reporting nearly
one-quarter of the total $1.8 billion in service industry receipts.
Within the service division, hotels and motels were the leading
industry with $460 million in receipts and passenger transportation
arrangement industries, including travel agencies and tour operators,
reported receipts totaling $143.1 million.
Unlike the continental United States, Guam is heavily dependent on
tourists from Asia, with 80% coming from Japan. After September 11, the
loss of consumer confidence to travel has cost the Government of Guam
millions of dollars in lost revenues. Japanese travel agents report a
50% cancellation rate after September 11 and anticipate 25%-30%
reduction in travel to Guam in December. Taiwan and Hong Kong travel
will be down 50% in the next three months and a 20% to 35% decline of
travelers from Korea is anticipated. The hotel industry reports
occupancy levels at a low of 20-30% and foresee a constant decline in
the months to come. The projected losses for the hotel industry alone
is approximately $30 million in gross revenues since September 11.
international travelers
I believe that one way in which the federal government can assist
Guam and other U.S. jurisdictions dependent on international travelers
is to encourage U.S. officials, particularly the State Department, to
promote international traveling, whether it be international travelers
coming to the United States or Americans traveling abroad. That is why
I want to commend President Bush for traveling to Shanghai, China, for
the Asian Pacific Economic Cooperation meeting. This is the kind of
signal that U.S. leaders must send to other countries.
More than 50 million international visitors spent $103 billion in
the United States in 2000. Fortunately, the countries that generate the
most international travelers to the United States come from our
strongest allies. In descending order of travelers, they include
Canada, Mexico, Japan, the United Kingdom, Germany, and France. I would
encourage that U.S. leaders take advantage of every diplomatic
opportunity available to send a message to the leaders and citizens of
these countries that the tourism and travel industry in America is
alive and well.
The top ten U.S. destinations affected by international travelers,
excluding travelers from Canada and Mexico, include California,
Florida, New York, Hawaii, Nevada, Massachusetts, Illinois, Guam,
Texas, and New Jersey. These destinations include the largest and most
populous states in the nation, whose economies are greatly impacted by
the travel and tourism industry. While Guam may have the smallest
population and land size on this list, it is important to understand
the disproportionate impact that any disruption in tourism has on our
economy.
Prior to September 11, Guam's economy was already struggling as a
result of the Asian economic crisis. During 1999 and 2000, Guam's
unemployment rate was 15.2% and 15.3% respectively. For 2001, Guam's
unemployment rate is already over 15%, and is anticipated to increase
by the end of the year. This rate is more than three times the national
average.
It is for all of these reasons, that I ask that Guam and the other
U.S. territories not be forgotten in any travel and tourism initiatives
being considered by this Congress.
Once again, I wish to thank the Chairman for giving me the
opportunity to testify and to tell Guam's story.
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Mr. Stearns. I thank my colleague.
I think hearing the opening testimony of our colleagues
gives real evidence to what this impact has been, and I think
for members and citizens alike who are out there and can see
people suffering through either being laid off or perhaps
trying to meet their mortgage payments, their rental, it is a
huge impact; and as long as this continues, the worse it gets.
So I thank my colleagues for coming very much.
Mr. Underwood. Thank you.
Mr. Stearns. We will now have the second panel, which we
have eight separate witnesses. The second panel would come to
the table if they would.
We have Linda Conlin, the Assistant Secretary for Trade
Development from the Department of Commerce. We have William
Norman, Travel Industry Association, CEO and President. We have
Robert Warren, the General Counsel and Secretary for the Air
Transport Association of America. We have here the Chairman and
CEO of Marriott International Corporation, J.W. Marriott. We
have the President and CEO of New York City and Company,
Cristyne Nicholas. We have the Universal Studios Recreation
Group Senior Vice President, Fred Lounsberry. We have the
President of the International Cruise Lines Council, Michael
Crye. And then we have the President and CEO, Terrell Jones, of
Travelocity.Com. So this is a very important hearing to hear
from industry.
We have heard from Members of Congress who talk to their
constituents and know about the small businesses, but now we
have a unique opportunity to hear from industry.
I thought we would start from my left to the right.
Ms. Conlin.
Mr. Deutsch. If I can ask for unanimous consent.
Mr. Stearns. For unanimous consent, the gentleman from
Florida, Mr. Deutsch, is recognized.
Mr. Deutsch. I apologize. You are probably aware the
building is going to be evacuated at 3 o'clock. I haven't
figured out why we are not evacuating now. We are evacuating at
3 o'clock.
But as someone who represents South Florida, we are as
affected maybe as other areas in the country. There may be
other areas like Hawaii and Las Vegas that might be a little
bit proportionally affected. Almost on a daily basis we are
seeing the impact, and literally anything this Congress can do
to make sure that the continuation of tourism is able to work I
am supportive of.
Thank you.
Mr. Stearns. I thank my colleague who, again, is in a very
tourist-oriented area like myself and Florida.
So we are most appreciative of all of you taking your time.
We know how valuable your time is. You are just as busy if not
more than any of us in Congress.
Mr. Stearns. Ms. Conlin, the Assistant Secretary of Trade
Development, Department of Commerce, if you would start out
with an opening statement, we would appreciate it.
STATEMENTS OF LINDA M. CONLIN, ASSISTANT SECRETARY, TRADE
DEVELOPMENT, DEPARTMENT OF COMMERCE; WILLIAM S. NORMAN,
PRESIDENT AND CEO, TRAVEL INDUSTRY ASSOCIATION; ROBERT WARREN,
SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY, AIR
TRANSPORT ASSOCIATION OF AMERICA, INC.; J.W. MARRIOTT, JR.,
CHAIRMAN AND CEO, MARRIOTT INTERNATIONAL, INC.; CRISTYNE L.
NICHOLAS, PRESIDENT AND CEO, NYC & COMPANY; FRED LOUNSBERRY,
SENIOR VICE PRESIDENT OF SALES, UNIVERSAL STUDIOS RECREATION
GROUP; J. MICHAEL CRYE, PRESIDENT, INTERNATIONAL CRUISE LINES
COUNCIL; AND TERRELL B. JONES, PRESIDENT AND CEO, TRAVELO-
CITY.COM
Ms. Conlin. Thank you, Mr. Chairman.
Mr. Chairman, Ranking Member Towns, members of the
subcommittee, I am honored to be invited to provide testimony
this morning regarding the impact of the tragic events of
September 11 on the travel and tourism industry and U.S.
Government efforts being made toward supporting the industry's
recovery.
I have provided, Mr. Chairman, a more detailed written
account for the record, and I will summarize its key points
this morning.
Undoubtedly, the terrorists have caused a terrible loss of
life and created concern among many Americans about basic
safety and security across all walks of life, but I have to
tell you that during these times I have never felt more proud
to be an American and to have the privilege of serving as a
member of this administration. I have faith in our great
country and in our strong leadership, and I feel fortunate to
be in the Department of Commerce as the Assistant Secretary for
Trade Development where I can call upon close to 20 years
experience in the travel and tourism industry to help in the
efforts for this industry's recovery. It is my honor to have
the opportunity to work together with President Bush, Secretary
Evans and Under Secretary Aldonas in this effort.
I want to begin my testimony by providing a few key facts;
and, Mr. Chairman, you have already mentioned some of them. But
I think they bear repeating to demonstrate the importance of
the travel and tourism industry to the U.S. economy.
According to the Travel Industry Association of America and
the U.S. Department of Commerce, total spending in calendar
year 2000 by domestic and international travelers in the United
States reached beyond $582 billion. Spending by these travelers
supported some 19 million jobs, and certainly the distinguished
member from Hawaii gave a very human face to those 19 million
jobs. Total tax revenues generated by travel and tourism
amounted to almost $100 billion.
As a former small businesswoman in the travel and tourism
industry, I fully appreciate that 95 percent of the travel and
tourism industry is comprised of small- and medium-sized
businesses. International travel to the United States is this
country's top services sector export. In 2000, international
travelers to the United States pumped some $103 billion into
the economy, supporting nearly 1 million jobs, and for the 11th
year in a row international travel contributed positively to
the balance of trade, generating a $14 billion trade surplus.
So the administration is therefore aware that restoring
consumer confidence in travel is a key factor to help generate
recovery for the economy as well as travel and tourism overall.
Preserving our citizens' ability and freedom to travel is
pivotal to generating economic recovery.
With the support of key industry trade associations and
leaders such as the Travel Industry Association and the Travel
Business Roundtable, on September 25 Secretary Evans organized
a business leaders roundtable with 15 CEOs from the travel and
tourism industry. Some of them join me here today. These
individuals represented companies in the hotel and resort,
rental car, theme park, travel agent, rail, bus tour operator
and airline businesses. This discussion allowed Secretary Evans
to learn firsthand from each representative about the impact of
the terrorist attacks on their individual industry sectors as
well as hear perspectives on the role that the U.S. Government
should play in helping to revitalize this vital sector of the
U.S. economy.
Two days later, Secretary Evans continued this dialog,
speaking with representatives from the National Restaurant
Association; and, in turn, they similarly conveyed their
concerns and perspective on appropriate responses.
Since the attack, I have also personally met and spoken
with a number of travel and tourism industry leaders to learn
more about the impact of these events and to hear additional
suggestions for government action. As a result of these
meetings and conversations, Secretary Evans determined that a
restoration of confidence in leisure and business travel can be
assisted and helped through stronger government coordination
and greater partnership with the private sector.
Specifically--and I would just like to comment on some of
these measures if I may, Mr. Chairman--one of these measures is
Secretary Evans' decision to reconvene regular senior level
meetings of the Tourism Policy Council, known as the TPC. The
TPC's overall function is to serve as the primary forum to
coordinate Federal policies and regulations affecting travel
and tourism. Let me tell you why that is so important.
By bringing together the key departments and agencies that
oversee policies affecting travel and tourism, the TPC provides
the appropriate framework for addressing short-term recovery
support and preparedness. Over the medium to long term, the TPC
also provides a mechanism to ensure that the national interest
in tourism is fully considered in Federal decisionmaking. The
Council has been enthusiastically endorsed by the White House
Domestic Consequences Policy Council and will hold its first
meeting at the Department of Commerce next week, 1 week from
today, on October 24.
I have outlined the membership of this Council in my
written testimony. However, I think it is important to note
that Secretary Evans will chair the Council, which will include
senior representatives from a broad range of departments and
agencies, including the State Department, the Department of
Transportation, Customs, the Immigration and Naturalization
Service, the FAA, and the newly created Office of Homeland
Security. In addition, to ensure coordination with Congress,
the Secretary has extended invitations to the co-chairs of the
Senate and congressional tourism caucuses.
The second key initiative in Secretary Evans plan to
support recovery----
Mr. Stearns. I need you to summarize.
Ms. Conlin. Yes--will be to further public sector and
private sector cooperation through an ad hoc roundtable.
Overall, Mr. Chairman, in concluding, let me say that it is
absolutely essential that the Federal Government play a key
role in restoring public confidence in not only our air
transport system but also travel and tourism in general. We
believe that the measures that we are now undertaking will help
to do that.
I thank you once again, Mr. Chairman, for allowing me to
inform you about the measures that we are taking. Thank you.
[The prepared statement of Hon. Linda M. Conlin follows:]
Prepared Statement of Hon. Linda M. Conlin, Assistant Secretary for
Trade Development, Department of Commerce
I am honored to be invited to provide testimony before the House
Committee on Energy and Commerce, Subcommittee on Commerce, Trade and
Consumer Protection, regarding the impact of the tragic events of
September 11, 2001, on the travel and tourism industry as well as on
industry recovery efforts. The terrorists have caused a terrible loss
of human life and created concern among many about basic safety and
security across all walks of life. During these times, I have never
felt more proud to be an American and to have the privilege of serving
as a member of this Administration. I have faith in our great country
and in our strong leadership, and I feel fortunate to be in the
Department of Commerce serving as the Assistant Secretary for Trade
Development where I can use the expertise I have in the travel and
tourism industry to be of help in bringing about this industry's
economic recovery. It is my privilege to be working to support
President Bush, Secretary Evans and Under Secretary Aldonas in this
endeavor.
I want to begin by emphasizing that the travel and tourism industry
is extremely important to the U.S. economy. According to the Travel
Industry Association of America and the U.S. Department of Commerce,
total spending in calendar year 2000 by domestic and international
travelers in the United States was $582 billion. Total direct and
indirect employment supported by travel spending was 19 million people.
Total federal, state and local tax revenues generated by spending on
travel and tourism in 2000 was almost $100 billion. The vast majority
(95 percent) of the travel and tourism industry is comprised of small
and medium enterprises. International travel to the United States is
the top services sector export for the country. In 2000, the total
impact of international travel (the sum of travel and passenger fares
exports) on the United States was $103 billion, and it generated a $14
billion trade surplus. The international travel export sector supported
nearly one million jobs, generating $14 billion in tax revenue in 2000.
The Administration is aware that restoring consumer confidence in
travel is a key factor to help generate recovery for the travel and
tourism industry as well as the overall economy. Preservation of our
citizens' ability and freedom to travel is pivotal to ensuring a rapid
economic recovery. With the support of key industry trade associations
and leaders such as the Travel Industry Association of America and the
Travel Business Roundtable, Secretary Don Evans organized and hosted a
business leaders roundtable on September 25, 2001, with fifteen CEOs
from the travel and tourism industry. These executives represented
companies with operations in the hotel and resort, rent-a-car,
amusement, travel agent, rail, bus, and airline businesses. The
discussion gave Secretary Evans first-hand information from each
participant on the impact of the terrorist attacks on their individual
industry sectors as well as perspectives on how the U.S. Government
could be involved in revitalizing this important sector of our economy.
``The fundamentals of our economy remain sound,'' observed
Secretary Evans following that meeting. He added, ``A reinvigorated
U.S. travel and tourism industry is important to economic vitality at
home and abroad. International travel represents one of the top exports
for our country, generating over $103 billion in revenue last year, and
supporting nearly one million jobs.''
On September 27, 2001, Secretary Evans conducted a conference call
with six key representatives from the restaurant industry and the
National Restaurant Association. Each participant similarly conveyed
their business concerns and perspectives on appropriate responses from
government. Since that time, I have personally met and spoken with a
number of other travel and tourism industry leaders to learn more about
the impacts of these events on the industry and gather additional
suggestions for governmental action.
As a result of the meetings and discussions taking place, Secretary
Evans has determined that a restoration of confidence in leisure and
business travel can be accomplished through stronger governmental
coordination and new partnerships with the private sector. I am here to
present what we view as a response that can be accomplished rapidly
without new funding requirements.
First among these measures is Secretary Evans' decision to
reconvene regular, senior-level meetings of the Tourism Policy Council
(hereafter referred to as the TPC). This proposal has been endorsed
enthusiastically by the White House Domestic Consequences Policy
Council, and the Secretary will be holding the next meeting at the
Department of Commerce on October 24. The TPC was originally
established in 1981 and re-authorized by the U.S. National Tourism
Organization Act of 1996 (22 U.S.C. 2124). The TPC's overall function
is to serve as the primary forum to coordinate federal policies and
regulations affecting travel and tourism. This must be done in a manner
that preserves overriding safety and security considerations. We seek
to support a restoration of confidence while also supporting
convenience where possible in order to help stimulate a renewed
appetite to travel by individuals and businesses. By bringing together
the key agencies that oversee policies affecting travel and tourism,
the TPC currently provides an appropriate forum for short-term recovery
support and preparedness. Over the medium to long-term, the TPC also
provides a continuing forum for coordinating U.S. Government efforts on
behalf of travel and tourism.1The Secretary serves as the chair of the
Council. According to the statute, other regular members of the TPC
include the Director Office of Management and Budget, the Secretary of
State, the Secretary of the Interior, the Secretary of Labor, the
Secretary of Transportation, the Commissioner of the United States
Customs Service, and the Commissioner of the Immigration and
Naturalization Service. The Act also allows the Secretary of Commerce
to include representatives of other federal agencies as needed, and as
a result he has expanded his invitee list to include the Administrator
for the Federal Aviation Administration, the Secretary of the Treasury,
the Attorney General of the United States, the Secretary of Housing and
Urban Development, the Administrator of the Small Business
Administration, and the Assistant to the President for Homeland
Security. In order to ensure that we are also coordinating with the
Congress as effectively as possible, the Secretary also has extended
invitations to the Co-Chairs of the Senate and Congressional tourism
caucuses.
Secretary Evans also is looking at instituting ad hoc meetings
between government and private sector representatives to coordinate
implementation of an effective public relations strategy to help
restore confidence in travel and tourism. The mandate for this
roundtable would include sharing and disseminating government and
private data on travel and tourism to monitor recovery efforts and
learning from industry about specific communications plans and
activities for restoring consumer confidence in the safety and security
of travel.
There are various promotional activities that the Federal
Government can institute to more actively support the industry, both
over the short term to aid recovery as well as over the long term.
Messages are important. The President's statements at Chicago O'Hare
Airport, as an example, were enough to buoy the bookings of future
British travelers to the United States. In addition, the Secretary of
Commerce took a flight with his peers to Kansas City, Missouri, and had
lunch in a local establishment to underscore the safety of travel and
the need to ``get back to business.'' As you may know, nine Governors
took trips on commercial airlines as well to convey the safety message.
Mayors of large cities, in particular Mayor Williams of Washington,
D.C., and Mayor Giuliani of New York City, have extended invitations to
the public to come to their cities and support the industry by taking
in the wealth of entertainment and attractions available to tourists.
Outgrowths of these invitations even resulted in nearly 1000 Oregonians
taking a Flight to Freedom trip to enjoy New York City. Certainly,
Congressional members have participated in this intrinsic way to convey
first-hand that every effort is being make to provide for traveler
safety.
We are aware of the involvement of Congress in various other
hearings that have given the travel and tourism industry the prominence
and attention needed at this crucial time. I applaud the Congress for
passing the Air Transportation Safety and Systems Stabilization Act to
provide economic assistance to airlines and to bolster confidence
within the industry, in financial circles, and among the flying public.
The travel and tourism industry differs from many others in that
the product is generally considered expendable. Once the day is gone,
you can not recover the loss of the hotel room not sold or the airline
ticket not purchased. These are not inventory to be sold at a later
date. Let me share some of the short-term projections from various
components of the industry.
According to the Travel Industry Association of America, projected
total U.S. domestic travel will be down 5 percent in 2001. The growth
in 2002 is forecasted at only around 1 percent, keeping it below 2000
levels.
The U.S. Commerce Department's revised forecast on international
travel indicates that this segment of the industry will experience a 13
percent decline for 2001, but shows signs of recovery by the end of
2002 (up 4 percent ) and over the next few years (this travel is
projected by 2005 to be 12 percent above 2000 levels, reaching an
estimated 57.2 million international travelers).
According to the Air Transport Association forecasts released at a
recent Travel Marketing Outlook Forum in Atlanta, revenue passenger
miles are projected to decline around 12 percent. Growth for calendar
year 2002 will be less than 5 percent over 2001.
According to Smith Travel Research, the hotel industry will see its
overall 2001 occupancy down 2.4 percent to 60.7 percent with revenues
per room at a lower 4.7 percent than 2000. Although less than
projected, the industry is still estimated to make a $16.7 billion
profit level in 2001. Weak growth in room demand (1.2 percent increase)
and flat growth in revenue per room is projected for 2002, suggesting
that it will take at least nine months for the industry to recover from
the September 11 attacks.
According to the American Society of Travel Agents, the 2001 travel
agent revenue will decline by 26 percent to less than $10 billion. They
expect revenues to dramatically decline again in 2002 to less than half
the 2001 level.
Not everyone is forecasting declines for 2001. The National
Restaurant Association is projecting a 5 percent increase in total
restaurant industry sales for 2001. The American Automobile Association
has stated that auto travel will most likely increase in 2001. Amtrak
has seen increased ridership and Greyhound has seen an increase in
revenues.
The impact of the September 11 attacks on the travel and tourism
industry is significant, but the industry can and will recover. The
individuals whom I know well and respect who make up the travel and
tourism industry are hard-working, dedicated, resilient and
resourceful. They are committed to working together to reassure the
public in the safety of travel. The Administration, the Secretary of
Commerce and I all share your appreciation for the importance of the
travel and tourism industry to our country and the economy. I am
grateful to have had this opportunity to inform you of the steps we are
taking to facilitate the industry's recovery.
Mr. Stearns. I thank you.
Mr. Norman, your opening statement.
STATEMENT OF WILLIAM S. NORMAN
Mr. Norman. Mr. Chairman, Ranking Member Towns and members
of the subcommittee, thank you for the opportunity to appear
before you today to comment on the current state of the U.S.
travel and tourism industry.
The Travel Industry of America, or TIA, represents some
2,600 organizations that encompass every segment of the $582
billion travel industry in the United States. TIA's mission is
to represent the whole of the travel industry to promote and
facilitate increased travel to and within the United States.
I am also pleased to represent a broad coalition of travel
industry members who comprise the travel industry recovery
coalition. These two dozen travel industry organizations are
working in a unified fashion to support marketing and
legislative proposals that will get the travel industry back to
business as usual.
The tragedies experienced by our Nation on September 11
have had a disastrous impact on our Nation's travel and tourism
industry. You will hear from a number of industry leaders this
morning who will detail the impact of these recent events on
their particular segments of travel and tourism. But overall,
Mr. Chairman, U.S. travel in the fourth quarter of 2001 is
expected to drop significantly, causing travel for all of 2001
to experience an average drop of 5 to 10 percent.
We are also experiencing and expect the travel to remain
soft in the first half of 2002 before returning to normal
levels later in the year, but that would still be below the
2000 record, year of 2000. While business travel was already
slightly down for the year, prior to September 11, it came to a
virtual standstill in the first 2 weeks following the attack.
Business travel is now showing some signs of recovery. But the
trend is fragile. While personal travel is not down as
significantly as business travel, many States and cities across
this Nation have experienced major declines in visitation.
As you can imagine, destinations such as Washington, DC,
and New York City have been especially hard hit. But so have
places such as Florida and Hawaii and California and many other
States as well. Because of the significant declines in travel,
a number of States have already announced major budget cuts.
For some States, Florida and Hawaii in particular, this is a
direct result of lost tourism. While in other places it is a
combination of lost tourism revenue and a general slowdown in
the economy. But why have some Americans stopped traveling or
changed their plans? There are currently some concerns about
traveling by air or traveling to certain major urban areas.
However, our recent surveys show that adults not planning trips
in the next 6 months are driven primarily by financial
concerns. While we commend all levels of government for the
extraordinary efforts that have been made to provide improved
security for travelers, much work remains to be done.
We urge the Congress and the administration to reach
agreement soon on an aviation security package and come to a
quick agreement on an economic stimulus package. A matter of
days after the attacks of September 11, TIA developed a
comprehensive recovery plan on behalf of the entire U.S. travel
industry. With significant input from industry leaders, we
initiated various efforts aimed at helping the industry get
back to business as usual.
On behalf of the unified travel and tourism industry, we
have two major objectives that guide our recovery program. Our
first objective has been and remains to work with the
government to insure that travel in the United States is safe
and secure. Our second major objective remains rebuilding
confidence among travelers. Travel is one of our most cherished
freedoms, and a return to travel is a return to normalcy. TIA
and two dozen other national travel and tourism organizations
have joined in a coalition effort to support a six-point plan.
We believe this should be included in an economic stimulus
package. We believe this plan is very workable since its impact
will be immediate, it is truly stimulative and its provisions
are short-term. This plan would provide incentives for personal
and business travel and improve cash-flow for ailing travel
companies and establish a private public sector travel
promotion campaign. It would also extend benefits for
unemployment or unemployed workers and assist small businesses
with expanded loans.
A complete description of all six provisions is included in
the written testimony which we provided to the subcommittee. I
am also pleased to report, Mr. Chairman, that H.R. 3140, which
was introduced last evening by Representatives Patrick Kennedy
and Alcee Hastings, includes all six provisions endorsed by the
Travel Industry Recovery Coalition. We thank both of those
representatives for their strong support during these
challenging times. Also, three of our six provisions are tax
related and are included in H.R. 3041, and S. 1500, supported
by Representative John Shadegg of this committee and Heather
Wilson and Senators Jon Kyl and Zell Miller.
We thank these members for their leadership for introducing
these bills and urge all Members of Congress to support these
bills.
In closing, I would like to say once again that the U.S.
travel industry intends to do all it can to get back to
business as usual, and during this time of national testing,
travel may best symbolize the normalcy of our Nation's leaders
have called for us to restore.
We thank you for the opportunity to tell our industries
story and our current plans for recovery.
[The prepared statement of William S. Norman follows:]
Prepared Statement of William S. Norman, President and Chief Executive
Officer, Travel Industry Association of America
Mr. Chairman, Ranking Member Towns, and Members of the
Subcommittee, on behalf of our 2,600 member organizations and a broad
coalition of travel industry members, I want to thank you for the
opportunity to testify about the current state of the U.S. travel
industry.
The Travel Industry Association of America (TIA) is the national,
non-profit organization representing all components of the $582 billion
U.S. travel and tourism industry. TIA's mission is to represent the
whole of the travel industry to promote and facilitate increased travel
to and within the United States. Our 2,600 member organizations
represent every segment of the industry, and I am pleased to be joined
on this panel today by several TIA members. We are also pleased to
represent a broad coalition of industry members, who are listed in the
attachment to my testimony.
The tragedies experienced by our nation on September 11 have had a
disastrous impact on this nation's travel and tourism industry. While
the most immediate and dramatic impact was felt by the nation's
airlines, many other companies and organizations that cater to business
and personal travel have been affected as well. Airline capacity and
load factors are down, hotel occupancy is down, while many meetings and
conventions have been canceled or deferred. Car rentals at airports
have declined, tour bus bookings are off, and there are fewer guests
visiting amusement parks and attractions. Because a number of these
industry segments are represented at this hearing today, I will defer
to them in providing the subcommittee with details about the current
state of affairs in their sectors.
Overall U.S. travel in the fourth quarter of 2001 is expected to
drop significantly, and travel for all of 2001 will experience a modest
drop. We are also expecting travel to remain soft in the first half of
2002 before returning to year 2001 levels later in the year. All of
this assumes, of course, there are no additional incidents.
With a softening economy in 2001, corporate travel was already
slightly down for the year prior to September 11. In the first few
weeks following the attacks, business travel came to a near standstill.
While many companies declared themselves open for business and said
they were allowing their employees to travel, the simple truth is that
many employers significantly cut back on business travel. While these
``road warriors'' are flying and driving again to conduct the nation's
business, travel in this segment is still off significantly.
While most association meetings and conferences are continuing,
dozens of major corporate meetings and conventions have been canceled
or postponed. Shortly after September 11, for example, the Orlando
Convention and Visitors Bureau announced it had experienced a nearly
$200 million loss in convention business. Right after the attacks it
was said by one industry executive that you could roll a bowling ball
right down International Drive in Orlando and not hit anything. While
cancellations have slowed, major convention facilities across the
country have experienced hundreds of millions of dollars in lost
revenue from dropped meetings.
While personal, or leisure, travel is not down as significantly as
business travel, states and cities across the nation have experienced
major declines in visitation. Because travel and tourism is one of the
top industries in terms of jobs and revenue in so many states, business
revenue is way off, employees are being laid off, and sales tax
collections are down dramatically. Many state governments already have
announced the need to make major budget cuts.
Two examples are particularly illustrative. Visitation to the state
of Florida is down dramatically, and it is expected the state could
lose as much as $3 billion in sales through the end of this year.
Hawaii Lt. Governor Mazie Hirono reported to the Senate Commerce
Committee last week that overall visitation to Hawaii is down by 40%,
with their largest overseas travel segment--Japan--down by 50%. The
downturn in Japanese travel alone to Hawaii has caused the state to
lose $4 million each day.
Every state and city has a similar story to tell about the falloff
in visitation to their destinations. And because the travel industry is
a top 3 employer in 28 states, the downturn in this industry has caused
a great deal of hardship throughout the nation. One out of every seven
Americans is directly or indirectly employed in the business of travel
and tourism. The livelihood of these 19 million Americans depends on
travelers having the confidence to travel.
Why have some Americans stopped traveling, or changed their plans?
There is certainly concern about getting on airplanes or traveling to
major urban centers such as New York City or Washington, DC. We commend
all levels of government (local, state and federal) for the
extraordinary efforts that have been made to provide safety and
security for travelers, whether flying or driving around this great
country. We must continue to be vigilant in our security efforts to
prevent further acts of violence, which will only cause Americans to
hunker down and abandon their normal way of life--including travel for
business or personal reasons.
Others are not traveling, or have altered their plans, out of
concern over the nation's softening economy and their own financial
security. Still others have delayed making travel plans because they
question the viability of the company they would buy a ticket or tour
package from. They wonder if the travel company they deal with will be
in business weeks or months from now and how they would collect a
refund if the company went bankrupt.
Government and travel industry leaders must work in partnership to
reassure the American people that both their physical security and the
nation's economic security will be protected in this time of crisis.
Congress and the Administration must act expeditiously to approve an
aviation security bill, and also devote resources and planning to
provide for safety in all modes of travel. Congressional leaders and
the White House must also come to a quick agreement on an economic
stimulus package to keep the nation's economy from slipping into a
major recession.
Restoring confidence in Americans to travel through their country
is also critical if we are to lure back international travelers, who
spend nearly $100 billion in the U.S. each year, and account for 1
million direct U.S. jobs. Travel and tourism is big business and a
major services export, and until these recent events the industry was
actually producing a $14 billion positive balance of trade in
international tourism.
A matter of days after the attacks on September 11, TIA developed a
multi-faceted recovery plan on behalf of the U.S. travel industry. With
significant input from industry leaders, TIA has instituted various
efforts and programs in areas such as marketing and public relations,
research, and government affairs--all aimed at helping the industry get
back to business as usual.
TIA, on behalf of the unified travel and tourism industry, has two
major objectives that guide its recovery program. Our first objective
has been, and remains, to ensure that travel in the United States is
safe and secure. The travel industry pledges to work with our nation's
political leaders to support policies to enhance the nation's security
in all areas of travel and tourism. We have also called on all travel
companies to do a thorough review of their security procedures and make
any necessary changes or enhancements to protect their guests and
customers.
Our second major objective remains rebuilding confidence among
travelers. Travel is one of our most fundamental freedoms and a return
to travel is a return to normalcy. TIA and its member companies and
organizations have already dedicated millions of dollars in resources
to get Americans traveling again. We also support a public-private
sector campaign to promote travel that will tell the industry's story
and help to restore consumer confidence in travel. In addition, there
is much the industry is doing in the area of public relations and
research to support our recovery efforts.
Most importantly for Members of this Subcommittee, and the U.S.
Congress, TIA and more than twenty other national travel and tourism
organizations that have joined in our coalition effort, have developed
a six-point plan we believe should be included in an economic stimulus
package to restore the U.S. travel industry to its pre-September 11
condition. We believe this plan is very workable since it its impact
will be immediate, it is truly stimulative, and its provisions are
short-term.
This plan would provide incentives for personal and business
travel, improve cash flow for ailing travel companies, and establish a
public-private sector travel promotion campaign. In addition, it would
extend benefits for workers who are unemployed or under-employed, and
would broaden loan programs for small businesses in travel and tourism
harmed as a result of the September 11 tragedies.
The following is a brief description of all six provisions:
<bullet> Provide substantial federal funding, with private-sector
support and input, for advertising campaigns to encourage
travel to and within the United States.
<bullet> Provide a workforce tax credit for training, retention, and
hiring of travel and tourism industry workers; financial
assistance to help employees meet COBRA payments and maintain
their health insurance; and payroll tax relief for employers
and employees.
<bullet> Expand the SBA loan program to small businesses that would not
otherwise qualify for the Economic Injury Disaster Loan
Program, with loans to be available at the lowest possible loan
rate.
<bullet> Provide for a $500 tax credit ($1000 for taxpayers filing
jointly) for enumerated personal travel expenses for travel
originating and occurring within North America (airplane,
cruise, train and bus tickets, hotel and motel accommodations,
and rental cars, but not meals) through the end of 2002.
<bullet> Restore full deductibility for those business entertainment
expenses, including meals, that are now subject to a 50%
deduction through the end of 2002. (The average business meal
is less than $20 and does not include any alcoholic beverages
at lunchtime.)
<bullet> Expand the allowance for the carry back of net operating
losses for taxpayers in the travel and tourism industry beyond
the current two-year limit for losses attributable to the
period 9/12/01-12/31/02.
The three tax provisions are included in H.R. 3041 and S. 1500
sponsored by Representatives John Shadegg, Neil Abercrombie, and
Heather Wilson, and Senators Jon Kyl and Zell Miller. We thank these
Members for their leadership in introducing these bills, and urge all
Members of Congress to support these bills. We are pleased that the
Ways and Means Committee has included the net operating loss proposal
in its economic stimulus package, and hope that the proposed tax credit
and business entertainment provisions can be included in the final
package sent to the President.
As Senator Kyl stated so correctly in testimony before the Senate
Commerce Committee just last week, the U.S. travel industry has taken a
major ``body blow'' as a result of the September 11 tragedies. Few
industries have been so directly and negatively impacted, and now we
are looking to the Congress and Administration for leadership in
providing safety and security and helping to restore consumer
confidence in travel once again.
In closing, I would like to say once again that the U.S. travel
industry intends to do all it can to get back to business as usual.
During this time of national testing, travel may best symbolize the
normalcy our nation's leaders have called on us to restore. Please join
with us in reminding the American people at every opportunity to defy
international terrorists by exercising America's precious freedom to
travel. Work with us create the conditions that will once again allow
Americans to begin traveling again, so we can put America's workers
back to work, and help to restore the nation's economy to its fullest
potential. Thank you for the opportunity to tell our industry's story
and our current plans for recovery. I would be happy to answer any
questions you may have.
members of the travel industry recovery coalition
Air Transport Association; American Association of Museums; American
Bus Association; American Recreation Coalition; American Society of
Travel Agents; Association of Retail Travel Agents; Association of
Travel Marketing Executives; Carlson Companies; Hospitality Sales &
Marketing Association International ; International Association of
Amusement Parks & Attractions; International Association of Convention
& Visitors Bureaus; International Council of Cruise Lines; National
Association of RV Parks and Campgrounds; National Business Travel
Association; National Council of Attractions; National Council of
Destination Organizations; National Council of State Tourism Directors;
National Tour Association; Receptive Services Association; Recreation
Vehicle Industry Association; Society of Government Travel
Professionals; Travel Goods Association; Travel Industry Association of
America; US Tour Operators Association.
Mr. Stearns. I thank the gentleman.
Mr. Warren, the general counsel for Air Transport
Association of America.
STATEMENT OF ROBERT WARREN
Mr. Warren. Thank you. Mr. Chairman, Ranking Member Towns,
members of the committee. I am Robert Warren, senior vice
president, general counsel of the Air Transport Association of
America. And on behalf of our members, I want to say thank you
very much for holding these very important hearings today. This
morning I want to talk about the current conditions of the
airline industry and its effect on tourism. More importantly, I
want to talk about what we, those in the airline business and
all of us in the tourism industry can do to improve that
condition.
We first, however, need to follow, I think, President
Bush's clear admonition to return to our daily lives and not
let the terrorists win. And part of this return to normal lives
involves travel for both business and pleasure. We face a long
and difficult climb back to a robust economic well-being and we
recognize that our industry is not alone in dealing with
economic woes brought on largely by the rippling effects of the
terrorist actions of September 11 and thereafter. And when
business in America hurts, the airlines and all facets of the
tourism industry feels the pain even more acutely.
For every airline employee, 16 jobs are provided by
business that depend all or in large part on the airlines for
their existence. This total adds up to nearly 10.5 million jobs
and accounts for 4 percent the gross domestic product. The
President and the Congress have not only recognized our
problems, but also have recognized a national need for a viable
and vigorous airline industry and have taken steps to help us
deal with our predicament, and we in the airline industry are,
of course, very grateful.
The $15 billion in loans and grants for which Congress has
voted will enable the airline industry to continue to be a
vital part of the tourism industry in the United States. The
only permanent cure for what ails our industry is to get
America flying again, to get people and products back on board
our planes for business, for vacation to visit relatives, and
for all the reasons that Americans and visitors alike have
chosen to fly.
Currently, we are flying close to 30 percent fewer
passengers each day than we were a year ago. We need to get
back to where we were and until that happens, hotel rooms,
restaurants, cruise ships remain substantially and adversely
affected. When we do get back to where we were, it will also
help travel and tourism and it will increase needed State and
local tax revenues. And this can only happen by convincing the
American people as well as businesses and industry that flying
today is safer and more secure than it ever has been. We need
to restore the confidence of the American people in the safety
and convenience of air travel.
President Bush certainly contributed mightily in this
effort by his personal involvement in a national campaign to
get Americans off the ground and onto our planes and back to
business. As well, confidence in aviation security is also a
key to our recovery. As you know, the airlines and the
government have already taken steps to increase security and
are communicating that information to the traveling public
through a variety of channels.
So I want to assure you of three things: First, our job,
our responsibility in the airline industry, is to remind people
that flying is a safe way to travel and that safety and
security of our passengers and crew is always our first
priority. Second, we will work very hard in our efforts to
enforce the FAA's new security procedures so as not to
unnecessarily delay or inconvenience passengers, but at the
same time, to make them feel secure throughout their travels.
And third, with every step we take, we are going to work with
the flying public to help them understand the importance of
improving safety and security, and at the same time educating
them as to the need for each step and the time it may take to
accomplishing these goals.
In closing, let me assure you that we in the airline
industry are absolutely committed to achieving these goals and
encouraging all of America to get back to business as President
Bush did when he urged us to get on board. In the long run, it
is up to us in the airline industry and the entire tourism
industry to renew and invigorate this important segment of the
Nation's economy. Working together, we will keep America
flying, and I urge everyone to get on board and join us in
promoting travel and tourism in this great country.
Mr. Chairman, this concludes my prepared remarks and I
would be happy to answer any questions that you have.
[The prepared statement of Robert Warren follows:]
Prepared Statement of Robert Warren, Senior Vice President, General
Counsel and Secretary, Air Transport Association of America, Inc.
Mr. Chairman, members of the Committee, I am Robert Warren, Senior
Vice President, General Counsel and Secretary of the Air Transport
Association of America, Inc. On behalf of our member airlines, and,
indeed, I would venture to say on behalf of all aviation consumers,
thank you for holding today's important hearing on the state of the
tourism industry.
This morning, I want to talk about the current condition of the
airline industry and its effect on tourism. And, more importantly, I
want to talk about what we--those in the airline business and all of us
in the tourism industry--can do to improve that condition.
Sadly, I have no easy answers and I have no magic wand. But we need
to follow President Bush's admonition to return to our daily lives and
not let the terrorists win--and part of this return to normal involves
travel for both business and pleasure.
Even in the best case, we face a long and difficult climb back to
economic stability. It is small solace to know that our industry is not
alone in dealing with economic woes.
Wherever we look across our land, we see that the businesses that
propel America, indeed, the industries that propel the world--are
hurting--largely because of the ripple effects of the terrorist actions
of September 11th. And when business in America hurts the airlines and
all facets of the tourism industry hurt as well.
For every airline employee, 16 jobs are provided by businesses that
depen--all or in large part--on the airlines for their existence. The
total adds up to nearly ten-and-a-half million jobs and accounts for
four percent of the gross domestic product.
While you may find these statistics interesting, when I look at
them today, I find them alarming. Because they are not holding up under
today's conditions. Too many jobs are being lost. Too many schedules
are being cut back. Too many planes are no longer are flying. And too
many employees are being furloughed.
The President and the Congress have not only recognized our
problems, but also recognized the national need for a viable and
vigorous airline industry, and have taken action to help us deal with
our predicament. And, we in the airline industry are, of course,
grateful. The $15 billion in loans and grants--for which Congress has
voted--will enable the airline industry to continue to be a vital part
of the tourist trade in the United States.
The only permanent cure for what ails our industry is to get
America flying again. To get people and products back onboard our
planes--for business, for vacation, to visit relatives--for all the
reasons that Americans and visitors alike have always chosen to fly.
Currently, we are flying close to 30 percent fewer passengers each
day than we were a year ago. We need to get back to where we were. And,
until that happens, hotel rooms and restaurants and cruise ships will
remain substantially and adversely affected. When we do get back to
where we were, it will also help local travel and tourism, and it will
increase needed state and local tax revenues.
So, how do we make it happen?
Again, there are no easy answers.
First, we have to convince the American people, as well as business
and industry, that flying today is safer and more secure than it has
ever been. We need to restore the confidence of the American people in
the safety and convenience of air travel. We need to tell them again
and again. And, we need to show them that flying is safe, and that we
are making it safer all the time.
When the public sees members of the President's Cabinet flying, as
six of them did last month; and when the public sees members of
Congress flying every week, we hope they will too.
President Bush's personal involvement in a national campaign to get
Americans off the ground, onboard our planes and back to business is a
very important development.
Communication is also a key component of our recovery and, as you
know, the airlines and the government have already taken a number of
steps to increase security, and are communicating that information
through a variety of channels.
For instance, only ticketed passengers--with special exceptions for
minor children and persons with disabilities--are allowed in boarding
areas. Curbside parking and curbside check-in have been reinstated at a
number of airports that meet certain FAA criteria, and everything is
being evaluated for what works and what should be changed. Airports
have added more police. And, as President Bush directed, the state
governors are supplying armed and trained National Guard troops for
increased security at airports. This additional law enforcement
presence should also give passengers a greater sense of confidence.
In addition, the Air Transport Association has called on the
government to re-institute the use of air marshals and to federalize
airport security.
Additionally, the President announced an aggressive security
package including:
<bullet> $3 billion in funding to improve security of airplanes and
airports
<bullet> $500 million in grant funding to make cockpits and pilots more
secure
<bullet> a dramatic increase in the number of federal air marshals on
airplanes and
<bullet> management of all airport security and screening services by
the federal government
Needless to say, improving airport and airplane safety and security
are not new approaches for the airline industry. As far back as 1996,
following the TWA Flight 800 accident, the ATA presented a far-reaching
security plan to the White House Commission on Aviation Safety and
Security, chaired by then Vice President Gore.
At that time, we warned that ``terrorism has come to our shores and
we need aggressively to combat the threat to our nation.''
We promised then to do everything in our power to assist the
government in improving aviation security. Our plan then included a
recommendation that the FBI dedicate a significant amount of its
resources to the problem of aviation terrorism.
That, of course, included keeping careful track of persons coming
from nations known to harbor terrorists, as well as persons believed to
have ties to terrorist organizations.
Other recommendations included:
<bullet> the use of air marshals and of bomb-sniffing dogs,
<bullet> the deployment of explosive-detection devices and,
<bullet> U.S. government certification of companies contracting to
provide airport passenger screening
<bullet> The use of effective computer-assisted passenger screening
technology and techniques, known as CAPS.
And so, I want to assure you of four things:
First, our job and our responsibility in the airline industry is to
remind people that flying is so safe that even the most timid
should not be afraid to fly. The safety and security of our
passengers and crews is always our first priority.
Second, we are doing everything in our power to bring that about. Among
other things, we are taking another look at the proposals we
made five years ago to the Gore Commission, to update them and
come back and push for the implementation of those that have
not been adopted.
Third: We will work very hard in our efforts to enforce these new
security precautions, so as not to unnecessarily delay or
inconvenience our passengers.
And Fourth: With every step we take, we are going to work with the
flying public to help them understand the importance of
improving safety and security. And, at the same time, educating
them as to the need for each step and the time it may take to
accomplish these goals.
In closing let me assure you we in the airline industry are
absolutely committed to achieving these goals and to encouraging all of
America to get back to business--as President Bush did when he urged us
to ``Get Onboard.''
In the long run, it is up to those of us in the air transport
industry and the entire tourism industry to renew and reinvigorate this
segment of the nation's economy.
Government must do its part. I know you are doing your part. And I
assure you that we in the airline industry are doing and will continue
to do ours.
Working together, we will keep America flying. I urge all of you to
``Get Onboard'' and join us in promoting travel and tourism in our
great country.
This concludes my prepared remarks. I would be happy to answer any
questions you may have.
Mr. Stearns. I thank the gentleman.
We have been called for a vote and we have just about 10
minutes left. And I want to be sure that members come back, so
I think we are going to adjourn right now, vote, and I will be
right back. And Mr. Towns will be right back and we will
continue. And I think other members will too. But I would say
to all of you, most of us didn't even know about the Kyl bill
or the Shadegg bill. We got the ``dear colleague,'' but we get
``dear colleague'' letters all the time. But the fact that this
hearing has come about, it certainly spread across the House
that we now know about Shadegg's bill. We know about Senator
Kyl's bill. And as chairman 2 days ago, I didn't even--I mean,
until late last week I didn't know about Congressman Shadegg's
bill.
So by you coming here, you are impacting the Members of
Congress to look at these bills. And now Congressman Patrick
Kennedy's bill I heard about today for the first time. So we
are going to vote. We will be right back. You are very
important to be here to spread the word so the other Members of
Congress know about it and we can get this stimulus package
going.
So with that I will adjourn and we will be right back.
[Brief recess.]
Mr. Shimkus [presiding]. Let me be so bold to call this
hearing back into order. And our desire is to try to move as
expeditiously as we can. We want to make sure we get the
opening statements on record, and I will be presumptuous in
taking the chair until the chairman gets back. We now would
like to hear from Mr. Marriott, Chairman and CEO of Marriott
international. Welcome. Your full statement is in the record
and you are recognized for 5 minutes.
STATEMENT OF J.W. MARRIOTT, JR.
Mr. Marriott. Thank you. Mr. Chairman and members of the
committee, I thank you very much for this invitation. These
past 5 weeks have been the most difficult weeks for the travel
and tourism industry that I have ever experienced in the 45
years I have been in the business. When the weapon of choice
for a terrorist attack is four airlines filled with fuel and
passengers, it is bound to have a devastating effect on all of
us.
Immediately following the attack our net reservations
dropped 94 percent. Our room revenues were already down about
10 percent prior to September 11. Business has come back, but
only part way. In the past 3 weeks, in September, we were about
off about 40 percent in revenue. In the first week of October,
we are 25 percent below last year in combined occupancy and
room rate, what we call rev par. And we seem to have plateaued
at that level. So we are running about 20 to 25 percent below
last year in sales. Our big city and resort and convention
hotels have been hit the hardest with massive group
cancellations. Business and vacation travel are far below what
they should be.
September and October are the very best months for business
and convention travel. Our industry has lost a lot of the
profit, almost all the profit that these months usually
provide. The hotel industry itself employs over 2 million
people. Today, about half of these employees either have been
laid off or are working 1 or 2 days a week. While some
conventions have been rebooked for next year, the airlines are
running an 80 percent schedule, planes are half full. Big
travel agencies continue to report future bookings are very
soft and now we are coming in for what is the very slow season
for the hotel business. December is the worst hotel month and
January is the next worse. The lodging industry is quite
capital intensive with over $150 billion in mortgage debts, and
many hotels will not make their debt service payments.
We are not asking for a bailout, just your leadership in
recognizing a major problem and its tremendous impact on our
economic stability and jobs. Your immediate action is needed to
help us resolve the situation before it completely erodes not
only the U.S. economy, but also the global one. We in the
industry are doing everything possible to act responsibly, both
with labor and management. We have a massive advertising
campaign. We have lowered our room rates. We are offering one
of the most attractive travel packages we have ever offered. We
have waived the minimum hours required for our benefits-
eligible employees so they can keep their medical coverage for
themselves and their families during this emergency period. We
have frozen and reduced executive salaries. We are looking at
every conceivable possibility to build back our business. We
ask our government to do the same. To join us, labor and
management, as partners in solving our travel and tourism
crisis.
In bipartisan meetings with Members of Congress, we have
been challenged to make recommendations. Of those measures
which provide an immediate stimulus to our economy for a
temporary period, I believe that one of the best proposals
which Congress should consider, because it will provide an
immediate shot in the arm for travel and do more to save jobs,
is a travel tax credit. The Congress should enact as part of an
economic stimulus plan a temporary, and I stress temporary
business travel tax credit targeted and limited in time and
cost. The Travel America Now Act of 2001 has been introduced in
both the House and the Senate.
The House legislation is H.R. 3041, introduced by
Representative Shadegg of Arizona, Abercrombie of Hawaii, and
Wilson of New Mexico. We strongly support their proposal. Let
me quote from a recent issue of Newsweek, ``Business Trips
Among the Terrorist Victims.'' the article goes on to state in
this post attack period, 58 percent of American business
corporations have plans to curtail travel. I know a lot of
Members of Congress don't like tax credits, but we believe they
can be used effectively. We use them effectively in getting
people back to work and getting them off the welfare payrolls,
and this small investment has saved a lot of money both for
employees and employers.
Our company has employed 3,000 former welfare recipients
through our pathways to independence program. Now is the time
for Congress and the administration to be creative by using the
tax credit process to get us traveling again. There is nothing
that will get business back to normal faster and more
effectively than a travel tax credit. You must do something
immediately to get our people traveling, or the consequences
for our economy could be disastrous. Labor and management are
united in this effort. Just as labor supports our efforts to
stimulate the economy through a travel tax credit, we support
their efforts to assist workers who have been laid off as a
result of the events of September 11. This is a big industry.
It is an important industry. I hope you will help us get
America moving again. Thank you very much.
[The prepared statement of J.W. Marriott, Jr. follows:]
Prepared Statement of J.W. Marriott, Jr., Chairman and Chief Executive
Officer, Marriott International, Inc.
Mr. chairman and members of the subcommittee, I'm Bill Marriott.
Thank you for the invitation to testify this morning.
These past four weeks have been the most difficult weeks for the
travel and tourism industry that I have experienced in the 45 years I
have been in the hotel business.
On september 11 we had our World Trade Center Hotel completely
destroyed and our Financial Center Hotel, one-and-a-half blocks away,
severely damaged. Hopefully, we will be able to reopen it in four or
five months. Tragically, two of our managers were killed at wtc as they
stayed behind trying to make sure that our guests had been evacuated.
Between the two hotels we successfully evacuated over 2000 people.
When the weapon of choice for a terrorist attack is four airliners
filled with fuel and passengers, it is bound to have a devastating
effect on all of us.
Immediately following the attack, our net reservations dropped 94%.
Our room revenues were already down about 10% prior to September 11.
Business has come back. But only part way. In the last three weeks in
september we were off about 40% in revenue. In the first week of
October we are 25% below last year in combined occupancy and room
rate--or what we call revpar.
Our big city and resort convention hotels have been hit the hardest
with massive group cancellations. Business and vacation travel are far
below what they should be. September and October are the best months
for business and convention travel. Our industry has lost all of the
profit that these months usually provide.
The hotel industry employs over two million people in the U.S.
Today, one half of these employees either have been laid off--or are
working one or two days per week.
While some conventions have rebooked for next year, the airlines
are running an 80% schedule and planes are half full. The big travel
agencies report future bookings are very soft and now we are coming
into the slow season. December is the worst hotel month and January is
the second worst.
The lodging industry is very capital intensive, carrying $150
billion of mortgage debt. Many hotels will not make their debt service
payments.
We are not asking for a bailout--just your leadership in
recognizing a major problem and its tremendous impact on our economic
stability and jobs. Your immediate action is needed to help us resolve
this situation before it completely erodes not only the U.S. economy,
but also the global one.
We in the travel and tourism industry are doing everything within
our power to act responsibly in doing our part--both labor and
management. We are embarking on a massive advertising campaign to ``get
America traveling again''.
We have lowered our rates and are offering the most attractive
travel packages ever.
We have waived the minimum hours required for our benefits eligible
employees so that they can keep their health coverage for themselves
and their families during this emergency period. And we have frozen or
reduced executive salaries.
We are looking at every conceivable possibility to build back our
business in this difficult time.
We ask our government to do the same--join us, labor and
management, as partners in solving our travel and tourism crisis. We
need your leadership as never before.
In bipartisan meetings with Members of Congress, we have been
challenged to make recommendations of those measures which would
provide an immediate stimulus to our economy for a temporary period.
The one best proposal I think Congress should consider, because it
will provide an immediate shot in the arm for travel and do more to
save jobs now is a travel tax credit.
The Congress should enact, as part of any economic stimulus plan, a
temporary--and I stress temporary--business travel tax credit, targeted
and limited in time and cost.
The ``Travel America Now Act of 2001'' has been introduced in both
the House and Senate. The House legislation is H.R. 3041 introduced by
Representatives Shadegg of Arizona, Abercrombie of Hawaii, and Wilson
of New Mexico. We support their proposal.
Let me quote from a recent issue of Newsweek: ``Business trips are
among the terrorists' victims''. The article goes on to state that in
this post-attack period 58% of American business corporations have
plans to curtail travel.
I know that many Members of Congress do not like tax credits--but
they can be effective when used prudently and cautiously.
A great example is the work opportunity tax credit, in which our
government and business have worked in partnership to get many of our
citizens off the welfare rolls and onto payrolls where they want to be
and deserve to be. All of you know how this small investment has saved
money, helping both employee and employer. Our company alone has been
able to train and put 3,000 former welfare recipients on our payroll
through our ``Pathways to Independence'' program.
Now is the time for the Congress and the administration to be
creative by using the tax credit process to get us traveling again.
There is nothing that will get businesses ``back to normal'' faster--
and more effectively--than a travel tax credit.
We must do something immediately to get people traveling again--or
the consequences for our economy could be disastrous.
Let me also stress that labor and management are united in this
effort. Just as labor supports our efforts to stimulate the economy
through a travel tax credit, we strongly support their efforts to
assist our workers who have been laid off as a result of the events of
September 11.
Travel and tourism is the first, second, or third most important
industry in 28 states and the District of Columbia. It employs 18
million Americans, and pays over $100 billion per year in federal,
state and local taxes.
Last year it generated a $17 billion trade surplus.
I hope you will help us get America moving again.
Thank you, and I request that my entire testimony be included in
the record.
Mr. Shimkus. Thank you, Mr. Marriott.
Now we will turn to Ms. Nicholas, president and CEO of NYC
and Company. Thank you. Your full oral statement is in the
record. You have 5 minutes.
STATEMENT OF CRISTYNE L. NICHOLAS
Ms. Nicholas. Thank you, Mr. Chairman and ranking members.
NYC & COMPANY Company is New York City's official tourism and
convention marketing organization. We are a private not-for-
profit organization representing more than 1,400 tourism-
related businesses, including museums, hotels, restaurant,
retail stores, theaters, tour operators and attractions. I
would like to thank the subcommittee for this opportunity to
testify about the current state of New York City's tourism
industry. Tourism is a vital component of the city's economy.
It generates $25 billion in spending. It equals 3,100 for every
man, woman and child in our city. The more than 37 million
visitors who we welcomed to New York last year had a tremendous
and positive impact throughout all five boroughs.
First, they supported 282,000 New York City jobs from the
hotel bellhop to the executive director of the Metropolitan
Museum of Art. Tourism offers a career opportunity for
individuals from all walks of life. Our visitors generated $936
million in safety tax revenues, 882 million in State tax
revenues, and $1.3 billion in Federal tax revenues. Tourism is
one of the largest job producers in New York City with a growth
rate that has been among the most stable of the city's major
industries. And in addition, the tourism industry has been a
key employer in the Nation's welfare-to-work initiatives.
The tragic events of September 11 have been devastating to
our city's tourism industry. In the first 4 weeks following the
attacks, we estimate that $271 million were lost in New York
City visitor spending. New York City's hotels have experienced
a tremendous drop in activity, during what is traditionally
their strongest quarter. In the weeks following the attacks,
the city's hotels lost an estimated $6 to $10 million a day in
room revenues. And while hotel activity has picked up to some
extent, it is nowhere near normal levels. The number of hotel
room nights sold down 29 percent from originally forecast. And
occupancies are currently hovering around 67 percent, compared
to the 84 percent the same period last year.
To date, an estimated 6,000 New York City hotel union
employees, 25 percent of the entire union membership have been
laid off. A figure that includes 1,000 jobs lost due to the
destruction of our downtown hotels. New York City restaurants,
a $9 billion industry, employ more than 160,000 people. Since
September 11, more than 30 restaurants have closed permanently
and an additional 40 temporary closed. According to the New
York State Restaurant Association, restaurant sales among their
New York city members declined 47 percent between September 10
and September 30. To date, these restaurants have laid off 12
percent of their employees and anticipate further layoffs up to
25 percent of the entire work force.
New York City theater community has also sustained
significant losses. Broadway ticket sales are down 26 percent
since September 11 compared to the year 2000. In addition to
immediate revenue shortfalls, the advanced ticket sales which
sustain cash-poor Broadway are virtually nonexistent, making it
increasingly difficult to forecast future activity. As for the
city's cultural institutions and attractions, the combined
attendance at the Metropolitan Museum of Art and the Museum of
Modern Art and the Bronx Zoo is down 47 percent over a
comparable period in 2000.
Citywide the cost associated with the destruction of the
World Trade Center is enormous. New York City is expected to
lose 110,000 jobs. And we will lose an estimated $1 billion in
tax revenues, including $86 million in hotel tax revenues and
$270 million in sales tax revenues. Tourism industries, the
travel research agency for the U.S. Department of Commerce
expects international visitorship to the United States to
decline 13 percent. While these valuable international
travelers make up only 18 percent of New York City's annual
visitors, or 6.8 million people, they are responsible for 41
percent of all visitor spending, which means New York, which is
the country's number 1 destination for international visitors,
stands to be disproportionately hurt.
New York City & Company joins the Nation's tourism industry
and Travel Industry Association of America in supporting
immediate legislative efforts to stimulate travel and tourism.
Specifically we encourage Congress to restore the full
deduction for all business meals and entertainment expenses now
subject to a 50 percent limitation, institute a temporary
Federal tax credit of 1,000 per person and 2,000 for a couple
filing jointly for personal travel expenses for travel within
the United States and restore the spousal travel deduction to
100 percent.
We support the recommendation of the travel business
roundtable for the creation of a Presidential advisory counsel
on travel and tourism. We urge the Federal Government to fund
national and international tourism marketing efforts as they do
in other countries. And finally, we ask the Federal Government
to lift the NEA funding caps on New York City cultural
institutions. These legislative efforts are important,
immediate and necessary steps to maintain a vibrant tourism
industry, generate much needed jobs, and drive economic growth
now and into the future. With the help of our friends in this
room and around the Nation, together we can act immediately to
spur this country, the vitally important tourism economy,
create jobs and generate taxes. And as Mayor Giuliani has been
saying for weeks now, and also Congressman Towns, the best way
that people can help New York City is to come to the city, eat
out in the restaurants, stay in a hotel, go to a Broadway show,
a museum, take a tour. We will be happy to help you with that.
It is also the best way that I know of that can also show the
world that in the wake of this tragic event of September 11,
both our city and Nation will emerge stronger than ever. Thank
you for your time.
[The prepared statement of Cristyne L. Nicholas follows:]
Prepared Statement of Cristyne L. Nicholas, President & CEO, NYC &
Company
Good Morning, Chairman Stearns and members of the Subcommittee.
My name is Cristyne L. Nicholas, President & CEO of NYC & Company,
New York City's official tourism organization. A private, non-profit
organization, NYC & Company represents more than 1,400 tourism-related
businesses, including museums, hotels, restaurants, retail stores,
theaters, tour organizations, and attractions. It has a current budget
of $12 million and is the leading force in attracting visitors and
visitor revenue to New York City.
I would like to thank the Subcommittee for its invitation to
testify about the state of New York City's tourism industry following
the events of September 11.
Tourism is a vital component of New York City's economy. A $25
billion industry (equivalent to $3100 for every man, woman and child in
the city), tourism's economic impact from its more than 37 million
visitors is extensive:
<bullet> Tourism supports 282,000 NYC jobs directly and indirectly.
From the hotel bellhop to the Executive Director of the
Metropolitan Museum of Art, tourism offers career opportunities
for individuals from all walks of life.
<bullet> Taxes generated by NYC tourism in 2000:
$936 million city tax revenues
$882 million state tax revenues
$1.3 billion federal tax revenues
And even more impressive is the growth the industry has experienced
in the last five years: visitor spending is up 34%; city and state tax
revenues rose 35% and 33%, respectively; federal taxes also rose during
this time period, up 30%.
And most importantly, the number of jobs supported by tourism has
increased 26% since 1996. Tourism is currently one of the top five
largest providers of jobs in New York, with a job growth rate that has
been one of the most stable and sustaining year after year among the
city's major industries including health services, business services
and Wall Street. In addition, tourism has long been an active
participant in the nation's Welfare-to-Work programs and initiatives.
The events of September 11th have been devastating to the city and
its tourism industry. In the time period of September 11th through
October 6th, we estimate that $270.8 million dollars has been lost in
New York City visitor spending.
And the losses continue. Tourism is greatly dependent on the
consumer's sense of well-being and financial security. The events
following those of September 11, many of which are heightening consumer
anxiety, are challenging the industry's ability to reassure the
consumer, and probably decelerating the nation's economic recovery
period.
Tourism is not recession-proof. In addition to well-known names
such as Marriott, the Empire State Building and Circle Line, the city's
tourism industry is a community of small businesses, many of whom will
not be able to sustain long-term declines in activity.
The following explain how individual segments of the city's tourism
industry are faring:
NYC Hotels
New York City's hotels experienced a tremendous dropoff in activity
during what is traditionally one of the strongest visitor months for
the city. In the first few weeks since September 11th, the city's
hotels lost an estimated $6-$10 million daily in room revenues. While
hotel activity has picked up to some extent, it is nowhere near where
it was forecast to be. Specifically, in terms of the percentage of
hotel rooms occupied since September 11th:
9/11/01-9/15/01: 63.1% NYC hotel rooms occupied
9/16/01-9/22/01: 45.4%
9/23/01-9/29/01: 59.3% (comparable 2000 period: 86.2%)
9/30/01-10/6/01: 67.5% (comparable 2000 period 83.7%)
(Source: Hotel RevMax)
An estimated 6000 NYC hotel union employees (25% of the entire
union membership) have already been laid off (includes 1000 jobs lost
due to destruction of downtown hotels). In addition, the remaining
employees have voluntarily reduced the number of days in their work
week from five to three or four to prevent any further layoffs.
NYC Restaurants
The NYC restaurant industry is a $9 billion industry, employing
over 160,000 individuals.
More than 30 restaurants have permanently closed following the
events of September 11th with an additional 40 temporarily closed.
(Source: Zagat Survey)
According to the New York State Restaurant Association, restaurant
sales among their New York City members declined 47% in the period 9/
10-9/30 compared to same period in 2000. Furthermore, these members
have, so far, laid off 12% of their employees and anticipate that
further layoffs up to 25% of the workforce may be necessary.
Broadway and Attractions
NYC's theater community also sustained significant losses due to
the events of September 11. Immediately following that morning's
events, Broadway cancelled its Tuesday evening and Wednesday matinee
and evening performances. And while the theaters reopened on Thursday,
September 13th, the performances played to considerably smaller
audiences than is normal in September. In terms of weekly ticket sales,
for the weeks ending:
9/16: down 65% over same 2000 period (three performances cancelled)
9/23: down 24%
9/30: down 10%
10/07: down 9%
(Source: League of American Theatres and Producers)
All told, Broadway ticket sales were down a cumulative 26% for this
period over the comparable period in 2000. The challenge now facing
Broadway is that advance ticket sales are not at previous levels,
making it increasingly difficult to forecast future activity and
respond accordingly.
The city's cultural institutions and attractions continue to feel
the impact of last month's events. For the time period of September 11
to October 1, the combined attendance at the Metropolitan Museum of
Art, the Museum of Modern Art and the Bronx Zoo is down 47% over the
comparable period in 2000.
Overall NYC Economy--Estimated Impact
The costs associated with the destruction of the World Trade
Center, the damage to Lower Manhattan, the disruption of business, the
decline of consumer confidence and a deeper-than-previously-expected
recession are staggering.
NYC Office of Management & Budget reports:
<bullet> Total loss of 110,000 NYC jobs
<bullet> Estimated loss of $1 billion in tax revenues including over
$100 million in hotel tax revenues and $270 million in sales
tax revenues
NYC Comptroller Office reports:
<bullet> Retail/Wholesale: $1.7 billion in losses and 17,500 lost jobs
<bullet> Hotel/Restaurants/Theaters: $2.3 billion in losses. Job
losses: 8000 restaurant jobs, 6000 hotel jobs
<bullet> Airlines: 7000 job losses
Travel Forecasts for 2001 and 2002
While it is too soon to forecast the specific long-term impact of
September 11th and subsequent events on NYC's tourism industry, it is
important to understand the national tourism picture in which NYC
operates. The Travel Industry Association of America, the trade
association for the nation's tourism industry, has forecast the
following for domestic travel within the US:
3rdQ 2001 volume: 5% decline over same period 2000
4thQ 2001 volume: 10% decline over same period 2000
x2001volume: 5% decrease over 2000
2002 volume: 1% increase over 2001
2002 will remain below 2000 levels
The international travel picture is even more grim. This is
particularly troubling to the tourism industry in New York City, given
our position as the number one US destination for international
visitors. More importantly, while international visitors represent 18%
of all NYC visitors, they generate 41% of all NYC visitor spending.
As for the outlook for international travel to the US, Tourism
Industries, the travel research agency for the US Department of
Commerce, anticipates that:
2001 volume, already declining due to a economic slowdown, will see an
accelerated drop in 2001, resulting in double-digit declines
for almost all international markets
2002 will see steady recovery, more likely in the latter half of the
year. Volume will not, however, reach 2000 levels
With the exception of the United Kingdom and Canada, most international
markets will not fully reach 2000 levels until 2004/2005.
Especially troubling is Japan, which may not fully recover
until 2006.
Forecast of International Travel to the US--Top Visitor Producing Markets
----------------------------------------------------------------------------------------------------------------
% chg % chg When this will
2000 2001 over 2002 over match 2000
----------------------------------------------------------------------------------------------------------------
Total.................................... 50.9m 44.5m -13% 46.4m +4% 2004
Canada................................... 14.6m 13.4m -8% 14.0m +5% 2003
Japan.................................... 5.1m 4.0m -21% 4.1m +4% beyond 2005
UK....................................... 4.7m 4.1m -13% 4.3m +5% 2003
Germany.................................. 1.8 m1.3m -25% 1.4m +6% 2005
France................................... 1.1m 878,000 -19% 917,000 +5% 2004
Brazil................................... 737,000 650,000 -12% 680,000 +5% 2004
South Korea.............................. 662,000 547,000 -17% 579,000 +6% 2004
Italy.................................... 612,000 495,000 -19% 522,000 +6% 2005
Argentina................................ 534,000 438,000 -18% 419,000 -5% beyond 2005
----------------------------------------------------------------------------------------------------------------
NYC Tourism Industry's Immediate Response to September 11th Events
Tuesday, September 11
The first concern was for the thousands of visitors who found
themselves stranded in a city that was virtually shut down. NYC &
Company made the immediate decision to keep NYC's Official Visitor
Information Center open throughout the day and reached out to the media
to alert travelers in need that the Center was ready to assist them.
A list of hotel room availability was immediately posted to NYC &
Company's website, www.nycvisit.com, and updated on a 24-hour basis
throughout the week to reflect the visitor industry's quickly changing
status. This list was supplemented with a list of which businesses were
open and what services they were providing.
Meanwhile, the Convention Sales, Convention Services, and
Conference Express departments began reaching out to meetings and
conventions scheduled in New York this fall to update them on events
and to reassure them that we were working closely with the city's
hotels and event venues to minimize any possible disruptions of their
plans.
Wednesday, September 12
NYC & Company began to coordinate the efforts of the hundreds of
city restaurants in order to feed emergency workers--a massive,
complex, and unprecedented undertaking.
At the same time, NYC & Company joined forces with Hotel
Association of New York City to begin canvassing the city's hotels
regarding the free and deeply discounted rooms available for the rescue
workers and the victims' family members who would be coming into the
city.
Thursday, September 13
NYC & Company brought a cross-section of industry leaders to Mayor
Rudolph Giuliani's temporary command center to communicate the entire
industry's willingness to help and to begin the important process of
coordinating our broader actions and messages with those of the city.
Friday, September 14
NYC & Company established a toll-free New York City Visitor Hotline
(888/805-4040 domestic, 860/496-5972 international) as a resource
for travelers in New York City and for those with plans to visit. NYC &
Company's professional staff of multilingual visitor information
counselors--available on the phone through the hotline and in-person to
walk-in visitors--were joined by NYC & Company staff volunteers to
extend the hours of NYC's Official Visitor Information Center. NYC &
Company staff also established a help desk at the Mayor's Office of
Operations at the piers to assist emergency workers and the families of
the victims with housing and general information.
NYC Tourism Industry's Short-term and Long-term Responses
Meetings and Conventions
In an overwhelming show of support for New York City, significant
meetings, conventions and tradeshows have rescheduled so they could
meet in NYC, including:
<bullet> The American Society of Travel Agents' (ASTA) World Travel
Congress will bring its 2,500 attendees to New York's Jacob K.
Javits Convention Center on November 4-7, 2001.
<bullet> The American Society of Association Executives (ASAE),
representing the nation's top trade associations and hundreds
of millions of dollars of potential convention business, will
hold its 150-person Board of Directors meeting on November 16-
18, 2001.
<bullet> The American Federation of State, County and Municipal
Employees (AFSCME), AFL-CIO is bringing the 1,500 attendees of
its biennial Women's Conference on November 16-18. The meeting
will be dedicated to union member Father Mychal Judge and seven
people who remain missing.
<bullet> The Magazine Publishers of America (MPA) will bring the 600
attendees of the annual American Magazine Conference on October
21-24.
<bullet> Meeting Planners International (MPI) will bring the MPI
Foundation Meeting on October 27.
Major organizations reaffirmed their choice of New York City for
their high-profile events, including:
<bullet> Microsoft will hold the official kickoff for the new Windows
operating system XP in Times Square and Rockefeller Center on
October 25, 2001; events will include a free concert by a major
popular music act and a high-profile media event featuring
Chairman Bill Gates.
<bullet> The Audio Engineering Society is bringing its 15,000 to 20,000
attendees to New York from November 30 to December 3, 2001.
<bullet> The International Engineering Conference and Exposition is
bringing 2,500 attendees to New York City from November 11 to
16, 2001.
I Love NY
New York State and the Port Authority of New York and New Jersey
each contributed $20 million to a greatly enhanced I Love NY
advertising campaign to encourage business travelers and tourists to
come back to New York in the wake of the World Trade Center attack. The
$40 million ad campaign features the ``I Love New York'' theme and
well-known New Yorkers from entertainment, news, sports and government.
The tourism outreach campaign will initially feature a television
ad with notable New Yorkers including Yankee shortstop Derek Jeter,
Regis Philbin and Kelly Ripa, CNBC's Maria Bartiromo, Ben Stiller,
Governor Pataki and Mayor Rudolph W. Giuliani. The television ad began
airing last week. In addition to the new television ad, the multi-media
tourism outreach campaign will also feature radio and print ads in
newspapers, magazines, and travel trade publications as well as outdoor
advertising, Internet ads and direct mail in ensuing weeks.
Consumer Marketing Efforts
NYC & Company has renamed its Paint the Town Red: NYC's Winter
Celebration promotional campaign Paint the Town Red, White & Blue,
adding travel package options, and moving up the start date to November
5 to drive immediate business to New York City.
A special Restaurant Week promotion to drive business for the New
York restaurant community has been launched. From Monday, October 15
through Sunday, October 21, 2001, almost 150 of the city's best
restaurants are offering prix-fixe, three-course lunch menus for just
$20.01 and prix-fixe dinner menus for $30.01--a fraction of their usual
cost. For the first time ever, this Restaurant Week includes a dinner
option and extends through a weekend.
NYC & Company just signed a multi-year agreement with Delta
Airlines to provide added tools with which to jump-start New York City
visitorship. As part of Delta's commitment to New York City's efforts
to revitalize travel, they have committed 10,000 free domestic tickets
for use in targeted promotions and are waiving the normal rapid
redemption fees charged to travelers wishing to redeem their frequent
flyer miles to travel to New York City in the near future.
NYC & Company aggressively pursued pro-bono advertising space from
local, national, and international newspapers and magazines for a print
advertising campaign. The ad, which tells people ``New York City Would
Like to Thank You. In Person,'' has run in the New York Post, USA
Today, The Boston Globe, Chicago Tribune, WHERE Magazine, Travel +
Leisure, several Conde Nast titles, and in British publications.
NYC & Company will also be repositioning our own television ad
campaign, originally scheduled to run this fall, to address the current
situation and promote immediate, short-term business.
Support for Legislative Efforts to Encourage Tourism to NYC
NYC & Company joins the nation's tourism industry and the Travel
Industry Association of America in supporting those legislative efforts
that would provide immediate relief for U.S. travel and tourism by
allowing for:
<bullet> restoration of full deductibility for all business meals and
entertainment expenses that are now subject to a 50 percent
limitation
<bullet> instituting a temporary federal tax credit of $1000 per person
($2000 for a couple filing jointly) for personal travel
expenses for travel within the United States
<bullet> restoration of spousal travel deduction to 100% to encourage
spousal travel to meetings and conventions
We also support the recommendation of the Travel Business
Roundtable for the creation of a Presidential Advisory Council on
Travel & Tourism.
Furthermore, we urge the federal government to fund national and
international tourism marketing efforts, thus joining those countries
that understand the value of tourism and the importance of maintaining
presence in the global marketplace. And finally, we ask the federal
government to remove the NEA funding caps on New York City's cultural
institutions, a group who has been greatly impacted.
We feel all these legislative efforts are important steps in
helping to maintain a vibrant travel and tourism industry, to keep
working people working, and to stimulate economic growth.
New York City absolutely, positively needs a strong, flourishing
tourism industry. As Mayor Giuliani has been saying for weeks now, the
best way people can help New York City is to come to the city, eat out
at a restaurant, stay in a hotel, go to a Broadway show, a museum, an
attraction; take a tour. And it is the best way I can think of to show
to the world that in the wake of the tragic events of September 11th,
our city and nation will emerge stronger than ever.
Thank you.
Mr. Stearns. I thank you.
Senior vice president, Mr. Fred Lounsberry, Universal
Studios.
STATEMENT OF FRED LOUNSBERRY
Mr. Lounsberry. Thank you, Mr. Chairman, and thank you for
the opportunity to be here today. I wear three hats before you
today: Senior VP of Sales for Universal Theme Parks in
Hollywood and Florida, the incoming national Chair of the
Travel Industry Association of America, and the current
Chairman of the Visit Florida public-private partnership
responsible for the promotion of tourism in Florida.
I want to just focus on some of the key points in my
testimony which has been submitted for the record. Tourism has
taken a direct hit and the impact is now cascading throughout
our economy. We are now seeing the full impact of how far the
absence of tourism has impacted many facets of our economy.
When you and your constituents think about tourism, the first
thing that probably comes to mind is the annual family
vacation, a trip by air or auto to a hotel or resort or to
visit friends and relatives, visit attractions, renting a car
and dining out.
However, it is also critical to recognize how tourism
impacts our economy far beyond these travel businesses which
first come to mind. All of these businesses have hundreds of
suppliers, food and beverage suppliers, paper products and
services. In addition, there are hundreds of peripheral
businesses which support tourism and the convention industry,
transportation companies, catering, gasoline, services, tour
operators and travel agencies. As we see retail sales drop, it
is also important to note that one of the top activities when
Americans travel is to shop.
Tourism is the first, second or third largest industry in
29 of our States. In Florida that represents 20 percent of
Florida's economic engine, employs 850,000 Floridians and
generates $3 billion in State sales tax, and those taxes
generated by tourism in Florida and elsewhere fund critical
social needs. Sales tax, hotel bed taxes and gasoline taxes
fund highway construction, convention centers and other
infrastructure projects as well as schools. We must restore
confidence in travel and get tourism back on its feet. We urge
the Federal Government to provide funding and create a national
advertising and marketing campaign to encourage travel to and
within the United States. This can best be accomplished by
establishing a public-private partnership through Federal
matching funds to support State tourism campaigns as well as
support for a national marketing effort through TIA, which is
ideally positioned to fulfill such a role. We urge the Federal
Government to raise the public-private partnerships, such as
the one which exists in Florida, to a national level.
Visit Florida, which is a unique public-private
partnership, is responsible for marketing tourism in Florida.
Last week, Florida Governor Jeb Bush unveiled an economic
stimulus package proposing an additional $20 million for Visit
Florida on top of the existing $20 million budget which would
be matched and leveraged into a $100 million plus campaign to
promote Florida tourism. I would like to show you the 30-second
public service announcement which kicked off the Florida
campaign to Floridians, which was produced by Universal on
behalf of Florida tourism and is now airing throughout the
State.
Mr. Stearns. Is this airing throughout the United States or
through----
Mr. Lounsberry. Just in Florida, in all the key markets
through the Florida Association of Broadcasters, and it is
being put on the air by the stations in support of tourism.
Mr. Stearns. And is that part of this $20 million effort?
Mr. Lounsberry. Rebuilding tourism will not be a quick fix.
It will take time and a concentrated effort on all fronts of
our industry to rebuild consumer confidence and get Americans
traveling again. We need your support and help. Thank you very
much.
[The prepared statement of Fred Lounsberry follows:]
Prepared Statement of Fred Lounsberry, Senior Vice President of Sales,
Universal Studios Recreation Group, Chairman, Visit Florida, &
Chairman-Elect, Travel Industry Association of America
Mr. Chairman and Members of the Subcommittee, thank you for the
opportunity to be with you today. My name is Fred Lounsberry, and I
come before you wearing several hats. One for my role as Senior Vice
President of Sales for Universal Studios Recreation Group. One for my
role as Chairman of Visit Florida--the public-private partnership that
promotes tourism in Florida. And one for my role as incoming Chairman
of the Travel Industry Association of America.
As Chairman of Visit Florida, I have spent the weeks since the
September 11th tragedy working with our state's unique coalition of
tourism leaders to develop a recovery plan. As I will detail a bit
later, Florida is taking bold and innovative steps to revitalize its
most valued asset. It is imperative that we do this on a national level
as well, and the federal government has a significant role to play. We
will ask you to provide critical leadership and resources, and to
partner with state and local governments and the private sector to help
get the American people traveling again.
Many of us remember piling into the family station wagon to head to
our favorite destinations. As the Chairman knows very well, the great
state of Florida which we both call ``home,'' is blessed with that
incredible aura and sense of ``getting away from it all'' that inspires
so many families and businesses to plan their vacations and meetings
there. It has become a way of life--a habit--simply ``routine'' for so
many Americans. And that translates into a $50 billion a year industry
for Florida.
But on September 11, that all changed. Our nation is still sorting
out the crippling effects of the most horrific act of terrorism we have
ever witnessed. And even as our men and women in uniform go after an
enemy so many of us don't fully understand beyond its sheer evil, we
are still realizing the incredible ripple effect of that fateful day.
Perhaps nowhere has the economic ripple effect been more evident
than within the tourism industry. When terror struck New York,
Washington, DC and Pennsylvania, it struck the heart of America and the
spirit of its people. That newfound fear and jolt to consumer
confidence scored a direct hit on the tourism industry.
Are we struggling? Yes. It's no secret that airline travel is down,
hotels are at record low capacities, rental car companies are hurting
and theme parks are being forced to reduce operations. An already
fragile economy prior to September 11 has now plummeted below where
anyone could have imagined.
Will we recover? The answer is also a resounding yes. Just as we
are witnessing the resilience of Americans and courage of ordinary
people performing heroic acts, I am here to tell you the tourism
industry will thrive again.
As our country enjoys being the number one tourist destination, our
competitors throughout the world are watching to see what actions we
take--and they have been swift. New York is investing $40 million; Las
Vegas, $13 million; and California has stepped in with $10 million. In
Florida, Governor Jeb Bush has taken to the airwaves at the industry's
request, and has pledged to do ``whatever it takes'' to help rebuild
the state's economy. I'd like to take this opportunity to show you a
30-second public service announcement that was produced by Universal on
behalf of Florida's tourism industry and is now airing throughout the
state.
Florida's efforts do not stop with the PSA. Even when faced with a
budget shortfall no one could have anticipated, Governor Bush has
committed to set aside critical funds to help tourism recover. Last
Friday, the Governor unveiled an economic stimulus package that
includes an additional $20 million for Visit Florida to help promote
tourism. These initiatives include targeted advertising to Florida and
out-of-state markets to encourage tourists to visit the state by
automobile, national marketing campaigns, and partnerships with
tourism-related businesses throughout the state to create special
discount programs and other incentives to attract visitors to Florida.
But if the efforts of Governors Bush, Davis, Pataki and others are
to succeed, they must be supplemented with federal resources. We urge
the federal government to raise public-private partnerships like the
one that exists in Florida to the national level. The federal
government should partner with the states, local Convention and
Visitors Bureaus and private sector partners to create a national
advertising and marketing campaign to encourage Americans to travel
again.
In order to succeed, this must be funded at a level sufficient to
reach all traveling Americans. Experts in the tourism and
communications industries estimate that such a campaign would cost $50-
$60 million, leveraged additionally with our national broadcast
partners. The commitment of federal funds would supplement spending by
state and local governments and private sector partners I mentioned
earlier. Other incentives such as a travel tax credit, a return to full
deductibility of business entertainment expenses and aid to displaced
workers are also of great importance.
We need your assistance and leadership, and most of all your
continued confidence in our industry to know how and when any recovery
plan should be implemented. Just as our military effort is strategic,
methodical and calculated to have long-term impact, the tourism
recovery plan must follow suit. The world is watching to see how we
take action, and we must set the bar high during this vulnerable time.
In the short term, we need you to continue being ambassadors of
good will whose mission is to rebuild consumer confidence. Never before
has your ability to use the bully pulpit to impact those you represent
been more critical. We implore you to talk with your constituents and
to the media--encourage travel, tout all our many destinations have to
offer, reinforce safety measures and reassure Americans that a return
to ``reasoned normalcy'' is in our best interests.
Make no mistake, while we will put a timeframe on this recovery,
this is a long-term effort. Yes, there have been and may continue to be
blips of positive news for the tourism industry. But the reality is,
we've been hit hard. Ground zero of the horror on September 11th was
also ground zero for a great deal of our nation's economic health.
As evidenced by this panel before you today, every faction of the
tourism industry has been adversely affected, and is now putting its
collective mind together to come up with a solution. Yes, we are
competitors, but we are also partners in an industry that is absolutely
vital to our nation's livelihood.
It will take a sustained, concerted effort on all fronts to rebuild
consumer confidence and get Americans traveling again. I can say with
confidence that the entire industry stands ready and united for that
challenge. With your support we will succeed.
Thank you.
Mr. Stearns. Thank you.
Michael Crye, President of International Cruise Lines.
Welcome.
STATEMENT OF J. MICHAEL CRYE
Mr. Crye. Good morning, Mr. Chairman, Mr. Towns, Mr.
Bryant. My name is Michael Crye. I am the President of the
International Council of Cruise Lines. I am honored to appear
before the subcommittee today to highlight the measures that
the cruise industry is taking to restore the confidence of the
traveling public and to assure passengers that it is safe to
travel on cruise vacations. I have a written statement that I
would request to be entered into the record of this hearing.
Mr. Stearns. By unanimous consent, so ordered.
Mr. Crye. While the tragic events of September 11 have had
a tremendous impact on the entire tourism industry, I wish to
reassure the subcommittee that the cruise lines are taking
every safety precaution, as their highest priority has always
been the safety and security of all their passengers and
cruise. Within hours after the terrorist attacks, members of
the International Council of Cruise Lines had implemented the
highest security measures, known as Level III, even before it
was ordered by the U.S. Coast Guard and the Department of
Transportation. We have since that day been working with all
appropriate Federal agencies to ensure that traveling Americans
are protected to the maximum extent possible.
The International Council of Cruise Lines is a nonprofit
trade association that represents the interests of 16 of the
largest cruise lines operating in the North American cruise
market and over 73 associated members companies that are cruise
industry business partners and suppliers. ICCL member cruise
lines serve major ports in the United States and call on more
than 1,800 ports around the world. Last year ICCL member lines
carried more than 7 million passengers on 95 vessels.
The passenger cruise industry is an exciting, modern and
rapidly expanding global industry. According to the World Trade
Organization, world demand reached 9.8 million passengers last
year. With the North American market representing two-thirds of
this global volume by the year 2010, total cruise passengers
worldwide are forecasted to grow to 20.7 million passengers.
Before the attacks of September 11, the North American market
was projected to rise from 7 million to 12 million and mainland
Europe was expected to grow from 1.3 million to 5.3 million.
These numbers reflect the cruise industry's dynamic
contribution to the global economy.
The U.S. economic impact in the North American market. U.S.
citizens were the dominant source of cruises, accounting for 82
percent of all passengers. As a result, the cruise industry has
developed into a significant economic contributor to the United
States economy. Since 1990, cruise ship embarkations from North
American ports have increased by almost 70 percent. The major
U.S. ports of call are located in Florida, Alaska, California,
Louisiana, New York, Texas and Massachusetts. Last year, the
total economic benefit generated by the cruise industry was
approximately $17 billion. Of this, the cruise industry
contributed $9.4 billion in direct spending for the products
and services of U.S. companies.
The industry's extensive economic relationships include
high tech equipment, travel services, banking and insurance,
textiles, technical services, dry-docking and ship repair.
Other major U.S. industries that benefit from the cruise
business are the airlines, travel agents, food and beverage
suppliers, and the business and service sectors. As a result of
these economic partnerships, the cruise industry is able to
create employment for approximately 257,000 Americans and
support for State and local economies in all 50 States. Total
wages generated by the industry in 2000 were approximately $8.7
billion in the United States.
Clearly these numbers demonstrate that the industry is a
significant contributor to the U.S. economy and any negative
economic downturn it experiences has a ripple effect on jobs
and other related industries. In recent days the industry has
had a cautiously optimistic view of prospects despite reporting
a precipitous drop in bookings since September 11. On September
12, cruise line reservation offices were overwhelmed by
requests for cancellations and new bookings were nearly
nonexistent. Since that time, the trend in future passenger
bookings is at 60 to 70 percent of pre-attack levels and is
increasing slowly but steadily over the weeks. Industry
executives are exercising every available marketing and
communications measure to stimulate travel and believe that
occupancy levels will eventually return to normal. Our major
members have just increased to 20 percent the commissions paid
to travel agents in an effort to incent them and provide
additional compensation to this very hard hit segment of the
industry.
The cruise industry is the second largest purchaser of
airline tickets, spending over $2.1 billion on airline tickets
every year. Over 65 percent of cruise passengers arrive at the
port city via air travel, spending an average roundtrip airfare
of $450 per passenger. With the impact that recent events have
had on the airline industry, the cruise industry in particular
has been disproportionately impacted since we are dependent on
the airlines for our passengers. Therefore, both the airline
and cruise industries are taking additional steps to reassure
passengers that it is safe to travel.
In a move to reassure consumer confidence and travel, the
individual cruise lines and their associations have been
actively communicating the safety and security procedures in
place to protect passengers and crew by media interviews, Web
sites, direct communications with travel agents and
governmental forums such as this. The cruise industry is proud
to highlight our environmental safety record and to detail the
heightened measures in place today. In 2 weeks the industry
will conduct a media tour in six major media markets, and today
the prices on a cruise vacation are so good that the consumer
will find it is less expensive to go cruising than to stay at
home. The cruise lines are rerouting itineraries to move ships
away from danger spots in the world. They are bringing the
ships closer to home, where it is more in expensive to be able
to come and enjoy a cruise.
Our security measures, both on and off the vessel are, as I
said before, our highest priority and we--I believe I am about
to over run my time here. So I am sorry. I will go to the
conclusion paragraph.
Mr. Stearns. If you just summarize.
Mr. Crye. Mr. Chairman, in conclusion, we believe that the
cruise industry has taken the appropriate additional steps to
restore the public's confidence. In the short term cruise lines
are rerouting itineraries. In the long term we will continue to
be proactive in developing additional security measures. These
are challenging times, but our industry pledges its cooperation
and working as partners to maintain the outstanding safety
record and to reassure the traveling public.
Thank you.
[The prepared statement of J. Michael Crye follows:]
Prepared Statement of J. Michael Crye, President, International Council
of Cruise Lines
Mr. Chairman, my name is Michael Crye, and I am the President of
the International Council of Cruise Lines (ICCL). I am pleased to
appear before the Subcommittee today to highlight the measures that the
cruise industry is taking to restore the confidence of the traveling
public and to assure passengers that it is safe to travel on cruise
vacations. While the tragic events of September 11th has had a
tremendous impact on the entire tourism industry, I wish to reassure
the Subcommittee that the cruise lines are taking every safety
precaution, as their highest priority has always been the safety and
security of all of their passengers and crew. Within hours after the
terrorist attacks, ICCL member operators had implemented the highest
security measures, known as Level III, even before it was ordered by
the US Coast Guard (USCG), and have since that day been working with
all appropriate federal agencies to ensure that traveling Americans are
protected to the maximum extent possible.
ICCL is a non-profit trade association that represents the
interests of l6 of the largest cruise lines operating in the North
American cruise market and over 73 Associate Member companies that are
cruise industry business partners and suppliers. ICCL member cruise
lines serve major ports in the United States and call on more than 400
ports around the world. Last year, ICCL's member lines carried more
than 7 million passengers on 95 vessels. Our efforts to communicate and
reassure the traveling public is a coordinated effort, involving sister
cruise industry organizations such as Cruise Lines International
Association. This coordinated effort permits us to provide information
and reassurance to many audiences including the public, government
officials, the media and over 19,000 travel agencies across North
America.
global economic dimension of the cruise line industry
The passenger cruise industry is an exciting, modern and rapidly
expanding global industry. During the current decade, the cruise
industry has continued to expand its capacity and develop new cruising
opportunities for vacationers. According to the World Trade
Organization (WTO), world demand reached 8.7 million passengers in
1999. The North American market covers \2/3\ of the global volume,
primarily due to the renaissance of the cruising destinations in the
Caribbean. By 2010, total cruise passengers worldwide are forecasted to
grow from 9.8 million last year, to 20.7 million. Within these figures,
the North American market is projected to rise from 6.8 million to 11.9
million and mainland Europe will grow from 1.3 million to 5.3 million,
demonstrating that the cruise industry is a dynamic sector of the
global economy. The cruise industry brings a burgeoning tourism economy
to American ports and over 1800 port destinations around the world. The
importance of the social and economic opportunities cannot be
understated. It has an effect on all sectors in the port city and
country. The cruise lines' presence in port cities, even on a seasonal
basis, strengthens the economy for many local elements. In addition to
local port user fees and head taxes and surcharges, cruise ships
purchase supplies and services such as pilots, tugboats, food and
beverage, waste disposal services, fuel and fresh water at ports of
call worldwide. In addition, the guest and crew purchases at port
destinations provide a major contribution to the local economies
including lodging, restaurants, attractions, retail shops, tour
operators and other businesses. It is estimated that a typical cruise
ship generates $260,000 in passenger and crew expenditures during a
port of call visit.
contribution of the north american cruise industry to the u.s. economy
In the North American market, the United States is the dominant
source of cruise passengers. Comparing 1998 to 1990, cruise ship
embarkations from North American ports increased by almost 70 percent.
The major U.S. ports of call are located in Florida, Alaska,
California, Louisiana, New York, Texas and Massachusetts. In Florida
alone, over 3.2 million passengers embarked last year. An additional
1.1 million passengers also boarded in San Juan, Puerto Rico and non-
U.S. ports, primarily Vancouver and Montreal, Canada. As a result, the
cruise industry has developed into a significant economic contributor
to the United States economy.
Last year, the total economic benefit by the cruise industry and
cruise-related activities was approximately $17 billion. Of this, the
cruise industry contributed $9.4 billion in direct spending for the
products and services of U.S. companies. The industry's extensive
economic relationships include high-tech equipment, travel services,
banking and insurance, textiles, technical services, dry-docking and
shipyard repair. Other major U.S. industries that benefit from the
cruise business are the airlines, travel agents, food and beverage
suppliers and the business and service sectors. As a result of these
economic partnerships, the cruise industry is able to create employment
for thousands of U.S. citizens and support for state and local
economies in all 50 states. Total wages generated for U. S. employees
in 2000 were $8.7 billion and the industry generated jobs for 257,067
Americans.
Clearly, the cruise industry is a significant contributor to the
U.S. economy and any negative economic downturn it experiences has a
ripple effect on jobs and other related industries. In recent days, the
industry has had a cautiously optimistic view of prospects for the
cruise industry despite reporting a precipitous drop in bookings since
September 11th. On September 12th, cruise line reservation offices were
overwhelmed by requests for cancellations and new bookings were nearly
non-existent. Since that time, we have experienced a positive trend in
passenger bookings with many lines reporting reservation volume at 70-
80% of the pre-attack levels. Industry executives are exercising every
available marketing and communications measure to stimulate travel and
believe that occupancy levels will eventually return to normal. A key
variable in this forecast is the continuation of consumer confidence in
travel.
The cruise industry is the second largest purchaser of airline
tickets, spending over $2.1 billion in airline tickets purchases last
year. With the impact that recent events have had on the airline
industry, the cruise industry, in particular, has been
disproportionately impacted, since we are so dependent on the airlines
for our passengers. Therefore, both the airline and cruise industries
are taking additional steps to reassure passengers that it is safe to
travel.
In a move to reassure consumer confidence in travel, the individual
cruise lines and their associations have been actively communicating
the safety and security procedures in place to protect passengers and
crew. Via media interviews, our web sites, direct communication with
travel agencies and governmental forums such as this, the cruise
industry is proud to highlight our enviable past history and to detail
the heightened measures in place today. In addition, cruise lines are
now in the process of re-routing itineraries to move ships away from
the Eastern Mediterranean, northern Europe, and the Middle East as a
short term measure to meet an anticipated trend for U.S. passengers
wanting to sail closer to home. Ships will still be cruising in Europe,
but instead of cruising the Eastern Mediterranean, they will sail the
Western Mediterranean and the Baltic. Most cruise lines are re-
positioning their ships to the Caribbean and other North American
ports. And, of course, the cruise industry is implementing aggressive
marketing initiatives to further stimulate demand for travel. Cruise
pricing, which is always viewed as a good value, now features a variety
of promotional fares designed to get America traveling again. Many
cruise lines have also implemented travel agency incentives to motivate
cruise sales and to show support for a distribution system that is
suffering terribly in the wake of this national tragedy.
security measures
As I mentioned at the outset, the cruise industry has heightened
its security measures both on and off the vessel in order to provide
the most secure environment for its passengers and crew. A cruise ship
is unique in that it is inherently secure because it is a controlled
environment with limited access. However, in order to maintain this
secure environment, cruise lines have established strict and highly
confidential ship security procedures that cannot, for obvious reasons,
be discussed in detail. These procedures are, in part, outlined in
measures set forth by the International Maritime Organization (IMO),
and the regulations established by the U.S. Coast Guard (USCG). In the
United States, the USCG oversees the enforcement of these security
measures. Regulations address both passenger ship and passenger
terminal security and outline methods to deter unlawful activities
onboard passenger vessels.
In l986, the IMO adopted Measures to Prevent Unlawful Acts Against
Passengers and Crew. These measures address restricting access to
authorized personnel onboard the ship and at the passenger terminal,
and monitoring the flow of materials and consumable supplies brought
onboard a ship. Security procedures within these measures include
inspection of all carry-on baggage and the use of metal detectors for
embarking passengers. Strict passenger screening to prevent
unauthorized entry or carriage of weapons onboard is only one component
of the security procedures implemented to deter unlawful acts on board
and to provide for the safety of all passengers.
In l996, the USCG implemented an Interim Final Rule on Security for
Passenger Vessels and Passenger Terminals, which was finalized in
October of l999. This rule sets three levels of security (low, medium,
and high) based on the nature of the threat received and requires
vessel operators and port terminal operators to adjust security levels
accordingly. These regulations also require ship operators to submit
Comprehensive Security Plans to the USCG for review and acceptance. All
ICCL member lines have submitted the required security plans. These
plans have been accepted by the USCG and are audited annually. The
security plans, which are sensitive law enforcement documents and
therefore not available to the public, include the following major
components:
<bullet> Identification of three levels of security and specific
procedures to follow at each level
<bullet> Prevent unlawful acts on board
<bullet> Prevention and deterrence of weapons and other unauthorized
items onboard
<bullet> Prevention and deterrence of unauthorized access to vessels
and restricted areas
<bullet> A security officer onboard every passenger vessel
<bullet> Security training for all crew members
<bullet> A security plan that is coordinated with the terminal security
plan
<bullet> Reporting of violations and unlawful acts
<bullet> Annual security audits for each ship and reviews by the USCG
Passenger vessel security plans and their amendments are reviewed
by the USCG National Maritime Center and inspections are conducted by
the Captain of the Port to verify that all security practices and
procedures are effective and up-to-date.
The U.S. Department of Transportation Office of Intelligence and
Security and the USCG Commandant direct the implementation of
nationwide and local security levels. Domestic threat advisories are
provided to the industry summarizing the nature of the security threat
and specifying changes to security levels both locally and nationally.
As a result of the attacks in September, implementation of Level III
security was directed by the U.S. Coast Guard at U.S. ports.
Security Level III is the highest level of security set by Coast
Guard Passenger Vessel Security regulations. At U.S. cruise terminals,
passenger vessel security measures include passenger screening
procedures similar to those found at airports. This includes l00%
screening of all passenger baggage, carry-on luggage, ship stores and
cargo, and also includes higher levels of screening of passenger
identification. Official passenger lists are carefully reviewed and
proper identification is ensured before anyone is allowed to board the
vessel. Even before the attacks of September 11, all passenger lists
were made available to the INS and Customs for screening. Passenger
identification is now subject to even stricter scrutiny and the
industry is working closely with the INS and other federal agencies to
ensure that those passengers suspected of being on the INS ``Prevent
Departure'' list are reported to the federal authorities for further
action.
Another component of Level III Security requires ship operators to
restrict access to authorized personnel and to identify restricted
areas on the vessel that require positive access control such as
intrusion alarms, guards, or other measures to prevent unauthorized
entry. Restricted areas on a vessel will include the bridge, the engine
room, and other areas throughout the ship where operations are
conducted. Other onboard security measures, not generally discussed for
obvious reasons, are employed to maximize shipboard security and to
deter unauthorized entry and illegal activity. Every vessel has a
trained security staff responsible for monitoring activities and
responding to any suspicious activity that may jeopardize the safety of
the passengers and crew.
For many years, the cruise industry has been pro-active in
developing effective security measures and has looked for ways to
increase passenger safety. In fact, most ICCL member lines now utilize
advanced technologies to control access to our vessels. The Passenger
Access Control System, that has been installed on most of our member's
vessels, utilizes a passenger identification card that takes a picture
of the passenger at the time of boarding and scans the picture into an
onboard computer. During the course of a cruise, the identification
card is presented each time a passenger departs or boards the vessel.
The picture appears on a computer screen that is matched against the
person's face for identification purposes before they are allowed to
board the ship. This new technology is part of an overall onboard
security system that further enhances the proper identification of all
passengers and crew boarding the vessel.
Since l998, ICCL and its member operators have been members of the
U.S. Interagency Task Force on Passenger Vessel Security. This group
meets every 60 days to discuss emerging security issues, receive
updated threat information, and address specific security concerns.
Since September 11, the ICCL Security and Operations Committee members
have efficiently communicated and resolved problems in daily conference
calls with all of the appropriate federal agencies. This information
exchange has proven to be valuable both to our member lines and the
federal agencies involved as we mutually address matters impacting both
ship operations and security. We are committed to providing the highest
levels of security for our passengers and to working with appropriate
federal agencies to address additional security measures that may
become necessary.
conclusion
Mr. Chairman, in conclusion, we believe that the cruise industry is
taking the appropriate additional steps to restore the public's
confidence that it is safe to travel. In the short term, cruise lines
are rerouting itineraries to move away from the Mediterranean, northern
Europe, and the Middle East so that U.S. passengers will be able to
sail closer to home. In the long term, we will continue to be pro-
active in developing effective security measures to increase passenger
safety as well as maintain close working relationships with federal
regulatory agencies. We are cautiously optimistic that occupancy levels
will return to normal, as the consumer is increasingly reassured that
the tourism industry is actively working with all appropriate federal
agencies to ensure that traveling Americans are protected to the
maximum extent possible. Of course, all of the additional security
measures that we have put in place are consuming resources and money at
a rapid pace. I would urge you to ensure that there is adequate funding
that comes with any additional mandates that you place on agencies,
ports or industry in any legislation you may consider. These are
challenging times, but our industry pledges its cooperation in working
as partners to maintain the outstanding safety record of the cruise
industry. As I stated before, the highest priority of the cruise
industry is to provide a safe and secure vacation experience for our
passengers. The cruise industry will do everything possible to protect
those who choose this outstanding and safe vacation option.
Thank you for the opportunity to appear before you today.
Mr. Stearns. I thank you.
Mr. Jones, President and CEO of Travelocity.com, your
opening statement
STATEMENT OF TERRELL B. JONES
Mr. Jones. Mr. Chairman and members of the subcommittee,
thanks for the opportunity to testify this morning. Travelocity
is the leading travel Web site with more than 30 million
registered members. Like all travel and tourism participants
represented here today, Travelocity was profoundly impacted by
the event of September 11. This morning I would like to share
some thoughts about how we have been affected, what we have
been hearing from many of our members in recent surveys and
what the government can do to help stimulate travel and
tourism.
Here are some key statistics about our company's
experience. Travelocity air ticket sales were down 75 percent
in the days following the tragedy in September, but have since
trended upward to be at about 70 to 80 percent of expected
October levels. This is an encouraging rebound, but these
levels remain below what we would expect for October, normally
the busiest traveling purchasing month of the year. And I would
like to point out to the subcommittee that we are kind of a
leading indicator, because most of our customers book about 45
days in advance. So we are kind of a picture of what could be
happening some months from now.
We have laid off employees for the first time in our 5-year
history. We have reduced our management head count by 10
percent and announced we will close one of our call centers at
the end of the year, affecting a further 300 people. These were
painful decisions for us to make. As challenging as the last 5
weeks have been for us, I know they have been as bad or worse
for others.
Steps must be taken to reassure the American people that
our transportation system is effective and to stimulate their
interest in travel spending. In the last few weeks I have heard
from many people who are reluctant to travel. Some are afraid
to fly. Others want no part of the hassles and the
inconsistencies they believe await them at the Nation's
airports. And still others are worried about their personal
financial future in an uncertain world, foregoing vacations
until they feel more confident about their jobs and the
economy.
There are initiatives that Congress can take to get these
people traveling again. Our industry needs you and your
colleagues to make it a national priority in the weeks ahead.
In a recent random survey of Travelocity members, nearly 3,000
people participated. Here is what they told us. 83 percent are
frustrated by the lack of consistency in security procedures at
the Nation's airports. Some passengers have complained that
they are waiting in extremely long lines and encountering
screeners who seem to be enforcing inconsistent rules. Others
have complained that they are waved through checkpoints without
appropriate screening. Over half the people traveling through
Baltimore, San Francisco and Denver since September 11 have had
to spend at least 1 additional hour or more due to enhanced
security at the airports. Sometimes the wait at the airport is
more than the time in the air. However, at other airports, such
as O'Hare, Dallas, Ft. Worth and Newark, many travelers said
they are experiencing waits of 30 minutes or less. So
inconsistency is an issue.
Surprisingly, 71 percent of those who have traveled five or
more times in the last year told us they were likely to apply
for a voluntary national travel ID card if it would speed up
their wait at airports. Above all, security must be executed by
professional workers who are properly trained and properly
compensated for the critical work that they do. Higher pay,
higher benefits and training are critical. In Europe, for
example, screeners receive an average of five times the amount
of training that screeners in the U.S. are given. No matter who
ultimately signs the screener's paycheck the Federal Government
must use its oversight to insist on turning this unacceptable
state of affairs around, and I urge the Congress to pass
security legislation quickly.
In addition, I believe that Congress as part of an economic
stimulus package must take specific targeted action to convince
Americans to travel again. As many companies and individuals
reduce or eliminate their spending on travel the downward
spiral begins. Airlines flew fewer flights and laid off
employees. Out of work employees cut back on their spending.
And in addition to those, others that depend on airlines and
hotels for tourist dollars, including car rental companies and
cruise lines and travel distributors like Travelocity, react
similarly. That is why it is so essential that Congress act
quickly to stimulate travel purchases and stop the spiral.
What should Congress do? I urge you to support the Travel
America Now Act sponsored by Congressman Shadegg. This
legislation provides immediate relief through a targeted
temporary tax credit for personal vacation travel, among other
things. This measure is designed to rebuild the vibrant travel
and tourism industry to keep working people working and to
stimulate economic growth.
I commend Congressman Shadegg and Congressman Abercrombie
for their leadership on this issue. We at Travelocity feel so
strongly about this bill that over the weekend we contacted
millions of Travelocity members across the country urging them
to contact their Senators and Representatives to urge them to
cosponsor this legislation, and you will undoubtedly be hearing
from them soon.
A few weeks ago Congress took steps to provide relief to
the airline industry, an important and necessary first step.
But that package does not address the underlying problem, which
is demand. If we want to get Americans flying again, we should
spend money on revenue stimulating activities.
Mr. Chairman, this is a tough time for our Nation and its
people. It is a particularly tough time for the travel and
tourism industry. With carefully considered government help I
believe we will come through with the traveling public feeling
a greater sense of security and a renewed passion for travel.
Travelocity.com looks forward to working with you and your
colleagues and with our colleagues in the industry to help make
this happen.
Thank you, Mr. Chairman.
[The prepared statement of Terrell B. Jones follows:]
Prepared Statement of Terrell B. Jones, President and Chief Executive
Officer, Travelocity.com
Chairman Stearns, Congressman Towns, Members of the Subcommittee,
thank you for the opportunity to testify before you this morning. My
name is Terry Jones, and I am President and Chief Executive Officer of
Travelocity.com. Travelocity is the leading travel website in the
world, with more than 30 million registered members. Like all travel
and tourism companies represented here today, Travelocity was
profoundly impacted by the events of September 11. While our business
has been slowly coming back, some major hurdles remain to getting
Americans traveling again in healthy numbers. This morning, I'd like to
share some thoughts about how we've been impacted, what we've been
hearing from many of our members in recent surveys, and what the
government can do to help stimulate travel and tourism.
When we launched in 1996, Travelocity was the 33,000th largest
travel agency in the United States. Today, we are the sixth largest. We
have sold more than 18 million airline tickets, as well as millions of
hotel room nights and car rental days. We are already a top-10 agent
for many cruise lines and a leading seller of vacation packages. In the
generally dismal world of e-commerce since the dot-com crash last year,
online travel has been one sector that has thrived on the Internet.
Travel is a virtual product well suited for distribution online--there
are no products to ship, and the popularity and wide acceptance of
electronic tickets mean a customer may purchase an airline ticket on
her computer, print the itinerary and (in most cases) head straight to
the gate. In all, our business doubled last year and was expected to
grow as much as 60% this year.
Yet even with our momentum and the resiliency of our category and
our business, we have faced a tough downturn since September 11. Since
much of the travel purchased on Travelocity is booked far in advance,
we consider our business to be a strong leading indicator of the health
of our country's travel and tourism industry. Here are some of the key
statistics about our company's experience:
Travelocity's sales were down 75% in the days following the tragedy
in September. Air ticket sales have since trended upward at 80% to 90%
of pre-September 11 levels and at 70% to 80% of expected October
levels. This is an encouraging rebound, but these levels remain far
below what we would expect for October, normally the busiest travel
purchasing month of the year.
We have aggressively reduced our costs and have laid off employees
for the first time in our five-year history. We have reduced management
headcount by 10%, and we have announced that we will close our call
center in Rancho Cordova, California in December, further reducing our
workforce by 285 employees. These were painful decisions for us to
make, as they have affected many of our employees and their families,
and I sincerely hope that the steps we have already taken will enable
us to weather whatever remains of the downturn in the travel business.
Of course, online travel is only one part of the travel and tourism
industry, and as challenging as the last five weeks have been for us, I
know it has been as bad or worse for others. Travelocity is an
industry-leading company with a strong balance sheet, more capable than
most of staying on course despite a slower economy and the impact of
the events of September 11. However, I regularly speak with people in
the vacation, cruise, hotel, car rental, convention and airline
businesses, and I continue to hear troubling, pessimistic predictions
from them about the future of their sectors. The Los Angeles Times
reported on October 15 that by the end of the year, travel experts are
predicting that one out of five of the country's 37,000 travel agencies
will be out of business. In addition, countless communities around the
country that rely heavily on tourism dollars to fuel their economies
are suffering today because of a lack of travel demand.
Steps must be taken to reassure the American people about our
transportation system and to stimulate their interest in travel
spending. In the last five weeks, I've heard from many people who are
reluctant to travel. Some of them are afraid to fly and are looking to
the government to enhance aviation security at the nation's airports
and on commercial aircraft to restore their confidence. Others want no
part of the hassles and inconsistencies that they believe await them at
some of the nation's airports, which can turn even short flights into
long nightmares. They want the government to help streamline the travel
process. And still others are worried about their personal financial
futures in an uncertain world, deciding to skip their vacations until
they feel more confident about their jobs and the economy.
There are initiatives Congress can take to help get all of these
people back into the air--and onto cruises and into hotels and rental
cars as well. Our industry needs you and your colleagues to make this a
national priority in the weeks ahead.
We recently conducted a random sample survey of Travelocity
customers, asking them about their opinions and experiences following
the events of September 11. Nearly 3,000 respondents participated. The
results underscore the need for Congress and the Administration to act
quickly to put a comprehensive air travel security plan into action.
The biggest frustration that our travelers mention is lack of
consistency--specifically, lack of consistency in security procedures
at the nation's airports. I can also tell you from my own experience--
I've been on several flights in recent weeks--that these standards
throughout U.S. airports vary greatly, and travelers do not know what
to expect.
Over four in five--83 percent--of Travelocity customers who
traveled since September 11 said that security between airports was
either ``not at all'' or only ``somewhat'' consistent. Some passengers
have complained that they are waiting in extremely long lines and
encountering screeners who seem to be enforcing arbitrary rules; others
have complained that they are waived through checkpoints without
appropriate screening. Security procedures can vary greatly from
departure airport to arrival airport. Indeed, security procedures at a
single airport can vary on a daily or weekly basis and among security
checkpoints at that airport. This creates anxiety for those afraid to
fly, and frustration for those who count on the air transportation
system to get them where they need to go reliably and conveniently. Our
customers tell us that they are willing to invest more time at the
airport in order to ensure greater safety and security, but they are
not willing to put up with uncoordinated, inefficient procedures.
Based on our survey, over half the people travelling through
Baltimore-Washington International Airport (BWI), San Francisco
International Airport (SFO), and Denver International Airport (DEN)
since September 11 have had to spend AT LEAST an additional hour or
more at the airport because of new security procedures. Sometimes the
time at the airport is more than the time in the air.
At other major airports, however, security clearance has been much
more manageable. At Chicago O'Hare International Airport (ORD), Dallas-
Fort Worth International Airport (DFW), and Newark International
Airport (EWR), about half of travelers said they experienced security
waiting time of thirty minutes or less.
Unharmonized standards throughout the country translate into long
lines at some airports, short lines at others, and questions throughout
about the effectiveness of the system at a time when American travelers
really need reassurance. This is neither good for travelers nor for
security. We must make the security experience more uniform and
dependable, and it must be executed by professional workers who are
properly trained and properly compensated for the critical work they
do. Screeners in Europe receive on average five times the amount of
training that screeners in the U.S. are given. The yearly turnover rate
at many U.S. airports can exceed 140%. No matter who ultimately employs
the screeners, the federal government must use its oversight to insist
on turning this unacceptable state of affairs around--and quickly.
Our survey suggests that those who travel most would look favorably
on some form of voluntary travel identification system that could
streamline air travel for those who choose to participate. Seventy-one
percent of those who have traveled five or more times in the last year
told us that they are likely to apply for a national travel ID card if
it were implemented. Our customers are telling us that they are willing
to make reasonable tradeoffs regarding privacy if they can expect a
streamlined travel process in return. Biometric technologies, such as
fingerprints and iris scans, could be part of such an ID card solution.
Security is not only confined to airports, it also involves the
airplanes. Of the more than half dozen actions that we listed,
Travelocity customers said that the two measures that would have the
greatest impact on improving security on U.S. flights were reinforcing
cockpit doors and deploying sky marshals, measures that are in fact
being implemented today.
In addition to passing meaningful security legislation as soon as
possible, I believe Congress, as part of an economic stimulus package,
must take specific, targeted action to convince Americans to travel
again. Travel and tourism is not only one of the largest industries in
the United States, it is also a linchpin to the economy as a whole. We
have already seen countless stories in the newspapers about the ripple
effects from the dramatic slowdown in travel spending.
As many companies and individuals reduce or eliminate their
spending on travel, the airlines now fly fewer flights, and because
they have fewer passengers, they must lay off employees. Those out of
work employees take steps to cut back their own spending. But it
doesn't end there. The airports that now have fewer flights must in
turn curtail retail operations, and the employees of these stores cut
back spending in their own lives. The taxis that serve the airport have
fewer riders. Hotels and resorts receive many fewer visitors and host
fewer conventions and events, causing them to cut back on their own
staffing levels and the services they sell to their customers. And
those that depend on airlines and hotels for tourist dollars--including
car rental companies and cruise lines--react similarly.
The trouble for us is that all travel services are perishable. The
new car or truck that is not purchased today can still be purchased
tomorrow. But the hotel room, airline seat or available rental car that
goes empty represents a permanent loss to the economy, and the
compounding nature of these losses for the rest of the economy should
be of the highest concern to Congress. That is why it is essential that
Congress act quickly to stimulate travel purchases. Unless things
change, there will be dramatically less choice for those who want to
travel.
We support the Travel America Now Act, H.R. 3041, sponsored by
Congressman Shadegg. This bill provides much needed incentives to get
America traveling again. Most importantly, this legislation provides
immediate relief through a targeted temporary tax credit ($500 for
individuals; $1000 for couples) for personal vacation travel. In
addition, it would temporarily restore the full tax deductibility of
meals and entertainment expenses and help travel and tourism companies
sustain losses that occurred since September 11. This measure is
designed to rebuild a vibrant travel and tourism industry, to keep
working people working and to stimulate economic growth. I commend
Congressman Shadegg for his leadership on this issue.
I believe this is the right way to proceed. Rather than giving
direct aid to companies and putting the government in an awkward
position of deciding who deserves aid and who does not, a tourism tax
credit puts money into the hands of consumers who will choose who
deserves their support. It makes economic sense to stimulate travel and
tourism now, before the ripple effects of this downturn grow wider and
the travel and tourism sector plunges the economy into a deep and
costly recession.
We at Travelocity feel so strongly about this bill that over the
weekend we contacted millions of Travelocity members across the
country, urging them to contact their Senators and Representatives to
urge them to cosponsor and support this legislation. These are your
constituents, and if you haven't heard from them already, I expect you
will soon. And in the meantime, I hope you'll consider my request to
support this critical measure.
A few weeks ago Congress took steps to provide relief to the
airline industry--an important and necessary first step. But that
relief package, which provided direct aid and facilitated loans to
airlines, did not address the underlying problem of a lack of demand.
Such packages have only the effect of making up losses or, in some
instances, forestalling bankruptcy. If we want to get America flying
again, we should spend the money on revenue stimulating activities.
Mr. Chairman, this is a tough time for our nation and its people.
It's a particularly tough time for the travel and tourism industry.
With carefully considered government help, I believe we will come
through it with the traveling public feeling a greater sense of
security and a renewed passion for travel. Travelocity.com looks
forward to working with you and your colleagues, and with our
colleagues in the industry, to help make this happen.
I look forward to answering your questions.
Mr. Stearns. I thank you for your opening statement. I will
start with my questions. And Mr. Marriott, just to commend you
and your employees for your commitment to having the Marriott
Center, which was severely damaged on September 11, opened in
the next 4 or 5 months, and I think you are trying to send a
message to the rest of America that we are going to try to
continue business as usual. I guess a question is, when do you
think the new Marriott World Trade Center will sort of be a
Phoenix and rise from the ashes?
Mr. Marriott. Well, we don't know. As soon as the Port
Authority decides what they are going to do with the land, I
guess, and as soon as there is a master plan developed for the
property, including office buildings as well as hotels. I would
hope the sooner the better.
Mr. Stearns. I think in your opening statement you said
that if something is not done immediately to get people
traveling again, the long-term consequences for our economy are
disastrous and that sort of goes in with what the CEO of United
Air Lines said, that he might, his company might vanish next
year if we don't get this going. And we mention, all of us, Mr.
Shadegg's bill. If you were President of the United States, can
you just tell me what you would do, beyond maybe what,
including the Shadegg bill and Senator Kyl's, what would you do
to get this economy going so that long term the consequences
are not disastrous?
Mr. Marriott. Well, we need an immediate stimulus, and I
think the Shadegg bill gives that immediate stimulus. We need
to get through the sound barrier here. There are a lot of
people holding back from travel because of the reasons that
have been stated by so many here about fear, about long lines
at airports, just a general malaise. Let's stay home this year.
Let's not get out and travel. We need to encourage people to
travel and it needs to be immediate. We can't wait for a year
or 2 years for some drawn out program. We don't need to have a
lot of meetings. We really need to get an individual tax credit
passed so that business travel can get a tax credit for
encouraging their people to travel and we can also get the
personal travel started again because we really have got to get
this started.
If we don't, we are going into the worst time of the year
for the hotel business. December, January and February months
are just really really bad months, and usually all the money
you make in September, October and November gets you through
December, January and February, and we are not making any money
in September, October or November. So we really have to spike
this and get it moving.
Mr. Stearns. I think a lot of businesses are not as much
dependent as the hotel business on the capital that you have to
pay the debt service on, and so when a lot of people realize
that a lot of the hotel industry and many other businesses are
leveraged out because of the mortgage payment, that when this
amount of money is not provided in the busy season then this
has a huge impact on paying that capital expense.
In your opinion, Mr. Marriott, do you think that the people
that you are laying off part-time, or full-time--will some of
these jobs be lost permanently? Or do you think, assuming that
we had an economic tax package, including one that includes a
$500 tax credit for airlines, do you think then these jobs
would come back then?
Mr. Marriott. I do. I think that if we can get people
flying again and traveling again and get back to normal. Right
now we are running 20 percent below where we should be in
occupancy, and if we could get those people traveling back
again to get up to a normal occupancy rate the jobs would be
filled and people would be put back to work. Now, there would
be some jobs probably that would be eliminated, but I think
they would be a small number compared to what they are now.
Mr. Stearns. Mr. Norman, the puzzling question I have is,
you explained that business travel is down more than leisure
travel. Are businesses cutting travel for economic reasons or
because of security concerns?
Mr. Norman. I think it is a combination of both, but we
have started to see some recoveries, as I indicated earlier.
But we think that is very, very fragile in terms of what is
happening now. If you bear in mind that leisure travel, which
may not be as much, but it is depended upon in filling the
airlines and the biggest quantity of yield is coming from that.
And we have seen the difference, as Mr. Marriott has indicated,
in some of the upscale hotels versus the lower ones, but the
overall effect of all of it is that we have started to see some
recovery. But the net effect is that they are going to have a
disastrous fourth quarter and it is probably going to be by the
middle of next year before we start seeing some recovery done.
And with that recovery it still will be below the record levels
of 2000.
Mr. Stearns. Mr. Crye, what ports and States are
experiencing the biggest impact from cancellation in the cruise
lines industry?
Mr. Crye. Mr. Chairman, the long distance air carriage
exotic locations are experiencing the most adverse impact. The
further away you are from the customer, the more difficult it
is.
Mr. Stearns. And Mr. Jones, with Travelocity.com, you are
probably--what you are saying is because people book 45 days in
advance that you can see it. What are you doing besides laying
off employees? Are you advertising more? I mean, like some of
the bargains that have been mentioned here by the Members of
Congress, I mean the fact that for $395 I could go on an 8-day
package to Hawaii from San Fransisco. I mean that is the first
I heard about it. And I think if somehow, like Governor Bush
did with his package in Florida, if somehow, not saying the
government or the Commerce Department, but somehow all these
packages could be made known, I think people would say, by
golly, I am going off to Hawaii for 8 days for $400.
Mr. Jones. Well, that is important, and our advertising is
back and we are also talking to our 30 million members through
e-mail. We communicated with 11 million last week, telling them
about these bargains. But I think in addition, you know our
surveys showed that infrequent travelers, 58 percent, are most
worried about security. So people are on the edge, and pricing
will help. Advertising will help and I think an industrywide
program will be good. But I think also a stimulus has to be
there, and we have to get the security bill passed because it
is the infrequent traveler, the leisure traveler, who is kind
of on the edge about this whole thing and they have to believe
it is safe.
Mr. Stearns. When I am back in my district talking to
different people, what they say is it looks like a hassle to
me, Cliff. I don't want to go on the airlines. This is on the
leisure side.
Mr. Jones. Right.
Mr. Stearns. I don't want to stand in line and it is just
too much of a hassle. I will go when things calm down. So,
speeding up airline security would be a big plus. Is that
possible?
Mr. Jones. Yeah, I think it is. I think if we have
consistent procedures--it varies wildly from airport to
airport. I flew seven times last week. It was different every
time. Sometimes I needed a boarding pass, sometimes I didn't,
and that wasn't because of an enhanced security. Obviously we
should have random checks and we shouldn't be exactly the same.
But I think today because it is up to the individual airport
and airline to decide that it is not efficient everywhere and
it could certainly be made more efficient through effective
application of national policy.
Mr. Stearns. Your survey showed that the travel I.D. Card
or something on the order of that, some travel identification
system, would expedite; and I don't think Americans have taken
that approach before September 11, but now I am starting to
hear more about people saying more than showing your license,
which anybody can fraudulently alter.
Mr. Jones. Apparently.
Mr. Stearns. So how do you feel about that?
Mr. Jones. I think this is something like the success the
immigration services had with an INS pass. The INS pass is very
difficult to get. When you use one, you use hand geometry, that
is a good identifier; and I can't get an INS pass because I
lost my passport once.
That is good. It is hard to get. I think if we have
something that is hard to get, but it does speed you through
security and that leaves the security screeners time to perform
good checks on the people who don't have that hard-to-get I.D.
Card, I think it makes sense and so do our members.
Mr. Stearns. I would be curious if anybody else on the
panel has some feelings about this new I.D. Card that would
replace identification for the airlines for people traveling.
If anyone else----
Mr. Crye. Mr. Chairman, in the Cruise Lines we have a
system that most of our members are using now that has a card
that you use to purchase goods on board the ship. This
particular card is also used to go on and off the ship. When
you first present it, there is a picture identification taken
of you, and then every other time you present this card into
the machine, the operator of the machine sees a picture of you,
and that prevents anybody from obtaining that card and then
using it to try to identify themselves otherwise.
Mr. Stearns. We are down to, I think, less than 5 minutes
on the vote, so I am going to temporarily adjourn. John Shimkus
is going to come back and reconvene.
I guess there are two votes, but we will have someone come
back in a little over 15 minutes. So we appreciate your
patience here while we temporarily adjourn and then the ranking
member, Mr. Towns, will have questions.
[Brief recess.]
Mr. Stearns. We will have the committee reconvene here. I
had finished up with my 5 minutes of questions, and we have our
colleague John Shadegg from Colorado here.
So, John, you are welcome with your questions.
Mr. Shadegg. Thank you, Mr. Chairman. I presume--if the
ranking member returns, I will be happy to stop and start
again.
Mr. Chairman, thank you for holding this hearing. I greatly
appreciate it, as I am sure the witnesses do. I apologize that
I was not able to be here in the beginning. I was in a markup
downstairs in the Health Subcommittee, where I had an amendment
of my own to carry. So that is the reason for my not arriving
in a timely fashion.
I also want to thank each of the witnesses for being here
today and for their thoughtful testimony and for all of your
efforts on behalf of the industry.
I want to make comments about three different issues and
ask a few questions going to each of them. The first, of
course, is the Travel America Now Act. I will say that to the
extent that some of you weren't consulted before it was
introduced and to the extent that, Mr. Chairman, we didn't work
closely with you before it was introduced, Senator Kyl and I
moved very quickly between concept and introduction for
various, obvious reasons.
As Mr. Marriott has said, this is not something we need to
do 6 months from now or a year from now; this is something we
need to do right now. So whereas in the normal course of
legislation we might have consulted further with people in the
industry, we might have consulted further with other Members of
Congress, we felt it was important to move very quickly. And
there really were just four conversations that occurred,
conversations between Senator Kyl and myself, those between
myself and Mr. Abercrombie to get a bipartisan cosponsor on
this side, and those between Senator Kyl and Senator Zell
Miller from Georgia to make the bill bipartisan on his side.
I am very pleased with the response we are getting from
members, the cosponsorships that are coming in. Though I
appreciate Travelocity and everyone else in the industry for
urging their Congressional delegation to get on the bill,
things around this place happen or don't happen based on the
amount of velocity force you can build behind them.
This is an issue where you are contacting, for example, at
Travelocity, Mr. Jones, all of your members saying, Call your
Member of Congress and tell him or her to get on this bill to
give us a leg up.
As you know, one thought, and the thought I prefer is that
it be made a part of the economic stimulus package. There is
some sentiment that there should be no, quote, ``industry-
specific legislation'' in that stimulus bill. Rest assured we
will oppose that and try to get it in the stimulus package,
notwithstanding other sentiments.
But for those who oppose the idea, rest assured if we don't
get it into the economic stimulus package, we will try to get
it as a freestanding bill. And my commitment is not just from
now until the economic stimulus package moves, but from now
until we get this enacted, because I think in a brief period of
time virtually every Member of Congress is going to realize
this is a prudent step in the right direction, that it does
affect their district, that it does affect the economy of their
district; and the notion that this just goes to hotel or motel
or aircraft or rental car companies and that it has some narrow
focus is simply wrong.
At our press conference, when we announced the introduction
of the bill, Senator Kyl went at that issue by pointing out
that he had the day before been speaking with Phelps Dodge
industry representatives and had said to them, I assume with
the war economy, you are feeling good about things going on.
And I believe it was the CEO of Phelps Dodge, which as you know
produces copper, said, No, quite frankly, we sell a huge amount
of product to the Boeing Aircraft Company, and the downturn in
the travel industry and the cancellation of those orders is
having a huge impact on us.
So it is not a narrow piece of legislation. It is intended
to be an economic stimulus.
I think it is important to focus on the fact that it is a
tax credit, so it goes to everybody equally. It is not a
deduction favoring people who will benefit by deduction because
they are in a higher bracket; it is the same amount for
everybody.
I also want to talk about airport security. I am very
aggressively working on the airport security issue. I think we
do have to rebuild that confidence. Regrettably, Mr. Jones,
that bill has some danger of being embroiled in a partisan
fight over who pays the paycheck; and I debated one of the
advocates on the other side of that issue last night on
``Crossfire.'' and the reality is, the issue isn't who writes
the paycheck; the issue is the competency of the people
involved, their training--may well be their pay, their
supervision.
Of course, there should be law enforcement personnel at
every single gate. The question is, is it necessary to make
everyone at every gate and everyone in every baggage inspection
facility a Federal employee. If we can't resolve that political
divide quickly, then the President ought to move by executive
order. We could then perhaps legislate in that area 6 months or
a year from now when things are calmer.
And so I do agree with you, there needs to be consistency,
although I think things are improving, the changes you see in
inconsistency, or the inconsistencies you see, are because they
are trying to do two things--make the airports more secure and
also more efficient.
I have flown a lot since September 11. I have been in about
half the airports you named, and you named a pretty good list,
not just the airports in Phoenix or Washington. I have been in
a number of airports across the country, including California
and New York and Illinois and Texas. I noticed the first time I
went to board a plane I had to present my I.D. To get my ticket
and boarding pass, but when I went through security I did not
have to re-produce a picture I.D. That gave me grave concern.
The second time I went through, I noticed they had changed
that, and now they are requiring that you show your I.D. Not
only when you get the boarding pass, but when you go through
security; and that gives me some level of confidence because
obviously it would be fairly easy to get your boarding pass, be
paid $1,000 or $2,500, get a boarding pass it and hand it off
to somebody else, and a stranger goes on the plane.
We have to do a great deal in that area, and I agree,
consistency is an incredibly important part of it.
I also want to talk about the airline relief package
because I think that is certainly critical for the industry. I
believe it will do grave damage if some of these airlines go
under, and in that regard, Mr. Warren, I want to ask you--I
applaud what has happened so far, but it is my understanding
that at the Treasury Department we are getting a little bit of
a slow walk in the processing of the loans, and that there is
some sentiment that they have to wait until they hire a staff,
even though the legislation says they should be using Treasury
Department staff in the interim.
And there is some resistance to the funding of the loans,
and I would like to ask you if you heard that; and second, I
would like to ask everybody on the panel, if they hear that or
if they hear that in the near future, that we might all agree
to pressure to get that job done. Because some of those loans
are vitally important, and we can't stall and pass them out 6
months or a year from now after the urgency of their need
occurs.
Mr. Warren.
Mr. Warren. Yes. I agree with you 100 percent that they are
vitally important for the industry and for every one of the
carriers that ATA represents, as well as the regional airline
association and others who are members of that organization.
I am, as I sit here today, not privy to exactly how many
members have applied or what particular obstacles they are
encountering at the moment, but certainly if there is a
problem, it should be brought to your attention.
Mr. Shadegg. I would ask each of you to please monitor
that, and if in fact we get a slow roll because the executive
branch does not want to process those loans, perhaps everyone
in the travel industry join us in trying to get that concluded.
I am sure my time has run out, but with your indulgence,
Mr. Chairman, I would like to ask one other question.
Mr. Stearns. Sure.
Mr. Shadegg. Mr. Warren, you made reference to the airline
security package and I don't know if you looked at the Senate
bill, but I see some problems with the Senate bill as passed
and I was encouraged that the House member I debated last night
was not urging us to just pass the Senate bill. One of the
things that I have heard about the Senate bill, for example, is
that it does not define the term ``screening,'' and so it is
left uncertain whether screening meant just the people at the
metal detector that we walk through or also baggage and also
the question about what food goes on the airplanes and cleaning
crews.
Have you looked at that issue, Mr. Jones? Did I say Mr.
Warren?
Mr. Jones. Yes.
Mr. Shadegg. I meant Mr. Jones.
Mr. Jones. No. I have not looked at that issue and it is
important that we define that. We need very good security
everywhere in the airport--the perimeter, the food service, the
baggage. We also need to understand that the screening
positions are kind of a symbol to the traveler. That is what
they see. So we need to understand there is a psychological
impact of that that needs to be handled in addition to making
sure that everything is correct in all of those places,
including the doors. They are all important.
Mr. Shadegg. I certainly agree with you that there needs to
be Federal supervision of all aspects and there needs to be
consistency.
Another issue that I am concerned about with regard to the
Senate is that the Sentate bill apparently draws a line between
larger airports and smaller airports and perhaps imposes a
different set of standards and a different supervision over
those airports. I can tell you that in my home State of Arizona
we have some large airports. Phoenix and Tucson would probably
fit in that that category. But I can go to Flagstaff and
Prescott and Page, I can get on an airline and then I fly into
a secure area, that is, Sky Harbor, much as the terrorists did
here and go from--once I am inside the secure area, go from
that plane to a plane that is flying to Reagan or Baltimore or
anywhere in the country, and I think that is another flaw in
the Senate bill.
Mr. Jones. Absolutely. We saw the photographs of the
hijackers going through a small airport, and it is exactly
that. So I think it is very clear that we shouldn't have
different standards and it needs to be consistent.
Mr. Shadegg. I would just conclude, Mr. Chairman, by noting
that in Europe there are 16 major airports in Europe and
virtually every country in Europe at one time an all-government
employee staff and they have now gone to a mix of government
and private sector employees, and that should not just be
rejected out of hand as politics. We need to look at this issue
seriously, and if we can't get the politics out of it, we need
to encourage the President to act by executive order and
legislate perhaps when emotions are a little calmer.
With that I yield back my time.
Mr. Stearns. I thank the gentleman.
Just to comment, in the Ben Gurion Airport, Israel has
taken the private/public approach with the work force for the
airlines as well as in most of the airlines in Europe. In the
1970's and 1980's, they had to change that, and they went to
private because they found it a more suitable way to go.
So I think the case can be made clearly for a public/
private work force in airlines, and experience has borne that
out. I don't think we have any additional members----
Mr. Shadegg. Mr. Chairman, apparently Mr. Shimkus could not
be here, and a representative of the International Association
of Amusement Parks and Attractions also could not be here, but
they asked if we could offer--they did----
Mr. Stearns. We will be glad to put that in, and all the
opening statements will be obviously part of the record.
Mr. Shadegg. Thank you, Mr. Chairman.
Mr. Stearns. I would say to Ms. Conlin, from what you have
heard today, is there something you could take back to your
boss that you would communicate to him, based upon what you
heard, where the administration could be creative and work out
not only just tax credit but other ways to get us back to a
normal situation with the airlines and in the long term make
sure we don't have consequences that are disastrous for this
economy?
And the other thing is, is there something you could do
without Congressional support that would expedite this without
Congressional initiative; I mean, you could do on your own,
sort of like an executive order that the White House has?
Ms. Conlin. Thank you, Mr. Chairman.
First of all, I compliment the members of the industry that
have come forward not only to express their concern, but to
share their ideas and recommendations. And I really feel--and
this is something that Mr. Norman said earlier--the heart of
this is making sure the system is safe and secure; making sure
that travelers are aware that the system is safe and secure;
and No. 3, make sure that people in the government, whether it
is the Secretary of Commerce, whether it is Members of
Congress, whether it is the President, that we all work
together to convey the message that everything is being done to
ensure passenger safety and to help restore consumer
confidence.
I also think that the work of the Tourism Policy Council,
which is going to start a week from today, is very important to
make sure that all Federal agencies and departments are
coordinating Federal policy vis-a-vis travel and tourism. In
response to your question, Mr. Chairman, that is something that
can be done immediately to help short term and long term. And I
invite the members of the industry to convey to me concerns
that they have, whether it is issues with the Treasury
Department, as Congressman Shadegg mentioned, so that these
issues can be raised in that forum; and conversely, I will make
every effort on behalf of the Secretary to make sure we convey
the information that is shared in this forum to members of the
industry.
So in response to your question, that is something we are
doing absolutely immediately that is very important and that I
think will have real value.
Mr. Stearns. Let me conclude by saying I think it has been
very helpful to all of you to take your valuable time to speak.
It is being put together in a package and it will be reviewed.
Your time is very valuable, but I think you made an impact in a
much broader way than you believe.
The message is, we need to get back to normality, to
business here in America. And, more importantly, in the
disastrous effects to our economy, if we do not do this, the
consequences thereof are something we want to mitigate and
obviate.
So I again thank you for your time and the hearing is
adjourned.
[Whereupon, at 12:32 p.m., the subcommittee was adjourned.]
[Additional material submitted for the record follows:]
Prepared Statement of Hon. Mary Bono, a Representative in Congress from
the State of California
Thank you Mr. Chairman. I would like unanimous consent to have my
complete opening statement included in the record.
The events of September 11th have been felt throughout the Palm
Springs region and Southern California. Although California is nearly
3000 miles away from both the World Trade Center and the Pentagon, the
impacts of this tragedy have been profound throughout the state.
Tourism is the single largest industry in the greater Palm Springs
desert resort community and a significant portion of the non-tourist
businesses rely on the tourist industry for their well being.
With over 500 restaurants, 300 hotels, and 100 golf courses, the
Palm Springs area is the destination of over 3 million people a year.
The warm and dry climate attracts people from all 50 states and
over 100 countries throughout the world. In calendar year 2000, tourism
accounted for more than $42,000,000 in spending into our local economy.
In Palm Springs alone, it is estimated that tourism is down 25% since
the events of September 11th. I have heard reports of hotels suffering
anywhere from $100,000 to $1 million in cancellations immediately after
the attacks.
However, the biggest threat to the tourist industry in Palm Springs
is the financial status of the Palm Springs International Airport.
Without our local airport bringing tourists from across the country
into Palm Springs, our tourist industry would collapse completely. In
light of the recent financial problems with our nations' airline
industry, secondary commercial airports such as Palm Springs are
currently suffering severe revenue shortages.
Immediately after the terrorist attacks on September 11, the
Federal Aviation Administration (FAA) understandably required airports
to deploy more law enforcement officers and spend more funds to improve
security at our nation's airports. These new security requirements will
cost airports across the country billions of dollars.
However, smaller airports such as Palm Springs do not have the
funds to pay for these increased security costs. Unlike America's major
hub airports that have billions of dollars in reserve funds, secondary
commercial airports do not have the funds to sustain themselves during
a time of declining passenger taxes and reductions in airline landing
fees.
Therefore, I am encouraged that the Chairman of the House
Transportation and Infrastructure Committee has been in conversations
with smaller commercial airports, such as Palm Springs, and is aware of
the recent financial shortfalls at these air facilities. I believe that
for the financial well-being of this nation's smaller commercial
airports, airport improvement program dollars should be used at the
discretion of each airport for one year in order to cover much needed
increases in operational costs.
I am pleased that our President and Congress have done so much to
revive our tourist economy. The passage of H.R. 2926, the ``Air
Transportation Safety and System Stabilization Act'' is a great first
step in keeping our nation's civilian airline system, and its tourism
industry, running during a time of fiscal crisis. I would like to thank
Chairman Stearns for this opportunity to study this issue in greater
detail. Thank you.
______
Prepared Statement of International Association of Amusement Parks and
Attractions
The International Association of Amusement Parks and Attractions
(IAAPA) thanks the Committee for holding this hearing focusing on the
travel and tourism industry. IAAPA appreciates the opportunity to
inform the Committee of the situation faced by its members following
the tragic events of September 11, 2001. IAAPA is the world's largest
association of permanently situated amusement parks, family
entertainment centers, waterparks, attractions, and industry suppliers.
IAAPA represents more than 5,000 members in 101 countries.
Our members in the United States face both short-term and long-term
consequences following the September 11 attacks. In the short term, the
shut-down of America's air transportation system following the attacks
resulted in a drastic reduction in attendance at destination parks,
particularly in Florida and California. On September 28, the Orlando
Sentinel had the following to say about the status of tourism in that
city:
``The marketing campaigns can't come soon enough for many in the
tourism industry.
``Immediately after the terrorist strikes, the number of tourists
and business travelers flying to Central Florida fell swiftly.
``Hotel occupancy, ordinarily about 60 percent in September,
plunged below 10 percent at some properties.
``Lines at popular theme-park attractions such as Space Mountain at
Disney's Magic Kingdom practically disappeared.
``Since then, business has picked up, but only a little, and then
mostly on weekends. Hotel occupancy has climbed to the 20 percent to 40
percent range, but that still is far below the 55 percent innkeepers
generally need to break even.
``And with business down, thousands of service- and hospitality-
industry workers had their work hours reduced or lost their jobs
outright.''
Because many IAAPA member facilities are closed for the season or
operating only on weekends, the long-term effects of the impact of the
events of September 11 on the industry are more difficult to determine.
It is clear, though, that if potential guests are afraid to travel and
this continues into 2002, the entire industry will be severely
affected.
With these considerations in mind, IAAPA makes the following
recommendations:
<bullet> Make travel safe again. Most importantly, the federal
government should do whatever is necessary to make air, and all
other forms of travel safe for Americans and for those visiting
the United States. Air marshals and the highest security
precautions should be added to airports that serve major
tourist destinations.
<bullet> Restore confidence in travel safety. Once every effort is made
to ensure that travel is safe, the government needs to take a
leading role in informing the public that it is safe to travel.
Americans' confidence with the safety of travel has been so
shaken that we believe it will take the government's
credibility to bring confidence back to the public.
<bullet> Promote the travel and tourism industry. The federal
government should directly support promotional campaigns
overseas, urging travel to the United States. Within the United
States, federal-state matching grant program should be set up
to fund state-run travel and tourism promotional campaigns. A
matching grant program would provide the resources, scale,
encouragement and credibility needed to kick-start an effective
campaign to get Americans feeling good about traveling again.
Economic Stimulus Recommendations
IAAPA commends Congress and the Administration on the work being
done to pass legislation to stimulate the economy. The industry would
greatly benefit by any legislation that encourages consumer and
business spending and gets the economy back on its feet as quickly as
possible.
Temporary changes to tax law should include the following:
<bullet> Temporary payroll tax credit for both employees and employers
applied towards taxes paid this year. It is important that this
provision be either retroactive to the beginning of the year or
the total allowed be an average for 2001.
<bullet> Accelerated or bonus depreciation retroactive to January 2001.
<bullet> Extension of the work opportunity tax credit for an additional
year, through the end of 2002.
Finally, we would like to lend our support to the proposals being
promoted by the Travel Industry Association of America (TIA). Among
those proposals, IAAPA would highlight the following:
<bullet> $500 tax credit per person ($1,000 for a couple filing
jointly) for personal travel expenses for travel originating
and within North America.
<bullet> Expanded allowance of carry back of net operating losses for
taxpayers in the travel and tourism industry beyond the current
two-year limit to five years for losses attributable to the
period between September 11, 2001 and December 31, 2002.
Additionally, the industry supports any efforts the government may
take to ensure that parks continue to be able to obtain their usual
reinsurance coverage at rates that are not cost prohibitive and that
acts of terrorism are not excluded from insurance coverage.
IAAPA thanks you for inviting our comments as the United States
House of Representatives continues its important work to move our
country ahead.