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With respect to the airline industry, TBR would like to express its appreciation to Congress for including provisions in the FY03 wartime supplemental appropriations bill to help the airlines. The $2.4 billion in grants to offset the significant security costs airlines have absorbed since September 11; extension of unemployment benefits for airline industry-related workers; and extension of the War Risk Insurance Program will provide much-needed assistance at a crucial time. TBR’s members recognize the integral importance of the sustainability of the airlines to the overall health of the industry, and we support reasonable federal assistance measures, particularly as they relate to necessary security costs. TBR also supports the timely reauthorization of the all three significant federal transportation bills that Congress is considering this year: the Aviation Investment and Reform Act for the 21st Century (AIR-21); the Transportation Equity Act for the 21st Century (TEA-21); and Amtrak, and the adoption of federal policies that will strengthen and provide vitality to all of these critical modes of transportation. It is extremely important to note that the employees and owners of travel and tourism businesses are not the only ones affected by the downturn in tourism. Cities, counties and states that were already beginning to see budget shortfalls due to the stagnant economy have also been deeply affected by the decline in the tourism and sales tax revenues that visitors bring to their jurisdictions. Forty-one states and hundreds of cities are currently experiencing major budget shortfalls, and Governors and mayors often cite a dramatic decline in travel and tourism tax receipts as a major cause. As a result of these revenue declines, states and local governments have been forced to reduce essential services at exactly the same time their citizens – who are also feeling the effects of the economic slump – require more assistance. RECOMMENDATIONS The Travel Business Roundtable would like to offer a few key recommendations for congressional action that can help the U.S. regain its dominance in the international travel and tourism market, as well as stimulate the domestic business and leisure travel sectors. A fuller explanation of TBR’s position on a wide range of issues is contained in our recently released document, Travel & Tourism: America’s Passport to Success, which we are sending to all Members of Congress and which can be found on TBR’s website, www.tbr.org. For purposes of brevity, we offer in our testimony the top three items that we feel are most pertinent to stimulating travel. We make these suggestions with the recognition that the federal government is experiencing the same types of fiscal restraints that state and local governments and the private sector are also facing. As has been the case since our inception, it is TBR’s goal to offer politically and economically feasible solutions. We do not want to overreach or ask for things that are unrealistic or unachievable. However, we hope that you will share our belief that a small investment now will yield multiple returns in the coming years. Implement and Build Upon U.S. Branding Efforts TBR applauds the Congress – Senator Ted Stevens in particular - and the President for the unprecedented appropriation of $50 million to the Department of Commerce in fiscal year 2003 for the development of a comprehensive marketing campaign to brand the United States as a destination of choice for international visitors. TBR has been calling for such an initiative for many years, and is working with Commerce Department officials as they lay the groundwork for this undertaking. It is impossible to stress enough how important international visitors are to the health of our industry as well as the overall U.S. economy. Total arrivals of international travelers to the U.S. registered 41.9 million in 2002 – a 7 percent decline from the 44.9 million foreign visitors in 2001. This is a continuation of a downward trend: in 2000, international arrivals were at an all-time high of 50.9 million. More to the point, the balance of trade surplus generated by travel and tourism has plummeted from $26 billion in 1996 to $8.6 billion in 2001. While countries like France and Spain – currently the most visited countries in the world – spend hundreds of millions of dollars each year to promote themselves to travelers, the U.S. – the third-most visited country in the world – spends nothing and has no comprehensive brand identity. In 2001, international visitors spent $73 billion in the U.S. – down from a high of $82.3 billion in 2000. It is well known that international visitors spend more than domestic travelers when they travel. For example, New York City is the nation’s number-one international visitor destination, and though international travelers comprise only a small portion of the City’s visitors, they are responsible for a disproportionately high level of spending. In 2000, though foreign visitors made up only 18 percent of New York City’s total visitors, they generated 42 percent of all visitor expenditures. It seems like good business sense – and good policy – to spend some money on promoting what the U.S. can offer to these visitors in an effort to retain and grow this powerful market share. Many countries, including Japan, agree. In the face of a weak economy and SARS, Japan has just committed $19 million for a Visit Japan campaign. The Japanese government views their downturn in tourism as both missed revenue and as a national embarrassment. While TBR is confident that the Commerce Department, in conjunction with the U.S. Travel and Tourism Promotion Advisory Board that is currently being formed, will utilize the $50 million it has been appropriated to develop an outstanding branding campaign for our country, we see this as an important first step to reaching our goals of increasing international visitorship, rather than the end. TBR supports a longer-term congressional authorization and funding for branding and marketing the U.S. to continue and build upon the groundwork that this initial undertaking will engender. Increase and Restore the Tax Incentives that Spur Business Travel After international travelers, business travelers are responsible for a significant amount of travel expenditures. However, business travel has been in decline for several years. The most recent figures show that in 2002, U.S. domestic business travel declined 5.5 percent over 2001, and is down nearly 9 percent from 2000. There are many factors contributing to what is likely to be a continued decrease in business travelers. Many companies that instituted travel bans in the wake of September 11 continued to discourage business trips because of economic difficulties. The recent war and concerns about SARS have caused even more companies to place severe limits on the amount of travel that takes place or to ban it altogether. For hotels, airlines, restaurants, car rental agencies and many other segments of the industry – as well as state and local governments – this translates to steep revenue losses as businesses send one representative to a meeting for two days rather than three days, or send two people to a conference rather than three or four people. The reduction of the business meal and entertainment tax deduction from 100 percent to 50 percent and the elimination of the spousal travel tax deduction negatively affected the restaurant and entertainment industries and the business customers they serve even before September 11, particularly harming small businesses. Research conducted by TBR members in 1998 shows that business meal users and providers span across demographic lines: one-fifth of business meal users are self-employed; more than two-thirds of business meal users have incomes of less than $60,000 and 37 percent have incomes below $40,000; and low to moderately priced table service restaurants – often small businesses themselves – are the most popular providers of business meals, with the average check totaling less than $20. TBR encourages Congress to upwardly revise the business meal and entertainment tax deduction and restore the spousal travel tax deduction. Doing so would provide an immediate incentive for small businesses and corporations alike to authorize their personnel to start traveling again. Establish a Presidential Advisory Council on Travel and Tourism Because travel and tourism policy matters are greatly diffused throughout the federal government, TBR called for the creation of a Presidential Advisory Council on Travel and Tourism in March 2001. More than two years later, the proposal is still under consideration by the Bush Administration. Comprised of presidentially appointed representatives of business, government and non-profit organizations with expertise in policy matters impacting tourism development, the Council would be the ideal body to explore ways that the travel and tourism industry can work for the benefit of our nation. The Council would advise the President on national tourism policies and would help ensure that travel and tourism receives a more sustained and vigorous policy focus at the federal level. It would also help coordinate the activities of the Administration and the many departments and agencies that impact travel and tourism. While the coordination of travel and tourism policy seemed like a great idea when TBR first proposed the formation of the Council in March 2001, it is now clear that this type of comprehensive partnership among the private sector, Congress and all agencies of the federal government that deal with tourism-related issues is an imperative. More than 130 nations have cabinet-level tourism officials or some form of government-sponsored tourism office. These nations recognize that a coordinated national tourism policy fulfills numerous goals, such as creating jobs, expanding trade surpluses and generating economic vitality on a multi-regional basis within their countries. The absence of an analogous effort within the United States hampers our nation’s ability to achieve these important objectives, and is a contributor to the factors that have stymied tourism to and within the U.S. in the last year-and-a-half. The Council would be created by Executive Order under the Federal Advisory Committee Act (FACA). TBR requests Congress’ support in urging the President to create the Presidential Advisory Council on Travel and Tourism. CONCLUSION The Travel Business Roundtable appreciates the opportunity
to provide, for the record, its thoughts and recommendations
on the common sense initiatives that will help revitalize
an industry that has contributed so much to our country’s
bottom line. We are also appreciative that the Subcommittee
will play our newly released video, which celebrates travel
and tourism in the U.S. The video was unveiled on April 9
at a summit that TBR hosted with the U.S. Chamber of Commerce,
a TBR member organization. The historic conference, titled
Re-Igniting Growth in Travel and Tourism, brought together
more than 200 CEOs and senior-level executives along with
three Cabinet Secretaries, congressional leaders, mayors
from cities across the country and senior Administration
officials. The event marked a turning point for our industry
in many ways, and we believe it represents the beginning
of a new and stronger partnership between the federal government
and the industry. TBR looks forward to working with the Subcommittee
as it examines issues relating to the industry and considers
policy initiatives to spur travel and tourism. ABOUT TBR
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