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NATIONAL TOURISM POLICY
HEARINGS
BEFORE THE
SUBCOMMITTEE ON
TRANSPORTATION AND COMMERCE
OF THE
COMMITTEE ON
INTERSTATE AND FOREIG~N COMMERCE
HOUSE OF REPRESENTATIVES
NINETY-SIXTH CONGRESS
FIRST SESSION
ON
S. 1097
A BILL TO ESTABLISH A NATIONAL TOURISM POLICY, A
CABINET LEVEL COORDINATING COUNCIL AND A NONPROFIT
CORPORATION AS AN IMPLEMENTING AGENCY TO CARRY OUT
THE NATIONAL TOURISM POLICY
JULY 25; AUGUST 1, AND 15, 1979
Serial No. 96-119
Printed for the use of the
Committee on Interstate and Foreign Commerce
0
U.S. GOVERNMENT PRINTING OFFICE
61-144 0 WASHINGTON 1980
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COMMYVT'EE ON INTERSTATE AND FOREIGN COMMERCE
JOHN D. DINGELL, Michigan
LIONEL VAN DEERLIN, California
JOHN M. MURPHY, New York
DAVID E. SATTERFIELD III, Virginia
BOB ECKHARDT, Texas
RICHARDSON PREYER, North Carolina
JAMES H. SCHEUER. New York
RICHARD L. OTTINGER, New York
HENRY A. WAXMAN. California
TIMOTHY E. WIRTH. Colorado
PHILIP R. SHARP, Indiana
JAMES J. FLORIO. New Jersey
ANTHONY TOBY MOFFE'VL Connecticut
JIM SANTINI. Nevada
ANDREW MAGUIRE. New Jersey
MARTY RUSSO, Illinois
EDWARD J. MARKEY. Massachusetts
THOMAS A. LUKEN, Ohio
DOUG WALGREN, Pennsylvania
ALBERT GORE, JR., Tennessee
BARBARA A. MIKULSKI. Maryland
RONALD M. MO11~L. Ohio
PHIL GRAMM, Texas
AL SWIFT, Washington
MICKEY LELAND, Texas
RICHARD C. SHELBY. Alabama
JIM SANTINI, Nevada
BARBARA A. MIKULSKI. Maryland
JOHN M. MURPHY. New York
MARTY RUSSO, Illinois
HARLEY 0. STAGGERS. West Virginia
(Ex Officio)
JAMES T. BROYHILL, North Carolina
SAMUEL L. DEVINE, Ohio
TIM LEE CARTER, Kentucky
CLARENCE J. BROWN, Ohio
JAMES M. COLLINS, Texas
NORMAN F. LENT, New York
EDWARD R. MADIGAN, Illinois
CARLOS J. MOORHEAD, California
MATTHEW J. RINALDO, New Jersey
DAVE STOCKMAN, Michigan
MARC L. MARKS, Pennsylvania
TOM CORCORAN, Illinois
GARY A. LEE. New York
TOM LOEFFLER, Texas
WILLIAM E. DANNEMEYER, California
EDWARD R. MADIGAN, Illinois
GARY A. LEE, New York
JAMES T. BROYHILL, North Carolina
)Ex Officio)
HARLEY 0. STAGGERS, West Virginia, Chairman
KENNETH J. PAINTER, Acting Chief Clerk and Staff Director
ELEANOR A. DINKINs, First Assistant Clerk
ELIZABETH HARRISON, Professional Staff
J. PAUL MOLLOY, Minority Professional Staff
SUBCOMMIrFEE ON TRANSPORTATION AND COMMERCE
JAMES J. FLORIO, New Jersey, Chairman
CLIFFORD ELKINS, Staff Director
(II)
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CONTENTS
Hearings held on- Page
July 25, 1979 1
August 1, 1979 305
August 15, 1979 (Atlantic City, N.J.) 515
Text of S. 1097 2
Agency reports of-
Agriculture Department 34
Civil Aeronautics Board 36
Comptroller General of the United States 37
Housing and Urban Development 38
Interior Department 40
International Communication Agency 41
Justice Department 43
National Endowment for the Arts 44
National Endowment for the Humanities 45
Office of Management and Budget, Executive Office of the President 46
Transportation Department 47
Statement of-
Connors, Leonard T., Jr., director, Ocean County (New Jersey) Board of
Chosen Freeholders 528
Danielian, Ronald L., executive vice president and treasurer, International
Economic Policy Association 81, 116
Edwards, William, president, Hotel Division, Hilton Hotels Corp., on behalf
of the American Hotel & Motel Association 432
Freeman, Harry, senior vice president, American Express Co 66
Gillett, Charles, president, New York Convention and Visitors Bureau, and
chairman, National Council of Urban Tourism Organizations 532
Gilmore, Voit, cochairman, Ad Hoc Committee on the National Tourism
Policy Study, American Society of Travel Agents, Inc 474, 482
Holt, David, vice president, passenger sales, Western Airlines, Inc 237, 279
Horrocks, J. N., Jr., director, Public Citizen Visitors Center 474, 502
Hosmer, Eugene C., Jr., president, Philadelphia Convention and Visitors
Bureau . . 532, 534
Jenrette, Hon. John W., Jr., a Representative in Congress from the State of
South Carolina 306
Juliano, Robert E., legislative representative, Hotel & Restaurant Employ-
ees & Bartenders International Union 49
Lazarow, Hon. Joseph, mayor, Atlantic City, N.J 517
LeBlanc, Robert, chairman, National Council of State Travel Directors, and
director, Louisiana Office of Tourism 81, 107
Lewis, Arthur D., president, American Bus Association 237, 280
McCarthy, Joseph, president, Quality Inns International on behalf of the
American Hotel & Motel Association 432
McSullivan, Donal, vice president, United States and Canada, Irish Tourist
Board, on behalf of the American Society of Travel Agents, Inc 474, 497
Madigan, Hon. Edward R., a Representative in Congress from the State of
Illinois . 48
Montgomery, James, senior vice president and assistant to the president,
Pan American World Airways, Inc 237, 262
Norton, H. Steven, vice president, Resorts International, Inc., and presi-
dent, Atlantic City Hotel/Motel Association 550, 552
Papone, Aldo, senior vice president, American Express Co., and president
of its Card Division 66
Pepper, Hon. Claude D., a Representative in Congress from the State of
Florida . . . 324
III
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Iv
Page
Philion, Norman, executive vice president, Air Transport Association of
America 237
Porter, Elsa A., Assistant Secretary for Administration, Department of
Commerce
Richer, Stephen, acting director, New Jersey State Division of Travel and
Tourism representing Hon. John J. Horn, commissioner of labor and
industry, State of New Jersey 521
Sarka, Michael F., president, Travel South USA 474
Shaw, Gary M.. chairman. board of directors, New Jersey Hotel-Motel
Association 550
Sullivan, Robert J., general manager, San Francisco Convention and
Visitors Bureau 532, 536
Toohey, William D., president, Discover American Travel Organizations,
Inc 81
Walton, William D., vice chairman of the board, Holiday Inns, Inc 292
Weinberger, William, president, Bally's Park Place 550, 555
Westphal, Jeanne, Acting Assistant Secretary for Tourism, Department of
Commerce
Additional material submitted for the record by-
Air Transport Association of America:
Attachment to Mr. Philion's prepared statement, letter dated March
22, 1979, from Mr. Philion to Senator Inouye re how the quasi-public
corporation might receive funds from other sources than the Govern-
ment
Letter dated August 6, 1979, from Mr. Philion to Chairman Florio re
budgets of U.S. airline overseas offices
American Express Co., charts attached to Mr. Papone's prepared
statement
American Hotel & Motel Association, attachments to prepared statement,
statistics relative to various Quality Inn properties and newspaper
articles from the New York Times relative to tourism
American Society of Travel Agents, Inc., organizational chart of the Irish
Tourist Board
Discover American Travel Organizations, Inc., letter dated Steptember 17,
1979, from Mr. Toohey to Chairman Florio with attached answers to a
series of questions and a report entitled, "The Travel and Tourism
Industry: An Economic Overview"
International Economic Policy Association, attachment to Mr. Danielian's
prepared statement, a report entitled, "Services in America's Interna-
tional Trade: the Air Travel and Tourism Sector"
Jenrette, Hon. John W., Jr., a Representative in Congress from the State of
South Carolina, letter dated August 29, 1979, from Congressman Jenrette
to Chairman Florio re types of incentives that the Federal Government
could use to encourage local participation, with attachments
National Council of Urban Tourism Organizations, letter dated August 22,
1979, from Charles Gillett, president, New York Convention and Visitors
Bureau, Inc., re comments on Elsa Porter's testimony
Pepper, Hon. Claude D., a Representative in Congress from the State of
Florida, letter dated August 8, 1979, from Elizabeth Finn, Florida
Division of tourism Marketing and Research to Congressman Pepper
with attached statistical reports profiling visitors to Florida and Dade
County
Statement received for the record from-
Metro-Dade County Department of Tourism and Promotion, Lew Price,
director
National Campground Owners Association
Oklahoma, State of, Hon. George Nigh, Governor
Letters received for the record from-
American Express. William Lilley III, vice president, Government affairs,
with attachment
Food and Beverage Trades Department, AFL-CIO, Peter Alistrom, director
of research and communications with attached statement
International Association of Amusement Parks and Attractions, Robert H.
Blundred, executive vice president
252
261
73
436
509
174
128
313
546
329
326
564
561
566
570
568
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NATIONAL TOURISM POLICY
WEDNESDAY, JULY 25, 1979
HOUSE OF REPRESENTATIVES,
SUBCOMMITTEE ON TRANSPORTATION AND COMMERCE,
COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,
Washington, D.C.
The subcommittee met, pursuant to notice, at 9 a.m. in room
2123 Rayburn House Office Building, Hon. James J. Florio, chair-
man, presiding.
Mr. FL0RIO. The subcommittee will come to order.
Today, as I am sure you all know, the Subcommittee on Trans-
portation and Commerce begins 3 days of hearings on the need to
have a national tourism policy. Last May this committee, against
the administration's request, reauthorized an additional year of
funding for the U.S. Travel Service. That funding was considered
an interim measure in order to give this committee an opportunity
to fully examine the need for an explicit, comprehensive national
tourism policy.
The economic and social benefits of a vigorous tourism industry
are enormous and are well-known, and need not be recounted here
today. Suffice to say that an area that we are very concerned
about, international travel, provides important assistance in reduc-
ing our balance-of-payment deficit.
I feel certain that all the members of the subcommittee appreci-
ate and understand the impact of the tourism industry in our
economy, and it is not our purpose in these hearings to dwell upon
that obvious point. Rather, the committee must consider and decide
specifically what the goals of a national tourism policy should be,
and more importantly, what role, if any, the Federal Government
should play in the promotion and coordination of tourism activities.
As I am sure you are all aware, the Senate has passed a National
Tourism Policy Act, S. 1097, which calls for the creation of a
Federal nonprofit corporation to promote tourism and a council to
coordinate Federal activities. As this subcommittee develops its
own legislation, we will welcome both comments and constructive
suggestions for changes, if appropriate, to the Senate bill.
Without objection, the text of S. 1097 and agency reports thereon
will be printed at this point in the record.
[Text of 5. 1097 and agency reports thereon follow:]
(1)
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2
I
96TH CONGRESS
1ST SEssioN
IN THE HOUSE OF REPRESENTATIVES
MAY 16, 1979
Referred to the Committee on Interstate and Foreign Commerce
AN ACT
To establish a national tourism policy, a Cabinet level coorthnat-
ing council and a nonprofit corporation as an implementing
agency to carry out the national tourism policy.
1 Be it enacted by the Senate and House of Representa-
2 tives of the United States of America in Congress assembled,
3 That this Act may be cited as the "National Tourism Policy
4 Act".
5 TITLE I-NATIONAL TOURISM POLICY
6 SEC. 101. FINDINGS AND PURPOSE.
7 (a) The Congress finds that-
8 (1) the tourism and recreation industries are im-
9 portant to the United States, not only because of the
10 numbers of people they serve and the vast human, fi-
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2
1 nancial, and physical resources they employ, but be-
2 cause of the great benefits tourism, recreation, and re-
3 lated activities confer on individuals and on society as
4 a whole;
5 (2) the Federal Government for many years has
6 encouraged tourism and recreation implicitly in its stat-
7 utory commitments to the shorter workyear and to the
8 national passenger transportation system, and explicitly
9 in a~ number of legislative enactments to promote tour-
10 ism, and support development of outdoor recreation,
11 cultural attractions, and historic and natural heritage
12 resources;
13 (3) as incomes and leisure time continue to in-
14 crease, and as our economic and political systems de-
15 velop more complex global relationships, tourism and
16 recreation will become ever more important aspects of
17 our daily lives and our growing leisure time; and
18 (4) the existing extensive Federal Government in-
19 volvement in tourism, recreation, and other related ac-
20 tivities needs to be better coordinated to effectively re-
21 spond to the national interests in tourism and recrea-
22 tion and where appropriate, to meet the needs of State
23 and local governments and the private sector.
24 (b) It is the purpose of this Act to establish a coopera-
25 tive effort between the Federal Government and State and
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3
1 local governments and other concerned public and private or-
2 ganizations, to use all practicable means and measures, in-
3 cluding financial and technical assistance, to implement a na-
4 tional tourism policy that will-
5 (1) optimize the contribution of the tourism and
6 recreation industries to economic prosperity, full em-
7 plovment, and the international balance of payments of
8 the Nation;
9 (2) make the opportunity for and benefits of tour-
10 ism and recreation in the United States universally ac-
11 cessible to residents of the United States and foreign
12 countries and to insure that present and future genera-
13 tions be afforded adequate tourism and recreation
14 resources;
15 (3) contribute to personal growth, health, educa-
16 tion, and intercultural appreciation of the geography,
17 history, and ethnicity of the United States;
18 (4) encourage the free and welcome entry of mdi-
19 viduals traveling to the United States, in order to en-
20 hance international understanding and goodwill, con-
21 sistent with immigration laws, the laws protecting the
22 public health, and laws governing the importation of
23 goods into the United States;
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1 (5) eliminate unnecessary trade barriers to the
2 United States tourism industry operating throughout
3 the world;
4 (6) encourage competition in the tourism industry
5 and maximum consumer choice through the continued
6 viability of the retail travel agent industry and the in-
7 dependent tour operator industry;
8 (7) promote the continued development and avail-
9 ability of alternative personal payment mechanisms
10 which facilitate national and international travel;
11 (8) promote quality, integrity, and reliability in all
12 tourism and tourism-related services offered to visitors
13 to the United States;
14 (9) preserve the historical and cultural foundations
15 of the Nation as a living part of community life and
16 development, and to insure future generations an op-
17 portunity to appreciate and enjoy the rich heritage of
18 the Nation;
19 (10) insure the compatibility of tourism and recre-
20 ation with other national interests in energy develop-
21 ment and conservation, environmental protection, and
22 the judicious use of natural resources;
23 (11) assist in the collection, analysis, and dissemi-
24 nation of data which accurately measure the economic
25 and social impact of tourism to and in the United
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1 States, in order to facilitate planning in the public and
2 private sector; and
3 (12) harmonize, to the maximum extent possible,
4 all Federal activities in support of tourism and recrea-
5 tion with the needs of the general public and the
6 States, territories, local governments, and the private
7 and public sectors of the tourism and recreation indus-
8 try, and to give leadership to all concerned with tour-
9 ism, recreation, and national heritage preservation in
10 the United States.
ii TITLE 11-NATIONAL TOURISM POLICY COTJNC11~
12 SEC. 201. ESTABLISHMENT OF COUNCIL.
13 (a) There is established as an independent entity in the
14 executive branch a National Tourism Policy Council (herein-
15 after referred to as the "Council"). The Council shall be the
16 principal coordinating body for policies, programs and issues
17 relating to tourism, recreation, or national heritage resources
18 involving Federal departments, agencies, or other entities.
19 (b) The Council shall consist of-
20 (1) the Assistant to the President for Domestic
21 Affairs and Policy, who shall serve as the Chairman of
22 the Council;
23 (2) the President of the United States Travel and
24 Tourism Development Corporation (as created in title
25 III of this Act), who shall serve as the Vice Chairman
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1 of the Council and who shall act as Chairman of the
2 Council in the absence of the Chairman;
3 (3) the Secretaries of the Department of Trans-
4 portation; the Department of the Interior; the Depart-
5 ment of Commerce; the Department of State; the De-
6 partment of Agriculture; the Department of Labor; the
7 Department of the Treasury; the Department of
8 Health, Education, and Welfare; the Department of
9 Energy; the Department of Defense; the Department
10 of Housing and Urban Development;
11 (4) the Attorney General of the United States;
12 (5) the Chairmen of the Civil Aeronautics Board;
13 the Interstate Commerce Commission; and the Federal
14 Trade Commission; and
15 (6) the Administrators of the International Com-
16 munication Agency and the Environmental Protection
17 Agency.
18 (c) Each member of the Council, other than the Chair-
19 man and the Vice Chairman may designate an alternate, who
20 shall serve as a member of the Council whenever the regular
21 member is unable to attend a meeting of the Council or any
22 committee of the Council. A member of the Council who as-
23 signs an alternate to serve as a member of the Council on
24 those occasions when the regular member is unable to attend
25 a meeting shall make such assignment for the remainder of
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1 the member's term on the Council. Any such designated a!-
2 ternate shall be selected from individuals who exercise sig-
3 nificant decisionmaking authority in the Federal agency in-
4 volved and shall be authorized to make decisions on behalf of
5 the member for whom he is serving.
6 (d) Whenever the Council, or a committee of the Coun-
7 cil, considers matters that affect the interests of Federal
8 agencies that are not represented on the Council or the com-
9 mittee, the Chairman may invite the heads of such agencies,
10 or their alternates, to participate in the deliberations of the
11 Council or committee.
12 (e) The Council shall conduct its first meeting not later
13 than 90 days after the enactment of this Act. Thereafter the
14 Council shall meet not less than once each 90 days.
15 (0 All meetings of the Council, including any committee
16 of the Coi~mcil, shall be open to the public.
17 (g) The Chairman, with the approval of the Council,
18 shall appoint an Executive Director who shall serve in a full-
19 time capacity as the chief executive officer of the Council.
20 The Executive Director-
21 (1) shall be an individual who by virtue of train-
22 ing, experience, and attainments is exceptionally well-
23 qualified to appraise programs and activities of the
24 Federal Government in light of the policies set forth in
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1 title I of this Act and to formulate recommendations
2 for the improvement of such programs and activities;
3 (2) shall be appointed without regard to title 5 of
4 the United States Code governing appointments in the
5 competitive service;
6 (3) shall be compensated at the rate now or here-
7 after prescribed for level V of the Executive Schedule
8 by section 5316 of title 5, United States Code; and
9 (4) shall not concurrently hold any other office or
10 position of employment with the United States.
11 (h) Members of the Council shall serve without addition-
12 al compensation, but shall be reimbursed for actual and nec-
13 essary expenses, including travel expenses, incurred by them
14 in carrying out the duties of the Council.
15 SEC. 202. FUNCTIONS OF POLICY COUNCIL.
16 (a) The Council shall be the principal coordinating body
17 for policies, programs, and issues relating to tourism, recrea-
18 tion, or national heritage resources involving Federal depart-
19 ments, agencies, or other entities. Among other things, the
20 Council shall-
21 (1) direct Council staff activities, such as the
22 study of appropriat.e issues and the preparation of
23 reports;
24 (2) approve or disapprove the Council staff recom-
25 mendations and reports;
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1 (3) coordinate the policies and programs of
2 member agencies that have a signiflcant effect on tour-
3 ism, recreation, and national heritage preservation;
4 (4) develop areas of cooperative program activity;
5 (5) resolve interagency program and policy
6 conflicts;
7 (6) seek and receive concerns and views of State
8 and local governments and the private sector with re-
9 spect to Federal programs and policies deemed to con-
10 flict with the orderly growth and development of tour-
11 ism; and
12 (7) refer problems to the Council's policy commit-
13 tees for study, recommendations, and resolution.
14 SEC. 203. ADMINISTRATIVE POWERS AND PROVISIONS.
15 In order to carry out the provisions of this title-
16 (1) the Council may promulgate, issue, rescind,
17 and amend regulations governing the manner or oper-
18 ation of the Council;
19 (2) the Executive Director, with the approval of
20 the Council, may appoint and fix the compensation of
21 such employees, according to the provisions of title 5,
22 United States Code, governing appointments in the
23 competitive service, as may be necessary to carry out
24 the functions of the Council: Provided, That no such
25 employee (other than the Executive Director) shall be
S.1097 O---2
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1 compensated at a rate exceeding the rate now or here-
2 after prescribed for positions under GS-15 of the Gen-
3 eral Schedule by section 5332 of title 5 of the United
4 States Code;
5 (3) the Executive Director, with the approval of
6 the Council, may obtain the services of experts and
7 consultants in accordance with section 3109 of title 5,
8 United States Code, at rates for individuals not to
9 exceed the daily equivalent now or hereafter prescribed
10 for positions under GS-18 of the General Schedule by
11 section 5332 of title 5 of the United States Code;
12 (4) the Executive Director, with the approval of
13 the Council, may request directly from any Federal de-
14 partment or agency such personnel, information, serv-
15 ices, or facilities, on a compensated or uncompensated
16 basis, as he deems necessary to carry out the functions
17 of the Council;
18 (5) each Federal department or agency shall fur-
19 nish the Council with such information, services, and
20 facilities as it may request to the extent permitted by
21 law and within the limits of available funds;
22 (6) Federal agencies and departments may, in
23 their discretion, detail to temporary duty with the
24 Council, such personnel as the Council may request for
25 carrying out the functions of the Council, each such
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1 detail to be without loss of seniority, pay, or other em-
2 ployee status; and
3 (7) the General Services Administration shall pro-
4 vide administrative services for the Council on a reim-
5 bursable basis.
6 SEC. 204. EXECUTIVE COMMITTEE.
7 The Council shall have an Executive Committee which
8 shall be comprised of the Council Chairman, the Council Vice
9 Chairman, and the Secretaries of the Department of Corn-
10 merce, the Department of the Interior, the Department of
11 Transportation, the Department of State, the Department of
12 Agriculture, and the Department of Labor. The Executive
13 Committee of the Council shall have such authority as the
14 Council may from time to time delegate to it: Provided, That
15 any such delegation shall be consistent with the other provi-
16 sions of this title and shall not relieve the Council of full
17 responsibility for the carrying out of its duties and functions.
18 SEC. 205. POLICY COMMITTEES.
19 (a) The Council shall have 4 Policy Committees as
20 follows:
21 (1) The Transportation and Facilitation Policy
22 Committee which shall consist of the heads of the fol-
23 lowing agencies or their designated representatives: the
24 United States Travel and Tourism Development Cor-
25 poration, the Federal Maritime Administration, the
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12
1 Federal Highway Administration, the Federal Aviation
2 Administration, the Urban Mass Transportation Ad-
3 ministration, the United States Coast Guard, the
4 Bureau of Economic and Business Affairs, the Depart-
5 ment of Energy, the Immigration and Naturalization
6 Service, the Animal and Plant Health Inspection Serv-
7 ice, the United States Customs Service, the Civil
8 Aeronautics Board, the Interstate Commerce Commis-
9 sion, the Federal Trade Commission, the Bureau of
10 Security and Counselor Affairs, and the National Rail-
11 road Passenger Corporation.
12 (2) The Economic Development Policy Committee
13 which shall consist of the heads of the following agen-
14 cies, or their designated representatives: the United
15 States Travel and Tourism Development Corporation,
16 the Economic Development Administration, the Indus-
17 try and Trade Administration, the Bureau of the
18 Census, the Rural Development Service, the Regional
19 Commissions of the Department of Commerce, the In-
20 ternal Revenue Service, the Occupational Safety and
21 Health Administration, the Employment Standards Ad-
22 ministration, the Bureau of Labor Statistics, the
23 Bureau of Indian Affairs, the Economic Research
24 Service, the Farmers Home Administration, the Coop-
25 erative State Research Service, the Department of
61_1L~L~ 0 - 80 - 2
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1 Energy, the Office of Community Planning and Devel-
2 opment of the Department of Housing and Urban De-
3 velopment, the Small Business Administration, and the
4 Appalachian Regional Commission.
5 (3) The Energy and Natural Resources Policy
6 Committee which shall consist of representatives of the
7 following agencies, or their designated representatives:
8 the United States Travel and Tourism Development
9 Corporation, the Department of Energy, the National
10 Oceanic and Atmospheric Administration, the Bureau
11 of Reclamation, the Bureau of Land Management, the
12 United States Forest Service, the National Park Serv-
13 ice, the United States Fish and Wildlife Service, the
14 Army Corps of Engineers, and the Environmental
15 Protection Agency.
16 (4) The Health, Education, and Cultural Policy
17 Committee which shall consist of heads of the follow-
18 ing agencies, or their designated representatives: the
19 United States Travel and Tourism Development Cor-
20 poration, the National Institutes of Health, the Nation-
21 al Institute of Mental Health, the Office of Education,
22 the National Institute of Education, the Extension
23 Service, the National Endowment for the Arts, the
24 National Endowment for the Humanities, the Interna-
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1 tional Communication Agency, and the Smithsonian
2 Institution.
3 (b) Each of the Policy Committees shall review and
4 comment on Federal agency program and planning docu-
5 ments that will have a substantial effect on tourism, recrea-
6 tion and heritage resource preservation and that are appro-
7 priate to the Committee's functional responsibilities and
8 agency representation. Each Policy Committee may also mi-
9 tiate its own agenda and discuss tourism, recreation, and
10 heritage resource preservation related issues, and problems
11 referred to it by the tourism and recreation industry through
12 the Council.
13 (c) The members of each of the Policy Committees shall
14 from time to time elect one of its members to serve as Chair-
15 man of the Policy Committee and one or more of its members
16 to serve as Vice Chairman or Vice Chairmen.
17 (d) Each head of an agency serving on a Policy Commit-
18 tee may designate an alternate to serve for him on the Policy
19 Committee, so long as such alternate is designated perma-
20 nently for the representative whom he replaces and is em-
21 powered to act fully for the agency or entity whom he
22 represents.
23 (e) Each of the Policy Committees shall hold its initial
24 meeting within 90 days of the enactment of this Act and
25 thereafter shall meet at the call of the Chairman of the Policy
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1 Committee or the Chairman of the Council, but not less than
2 six times a year.
3 (0 Members of a Policy Committee shall serve without
4 additional compensation, but shall be reimbursed for actual
5 and necessary expenses, including travel expenses, incurred
6 by them in carrying out the duties of the Policy Committee.
7 SEC. 206. ANNUAL REPORT TO THE PRESIDENT AND
8 CONGRESS.
9 The Council shall, beginning with the first complete
10 fiscal year following the date of enactment of this Act, submit
11 an annual report for the preceding fiscal year, to the Presi-
12 dent for transmittal to Congress on or before the 31st day of
13 December of each year. The report shall include-
14 (1) a comprehensive and detailed report of the ac-
15 tivities and accomplishments of the Council and its
16 Policy Committees;
17 (2) the results of Council efforts to coordinate the
18 policies and programs of member agencies that have a
19 significant effect on tourism, recreation, and national
20 heritage preservation, resolve interagency conflicts,
21 and develop areas of cooperative program activity;
22 (3) an analysis of problems referred to the Council
23 by State and local governments, the tourism industry,
24 the United States Travel and Tourism Development
25 Corporation, or any of the Council's Policy Commit-
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16
1 tees along with a detailed statement of any actions
2 taken or anticipated to be taken to resolve such prob-
3 lems; and
4 (4) such recommendations as the Council deems
5 appropriate.
6 SEC. 207. AUTHORIZATIONS OF APPROPRIATIONS.
7 To carry out the provisions of title II of this Act, there
8 is hereby authorized to be appropriated for each of the fiscal
9 years ending on September 30, 1980, and 1981, the sum of
10 $500,000.
11 TITLE 111-THE UNITED STATES TRAVEL AND
12 TOURISM DEVELOPMENT CORPORATION
13 SEC. 301. PURPOSE.
14 It is the purpose of this title to establish a nonprofit
15 corporation, to be known as the "United States Travel and
16 Tourism Development Corporation".
17 SEC. 302. CONGRESSIONAL DECLARATION OF POLICY.
18 The Congress finds and declares-
19 (1) that it is in the national interest to encourage
20 the orderly growth and development of tourism to and
21 within the United States;
22 (2) that orderly growth and development of tour-
23 ism depends on the efforts of the public and private
24 sectors of that industry to assure that the objectives of
25 the national tourism policy are implemented to the
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17
1 maximum extent consistent with other public policy
2 objectives;
3 (3) that orderly growth and development of tour-
4 ism, while matters for regional, State, local, and pri-
5 vate development, are also of appropriate and impor-
6 tant concern to the Federal Government;
7 (4) that it furthers the national interests to assure
8 that the extensive Federal policy and programmatic
9 involvement in tourism is responsive to the needs and
10 interests of the public and private sectors of that
11 industry;
12 (5) that in view of the importance of travel and
13 tourism to the economy of the United States, and the
14 pervasive Federal policy and programmatic involve-
15 ment in tourism, it is necessary and appropriate for the
16 Federal Government to complement, assist and support
17 mechanisms that will most effectively assure implemen-
18 tation of the national tourism policy; and
19 (6) that a federally chartered, nonprofit corpora-
20 tion should be created to promote and facilitate the or-
21 deny growth and development of tourism and to assist
22 in the implementation of the national tourism policy.
23 SEC. 303. CORPORATION ESTABLISHED.
24 There is established a nonprofit corporation, to be
25 known as the "United States Travel and Tourism Develop-
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18
1 ment Corporation", which shall not be an agency or estab-
2 lishment of the United States Government. The Corporation
3 shall be subject to the provisions of this Act, and, to the
4 extent consistent with this Act, to the District of Columbia
5 Nonprofit Corporation Act.
6 SEC. 304. BOARD OF DIRECTORS.
7 (a) The Corporation shall have a Board of Directors
8 (hereinafter referred to as the "Board"), consisting of 15
9 members appointed by the President, by and with the advice
10 and consent of the Senate. Not more than 8 members of the
11 Board may be members of the same political party.
12 (b) The members of the Board (1) shall be appointed
13 from among citizens of the United States (not regular full-
14 time employees of the United States) who are senior execu-
15 tive officers of tourism corporations and other organizations
16 representative of such segments of the tourism industry as,
17 but not limited to, transportation, lodging, wholesale and
18 retail travel sales, employee relations, attractions and out-
19 door amusement facilities, recreation, heritage resources,
20 consumers, convention and visitor bureaus, travel trade asso-
21 ciations and elected officials of cities and States; and (2) shall
22 be selected so as to provide as nearly as practicable a broad
23 representation of different geographical regions within the
24 United States and of the diverse and varied segments of the
25 tourism industry. At least one member of the Board shall be
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19
1 a consumer advocate/ombudsman from the nonprofit sector
2 of the organized public interest community, and at least one
3 member of the Board shall be a senior representative from a
4 labor organization representing employees in the tourism
5 industry.
6 (c) The members of the initial Board of Directors shall
7 be appointed by the President within 120 days of the enact-
8 ment of this Act and shall serve as incorporators and take
9 whatever actions are necessary to establish the Corporation
10 as expeditiously as possible under the District of Columbia
11 Nonprofit Corporation Act.
12 (d) The term of office of each member of the Board shall
13 be 3 years; except that (1) any member appointed to fill a
14 vacancy occurring prior to the expiration of the term for
15 which his predecessor was appointed shall be appointed for
16 the remainder of such term; and (2) the terms of office of
17 members first taking office shall begin on the date of incorpo-
18 ration and shall expire, as designated at the time of their
19 appointment, five at the end of the 1st year, five at the end of
20 the 2d year, and five at the end of the 3d year. No member
21 shall be eligible to serve in excess of 2 consecutive terms of 3
22 years each. A member who does not regularly attend meet-
23 ings of the Board shall be replaced. Notwithstanding the pre-
24 ceding provisions of this paragraph, a member whose term
25 has expired may serve until a successor has qualified.
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20
(e) Any vacancy in the Board shall not affect its power,
but shall be filled in the manner in which the original ap-
pointment was made.
(0 A majority of the directors shall constitute a quorum
and action shall be taken only by a majority vote of those
present.
SEC. 305. ELECTION OF CHAIRMAN: COMPENSATION.
(a) The President shall designate one of the members
first appointed to the Board as Chairman and thereafter the
members of the Board shall annually elect one of their
number as Chairman. The members of the Board shall also
elect one or more of them as Vice Chairman or Vice Chair-
men.
(b) The members of the Board shall not, by reason of
such membership, be deemed to be employees of the United
States. Members of the Board shall serve without compensa-
tion, but shall be reimbursed for actual and necessary ex-
penses, including travel expenses, incurred by them in carry-
ing out the duties of the Board.
SEC. 306. OFFICERS AND EMPLOYEES.
(a) The Corporation shall have a President, and such
other officers as may be named and appointed by the Board
for terms and at rates of compensation fixed by the Board.
No individual other than a citizen of the United States may
be an officer of the Corporation. No officer who is an em-
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
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21
1 plovee of the Corporation may receive any salary or other
2 compensation from any source other than the Corporation
3 during the period of his employment by the Corporation. All
4 officers shall serve at the pleasure of the Board. The officers
5 and employees of the Corporation shall not be deemed to be
6 employees of the United States.
7 (b) Except as provided in the second sentence of section
8 304(a) of this Act, no political test or qualification shall be
9 used in selecting, appointing, promoting, or taking other per-
10 sonnel actions with respect to officers, agents, and employees
11 of the Corporation.
12 SEC. 307. NONPROFIT AND NONPOLITICAL NATURE OF THE
13 CORPORATION.
14 (a) The Corporation shall have no power to issue any
15 shares of stock, or to declare or pay any dividends.
16 (b) The income and assets of the Corporation shall not
17 be used for any purpose other than carrying out the purposes
18 of the Corporation as set forth in this title, and no part of
19 such income or assets shall inure to the benefit of any three-
20 tor, officer, employee, or any other individual except as
21 salary or reasonable compensation for services.
22 (c) The Corporation may not contribute to or otherwise
23 support any political party or candidate for elective public
24 office.
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22
1 SEC. 308. PURPOSES AND ACTIVITIES OF THE CORPORATION.
2 (a) In order to achieve the objectives and to carry out
3 the purposes of this title the Corporation is authorized to
4 assist the Congress of the United States, the National Tour-
5 ism Policy Council, all Federal agencies having policy and
6 programmatic responsibilities affecting tourism, and the
7 public and private sectors of the tourism industry.
8 (b) The primary purpose and activity of the Corporation
9 shall be developing and administering a comprehensive tour-
10 ism program designed to stimulate and encourage travel to
11 the United States by residents of other countries for the pur-
12 poses of study, culture, international congresses, recreation,
13 business, and other activities. The Corporation's activities
14 may not compete with activities of any State, city, or private
15 agency.
16 (c) Included in the activities of the Corporation author-
17 ized for accomplishment of the purposes set forth in this title,
18 are, among others not specifically named-
19 (1) establishing branch offices in foreign countries
20 and facilitating services at United States ports-of-entry
21 without, to the maximum extent feasible, consultation
22 with the Secretary of State or other Government agen-
23 cies;
24 (2) consulting with foreign countries on travel and
25 tourism matters and, in accordance with applicable
26 law, representing United States travel and tourism in-
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23
1 terests in international meetings, conferences, and ex-
2 positions;
3 (3) participating as a party in interest in proceed-
4 ings before Federal agencies when such initiation or in-
5 tervention is necessary to implement or further the na-
6 tional tourism policy as set forth in title I of this Act;
7 (4) monitoring the existing and proposed policies
8 and programs significantly affecting tourism of all Fed-
9 eral agencies to ascertain whether, insofar as consist-
10 ent with other public policy objectives, they are in fur-
11 therance of the objectives of the national tourism
12 policy, and reporting the results of its monitoring activ-
13 ities at least semiannually to the Congress and the Na-
14 tional Tourism Policy Council, or more frequently if
15 necessary;
16 (5) monitoring the policies and programs signifi-
17 cantlv affecting tourism of all Federal agencies for the
18 purpose of ascertaining instances of intraagency and
19 interagency duplication or contradiction and reporting
20 the results of its monitoring activities at least semian-
21 nually to the concerned agencies, the Congress, and
22 the National Tourism Policy Council, or more fre-
23 quently if necessary;
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24
1 (6) developing and administering a comprehensive
2 program relating to industry information, data service,
3 training and education, and technical assistance;
4 (7) developing and administering a comprehensive
5 program relating to consumer information, protection,
6 and education;
7 (8) developing a program to seek and to receive
8 information on a continuing basis from the tourism in-
9 dustry, including consumer and travel trade associ-
10 ations, regarding needs and interests which should be
11 met by an agency or program, and directing that infor-
12 mation to the appropriate agency; and
13 (9) encouraging to the maximum extent feasible
14 travel to and from the United States on United States
15 carriers.
16 SEC. 309. ADMINISTRATIVE POWERS AND PROVISIONS.
17 (a) To carry out the purposes and activities of the Cor-
18 poration as set forth in section 308 of this Act, the Corpora-
19 tion shall have the usual powers conferred upon a nonprofit
20 corporation by the District of Columbia Nonprofit Corpora-
21 tion Act to the extent that such powers are not inconsistent
22 with this Act. In addition the Corporation is authorized to-
23 (1) enter into such contracts, agreements, or other
24 transactions as the Board of Directors deems appropri-
25 ate: Provided, That in entering into any contract,
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25
1 agreement, or transaction the Corporation shall rely on
2 competitive bidding to the maximum extent practicable;
3 (2) accept in the name of the Corporation and
4 employ or dispose of in furtherance of the objectives of
5 this title any money, or property, real, personal, or
6 mixed, tangible or intangible, received by gift, devise,
7 bequest, or otherwise;
8 (3) appoint such officers and employees as the
9 Board deems necessary, and fix their compensation
10 without regard to the provisions of chapter 51 and sub-
11 chapter III of chapter 53 of title 5, United States
12 Code, except that no officer or employee of the Corpo-
13 ration may be compensated in excess of the rates now
14 or hereafter prescribed for level I of the Executive
15 Schedule under section 5312 of title 5 of the United
16 States Code;
17 (4) obtain the services of experts and consultants
18 without regard to section 3109 of title 5 of the United
19 States Code except that no such expert or consultant
20 may be compensated at rates which exceed the daily
21 equivalents of rates now or hereafter prescribed for
22 GS-18 of the General Schedule by section 5332 of
23 title 5 of the United States Code;
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26
1 (5) accept voluntary and uncompensated services
2 of attorneys, consultants, and experts notwithstanding
3 any other provision of law;
4 (6) appoint without compensation, such advisory
5 committees as the Board deems appropriate; and
6 (7) accept and use with their consent, with or
7 without reimbursement, such personnel, services,
8 equipment, and facilities of agencies of the Federal
9 Government, State governments, or local political sub-
10 divisions thereof, as are necessary to conduct the activ-
11 ities of the Corporation efficiently.
12 (b) Upon request made by the President of the Corpora-
13 tion, each Federal agency is authorized and directed-
14 (1) to make its services, personnel, and facilities
15 available to the greatest practicable extent to assist the
16 Corporation in the performance of its functions; and
17 (2) to furnish to the Corporation, subject to the
18 provisions of applicable law, such information, sugges-
19 tions, estimates, and statistics as the President of the
20 Corporation may request.
21 (c) The Corporation may not-
22 (1) provide or arrange for transportation or ac-
23 commodations for persons traveling between other
24 countries and the United States, or between points
25 within the United States, in competition with busi-
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27
1 nesses engaged in providing or arranging for such
2 transportation or accommodations;
3 (2) operate industry trade shows or related activi-
4 ties within the United States or provide personnel or
5 financial assistance for such trade shows or activities;
6 (3) promulgate any rules or regulations;
7 (4) solicit dues or memberships from any State,
8 city, or private agency;
9 (5) lend money to employees; and
10 (6) own stock in another corporation.
11 SEC. 310. REPORT TO CONGRESS.
12 The Corporation shall, beginning with the first complete
13 fiscal year following the date of enactment of this Act, submit
14 an annual report for the preceding fiscal year, to the Presi-
15 dent for transmittal to the Congress on or before the 31st day
16 of December of each year. The report shall include a compre-
17 hensive and detailed report of the Corporation's operations,
18 activities, financial condition, and accomplishments and may
19 include such recommendations as the Corporation deems ap-
20 propriate.
21 SEC. 311. RECORDS AND AUDIT.
22 (a) The accounts of the Corporation shall be audited an-
23 nually in accordance with generally accepted auditing stand-
24 ards by independent certified public accountants or independ-
25 ent licensed public accountants certified or licensed by a reg-
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28
1 ulatory authority of a State or other political subdivision of
2 the United States. The audits shall be conducted at the place
3 or places where accounts of the Corporation are normally
4 kept. All books, accounts, financial records, reports, files and
5 all other papers, things or property belonging to or in use by
6 the Corporation and necessary to facilitate the audits shall be
7 made available to the person or persons conducting the
8 audits, and full facilities for verifying transactions with the
9 balances or securities held by depositories, fiscal agents, and
10 custodians shall be afforded to such person or persons.
11 (b) The report of each such independent audit shall be
12 included in the annual report required by section 310. The
13 audit report shall set forth the scope of the audit and include
14 such statements as are necessary to present fairly the Corpo-
15 ration's assets and liabilities, surplus or deficit, with an anal-
16 ysis of the changes therein during the year, supplemented in
17 reasonable detail by a statement of the sources and applica-
18 tion of funds, together with the independent auditor's opinion
19 of those statements.
20 (c)(1) The financial transactions of the Corporation for
21 any fiscal year during which Federal funds are available to
22 finance any portion of its operations may be audited by the
23 General Accounting Office in accordance with the principles
24 and procedures applicable to commercial corporate transac-
25 tions and under such rules and regulations as may be pre-
61-144 C - 80 - 3
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1 scribed by the Comptroller General of the United States. Any
2 such audit shall be conducted at the place or places where
3 accounts of the Corporation are normally kept. The repre-
4 sentatives of t.he General Accounting Office shall have access
5 to all books, accounts, records, reports, files, and all other
6 papers, things, or property belonging to or in use by the Cor-
7 poration pertaining to its financial transactions and necessary
8 to facilitate the audit, and they shall be afforded full facilities
9 for verifying transactions with the balances of securities held
10 by depositories, fiscal agents, and custodians. All such books,
11 accounts, records, reports, files, papers, and property of the
12 Corporation shall remain in the possession and custody of the
13 Corporation.
14 (2) A report of each such audit shall be made by the
15 Comptroller General to the Congress. The report to the Con-
16 gress shall contain such comments and information as the
17 Comptroller General may deem necessary to inform Con-
18 gress of the financial operations and condition of the Corpo-
19 ration, together with such recommendations with respect
20 thereto as he may deem advisable. The report shall also show
21 specifically any program, expenditure, or other financial
22 transaction or undertaking observed in the course of the
23 audit, which in the opinion of the Comptroller General, has
24 been carried on or made without authority of law. A copy of
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1 each report shall be furnished to the President and to the
2 Corporation at the time submitted to the Congress.
3 SEC. 312. FUNDING STUDY; AUTHORIZATION.
4 (a) The Corporation shall immediately undertake a corn-
5 prehensive study of the funding levels required to effectively
6 implement a comprehensive tourism development program
7 and all alternative funding measures other than direct Treas-
8 ury funding and report its findings and recommendations to
9 the Congress and the President within 6 months of its
10 incorporation.
11 (b) There is authorized to be appropriated for the ex-
12 penses of the Corporation $9,500,000 for the fiscal year
13 ending September 30, 1980. Funds appropriated for any
14 fiscal year shall remain available for obligation until expend-
15 ed, but no more than 5 per centum of the funds appropriated
16 in any fiscal year may be used for the general administrative
17 costs of the Corporation, the salaries or related expenses of
18 Corporation personnel and members of the Board, or for ex-
19 penses of consultants and advisers to the Corporation.
20 (c) Nothing contained in this Act shall be construed to
21 commit the Federal Government to provide any sums for the
22 payment of any obligation of the Corporation which exceeds
23 amounts provided in advance in appropriation Acts.
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1 SEC. 313. TRANSFER OF FUNCTIONS.
2 (a) Within 180 days after the incorporation of the
3 United States Travel and Tourism Corporation pursuant to
4 this title, the Corporation and the United States Travel Serv-
5 ice (hereinafter referred to as the Travel Service) shall take
6 such steps as are necessary to transfer to the Corporation-
7 (1) the assets, funds, supplies, materials, equip-
8 ment, and records of the Travel Service;
9 (2) the rights, privileges, powers, duties, and Ii-
10 abilities of the Travel Service in respect to any con-
11 tract, agreement, loan, account, or other obligation:
12 Provided, That, such transfer shall not limit or extend
13 any period of limitation otherwise applicable to such
14 contract, agreement, loan, account, or obligation; and
15 (3) any unexpended balances of funds appropriated
16 or otherwise accruing to the Travel Service for ex-
17 penditure by the Corporation for the payment of any
18 expenses lawfully incurred by the Travel Service.
19 (b) One hundred and eighty-one days after the incorpo-
20 ration of the United States Travel and Tourism Development
21 Corporation pursuant to this title, the International Travel
22 Act of 1961 (22 U.S.C. 2121 through 2127) and the Act of
23 July 19, 1940 (relating to the encouragement of travel) (16
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1 U.S.C. 18 through 18d) are repealed and the United States
2 Travel Service is abolished.
Passed the Senate May 14 (legislative day, April 9),
1979.
Attest: J. S. KJMMITT,
Secretary.
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DEPARTMENT OF AGRICULTURE
~S OFFICE OF THE SECRETARY
WASHINGTON. D.C 20250
OCT 9 i979
Honorable Harley 0. Staggers
Chairman, Committee on Interstate
and Foreign Commerce
House of Representatives
Washington, D.C. 20515
Dear Mr. Chairman:
This is in reply to your request of lune 22, 1979, for a report on S. 1097, a bill
"to establish a national tourism policy, a Cabinet-level coordinating council, and
a nonprofit corporation as an implementing agency to carry out the national tourism
policy."
This Department recommends that this bill not be enacted. /
The bill provides for cooperative efforts between Federal, State, and local govern-
ments and public and private organizations to implement a national tourism policy.
A National Tourism Policy Council would be established to be the principal co-
ordinating body for policies, programs, and issues relating to tourism, recreation,
or national heritage resources involving Federal agencies. The Council would
coordinate the policies and programs of member agencies, develop areas of coopera-
tive program activity, resolve interagency program and policy conflicts, and seek
the views of these outside the Federal Government with respect to Federal policy
deemed to conflict with development of tourism. The bill would also create the
United States Travel and Tourism Development Corporation, a federally-chartered,
nonprofit corporation to develop and administer a tourism program designed to
stimulate and encourage travel to the United States by residents of other countries.
We recognize the importance of both domestic and foreign tourism to the economy
of our Nation. We also recognize that the word "i~ecreation" can indude a broad
range of activities. We further recognize that tourism and recreation have important
linkages. However, a great deal of recreation activity does not indude travel
or tourism, and tourism does riot necessarily involve recreation as a primary purpose.
The Department of Agriculture is primarily concerned with recreation related
to natural resources and rural development.
We do not believe that the National Tourism Policy Council authorized in Title Il
is needed to coordinate Federal programs in natural resource related recreation.
The Council would be duplicative of the coordinating functions now being carried
out by the Heritage Conservation and Recreation Service of the U.S. Department
of the Interior. A Nationwide Outdoor Recreation Plan is prepared and updated
every 5 years by an interagency task force headed and coordinated by HCRS.
This activity has proven useful in achieving a coordinated Federal program in
natural resource related recreation.
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To achieve the recreation coordination objectives stated in paragraphs (9), (10),
and (12) of section 101 of the bill, the Council would also inevitably impinge to
some degree on the statutory authority of the Federal land managing agencies.
Through numerous acts, the Congress has recognized that Federal land managers
must have full authority to manage the lands and resources entrusted to their
care. This indudes authority to plan for and coordinate the recreation resource
on Federal lanc~ with other natural resources. It is the Federal land manager's
responsibility to assure that resource plans and programs, including recreation,
are carried out in a manner which safeguards the environment, results in judicious
use of natural resources, and meets other national goals--objectives which S. 1097
would have the Tourism Policy Council achieve through its coordinating role.
We have no comment on Title III of the bill and defer to those Federal agencies
more directly concerned with travel to the United States by residents of other
countries.
The Office of Management and Budget has advised that there is no objection to
the presentation of this report from the standpoint of the Administration's program.
Sincerely,
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CIVIL AERONAUTICS BOARD
WASHINGTON. D.C. 20428 NRE~LV~EFEmT0 B-l--35
OCT 1 0 1979
Honorable Harley 0. Staggers
Chairman
Committee on Interstate and Foreign Commerce
U.S. House of Representatives
Washington, D.C. 20515
Dear Mr. Chairman:
The Board has reviewed S. 1097, the National Tourism Policy Act, as
you asked.
S. 1097 would establish an intergovernmental council to coordinate
policies and programs affecting tourism among Federal and State agencies
and the private sector. The bill would also establish a national non-
profit corporation to promote tourism to the United States. This
corporation would be able to participate in government agency proceed-
ings that affect tourism.
We have no substantive comments on S. 1097. We do support, however,
efforts to encourage tourism to the United States, and to strengthen the
ability of the United States to compete in this area. Our own efforts
have been directed toward encouraging greater competition and lower air
fares in international markets, thereby also increasing travel by foreign
nationals to the United States. We will continue, of course, to encourage
intergovernmental and private sector help in easing and promoting inter-
national air travel.
Sincerely,
Chairman
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COM~RO~ER GENERAL OF THE UNITED ~ATES
WASHINGTON, DC. ZO54~
July 25, 1979
The Honorable Harley 0. Staggers
Chairman, Comittee on Interstate
and Foreign Catmarce
House of Representatives
Dear Hr. Chairman:
In resLxs'ise to your letter dated July 20, 1979, we have
no ooirrr~nts to offer on S. 1097.
Sincerely yours,
Associate Legislative Adviser
Office of Congressional
Relations
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THE GENERAL COUNSEL OF HOUSING AND URBAN DEVELOPMENT
WASHINGTON~ D.C. 20410
SEP 28 1979
Honorable Harley 0. Staggers
Cnairman, Committee on
Interstate and Foreign Commerce
House of Hepresentatives
Nasnington, C. C. 20515
Re: S. 1097, 96th Congress
(Cannon)
Dear Mr. Cnairrnan:
This is in response to your request for our views
concerning 5. 1097, the "National Tourism Policy Act".
The purpose of this bill is to establish a national
tourism policy. To achieve this goal, the bill provides for
tne creation of a National Tourism Policy Council, an
indepenaent entity within the Executive brancn, and the
Unitea States Travel and Tourism Development Corporation, a
nonprofit corporation whicn would implement the policies of
the Council
The Council would be "tne principal coordinating body
for policies, programs and issues relating to tourism,
recreation, or national heritage resources involving Federal
departments, agencies, or other entities". The Council
would consist of the Assistant to the President for Domestic
Affairs and Policy, wno would serve as the Council's
Chairman, anci a numoer of Cabinet officials including the
Secretary of tnis Department.
As the principal coordinating bocy for tourism,
recreation and national heritage preservation policies, tne
Council would coorcinate the policies and programs of
agencies tnat nave a significant effect on these subject
areas, develop areas of cooperative program activities, and
develop liaison with State and local governments. The
Council's annual appropriation woulu be $500,000.
Tne Corporation would have a board of Directors, made
up of fifteen persons who would be appointed by the
President for three-year terms, "by and with the consent of
the Senate". The primary business of the Corporation would
be to implement the policies of the National Council. The
proposed appropriation for tne first year would be
$9, 500, 000.
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2
Although we support the objective of the Federal
government developing a coordinated policy on tourism and
recreation, we do not support this bill's approach. We have
several specific objections concerning the bill.
We do not see any need to create a council-type
organization like the proposed National Tourism Policy
Council described in Title II of this bill. We also oppose
the creation of a federally funded development Corporation
such as the bill proposes in Title III. We do not find that
the proposed appropriations have been either adequately
explained or justified.
Finally, in our view, the proper role of the Federal
government is to develop policies conducive to increasing
tourism, collecting data on tourism to share with those
directly involved in promoting tourism -- most especially
the private sector -- and coordinating Federal activities
related to tourism. The Industry and Trade Administration
in the U. S. Department of Commerce is fully capable of
perfarming these functions.
Because of these concerns and questions, we are unable
to support S. 1097. We do, of course, support the general
objective of the Federal government developing a coordinated
tourism and recreation policy.
The Office of Management and Budget has advised that
there is no objection to the presentation of this report
from the standpoint of the Administration's program.
Sincerely,
Edward W. Norton
Acting General Counsel
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United States Department of the Interior
OFFICE OF THE SECRETARY
WASHINGTON, D.C. 20240
SEP 2 11979
Honorable Harley 0. Staggers
Chairm3.n, Ca~inittee on Interstate
and Foreign Carnerce
U.S. House of Representatives
Weshington, D. C. 20515
Dear Mr. Chairman:
This responds to your r~jiiest for our views on S. 1097, an Act
"To establish a national tourism policy, a Cabinet level courdinating
c~u-cil and a nonprofit corporation as an inpienenting agency to carry
out the national tourism policy."
We recxzrrrend against the enactaent of this legislation.
S. 1097 would establish a national tourism policy, a Cabinet level
cxordinating council and a non-profit corporation as an iplensmting
agency to carry out the national tourism policy.
In our view, the activities called for in S. 1097 are already in place
in Federal agencies and the private sector. We are aware of no deton-
strated need for a r~i burea~racy to perform then~. Moreover, the
pratotional, market research and infornational services which would be
undertaken by the Council are already perforrt~f by Chaxrbers of CanlErce,
State develo~nt and tourism agencies and non-profit volunteer
organizations. Thus, there is no need for Federal duplication of
these private sector activities.
The Office of Managenent and B~get has advised that there is r~n
thjection to the presentation of this r~ort fran the standpoint of
the Adeinistration' s program.
Sixx~erely,
Herb st
SEERE2ARY
PAGENO="0045"
41
International Office of the Director
Communication . -
Ag~n~cy
Uniied States of America
V.öshington. D.C. 20547 USICA
September 7, 1979
Dear Mr. Chairman:
I am pleased to reply to your request for comment
on S. 1097, the "National Tourism Policy Act."
The Agency prefers the approach of H.R. 3449 to
that of S. 1097 to give direction to the U.S.
Government's role in tourism development. Because
the mission of this Agency, as defined in P.L. 95-
426, is "To further the national interest by
improving United States relations with other
countries and peoples through the broadest possible
sharing of ideas, information, and educational and
cultural activities," we have reservations about
5. 1097.
Section 308(b) of S. 1097 could be interpreted to
authorize the United States Travel and Tourism
Development Corporation (the "Corporation") to pay,
in whole or in part, for scholarships, stipends or
other inducements "to stimulate and encourage
travel to the United States by residents of other
countries for the purpose of study, culture,.. .and
other activities." As you no doubt know, this
Agency, under the authority of the Fulbright-Hays
Act and Reorganization Plan No. 2 of 1977, is
responsible for official U.S. support of
international educational and cultural exchange
programs. We think it important -- in the
interests of the taxpayers -- to insure that any
legislation specifically preclude duplication with
already existing activities administered by this or
other agencies.
The Honorable
Harley 0. Staggers, Chairman
Committee on Interstate and
Foreign Commerce
House of Representatives
PAGENO="0046"
42
An equal degree of concern is caused by the
imperative in Section 309 which would direct each
Federal agency to comply with a request from the
President of the Corporation for services,
personnel, facilities, information, suggestions,
estimates or statistics." We think this goes too
far in permitting the proposed Corporation to levy
demands on the resources and to set the work
priorities of the Executive Branch.
Finally, Section 306(a) of the bill imposes an
absolute bar on the receipt of . . . any salary or
other compensation from any source other than the
Corporation. . ." by officers of that proposed
Corporation. As drafted, this section could bar
the employment of disabled veterans who are
eligible for veterans compensation. The broad
prohibition may have other undesirable effects.
We are advised that the Office of Management and
Budget has no objection to the submission of this
report.
Sincerely,
PAGENO="0047"
43
~Intttb ~tatr~ ~tpartmtnt of 3~u~ticr
ASSISTANT ATTORNEY GENERAL
LEGISLATIVE AFFAIRS
WASHINGTON, D.C. 20530
CCI 19 t979
OCT19 1979
Honorable Harley 0. Staggers
Chairman, Committee cm Interstate
and Foreign Commerce
House of Representatives
Washington, D. C. 20515
Dear Mr. Chairman:
This is in response to your request for the views of
the Department of Justice on S. 1097, a bill `To establish
a national tourism policy, a Cabinet level coordinating
council and a nonprofit corporation as an implementing agency
to carry out the national tourism policy.' Because the sub-
ject matter of the proposed legislation is not generally
within the primary areas of responsibility or concern of the
Department of Justice, we defer to those departments more
directly affected, such as the Departments of State and Com-
merce, on such questions as the need for this legislation.
The Office of Management and Budget has advised that
there is no objection to the submission of this report from
the standpoint of the Administration's program.
Sincerely,
Alan A. Parker
Assistant Attorney General
PAGENO="0048"
44
flATIOflAL WRSHIflBTDfl
EfiODUJfl1EflT D.E. 20505
T F-1 E A F~TS A Federal agency advised by the
National Council on the Arts
September 6, 1979
Honorable Harley 0. Staggers
Chairman, House Committee on
Interstate and Foreign Commerce
Room 2125, Rayburn House Office Building
Washington, D. C. 20515
Dear Mr. Chairman:
This is in response to your letter of July 23 requesting
the views of the National Endowment for the Arts on S. 1097,
a bill "to establish a national tourism policy, a Cabinet
level coordination council and a nonprofit corporation as
an implementing agency to carry out the national tourism
policy.
The National Endowment for the Arts defers to the views of
other agencies directly concerned with foreign tourism in
the United States.
The Office of Management and Budget has advised us that it
has no objection to the submission of this report from the
standpoint of the Administration's program.
Sincerely,
/~~e(9f~ /5ii&1/~
Livingston L. Biddle, Jr.
Chairman
PAGENO="0049"
45
NATIONAL ENDOWMENT FOR THE HUMANITIES
WASHINGTON, D.C. 20506
July 31, 1979
THE CHAIRMAN
Honorable Harley 0. Staggers
Chairman
Committee on Interstate and Foreign Commerce
2125 Rayburn House Office Building
Washington, D. C. 20515
Dear Chairman Staggers:
I reply to your letter of July 23 on S. 1097.
A review of S. 1097 suggested little, if any, impact upon
the work of the National Endowment for the Humanities. I therefore
offer no comment on the bill, though thanking you for the invitation
to do so.
Best wishes,
Sincerely,
Joseph Duf fey
Chairman
~ 0 - 80 -
PAGENO="0050"
46
EXECUTIVE OFFICE OF THE PRESIDENT
OFFICE OF MANAGEMENT AND BUDGET
WASHINGTON. D.C. 20503
OCT15 1979
Honorable Harley 0. Staggers
Chairman, Comr~iittee on Interstate
and Foreign Commerce
House of Representatives
Washington, D.C. 20515
Dear Mr. Chairman:
This is in response to your request for the views of
the Office of Management and Budget on S. 1097, a
bill "To establish a national tourism policy, a Cabinet
level coordinating council and a nonprofit corporation
as an implementing agency to carry out the national
tourism policy."
For the reasons stated in the testimony given before the
Subcommittee on Transportation and Commerce on August 1,
1979, by the Department of Commerce, the Office of
Management and Budget opposes S. 1097, enactment of which
would not be in accord with the program of the President.
Sincerely,
/7ames M. Frey /
/ Assistant Director/for
Legislative Reference
PAGENO="0051"
47
,~,oI Tt~
OFFICE OF THE SECRETARY OF TRANSPORTATION
WASHINGTON, D.c. 20590
5R4~ OAR
GENERAL COUNSEL SE P 1 `7 1979
Honorable Harley 0. Staggers
Chairman
Committee on Interstate and
Foreign Commerce
House of Representatives
Washington, D. C. 20510
Dear Mr. Chairman:
Your Committee has asked for the views of this Department concerning S.
1097, a bill
"To establish a national tourism policy, a Cabinet level
coordinating council and a nonprofit corporation as an
implementing agency to carry out the national tourism
policy."
Title I of 5. 1097 would establish a national tourism policy. While the
Department of Transportation believes that there is a need for such a
policy to guide the many government programs relating to tourism, we
perfer the policy objectives outlined in the Administration's bill H.R.
3449.
Titles IT and TIT of S. 1097 would create a National Tourism Policy
Council and a United States Travel and Tourism Development Corporation.
The Department questions the effectiveness of such a Policy Council and
whether or not the United States Travel and Tourism Development Corporation
would be the most effective approach for United States Government
involvement in the development and promotion of tourism.
The Department of Transportation supports enactment of H.R. 3449, and
opposes enactment of 5. 1097.
The Office of Management and Budget advises that from the standpoint of
the Administration's program there is no objection to the submission of
this report to the Committee.
Sincerely,
Linda Heller Kansas
PAGENO="0052"
48
Mr. FL0RI0. Each of the witnesses has received an advance list of
specific questions which they are requested to address. I would ask
that the witnesses submit their testimony, and their entire testimo-
ny will be made part of the record, summarize their testimony, and
then do their best to address the specific questions that we have
provided to them.
Our first witness is a longtime friend of the committee and a
personal friend of the chairman, who has played a very important
role with assisting this committee in providing and obtaining infor-
mation on the economic consequences particularly of the tourism
industry. Before perhaps introducing Mr. Juliano I would ask if
Mr. Santini has anything he would like to say by way of introduc-
tory remarks.
Mr. SANTINI. I appreciate the opportunity to welcome the distin-
guished array of panelists and speakers that we will have before us
this morning, Mr. Chairman. I particularly appreciate your com-
mitment to an ongoing vigorous effort to advance the interests of
tourism. I will certainly do everything I can to support and encour-
age and endorse your efforts in that regard. In view of all the
distractions you are having these days with trains, I think it is
particularly laudable that you have time to dedicate yourselves to
tourism.
Thank you, Mr. Chairman.
Mr. FL0RI0. Thank you very much.
Without objection the Chair would like to place, at this point in
the record, Congressman Madigan's opening statement. Unfortu-
nately he could not be here this morning.
STATEMENT OF HON. EDWARD R. MADIGAN, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF ILLINOIS
Mr. MADIGAN. Good morning. I am extremely pleased that we
are initiating this series of hearings on the national tourism policy.
Mr. Chairman, during the consideration of H.R. 2795, which
provides for interim financing of the U.S. Travel Service, we indi-
cated that we were not satisfied with the present efforts of the
USTS and expressed the hope that this Congress would be able to
definitively outline our national tourism policy and determine
what the Federal role should be.
We have agreed that the travel and tourism industry has not
received adequate policy support or guidance from the Federal
Government.
I would like to work closely with the members of the subcommit-
tee and the administration do define a national tourism policy and
to create an acceptable mechanism to coordinate and implement
that policy.
These hearings provide the opportunity for us to hear the views
of those who will be impacted most by a new tourism policy. I
appreciate the active participation of representatives of the tour-
ism and travel industry in our efforts to formulate an effective
Federal program.
Mr. Chairman. I am confident that following these hearings we
can jointly develop legislative proposals for consideration by our
subcommittee and the full committee. I look forward to that effort.
PAGENO="0053"
49
Mr. FL0RI0. The first witness is Mr. Robert Juliano, legislative
representative of the Hotel and Restaurant Employees and Bar-
tenders International Union.
STATEMENT OF ROBERT E. JULIANO, LEGISLATIVE REPRE-
SENTATIVE, HOTEL AND RESTAURANT EMPLOYEES AND
BARTENDERS INTERNATIONAL UNION
Mr. JULIANO. I would ask permission to make my statement a
part of the record.
Mr. FL0RI0. Without objection [see p. 52].
Mr. JuLIAN0. I caught Amtrak on time here. I speak of the time
of some personal disappointment, however, because I just got my
report card back, and Ham Jordan said that the one area that they
were looking for the most was people who had good relations with
Capitol Hill, and I flunked miserably in that respect. I did all right
on loyalty, however, to the President, so I think there is a possibil-
ity we may have something going.
In behalf of our general president, Ed Hanley and the 450,000
members we proudly represent, may I say what a pleasure it is to
appear before this distinguished subcommittee for what all of us
hope is the near completion of our long effort begun over 6 years
ago to enact a national tourism policy, and thereby make sense out
of the extensive Federal involvement in the industry. If we are
successful, the American economy will be the winner.
Lest there be any doubt, tourism in our mind means one thing-
jobs. Total employment in the industry is over 6 million men and
women, almost 7 percent of the total work force. As we have said
often, to the point of redundancy, we are undoubtedly the most
labor-intensive industry in the United States. Just a few quick
figures. Women constitute more than half of the travel industry
work force. Blacks constitute about 14 percent of the total work
force. One-third of all youths age 16 to 21 in the work force are
employed in the travel industry. I might add that there are other
witnesses such as American Express, I am sure, who have taken
the time to put together a very cogent presentation to dwell more
on those aspects.
Our economy obviously is very sensitive to the travel industry.
Travel industry in turn is very sensitive to the economy. Unfortu-
nately, we are a direct barometer of the overall national economy,
so when there is a soft economy or recessionary period, we have
potentially serious problems in our industry. When the economy is
solid and is very positive, that is usually a time for an upbeat
period.
We also are sitting here today confronted with a major national
problem, which has enormous consequences in our industry, and
that is energy. I cannot think of a more appropriate time to be
sitting here discussing the need to have some sort of a Federal
entity to discuss what kind of a role the Federal Government
should play in tourism, at a time when we have apparently a total
lack of policy at a national level on both of the issues that affect
the industry the deepest.
You all know what happened in the energy crisis of 1974. We
had 5 years in between, full knowledge of what happened, with the
amounts of layoffs and the bankruptcies that were caused, and yet
PAGENO="0054"
50
DOE primarily permitted us to drift into the energy crisis, and the
best they could do was again recommend, incredibly, weekend clos-
ings of gasoline stations. Congress, in its infinite wisdom, categori-
cally rejected this nonsensical proposal.
Another area of interest to us is the situation regarding the so-
called three-martini lunch or legitimate business-related entertain-
ment expenses. We were able to defeat that, thanks to the help of
you people in Congress, and the proposal keeps kicking around.
There is no merit to the issue, an enormous impact, and yet it still
keeps kicking around because it has a lot of media appeal, and it is
a widely misunderstood issue.
We have a situation today where the United States is without
question the greatest tourist attraction in the world, the greatest
bargain, and at a time when we should be spending large sums of
money to attract people over here we are instead confronted with
the administration saying we are going to eliminate the U.S.
Travel Service, we are going to cut back the moneys and we are
going to put the moneys into another area as it relates to interna-
tional trade.
We are confronted-you were, we were-with what I consider to
be the unbelievable testimony in the last hearing on the temporary
bill which is ready to come I think for full House action any day
now, of the administration witness testifying against the commit-
tee's bill for an $8 million authorization and appropriation for
continued funding, testifying against that, and yet fully admitting
that the cost-benefit ratio for every dollar spent in international
promotion is 18-to-i, again somewhat of an incredible situation.
We have had other examples, and you will hear many, from
other witnesses about what we need to do, and I just thought that,
in light of what you asked for, Mr. Chairman, our feeling is we
need to make some sense out of the existing Federal involvement.
By that we mean two things:
No. 1, assure that the interests of the travel industry, as set out
in a statement of national policy, are adequately weighed whenever
an agency of Government considers a policy or program which
affects the industry. In other words, that we get a hearing before a
proposal is formulated, not de facto as has been the practice.
Second, that to the maximum extent possible, all policies and
programs affecting tourism are in harmony, and contradiction and
duplication are removed.
My union, as well as many diverse segments of the industry,
believes S. 1097 accomplishes this and that is why we work for its
passage.
We would like to make a few quick comments about why we feel
a quasipublic corporation or a similar entity is a more effective
vehicle than any agency of the Federal Government.
First, no one agency would be able to put ft,rward the interests of
the industry aggressively. Again running the risk of sounding re-
dundant, all of the examples we could talk about are existent
today, with the situation of USTS not making any comments on
the three-martini lunch. What was anyone doing with DOE when
we were facing critical problems on the weekend closings? Those
kinds of examples, where one entity could act as a focal point for
industry attention.
PAGENO="0055"
51
Second, experience tells us that an agency such as USTS is not
only subject to the budgetary whims of any given administration,
but its very existence is subject to the caprice of 0MB. It is simply
impossible to do an effective job on any long-range, permanent
basis, under those circumstances.
Finally, the quasi-public corporation that the Senate bill calls for
and that you all are considering raises some questions about over-
seas offices, about the funding level, about the costs of the various
programs, about the appropriate method of financing. I suggest
respectfully these questions are premature, since part of the man-
date is that the corporation and an advisory board put together
and formulate a program as part of the legislation, report back to
you people within 6 months, specifically delineating the type of
programs that such an entity would carry out, and the funding
level for these respective programs.
Then we believe would be the time for the subcommittee to raise
the questions based on whatever recommendations the experts on
the corporation would submit, who would be most familiar with the
industry problems.
Finally, Mr. Chairman, you are to be commended for holding
hearings on this subject matter. We understand and applaud your
desire to hold field hearings which will further expose tourism to
public scrutiny and allow another opportunity to engender positive
public opinion on a very misunderstood subject. Our ideas are not
cast in concrete, and we hope your subcommittee's deliberations
may shed light on some new ideas or further bolster the veracity of
old ideas whose time now has arrived.
To the extent that it means anything, rest assured you are
proceeding in these important deliberations with the full support of
the Hotel and Restaurant Employees and Bartenders International
Union. Thank you.
[Mr. Juliano's prepared statement follows:]
PAGENO="0056"
52
STATEMENT OF ROBERT E. JULIANO, LEGISLATIVE REPRESENTATIVE
HOTEL AND RESTAURANT EMPWYEES AND NAF:ENDERS INTERNATIONAL
UN ION
MR. CHAIRMAN, ON BEHALF OF OUR GENERAL PRESIDENT, EDWARD T. HANLEY,
AND THE 450,000 MEMBERS WE PROUDLY REPRESENT, MAY I SAY WHAT A
PLEASURE IT IS TO APPEAR BEFORE THIS DISTINGUISHED SUBCOMMITTEE
FOR WHAT ALL OF US HOPE IS THE NEAR COMPLETION OF OUR LONG EFFORT
BEGUN OVER 6 YEARS AGO TO ENACT A NATIONAL TOURISM POLICY AND
THEREBY MAKE SENSE OUT OF THE EXTENSIVE FEDERAL INVOLVEMENT
IN THE INDUSTRY, IF WE ARE SUCCESSFUL, THE AMERICAN ECONOMY
WILL BE THE WINNER.
LEST THERE BE ANY DOUBT, TOURISM IN OUR MIND MEANS ONE THING: JOBS
A THRIVING TRAVEL INDUSTRY MEANS MORE JOB OPPORTUNITY AND STABILITY
FOR OUR MEMBERS. TOTAL EMPLOYMENT IN THE INDUSTRY IS OVER 6 MILLION
MEN AND WOMEN, ALMOST 7% OF THE WORK~3RCE. AS WE HAVE SAID OFTEN,
THERE IS NO MORE LABOR INTENSIVE INDUSTRY THAN OURS. WE ARE THE
CHIEF EMPLOYERS OF MINORITIES, FEMALES, UNSKILLED, AND SEMI-SKILLED
WORKERS, ALL CATEGORIES WHERE UNEMPLOYMENT IS THE HIGHEST. THE
FOLLOWING INFORMATION SHOULD INDICATE JUST WHAT OPPORTUNITY THE
TOURISM INDUSTRY PRESENTS FOR THE AFOREMENTIONED CATEGORIES:
WOMEN CONSTITUTE MORE THAN HALF ~53~3%) OFTHE TRAVEL
INDUSTRY WORKFORCE.
BLACKS CONSTITUTE ABOUT 14% OF THE TOTAL TOURIST
INDUSTRY WORKFORCE AS AGAINST A 10% PARTICIPATION
IN THE REMAINDER OF THE WORKFORCE.
ONE-THIRD OF ALL YOUTHS AGED 1621 IN THE WORKFORCE
ARE EMPLOYED IN THE TRAVEL INDUSTRY.
TWO ARTICLES APPEARING SIDE-BY-SIDE IN LAST FRIDAY'S WASHINGTON
POST ILLUSTRATE THE POINT VERY CONCRETELY, WE ALSO BELIEVE THEY
ILLUSTRATE WHY WE NEED A NATIONAL TOURISM POLICY SO URGENTLY. WE
WOULD LIKE TO QUOTE FROM THEM,
PAGENO="0057"
53
"NO. 1 D.C. RETAIL SECTOR
"MORE CONSUMER DOLLARS GO TO RESTAURANTS AND BARS IN THE
DISTRICT OF COLUMBIA THAN ANY OTHER RETAIL BUSINESS,
ACCORDING TO A NEW SURVEY OF THE CITY'S ECONOMY BY
THE U.S. COMMERCE DEPARTMENT,
"THERE ARE MORE EATING AND DRINKING PLACES THAN ANY
OTHER TYPE OF RETAILING ESTABLISHMENT, HIGHER ANNUAL
SALES THAN ANY OTHER SECTOR, THE LARGEST SINGLE
EMPLOYMENT BASE A~ HIGHEST ANNUAL RETAIL PAYROLL,
ACCORDING TO A 19/I CENSUS BUREAU STUDY RELEASED
THIS WEEK,
"EATING AND DRINKING SAL~ IN D C JUMPED 147 PERCENT
IN THE FIVE YEARS FROM fl~/2 TO ~977 WHIL~ THE PAYROLL
FOR WORKERS AT SUCH ESTABLISHMENTS ROSE 44 PERCENT,
THE CENSUS BUREAU REPORTED,
"AT THE SAME TIME, THE CENSUS BUREAU STATISTICS SHOW A
CONTINUED DETERIORATION OF OTHER RETA.LL BUSINESSES IN
THE CITY, OVERALL THE NUM~R OF D,C, RETAIL ESTABLISH-
MENTS DECLINED BY 425 TO 14,115 BETWEEN 1972 AND 19//.
THE NUMBER OF EMPLOYEES IN RETAILING FELL MORE THAN
6,500 TO 47,000.
"WITH THEIR DOORS BLOCKED BY GAS LINES, THEIR CUSTOMERS
STRANDED BY CAB STRIKES AND THEIR DINING ROOMS TURNED
INTO DESERTS BY PRESIDENT CARTER'S THERMOSTAT RULES,
WASHINGTON S RESTAURANTS ARE IN TROUBLE.
"SHORT LINES AT LUNCH AND EMPTY TABLES AT DINNER ARE
THE SYMPTOMS OF M) ENERçY-INSPIRED EXODUS FROM THE DIS-
TRICT OF COLUMBIA S 1,OUO RESTAURANTS, THE BIGGEST RE-
TAIL BUSINESS IN THE CITY.
"THE LAST TWO MONTHS HAVE BEEN SLOW ALL OVER THE METRO-
POLITAN AREA RESTAURATEURS REPORT, BUT ESPECIALLY SO IN
DOWNTOWN ESTABLISHMENTS AND ESPECIALLY ON WEEKENDS.
"BUSINESS IS DOWN AS MUCH AS 30 PERCENT, RESTAURANT
OWNERS SAY.
PAGENO="0058"
54
"IT'S A TWO-PRONGED PROBLEM, EXPLAINED LEE PALMER,
OWNER OF THE OLD CLUB IN ALEXANDRIA AND PRESIDENT OF
THE RESTAURANT ASSOCIATION OF METROPOLITAN WASHINGTON,
"TOURIST BUSINESS HAS DECLINED DIRECTLY DUE TO THE
GASOLINE SITUATION, AND WHEN IT DEC~INES, ALL THE
ECONOMY DECLINES WITH IT, E ADDED,
OUR ECONOMY IS VERY SENSITIVE TO THE STATE OF THE TRAVEL INDUSTRY,
AND THE STATE OF THE TRAVEL INDUSTRY IN TURN IS VERY SENSITIVE TO
THE MANY GOVERNMENT AGENCIES, PROGRAMS, AND POLICIES (50 PLUS
AGENCIESJ 100 PLUS PROGRAMS) WHICH AFFECT IT, IF THERE IS ANY
DOUBT AS TO HOW THE INDUSTRY IS AFFECTED BY GOVERNMENT PROGRAMS,
THE INDUSTRY UNEMPLOYMENT AND BANKRUPTCIES CAUSED BY THE WEEK-END
CLOSING OF SERVICE STATIONS DURING THE ENERGY CRISIS OF 19714,
SHOULD DISPEL IT,
NEVERTHELESS, WITH FULL KNOWLEDGE OF WHAT HAPPENED, AND HOW
DEPENDENT THE INDUSTRY IS ON ADEQUATE AND UNINTERRUPTED SUPPLIES OF
ENERGY, THE AGENCIES 0P THE FEDERAL GOVERNMENT (PRIMARILY DOE) NOT
ONLY PERMITTED US TO "DRIFT" INTO THE PRESENT ENERGY CRISIS, THEY
AGAIN INCREDULOUSLY RECOMIENDED "WEEKEND" CLOSINGS OF SERVICE STATIONS.
CONGRESS, IN ITS INFINITE WISDOM, CATEGORICALLY REJECTED THIS
NONSENSICAL PROPOSAL.
ANOTHER EXAMPLE OF HOW SERIOUSLY THE GOVERNMENT REGARDS THE INDUSTRY
IS THE RECURRING, FRIVOLOUS PROPOSAL TO DENY TAX DEDUCTIONS FOR
LEGITIMATE BUSINESS-RELATED ENTERTAINMENT EXPENSES. HAD THE MOST
RECENT PROPOSAL BECOME LAW, IT WOULD HAVE DEVASTATED CONVENTION
BUSINESS, WHICH IS A SUBSTANTIAL SEGMENT OF OUR $115 BILLION TRAVEL
INDUSTRY, AND CAUSED THE LOSS OF UPWARDS OF 200,000 JOBS.
PAGENO="0059"
55
ANOTHER EXAMPLE IS THE ADMINISTRATION'S EFFORTS TO DENY A FEDERAL
ROLE IN PROMOTING INTERNATIONAL TOURISM. AS THIS COMMITTEE IS
WELL AWARE, THE UNITED STATES HAS A CHRONIC TRAVEL DEFICIT OF
ABOUT $3 BILLION. NEVER HAS THE OPPORTUNITY BEEN GREATER TO REVERSE
THAT TREND, THE STATE OF THE DOLLAR, CHEAPER AIR FARES, AND GREAT
TOURIST ATTRACTIONS, MAKE THE U.S. THE BEST INTERNATIONAL TOURIST BUY.
THE TRAVEL INDUSTRY UNANIMOUSLY RECOGNIZES THAT TO CAPITALIZE FULLY
ON THIS POTENTIAL, THE PROMOTIONAL EFFORTS OF THE PRIVATE SECTOR
ARE NOT SUFFICIENT OF THEMSELVES. A SEPARATE, COMPLEMENTARY EFFORT
BY THE GOVERNMENT IS ESSENTIAL.
WE MIGHT ADD THAT 125 OTHER NATIONS ALSO RECOGNIZE THE IMPORTANCE
OF A GOVERNMENT EFFORT, AND OPERATE NATIONAL TOURIST OFFICES ABROAD.
FOR EXAMPLE, 25 FOREIGN GOVERNMENTS HAVE NATIONAL TOURIST OFFICES
IN CANADA UJ~GING THE CANADIAN CONSUMER TO TRAVEL TO DESTINATIONS
OTHER THAN THE U.S. SIMILARLY IN MEXICO THERE ARE AT LEAST
17 SUCH NATIONAL TOURIST OFFICESJ IN JAPAN THERE ARE ~4O FOREIGN
NATIONAL TOURIST OFFICES AND AT LEAST 31 FOREIGN AIR CARRIERSJ
65 FOREIGN GOVERNMENTS AND 64 FOREIGN AIRLINES COMPETE IN WEST
GERMANY~ IN THE UNITED KINGDOM THERE ARE 5~ FOREIGN NATIONAL TOURIST
OFFICES~ AND 46 IN FRANCE. YET, 0MB HAS SAID THERE IS NO ROLE FOR
THE FEDERAL GOVERNMENT IN PROMOTING INTERNATIONAL TOURISM,
WE ARE CERTAIN YOU WILL HEAR OF MANY OTHER EXAMPLES DURING THESE
HEARINGS, AND THE RECORD OF THE NATIONAL TOURISM POLICY IS FULL
OF THEM AS WELL. THE POINT OF IT ALL IS THAT WE URGENTLY NEED A
PAGENO="0060"
56
NATIONAL TOURISM POLICY TO "MAKE SENSE" OUT OF THE EXISTING FEDERAL
INVOLVEMENT WHICH IS SO EXTENSIVE.
AND BY "MAKING SENSE" I MEAN TWO THINGS:
* ASSURE THAT THE INTERESTS OF THE TRAVEL INDUSTRY,
AS SET OUT IN A STATEMENT OF NATIONAL POLICY, ARE
ADEQUATELY WEIGHED WHENEVER AN AGENCY OF GOVERNMENT
CONSIDERS A POLICY OR PROC~A1 WHICH AFFECTS THE
INDUSTRY. IN OTHER WORDSJ THAT WE GET A HEARING
BEFORE A PROPOSAL IS FORMULATED, NOT DE FACTO AS HAS
BEEN THE PRACTICE.
* THAT TO THE MAXIMUM EXTENT POSSIBLE, ALL POLICIES
AND PROGRAMS AFFECTING TOURISM ARE IN HARMONY, AND
CONTRADICTION AND DUPLICATION ARE REMOVED.
MY UNION) AS WELL AS MANY DIVERSE SEGMENTS OF THE INDUSTRY, BELIEVES
s.1097 ACCOMPLISHES THIS. THAT IS WHY WE WORKED FOR ITS PASSAGE.
WE WOULD LIKE TO MAKE JUST A FEW COMMENTS ABOUT WHY WE FEEL A
QUASI-PUBLIC CORPORATION OR SIMILAR ENTITY, IS A MORE EFFECTIVE
VEHICLE THAN AN AGENCY OF THE FEDERAL GOVERNMENT. FIRST, THE
GOVERNMENT INVOLVEMENT IS BROAD AND PERVASIVE (100 PLUS PROGRAMS;
50 PLUS AGENCIES). NO ONE AGENCY OF G~VERNMENT WOULD BE ABLE TO
PUT FORWARD THE INTERESTS OF THE INDUSTRY AGGRESIVELY. WE HAVE
ALREADY SEEN THIS. FOR EXAMPLE) HOW EFFECTIVE WAS THE DEPARTMENT
OF COMMERCE WHEN THE DEPARTMENT OF THE TREASURY WAS PROPOSING THE
THREE-MARTINI LUIICH; OR DOE PROPOSING WEEKEND CLOSINGS; OR 0MB
PROPOSING TO CLOSE DOWN USTS? IT JUST ISN'T IN THE CARDS FOR ONE
PAGENO="0061"
57
AGENCY, ESPECIALLY ONE THAT IS CONSIDERED INSIGNIFICANT, TO INTERVENE
EFFECTIVELY IN THE DECISION PROCESSES OF ANOTHER,
SECOND, EXPERIENCE TELLS US THAT AN AGENCY SUCH AS USTS IS NOT
ONLY SUBJECT TO THE BUDGETARY WHIMS OF ANY GIVEN ADMINISTRATION1
ITS VERY EXISTENCE IS SUBJECT TO THE CAPRICE OF 0MB, IT IS SIMPLY
IMPOSSIBLE TO DO AN EFFECTIVE JOB ON ANY LONG-RANGE, PERMANENT
BASIS UNDER THOSE CIRCUMSTANCES, TO THOSE WHO ASK WHY SHOULD
THE GOVERNMENT BE INVOLVED, I SAY IT ALREADY IS - (50 PLUS
AGENCIES~ 100 PLUS PROGRAMS), BUT EVEN MORE IMPORTANTLY WE SAY
"WHY SHOULDN'T THE GOVERNMENT GET ITC ACT TOGETHER?" WE ARE
TALKL~G ABOUT 6 MILLION JOBS, AND A $115 BILLION PLUS
INDUSTRY, THAT IS THE BOTTOM LINE,
FINALLY, WE WOULD LIKE TO MAKE A FEW OBSERVATIONS ABOUT THE FUNCTIONS
GIVEN THE QUASI-PUBLIC CORPORATION UNDER S, 1097. QUESTIONS
HAVE BEEN RAISED AS TO WHETHER THE CORPORATION'S OVERSEAS OFFICES
SHOULD BE STREET LEVEL AND OPEN TO THE PUBLIC~ AND HOW THE
CORPORATION CAN BE EXPECTED TO CARRY OUT ALL THE PROGRAMS GIVEN IT BY
s,1097, ON A $9 MILLION BUDGET. s,1097, ANTICIPATES ALL OF THESE
QUESTIONS, THE $9 MILLION IN SEED MONEY, INTENDED TO GET THE
CORPORATION OPERATING AT A MINIMAL LEVEL PENDING ITS RECOMMENDATIONS
TO CONGRESS FOR THE FULL PROGRAM, PRESCRIBED IN s,1097, THE COST
OF THAT PROGRAM, AND THE APPROPRIATE METHOD OF FINANCING THE
CORPORATION, MAY I RESPECTFULLY SUCCEST THESE QUESTIONS ARE
PREMATURE. THE CORPORATION MUST SUBMIT ITS REPORT TO CONGRESS
PAGENO="0062"
58
WITHIN SIX MONTHS. THEN,WE BELIEVE) WOULD BE THE TIME FOR THE
SUBCOMMITTEE TO RAISE THESE QUESTIONS BASED ON WHATEVER RECOMMENDATIONS
THE EXPERTS ON THE CORPORATION SUBMIT.
MR. CHAIRMAN., YOU ARE TO BE COMMENDED FOR HOLDING HEARINGS ON
THIS SUBJECT MATTER. WE UNDERSTAND AND APPLAUD YOUR DESIRE TO
HOLD FIELD HEARINGS WHICH WILL FURTHER EXPOSE TOURISM TO PUBLIC
SCRUTINY AND ALLOW ANOTHER OPPORTUNITY TO ENGENDER POSITIVE
PUBLIC OPINION ON A HITHERTO MISUNDERSTOOD SUBJECT. OUR IDEAS
ARE NOT CAST IN CONCRETE, AND WE HOPE YOUR SUBCOMMITTEE'S
DELIBERATIONS MAY SHED LIGHT ON SOME NEW IDEAS OR FURTHER BOLSTER
THE VERACITY OF OLD IDEAS WHOSE TIME HAS NOW ARRIVED. TO THE
EXTENT IT MEANS ANYTHING) REST ASSURED YOU ARE PROCEEDING IN
THESE IMPORTANT DELIBERATIONS WITH FULL SUPPORT OF THE
HOTEL AND RESTAURANT EMPLOYEES AND BARTENDERS INTERNATIONAL UNION.
Mr. FLORIO. Thank you very much. Mr. Santini.
Mr. SANTINI. Thank you, Mr. Chairman.
I certainly endorse, Mr. Juliano, your sense of personal exaspera-
tion at the inability of the Government to deal in a balanced
fashion with the problems on the tourism industry. I think that is
unequivocally true. We are looking at a legislative vehicle, now
designated S. 1097, which hopes to respond and address these prob-
lems. And given the sort of low-level consideration that tourism is
given in governmental deliberation bodies today, I suppose any
kind of legislative improvement would be welcome.
We are going to study very carefully this proposal, and deter-
mine if this is the best solution, or at least the best solution
available.
I have concerns. If we designate, for example, Mr. Stuart Eizen-
stat as the entity within the National Tourism Policy Council and
we are confronted again with another energy shortage, do we, do
those of us who are concerned about the survival of the tourism
industry, and its continued economic growth, development, have
any realistic hope and expectation that Mr. Eizenstat will devote
serious time, effort and deliberation to the concerns of weekend gas
station closings, rationings, three-martini lunches?
Are we putting in place a solution that is doomed to failure
before it commences? I would appreciate your thoughts on that.
Mr. JuLIAN0. I believe, first of all, that the individual in question
is sensitized to those areas as of right now. I do not know of any
sentiment that exists in Congress or in the administration or in
DOE for weekend closings.
I must say, however, it exacted quite a price to reach that
particular stage. We all had information in February, and DOE
had studies, talking about how do you manage gasoline queues in
periods of shortfall. It sounds terribly like deja vu, because here
PAGENO="0063"
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they had a professional study talking about it and what was the
problem addressing itself to, and that was gasoline lines, and what
do we end up with? A serious problem with gasoline lines.
What the study in essence said, and what we were proposing
were things like minimum purchase, consideration of odd-even, 55-
mile-per-hour speed limit, carpooling, et cetera. All those things
were available at their disposal for their consideration. The one
thing the study said you should not consider under any circum-
stance is closing the gasoline stations, especially on the weekend,
because they are counterproductive.
What does Mr. Schlesinger take but the weekend closing and put
it in as one of his proposals along with an inequitable and unfair
rationing program, an absolutely ludicrous proposal about outdoor
lighting, and unfortunately something to do with thermostats. In a
weekened condition I was one who suggested and I apologize to you
enormously that one out of four is the least we could do for the
President and so we backed off the thermostat and that is why it is
a little warmer in these rooms, besides the hot air from some of the
witnesses.
I think they are totally sensitized to that, but the problem is it
was the Congress that had to do that. We had to come to you and
say, will you please reject these proposals. You did not have a
chance to amend it, going back to whatever was called for that had
to be submitted, and what I feel is that if there is an entity that
could focus in on these problems, certainly they could intervene
with DOE. We could go to them and say, "Why don't you talk to
these people and see if you can make some sense before they issue
the proposal." They issue the proposal. DOE would have to under-
stand.
Maybe they are not going to listen to them. Chances are they
would not. Certainly Schlesinger would not have listened, but then
they face the prospect of an entity that is discharged with the
responsibility of coordinating tourism matters for the Federal Gov-
ernment, possibly going public, or making their cause known, that
this is a stupid proposal, weekend closings, that there are other
alternatives, and that there are considerations that you have to go
to.
In the absence of that kind of a focal point, we are consistently
confronted with what we have had to do for the last 6 years, and
that is come back to you people, and the Congress has responded
magnificently, but you know this is not the kind of exercise you all
need to go through or we do every single year.
We have been fighting brush fires. There has been no manage-
ment given to it. There has been no long-range planning, and I
think that the reason for that is that there simply is not one focal
point, one entity that we can go to and say, "Here is our problem,
help us address it. This is our input, and you take it from there
and let's start fighting some of these agencies on a purely profes-
sional level."
Mr. FL0RI0. Will the gentleman yield?
Mr. SANTINI. I will be happy to yield.
Mr. FL0RI0. A very basic philosophic question. We are all very
frustrated with the response of this administration to our concerns
about tourism, and yet the point that you have made, and legiti-
PAGENO="0064"
60
mately, that perhaps the administration has not addressed con-
cerns of tourism the way it should be, can be made about a lot of
other areas as well. The governmental process is such that within
the public system, within the public process, there is supposed to be
a harmonizing of the conflicting interests.
The agricultural people probably would like higher price sup-
ports for their goods, but we are concerned about inflation, so that
within the totality of the system, we should be harmonizing.
What you are saying and what I am saying to a certain extent is
that we become so frustrated that we have decided to think about
going outside of the governmental system. I am just not sure if that
is a precedent that is something as meritorious as it may be in this
particular area, that does not open some doors for everybody else
to go outside of the governmental system, and, in a sense, take the
element of public accountability out of the process of Government
by shifting it off to someplace else.
Do you have concerns about any of this?
Mr. JULIANO. We do, but when we initially had this idea, work-
ing with some of our friends in the industry for some sort of an
entity, what we looked at specifically was an entity such as the
Corporation for Public Broadcasting, and others like that, and our
thought was that if something could be set up, initially with Feder-
al moneys, so that it would not, you know, be beholden to any
group of people who would be submitting large contributions or
any types of foundations and things like that, that with an adviso-
ry board, and Federal moneys initially, that programs could be
developed, apart from any particular pressure of a given govern-
ment or a specific administration, that would simply be geared
toward the long-term interests of the people in the industry, of the
national economy, of the employment situation.
If there were a specific agency in Government that perhaps could
meet that test, obviously we would be more than willing to look at
that, but it was our feeling that if such an entity were set up, we
would be able to have two pressure points:
No. 1, an outside force to an extent that would be responsible to
public interest, to private interests, and industry input. Second, the
Congress, and that it would be another way for us to give ammuni-
tion to you people, who have consistently fought this battle, by
saying, "Look, we are developing very cohesive, long-term pro-
grams for the industry, which are going to bear fruit, and which
are going to have merit. That is really the area that led us to this
type of a situation.
I feel we have run the risk, run the gamut. It was a political
dumping ground at first, the agency in question. Now they have
been trying to eliminate it, and this is 6 years running, so we come
back. You people reauthorize it. Then we appropriate the situation,
back to the drawing board with the program, and it really has just
been a matter almost of let's keep something alive while we are
formulating something that will be in the long-term interest, and I
believe that this is the stage we are at. That we have kept the
situation alive as long as possible, and we should do either one of
two things: Just give up, which I am not going to do and I am sure
you all are not, or to try to come up with some specific agency or
entity that would focus on these problems.
PAGENO="0065"
61
Due to all of the past track record and the political pressures, it
was our initial feeling that perhaps a quasi-public corporation
would better serve those interests than an agency.
Mr. FL0RI0. I thank the gentleman for yielding.
Mr. SANTINI. Your response by and large, Mr. Juliano, has ad-
dressed itself to the contribution that the U.S. Travel and Tourism
Development Corporation would make. I was focusing my initial
question, or attempting to, on the National Tourism Policy Council.
I am fascinated by both of these notions. I think they have merit,
both concepts.
My ongoing question to you and other witnesses as well would
be, are there ways that we could offer to either advance, to im-
prove, to modify, or to completely revamp either one of those
concepts to make it more realistically responsive to the concerns of
the Nation's second leading retail industry, and to provide the
effective voice that you are articulating in administration policy-
making activities?
I would like to ask you, if the House were to go along with this
kind of tourism entity, do you believe that it should be initially
funded with Federal moneys or a combination of Federal and pri-
vate moneys?
Mr. JuLIAN0. I strongly believe that it should be solely funded by
Federal moneys initially. I would not want to run the risk of
having large corporations, large foundations, large unions, who are
in a position financially to make substantial contributions, and to
have those contributions viewed as a way to attempt to influence
what the overall programs will come out of those deliberations, so I
think initially it should be very strong solely Federal funding for
that type of a corporation.
Mr. SANTINI. Finally, Mr. Chairman, my last question. Mr. Ju-
liano, I will attempt to share with the other witnesses as my time
permits. How do you feel that the U.S. Travel and Tourism Devel-
opment Corporation is going to materially differ in its function and
its service from the U.S. Travel Service? What differences do you
perceive in the proposed entity versus the established entity?
Mr. JULIANO. Well, I am into applying for the job as the director
of the new corporation, so running the risk of sounding like I
would be running it, what we would hope for is that assuming-
and I am certain that we will pass the temporary bill to keep
USTS going-and assuming that you took positive action on some
similar type of activity on a quasi-public corporation or some sort
of entity, at a funding level that is approximate to what the Senate
called for, we would allow ourselves to have some sort of a continu-
ity of effort in those areas that have been most productive, such as
international promotion.
At the same time, the mandate would be with this new entity
you have got an advisory board comprised of people from industry
and from labor and from the consumer segment and so on, and
their responsibility would be to delineate once and for all what the
future areas of involvement would be for the specific entity, and so
I think there would be a significant possibility-it is premature
and I cannot say this, Congressman, at this point.
What I would hope for and what we would hope for is that you
would see programs set up with long-term goals in mind, instead of
31_1L4L~ 0 - 80 - 5
PAGENO="0066"
62
fighting the proverbial brush fires we have talked about. I think
this is a way to do it.
In other words, if international promotion in fact does return 18
to 1 ratio, why are we spending x amount of dollars, and couldn't
we spend more? And if there would be agreement on the part of
such an advisory board that in fact we should, I think that would
be a legitimate proposal to come back to the Congress with, and
say we want a budget of x millions of dollars, and here is how it is
going to be broken down: such-and-such for international promo-
tion, such-and-such for research, such-and-such for city and State
matching grants, x amount for domestic tourism, and so on. It is
vitally important, and especially now, with the ongoing energy
problem, and I am one who believes that, whether it is contrived or
whatever, that we have a serious problem, and that is the way my
union is addressing it, because it is not going to go away.
I do not know of another industry that is impacted as greatly as
we are. I view in the future, you know in your State, both of you,
what happens and what can happen on weekend business, where
the crux of the business or the bulk of it has to get to the destina-
tion by automobile, because we have had some layoffs in Las
Vegas. Atlantic City, which has a potential to be another boom
area, will never materialize, regardless of how large the area of
volume is of 60 million people within 500 miles, because the real
mode of transportation for those people would be the automobile,
and if there is an energy crisis, there is going to be a problem.
We view the prospect in the future, that instead of conventions
perhaps going cross-country or overseas or what not, that they
might become more regional, not all the time and not every year,
but certainly it is going to be a consideration. These are things that
have to be addressed. Maybe the people in the West would stay
more in the West, and instead of just going to Las Vegas or Los
Angeles, they will simply go over to other areas. It might be a
boom to some cities and tourist attractions where they could match
with bigger cities and provide some program overall of a regional
nature.
I think there are very plausible considerations that this type of
an entity should address and could address and programs that
could be developed, and once and for all that we could come to you
people and say we have a program. This is our best recommenda-
tion, and these are the appropriate funding levels for the program,
and we think that they should be carried out over a 3- or 4- or 5-
year period, and you exercise your oversight, which we urge you to
do at all times, and let's have a run at it.
I think it is just a plausible way to approach the whole situation.
Mr. SANTINI. You are suggesting that this new entity would then
have a role in coordinating and planning domestic tourism consid-
erations as well as foreign?
Mr. JuLIAN0. Absolutely.
Mr. SANTINI. Thank you, Mr. Chairman.
Mr. FL0RI0. Just one or two points. I reiterate a point that I
made before that the committee, and I personally, feel extremely
frustrated with regard to the administration response. As you will
recall, about 3 months ago I was requested and agreed to attempt
to establish a meeting between leaders of industry and high offi-
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63
cials in the administration. We have not identified these high
officials. We have been attempting to deal with the Office of Do-
mestic Policy, and have not found anyone who is willing to meet,
who is really charged with responsibilities in this area, so we
continue in our ongoing search. I think that is symptomatic of the
relative importance that the administration places upon this area.
Saying that, I am still not prepared to walk away from the whole
idea that the governmental policy toward tourism should be con-
ducted in the public arena. My understanding is that the adminis-
tration and the President, in light of the passage of the multi-
lateral trade legislation, will be proposing a new reorganized De-
partment of Trade and Commerce. I was wondering what your
thoughts were as to the hope that this Congress, and hopefully the
enlightened administration, might be able to insert in that Depart-
ment a new sense of awareness of the fact that effectively tourism
is a trade, is an export, for exporting services and taking back
dollars. Don't you agree that there is a new sense of awareness of
imports an exports?
Perhaps the time might be right for a blitz upon the conscious-
ness and the sensitivity of the administration to make them aware
of the importance of this area, and to roll into the new Department
a fairly significant operation to deal with the problems that we are
talking about.
Mr. JuLIAN0. I am afraid our feeling is very strong that such an
agency would get buried, as it has been in the past, that the same
cast of players who have been involved would be involved, that it
would be subject to the same political types of pressures that have
been applied.
The Secretary of Commerce is still one and the same, at least
today-I have not read the morning papers and I assume she is
still in her job-and she is the one with her top aides who said
after all we need something for ourselves in commerce. And so the
bone they threw 0MB for the sake of cutting the budget or for
media purposes was let's eliminate the U.S. Travel Service.
I am just fearful that that is exactly the kind of consideration
that the current administration and that the current top-level
people at Commerce would give to an agency going into their
Department.
Mr. SANTINI. Would the Chairman yield?
Mr. FL0RI0. Yes.
Mr. SANTINI. I think the Chairman makes, in a very well-defined
sense, a very important point that my first question to you at-
tempted to stress. I think Mr. Stewart Eizenstat is a marvelous
man. He in my judgment does not give a damn about the Nation's
tourism industry. Yet he will be the entity, or his successor, given
the rapid transition of jobs, who will be chairing the National
Tourism Policy Council, if 5. 1097 were enacted tomorrow. And if
you have an entity whose chairman does not have any personal
sense of concern or interest or involvement in any way, shape, or
form, in the council that he is chairing, I do not see the new
council as a dynamic force for advocacy or understanding of tour-
ism, and that concerns me. I am not ready to propose an alterna-
tive solution, because I do not have one, but it really troubles me in
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64
terms of an inherent infirmity in this kind of organizational struc-
t U re.
Mr. FL0RI0. And to follow up on the point the gentleman has
made, are we not, by creating a semiautonomous quasi-independent
agency, reducing the ability of the Congress to exercise its over-
sight powers, and the fact of the matter is, as I think most will
concede, the most vigorous friends of tourism in this whole city
have been largely on Capitol Hill. To diminish their impact in the
process does not weigh very heavily on the side of moving in the
direction that we are inclined to want to move in, so that is a
concern that I have as well.
Let me ask one last question. Should the entity, the nonpublic
semiautonomous entity, go into operation, one of the proposals, and
I am sure it is put forth in good faith, is to give this entity more
clout, more of an opportunity to be an advocate for the industry.
But of course the industry is not monolithic. Everyone is equal, but
there are some who are more equal. We have airlines, we have
hotels, we have union restaurants, we have nonunion restaurants,
and are you at all concerned about the possibility of the entity
speaking on behalf of a particular perspective or a particular
aspect or a feature of the industry, to the detriment of others in
the industry, so that what might be put forth is the industry
position that may not reflect all of the interests of all of the
elements of the industry?
Mr. JULIANO. That is a possibility. I think one of the real positive
aspects is perhaps if we were involved in any way, we might end
up with more union hotels or restaurants-but seriously, it is a
concern. I do not know how we could change those disparate ele-
ments of the industry, whether we had a quasi-public corporation
or an agency of the Government, because they are always going to
exist.
I do not think that they could manifest their strength any great-
er or any less, and in fact perhaps with the proper mandate from
Congress would be discharged with the professional responsibility
to be able to get their act together, finally start to work together,
which has not been the case in its long history, that all of the
disparate elements were working against each other.
I think perhaps it might provide a more cohesive force toward
achieving some sort of a semblance of unity between all those
elements, fighting toward a common goal. That would be our hope,
and I might add also we would not be party to any type of sugges-
tion which would lessen or diminish the role of Congress.
You are so right in your statement about where our friends are,
and I have no doubt at all, having fought a few battles over 6
years, that it is with you people.
Mr. SANTINI. Excuse me, Mr. Chairman. Let me offer a specific,
concrete example on which my apprehensions are based. The chair-
man does not want to share this or make this public, but I hope he
will indulge me, because I think it is important.
This committee strived mightily to have some representative
from the domestic policy staff come to this hearing this morning,
and discuss with us their concerns about tourism, their responses
about tourism. A July letter was sent to the domestic policy staff
signed by Chairman Staggers.
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65
After some hunting and pursuit, conscientiously we must pre-
sume, to try and find somebody within the domestic policy staff
that knows anything about tourism, they came up with a flat zero
in terms of people that had any working command of tourism-
related problems.
The proposal, and again offered in all good faith, for a witness to
this committee on this critical subject was Elsa Porter, who does
not happen to be an employee of the domestic policy staff, but
rather is working conscientiously in the Department of Commerce,
and is one and the same who came and recommended to this
committee that we disband the U.S. Travel Service and shut down
the last whimpering voice of concern in the administration for
tourism.
Now that is a pretty dismal state of affairs, and what concerns
me about S. 1097 is it presumes that we can superimpose a legisla-
tive structure on that dismal state of affairs, and hope that we
could get some meaningful responsiveness out of it. I am very
much concerned.
Mr. JuLIAN0. The beautiful part about these hearings, I hope you
rip apart all of these concepts. I have to sit here today and candid-
ly tell you I do not have another alternative. I mean our mind is
totally open. I wish we had one. The frustration stems from the
fact that those of us-I do not want to sound too parochial or part
of that Washington, whatever it is, that Jordan keeps talking
about, but you know the problem is we have been working on this
issue for 6'/2 years. No one has ever questioned the merits of the
issue. No one has ever questioned the consequences of the impact.
None of the professional points that have ever been raised, plain
and simple, have ever been refuted, so the problem as I view it is
we need to develop some sort of an agency or entity that will not
only continue that kind of a professional input, but would maxi-
mize the potential political clout without our having to come back
consistently to the Congress and play a political game.
That is what we have done. We have been successful, and I am
sure with the Congress we would continue to do so. That is simply
not the way or the best way to approach the subject matter. I do
not know how to reach that point of maximum political opportuni-
ty. This was merely a suggestion of another alternative that might
help us get to that stage. I certainly do not think we could look at
the present scope of the Government and expect someone from
0MB or someone from Commerce to talk in our behalf against the
DOE proposal of weekend closings or something of that nature.
Obviously they did not do it, and I would not be overly concerned
about the administration's lack of concern for the tourism industry,
because regardless of what party, that apparent lack of concern
has consistently manifested itself.
I suppose we in finality feel that probably the best way to ap-
proach it is to come up with something new. That is a lot of our
feeling. If we could come up with something new that would have a
new fresh idea and a start, with the support of Congress, and with
the strong responsibility of reporting back to you people, I reiterate
that again. If there is any lessening of your role, of the Congress
role in this area, we are not going to be a part of it, and we would
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not support that, because we know it has been the Congress that
has given the most help to the industry, and will continue to do so.
Mr. SANTINI. Thank you, Mr. Chairman.
Thank you, Mr. Juliano.
Mr. FL0RI0. Mr. Juliano, we thank you for your very helpful
testimony, and look forward to working with you in the future.
Mr. JULIANO. Thank you.
Mr. FL0RT0. Our next witness is Mr. Aldo Papone, senior vice
president of the Card Division of American Express Co.
We welcome you to the committee. We would ask that you iden-
tify your associate.
Your statement will be made a part of the record in its entirety.
Will you proceed.
STATEMENT OF ALDO PAPONE, SENIOR VICE PRESIDENT,
AMERICAN EXPRESS CO., AND PRESIDENT OF ITS CARD DI-
VISION, ACCOMPANIED BY HARRY FREEMAN, SENIOR VICE
PRESIDENT. AMERICAN EXPRESS CO.
Mr. PAPONE. Thank you, Mr. Chairman.
Mr. Chairman, distinguished members, my name is Aldo Papone,
senior vice president of American Express, and president of the
Card Division of American Express. I am accompanied today by
Mr. Harry Freeman, senior vice president of American Express Co.
Mr. Freeman is extremely familiar with the issues before us, and
he will be a valuable help, particularly in the areas of his particu-
lar expertise, which is that of, among others, of government-created
corporations.
I am honored today to have been asked to appear before you on
behalf of American Express Co., to testify as to the critical impor-
tance of tourism to our national life.
Mr. Chairman, I hope you allow me to applaud these hearings
since they indicate a growing awareness of the Congress and the
country that travel and tourism, as the second largest industry in
the world, are powerful forces in the life of all nations, and particu-
larly of our own.
It is sadly ironic-and indicative of a past negative attitude
toward tourism which viewed it as a peripheral, almost frivolous
activity, that our country has done so little to develop and encour-
age tourism to America by people from other countries. I stress
that, by people from other countries. If we take funds expended as
an index of a nation's interest in developing tourism as a potential
source of economic prosperity and national pride, it is interesting-
and I believe sad-to note that as recently as 1977 the United
States was not even in the top 10 countries ranked according to
expenditures to promote inbound tourism. As you can see on the
chart (Fig. U [see p. 73], countries like Belgium, Spain, and even
Ireland, spend greater amounts than we do to promote their coun-
tries as attractive destinations for foreign travelers; and Canada,
culturally and geographically our closest neighbor, has been spend-
ing over twice as much as we have to attract foreign tourism.
Mr. Chairman, in undervaluing tourism as we have, we have
failed to develop a major, as yet largely untapped resource in our
continuing battle to improve our international balance of pay-
ments, and to create new jobs and a higher level of economic
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67
prosperity at home. Mr. Chairman, every dollar we spend to pro-
mote inbound tourism will generate income for our country, and
perhaps more importantly, will create much-needed jobs at home
in a time of economic slowdown. Especially in these difficult and
trying times, we can ill afford to pass up such an important oppor-
tunity as the development of inbound tourism. This critical effort
assumes a whole new dimension of significance in the light of the
deepening energy crisis and its potential impact on the Nation's
economy.
Mr. Chairman, I find it instructive to look at the financial ex-
penditure required in various industries to create one new job (Fig.
2) [see p. 73]. As you can see, in the travel and tourism sector, an
expenditure of less than $30,000 can create a job, while it costs
from three to eight times that much to create one job in steel,
chemicals, plastics, and in the automobile industries. There are two
points to be made here, Mr. Chairman. One is that jobs in the
tourism sector are created more efficiently in relation to other
industries; and second, precisely because these tourism jobs are
nontechnical, service jobs, they are particularly accessible to those
segments of our population traditionally hit hardest by unemploy-
ment.
Look, for example, at minority employment in the tourism indus-
try in the years 1976-78 (Fig. 3) [see p. 73]. As you can see, minor-
ity employment in tourism is disproportionately high relative to
other industries. Similarly, the tourism industry is a major source
of employment opportunities for women (Fig. 4) [see p. 74]. Whereas
in 1960 women comprised almost half of all employees in the
tourism industry, in 1978 their proportion had risen to 53.5 per-
cent. On the other hand, in 1964 women comprised less than one-
third of employees in all other industries, and by 1978 the percent
of women in nontourism industries still was less than 40 percent.
So, Mr. Chairman, the tourism industry has been good for minor-
ities and for women.
In summary, Mr. Chairman, I would emphasize that if we could
set as a short-term goal the doubling of our foreign visitor expendi-
tures, we could create an additional 270,000 jobs-and these jobs
would largely go to our citizens who need them most.
We at American Express very much support our President's
stated goal of controlling inflation in part by reducing Government
spending. Accordingly, we realize that the promotion of tourism to
the United States from abroad is an activity which must compete
with other worthwhile programs for the limited resources our Gov-
ernment is allocating to the nondefense area. The point I want to
make as a businessman is that any reasonable investment in en-
couraging travel to our country, if properly managed, is one which
will repay itself many times over through the multiplier effect it
will have in our domestic economy, and through the beneficial
impact it will have on increased employment and on our interna-
tional balance of payments.
I will not hide the fact that we at American Express were
disappointed at the administration's decision to eliminate the ap-
propriation request for the U.S. Travel Service. We were disap-
pointed by the arguments the administration put forward in sup-
port of its decision not to request funding for the promotion of
PAGENO="0072"
68
inbound tourism. A careful reading of the administration's position
convinces me that we in the tourism industry have failed miserably
to transmit to an important segment of our Nation's leadership our
long-held vision of tourism as a powerful force in building a strong-
er economy as well as bridges of trust and friendship among peo-
ples; and, on a more tangible level, we have failed to present to our
fellow citizens a compelling strength and vitality in the world
economy, and especially in the economic life of our own country.
And we have failed in spite of our size, Mr. Chairman, as the
second-largest country in the world.
I refer to this failure before discussing a possible coordinating
mechanism for our national tourism effort, because to me a funda-
mental issue is whether or not the instrumentality finally decided
upon will be able to mobilize the various factions of the public and
private sectors of tourism into a coherent, well-targeted effort to
lead our Government and our people to a better understanding of
the current role tourism plays in the life of the Nation and the
world; and to a realistic, but ambitious, vision of what its future
role might be. For without this kind of visionary leadership, no
coordinating body or mechanism can succeed-for it continually
will be justifying its existence, rather than generating ideas and
programs, and harnessing the fragmented and still largely latent
power of our widely dispersed industry.
We in the tourism industry are working to change by education
and persuasion two very damaging-and unfortunately widely
held-assumptions:
That inbound tourism is of marginal importance to the economy
of the United States; and,
That the task of developing inbound tourism to the United States
is one best left exclusively to the private sector.
Mr. Chairman, I have tried already to point out the tremendous
beneficial result of increasing foreign tourism expenditures for our
domestic economy and our continuing negative balance of pay-
ments. If tourism has been only peripherally important in its
impact on our national life, it is because we as a nation have
undervalued its potential to improve our country's economy and
enhance our status as the most desirable place in the world to visit.
In undervaluing inbound tourism, we have similarly underregarded
the country's unexcelled natural beauty and diverse cultural heri-
tage. We have hid our Nation's attractive light under a bushel
basket of unconcern and neglect-and I hope, Mr. Chairman, that
these hearings will be an important step to reverse this unfortu-
nate situation.
Lurking behind the administration's failure to support continued
funding for the U.S. Travel Service was the fallacious assumption
that the private sector is doing an adequate job in promoting
inbound tourism. The Honorable Elsa A. Porter, Assistant Secre-
tary for Administration in the Department of Commerce, appeared
before a congressional committee in February of this year. In stat-
ing her case for no Federal involvement in this vitally important
effort of encouraging inbound tourism, what the Assistant Secre-
tary in effect said is that the problem has been solving itself. As
proof of this, she cited the increase in tourism to the United States
PAGENO="0073"
69
attending the recent devaluation of the dollar against the yen, the
deutschmark, and the pound.
In 20 years of marketing and merchandising, I have always
followed the contrary proposition: that, when the conditions in a
particular marketplace are up-trending, that is precisely the time
one should increase the investment of resources to solidify that
positive trend, and, if possible, to dramatically accelerate it. Unfor-
tunately-and most assuredly-this problem of imbalance between
inbound and outbound tourism will not solve itself. Furthermore,
the recent devaluation of the dollar and increasing airline profit-
ability are not constant trends; they are merely transient episodes
in the ebb and flow of national and international economics. In
other words, let us assume that the dollar will eventually stabilize
against major foreign currencies; and we see already that airline
profits are beginning to soften. These foreseeable eventualities
themselves seriously undermine the argument that long-term
trends with the dollar and within the airline industry will defi-
nitely ameliorate our inbound/outbound tourism imbalance.
The argument that the promotion of inbound tourism is a job
that is being adequately done by, and should therefore be left
exclusively to, the private sector is one which, at first glance,
appeals greatly to us in private enterprise. Unfortunately, the his-
torical development of, and current situation in, the U.S. travel
and tourism industry make this argument specious; for the ideal
solution to our private-sector/public-sector cooperative effort is
greatly more complicated than is implied by a simple division of
labor between the Government and private business.
Mr. Chairman, as this chart shows (Fig. 5) [see p. 74], our deficit
from tourism alone has for some time been hovering around an
annual rate of $3 billion. Our calculations show that this negative
trend continues into the current quarter at about the same level.
This fact is a most concrete demonstration that private enterprise
does not-and cannot-handle this job alone.
The development of our industry over the past 20 years has been,
to say the least, both sporadic and eccentric. The simple fact is that
the overwhelming momentum, expertise, and cumulative experi-
ence in the U.S. travel and tourism industry is with outbound
travel; and, beyond the rhetoric all of us regularly employ in
support of the concept of promoting inbound tourism, the United
States today-when viewed as a destination for tourists as opposed
to an origin market-remains an underdeveloped country. Further-
more, in a time when the costs of doing business are increasing,
and margins and profits are stabilizing or declining, it is not rea-
sonable to suppose that the few airlines and large travel companies
operating worldwide will invest the mammoth resources necessary
to develop the United States as a destination-at least not without
some form of encouragement, stimulation, or cooperation from the
Federal Government. And, Mr. Chairman, the market is ripe for
much more effort from both the public and private sectors.
To expand this point a bit, I cite the example of our own Travel
Division at American Express. I would imagine that, with five
wholesale travel operations in as many foreign origin markets, we
bring as many foreign tourists to the United States as anybody;
and, while we will agree with the administration's position that
PAGENO="0074"
70
this number is fractionally growing due to foreign currency fluctu-
ations and other temporary situations, our total wholesale travel
business continues to be dominated by traffic within the United
States, and from the United States to foreign destinations. If this is
characteristic of American Express Travel Service-the largest in
the world, with offices in 110 countries-imagine how much more
serious is the situation in other, smaller companies which have no
inbound operating capacity, and no offices in origin markets over-
seas.
Obviously, the idea of a governmental or quasi-governmental
agency with offices abroad to encourage visitors is not new. Right
now, 112 nations have national tourist offices, many of them at the
ministerial level, trying to attract tourists to their countries. These
are not just storefronts; they are part of an aggressive campaign,
regularly luring Americans by expensive, sophisticated television
and other media ads.
In addition, Mr. Chairman, we have specific case studies of sev-
eral States which, through imaginative marketing programs, have
boosted significantly revenues from tourism. To name only three of
the most prominent examples, I would cite New York, Virginia,
and Hawaii as States which have made enviable records in using
public funds creatively to augment the ongoing efforts of private
enterprise.
Ms. MIKuJ~sKI [presiding]. Not to interrupt you, but you are con-
tinually referring to Mr. Chairman.
Mr. PAPONE. Yes, Ms. Chairwoman.
I would not presume to define our national priorities in their
rank order of importance. But assuming that the amelioration of
our trade deficit and the creation of new jobs are important areas
of emphasis in our national life, then tourism in my opinion should
be viewed in a new, significantly different light against other im-
portant national needs. What we must not forget or allow to be
obscured by less important issues is that, in the final analysis, the
most compelling reason for the Federal Government to fund the
development of inbound tourism is that it is the major, largely
untapped, resource we can use to improve our overall international
balance of payments. Let us look for a moment behind the specific
causes for the current trade deficit-the oil shortage, transporta-
tion, current imbalances within tourism, whatever. The fact is we
have a large overall balance-of-payments problem; and, independ-
ently of what happens in other sectors, we ought urgently to devel-
op inbound tourism-not with the myopic view just to offset the
current imbalance in the transportation and tourism sectors-but
because it is our single best hope to create national wealth and to
significantly improve our long-term balance-of-payments situation.
We tend to forget that many other countries, forced by chronic
disadvantageous economic circumstances, have made a major in-
dustry of inbound tourism. They have done this by capitalizing on
their national resources and cultural heritage. We in America also
have great national resources, a magnificent cultural heritage, and
the best quality of consumer goods-unmatched on the globe in
their variety and quality-and, therefore, it is especially sad that
the United States is almost unique among the developed nations of
PAGENO="0075"
71
the world in its virtual neglect of tourism as a potential source of
economic prosperity and national pride.
I would further like to emphasize that even the largest suggested
figures I have heard in the various discussions of possible Federal
appropriations for encouraging foreign tourism to the United
States are modest indeed, especially when laid alongside the crying
need for such stimulation, and when compared to the magnitude of
the benefit our economy could receive from the revenues generated
by foreign tourism, and the help we could expect to receive from
expanded foreign tourism in the nagging problem area of interna-
tional payments. So while it is clear that much-needed austerity
dictates that we test our assumptions and that initially we keep
our request for financial support modest, it is equally clear that we
should press for a national commitment-if only symbolic at first-
to the concept of encouraging foreign tourism as an important
facet of our international economic and political policy.
I think it important to realize that the creation of a new coordi-
nating mechanism-whether a quasi-public corporation similar to
the Corporation for Public Broadcasting or another body-in no
way lessens the legitimate need to streamline existing administra-
tive functions and to consolidate tourism-related activities as rea-
sonably and efficiently as possible. For, to me, it makes no sense to
create a new coordinating body without also subsequently address-
ing the fundamental, already-existing problem of fragmented ad-
ministration and diffused oversight. If we fall prey to that tempta-
tion, we will have created a body to coordinate what has up to now
resisted effective coordination; and we will have asked that body
we created to reconcile the heretofore irreconcilable interests of
organizations whose constituents pursue, in some cases, mutually
exclusive aims and programs.
I will close with the hope that these hearings are the beginning
of an expression of a clear national interest to use the mighty
pewer of tourism as a conscious instrument of economic benefit to
our country, and as a source of a national pride in our Nation's
culture and beauty. I would hope that this national commitment
would be translated into practice through a sufficient amount of
money to get the job done, and in a collective determination that
this critical activity should never again be relegated to an inferior
rank in our list of national priorities.
Furthermore, I hope that the body eventually constituted to lead
us in the promotion of inbound tourism will be ably led and staffed
by the best talent in the Nation; and that these able people will be
supported by a Congress and a public determined that our Nation
will do no less to encourage visitors from abroad than our great
country merits.
Before closing I would like to emphasize the importance of
having the national tourism policy explicitly recognize certain es-
sential elements of tourism and the tourism sector. First, the policy
recommended by Arthur D. Little omits reference to the important
role that retail efforts play in the tourism industry.
This is an important and obvious point I will not belabor here.
Second, the role of the independent charter and tour operators
should also be recognized. Like the retail travel agents they pro-
vide a consumer with additional choices in the marketplace and
PAGENO="0076"
72
are among the totirism industry's most useful and entrepreneural
businesses.
They also provide the consumer with myriad choices in buying
travel.
Third, we think that the policy statement ought to emphasize the
areas of consumerism, and product integrity.
Fourth, the policy statement should mention the desirability of
removing and preventing nontariff barriers to tourism, such as
unnecessarily rigid laws restricting the flow of data across national
boundaries.
The policy should mention the importance of preserving alterna-
tive international payments systems. These mechanisms, such as
credit cards and travelers checks, have been indeed a major force
in expanding national and international tourism. Their continued
use is vitally important to our efforts to promote travel to the
United States.
Six, we think it is important to state as a policy goal the desire
to minimize restrictions imposed by the U.S. Government on the
freedom of travel by its own citizens and by foreigners traveling to
the United States consistent with, of course, the requirement of
national security and other legitimate concerns.
Finally, I would like to stress that I am not advocating that this
subcommittee or the House of Representatives simply rubber
stamp the Senate and approve S. 1097. I think that the Senate bill
is a good one, but I also think that the House can and should make
its own contribution to this effort.
I would like you to know that we in American Express stand
ready to assist you in this effort.
Distinguished members, Ms. Chairwoman, I thank you for your
attention. We should be glad to respond to your questions.
[The charts referred to follow:]
PAGENO="0077"
73
NEW PRIVATE SECTOR SPENDING FOR CREATION OF ONE ADDITIONAL JOB
INDUSTRY BY INDUSTRY (THOUSANDS)
90 25 50 75 100 125 150 175 200 225 250
HOTELS MOTELS
TRAVEL/TOURISM (OVERALL)
TEXTILES
PRINTING & PUBLISHING
- RETAIL TRADE
BROADCASTING
COMPUTING&CALCULATING EOUIPMENT
BUILDING MATERIALS
GENERAL INDUSTRIAL EHUIPMENT
STEEL
PRIMARY MATERIALS
CHEMICALS
!LASSMATERIAIS RESINS
MOTOR VEHICLES I
SOURCES. U.S. Department of Commerce lndustrf & Trade Administration 1979 U.S. Industrial Outlook
MINORITY EMPLOYMENT -TOURISM INDUSTRY
1976-1978
1976
TOURISM
1977
. ALL OTHER
INDUSTRIES
1978
.
0 5% 10% 15% 20%
SOURCES Employmenl and I urninos 1 7R-79,"Employed Persons by Detailed Industry Sex & Race, table x3('
US Department of Labor Eureau tl Labor Statistics, Aols 25-26, ci
NATIONAL TOURISM ADMINISTRATION EXPENDITURES PER CAPITA
1976 1977 IU S DOLLARS)
s5
Sal
$3
$2
Si
0
SOURCES; British Embassy, United States travel Service, World Almanac. World Dank, World tourism Drqanizatioe
PAGENO="0078"
74
:R~
WOMEN EMPLOYMENT-TOURISM INDUSTRY
1964-1978
WOMEN IN TOURIST IIJOUSTRY WOMEN IN ILL NON-AGRICULTURE ESTABLISHMENTS MINUS TOURISM
- ~
5O~-~___ -- -
~--~-
77 78 79
SOURCE U S Department of Labor, Bureau of Labor Statistics
U.S. BALANCE OF PAYMENTS -TOURISM ACCOUNTS
(BILUONS OF DOLLARS)
`El
I
iiIiiiiI~
-- -.- I.
1973 1974 1975 1976 1977
1978
SOURCE- Travel & Leisure, Travel & Leisure's Fourth Annual World Tourism Overview, 1979.
PAGENO="0079"
10
Ms. MIKuLsKI. Thank you, Mr. Papone. I would like to thank you
for the rather thoughtful presentation you made on the need for a
national and international tourism policy. The committee has some
questions.
I think many of us are agreed that there is a need for a clearly
articulated policy, and then the need for some type of Government
entity to implement that policy. I think one of our concerns, cer-
tainly one of mine, is what is the best mechanism for accomplish-
ing some of the goals that you have articulated.
Now, based on your experience with Government-created corpo-
rations, do you think that a quasi-public corporation for tourism as
proposed by the Senate would really be able to help tourism in a
way the Travel Service has not?
This is a new concept. One is the Federal agency, ala tourism,
perhaps, with expanded functions. The other is the corporation.
Could you tell us what your thoughts are on that?
Mr. PAPONE. Well, I am not well qualified to talk about the
mechanism that would be most effective. Perhaps Mr. Freeman can
help us in that direction.
What I would like to perhaps talk about is what I perceive are
the important objectives and concepts that must be achieved by
whatever mechanism is eventually created. I think that there are
three or four key elements that are very important, that must be
recognized as part of the mechanism's objectives.
The first thing we must recognize is that private sector activity
is a profit driven effort; so the industry and th~ States have been
emphasizing the outbound aspect of tourism, as that is just the
natural way the industry has to react in terms of profit opportuni-
ty and because of the lack of a cohesive and coordinating capability
to address the country inbound capabilities as a whole.
So any organization we create must address as a top priority the
largely undeveloped inbound opportunity.
The second point is that we must combat the erroneous percep-
tion that tourism is not a critically important opportunity for this
country, because it most certainly is. As you know, we said this
morning the country is goods-oriented and export-oriented.
Ms. MIKULSKI. Excuse me. We usually limit the questioning to 5
minutes per member.
Mr. PAPONE. The third point I think is this coordinating mecha-
nism must develop a marketing plan. This is the most important
thing. We believe it should be a staged marketing plan that would
prove itself preliminarily before being implemented on a large
scale.
I think that the differences of these coordinating mechanisms in
the past efforts should be fundamentally in that area. It should be
led by a marketing thrust. It should not be an information agency,
it should not be a passive organization.
Now, those are the three important things I see that need to be
accomplished. If those are accomplished then the coordinating
mechanism can be addressed by Mr. Freeman.
Mr. FREEMAN. Madam Chairwoman, let me add one or two points
on the question of what kind of body-because we have given, with
others in the industry, quite a bit of thought and headscratching
on this.
PAGENO="0080"
76
We have decided that the best alternative would be some kind of
corporation, generally along the lines of the Senate bill.
One of the reasons we had for that is it would be able to draw
the kind of marketing talent we think is necessary because we are
really talking about how to market America in foreign countries.
Second, we have seen in the questioning before by Mr. Florio,
and Mr. Santini, how responsive would that corporation be to this
committee and to the Senate committee.
We think that if you set up the corporation in the right way, you
are going to be in a position to review the authorization of that
corporation, you are going to be in a position to review its appropri-
ations.
You might want to take an annual very close look at the market-
ing plan, require that in the legislation. I think you might have
much better control over that kind of corporation than you have
had over the Commerce Department's prior experience.
That is one of the reasons we had in mind. We have found major
congressional support for the tourism industry, and very little sup-
port in the administration, as you are aware.
Therefore, the idea of a corporation, where you really have juris-
diction to call in those people, question them on their budget, on
their marketing plans, on who they are hiring and what they are
doing, I think would be more augmented than not under this plan.
Ms. MIKuLsKI. I am not wedded to a particular plan either way. I
will be moving on in my questioning to see what my other col-
leagues feel.
I have had a dismal experience with quasi-public corporations
since I have been in Congress, in terms of their responsiveness.
Such so-called quasi-public corporations in railroads, ConRail and
Amtrak, are perfect examples, which tie right into part of the
tourist policy.
The so-called independent Corporation of Public Broadcasting
has really in some ways developed what I have often been critical
of, rather elite ambitions for a fourth network, and taking the
people's money but not necessarily thinking about how to maxi-
mize it for the people.
That is one of the reasons why, as business people who really are
committed-the phrase marketing America really I think has enor-
mous potential, for the reasons you mentioned, sir.
One, in terms of good will. I think we are really marketing good
will. There is something about people-to-people contact in neighbor-
hoods, and in our cities and in our communities, that really tell the
story of America in a way that running off to Vienna, saying how
terrific we are, just doesn't do because it is people meeting people.
I am working for the entity that is the best to promote these
goals. That is why I have been trying to dig in that way. Which
takes me to another question.
You have made a very strong case for the promotion of inbound
tourism, particularly international tourism. What is your view on
the need for Federal support for domestic tourism, which would be
intra-American travel?
Do you think there is potential in that area, number one, and
number two, do you think that has also been developed along the
lines merited?
PAGENO="0081"
Mr. PAPONE. Well, I view the international portion of this effort
to take a high priority at this point, for this corporation or what-
ever mechanism is going to be put in place.
I believe that the international inbound tourism should take all
of the initial effort and priorities, to coordinate the State efforts
and the private sector efforts.
I think after that has been accomplished, then perhaps some of
the same techniques used to maximize opportunity of origin mar-
kets internationally, can eventually be utilized to expand interstate
movements of people in the United States.
Ms. MIKuLsKI. So that you feel by maximizing our international
outreach, or inbound, in effect we are bringing new people and new
dollars to the country rather than recycling American dollars
within the country.
Mr. PAPONE. Yes, I think that the Nation's economy and its
needs indicate that we should emphasize inbound tourism first.
Mr. FREEMAN. I think we also have to think in terms of what is
the Federal interest. The Federal interest includes promotions of
jobs nationwide, promotions of the balance of payments, where we
have presented, I think, what we hope is a very convincing argu-
ment.
The best shot in improving the dollar and balance of payments is
through this kind of program. There is a Federal interest in this.
There is a Federal interest in creating jobs, as we are either in a
recession or going into a recession.
This kind of expenditure is well warranted. We think that is the
Federal interest.
Ms. MIKuLsKI. I would like to bring to your attention that those
two bells mean there is a vote on in the House. We are going to
recess only temporarily, to come back and continue our discussion.
What you have here is an east-west alliance. Mr. Santini repre-
sents Nevada and the western States. He is the Las Vegas connec-
tion. I represent Baltimore, which is what we hope is a new bud-
ding tourism center.
I am going to turn the chair over to Mr. Santini for his ques-
tions. I will go over to vote, and then come back and finish my
own.
Mr. PAPONE. Thank you, Madam Chairwoman.
Mr. SANTINI [presiding]. I want to initially, Mr. Papone, com-
mend you and American Express Co. for this excellent presenta-
tion. This is perhaps one of the finest synopsis of the problems of
tourism, national and international, that I have had the privilege
to listen to.
I hope that your effort on these pages will be translated by many
of us who are concerned about this subject in a broader scope
throughout this Nation, because this message deserves to be deliv-
ered on a national scale.
I would like to return to the subject matter relating to phase one
of the essentially two-phased program proposed by S. 1097 which
was of specific concern to me in my question and answer exchange
with Mr. Juliano.
You did, Mr. Freeman, respond with regard to the U.S. Travel
and Tourism Development Corporation. I would like to focus your
attention for a moment on the National Tourism Policy Council.
~1_1L44 - - S
PAGENO="0082"
78
I believe you were present when I shared my dismay at our
committee's experience in dealing with the Domestic Policy Coun-
cil. We asked them to provide for us a witness for today's hearings.
On the President's Domestic Policy Council there is a person who
is given the responsibility of tourism as part of his many duties.
One might not expect that Mr. Eisenstat would have command of
all subject matter that confronts the Presidency and the Nation.
But, one might hope, in this instance vainly, that the person on
that council who has the responsibility for tourism would have
sufficient knowledge and information to be able to come before this
committee and share some positive, negative, or otherwise thoughts
on S. 1097.
It wasn't that the Domestic Policy staff was simply trying to be
obstructionist. They were not. They reached out to the person
logically to be tapped for participation in this hearing, and said,
"Will you go down and talk about tourism on such and such a
date." And that person, if I can presume to summarize the events,
said, "I don't know anything about tourism."
So ultimately they wind their way through the bureaucracy and
come down through the Department of Commerce to an able As-
sistant Secretary, but a Secretary who has been given marching
orders with respect to commending the execution of the U.S.
Travel Service.
You mention on page 5 of your testimony, Elsa A. Porter. We
have no particular grievance with that Assistant Secretary. She
was merely complying to the orders of the day, to wipe out the U.S.
Travel Service.
Given that kind of dubious negative history, how can we look
with hope and optimism to the expectation that the National Tour-
ism Policy Council, headed by the President's Domestic Adviser, is
going to offer any sort of salvation or solace to those of us who feel
that the tourism industry has gotten the short shrift all these
years.
Mr. Freeman, I would appreciate your thoughts as the person
who is senior vice president and working in Government liaison
today.
Mr. FREEMAN. Well, I first would say that there are at least
three very frustrated people in the room-if Mr. Juliano is still
here-you, me, and him. I am sure there are others. Mr. Juliano
and I and others in the industry, travel and tourism, have been
very concerned, would be a modest statement, about the lack of
responsiveness of the administration in this area.
We have been delighted with what we have gotten in the House
and also in the Senate.
Mr. SANTINI. May I interject at this point. When you refer to this
administration, and this area, Mr. Freeman, I think it character-
izes all past administrations. This dismal abyss of indifference and
ignorance has characterized each and every administration, with
which I am familiar, regarding the issue of tourism.
Mr. FREEMAN. I couldn't agree with you more. I don't think it is
a partisan matter. I think it partly is due to the industry's fault in
communicating this to the administrations, this one and the prior
ones. I think we are correcting that very, very rapidly.
PAGENO="0083"
79
But getting to the point that you asked earlier, and asked me-
on this coordinating council. I think it is a very, very difficult
problem, to try to bring together some kind of mechanism which
looks at, I think there are, over 200 kinds of tourism programs in
the United States.
Perhaps you could phrase it in terms of how do you package a
100- or 200-pound turkey.
Now, we thought of various alternative ways. We don't think
that the Senate version is necessarily the only way to do it. We
think it might be the best shot that we can think of at this
particular time.
We think that if a law like this or a similar law, after you
consider, is passed, that Mr. Eisenstat or whoever takes that posi-
tion in subsequent administrations, at least has a law commanding
him to take cognizance of this, and to perform these duties.
You have this mechanism of the corporation where you can get
your hands around that. It is very difficult for you people, and I
say we share your frustrations, in getting your hands around the
people in the White House to direct this.
I do think that having a coordinating council is necessary. I don't
think there is any guarantee in that law that it will work perfectly
or that it will even work well. I think that it is the best thing that
we can come up with at this time to give it a shot, to get some kind
of coordination going.
I would hope that if the Congress does pass the law, the Presi-
dent signs it along these lines, it would be considered a mandate
and a very strong mandate from the Congress to the Domestic
Council to get people to get interested in that.
I don't think there are any warranties coming with this.
Mr. SANTINI. There certainly are not. I concur with your general
sentiments that this is at least one positive suggestion in an arena
where many are welcomed. I treat it similarly. I too am receptive
to any and all kinds of ideas and notions that might renovate this
administration's and successive administration's attitudes with
regard to tourism.
I am going to view it in that objective, positive sense as we
proceed.
You make a valid point about at least heightening it in terms of
perception of the administration.
I don't know. Maybe we will have to construct a tourism office in
the portico of the White House before we get any impression. But I
am going to look positively at these things as we go along.
You have indicated, Mr. Papone, that New York, Virginia,
Hawaii, and I hasten to interject, Nevada, have used public funds
to augment private industry moneys for tourism. Could you be a
little more specific on how those three States and Nevada have
been successful at supplementing the tourism industry with public
funds?
Mr. PAPONE. I am sure that you are familiar with some of the
slogans and marketing efforts that have been employed by the
States, "Virginia is for Lovers." Certainly with the efforts of the
Hawaii Visitors Bureau--
Mr. SANTINI. I hasten to interject, I live in Maryland. Please
continue.
PAGENO="0084"
80
Mr. PAPONE. The point to be made about this successful market-
ing effort, for instance, if one takes Virginia, is that the $1.3
million that Virginia spend per year is I believe all oriented to
domestic travel.
Again, there is no effort at all to create a market now from
international areas of the world. That is the point. While there has
been a successful effort by individual States, there is a need for a
complementary Federal effort to expand the horizons for all of the
States.
Also, I believe it very important to develop many areas in the
heartland of America that deserve attention, and that deserve an
opportunity to be seen by people in the world, but where we need
to develop the infrastructure and the capabilities to accommodate
and to welcome foreign tourism. And this infrastructure-transpor-
tation, multilingual guides-does not now exist in many places.
Mr. SANTINI. Does your company have an estimate of the amount
of consumer goods purchased in the United States by foreign tour-
ists?
Mr. PAPONE. Well, we have looked at an interesting set of statis-
tics given to us again through-we have found one study by the
State of Hawaii in 1977. I think that the findings are rather
surprising.
The study has analyzed how Japanese tourists spend their money
in Hawaii. The breakdown in spending dollars per Japanese tourist
per day is a very instructive one.
They spend about $150 a day, of which $23 is for food, $12 for
entertainment, $4 for nightclubs, $4 for transportation, $17 for
neighbor island trips. Now for gifts, souvenirs and clothing, almost
$60.
That is incredible. It is over 35 percent expenditure on goods.
Again, as I mentioned, we have I think the most attractive mer-
chandise selection and quality and variety that we can offer foreign
tourists. Certainly this is a very, very dramatic demonstration of
the unexploited opportunity.
Mr. SANTINI. Well, that certainly is a good example. Your testi-
mony and the testimony of previous witnesses before this commit-
tee that for every one American taxpayer dollar we invest in
tourism, we get over $18 back in return, is probably one of the few
positive investments we have made recently in this Nation.
I am continually frustrated with another segment of the Govern-
ment decisionmaking process, and that is OMB's refusal to recog-
nize return on dollar value that our tourism represents as an
industry potential, that you so well outlined in your sentiments
here.
I very much appreciate hearing your testimony today. There are
additional questions. But time will not permit us to pursue them.
I will urge the chairman to leave the record open for submission
of additional written questions. In my capacity as acting chairman
I will state that the record will remain open for approximately 15
days for the addition of any other supplemental materials.
Thank you both very much for your contribution to this hearing
this morning.
Mr. PAPONE. Thank you.
PAGENO="0085"
81
Mr. SANTINI. Next I will summon my good friend Mr. William D.
Toohey, president of Discover America Travel Organizations, as a
part of a panel.
He will be accompanied by Mr. Robert LeBlanc, chairman of
governmental affairs, and regional director, National Council of
State Travel Directors, and Mr. Ronald L. Danielian, executive vice
president and treasurer, International Economic Policy Associ-
ation.
Gentlemen, we welcome you to our committee hearing this morn-
ing. I have had an opportunity to skim your prepared remarks.
Not wishing to have you abandon any one of the golden words, if
it is possible that you could summarize those statements, and that
we might enter these very detailed statements in our record verba-
tim, I believe I can speak for the balance of the committee that
there would be an expression of appreciation that would follow
that.
However, if you wish to read your statement verbatim, that
certainly is a prerogative that you can pursue as well.
Mr. Toohey.
STATEMENTS OF WILLIAM D. TOOHEY, PRESIDENT, DISCOVER
AMERICA TRAVEL ORGANIZATIONS, INC.; ROBERT LeBLANC,
CHAIRMAN, NATIONAL COUNCIL OF STATE TRAVEL DIREC-
TORS, AND DIRECTOR, LOUISIANA OFFICE OF TOURISM;
RONALD L. DANIELIAN, EXECUTIVE VICE PRESIDENT AND
TREASURER, INTERNATIONAL ECONOMIC POLICY ASSOCI-
ATION
Mr. TOOHEY. Thank you, Mr. Chairman.
I will attempt to summarize my statement to the best of my
ability, to allow as much time as possible for your questions.
Mr. SANTINI. Your complete statement-and it is a very complete
statement-will be entered in the record [see p. 86] and supple-
mented by your personal remarks.
Mr. TOOHEY. Thank you, Mr. Chairman.
We are grateful for the opportunity to testify today, and we will
try to provide the subcommittee with the basic reasons why the
industry supports Senate bill 1097. We will also be most pleased to
respond to the questions that you may wish to ask us.
With me today are Robert LeBlanc and Donald L. Danielian. Mr.
LeBlanc is director of the Louisiana Office of Tourism, and chair-
man of the National Council of State Travel Directors. Mr. Daniel-
ian is executive vice president and treasurer of the International
Economic Policy Association, and he is with me today to elaborate
on the importance of international travel and tourism from an
international economic context and perspective.
Madam Chairwoman, on September 28, 1978 and on February 26,
1979, I appeared before the Senate Committee on Commerce, Sci-
ence and Transportation in support of the basic concepts and ap-
proach embodied in Senate bill 1097.
At that time, 21 national travel industry associations and coun-
cils endorsed this testimony. They continue to support the basic
concepts contained in this bill. We don't appear today with a broad-
based industry panel because we believe to do so would unnecessar-
PAGENO="0086"
82
ily take the valuable time of this committee and result in repeti-
tious testimony.
We have attached to the testimony and for the record the list of
those organizations and councils which are in support of these
concepts.
The travel industry strongly supports the three-pronged ap-
proach contained in Senate bill 1097. First of all, that there should
be a declaration of national tourism policy for the United States,
that there should be put in place some type of coordinating mecha-
nism to resolve tourism questions and deliberations regarding
public policy planning at the Federal level; to provide an advocate
for tourism interests and its impact on the national economy; and
finally to have an implementing agency that can effectively carry
out policy.
We have carefully looked at the record of the past and the
agency that has been in place, and have studied the question
thoroughly.
I would like to make one brief comment regarding the U.S.
Travel Service. As you know, there is legislation before the House
to continue the USTS and its marketing activities for 1 additional
year. We realize, as do you, that its funds will be exhausted on
September 30 and its legislative authority will expire.
We believe it would be most unfortunate if the international
promotional activities of the U.S. Travel Service and the efforts of
its six foreign markets collapsed on September 30. Program con-
tinuity would be irreparably damaged.
So we ask the members of this subcommittee to exert whatever
additional influence they can for immediate passage of H.R. 2795
by the full House in order to keep the U.S. Travel Service operat-
ing until some other entity can be put in place to replace its
efforts.
We believe there is a strong need to coordinate at the highest
level the many existing Government programs involved in travel
and tourism so as to insure these programs' effectiveness and re-
sponsiveness to the national interest. This is a broad and complex
question.
Again, we have studied the possibilities for coordinating existing
programs within the Government and believe that the suggestion
to establish a national policy council is probably the best way to go,
although there is some skepticism which I realize is shared by this
committee regarding its possible effectiveness.
We believe an interagency coordinating body is needed as a
practical way to bring cohesion to the extensive but fragmented,
uncoordinated and often inefficient Federal involvement in tour-
ism.
We believe the policy council would be aided in its work if it
were established by law at the highest level, and given sound
directives and powers needed to give real effect to its work.
We believe it is also essential that those participating in the
work of the policy council have the power to make decisions. We
believe it is also essential that the policy council report frequently
on its activities to the Congress of the United States.
We believe it should be provided with a professional director, and
with a staff independent of any single agency. We believe further
PAGENO="0087"
83
that the director of the policy council staff should be an individual
possessing broad-based experience in the travel industry.
With these provisions, the policy council seems to us to be the
most practical method of bringing cohesion to the Federal Govern-
ment's involvement in travel and tourism.
We believe also that legislation should establish this council in
the executive office rather than in any single department or
agency because the function of the council will cut across agency
lines.
We do not believe, therefore, that it should be identified with
any one agency or department.
The legislation should also require that the council afford the
States, the cities, and the private sector opportunity for adequate
input on their needs and on tourism issues.
This provision would encourage improved coordination on formu-
lating policy within the entire travel industry, rather than just
within the Federal Government.
We believe a federally chartered nonprofit corporation is the
most effective means of implementing a tourism development pro-
gram because international marketing would be its primary pur-
pose and activity.
The Federal Government has a proper role in marketing the
United States as a travel destination and in the facilitation of
travel to this country. These are legitimate functions of the U.S.
Government designed to benefit the general welfare and cultural
understanding of the Nation, to improve its commerce and impor-
tantly, to add to our foreign exchange earnings.
The encouragement and promotion of international travel to the
United States can best be carried out by an organization that is
accountable to, but outside the framework of, the U.S. Government.
This has been recommended before. As far back as 1968, a Presi-
dential Commission on Travel under President Lyndon Johnson
recommended creation of a nonprofit corporation to implement
tourism development programs for the United States.
Promoting international travel and tourism is clearly in the
national interest. But we don't believe it is a function that can be
carried out most effectively by a Federal agency.
In a highly competitive international tourism market an organi-
zation promoting tourism must be flexible, must be mobile, it must
be quick to grasp opportunity, and able to adjust personnel require-
ments according to the organization's frequently changing needs.
A U.S. Government agency operating under civil service and
bureaucratic and other restraints simply cannot compete as effec-
tively as possible in the international tourism marketplace.
In our opinion, a corporation that is accountable to Government
but not bound by it can most effectively compete and sell the
United States as an attractive travel destination.
Last year it is estimated that the people of the world spent $156
billion on international tourism. Of this amount, a little more than
5 percent, or about $8.5 billion, was spent on international travel to
the United States, a pitifully small share of market when one
considers this Nation's capacity to service travelers, when one con-
siders the attractions of the United States, and its share of market
in other major commercial categories.
PAGENO="0088"
84
The role of Government promotion is to expand the Nation's
share of the total market for international tourism. The Govern-
ment promotes the Nation as a whole, so that travelers will favor-
ably compare it to other nations which would be alternate destina-
tions for those international travelers.
The role of the State, the locality, or the private company is to
increase its share of total receipts from international tourism. Pri-
vate sector advertising markets a specific destination, a specific
service or tour program.
The private sector, by advertising its services and competing for
a larger share of market, provides the means for Government to
realize these increased foreign exchange earnings from tourism.
Government and private sector promotion clearly support each
other. The Federal program of grants in aid and matching funds
for State and local efforts to promote their areas overseas should
be strengthened and expanded.
Only the Federal Government can present this Nation in its
entirety as a desirable place to visit, and educate people to the
rights and responsibilities of international travelers and of the
inhabitants of the host countries they visit.
Only the Federal Government can provide for technical assist-
ance and data service programs and can facilitate the movement of
travelers and give the industry the recognition and access to Gov-
ernment policymakers that its performance and its importance so
well deserve.
We want those programs to be conceived, coordinated, and ex-
ecuted effectively and efficiently.
To conclude my remarks, we have two specific suggestions about
Senate bill 1097. Section 312 limits funding for general administra-
tive costs of the corporation-salary, expenses, and so forth-to 5
percent.
We believe this limitation results in unnecessary inflexibility
and the possibility of inadequate staff support given the level of
Senate approved authorization. We would not recommend a fixed
limitation of these costs, but suggest that language be substituted
for the 5 percent. emphasizing the congressional intent to hold
administrative expenses to as low a level as possible.
The congressional appropriations process will then serve as a
check on these expenses to prevent them from becoming excessive
or too large a percentage of the overall budget.
Second, in the suggested bill attached to the testimony presented
to the Senate on February 26, 1979, we propose language to make
sure that the purposes and activities of the corporation are clear.
To dispel any uncertainty about the authority of the corporation
relative to its promotional activities, we included language in sec-
tion 8, and I quote, * * * utilizing all appropriate media of public
information and communication.'
This does not appear in Senate bill 1097. We ask that it be
inserted in section 308 so it is clear that the intent of the corpora-
tion will be to advertise and promote-using all existing media
channels-the attractiveness of visiting the United States.
Many of the questions that were proposed by the subcommittee
that we received in advance of the hearing relative to the corpora-
tion, we believe, are matters which should be considered and re-
PAGENO="0089"
85
solved by its board of directors when it formulated its program and
presented its recommendations to the Congress.
Programs and priorities of the corporation for the most part, we
believe, would best be left to the collective judgment of the corpora-
tion's board.
We meet here at a time of maximum opportunity, maximum
need in our national and international life, Madam Chairwoman.
Our trade balance, our foreign exchange earnings, the strength of
the dollar and the understanding and image our country and our
people confront abroad make the deliberations before this subcom-
mittee more urgent to our national interests than ever before.
Madam Chairwoman, this concludes my statement. With your
permission, I would like to call upon the two gentlemen accompa-
flying me today for the comments they might wish to make. We
will also be pleased to answer any questions that you may wish to
ask.
[Testimony resumes on p. 107.]
[Mr Toohey's prepared statement follows:]
PAGENO="0090"
86
STATEMENT
of
NILLIAN D. TOOHEY
PRESIDENT
DISCOVER AMERICA TS~VEL ORGANIZATIONS, INC.
Mr. Chairman, my name is N~ll~am D. Toohey. I am amcearing
in my caracity as president of Discover Acnerica Travel OrganiZatlOflS,
Inc. (DATO) , the national association of the U.S. travel industry.
Its oolicies and programs reflect the corrsnon interests and concerns
of the travel industry's major components and are supported by
them.
Its membership consists of individuals from more than 1,200
organizations: state and territorial travel offices; local
convention and visitors bureaus; travel-related associations; and
individual companies connected with the travel and tourism
industry.
Mr. Chairman, we are grateful to have this opportunity to
testify today and will try to provide to the Subcommittee the
basic reasons that the industry supports S. 1097. We will also
respond generally to the questions recently sent to us by the
Subcommittee. We will, in the near future, submit a more detailed
written response to the questions for inclusion in the record.
Accompanying me today are Robert LeBlanc and Ronald L. Danielian.
Robert LeElanc is Director of the Louisiana Office of Tourism and
Chairman of the National Council of State Travel Directors. Each
of the nation's state governments has a state travel office
mandated to promote travel. The directors of these offices
constitute a vital force within DATO and the travel industry and
seek a more effective and responsive Federal involvement in travel
PAGENO="0091"
87
and tourism. Nr. Danielian is Executive Vice President and
Treasurer of the International Economic Policy Association. He
is with me today ~n order to elaborate on the importance of
international travel and tourism from an international economic
context and perscective. Also, in this connection, we retained
Doctor Samuel Rosenblatt, President of SNR, Inc., an economic
consulting firm, and former Assistant Director of the Council on
International Economic Policy to further elaborate the economic
basis and national interest served by the Federal government
undertaking a program to support and promote travel and tourism
to the United States. We ask that this written report be included
as part of our presentation.
On September 28, 1978 and February 26, 1979, I appeared
before the Senate Committee on Commerce, Science and Transportation
and the National Tourism Policy Study in support of the basic
concepts and approach embodied in 5. 1097. At that tine I was
accompanied by a panel of executives who represented various
components of the travel industry and who were unanimous in their
support of the DATO testimony.
Twenty-one national associations and councils also endorsed
the DATO testimony presented at that time and continue to support
the basic concept and approach contained in 5. 1097. A list of
these organizations is attached to this statement. We do not
appear today with the broad-based industry panel that accompanied
us before the Senate Committee. To do so would have unnecessarily
taken the valuable time of this Subcommittee and resulted in much
PAGENO="0092"
88
repetitious and cumulative testimony. While DATO has some
suggestoons relative to imorov~ng S. 1097, we urce the S~bcommittee
to act favorably on thos legislation. t is on the natoonal
interest and will enhance the nations we11-be~no.
~istorica1lv, the Federal government has denied travel and
toorosm a oace on rubloc po1_ocypl anniny commensurate with its
imocroance to this nation.
This tanial has had a cumulative negative effect through
the years in the way the Federal government views the industry.
For example:
* In its various plans to narrow the nations balance-cf-
payments deficits during the 1960's the Government
sought to discourage international travel by U.S.
residents by imposing a punitive exit tax.
* In its plans to beautify the environment in the late
1960's, the Government sought to ban altogether informative
advertising on the nation's highways.
* When the nation faced a sudden energy shortage six
years ago, some high-level government officials declared
travel "non-essential" and proposed energy polices that
placed a disproportionate burden on travel and tourism.
And recently, the Department of Energy submitted
contingency plans to close gasoline stations on the
weekends, which would have had disastrous results.
* In 1976, congress passed a tax law to discourage Americans
from participating in business conventions abroad.
PAGENO="0093"
89
* Last year, the Administration procosed to severely
limit tax deductions for iccitimate business travel and
entertainment.
All of these actions reveal a pattern of insensitivity and
lack of understanding by the Federal government for an industry
that employs over four million ~Terican citizens, that is one
of the three most important industries in virtually every state
of the Union, and that perfo~s a vital function for the
hundreds of millions of trips Americans take every year for
business, pleasure, or personal reasons.
To remedy this denial, the Senate passed S. 1097. We
firmly believe that this legislation would make the government
involvement in travel and tourism more effective and responsive.
5. 1097 would enact legislation creating a high-level Policy
Council headed by a Cabinet-rank advisor to the President to
coordinate policies, programs or issues relating to travel and
tourism involving two or more Federal agencies and would establish
a federally-chartered, non-profit corporation as the most
appropriate and effective Federal implementing mechanism to carry
out a National Tourism Policy.
The industry strongly supports this three-pronged approach.
The Federal government has encountered serious obstacles
and difficulties in its effort to respond creatively to the
opportunities offered by the worldwide growth of travel and tourism
during the past two decades. The United States Travel Service
(USTS) has been inadequately funded and without sufficient
PAGENO="0094"
90
tegislat~ve authority to carry cut a fully effective orogram.
These and other crobems aro documented in the Tonal Report of
the National Tourism Policy Study, prepared for the Senate
Commerce Ccmmottee.
Before discussing the new approach we beloeve is needed
to coordinate and implement a National Tourism Policy, we would
like to comment briefly on the present predicament of the USTS.
Its legIslative authcrity woll shortly expire and its funds will
be exhausted on September 30 of this year. As you know, H.R. 2795,
an interim measure that would authorize one year of additional
funding, was promptly approved by this Subcommittee and the
full Committee but is still awaiting full House action. The
withdrawal of Administration support and the current uncertainty
about the USTS's continued existence has had, and is presently
having, a serious adverse impact on its mission and effectiveness.
It would be most unfortunate if the international promotional
activities of the USTS and the six foreign offices collapsed on
September 30. Program continuity will be irreparably damaged.
DATO asks the members of the Subcommittee to exert whatever
further influence they can for immediate passage of H.R. 2795
by the full House in order to extend the.life of the USTS and
to continue its international marketing programs through 1980
until the more effective mechanism called for in S. 1097 replaces
it.
We believe Congress should enact legislation that incorporates
a national statement of policy toward travel and tourism.
PAGENO="0095"
91
We further believe that there is a need to coordinate,
at a high level, the many existrng government rrocrams involved
in travel, tourism and recreation so as to insure these programs
effectiveness and responsiveness to the national interest.
New legislation incorvorating a statement of tourism policy
and a Federal coordinating mechanism is badly needed.
The International Travel Act of 1961, which authorized
promotion by the government of travel to the United States, was
enacted when mass travel as we know it today was just beginning.
During the past 30 years, tourism has been one of the world's
leading growth industries. Expenditures on travel worldwide have
grown at the compound rate of more than 10 percent a year.
Today, travel is the third largest retail industry in the
United States in terms of consumer sales. In 1976, it accounted
for more than $115 billion in domestic spending -- some 6 percent
of the gross national product -- and was exceeded only by food
and automotive industries.
It directly employs 4 million Americans at every level of
skill and indirectly produces another 2 million supporting jobs.
It generates $27 billion a year in wages and salaries, and $16
billion in tax revenues.
Travel provides large numbers of entry-level positions and
is pre-eminent in the employment of women, youths, and members of
minority groups. At a time when the service sector accounts for
most employment growth, travel is one of the world's leading
labor-intensive service industries.
PAGENO="0096"
92
It h:ghy doversifted. itS 1.4 millaon component
com~ao~cs ratos from small tra-:el apancies to large airlines
and hotel chains.
It was the largest item in world trade until the recent
four-fold increase in oil ~rices cataculted petroleum into the
No. 1 cosotron.
it has become essential to the way ceocle carry out their
busimess. One cannot imagine a modern economy without business
travel.
But travels importance is more than economic. It is an
extraordinary industry that confers a unique array of social
and intangible benefits on the people of the world.
It is at the heart of this Nation's value system, which
supports the free flow of people and ideas.
It enables tens of millions of familes to fulfill some of
their dreams, and to return to their daily lives rested in body
and enlarged in spirit. In 1976, more than 100 million Americans
left their homes on overnight personal, pleasure, or business trips.
We who have watched travel grow at firsthand are, for the
most part, proud and happy with the progress this industry has
made.
But we see difficulties that could have been avoided if a
national statement of policy and a Federal coordinating mechanism
had existed in the past. More importantly, we see positive benefits
today from a policy statement that recognizes the place of travel
in American society; from a mechanism that gives the travel
industry access to government and a role in the creation of
PAGENO="0097"
93
government policies that affect the industry; and from a new
legal framework that points the way toward more active 000ceration
between the industry and other sectors affected by travel and
tourism.
Specifically, a national policy on travel might have prevented
the government from issuing a plan proposing weekend closings of
gasoline servtce stations in the event of a severe shortage. Six
years ago, when the Nation faced a sudden energy shortage, some
high-level government officials categorized travel as a non-
essential industry. It took a Senate resolution recognizing the
vital contributions of travel to society and to the economy to put
matters in more realistic perspective. But to judge by the
Department of Energy's latest initiatives, the travel industry's
struggle for consideration and timely invitations to contribute
constructively to the making of policies that affect it is not
yet won.
An existing policy statement might have restrained the Admini-
stration from its ill-conceived attacks on business travel and
entertainment. It might also have prevented the 1976 enactment of
a tax law that has hindered participation in business conventions
abroad.
A Federal coordinating mechanism might have helped the travel
industry campaign to ease visa requirements for bona fide foreign
visitors with return tickets and to provide for their more
hospitable reception at international terminals. We have made
some progress in recent years with customs and immigration
61_1L~L~ C - 80 - 7
PAGENO="0098"
94
preclearance at some popular departure areas and with improved
foreign language capabilities among irmigration, public health,
and custcms employees; but ~e've a long way to go to create an
initial atmosphere of hospitality to foreign visitors that
accurately reflects the kind of friendly people and open society
we are.
At a time when the Administration wishes to promote exports,
the low priorities it gives service industries, which account
for more than 25 percent of total exports, is ill-advised and
unfortunate. We believe that the major service industries,
including tourism, should play a far more important role in our
national efforts to increase its foreign exchange earnings.
A policy statement and coordinating mechanism would do nore
than insure equal priority for travel and tourism with other
major interests in the formation of national policy and programs.
It would facilitate the active cooperation between the industry
and recreationists, environmentalists, perservers of historic
sites, and concerned residents living near popular tourist
destinations. In Europe and the Pacific, the travel industry is
working successfully with such interests in the joint development
of programs to educate travelers, and to preserve the scenic
beauty and cultural values of popular areas. We can achieve the
same degree of cooperation in this country if all interests can
be guided by a comprehensive acceptable national policy that
assures consideration for all those interested in business travel,
convention travel, pleasure travel, personal travel, tourism and
PAGENO="0099"
95
recreation -- with domination by no single interest.
For these and other reasons, :-Ir. Chairman, thcs ~at:on
needs a national policy on travel and tourism and a Federal
mechanism to coordinate that policy. We are pleased and
grateful that the Congress is seriously considering such action.
The statement of national policy contained in S. 1097
represents the most serious and important consideration ci
tourism as a social and economic activity that the government
has ever undertaken.
The industry endorses the proposed Federal mechanism to
coordinate tourism activities in existing agencies contained in
S. 1097. We believe an interagency coordinating body is needed
as a practical way to bring cohesion to the extensive but
fragmented, uncoordinated, and often inefficient Federal involvement
in tourism. The policy council should be established by law
at the highest level and given sound directives and the powers
needed to give effect to its work.
It is essential that representatives of the various
government entities on the council have the power to make decisions.
The council should report annually to the Congress to facilitate
meaningful Congressional oversight of its activities, it should be
provided with a professional director and staff independent of
any single agency. The director should be an individual possessing
broad-based experience in the tourism industry. With these
conditions, the policy council appears to be a practical method
of bringing cohesion to the Federal involvement in travel and tourism.
PAGENO="0100"
96
We believe strongly that legislation should establish the
council in the Executive Office rather than any single department
or agency because its function will cut across agency lines.
It should not, therefore, be identified with any one agency or
decartment.
The legislation should also require that the council afford
the States, cities, and private sector adequate input on issues.
This provision would encourage improved coordination on formulating
policy within the entire travel industry rather than just within
the Federal government.
want to reiterate that DATO is keenly concerned with
two basic aspecos of the present relationship between the
Federal government and tourism.
One is greater recognition of the size, complexity, and
importance of the travel industry and of its interrelated totality.
The second is the need for a focus within the government
to which the travel industry can look for support, advocacy,
guidance, and coordination of implementing agencies. The travel
industry looks to the proposed policy council to be such a place.
The government's involvement in travel and tourism need the kind
of coordination and policy guidance that only itcan provide.
We believe a federally-chartered, non-profit corporation is
the most effective means of implementing a tourism development
program with international marketing as its primary purpose and
activity.
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97
The Federal government has a proper role in marketing the
United States as a travel destination and in the facilitation
of travel to this country. These are lecitimate functions
of the U.S. government designed to benefit the general welfare
and cultural understanding, improve commerce and add to this
country's foreign exchange earnings.
To begin with, the encouragement and promotion of international
travel to the United States can best be effected by an organization
accountable to, but outside the framework of, the U.S.
government.
As far back as 1968, a Presidential Commission on Travel
appointed by President Lyndon Johnson, recommended creation of
a non-profit marketing corporation to implement tourism development
programs.
Federally-chartered, non-profit corporations exist to achieve
objectives that are in the national interest but outside of
traditional areas of government operations. Promoting international
travel and tourism is clearly in the national interest but is not
a function that can be carried out most effectively by a Federal
agency.
In a highly competitive international tourism market, an
organization promoting tourism must be flexible, mobile, quick
to grasp opportunities, and able to adjust personnel requirements
according to the organization's frequently changing needs. A
U.S. government agency, operating under Civil Service, bureaucratic
and other constraints, simply cannot compete with maximum
PAGENO="0102"
98
effectiveness to the coteroattonal tourosm marketplace.
In cur onion, a corocrattOn acooannmbe to government, but
not bound by :t, can most effectivey compete and sell the
United States as an attractive travel destination.
ke pr000se, theredore, that Concress charter a U.S.
travel and tourcsm develooment coroorati:n, with, as tts
Drlr'ary task, the devecoment and tmvlcnantatton of a
vi0000cs marceotno ortoram to sotmulate torelon travel to the
United States. :hts os the basoc aooroach taken by S. 1097.
Briefly, the proposed Corporation would be governed by
a Board of 15 Directors appointed by the President of the
United States and confirmed by the Senate. Congress would have
annual budgetary oversight, supported by an independent audit,
and the Corporation would be required to submit an Annual Report
to the President and to the Congress.
The Corporation would be required to monitor all Federal
programs affecting tourism for duplication, effectiveness and
compliance with the objectives of the national tourism policy
statement -- and to report the results of the monitoring to the
Policy Council and to the Congress at least once every six months.
S. 1097 would provide for the Corporation to seek and to
receive continual input and recommendations from State and local
governments, and the private sector, with respect to their tourism
needs, and their evaluation of the individual Federal policies
and programs, which are intended to meet those needs. The
Corporation would direct this information to the appropriate agencies
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99
and to the National Travel and Tourism Policy Council. For
the forst tone, the tra~.'el oniostr~' would have an onstot~t:onalized
channel for input in the fo~ulation of government policy
affecting it.
The Corporation would be authorized to conduct a broad
rance of activities to assure the orderly growth and development
of tourism and to help implement national policies.
These activities would include:
* Operating offices in other countries
* Developing a tourism research and statistical
program.
* Training and education.
* Providing technical assistance.
* Providing consumer information to travelers.
But the most important programs, by far, are the promotion
and facilitation of international travel to the United States,
including undertaking the research necessary to these programs.
Virtually every other national government -- 122 by a recent
authoritative source -- views government promotion of international
travel as a keystone of public policy. If the United States were
to abolish a government role, it would leave a vast potential
market to other nations in a highly competitive situation at a
heavy cost in foreign exchange earnings and lost tax revenues.
Last year, it is estimated that the people of the world
spent $156 billion on international tourism. Of this amount,
little more than five percent, or about $8.5 billion, was spent
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100
on international travel to the United States -- a pitifully
small figure when one considers this nation's capacity to
service travelers, its attractions and its share of the market
in other major commercial categories.
If the U.S. government would recognize this potential and
accept its proper role in marketing the United States as a
destination, we believe our international tourism receipts could
be doubled in the near term, with substantial benefits to the
economy and commerce of the United States.
Economics aside, tourism is justifiably viewed as an
important positive factor in a nation's foreign relations and
in the attitudes of other governments and people toward a host
country.
It is clearly in the national interest to promote international
travel to the United States. Yet, some in the national government
believe that such promotion should be handled by the State, local,
and private sectors alone. It fails to understand that the
Federal government and the travel industry have parallel, non-
duplicating roles in tourism promotion -- a fact understood by
many free enterprise nations such as Canada, Germany, Ireland,
Japan, Mexico, Switzerland and the United Kingdom.
The role of government promotion is to expand a nation's
share of the total market for international tourism. A
government promotes the nation as a whole, so that travelers can
favorably compare it to other nations, which are alternate
destinations for international travelers.
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101
The role of a state, locality or private company is in
turn to increase its share of thao ~atio~s total receivts
from international tourism. Private sector advertising markets
a specific destination, services or tour program. The private
sector, by advertising its services, and competing for a larger
share of the market, provides the means for the government to
realize these increased foreign exchange earnings from tourism.
In reference to the argument that the promotion of international
travel to the United States should be accomplished by the private
sector, it should be noted that there are few companies in
the U.S. travel industry that can afford any overseas advertising.
Almost all of the 1.4 million tourism-related businesses in
the United States are small businesses, operating on. miniscule
or non-existent advertising budgets.
Government and private sector promotion clearly support
each other. The Federal program of grants-in-aid and matching
funds for state and local efforts to promote their areas overseas
should be strengthened and expanded.
Only two years ago, the International Economic Report of the
President to Congress pointed out that within a country, competition
for the tourism dollar is between individual localities and
business firms, but that on the international level, competition
is between national governments.
The proposed legislation requires Congress and all government
agencies to recognize tourism's importance and to consider its
legitimate claim to fair and equitable treatment.
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102
The proposed National Tourism Policy statement, Policy
Ccuncil and Ccrroraoicn are all necessary for recognition,
access and advocacy.
The Chairman of the Policy Council will have the standing
and influence of a Cabinet-rank Presidential assistant. He
would be the chief spo-:esman and advocate of tourism at the
highest levels of ~cvernment in this country and abroad on
matters of national and foreign tourism policy, and in reconciling
conflicts between two or more agencies of the Government over
programs that affect tourism.
The President of the Corporation would be a full-time travel
professional with an adecuate budget and staff. He would be
the spokesman for tourism on the day-to-day operating level and
would be authorized to represent the United States government
at intergovernmental tourism conferences as well as at U.S.
travel industry meetings.
The Chairman and the President would thus work closely
together, complementing each other's functions. Both, however,
would be advocates, monitors and channels for access.
We want the travel industry to grow in ways that harmonize
with the overall interests of the American people and the world
around them; and that add to, rather than subtract from, the sum
total of human happiness and the quality of life on our planet.
Only Federal programs can present the entire nation as a
desirable place to visit; can educate people to the rights and
responsibilities of international travelers and of the inhabitants
of the host countries they visit; can provide for technical
PAGENO="0107"
103
assistance and data services programs; can facilitate the
movement of travelers; and -- yes -- can give the industry the
recognition and access to government policymakers that its
performance and importance so well deserve.
And we want those Federal orograms to be conceived,
coordinated and executed effectively and efficiently. We
are convinced that a coordinating Policy Council and implementing
federally-chartered Corporation are the best mechanisms for
fulfilling the spirit and aims of a national tourism policy.
In conclusion, we have two specific suggestions about S. 1097.
Section 312 (b) limits funding for general administrative costs
of the Corporation, salaries and expenses of consultants to 5
percent. We believe this limitation results in unnecessary
inflexibility and the possibility of inadequate staff support
given the level of Senate-approved authorization. We would not
recorrsnend a fixed limitation of these costs but suggest that
language be substituted for the 5 percent clause emphasizing the
congressional intent to hold administrative expenses to as low a
level as possible. The Congressional appropriation process will
then serve as a check on these expenses becoming excessive or too
large a percentage of the overall budget.
In the suggested bill attached to the DATO testimony presented
on February 26, 1979, we proposed language (Section 8) to make
sure that the purposes and activities of the corporation were
clear. To dispel any uncertainty about the authority of the
Corporation relative to its promotional activities, DATO included
PAGENO="0108"
104
the following language in Section 8 (b) "utilizing all
apcrc~riate media of public information and communication."
This does not appear in 5. 1097. We ask that it be inserted
in Section 308 (b)
Many of the auestions proposed by the Subcommittee relative
to the Corporation are matters which would be considered and
resolved by its Board of Directors. Activities, programs and
priorities of the Corporation, we believe, would best be left
to the collective judgement of its Board.
While past experience provides some basis for skepticism
as to the effectiveness of coordinating bodies within government,
we believe the ccord~nating council as proposed in 5. 1097 is
effectively structured to coordinate the policies and programs
of member agencies. Because of the importance of the issues and
conflicts that have developed in the past, DATO believes it is
essential to establish a mechanism to monitor, advocate and
attempt to resolve conflicts of policies and programs. A legislative
mandate and Congressional oversight will assure that the Chairman
of the Council - the Assistant to the President for Domestic
Affairs and Policy - fulfills his specified duties and takes
seriously his responsibility.
In conclusion, we ask the Subcommittee to enact into law a
National Tourism Policy, a Policy Council, a federally-chartered
travel and tourism development corporation.
We meet here at a time of maximum opportunity and maximum
need in our national and international life, Mr. Chairman. Our
trade balance, our foreign exchange earnings, the strength of
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105
the dollar, and the understanding and image our country and
our people confront abroad make the deliberations before
this Subcommittee more urgent to our national interest than
ever before.
What is required at this moment is a largeness of vision
and understanding by our government with respect to the role
and potential of tourism for creating employment, generating
tax revenues, earning foreign exchange and supporting the
global commitment of the U.S. to a more peaceful and stable
world.
Mr. Chairman, that concludes my statement which I ask to
be placed in the record of this hearing. With your permission,
I would like to call upon the two gentlemen accompanying me
today for comments they wish to make. We also will be pleased
to answer any questions you may wish to ask.
PAGENO="0110"
106
Oroanozations Sucoorting DATO Testimony
Re Easoc Conceot and Apprcach Set
Fort~o ~n S. 1097
Aor Transoort Assoc~ataor. of America
America ~utomcb~le Associataon
American Siohtseeinc :nternational
Amerocan Scciet; of Travel Acents
?~4TRAK
Conference of National Parks Concessioners
Gray Line Sight-Seeing Association, Inc.
Hotel Sales Management Association International
International Association of ?_nusenent Parks & Attractions
International Association of Convention & Visitor Bureaus
National Campground Owners Assocaataon
National Caves AssociatIon
National Council of Area and Regional Travel Organizations
National Council of State Travel Directors
National Council of Travel Attractions
National Council of Urban Tcurism Organizations
National Innkeeping Association
National Tour Brokers Association
Recreational Vehicles Association
United States Tour Operators Association
United States Travel Data Center
PAGENO="0111"
107
Ms. MIKuLsKI [presiding]. Did Mr. LeBlanc wish to add a few
words or just enter into the dialogue?
STATEMENT OF BOB LeBLANC
Mr. LEBLANC. I am Bob LeBlanc, director of the Louisiana Office
of Tourism and chairman of the National Council of State Travel
Directors.
I am appearing today to join Mr. William Toohey, president of
Discover America Travel Organizations, Inc., the national associ-
ation of the travel industry, and Mr. Ronald L. Danielian, execu-
tive vice president of the International Economic Policy Associ-
ation on this panel.
Madam Chairwoman, I will shorten my remarks. You have them
in the written testimony.
Ms. MIKuLSKI. Mr. LeBlanc, your statement in toto will be en-
tered into the record [see p. 109]. We can assure you that will be
made a permanent part of our record.
Mr. LEBLANC. There are just a few highlights.
I should explain that the National Council of State Travel Direc-
tors serves as a national coordinating body for State and territorial
travel offices and consists of elected representatives from nine
DATO regions. I won't go into the regions, but they are listed in
my prepared testimony for the record.
The combined budget allocation for these offices was about $90
million for fiscal year 1978-79. This represents a 20-percent in-
crease over last year's allocation and indicates a greater awareness
for the States the value of tourism to State economies, and the
need to apply for adequate funding for tourism offices and develop-
ment.
The States are in agreement that there should be a national
tourism policy which would establish a cooperative effort between
the Federal Government and the States and other concerned State-
related public and private organizations.
The 12 policy goals set forth in title 1 of the proposed National
Tourism Policy Act are comprehensive. Taken together with the
policy objectives which are inferred, they appear adequate to the
solution of problems which exist and which will continue to arise
due to lack of policy guidance regarding the interest in tourism as
they pertain to State and region.
We are also pleased to see that title 2 establishes a Policy Coun-
cil as an independent entity to the executive branch, and it will be
chaired by an Assistant to the President of the Cabinet rank. This
is the appropriate level and position in an administration, in our
judgment.
However, we would strongly recommend that the executive direc-
tor, staff counsel, who is to be appointed by the chairman, with the
approval of the council, should have some practical experience in
the nonpublic or private sector, in addition to being qualified to
appraise programs and activities of the Federal Government.
You may wish to consider making our recommendations a stipu-
lation with respect to the executive director as a provision in the
act.
Madam Chairwoman, that completes my statement. Thanks for
hearing in full the support for the proposed National Tourism
PAGENO="0112"
108
Policy Act as set forth in Senate bill 1097 as appropriately amend-
ed by the subcommittee.
[Testimony resumes on p. 116.]
[Mr. LeBlanc's prepared statement follows:]
PAGENO="0113"
109
Statement of Bob LeBlanc
Director of ~ouisiana Office of Tourism
Chairman of the National Council of State Travel Directors
Before the Subcommittee on Transcortation and Commerce
of the Committee on Interstate and Foreico Commerce
U.S. House of Representatives
Mr. Chairman, thank you, sir, for permittinc me to add
a few words on behalf of the State Tourism Offices.
I am Bob LeElanc. I am Director of the Louisiana Office
of Tourism and Chairman of the National Council of Stats
Travel Directors. i am appearing today with William t.
Toohey, President, of DATO, the national association of
the travel industry, and Mr. Ronald L. Daneijan, Executive
Vice President, of the International Economic Policy Association
on this panel.
I should explain that the National Council of State Travel
Directors serves as a national coordinating body for the state
and territorial travel offices and consists of elected representa-
tives from the nine DATO regions. The nine official DATO
regions are indicated in the attachment to this statement.
There are 49 state tourism offices and comparable offices
in the District of Columbia, Maine, American Samoa, Guam, Puerto
Rico and the U.S. Virgin Islands.
The combined budget allocations for these offices was
about $90 million for fiscal year 1978-79. This represents a
20% increase over last year's allocations and indicates a greater
awareness of the value of tourism to state economies and the
need to apply more adequate funding to tourism development.
A National Tourism Policy
The states are in agreement that there should be a national
tourism policy which would establish a cooperative effort between
the Federal Government and the states and other concerned state-
61_1L~L~ 0 - 80 - 8
PAGENO="0114"
110
related nublic and private orcanizations. The twelve policy
coa0s set forth on Title I of the prooosed "National Tourism
ace concrehensove. Taken tocether with the policy
cb'eczi:es which are inferred they ampear adequate to lead to the
solution of problems which exist and will continue to arise
due to the lack of policy guidance regarding the national
interests on tourism as they pertain to states and regions.
The yational Tourism Policy Council
The fact that 50 Federal agencies are involved in over 100
tourism and recreation related programs points up the need for
a Federal coordinating body, to refine policy, to resolve
diffecences between agencies and ensure that the policies are
implemented at the state and regional level.
Ne are pleased to see that Title II establishes a Policy
Council as an independent entity in the executive branch and
that it will be chaired by an assistant to the President of
Cabinet rank. This is at the proper level in the Adininstration
in cur judcement. However, we recor~end that the Executive
Director of the Council, who is to be appointed by the Chairman
with the approval of the Council, should have some practical
tourism experience in the nonpublic or private sector in
addition to being qualified to appraise programs and activities
of the Federal Government. You, sir, may wish to consider making
our recommendation a stipulation in the Act.
A Federal Nonprofit Corporation
He are especially pleased the proposed Act calls for the
creation of a Federally chartered nonprofit corporation as an
PAGENO="0115"
111
implementing agency to carry out the national tourism policy.
We understand that sometime in the future the corporation nay,
after careful study and evaluation of promotional activities carried
out by non-Federal entities, undertake, on an institutional
basis, a domestic promotional program. But we believe the
primary purpose and activity of the corporation should be initially
confined to developing and administering a comprehensive
tourism prooram designed to stimulateand encourage travel to
the United States by visitors from other countries. It should
set its program into motion immediately to take full advantage
of up-trending traffic flows to the U.S.A. and favorable economic
factors for the U.S.A. compared to other countries.
Mr. Chairman, your committee should know that state and
regional travel offices have long been interested in the
development of international visitor traffic. This interest
goes back to the mid-30's, when modest promotional activities,
were initated but largely confined to encouraging more visitors
from nearby Canada, Mexico and Western Hemisphere countries on
a reciprocal basis.
The Federal interest in tourism was expressed in the
domestic tourism Act of 1940 which engaged the Department of
Interior in encouraging tourism within the United States together
with an incidental reference to travel to the United States from
foreign countries and the use of United States ships and planes.
Concern over adverse balance of payments position developing
with a feared consequent drain of gold stocks was a reason for the
PAGENO="0116"
112
enactment bY Concress of the international Travel Act of 1961.
This bocuont the COTS into being, with the purpose to strengthen
the domesttc and foreign commerce of the United States in the
national iterest, of improving the U.S. economy as a whole and
improve the balance of international payments situation.
Over the 13 years since 1961 one state after another has
been persuaded to cooperate with the Federal Government in the
pursuit of these national interest goals. They have been
aided in this by some Federal technical and financial assistance,
most recently from the COTS, and many have initiated modest
foreign visitor development programs.
Right now thirty states allocate some portion of their
budgets to foreign advertising but, mind you the total is only
$57,000 a gcod portion of which is directed toward the market
across the border in neighboring Canada. Nineteen states allocate
funds to foreign promotion and six have budgets for foreign
press and public relations activites. Twenty two states
maintain twenty nine information centers outside the United States.
The further development of these programs and initiation of
new programs depends upon the continuance of Federal assistance
and presence in the several foreign market places.
A Federal Yarket~mo Program
I believe that it has been made clear that it is an
aomropriate role in travel and tourism for the Federal Government
to activate and fund the operation of a powerful program which
would advertise and promote the U.S.A. as a travel destination
PAGENO="0117"
113
on foreign countries. Such an effort is consistent with the
related policy purcoses of the ~roccsed ~ct aod is justified
on at least two grounds:
First, it will improve the economy of the nation as a
whole, and second, through greatly increased foreign exchange
earnings it will make an immediate, significant and positive
contribution to the nation's deficits in internatiomal trans-
actions on current accounts.
Whilo these goals are nationa~ fite-est.: o. hoer c~-icern
to the state tourism offices, any direct funding of
the corporation is out of the question. There are programs
to which state tourism offices might make a meaningful contri-
bution. We think the corporation should immediately go about
establishing a revised overall marketing program abroad within
the framework of the program which now exists under the USTS.
This marketing Program contains elements of particular interest
to state tourism offices and we have recommended the following:
o A consumer media advertising campaign should be
structured to encourage cooperative advertising by states or
groups of states. The corporation should allocate and grant
funds on sliding scale formula perhaps up to 95% rather than
the existing 50-50 matching basis. The exact amount of any
individual grant should be increased many fold over the
exisiting $10,000 ceiling.
o The corporation should be provided a generous budget
to finance, in part or in whols, special missions and promotions
PAGENO="0118"
114
abroad organized by a state or a group of states having the
pcrrose of increasing the flow of anternational visitors to
the :nd:;:dua states and regions.
* The corporatior. should persuade states, not now engaging
in promotional missions abroad, to activate such a program
utilizing technical and financial assistance available from the
corporation on suproro of its local marketing program.
* The corporation should have and make available adequate funds
to states to finance the o~eration of familiarization tours for
travel sales agents and for consumer and travel trade journalists.
Many more agents and journalists need to see and experience first
hand the services, facilities, attractions, historical sites
which constitute the available "tourism plant' of the United
States, its states and regions.
Mr. Chairman that completes my statement. Thank you
for hearing me in full support of the proposed National Tourism
Policy Act as set forth in S. 1097 with the appropriate amendments
recommended to your committee.
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THE NINE OFFICIAL DATO OCCIONS
New England The South Frrntier West
Connecticut Alabama Arizona
Na~ne Arkansas Kansas
Massachusetts Florida Kissorri
New Hamoshire Georcia
Rhode Island Kentucky ~lahoma
Vermont Louisiana Texas
:Ii ss i ss i pp i
Eastern Gateway North Car:lina Far West
South Carolina
New Jersey Tennessee Alaska
New York California
Great Lakes Idaho
George Washington Country Nevada
Country Oregon
Illinois Washington
Delaware Indiana
District of Columbia Iowa The Islands
Maryland Michigan
Pennsylvania Minnesota American Samoa
Virginia Ohio Guam
West Virginia Wisconsin Hawaii
Marianas Islands
Mountain West
The Islands - Caribbean
Colorado
Montana Puerto Rico
Nebraska Virgin Islands
North Dakota
South Dakota
Utah
Wyoming
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116
Ms. MIKuLsKI. Mr. Danielian?
STATEMENT OF RONALD L. DANIELIAN
Mr. DANIELIAN. Madam Chairwoman, I have done some editing
on my statement. I would like to submit my statement for the
record [see p. 120].
Ms. MIKuLSKI. Certainly.
Could you tell me what the International Economic Policy Asso-
ciation is?
Mr. DANIELIAN. Yes. It is a nonprofit research group founded in
1957. It has been concerned with policy issues surrounding the
international peformance of the U.S. economy, balance-of-pay-
ments, export, U.S. investments, international tax matters, and
strategic raw materials questions.
The Association has written three books on the U.S. balance of
payments and on other areas of U.S. international accounts looking
at what we believe to be some of the solutions in terms of solving
our problems.
Your committee will be deciding what to do in a strategic context
with U.S. national and international tourism policy. I am here
today to talk about our national needs concerning international
economic interdependence, inflation, unemployment, the value of
the dollar and OPEC oil payments and their relationship to the
export of U.S. services, including air travel and tourism.
The United States is now entering a phase of international eco-
.nomic activity in which we, as a nation, have become interdepen-
dent with other economies. Our two-way trade is equal in value to
almost 21 percent of our gross national product, which means that
we need to purchase and sell on the world market and can no
longer maintain an attitude of "go it alone."
To do so, and to ignore foreign markets and incur balance-of-
payments deficits, is really transferring wealth from the United
States overseas. We are transferring claims on future goods and
services and production in the United States to foreign holders.
These concerns have a direct bearing on long-term issues such as
inflation, unemployment, the value of the dollar, and even the
freedom of our citizens to travel.
The problem of inflation and balance-of-trade deficits is not a
temporary situation, but rather an explosive structural strain
which at times results in sharp shocks to the monetary system.
We cannot solve it and sustain the health of the U.S. interna-
tional economy by continually ignoring the problem and mortgag-
ing the future.
Our problems, then, are not merely a matter of confidence, rela-
tive exchange rates and a myriad of other explanations which can
be dealt-within the short term-by statistical tranquilizers, such
as floating exchange rates or benign neglect in our export efforts.
There are no appropriate short-term measures to quickly correct
our deficits or to pay for oil, or U.S. security abroad. We must
reorganize U.S. international economic activity, looking at the
long-term strategic problems and long-term methods to solve them.
In doing so, we can reap substantial benefits to our domestic
economy.
PAGENO="0121"
117
In 1976, the U.S. Department of Commerce published a study,
"U.S. Service Industries in World Markets," which showed that
over the last 20 to 30 years services have provided the major
ingredient of U.S. economic and employment growth.
The Bureau of Labor Statistics has estimated that the rapid
growth in the labor force in the last several years was facilitated
by strong employment gains in service and trade industries and
believes that this growth reflects a long-term trend for the United
States.
It should be noted that the evolution and rapid growth of service
industries in the United States and other industrial nations are not
the result of any erosion in manufacturing ability or competitive-
ness. They are the natural result of increasing economic wealth
that creates increased demand for services relative to goods and of
increasing economic specialization.
Service receipts in the U.S. balance of payments have become a
large component of the country's total international economic pic-
ture. All private service receipts, excluding exports of goods and
military equipment, rose from a level of $7 billion in 1960 to $17.2
billion in 1970, and finally to $55.6 billion in 1978.
These receipts, which now represent some 26 percent of the U.S.
international exports of goods and services, have grown rapidly in
the past. Most important to this committee, they also include tour-
ism services including foreigners spending here, as well as receipts
of U.S. carriers for travel to the United States.
Of the $55.6 billion of gross receipts for all service industries in
1978, the largest segments, in order of importance, were $18.8
billion from dividends, interest, and earnings from U.S. direct in-
vestments abroad-including royalties and fees from affiliated and
unaffihiated foreigners-$15.9 billion from interest and dividends
received by U.S. residents on foreign debt, loans, and equity securi-
ties, and $8.5 billion from foreign tourist expenditures in the
United States and on U.S.-flag carriers for traveling to the United
States.
Clearly, then, in gross terms, foreign tourism and its transporta-
tion component is the third most important single item in our
service industry earnings abroad.
Commerce figures show that in 1978 total visitors to the United
States increased by 7 percent to a level of 19.8 million persons.
This 7-percent increase created a $1.3 billion increase in the gross
receipts for the United States in the tourism and air transportation
account. These gross earnings, and the increase between 1977 and
1978, are extremely important to the value of the dollar.
Consider, for example, that the total gross earnings on this tour-
ism account represents 28 percent of the amount of money that the
President committed on November 1, 1978, to defending the dollar.
It represents more than twice as much money as was used to
actually defend the dollar through the Treasury issuance of securi-
ties denominated in foreign currencies in Germany and Switzer-
land.
In fact, the increase between 1977 and 1978 of $1.3 billion was
only $300 million shy of the first large $1.6 billion loan floated as a
foreign currency denominated debenture on the German market.
PAGENO="0122"
118
The week after that issue was placed on the market the U.S.
dollar did firm up against the German mark. So those levels of
income to the United States can affect the value of the dollar.
It has been estimated by various Government sources that the
decline in the value of the dollar in the past year led to an
approximate 2-percentage-point increase in the Consumer Price
Index. If we stemmed the dollar decline through an active program
to increase further travel to the United States, it stands to reason
that there would be less inflation in America.
The previous U.S. policies of letting the dollar float downward
without trying to stem the "run" could thus be credited with
taking out of the U.S. economy $4.4 billion which is 2 percent of
the $220 billion rise of the GNP between 1977 and 1978.
On the unemployment side, the return to the U.S. economy from
tourism can help alleviate a longstanding problem. We know from
Department of Commerce and Labor statistics that in tourism serv-
ice industries every $25,000 of tourist spending creates one job.
There is a range, but I use $25,000 as a midpoint.
With these figures in mind, the $8.5 billion in receipts helped
employ 340,000 persons, and the $1.3 billion increase between 1977
and 1978 employed 52,000 persons.
We have all been made aware of the oil crisis that is upon us and
of the tremendous financial burden that it places on our economy.
In 1979, it is estimated that we will spend $58 billion on imported
oil and up to $70 billion in 1980.
We must become more export-oriented in our domestic and inter-
national policies and stand ready to help U.S. industry meet for-
eign competition which will ultimately provide the jobs we need
and pay for the oil we use.
Service sector earnings in our international accounts are an
important component of U.S. export activities and tourism, as I
have pointed out, is one of the largest parts. The background
report prepared for this committee entitled "National Tourism
Policy" indicates the extent to which other countries are involved
in promoting tourism.
When you consider that in 1978 world tourism spending will
reach the level of approximately $154 to $156 billion, more than
the total world trade in oil, excluding Communist-bloc countries,
there is a large part of the pie which we should be actively pursu-
ing.
The U.S. share at the present time is approximately 6 percent
and there is no reason that, with the diversity of attractions in this
country, we cannot increase our earnings.
It won't be easy, for there are many other world destinations
that are competitive with the United States and we must persuade
international travelers to come to our shores, rather than go else-
where.
To do this requires a concerted marketing effort to sell this
Nation as a destination and detailed research into the market
segments so that a marketing plan of actiOn can be targeted to
reap the most dollar benefits in terms of our foreign exchange
receipts.
I want to emphasize that the competition is stiff-and not always
fair-so we cannot pull back from our efforts on any front. Last
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119
year, in our attached report on "Services in America's Internation-
al Trade: The Air Travel and Tourism Sector," we outlined some of
this competition for the transportation and travel dollar.
I would like to add one more paragraph.
In reviewing some of the material and literature both from the
Senate side as well as on the House side in the tourism area, I find
that in Congress investigation of Government travel programs the
most frequently asked question is, "why should the U.S. Govern-
ment be involved in this activity at all?"
Looking at it from the international perspective, one major
reason is the overall national interest in improving our foreign
exchange receipts; there is no question about it.
A tourism facility gets the same economic benefit whether or not
a Frenchman or an American uses it and spends his money there.
The Nation does not. The Nation gets a higher benefit-especially
at this time of high balance-of-payments deficits, high trade defi-
cits, and the high cost of imported oil-from trying to promote
exports of goods and services, and from attracting that French-
man's French franc, and the German's German mark.
I think it is incumbent upon the U.S. Government to encourage
international business for broad public policy purposes such as this.
Thank you for giving me the opportunity to present our views on
this special area.
[Testimony resumes on p. 165.]
[Mr. Danielian's prepared statement and attachment follow:]
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TESTIMONY OF
RONALD L. DANIELIAN
INTERNATIONAL ECONOMIC POLICY ASSOCIATION
BEFORE THE
SUBCOMMITTEE ON TRANSPORTATION AND COMMERCE
OF THE
COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE
1-lOUSE OF REPRESENTATIVES
WEDNESDAY, JULY 25, 1979
Mr. chairman:
My name is Ronald L. Danielian. I am the Executive Vice President
and Treasurer of the International Economic Policy Association which is
a nonprofit research group founded in 1957. The Association has been
concerned with the policy issues surrounding the international per-
formance of the U.S. economy--in specific, with the U.S. balance of
payments, U.S. export and investment policies, international tax
matters and strategic raw material questions since 1957. We have been
active in analyzing the U.S. balance of payments deficits and suggesting
possible remedies and have published three books on this subject,
stressing the positive approach in addressing the disequilibrium in
the U.S. international accounts. We believe that the solution to our
problem must be found in a number of actions, each of limited returns
but the combination of all leading to a fundamental correction in the
U.S. international position. As the members of this Comittee know,
the U.S. international economic position is not as stable as policy-
makers would like!
Your Comittee, Mr. Chairman, will be deciding what to do in a
strategic context with U.S. national and international tourism policy.
I sin here today to talk about our national needs concerning international
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121
economic interdependence, inflation, unemployment, the value of the
dollar, and OPEC oil payments and their relationship to the export
of U.S. services, including air travel and tourism.
The United States is now entering a phase of international economic
activity in which we, as a nation, have become interdependent with
other economies. Our two-way trade is equal to almost 21 percent of
our gross national product (GNP) which means that we need to purchase
and sell on the world market and can no longer have an attitude of
"go it alone." We can no longer ignore markets, thus foregoing
possible earnings from exports of goods or services, and we can no
longer afford to run substantial balance of payments deficits. To
do so is to transfer from the United States to overseas, claims on
future goods and services production in the United States. These
concerns have a direct bearing on such far-reaching issues as
inflation, unemployment, the value of the dollar, our ability to
maintain conniitments abroad, and the freedom of U.S. citizens to travel.
The U.S. Government must concentrate its efforts On helping
U.S. goods and service exporters to overcome the various government
hindrances, including tariff and nontariff barriers limiting our
markets abroad, and we were pleased to note the Congress' favorable
approval of the recently concluded M1~4 Geneva agreements. We should
now take a positive approach in helping the United States earn foreign
exchange through the sale of goods and services abroad. Programs
should be initiated and expanded to give U.S. business and U.S. labor
a fighting chance over foreign competition in world markets. The
problem of inflation and balance of payments is not a temporary
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122
situation, but rather an explosive structural strain which, at
times, results in sharp shocks to the monetary system. We cannot
solve it and sustain the health of the U.S. international economy
by continually running deficits and mortgaging the future, or by
borrowing from abroad, or "over encouraging" the purchase of U.S.
assets here in the thited States, or the sale of U.S. investments
abroad.
Our problems, then, are not merely a matter of confidence,
relative exchange rates and a myriad of other explanations which
can be dealt with in the short term by statistical tranquilizers,
such as floating exchange rates or benign neglect in our export
efforts. There are no appropriate short-term measures to correct our
deficits, or to pay for oil, or to maintain U.S. security abroad.
We must organize U.S. international economic activity, looking at the
long-term strategic problems and long-term methods to solve them.
In 1976, the U.S. Department of Commerce published a study on
U.S. Service Industries in World Markets which showed that, over the
last 20 to 30 years, services have provided the major ingredient of
U.S. economic and employment growth. The Bureau of Labor Statistics
has estimated that the rapid growth in the labor force in the last
several years was facilitated by strong employment gains in service
and trade industries and believes that this growth reflects a long-
term trend for the United States. It should be noted that the
evolution and rapid growth of service industries in the United States
and other industrial nations are not the result of any erosion in
manufacturing ability or competitiveness. They are the natural result
PAGENO="0127"
123
of increasing economic wealth that creates increased demand for
services relative to goods and of increasing economic specialization.
We are now facing an era of chronic problems in the U.S. balance
of payments and trade. Except for those years in which the U.S.
economy performs rather poorly (thus drawing in less imports) we can
expect only small improvements in our trade account. In 1977 our
trade deficit was a little over $31 billion. In 1978 our trade deficit
was a little over $3L~ billion. In fact, over the last 3 years the
Ikiited States has bought $71L6 billion more worth of goods than we
have sold abroad. The magnitude of these deficits requires that the
thited States use every means possible to earn foreign exchange by
selling goods and services abroad. Only in this way will we be able
to maintain the value of the dollar, pay for OPEC oil, reduce our
unemployment and help bring inflation under control.
Service receipts in the U.S. balance of payments have become a
large component of the country's total international economic
picture. All private service receipts, excluding exports of goods
and military, equipment i~ose from a level of $7 billion in 1960 to $17.2
billion in 1970, and finally to $55.6 billion in 1978. These receipts,
which now represent some 26 percent of U.S. international exports of
goods and services, have grown rapidly in the immediate past and are
likely to continue to grow rapidly in the future. They include
services dealing with international construction, architectural,
engineering, accounting and insurance. Most important to this
Committee, they also include tourism services including foreigners
spending here, as well as receipts of U.S. carriers for travel to
the 1.hiited States.
PAGENO="0128"
124
Of the $55.6 billion of gross receipts for all service industries
in 1978, the largest segnents, in order of importance, were $18.8
billion from dividends, interest, earnings from U.S. direct invest-
ments abroad (including royalties and fees ~from affiliated and
unaffiliated foreigners), $15.9 billion from interest and dividends
received by U.S. residents on foreign debt, loans and equity securities,
and $8.5 billion from foreign tourist expenditures in the United States
and on U.S. flag carriers for traveling to the United States. The
next largest item was other transportation which includes cargo
shipping at $7.8 billion. Clearly, then, foreign tourism and its
transportation component is the third most important single item in
gross terms in our service industry earnings abroad. Corrrnerce figures
show that in 1978 total visitors to the United States increased by
7 percent to a level of 19.8 million persons. This 7-percent increase
created a $1.3 billion increase in the gross receipts for the United
States in the tourism and air transportation account. These gross
earnings, and the increase between 1977 and 1978 are extremely important
to the value of the dollar. Consider, for example, that the total
gross earnings on this tourism account represent 28 percent of the
amount of money that the President committed on November 1, 1978 to
defending the dollar. It represents more than twice as much money as
was used to actually defend the dollar through the Treasury issuance of
securities denominated in foreign currencies in Germany and Switzerland.
In fact, the increase between 1977 and 1978 of $1.3 billion was only
$300 million shy of the first large $1.6 billion loan floated as a
foreign currency denominated debenture on the German market. The week
PAGENO="0129"
125
after that issue was placed on the market the U.S. dollar did firm
up against the German mark. So, when we talk about tour~sm earnings
for the U.S. balance of payments, we are talking about sums of money
which can, in fact, have an effect on the value of the dollar. If
we were to reduce the intensity in which we market the United States
abroad and lose competitiveness as a destination to other areas of
the world which are able to get their message across to the traveling
public, then our international accounts and the dollar would suffer.
The relationships I have pointed out above, relating to the
gross earnings on tourism and the value of the dollar, have a direct
bearing on inflation and the unemployment problem here in the United
States.
It has been estimated by various government sources that the
decline in the value of the dollar in the past year led to an
approximate 2 percentage point increase in the consumer price index
If we stemmed the dollar decline through an active program to increase
further travel to the United States, it stands toreason that there
would be less inflation in Mierica. The previous U.S. policies of
letting the dollar float downward without trying to stem the "run"
could thus be credited with taking out of the U.S. economy $UJI
billion which is 2 percent of the $220 billion rise of the GNP between
1977 and 1978.
On the unemployment side, the return to the U.S. economy from
tourism can help alleviate a longstanding problem. We know from
Department of Commerce and Labor statistics that in the tourism service
industries every $25,000 of tourist spending creates one job. With
5i_1~L~ 0 - 83 - 9
PAGENO="0130"
126
these figures in mind, the $8.5 billion in receipts helped employ
3140,000 persons, and the 51.3 billion increase between 1977 and 1978
employed 52,000 persons.
We have all been made aware of the oil crisis that is upon us
and of the tremendous financial burden that it places on our economy.
In 1979 it is estimated that we will spend $58 billion on imported
oil and up to $70 billion in 1980. This obviously has aggravated ~ur
trade deficit, but oil is not the total cause of the imbalance. We
are facing stiff competitors in the world market (most notably the
European Community and Japan) and the 1.h~iited States must remain an
agile active member of the international trading community. We must
become more export-oriented in our domestic and international policies
and stand ready to help U.S. industry meet foreign competition which
will ultimately provide the jobs we need. Service sector earnings in
our international accounts are an important component of U.S. export
activities and tourism, as I have pointed out, is one of the largest
parts. The background report prepared for this Committee entitled
National Tourism Po)~p~ indicates the extent to which other countries
are involved in promoting tourism. When you consider that in 1978
world tourism spending will reach the level of approximately $l5L~
billion (more than the total world trade in oil, excluding Communist-
bloc countries) there is a large part of the pie which we should be
actively pursuing. The U.S. share at the present time is approximately
6 percent and there is no reason that, with the diversity of attractions
in this country, we cannot increase our earnings. It won't be easy
for there are many other world destinations that are competitive with
PAGENO="0131"
127
the United States and we must persuade international travelers to come
to our shores, rather than go elsewhere. To do this requires a
concerted marketing effort to sell this nation as a destination and
detailed research into the market segments so that a marketing plan
of action can be targeted to reap the most dollar benefits in terms
of our foreign exchange receipts.
I want to emphasize that the competition is stiff (and not
always fair) so we cannot pull back from our efforts on any front.
Last year, in our attached report on Services in America's International
Trade: The Air Travel and Tourism Sector we outlined some of this
competition for the transportation and travel dollar.
I want to thank the Committee for giving me this opportunity to
present our views. I know that the travel industry has been suggesting
the most appropriate ways to achieve the goal of effectively marketing
the United States as a destination and will continue to do so.
PAGENO="0132"
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SERVICES IN AMERICATS INTERNATIONAL TRADE:
THE AIR TRAVEL AND TOURISM SECTOR
by the
International Economic Policy Association
Washington, D.C.
August 1978
All rights to reproduction of this material are reserved
by IEPA. Additional copies of this report are available
upon request from the International Economic Policy Asso-
ciation, Suite 9D8, 1625 Eye Street, N.W., Washington,
D.C. 20006. There is no charge to members of IEPA and
the Center for Multinational Studies. Others should in-
clude 53.00 for each copy to cover reproduction and
handling costs.
PAGENO="0133"
129
FOREWORD
The International Economic Policy Association has bog advocated
a greater recognition of the role of services in international trade
because of its potential for balance of payments earnings and for
stimulstion of employment. For the first time Congress recognized
the increasing role of services in the Trade Act of l97~# (PC 93-618).
That Act, in particular Title III, Chapter 1, Section 301, and the
House Ways and Means Committee report on the Trade Act, clearly show
this recognition and the congressional concern about the problems
facing U.S. service industries.
Service industries encompass a broad range and include such
activities as construction and engineering, shipping and insurance,
financial and accounting services, and air travel and tourism. The
latter two were specifically discussed in the Ways and Means Com-
mittee report. The executive branch, however, has done little to
carry out the expressed mandate of Congress, and the exhaustive study
done in 1976 by the Commerce Department, U.S. Service Industries in
World Markets," has not been followed up.
In the changing mix of international transactions, and with the
problems encountered by direct investment in many countries, the petro-
dollar and world financial crises plus general currency uncertainties,
service-industry investment and foreign exchange earnings around the
world have become more important for the United States. These subjects
are examined in the first part of this paper. The paper then turns to
the tourism and the air travel sector of the international service
PAGENO="0134"
130
industry to illustrate the specifio types of problems oonfronting
U.S. industry in this regard. This is especially relevant in light of
the current controversy over the Carter administration policy of
stressing international competition per se, as opposed to seeking an
international ijalance' in the concessions and agreements involved in
that competition.
This paper is the work of the ISPA staff, particularly Ronald L.
Danielian, who has had governmental experience with tourism matters
in the past while occupying the post of Director, Dffice of Research
and Analysis of tho U.S. Department of Cormierce United States Travel
Service. It has been discussed with members of the IEPA Committee on
Trade but it does not necessarily reflect the corporate views of any
individual member company.
PAGENO="0135"
131
INTRODUCTION
Over the last 20 to 30 years, services have provided the major
ingredient of U.S. economic and employment growth.1 Shortly after
World War II, services, broadly defined, comprised slightly over half
of the value of goods and services produced in the country. Thday
they account for two-thirds of U.S. economic output and consumption
and about two out of every three Miericans in the work force are
employed in the service sector. The Bureau of Labor Statistics has
estimated that the rapid growth in the labor force was facilitated by
strong employment gains in service and trade industries, and believes
2
that this growth reflects a long-term trend.
The evolution and rapid growth of service industries in the United
States and other industrial nations are not the result of any erosion
in manufacturing ability or competitiveness. They are the natural
result of an increasing economic wealth, that creates increased demand
for services relative to goods, and of increasing economic specialization.3
1
See U.S. Service Industries in World Markets, U.S. Department
of Commerce, December 1976.
2 Statement of Julius Shiskin, Commissioner of Labor Statistics,
before the Joint Economic Committee, January 12, 1977.
3
Ibid., 1
PAGENO="0136"
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I. SERVICES IN THE BALANCE OF PAYMENTS
Service receipts in the U.S. balance ef payments have become a
large component cf the country's total international economic picture.
Table 1 shows the annual U.S. receipts for goods and services in
selected years iron 1960 through the first three quarters of 1977. As
can be seen, all private service receipts (excluding exports of goods
and military equipment and U.S. Government receipts) rose from a level
of 97 billion in 1960 to $17.2 billion in 1970, and finally to $~6.3
billion in 1977. These service receipts, which now represent 26.3
percent of U.S. international exports of goods and servioes, have
grown rapidly in the immediate past and are likely to continue to grow
rapidly in the future.
The dollar amount of exports required to create or maintain a job
in the United States has been variously estimated over the last several
years. The latest Commerce and Labor Department findings are that
approximately 935,000 in exported goods supports one job. Service
industries by their very nature are more labor-intensive than the all-
industry average, and therefore the amount of receipts required to
produce a job in the service sector would be less than the overall figure
cited. The Commerce Department's United States Travel Service has
LI
estimated that for every $25,000 of tourist spending, one job is created.
Highlights, International and Domestic Tourism 1976, U.S.
Department of Commerce, U.S. Travel Service, April 1977. Also see:
Travel: An Engine cf Employment, Discover America Travel Organizations,
1977.
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133
If that figure is used as a broad gauge for all service industries, up
to two million jobs were supported by the gross export receipts of U.S.
service industries. If you net out service earnings against the U.S.
payments for foreign services received in 1977, there is still a sur-
plus of $12.9 billion in our total private service account which would
have netted over one-half million new jobs.
One-third of the $L~6.3 billion in service export receipts for 1977
came from U.S. direct investments abroad (either royalties and fees
from affiliated foreigners, or income receipts on direct investments);
another third came from transportation services, including both air and
sea; and the remaining third derived from other private services and
receipts, mainly in the banking sector and in fees and royalties from
unaffiliated foreigners.
The largest contribution to our returns in the service sector has
been that generated by U.S. direct investments--$lS.8 billion in gross
receipts in 1977. This is closely followed, however, by service sector
receipts in transportation and tourism, at $l~t.S billion. Approximately
half of that amount represents travel and air transportation to the
United States by foreigners.
Table 2 shows U.S. travel and transportation expenditures and
receipts in the balance of payments from 19714 through 1977. Prior to
1973, the U.S. deficit on a balance of payments basis for airfare and
other travel and transportation expenditures was above $3 billion.
More recently, the United States has been able to reduce this deficit
to levels below $3 billion.
PAGENO="0138"
134
All the service sector accounts have become extremely important
to the ability of the United States to finance its expenditures
abroad. According to the Morgan Guaranty Trust Company, "A major
favorable factor /in the balance of payments/ which has partly offset
the growing trade deficit has been the rapidly rising net revenues on
services. Only a few years ago net income from services was close to
balance with payments to foreigners largely offsetting income from
abroad. However, in l97Lt, and particularly in 1976, and again in the
first half of this year /1977/ the net services income has climbed
D
sharply. This trend continued throughout 1977 to the present time.
Congressional Concern
Tourism is the third largest U.S. industry in terms of consumer
spending, and its average annual growth rate in the last five years
6
has exceeded that of the GNP. Despite this fact, the Congress paid
little direct attention to services in our international trading
relationships until the passage of the Trade Act of l97'4. The House
Committee on Ways and Means in its report on that statute explains that,
"It is the intent of the Committee that `commerce' as it is used in
Section 301(a) is to include the services as well as goods. Although
the Committee understands that the trade agreements of the type
authorized under Title I of the bill do not usually extend to the
World Financial Markets, Morgan Guaranty Trust Company,
September 1977.
6
U.S. Department of Commerce, United States Travel Service Fact
Sheet, 1977.
PAGENO="0139"
135
treatment of services, it is much concerned over present practices of
discrimination against U.S. service industries including, but not
limited to, transportation, tourist, banking, insurance and other
services in foreiqu countries. It is the Corrmiittee's intent that the
President give special attention to the practical elimination of this
discrimination by the use of authority under this provision, to the
extent feasible, as well as steps he may take under other authority.
This intent is further indicated in the Section 163 requirement that he
report to the Congress on the results of action taken to remove this dis-
crimination in international conwnerce against U.S. service industries.'
The sections of the Act which cover services or service industries
include Title I, Chapter 1, Section 102; Title I, Chapter 3, Section
135(b) (1); Title I, Chapter 6, Section 163; Title IV, Section 405;
Title VI, Section 601(10). However, the most important section dealing
with services including tourism services, is Title III, including
Sections 301 and 302.
Specifically Section 301 empowers the President to withdraw trade
agreement concessions, impose duties or other import restrictions on
imported products, or impose fees or restrictions on the services of any
foreign country which burdens, restricts, or discriminates against U.S.
comerce or engages in discriminatory or other acts or policies which
are unjustifiable or unreasonable and which burden or restrict U.S.
House Counittee on Ways and Means, Report on the Trade Reform Act
of 1973 (H.R. 10710) which was passed as the Trade Act of i97L~. House
Report #93-571, October 10, 1973, p. 66.
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commerce.8 For the purposes of this section, ronmerce is specifically
defined to include services associated with international trade. This
section of the Act has been used in several cases when service industry
barriers have ariaon, principally against U.S. shipping companies. The
besi exaripie is in a Delta Steamship case against Guatemala. That
ccuniry imposed restrictions on the carrier and became subject to review
under Section 301. Ultimately, the case was settled out of court, but
the nressure cf a U.S. investigation under Section 301 was responsible
for moving the issue to settlement between the parties concerned.
in 1978 the Congress also passed the Fair Competitive Practices Act,
which allows U.S. Government action against discriminatory and unfair
competitive practices against U.S. air carriers in providing foreign air
transportation services. The coverage of the Act includes unreasonable
international user charges and unfair rates for transportation of inter-
national mail. It also mandates that transportation of government-financed
passengers and property be on U.S. carriers as certificated under Section
401 of the Federal Aviation Act of l9S8,as amended. The law further pro-
hibits solicitation or acceptance of rebates by shippers of air freight;
it mandates observance of tariffs by ticket agents; and it amends the
International Travel Act of 1961 to provide for the promotion of travel on
U.S. carriers in foreign air transportation.
The hearings accompanying the Act describe some of the nature and
extent of the problem of discriminatory practices followed by foreign
countries as related in the CAB's 1974 report entitled "Restrictive
See, Trade Act of 1974, Public Law 93-618, 19 U.S.C. 2101.
PAGENO="0141"
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9
Practices Used by Foreign Countries to Favor Their National Carriers."
In supplementary information provided for those hearings before the
Senate Subcommittee on Aviation, the Department of State indicated some
of the problems faced by U.S. carriers in foreign countries. For
example, Air France, through its ownership of tourist agencies and air
freight forwarders, controls a significant portion of the French market;
and the French Government, through its ownership of the major domestic
carriers as well as Air France, has virtually a monopoly position on
10
traffic originating in France. It is no wonder that roughly two-thirds
of the foreign visitor arrivals in the United States from France flew on
foreign carriers (most notably those of French registry).
Executive Concern
In December 1976 the Department of Commerce issued a 918-page
study entitled "U.S. Service Industries in World Markets: Current Prob-
lems and Future Policy Development." It outlined some of the problems
faced by all U.S. service industries. Among those specifically facing
U.S. air transportation--especially in international markets--it cited
such factors as the following: (1) foreign government subsidization
which allows the operation of national air carriers on a non-economic
basis; (2) foreign currency controls that restrict the availability oi
foreign exchange for purchasing air transportation services and inter-
fere with the remittance of profits back to the United States;
See International Air Transportation Fair Competitive Practices
Act of 1974, hearings before the Senate Committee on Commerce, Subcom-
mittee on Aviation, July 16 and 17, 1974.
10 Ibid., p. 54.
PAGENO="0142"
138 ~
(3) excessive and discriminatory charges for the use of airport and
airway facilities; (Li) discriminatory application of income, fuel, and
other taxes between foreign and national carriers; (5) illegal ticket
discounting and rebating; (6) ground handling monopolies by foreign
governments for carriers; (7) government procurement practices.
The study highlighted the fact that the international receipts of
U.S. scheduled airlines accounted for some 27.8 percent of their total
operating revenues in 1975. It also pointed out that of the 60 forei~i
carriers providing service to the U.S. market, 46 are either wholly
government-owned or receive substantial subsidies. In the North Atlantic
markets, where U.S. financial losses during that year were the largest,
every major foreign carrier was either government-owned or supported.
Thus, up to 1976 at least, Congress and the executive branch expressed
deep concern for the discriminatory practices that sometimes beset our
international service industries; and tourism and travel are key compon-
ents of that group. As mentioned above, international and domestic
tourism for the United States was estimated in 1976 at $105 billion or
6 percent of the American GNP. In 1976 again, tourism ranked fourth
~ong U.S. exports of goods. Only machinery, transport equipment, and
grain and cereal preparations ranked above tourism in the export cate-
gories. U.S. tourism receipts in 1977 are estimated to have supported
some 270,000 U.S. jobs and contributed approximately $975 million in
Federal, state, and local tax receipts, according to the U.S. Travel
Service Fact Sheet.
PAGENO="0143"
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II. COMPETITION FOR THE TRANSPORTATION AND TRAVEL DOLLAR
With tourism becoming such an important feature in the American
economic landscape, and with international tourism so full of potential
economic benefits to the United States, it is no wonder that the compe-
tition for the international travel and transportation market is fierce.
Foreign governments are organized to a,:tract international tourism
receipts and the transportation portion of these expenditures is viewed
as an integral part of the total package. Generally the European
countries, especially our OECD trading partners, have viewed tourism and
transportation services as one commodity in the aggregate of money spent
by travelers. Their policies have been generally directed toward getting
the traveler to their countries to spend foreign currencies. The fact
that the air transportation portion of the trip may be at brea]<-even
cost is not important so long as the total expenditure of foreign ex-
change by the tourist, for both transportation and expenses within the
country, is increased. The national tourist offices of 35 countries
spent approximately $1420 million in 1975 to attract foreign tourists to
their shores. The competition for tourist dollars has centered on the
key factors of market access and share of the potential travel earnings.
For example, a special survey done in collaboration with the European
Travel Commission on the occasion of the Commission's Zurich conference
on European Tourism Prospects in the 1980's, elicited several responses
to a question about the scope and emphasis in the marketing policy of
government tourist organizations. In the reply from The Netherlands,
the government's involvement in tourism and tourism receipts was
PAGENO="0144"
140
described as devoted to `more emphasis on employment-foreign exohange
11
maximization, (arid) environmental protection."
In nursuit of market share and access, the European governments
will not willingly let their carriers suffer losses from market dilu-
tion or overoapsoity. European officials, representing both govern-
ment and urivate business, have indicated to this author in private
discussions during the spring of 1978 that foreign governments will use
any available means of subsidy to maintain the presence of their
carriers fn the market. Dne such spokesman noted that "Dilution of
routes wilt simply hurt U.S. private carriers, and some of them will go
out of business; but we will still be here to market our product. We
are convinced that European carriers will be subsidized by their
governments."
Even in Germany, the largest European travel market, the U.S. drive
to dilute the market may cause numerous foreign policy problems. This
market is composed of large tour organizations that are involved in
12
routing almost 89 percent of the travel of Germans. A move to dilute
routes and offer cut-rate transportation by the United States will bring
strong German financial interests forward to put pressure on the German
Government not to give in to the American desires. This is because a
plethora of carriers offering services will probably alter the basic
See Tourism International ~licy, Tourism International ~eaa,
London, England, 9th griarter l97T.
12 About 52 percent of the German international travelers coming to
the United States in 1976 used travel agencies in booking their trips.
See: West Germany, A Study of the International Travel Market, May 1978,
United States Travel Service, U.S. Department of Eommerre.
PAGENO="0145"
141
nature of the German travel business, in which ground arrangements
including tours and hotels traditionally have been purchased along
with air transportation through travel agencies. Chart 1 shows the
interrelationship between the major travel agencies in Germany and
other business interests. It is also noteworthy that the Deutsches
Reiseburo, one of the largest tour operators, is directly owned by
the German Government through the federal railroads. Since Germans
alone spent $8.1 billion in 1977 on travel, it is safe to assume that
any perceived jeopardy to that market would be resisted.
The foreign competition for the travel dollar is surely under-
standable when you consider that U.S. citizens spent ~ billion in
1975, $6.9 billion in 1976, and $7.6 billion (estimated) in 1977 on
world travel. The 1977 figure excludes the estimated $2.8 billion spent
by U.S. tourists on foreign air carriers (see Table 2). The total
worldwide international travel market (according to the U.S. Department
of Commerce) is worth $50 billion and represents 2'lO million world
travelers. The name of the game for each competing country is market
share. In support of this, the U.S. Government interest in the service
industries associated with tourism should be to maintain reciprocity of
opportunity for U.S. carriers, taking into account the volume of tourist
movements generated by the 1.kiited States and its trading partners. U.S.
efforts in international aviation should be aimed at enabling American
companies to market their products overseas under very competitive terms
and conditions looking towards the maximization of foreign exchange
earnings. However, instead of pursuing this goal, the U.S. Government
recently seems to have shifted to allowing country-of-origin rules in
61_1L~~~ C - 8C - 11
PAGENO="0146"
ownership
WELT SONNTAG-
Sonetag, 12. Mär~ 1978
ChART I
TRAVEl, AGENT
FOR MIllIONS
Urlaubsmacher für Millionen H
[D.uta:.Bank 1 ~msnba::!~n*r~:
Knuihot AC,
G9stezahlen Saloon 1978/77
PAGENO="0147"
143
air transportation. In addition, we have maintained a traditional
negotiating stance of bilateral discussions which, in the case of Europe,
does not fully recognize the total European market but rather pairs each
individual country market with our total market. The effect of this
shift could well be to deal the country out of a fair share of the
tourism business, since we will be forced to rely on the rules of
foreign countries for access to their markets. At the same time the
proliferation of American route awards to foreign carriers which allows
them greater access to a travel market than our carriers can obtain
from a single overseas market would enable foreign carriers to obtain a
greater share of the U.S. travel pie.
Table 3 shows the potential size of the market of travelers to the
United States. It was developed by the U.S. Travel Service of the
Department of Comerce. Taken together (rather than individually) the
three primary European markets, West Germany, United Kingdom, and France,
represent a potential of 214 million individuals with the financial means
to travel to the United States. If The Netherlands is added, the total
comes to 26 million. It has been estimated that all foreign travelers
to the United States spend approximately $1400 on the average, and that
overseas travelers (i.e., excluding Canadians and Mexicans) spend on the
average of $576 in the United States (not including an average $293 on
13
U.S. carriers). The overseas figure points to potential earnings of
just over $l'4 billion for tourism expenditures in the United States and
$7.6 billion for payments to U.S. international carriers. Obviously a
13 Survey of Current Business, U.S. Department of Commerce,
June 1978, pp. 6~4-67.
PAGENO="0148"
144
great nurcber of faotors enter tnto a derision on a destination for
pleasure travel, but it is clear the market potential is large snd it
is important that the United States have a fair access to this total
market without unnecessarily diluting all North Atlantic routes.
The opportunity to obtain a fair share of that market is not
enhanced unless the United States is able in some way to have an impart
on the rules and regulations for carrying passengers and access to a
multiplicity of tcreigu travel generating markets. Simple reciprocity
in granting access to each other's markets for charters may not enable
the U.S. companies (supplemental or scheduled) to market competitively
a U.S. destination to foreigners. Such subtle factors as length of
stay, currency restrictions, primary destination market size, and
ticketing requirements can severely curtail our access to a foreign
market.
The suthor of this paper served with and advised the U.S. delega-
tion for charter talks on North Atlantic routes with the European
Civil Aviation Conference carriers in the early l970'a. In the initial
discussions, for instance, the European carriers took the position that
there should be a minimum stay on charters from Europe to the United
States cU 14 days. They uculd also be satisfied to have a 14-day
minimum stay requirement for lifting American travelers from the United
States to Europe. That this is a most subtle form of diacrimlnation
is evident to those who know the facts on travel between Europe and the
United States. Figures supplied by the Department of Commerce to that
conference showed that the median length of stay for Europeans (cape-
cially charter passengers) in the United States was 7 days. If the
PAGENO="0149"
145
United States had agreed to a minimum stay requirement of 1k days we
would have been effectively cut out of 50 percent of the market. On
the other hand, the average American's length of stay overseas, espe-
cially in Europe and the Mediterranean area, was 2k days. A 1k-day
rule would hays opened up our markets and closed theirs!
The Problems for International Transportation Earnings
Competition in the international travel market can benetit both
U.S. citizens and foreign nationals. But there should be a differentia-
tion in terms of the capacity (i.e., the number of carriers or absolute
seats) on any route or group of routes. The latter can have the effect
of reducing the profitability of those carriers operating without offi-
cial subsidies (such as the U.S. international airlines) while giving
an unfair competitive advantage to other airlines with increased access
to our total market. It is possible to have price competition with more
limited access to the U.S. market on the part of foreign carriers as
long as the total capacity in any market is more than enough to satisfy
the demand of that market. On the North Atlantic, for instance, evar
the last three years, there has never been a shortage of seats except
during extraordinary peak-demand periods as noted below. Markec demand
and its yearly increases can be satisfied with today's level of reciprocal
route awards. Placing more carriers on these routes will not insure the
lowest possible price to the consumer in the long run consistent with
sound business management. Such pricing is not solely dependent upon
adding present or future capacity between the United States and Europe.
Most foreign carriers competing with the U.S. private carriers are
PAGENO="0150"
146
government-supported, government-subsidized, government-run, or
government-directed. Their main objective is to obtain a requisite
market share, taking into account not just the transportation revenues
but also the tourist spending involved. Foreign carriers that are
government influenced are more concerned with their total earnings and
not whether the revenues in the transportation sector alone cover the
costs of the service.
Furthermore, there is an interwoven relationship between U.S.
transportation earnings and U.S. exports and employment. The social
returns to the United States in the form of exports and employment
reinforces a need to maintain a healthy U.S. international flag system.
A policy that looks only to the consumer benefits and acquiesces in
foreign subsidization of passengers and cargo transportation can only
place our returns in jeopardy and adversely affect our balance of
payments.
For example, on a census basis in 1976, the United States exported
$6.2 billion worth of civilian aircraft engines and parts. Netting out
imports gave us a surplus of $5.8 billion in that year, and in the first
three quarters of 1977 our net account in aircraft sales to foreigners
was plus $3.6 billion. There is a "pull effect from U.S. international
airlines. Furthermore, a cause and effect relation appears between
U.S. orders and overseas sales, for the ability of U.S. manufacturers
to profitably produce a new generation aircraft depends on the total
foreign and U.S. market demand for the plane. U.S. international air
carrier purchases oftentimes determine the `go or no go' decision on
PAGENO="0151"
147
the production of new generation aircraft. If an aircraft manufacturer
cannot obtain enough commitments to buy before production starts, the
iLl
aircraft will not be produced." In the past, foreign sales oftentimes
have been a key to aircraft manufacturing profitability. It is clear
that these sales would be in jeopardy if it were not for the strong
U.S. international flag system.
According to 1976 figures, the five major U.S. air carriers with
15
authority to fly on the North Atlantic routes employed 109,000 persons.
Weighted for the passenger kilometer-miles flown in the same year, the
international operations of those carriers accounted for 36,681 jobs.
These figures reflect information from the scheduled airline industry
and probably would be several thousand more if they included the em-
ployees related to nonscheduled charter services across the Atlantic.
Certainly some 36_Ll0,000 employees depend upon the viability of U.S.
international aviation for their livelihood. A dilution or overcapacity
in the market well beyond that necessary to carry the total traffic
could jeopardize these jobs. In addition, the health of our airline
industry and its profitability are key ingredients in our continued
predominance in the aircraft manufacturing industry. In the early
iLl See The United States Flag System in International Air Commerce:
Pin Analysis of Public Policy Implications, International Economic Policy
Association, l97Ll. Also see National Interest Aspects of the Private
International Air Carrier System of the United States, Office of Policy
Development, U.S. Department of Commerce, September l97Ll.
15
See World Air Transport Statistics, No. 21, International Air
Transport Association, 1976.
PAGENO="0152"
148
1970's we still provided approximately 85 percent of the world's civil-
ian commercial aircraft. Today our share is about 80 percent and as
foreign consortia continue to make inroads in the aircraft manufac-
turing field, that share will be more difficult to maintain.
A diminution of U.S. earnings in tourism receipts for travel or
transportation, or a decline in our esrnings under aircraft sales would
mean a corresponding reduction in gross receipts for the U.S. balance
of payments. Our deficit in current account in 1978 is running, on an
annual basis, in the neighborhood of $l8-S20 billion, and the deficit in
our trade account ia over the 931 billion registered in 1977. Since the
only major surplus factor in our balance of payments seems to be in
service sector earnings, the United States should be doing everything
it can to maintain our income from this all-important source.
PAGENO="0153"
149
III. U.S. INTERNATIONAL AVIATION POLICY
U.S. international aviation policy has been guided by the compre-
hensive statement of U.S. policy developed by the Economic Policy
Board Task Force on International Air Transportation Policy that
16
reported to the President in the fall of 1976. The policy calls
for our aviation to contribute to our objectives in national defense,
foreign policy, and international commerce. It recognizes that the
governments of other nations may share our objective of efficient
transportation services, but many differ sharply as to how such trans-
portation should be organized, financed, regulated, or promoted. The
statement also stresses that often we cannot pursue our international
policy goals with the sane means by which we conduct our domestic
transportation system. The substantial differences between the inter-
national and domestic operating environments are set out as follows:
1. Private U.S. companies must compete with state enterprises
in most markets. Competition in international transportation is
limited by government policy in most other countries, and in
some instances restraints are imposed against efficient competitive
practices.
2. Some foreign states underwrite their national carriers'
losses in order to maintain large capacity to the United States for
a number of reasons (e.g., tourist revenues). Similarly, foreign
carriers sometimes seek below-cost cargo rates as a means of promoting
their nation's exports.
16
See, International Air Transportation Policy of the United
States, The White House, September 1976.
PAGENO="0154"
150
3. The problem of tailoring supply to meet demand is more diff i-
cult on international routes than on usually denser domestic routes.
The ratio of daily flights to the number of competing carriers is
generally much lower than domestically; international aircraft are
larger on average; and carriers have less flexibility in arranging
continental schedules.
Present international aviation policy can be viewed through the
speeches and appearances of members of the Administration. It appears
that a new policy focus has developed that does not take into considera-
tion some of the differentiation between domestic- and international air
service. On October 6, 1977 President Carter's letter to Secretary of
Transportation Adams set down the basic Administration goals for inter-
national aviation in discussing the bilateral negotiations with the
Japanese over air agreements. The letter states, in part:
"Our central goal in international aviation should be
to move toward a truly competitive system. Market forces
should be the main determiner of the variety, quality,
and price of air service.
"We should seek international aviation agreements that
permit low fare innovations and scheduled service, ex-
panded and liberalized charter operations, nonstop inter-
national service, and competition among multiple U.S.
carriers and markets of sufficient size. We should also
avoid government restrictions on airline capacity.
For keeping in mind the importance of a healthy U.S.
flag carrier industry, we should be bold in granting
liberal and expanded access to foreign carriers in the
United States in exchange for equally valuable benefits
we receive from those countries. Our policy should be to
trade opportunities rather than restrictions."
The problem remains, however, that we may be in a position of trading
aviation rights for ncneciual returns to the United States, for there is no
attention to total market access and size in the policy statements of the
PAGENO="0155"
151
present Administration, A 1975 report by the Civil Aeronautics Board
noted that of 55 airlines examined, 25 were wholly state-owned and 22
17
were partly state-owned. Only eight were owned totally by the private
sector. The government-owned airlines sometimes receive direct sub-
sidies; one case involved cancellation of debt as well as low-interest
government loans and guarantees and other special treatment. Con-
sidering that in 1977, 71 foreign airlines were operating scheduled
passenger service to the United States (with several other nonscheduled
charter operators), it is safe to assume that in terms of flights (and
18
seating capacities) there is, indeed, competition. However, competi-
tion for the airline industry is not just the number of airline flights
or capacity, but also the amount or market share of business accruing to
each carrier, both in the United States and overseas. Since it appears
that U.S. international aviation policy is relying upon country-of-
origin rules for airline service to the United States, especially
charter operations, our ability to increase our market share of foreign
travelers will be dependent upon foreign rules for flights from other
countries. In addition, the threat of reduced profitability of our car-
riers in the face of foreign government subsidies can hinder the extent to
which our airline industry aggressively markets its services. This is
17 Government Ownership, Subsidy and Economic Assistance in Inter
national Commercial Aviation, Civil Aeronautics Board, 1975.
18 The fact that at most times, there are load factors on flights of
50-60 percent and that even Skytrain price-competitive service usually has
load factors of 80-90 percent means that additional capacity is generally
available to the traveling public. This must be viewed over a year's time
because peak demands could be made which the international air system would
be temporarily unable to handle. Opportunity costs are such that no airline
could incur the capital costs of more equipment to meet peak demands.
PAGENO="0156"
152
truly a noncompetitive environment which is not in keeping with main-
taining a strong international service sector with an ability to earn a
fair share of service receipts. As evidenced by the statement of the
Dutch quoted earlier in this paper, it seems that foreign countries view
their own interests in this important foreign exchange earnings sector
as critical. The United States should view its interests in no less
terms, especially with the plight of our balance of payments and its
effect on the dollar.
Conflict of Aviation Policy With Trade Policy
The evident change in u.s. international aviation policy also
appears to be in conflict with policy previously set by the Congress
for other trade-related negotiations.
The House Ways and Means report on the Trade Act of l97'4 states,
In the opinion of the Cotmrittee the negotiating authority granted by
the bill is fully adequate for such negotiations and recognizes at the
same time that the best negotiating tool the United States has in seeking
an open and nondiscriminatorY trading world is access to the U.S.
market. 19 The key here is that the Congress viewed the Trade Act as
a tool for negotiations with foreign countries and the muscle behind
the tool is control of access to U.S. markets. In international aviation,
however, it appears that we have given up our negotiating tool with
foreign countries, i.e., by granting access to our markets and our
citizens, but we may not have gained commensurate rights of access to
the foreign markets. The country-of-origin operating rules of foreign
19
Ibid., 8
PAGENO="0157"
153
countries may, indeed, be nontariff barriers which are ciassified
"to encompass all private and governmental poiicies and practices
that serve to distort the volume, commodity composition, or
20
direction of trade in goods and services.' (emphasis added)
It should be remembered that at the close of the Kennedy Round
negotiations under the Trade Expansion Act of 1962, dissatisfaction
developed in the United States over the ultimate agreement because,
while we lowered tariff barriers for industrial products in general,
we did not settle agricultural commodity issues or the broader
21
question of conditions of access to commercial markets. In large
measure, it is because of this background that the Trade Act of l97L~
contains numerous congressional safeguards and requires that the
Administration keep in close contact with the Congress during the
negotiation process. In fact, with regard to nontariff barriers and
other distortions of trade the Congress must specifically be consulted
and may overrule any agreements made. The Congress also established
sector negotiating guidelines indicating that the principal objective
of the United States in negotiating under Sections 101 and 102 of the
Act shall be "to obtain to the maximum extent feasible, with respect to
appropriate product sectors of manufacturing and with respect to the
20Studies in Business Technology and Economics, Commercial Policy
Options in An Age of Controls. Prepared under the auspices of The Center
for International Studies, New York University, Robert C. Hawkins, Ingo
Walter, editors, Lexington Books, D. C. Heath Company, 1972, p. 61+.
215ee "Traders and Diplomats" by Ernest H. Preeg, An Analysis of
the Kennedy Round of Negotiations Under the GATT, Brookings Institu-
tion, Washington, D.C., 1970, Chapter 16.
PAGENO="0158"
154
agricultural sector, competitive opportunities for U.S. exports to
the developed countries of the world equivalent to the competitive
opportunities afforded in U.S. markets to the importation of like or
similar products, taking into account all barriers (including tariffs)
22
to and other distortions of international trade affecting that sector."
The Trade Act emphasizes sectors, so that arty trade agreement that is
consursnated contains a balanced result without trading one major group
for another. Yet in international aviation we seem to be deviating
from the objective of balance.
The Trade Act of 197~4, PL 93-618. Also see, House Comittee on
Ways and Means report on the Trade Reform Act of 1973 (enacted as the
Trade Act of 197W) No. 93-571.
PAGENO="0159"
155
IV. THE SECURITY ASPECTS
This paper is not intended to deal with the international military
significance of U.S. service industries. However, the American foreign and
security policy context of maintaining a viable Civil Reserve Air Fleet
(CRAP) is important in addressing the returns to U.S. industry and the
national interest from a healthy U.S. international service industry
23
base. With the development of detente with the Soviet Union and
China, and the unwillingness of the U.S. Congress to retain the primary
guarantees of our sweeping range of post-World War II military security
role, the United States has moved into an era of reduced defense
comitments with lower levels of on-scene American participation.
The political and economic factors of the 1970's has forced the United
States towards a strategic concept of a central reserve of Army, Navy
and Air Force elements, located in the United States but able to defend
U.S. interests and carry out U.S. comitments abroad, including logistic
support of UN peacekeeping forces and other international obligations.
The key strategy in our defense posture has been one of mobility.
Our defense and national security posture in the seventies depends on
the ability to rapidly respond to contingencies ranging from political
tension to the support of our allies, all the way to actual military
operations should they become necessary to defend our treaty comitments.
Various cost factors make it too expensive for the U.S. military to
23
See: The United States Flag System in International Air Commerce,
An Analysis of Public Policy Implications, August 1971t, International
Economic Policy Association, Washington.
PAGENO="0160"
156
maintain the total required transportation on its own account. The
Civil Reserve Air Fleet is designed to fulfill the need for
mobility during a crisis by rapidly augnenting military forces with
supplementary transportation from commercial airlift and sealift
resources.
Established after World War II, the program entails the commit-
ment on the part of U.S. domestic and international air carriers to
allocate specific aircraft sorvices to military proourement in
several stages for emergencies as provided in a memorandum of under-
standing between the Secretaries of Defense and Commerce. While both
domestic and international U.S. carriers provide passenger and cargo
aircraft for the CRAF, there is an extra utility from having U.S.
international carriers involved in this program. The overseas repair
and refueling facilities and ground personnel of U.S. international
carriers enable these airlines to enter military service with less
problems than strictly domestic carriers. The two largest U.S.
international flag carriers--Trans World Airlines and Pan American
World Airways--make up a large portion of the international long-range
capability. Together they provide approximately two-thirds of the
passenger capability and almost one-third of the cargo capability of
our CRAY system. We understand that in the continuing reassessment of
our defense and national security commitmients there has been a reemphasis
on maximum mobility of U.S. forces and support personnel from the United
States to trouble spots around the world. Thus, the health of the U.S.
carrier system, including the maintenance of retaining the U.S. flag on
PAGENO="0161"
157
overseas routes is extremely important in this national security con-
text. This is in addition, of course, to the intangible benefits of
"showing the flag" through U.S. international carriers.
61-144 C - So -
PAGENO="0162"
158
V. CONCLUSION
We have seen that the international service earnings in the
U.S. balance of payments are important for helping to offset the
deficit in our overall relations with other countries. Specifically,
the travel and transportation sector of service industries has been
viewed as an important and growing dollar earner for the United States.
Service industries, however, are beset by a series of nontariff-type
barriers that various nations have developed over the years to protect
2L~
their own industries. The General Agreement on Tariffs and Trade
(GATT) establishes, in a sense, the rules of the road for inter-
national trade in goods and commodities, but there are no such rules
or safeguards for service industries. In fact, nowhere in the GATT is
the service sector addressed. But the importance of U.S. service
earnings has been highlighted and the Congress has directed its atten-
tion to them in the 1970's. For the first time there are laws on the
books to begin to cope with some of our international service-sector
problems. However, it appears that in the airline area, which encompasses
the tourism sector, we have not differentiated between the consumer need
for lover and more competitive fare structures and the proliferation or
dilution of the market which can have adverse effects on U.S. market shares
and the balance of payments. Unrestrained and open competition is an
efficient way of insuring the best possible fare structure for the con-
sumer, but in an international industry structure dominated by government-
linked corporations, truly private, profit-oriented industries can find
2W
U.S. Service Industries in World Markets, U.S. Department of
Commerce, December 1976.
PAGENO="0163"
159
the international competitive process noneconomic. The extreme example
of this effect, in transportation service industries, can be seen in
the predilection of the Soviet Union to undercut shipping rates in
the Pacific, for instance, in order to gain market share, which
damages the profitability of U.S. private shipping companies.
The level of service provided on any route should be commensur-
ate with the present traffic and the immediate market potential for
its growth, and it need not be set at a level that dilutes overall
market shares. This would be consistent with a desire to
provide the lowest possible transportation cost to the consumer. More
importantly, it would be consistent with the objective of maintaining
our foreigr exchange earnings in this important service sector. A
negotiating process that concentrates mainly on U.S. domestic
objectives without taking into account our forei~ economic or security
interests, and a negotiating stance that defers to country-of-origin
rules can be detrimental to the U.S. international economic posture.
We must maintain a balance in our negotiation process that trades
commensurate benefits instead of apples and oranges. The Congress has
dictated this policy in the goods trade area after observing in the
1960's what it considered unequal trade-offs in certain areas. Equal
access to markets is critical, but so is insurance against noncompeti-
tive factors that can be used by foreigr governments to increase their
market shares to the detriment of our own international aviation industry.
In order to maintain the viability of our international service sector
in transportation and tourism and to insure the health of the private
PAGENO="0164"
160
competitive U.S. industries, our negotiating process must stress the
following:
1. We must maintsin a balance of concessions with our
international trading partners involving access to their markets.
They must not be granted access to the U.S. market on any more
favorable terms than those governing our access to their markets.
2. We must support a private U.S. international air trans-
portation and surface shipping industry that is economically viable
and efficient and that will generate sufficient earnings to attract
private capital and provide job opportunities.
3. We must rely primarily on competitive market forces
to provide the lowest-priced, economically justified transportation
for U.S. consumers. At the same time, we must recognize that the
views of other nations differ, especially as regards the use of
nontariff barriers for furthering their policies. Our policies must
be modified accordingly, in order to reach bilateral and multilateral
accommodations.
[4~ The international transportation market must be viewed
in its totality and the level of service provided must be related
to the present market and its projected growth. This means that
market dilution through the provision of excess service must not be
allowed to harm the international earnings of U.S. transportation
companies.
5. In negotiations, trading access to our total market through
a multiplicity of city routes in exchange for access to a single
PAGENO="0165"
161
country market is not dealing from atrength. In the European
Community, for instance, member nations want to be viewed as one
market when dealing with other countries in goods trade. However,
in airline matters they consider themselves individual countries,
just as if we were to consider the SO American states as single
entities for the certification of a plethora of airlines. Our
objectives in the negotiating procesa must be aimed at the total
European market and at denying the Community members the advantage of
individual bargaining which restricts our access to their total market.
6. We cannot rely on country-of-origin rules in this service
sector, for to do so would limit our ability to influence our access
to foreign markets. If we acceded to our trading partners' rules for
such access we would be sanctioning foreign country restrictions.
This is something we are not willing to do, for instance, in our
goods trade with countries such as Japan and the members of the
European Common Market.
PAGENO="0166"
TABLE I
U.S. Balance of ~ Goods and Services
1960-1977[j~jjjj (or SeLected Years
(Millions of $)
I 977
(j 1 - I I I
at annual
1 96(1 1965 197(1 1)75 1976 rate
Exports of goods and services 27,51(1 39,502 62 ,l)21) 1(7,601) 163 ,265 175,736
Merchand se, adjusted, excluding miii tary2 10,65(1 26,561 b52 ,1169 107,088 115,695 120,212
Transfers under 11.5. military agency sales
contracts 335 83(1 1,501 3,919 5,213 7,376
Travel 919 1,38(1 2,331 1,839 5,806 6,161)
Passenger fares 175 271 555 1,039 1,225 l,325~
Other transportation 1,607 2,175 3,113 5,785 6,529 6,973
Fees and royalties from affiliated foreigners 590 1,199 1,758 3,553 3,522 3,533
Fees and royalties Ironi itnaffiliated foreigners 257 335 573 757 88') 910
(Ither private services ~l86 668 1,228 2,868 3,586 5,339
U.S. Government miscellaneous services 153 285 332 532 578 500
Receipts of income on.3U~,S. assets abroad:
1)irect investments - 2,355 3,963 5,992 8,567 11,127 12,308
Other private receipts 656 1,521 2,671 7,6511 8,955 10,528
U.S. Government receipts 359 515 912 1,119 1,287 1,351
Source: Survey of Current Business, U.S. Departiient of Commerce, June 1975, December 1977.
1 Excludes transfers of goods and services under U.S. military grant programs
2 Excludes exports of goods under U.S. military agency sales contracts and imports of goods under direct
defense expenditures identified in Census import documents.
Consists of interest, dividends and branch earnings; excludes reinvested earnings of foreign incorporated
affiliates of U.S. firms or of U.S. incorporated affiliates of foreign firms.
Estimated from first 3 cpiarters with 5th quarter at 1976 rate. Traditionally, tourism receipts and expendi-
tures drop sharply in the 4th quarter and it would exaggerate the figures to annualize these on a 3-quarters
basis.
b = denotes break in series
PAGENO="0167"
TABLE 2
U.S. Travel and Transportation Expenditures
and Receipts in the Balance of Payments'
l97~-l977
(Millions of $)
1,325 (e)
Total
Passenger fare expenditures (-)
Travel expenditures (-)
Balance
Total
5,136 +5,878
2,095 2,263
5,980 6,917
8,075 -8,680
-2,939 -2,802
+7,031 +7,1489
2,568 2,8~43
6,856 7,1451
-9,920 -10,2914
-2,393 -2,805
Source: ~~py of Current Business,
U.S. Department of Commerce, June 1977, December 1977, June 1978.
Includes passenger fares paid by foreigners to U.S. carriers for travel outside of the U.S.A. as appears
in U.S. balance of payments accounts. The deficit on the `travel account" for tourism is sometimes quoted
without these receipts. Since our study concerns total U.S. dollar earnings in the balance of payments
from international service activities in travel and passenger transportation, they are included here.
Travel receipts (+)
19714
1975
1976 1977
Passenger fares receipts (+)
1,032 4,839
5,806 6,164
(e) = Estimated on first 3 quarters with 11th quarter at 1976 rate. See note 5, Table I.
PAGENO="0168"
164
TA.BLE 3
BASE PDTEI'JTIAL
FOR TRAVEL TO THE U.S.
COUNTRY OF
RESIDENCE
NO. OF INDIV.
W/I FINANCIAL MEANS
FOR TRAVEL TO THE U.S.
CANADA
MEXICO
W. GERMANY
JAPAN
UNITED KINGDOM
FRANCE
12 1
10 2
9 3
8 4
8 5
7 6
SUB-TOTAL 6 USTS
PRIMARY MKTS
54 (63%) -
ITALY
BRAZIL
AUSTRALIA
NETHERLANDS
SWITZERLAND
BELGIUM
VENEZUELA
5 7
4 8
2 9
2 9
1 12
1 12
1
SUB-TOTAL 7 USTS
SECONDARY MKTS
16 (19%) -
TOTAL USTS MKTS
70 (81%) -
OTHER AREAS
16 -
Source: Speech by Beverly Shipka, Director, Research and Analysis Division,
United States Travel Service, U.S. Department of Commerce at the 1978 Travei
Outlook Forum, Washington, D.C., December 1, 1977.
MILLIONS OF
I ND! VI DUALS
RANK
TOTAL WORLD 1 85 (100%)
PAGENO="0169"
165
Ms. MIKuLsKI. Thank you very much.
I would like to thank all three of you. I have a few questions I
would like to address, some individually, and some as a whole.
One of the things I would like to note in chairing this hearing is
that just because there is only one member here, please don't
mistake this as a lack of interest in this particular subject.
As you know, in addition to dealing with commerce, this commit-
tee also handles tourism. We are also the railroad committee.
Chairman Florio right now is shepherding the lost sheep of the
Congress through the Amtrak legislation.
I just want to convey to those people in the audience, and to the
panels in particular, that the committee really has a very intense
interest in the area of tourism for a variety of reasons that you
have enumerated, both in terms of its economic and its good will
benefits.
So, I just wanted to make it clear that we have an intense
interest and, therefore, are interested in certain nuts and bolts
type questions.
In my conversations with my colleagues preceding this hearing,
it was very clear that those of us who are on this committee
support a very strong, affirmative, aggressive tourism policy, both
international and intra-American.
I think our concern is how best to accomplish that, No. 1, and
then to ask you, while you are here, some of the questions the
American people would ask if they had a chance to talk with you
on how their money is going to be spent.
Which then takes me to a couple of questions that I have on how
we could accomplish certain of the tourism policy goals that I think
we are fairly well agreed on.
Some of the comments you made, Mr. Toohey, I found interesting
since you talk, one, about the need for a Federal council at the
executive branch level. I presume you mean right out of the White
House.
Am I right in that?
Mr. TOOHEY. That is correct, Madam Chairman.
Ms. MIKuLsKI. Let me tell you my questions here. On the one
hand we are talking about an executive office-oriented coordinating
council. On the other hand, we are talking about a quasi-public
corporation.
Before I come back to the specifics in those two areas, could I
take it that by you advocating those two different species of imple-
mentation you have really been dissatisfied with the idea of a
Federal agency say within Commerce or Treasury or State on this
particular matter?
Has or has not a Federal agency within a regular department
met your needs, and could you comment on whether it would if we
located it within a particular department-say Commerce and
Trade.
Mr. TOOHEY. I think that is a broadly held view within the travel
industry. I think the history of the U.S. Travel Service supports
that view. It has been located in the Commerce Department since
its inception in 1961. It never has been given the recognition or the
funding to do the kind of job that it has always wanted to do.
PAGENO="0170"
166
Past administrations have consistently requested less funding
than the Congress had authorized for the purposes of USTS activi-
ties. So, we think the record there has been a dismal one.
For that reason, in discussing the kind of implementing agency
needed, and in recognizing that one of its principal activities would
be marketing, the industry believes that it might be a much better
approach to create a quasi-public corporation to carry out the
national policy and the national purposes, free of bureaucratic
restraints and free of subservience to any existing department of
government where it likely would not receive recognition.
The same case was true when domestic tourism authority was
vested in the Department of the Interior. That never really got off
the ground, either. I think the maximum appropriation for that
activity was something around $700,000.
It has always been a kind of ludicrous situation. What we are
looking for is some type of feasible answer to this problem so that
the Federal Government does not continue to view travel as an
activity, but rather as an industry that has great economic impor-
tance to this Nation.
Ms. MIKuI~sKJ. So in summary what you are saying is that where
it has been located in a Federal agency it has been a real flop?
Mr. TOOHEY. It hasn't worked.
Ms. MIKuI~sKI. I can see the merits very much of the executive
branch coordinating council for some of the reasons which you and
the American Express people articulated when we talked about the
variety of issues involved in promoting international travel, not
only in terms of a marketing strategy to attract but the whole
issue of banking, credit, immigration, visa status-passport status,
the kinds of things that are handled through Treasury, Immigra-
tion, and Justice.
I see where there are a lot of things that affect your business
which are in effect scattered through the Federal Government, and
there is no one with the power and stature to get everybody in the
same room at the same time to say, "What the Dickens, Charles or
Jane, are we going to do to not only market America, as the
American Express people say, but also to facilitate visitors?"
Mr. TOOHEY. You put your finger exactly on the heart of the
problem.
Ms. MIKuI~sKI. What, that this is really what you need, that
nobody is talking to each other?
Mr. TOOHEY. That is right, tourism interests are so pervasive
throughout the Federal Establishment, and so uncoordinated, that
they must be brought together, the whole area of facilitation that
you are talking about. It is critically important to the marketing of
this country as a travel destination abroad-the way we issue
visas, the way we receive visitors at ports of entry, the way we
have policies that affect tourism-all of this has been a disaster.
Ms. MIKULSKI. My fundamental concern, and I think it is the
same as the members of the panel, and I would welcome responses
from all the panelists on this, is that I think we want to accom-
plish the same goal, which is first of all agreement on a policy;
second, some type of one-stop shop to get the Feds to talk with each
other, and then, third, a very assertive marketing plan to attract a
variety of visitors-people who are going to stay in fancy hotels
PAGENO="0171"
167
and young people who are going to come to your campsites. The
ones who are going to be here on corporate expense accounts as
well as the family that always wanted to see whether a tea party
really did take place in Boston.
My concern is that by establishing an executive office coordinat-
ing council, and by establishing a quasi-public corporation, it will
do exactly the opposite of what we want it to. Let me share my
concerns and then welcome your dialogue on this.
No. 1, if the President and his 0MB crowd don't like it, an
executive council is only as good as the Executive. You have indi-
cated that in all administrations in the past 17 years there has not
been that kind of zip and commitment that we would hope for, so
my concern is that it is going to be over in room B-167 in the
bowels of the Executive Office Building right next to an unventilat-
ed restroom.
Mr. TOOHEY. I have been there.
Ms. MIKuLSKI. I have been there. That is where they keep the
women's programs.
Originally in the 1960's the quasi-public corporation was a new
organizational fad. It was hoped at that time that by using these
nonprofit quasi corporations we could bring the best of the corpo-
rate sector, with the resources, you could bring the best of both
private and public resources together, and do something quite
unique and creative.
My observations are that we have brought the worst of the
private sector and the worst of the public sector together, and put
them in an organization that is unresponsive and unaccountable to
the people who are elected. You have heard about the ones that I
have outlined, whether it is some of the things we have done with
railroads or some of the things we have done with broadcasting.
They set their own salaries. They thumb their noses at us and tell
us, "Well, we are independent."
Well, to me, if you take the people's money you take the people,
and the hopes and dreams of the people, and that is one of the
reasons I have a reticence about it. I do not have an answer to it
today and that is why I mention it to you. How do you think this
corporation would be different than some of the other ones, in our
experience with them?
Mr. TOOHEY. You know we have been looking at this question for
probably 6 or 7 years, and there has been a very exhaustive study,
several studies as a matter of fact have been carried out, and this
is a recommendation that has been made before, as I indicated in
my testimony, by a Presidential commission back in 1968.
We believe that, with the proper relationship to the private
sector, and with proper ties to Congress, specifically this committee
and its counterpart in the Senate, that a quasi public corporation
can be made to work. I think there is a great deal of seriousness in
the travel industry about the need that must be met, and I think
you would find a lot different relationship existing between this
corporation and the Congress and this corporation and the private
sector in the States and cities than you find in others that you
have mentioned.
In all of these areas, Madam Chairman, we have some degree of
skepticism, when you are talking about coordinating public poli-
PAGENO="0172"
168
cies, working with an administration, and putting this responsibili-
ty in the Office of the President. That has been tried many, many
times for many, many other reasons, and there have been failures.
These coordinating committees come into being, and they address a
problem and fade away.
We feel the difference here might be that this policy council is
mandated by law, and its participants are obligated to participate,
and the level of participation should be designated in the law. It
should have a small professional and experienced staff to keep it
moving, to keep it going. It should have an access or input mecha-
nism for the private sector. We want to keep it constantly ener-
gized, with the problems and the needs of the industry as we see
them. With those kinds of safeguards, I don't know, maybe it would
work.
Ms. MIKULSKI. So you are saying the difference between some of
our experience and what you are advocating is the fact that the
board of directors would really be from the industry itself, and
therefore have an enormous stake and be a successful energet-
ic--
Mr. TOOHEY. I just do not think it would be a boondoggle. I really
don't. If the President would appoint the proper kinds of people
and the law would mandate the kinds of people he should be
looking for and appointing I think it has a great opportunity for
success, and I think you are bringing industry expertise and ad-
dressing it to a problem that is clearly in the national interest. It
has not worked the other way, Madam Chairman. Maybe it will
work this way. We cannot think of a different way. We hope you
can if there is another effective way.
Ms. MIKui~sxI. Perhaps one of the things that we could do, and
this should not be construed as an anti-effort here, would be to put
some type of sunset provision on it, just to guarantee a revision.
Mr. TOOHEY. We would probably welcome that. We would be as
concerned as you are that this corporation is successful, that this
idea will work, and if it does not we would not want it any more
than you would.
Ms. MIKui~sKI. Mr. LeBlanc, has any State tried something like
this at a State level? I know that there are State travel initiatives,
but has anyone established this type of thing?
Mr. LEBLANC. Madam Chairman, every State just about through-
out the country has a travel council. It is comprised probably of
components of the industry, you know, made up of hotels and
attractions and whatever components of the travel industry. Most
of these are called travel councils. In Louisiana it is called Louisi-
ana Travel and Development Council.
In addition to this, there are also statewide associations that we
work very, very closely with.
Ms. MIKULSKI. But have you tried the quasi-public corporation at
a State level?
Mr. LEBLANC. I think it may have been tried in Maine. I don't
know if they are receiving any State fundings or not, but that is
the only one to my knowledge that may have tried this.
Ms. MIKuIsxI. Mr. Danelian, do you know if this has been tried
by other countries, and their success?
Mr. DANELIAN. It comes to my mind that the Irish--
PAGENO="0173"
169
Mr. TOOHEY. Two countries.
Ms. MIKuLsKI. Mr. LeBlanc, do you?
Mr. LEBLANC. Yes, the Irish Tourist Board, and I think that they
have had substantial success. I think the size of the country and
the size of the investment, and what they have at stake in the
travel industry, internationally their budget has been consistently
allocating more funds than a country of the size of the United
States does.
Mr. DANELIAN. I would like to comment on the council and any
qualms that people might have about setting such a coordinating
mechanism. I think you can take a cue in what occurred in the
trade area-general goods trade ~area. After the passage of the
Trade Expansion Act in 1962 you had negotiations finally leading
up to the Kennedy round agreements. Some people were very
dissatisfied about the process that was used to reach those trade
agreements and some of the deals that they struck. They found
that the coordination within the executive structure of the Federal
Government was lacking.
Agriculture felt it was dealt out of the Kennedy round negotia-
tions, and as a result of that, in the Trade Act of 1974, Congress
finally took out of the State Department those trade functions and
said, "We are going to set up a special trade representative, STR,
to handle this particular problem." This cut across many, many
Government lines and many other Government agencies also, and I
think it has worked effectively. So here is an example of a type of
coordinating council idea that has worked effectively, where you
had many Government agencies that were not doing a good enough
job at the time.
Ms. MIKuI~sKI. But I think the key point that you mentioned was
a crack professional staff committed to the goals and objectives. As
you mentioned, the Special Trade Representative. I happen to be
very close to Chairman Strauss, who I think did a brilliant job on
the MTN, I mean even when I didn't like some of the things he
was doing. He was at least negotiating an agreement.
What I find is that prior to the Strauss leadership, you had a lot
of people over at Geneva, and they learned French, they learned to
ski, and they were having a good time and maybe next week we
would meet and the following week maybe we could get agreement
on pink thread or red thread and things like that. Really there
wasn't the same sense of urgency that he provided. That takes me
to something else on an international scope.
In your testimony, I was struck where you said this: "I want to
emphasize that competition is stiff, and not always fair, so we
cannot pull back from our efforts on any front." In the internation-
al manufacturing trade, as you know, whether it is steel or what-
ever, one of our concerns and one of the reasons we have advocated
MTN is that we have often confused trade with fair trade. They
are not synonymous. What are some of the issues you are talking
about when you say competition is stiff but not always fair?
Mr. DANELIAN. I think first if you are looking at the overseas
visitors travel to the United States you have to look at the means
by which they come here, which is part of the whole tourism
package, that is, air transportation. U.S. airlines are facing compe-
tition against government-owned or controlled airlines abroad.
PAGENO="0174"
170
Such entities are willing to subsidize their carriers, if need be, to
keep them on money-losing routes, because they earn foreign ex-
change from bringing the traveler to their shore. That is how
important tourism is to some countries.
You have a problem overseas in marketing the United States
because the travel agent is under pressure in some countries. In
Germany, where the market is so consolidated that about 52 per-
cent of the international market uses travel agents to book their
international trips, either Government travel bureaus or Govern-
ment-connected travel bureaus or travel bureaus that are connect-
ed with Government airlines exert pressure on agents to make sure
the traffic might go on let's say Lufthansa to Bangkok in terms of
a comparable destination or distance.
That presents a real tough problem for the U.S. tourism industry
as a whole, not just the airlines who bring the people here. It
presents a problem for the American Expresses of the world and
corporations like that which are trying to really market the United
States.
Ms. MIKui~sKI. Mr. LeBlanc, I will come back to you in a second.
You are describing the same types of problems we ran into in
terms of industrial or manufactured goods, overt or hidden subsi-
dies, for example, in the steel industry. The other that we found in
certain Asian markets and in certain European markets was the
whole issue of nontariff barriers. Though it was not written down
anywhere, it was just that the way they did business really stuck it
to the United States.
Mr. DANELIAN. Absolutely. This is exactly the case in a lot of
areas in the tourism field or the components of the tourism field,
certain components.
Ms. MIKuLsKI. When I visited Japan and discussed with them
why they didn't import American products, they said to me, "Oh,
well, you don't know how to market," and then they went on to say
how the Japanese were different, for example, in shoes or what-
ever.
I visited a Japanese department store and found out-and since I
am not too different in height from an average Japanese woman I
tried on a lot of the things the Japanese women wear, from shoes
to foundation garments, and I found out that what they wore was
not any different and did not fit any different than what I would
buy up here in Bloomingdale's or J.C. Penney's.
I found that what they invented was the ~mythology of keeping
America out, and in some way feeding on our own negative atti-
tude about ourselves these days, that we don't know how to com-
pete. I found that that just simply wasn't true. There were all
these unofficial obstacles and barriers. I wasn't aware that this was
also true in tourism.
Mr. DANELIAN. It is in certain components.
Ms. MIKuLsKI. It is?
Mr. DANELIAN. Absolutely. Let's say you are operating abroad,
and selling the United States as a destination, and you are an air
carrier and a travel agency and you put a package together. If you
are in a less-developed country, you could get a visit from the
Minister of so-and-so, who might come in an say, "We think you
are taking too much of the traffic,'~ and then what do you do? It is
PAGENO="0175"
171
this kind of a situation. It is subtle in some cases, and it is very up
forward in others.
Ms. MIKULSKI. If they are engaging in these tactics, then I think
that only further affirms your point. If foreign countries are going
to that much trouble to keep that buck for themselves, it really
shows how big and important that buck is.
Mr. DANELIAN. That is correct.
Ms. MIKuLsKI. Mr. LeBlanc, did you want to amplify what was
being said on this matter?
Mr. LEBLANC. Yes, Madam Chairman. When you mentioned
about the competitiveness of it, we are sometimes at a State level
competing with Federal Governments. For example, I will cite
American Society of Travel Agents. ASTA conducts an Internation-
al World Travel Congress and it is hosted in the United States
every 4 years. Mr. Santini's State hosted it. It was hosted in
Canada for 7 or 8 years, and we in Louisiana hosted this.
We were following Canada and also Brazil, and I am told by
reliable sources that the Brazilian Government, in order to attract
this particular convention to Rio spent over $1.5 million, and we as
a State have to compete with this. It goes on.
It is much broader than that, because as was pointed out, the
competition is fierce, and unlike commerce and industry, where
because of technology or because of development or something,
where it is more difficult for a nation to get involved in different
components of commerce, just about every nation that has any
development at all is able to sell their history, their culture, their
beauty, and so nations like Egypt, India, and so forth are very
active in the international tourist market.
We as a Federal Government have not been competitive, because
of lack of funding, lack of staff, and lack of recognition, and I think
that this quasi-public corporation would bring identity and maybe
help turn around and bring this into a focal point and help support
what Congress has recognized. Maybe this administration or future
administrations would recognize the viability and the contribution
that the travel industry makes to the economy and to the employ-
ment situation.
Ms. MIKuI~sKI. I only have one other question, which would then
deal with some of the concerns that taxpayers raise about this. I
must say that so far this has been extremely instructive testimony,
and I very much appreciate it.
The tourism industry talks a great deal about how it is a major
employer of women and minorities. One of the questions raised
with me by women and minorities is about the dollar that is spent
on people who work at low-income jobs, whether it is the hotel
industry or restaurant industry. Those primary employers do not
provide opportunities for upward mobility for women and minor-
ities, so in effect what they say is, why should we take money and
spend it on an industry that really has not had a very good pic-
ture? That is the mental image that many of the people I represent
have of the travel and tourism industry; there is the black maid on
the bottom earning something that very often is protested by some
of the people you represent. They even come in and lobby against
increasing the minimum wage. There are the fat cats up at the top
of hotel chains who are making a lot of money off their backs, and
PAGENO="0176"
172
they are not too eager to see this stimulated. What would you say
to those kinds of arguments?
Mr. TOOHEY. I think that is somewhat of a misconception really.
There are enormous employment opportunities in the travel indus-
try for women or young people, members of minority groups, but
they are not all entry level. A lot of them are, and that is great,
because that offers opportunity for people to find employment. This
Government is spending a lot of money on the CETA program and
other efforts to find employment for people, and tourism offers a
really unique opportunity to employ the unskilled.
There are many areas in which that can be done, but on the
other hand, in tourism businesses, my own personal experience,
along with statistics that have been developed, show me that there
is a great opportunity for women in the field of tourism, and if you
go to a national convention of Discover America Travel Organiza-
tions or the American Society of Travel Agents, you would be
impressed by how many of the registrants and participants in those
meetings are women, probably the majority in most cases are
women, who are active in sales, in marketing, for various travel
industry companies.
The idea that all this employment opportunity in the travel
industry is menial labor I think is a distortion of reality. There is a
lot of entry-level opportunity for people that are not skilled, but I
think there is equal opportunity for people who are interested in
upward mobility, and a lot of them women. I have seen that
myself.
Ms. MIKULSKI. Did you want to comment?
Mr. DANELIAN. I wanted to also comment. As I said in my state-
ment, you are talking in the level of something like $25,000 or so
that produces a job. It is in that range. I remember a couple of
months ago looking at the District of Columbia CETA appropri-
ations, Comprehensive Employment and Training Act. I think I
divided through the figures and I came up with something like
$80,000 per job.
It was a tremendous amount of money needed for a job. The
numbers of jobs provided even in the export of goods area, is not as
labor intensive. In fact, $35,000 or $40,000 produces a job in the
export of goods area. So I think the kinds of benefits you can reap
from tourism are great, and the bell-shaped curve, so to speak, in
terms of the display of employment and the salaries over the years
has certainly moved up. It is not like it used to be let's say 10 or 20
years ago.
Ms. MIKULSKI. I would really like to encourage you, one, if it is a
myth-I don't want to get into it today-to really advocate the
commitment of equal and upward opportunity from your industry,
and really talk with your member organizations, to encourage
them to be more aggressive in this area.
One of the things that I work very closely with is the Depart-
ment of HUD in their UDAC program. One of the things that they
have made a tremendous investment in, in urban America, has
been some hotel-related things, because those of us who represent
older cities know what tourism means. My own city is developing
an aggressive policy in this area.
PAGENO="0177"
173
Those of us who advocated spending funds in this area came
under quite sharp criticism from the people we represented, be-
cause of, one, the misunderstanding of the enormous payoff, and
then, second, in terms of the opportunities for citizens that are
either out of work or underemployed.
I would encourage your industry to tell its own story in its own
positive way and then really establish an internal commitment to
equal opportunity and upward mobility. I think it would certainly
strengthen your hand with many of the members of either State or
Federal Government. I just want to pass that on.
I have no further questions. I would like to thank you really for
very instructive testimony, and I know that, speaking for the mem-
bers of the committee, we look forward to working with you. If you
come up with any other ideas in regard to the quasi-public organi-
zation, write them down and send them. We are very much inter-
ested.
Mr. TOOHEY. Madam Chairman, we are very much impressed
with your perception and we deeply appreciate your interest.
Thank you very much.
[Testimony resumes on p. 237.]
[The following letter and attachments were subsequently re-
ceived for the record:]
S1~~i4L~ C - 80 - 12
PAGENO="0178"
174
DISCOVER
AMERICA
T RAV EL
OR~ANIZAT~ONS. INC.
THE NATIONAL ASSOCIATION
_______ OF THE U.S. TRAVEL INDUSTRY
1899 L Street. Northwest. Washington. 0 C 20036 * 202) 293.1433
September 17, 1979
The Honorable James J. Florio
Chairman, Subcommittee on
Transportation and Commerce
House of Representatives
Washington, D.C. 20515
Dear Mr. Chairman:
This refers to your letter of July 16, 1979 concerning
testimony on the Senate-passed bill, S. 1097, the National
Tourism Policy Act which enclosed a series of questions.
The questions were of general assistance in preparing our
testimony given on July 25 when we indicated that many of the
questions would be of concern and would be proper for consideration
by the proposed federally chartered non-profit travel development
corporation. We are, however, forwarding herewith responses to
specific questions which we would appreciate having inserted
in the record of the Hearings.
Also enclosed is the report `The Travel and Tourism Industry:
An Economic Overview' by Samuel N. Rosenblatt which was referenced
in our testimony and which also should be included in the Hearings
record.
~Sincerely,
~i~LoK7. 1~L~
William D. Toohey
President
cc: The Honorable Edward R. Madigan
Ranking Minority Member
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COUNCIL
QUESTION
Given the history of Administration opposition to the
International Travel Act as administered by the USTS and the
current Admrnistration's opposition to S. 1097 as passed by the
Senate, do you think the Assistant to the President for Domestic
Affairs and Policy can or will serve as an effective Chairman
of the Council?
ANSWER
Opposition to the International Travel Act which established
the United States Travel Service withit the Department of Commerce
is essentially the inability of one agency of the Administration
not only to accept the stated national tourism policy of utilizing
tourism as one means to strengthen the domestic and foreign
commerce of the United States, but also to accept the role mandated
by Congress for this government agency to be a promoter and marketer
of the United States as a travel destination for visitors from abroad.
There is no indication that the Administration has really
focused its attention on the wide spectrum of purposes and provisions
encompassed in S. 1097. Rather, it has relied on the judgement of
one Federal agency with a narrow field of interest, primarily that
dealing with domestic and foreign commerce, to assess 5. 1097 solely
as it relates to that Department's activities.
The Administration has, by executive order, established a
similar interagency coordinating council for implementation.of
Federal urban and regional policy. It would appear likely that if
this law were enacted providing for a cabinet level assistant to
the President to be Chairman the duty would be accepted, and he would
be able to work effectively. Fle oould, of course, be substantially
assisted by a skilled staff under an Executive Director.
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COUNCIL
QUESTIONS
There crc IS ether Council neribers, all of whoo are policy
heads of imoortant ceveroment departments or ageociea aod the new
tourism corporation. Do you believe this large a Couocil cao
`effectively ~eako the nectaaary decisioos to perform all the functiona
listed in sooner 202 of S. 1097 at four meetings a year?
Section 204 esnablishes an Executive Committee for the Council.
The members are: Tho Council Chairman, the Council Vice Chairman,
and the Secretaries of Cnmnorce, Interior, Transportation, State,
Agriculture, and Labor.
This Executive Comnittea baa only the authority which the
full Council mac delegate to it and the Council remains responsible
for the fulfillcent of its statutory duties.
What useful functions do you envision the Executive Committee
performing?
The Council baa 4 policy committees established in section 205
of 5. 1097:
(1) Transportation and Facilitation Policy Committee with
16 agency heads as members.
(2) Economic Development Policy Committee with 18 agency
heads as members.
(3) Energy and Natural Resources Policy Committee with 10
agency heads as members.
(4) Health, Education and Cultural Policy Committee with
10 agency heads as members.
The basic purpcse of these Committees is "to review and comment
on Federal agency program and planning documents that will have a
substantial affect on tourism..." The Committees may also discuss
tourism issues and problems referred to it by the tourism industry
through the Cmuncil. There are a minimum of six meetings a year.
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(QUESTIONS CONT'D)
Can you suggest ways in which to make these policy committees
smaller in size?
Their role is essentially a reactive one which historically leads
to inaction and stagnation. Can more positive functions be incorporated?
In view of Arthur U. Little's comments on similar organizations
in other -countries, what can you suggest to avoid the same ineffective
result? A copy of ADL's views is attached.
Should the idea be abandoned?
ANSWERS
The entire Policy Council organization has been reviewed by
individual corporations and by industry groups. Although it appears
cumbersome and unwieldy, no one has come up with a better way to deal
with issues of duplication, contradiction, and lack of coordination
among the 50 Federal agencies having tourism related policies and
over 100 tourism or tourism-related programs.
It certainly appears that the provisions of Title II of the
proposed Act dealing with the Policy Council have more than met the five
chief weaknesses commented on in the Arthur D. Little report:
.1. There is a clear mandate set forth in section 201 and 202.
2. The Council is accountable not only to the executive head of
the government (the President of the United States) , but also,
according to section 206, it must submit a comprehensive and
detailed report through the President to Congress on the
activities and accomplishments of the Council and Policy
Cormnittees, the results of its coordination efforts, an
analysis of the problems referred to it from any source, and
make any appropriate recommendations to Congress.
3. Specific procedures for conducting the business of the
Council and its committees are provided.
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(ANSWERS CCI?'
4. Sufficient staff support is specifiod with directions
whcch wilt make the Policy Council and its committees truly
effective.
5. The Act specifies, that heads of departments or their
designees must be members. Thus, high-level departmental
representation is assured.
We do not believe the idea of the Policy Council committees
should be abandoned as a large number of the top-ranked needs
identified in the ascertainment Phase II of the National Tourism
Policy Study, can ha net by effective agency coordination and encouraging
responsiveness to tourism needs. The Policy Council provides for such
coordination and responsive encouragement and there would be no need
to refer elsewhere to fulfill these needs.
The Executive Committee could meet freguently as needed and
would carry out the duties assigned by the Council in between the
Quarterly meetings of the Council. -
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CORPORATION
QUESTIONS
1. What are the advantages and disadvantages of establishing
a nonprofit corporation, which is not a government agency,
to encourage foreign travel to the United States?
2. Flow can Congress assure that the Corporation's activities
do not compete with the activities of any State, city or
private agency~
ANSWERS
1. Marketing and promotion in a commercial sense have up to
now not been recongized as normal government function. The federally
chartered nonprofit corporation accountable to government but outside
the framework of government would be established to perform this function.
To be fully viable in a competitive situation, which in this case is
one between governments seeking visitors, the tourism organization
must be flexible, mobile, quick to grasp opportunities and able to hire
and fire personnel quickly according to need and experience. A U. S.
government agency operating under normal U. S. government constraints
cannot compete effectively. A federal corporation which would operate
in a truly commercial way can. At first sight there may appear to be
some mintor disadvantages to be encountered by the Corporation with its
operations abroad.Even here, however, Section 309(b) of the proposed
Act requires other Federal agencies to assist the Corporation in the
performance of its duties. This would be a definite improvement over
the situation of the USTS field offices today operating within the
U. S. Government's overseas bureaucracy.
2. The Corporation is instructed by Congress not to compete
with the activities of any state, city or private agency. A Board
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(ANSWERS CONT'D)
of Directors drawn from the non-Federal public and private sectors would
certainly restrain any tendency of the Corporation to enter forbidden
areas of activity. These safeguards do not imply that the Corporation
would not participate with the other entitles having common objectives.
It is expected, for instance, that the Corporation would provide
financial assistance to States and municipalities for complementary
promotional activites. The Corporation would maintain offices and
conduct marketing activities in the foreign countrieg. These would
focus on a consumer media advertising to create demand for the United
States as a travel destination in the competition for a larger share
of the international travel market. The private sector represented
abroad will undoubtedly consider itself as a complementary partner in
this endeavor complementing it by promoting its services and facilities
to oeet increased demand and provide means by which the government will
realize all the benefits of increased tourism to the United States.
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CORPORATION
QUES TI ON
With the first year's funding level at $9.5 million, how
many branch offices in foreign countries should be established?
Where should these offices be located?
Should the existing foreign branch offic.es in six countries
and marketing activities in nine other countries of the USTS be
retained during the first year until the Corporation can evaluate
changes in number and location?
If the answer to the previous question is yes, should the
staffing and budgets of these foreign branch offices remain at their
current levels? If the answer is no, what level of staffing and
funding do you suggest?
ANSWER
It is not contemplated that a $9.5 million fundinq level
called for in S. 1097 would be used to establish branch offices. If
the $8 million funding level called for in 5. 233 and H.R. 2795 is
appropriated, the USTS will be able to maintain its field marketing
operations but at a considerably reduced scale since this field
operation is now funded at a $9 million level out of the total USTS
budget of $13.5 million.
It is believed that the facilities and activities of existing
foreign branch offices in the primary markets of Canada, Mexico,
Japan, United Kingdom, France and Germany and the marketing acitivities
in the special markets of Switzerland, Italy, Sweden, Spain, Belgium,
Netherlands, Austria, New Zealand, and Venezuela should be maintained
as assets until they are absorbed into the Corporation's new program
as provided by Section 313.
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CORPORAT I ON
QUESTION
Should these foreign branch offices be open to the public? If
so, what services and information should be provided that private industry
foreign offrces cannot provide? Clearly, referrals to private industry
foreign offices will be the answer to many inquiries. Wh~at is your
estimate of the extra staff and budget needed to provide these services
and information to the public by the foreign branch offices of the
Corporation?
Regarding section 308(c) (1) of 5. 1097, is it advisable to
require the Corpuration to establish these foreign branch offices and
to facilitate services at U. S. ports-of-entry without, to the maximum
extent feasible, consulting the Department of State or other government
agencies? Recognizing the Department of State's own role overseas and
those of other government agencies, would this provision unnecessarily
antagonize the Department of State and other agencies?
ANSWERS
The Corporation should plan and budget for public information
offices in each of the countries in which it carries out marketing
activities.
Hearlngs on S. 233 and H.R. 2795 revealed the need for public
information offices to provide general information directly to consumers
which would not necessarily be available through travel agents, public
carrier offices or other private industry travel offices. A consumer
media advertising campaign activated by the Corporation would increase
the awareness in the market of the USA as a travel destination and
would stimulate demand for specific information about destinations,
accommodations, sightseeing, national parks, recreational areas,
camping, sports and other events.
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(ANSWERS CONT'D)
We understand USTS InfoRoad information offices in Canada are
currently budgeted at $302,000; the Mexico public office at $114,000;
the Paris public information office at $130,000. The cost per office
would vary by market from $75,000 to $150,000 which would include staff
costs. Information offices which ~hosld be established by contract
arrangements in all 15 markets would require a total budget of
approximately $3.0 million. (See testimony of Pan American witness
James Montgomery.)
The probable intent of Section 308(c) (1) of S. 1097 is to
indicate that the Corporation is not a part of the Government bureaucracy
and would not be under the domination of nor require the assent or
approval of the Secretary of State or other government agencies for
the Corporation to establish branch offices and provide facilitative
services at ports of entry. The Corporation would be expected to act
in a prudent manner in all cases and that the affected Government
agency, would receive proper notification of Corporation~s activities
and would be asked for any cooperation necessary.
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CORPORCTI ON
QUESTION
Lost year United States scheduled airlines spent about $36 million
for advertising in foreign countries to promote travel to the United
States. Other segoects of private industry are also engaged in
exte~sive advertising and pr~otional effo~s abroad. How much.d*d -
your industry spend here and overseas? In light of these large
expenditures, how can we effectively utilize a relatively small sum,
$9.5 million, to promote tourism?
ANSWE S
It should be pointed out that the $36 million was spread over all
the countries serviced by the U. S. scheduled carriers and, while, other
segments of private industry are engaced in advertising abroad, the
purpose of the effort is to increase the business of the individual
companies and their share of the market. The demand for the overall
U. S. market would be stimulated by an adequately funded federal
marketing program.
DATO itself has since 1969 operated a "Discover America
International Pow Wow which brings foreign "Visit USA" sales producers
together with U. S. suppliers of tourism goods and services in a forum
for intensive face-to-face business conferences. This year there will
be at least 30 thousand individual business appointments made. 800
foreign delegates are expected in New Orleans, which is the site of this
year's Pow Wow, to meet with 1,500 representatives of U. S. firms. The
foreign sales producers will package the U. S. travel product and put
it up for sale to prospective foreign visitors.
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(ANSWER CONTd(
The $9,500,000 authorization is intended to be utilized to
cover organizational and other expenses for the corporation for the first
year. The Corporation is to determine the funding needed and its
sources and later be provided with adequate funding to undertake a
comprehensive marketing program abroad and carry out its other
responsibilities.
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CORPORAT I ON
QUESTION
Based or. your industryS experience with regulatory agencies,
what impact do you think the Corporation can have as a "party in
interest in proceedings before Federal agencies" when a national
tourism policy issue is the subject matter of the proceeding?
RAy could cot affected segments of the tourism industry do the same
jcb?
The monitoring activities spelled out in section 308(c) (4)
and (5) will consume considerable time by Corporation staff. Do you
think this will be an effective use of imited manpower?
Should this activity be re-evaluated at the end of the first
year?
This activity overlaps, to some degree, with the NTP Council
functions. Could the Council staff perform this function as well?
ANS1IERS
The Corporation would be an advocate of public and
private sector tourism needs and interests set forth in the National
Tourism Policy. A federally chartered corporation specifically
authorized to intervene in proceedings before Federal agencies should
have considerable weight. It might be the only way national
interests in tourism would be taken fully into account free of policy
screening by the Administration.
The personnel and other resource allocated would be determined
by the President of the Corporation and the Board of Directors. There
would be continuous evaluation of the benefits of all staff activities.
The Council staff would also perform the monitoring function,
but from its own and different perspective.
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C0RPOR;'rIo~
QUESTION
Do you think members of the tourism industry wil] he willing
to serve on the Board of Directors of the Corporation without
compensation, except fur expenses? (S~ction 305(h) of S. 1097.)
AN SUE B
Certainly most members will be willing to serve without compensation
except for expenses. However, if it is customary for Directors of
other federally chartered corporations to be compensated while attending
meetings of the Board we see no reason for excluding this Corporation.
It right ho an amportanr cons eruc~rc fcc tic aelf-ereloyed or those frc~
small businesses who might be asked to serve. Compensution and
reimbursement should-be limited to whot is generally acceptable for -
similar governmental activity.
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CORPORATI ON
QUESTION
Section 304 of 5. 1097 establishes a 15-member Board of Directors
appointed by the President with the advice and consent of the Senate.
No more than eight members shall be of the same political party.
The bill requires the initial Board members to be appointed ssithin
120 days of enactment and to establish the Corporation. Since the bill
contains only a one-year authorization and the first year is essentially
a trial period during which the Corporation most set up a complete progran,
operation, and marketing plan, should not the Board members be appointed
as soon as possible, perhaps no later than 45 days after enactment?
Tha Soard mambsrs hava three-year terms with a limit of two
consecotive terms. Should not the members' terms be staggered starting
with the f:rst appointments, to provide continuity?
ANS NP PS
Perhaps Sec. 304 (c) should be amended to state that
the Board members should be appointed as soon as practical but no later
than 120 days after enactment of the Act to indicate a sense of urgency.
45 days would appear to be too short a time to recruit candidates and
fulfill all the conditions specified and implied in Sec. 304 Cb)
Sec. 304 (d) provides that the terms of office of members
first taking office shall begin on the date of incorporation and expire
five at the end of the first year, five at the end of the second year,
and five at the end of the third year. This staggering of the first
appointments provides the desired continuity.
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CORPORAT I ON
QUESTION
The Corporation is authorized to develop and administer a compre-
hensive program relating to industry information, data service, training
arid education, and technical assistance.
The Committee does -not want the data and statistical service merely
to duplicate or rework that already available from government and
industry sources. The tourism industry has probably the most comprehensive
data on domestic tourism. What are your suggestions?
Would not the training and education and technical assistance
activities, as described in the Senate report, be best performed by
industry? (See pages 33-34 of S. Rpt. 96-126) . Could tourism industry
trade associations do this job? There are, of course, existing vocational
schools, as well as the training programs of individual companies.
The point is that industry receives the greatest benefits of these
activities.
ANSWER
The purpose of the Act is to establish a cooperative effort between
the Federal government and state and local governments and other concerned
public and private organizations, to use all practicable means and
measures including financial and technical assistance to implement a
national tourism policy.
The Corporation as an implementing agency is authorized to develop
and administer a comprehensive program relating to industry information,
data service, training and education, and technical assistance. It will
certainly exercise this authority only by fo1lo.~ing the detailed guidelines
which appear on pages 33-34 of the Report No. 96-126 accompanying S. 1097.
The guidelines provide for research and analysis to determine what is now
available and where, what is needed and who in what sector will supply it
and what assistance,if any,is required. The Committee might provide
further guidance by expressing its concerns in this area.
61_1LIL1 0 - 80 - 13
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CORPORATION
QUESTION
What kind of consumer information, protection, and education
program do you see as useful for the public?
ANSWER
The text whfch appears on pages 34-35 of S. Report No. 96-126
which has previously been referred to will give initial guidance to
the Corporation in this area. These needs were, of course, determined
during the Ascertainment Phase II of the National Tourism Policy
Study in which all sectors of the industry participated.
QUESTION
Should the Corporation be permitted to establish "such advisory
committees as the Board deems appropriate'? Should there not be a
limit on their number and size? Tho USTS functioned with one, the
Travel Advisory Board. Considering the various committees established
in Title II, a multituBe of advisory boards could lead to loss of
direction and focus for the Corporation.
ANSWER
We do not see where the- activities of the Corporation would in
anyway be curtailed if Sec. 309(b) were deleted. The needs advisory
committees usually fulfill seem to to nm ~n Sen. 30E(c) (8) which
provides for developing a program to sem~i and to receive information
on a continuing basis fron the tourism industry.
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COP PORATI ON
QUESTION
How would you suggest that the Federal government establish
programs concerning foreign visitor facilitation, international visitor
information, and international travel promotion? What should the
budgets be?
ANSWER
The Federal government now has established programs in the
three areas indicated. These programs now suffer in administration
and execution because of conflicting policies, priorities and lack of
skilled personnel and funds. Basedonthe previous studies made in 1968 and
1970, today a total initial budget of about $60 million is indicated,
80% or $48 million for an international narketing program and 20% or
$12 million to cover foreign visitor facilitation activities and
the remaining Corporation activities specified in the Act.
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CORPOPATI ON
QUESTION
In Section 312(b) $9.5 million is authorized for the first
fiscal year of the new Corporation. A ceiling of 5 percent of these
funds is established to cover the Corporation's general administrative
costs, salaries or expenses of personnel and Board members, and
expenses of consultants and advisors. In your opinion, is $475,000
sufficient to cover these costs for one year? If not, what percentage
do you suggest and how should these funds be allocated amont the types
of expenses listed above?
ANSWER
We suggest the specification of 5 percentum ceiling in Sec.
312(b) be deleted. This would leave the allocation of funds as
en operation in the authorization and appropriation process and which
would take into account the directions contained in Sec. 312(a) of
the proposed Act with respect to funding levels required.
CORPORATION
QUESTION
What would be the proposed operating cost for U. S.-based
foreign visitors' centers and associated costs of the information and
informational materials to be distributed to the foreign visitors?
ANSWER
This proposal should be developed by the Corporation as part
of its first year organizational program.
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CORPORATION
QUESTION
How many offices does your industry or company have in
foreign countries? What are their budgets?
ANSWER
DATO is the national association of the travel industry.
Although several of its 1,200 members have offices abroad, DATA has
at present no offices in foreign countries. We understand other travel
industry association such as the Air Transport Association which are
DATO members, other travel-related association, and individual
companies are supplying this information.
CORPORATION
QUESTION
Can an employee of a quasi-public nonprofit corporation
represent the U. S. at international meetings, conferences, and
expositions as effectively as a government aqency representative?
ANSWER
Yes. Where governmental presence or credentials are
required, there is nothing to prevent the Secretary of State from
designating an official of the Corporation to act in such a
capacity. The President of the Corporation and his senior officials
would probably be better able to speak for, and advance the interests
of, the tourism industry in tourism promotional matters than
government agency officials.
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CORPORATION
QUESTION
Why should promotion for tourism be treated any differently
than our promotion efforts for agricultural products? Promotional
activities for agricultural products are based upon a collection of
assessmests on producers. Are there any other similar programs? -
ANSUER
Agricultural sales and tourism are distinctly separate
activities and promotional policies must reflect the special nature
of each.
Notwithstandina the differences which are more fully explained
below, United States Government funds are used to support a substantial
Federal promotion program for agricultural products. According to
the Proposed Budget for Fiscal Year 1980, the 1979 fiscal year program
for the foreign Agricultural Service of the Department of Agriculture
and the fiscal 1980 proposal are as follows: (in millions of dollars)
1979 eat. 1980 est.
Agricultural Attaches $ 15.5 $ 16.5
Commodity analysis and services 16.1 17.0
Market Development Activities 20.2 20.3
$ 51.8 $ 53.8
The Market Development Activities are described in the
budge as follows:
Market development activities.-This activity provides funding
support to about 45 commodity association (cooperators) and 3 regional
groups representing 37 State departments of agriculture that, under
FAS guidance and supervision, conduct an extensive world-wide market
development program on behalf of the U. S. farm sector. In addition,
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FAS develops and operates a world-wide system of multicommodity
promotional programs utilizing product exhibits, trade teams, trade
services, market information programs, and trade referral services to
expand overseas markets. To increase the effectiveness of USDA export
promotion efforts, a U. s. agricultural trade office was opened in May
in London, England. The Agricultural Trade Act of 1978 authorized the
establishment of between 6 and 25 of these offices."
Thus the U. s. Government 15 funding a promotional program
for support of u. S. agricultural products, something it should do no
less for in tourism.
Tourism promotion is different from agriculture in that the
latter is targeted on sale of goods and supports a homogenous sector
of the national economy. Thus, it can identify and use the cooperative
efforts of agricultural groups, such as soybean growers in joint efforts.
Tourism promotion, on the other hand, is targeted at providing
a service to people. It persuades foreign residents to visit the
United States. The goods and services used by these visitors are
consumed in the United States but they earn foreign currency for the
United States just as the export of U. S. products does. In 1978, the
United States earned $7.3 billion in foreign currency on sales of goods
and services consumed by residents of foreign countries visiting this
country. These sales were diffused throughout the country.
To the extent that foreign visitor expenditures in the United
States follow the pattern of domestic travelers, these visitors spent
29% of the total, or $2.3 billion, on food. As with the other
beneficiaries of tourist spending, it would be very difficult, if not
impossible to determine a formula to collect assessments for tourism
promotion from the more than 300,000 Individual food establishments
or their agricultural product suppliers who benefit from increased sales
of agricultural products in the United States.
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CORPORATION
QUES TI ON
How many tourism offices do foreign governments have in the
United States. This should not include offices under the guise of
Irish Airlines, Swiss Air, other government-owned airline offices.
Can you supply the Committee with information on how much each
foreign government spends in the U. S. promoting travel to their
country?
ANSWER
There are about 200 individual tourism office locations
in the United States pro:iding tourism information to the public
and the trade. This does not include Embassies, Consulates or
other diplomatic representation nor the national carriers. The
total promotional budget for these offices is not readily available.
However, foreign governments are estimated to have spent over $32.0
million in 1978 in measured media advertising their countries.
This does not include the substantial amounts spent by the national
carriers on destination advertising.
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CORPORATION
QUESTION
How many visitor facilitation centers are there now in the United
States? What are their staff, functions and budgets?
Can the Bureau of the Census travel data be done annually instead
of every five years? What would be the cost?
ANSWERS
There are no USTS Visitor facilitiation centers in the United
States
The industry has recommended that the quinquennial
National Travel Survey carried out by the Census Bureau in connection
with its Transportation Survey be considered as the benchmark survey
and that there be four annual updates. The 1977 survey cost about $2.4
million. The proposed updates at half scale would cost about
$1.2 million.
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CORPORATION
QUESTION
The Administration has called for an authorization level of $3
million for its funding of the government's role in tourism in the
Industry and Trade Administration. Various industry sources supported
an authorization of $30 million for a quasi-public corporation proposal.
what benefits can you foresee that would result from that expenditure
of an additional $6.5 million over the $3 million proposed by the
Administration? How would you suggest that money be spent? What
would be the result that you would project from such an expenditure?
AN SEE P
The $3 million called for by the Adoinistration would fund 50
positions in the Industry and Trade Admin:stratlon (ITA) of the
Department of Commerce eliminating the USTS as a separate agency in
1980. In its place a capability would be established to (a) collect
and analyze data on international tourism, (b) provide policy
recommendations, technical assistance, and coordination to governmental
organizations involved in tourism; and carry out federal responsibilities
for recognition of and participation in Federal Expositions.
The $30 million supported by various industry sources is the level
of funding authorized by Congress for the United States Travel Service
through FY 1979.
S. 1097 provides for $500,000 for the staff operation of the
Policy Council, $9,500,000 for the start-up expenses of the Corporation
which requires a far greater capability than the unit proposed by the
Department of Commerce. The Corporation would be considering and planning
programs to carry out or adhere to any number of the nineteen economic,
sixteen consumer, five environmental and natural resources and five
government operations goals and objectives included in the twelve national
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ANSWER (Contd)
policy statements set forth in the proposed National Tourism Policy
Act. Section 308 sets forth the initial purposes and activities of
the Corporation. The projected result would be an expedited study
of the funding levels required to carry a comprehensive tourism
development program with the Corporation so organized and funded
that it can put in place abroad a new marketing mechanism built on
the base of the existing United States Travel Service foreign field
operations to carry out an effective marketing program abroad plus
support activities in the United States.
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The Travel and Tourism Industry
An Economic Overview
by
Samuel N. Rosenblatt°
conducted for Discover America Travel Organizations
The purpose of this study/is to provide some perspective
on the role of the travel and tourism industry in the U.S.
economy, with particular emphasis on travel and tourism by
foreign visitors. The role of U.S. Government policy with
regards to the encouragement of goods and services exports,
including travel and tourism, will also be reviewed. Finally,
some ideas for public policy regarding the promotion of travel
and tourism by foreign visitors will be put forward.
Some of the characteristics of the travel and tourism
industry that make it an important potential candidate for a
fresh initiative by the Federal Government at this time in-
clude the following:
1. Tourism-related activities are ubiquitous. Indus-
tries that serve the needs of the tourist are found in
every county in the nation.
2. Tourism-related activities are major employers of
American labor throughout the nation. In 1976, it was
estimated that more than 3.8 million jobs were travel
and tourism rclated. These activities accounted for more
~Prcsident, SER Inc. Es. Kathleen Charles provided research
assistance in the preparation of this pener, especially for
Apnendix 1.
PAGENO="0205"
201
than l~ percent of total non_agricultural payroll era-
ployrnent in Nevada, Hawaii, and Vermont. In absolute
terms, California, Florida and Texas had at least 200,000
people enployed in providing these services in 1976.
3. Tourism-related activities generate employment that
is relatively recession-proof. In the l97~-75 recession,
total employment declined by some 2.2 million jobs,
whereas in tourism-related activities employment actually
2
rose by some 700,000 jobs.
13* Tourism-related activities are an efficient means of
generating new employment. It has been estimated that a
new job in the tourist industry can be generated with
about $25,000 to $28,000 of additional retail sales.
The cost of creating an additional job through public
service employment programs has been estimated to be as
3
high as $80,000. It has also been estimated that it takes
4
about $35,000 of goods exports to generate a new job.
S. Tourism-related activities do not require major new
expenditures of capital. The capita'~ infrastructure
needed to service tourism is presently in place. Hence,
any additional growth in tourism can easily be serviced
out of the existing stock of invested capital. That is,
PAGENO="0206"
202
we already have in place the needed transportation
network, accommodations facilitiec, and retail and
wholesale distribution channels to handle this increased
growth.
6. Tourism-related activities provide a quick pay off.
The income and employment generated from these activi--
ties provide an immediate benefit in the form of addi-
tional income streams. Foreign tourism provides an
immediate return flow of foreign exchange, which is
most critical at this time.
Within this broader context, the particular relevance
of travel and tourism by foreign visitors to the United States
economy and U.S. policy includes the following points:
1. Job creation and economic development. Travel by
foreign visitors to the United States enhances the
employment and income earning opportunities for American
workers and American firms. These opportunities are
especially important for minority and other disadvantaged
labor groups in the country.
2. Foreign exchange earnings. Increased travel and
tourism to the United Stares by foreigners will increase
PAGENO="0207"
203
the foreign demand for dollars. This will strengthen
the international value of the dollar) thereby depres-
sing the inflationary pressures that emanate from a
declining dollar internationally. It has been various-
ly estimated that a ten percent decline in the trade
weighted value of the dollar adds between 1 and 2 per-
cent to the rate of inflation. Furthermore, the U.S.
balance of payments problems will not be solved through
one or two simple solutions. These difficulties must
be dealt with with very specific and carefully directed
policy and program approaches. Increased receipts from
foreign travel will provide immediate means of paying
for oil imports.
3. Policy equality with goods exports. While the pro-
motion of exports has never been a high priority for
U.S. policy, promoting service exports has received
even less attention than goods trade. This imbalance
needs to be redressed because of the growing importance
of services domestically and internationally~
t~. Countering travel and tourism promotion programs
of foreign countries. As discussed below, virtually
all countries spend a great deal more than the U.S.,
on a per capita basis, in the promotion of their home
PAGENO="0208"
204
countries as destinations for foreign travellers. The
U.S. share of the tourist and travel market, in terms
of number of travellers and value of expenditures,
has remained virtually unchanged for almost the past
20 years -- around 7 to 8 percent for the former and
S
l~ to 15 percent for the latter. However, over this
almost 20-year period, the relative income and wealth
position of the United States has clearly declined,
indicating the increased relative capability of for-
eigners to be able to afford more travel abroad~ Un-
fortunately, for whatever reasons, they have not cho-
sen to increase their travel to the United States, pro-
portionate to their increased capability and economic
potential to travel to all destinations.
S. Overcoming non-tariff barriers. The recently con-
cluded multilaterial trade negotiations clearly repre-
3ent an historic breakthrough in the treatment of ser-
vices in international trade. It is most important that
this momentum not be lost and that attention and resour-
ces continue to be focused on the removal of these
barriers.
6. Private market failures. One of the principal justi-
fications for the establishn'mt of public programs of
PAGENO="0209"
205
any type is the need to fill the void left by private
market action or inaction. In the case of goods export
financing, one such void was felt to exist in the inter-
mediate maturity lending range, thereby justifying the
establishment of Export-Import Bank financing. A
directly analogous case can be made in the travel and
tourism industries. While it is clearly in the interest
of private carriers, private tour operators, and private
hotel, resort and recreation facility owners to promote
the use of their own facilities, it is not feasible for
them to utilize their own financial resources to promote
the U.S. as a destination for foreign travel. The direct
benefits to private firms from such efforts clearly are
too diffuse and uncertain to justify such expenditures.
For example, General Motors advertises its own cars abroad
for purchase by foreigners, but does not allocate any of
its promotional budget to tout the attractiveness of U.S.
cars in general. However, as with all other goods producers,
it is able to benefit from the availability of official fi-
xiancial support from the Export-Import Bank.
U.S. Balance of Payments
In elaborating on the conclusions just stated, it is most
useful to start from the perspective of the U.S. balance of
payments and the harmful effect it is having on the U.S.
61-144 0 - 80 - 14
PAGENO="0210"
206
economy in the form of inflation and economic stagnation.
This perspective also provides an appropriate vantage point
to assess and analyze the policy proposals put forth to deal
with the nation's international payments problems, and also
highlights the need for action on foreign travel and tourism
policy -
The U.S. merchandise trade balance in recent years has
exhibited persistent and large deficits. In all but two
years since 1971 this balance has been in deficit and the
estimated cumulative deficit for the three most recent years,
6
1977-1979, runs in the neighborhood of $93 billion.
What are the reasons for this performa:ice? First and
foremost, of course, is the cost of imported oil and the
increases in these costs that have taken place since the
Arab oil embargo in the fall of 1973. In 1978 the U.S.
paid out about $~S billion for petroleum and petroleum deri-
vative imports and is expected to spend around $58 billion this
year. Clearly, this has been the principal cause of our defi-
cit, leading to a depreciation in the international value of
the dollar, and contributing to U.S. domestic inflation and
stagnation.
A second factor put forward to explain these deficits
has been the long-run decline in u.s. international competi-
tiveness. This is evidenced by the decline in the U.S. share
of worldwide exports of manufactured goods. In the recent
past and for the foreseeable future competition for world
PAGENO="0211"
207
markets has been and is going to be intense. The U.S. will
be competing with other industrial countries, such as Japan
and the EC as in the past, but it will also experience
intensified conpetition from the advanced developing coun-
tries, such as Brazil, Mexico, Korea, Hong Kong, and Taiwan,
in the future. These coutries will not only be competitive
in the so-called light manufacturing, labor-intensive sec-
tors, but in some of the more capital and technology inten-
sive sectors, such as steel, shipbuilding, and electronics,
as well.
Since the causes of these cumulative deficits are dis-
parate, there is little sense in relying on a single solution.
In particular, the tendency among policy makers to rely almost
exclusively on the floating dollar to right these imbalances
is not realistic. For one thing, the rules of the new float-
ing game are still being formulated and, at best, they appear
to be quite imprecise. Second, the U.S. is unsure that other
countries can and will play the floating game even by its
understanding of those rules. It is only in recent months
that public talk of the so-called "dirty" float has stopped
appearing in the financial press. Third, the favorable price
effects on U.S. exports from dollar depreciation have come
to pass, if at all, only with lags much l~nger than anticipated
and to an extent that is much more limited than economic theory
would support. This latter result may be due to the fact that
much of U.S. trade is with countries whose currencies are tied
PAGENO="0212"
208
to the dollar, and that a large percentage of U.S. trade
is in goods whose demand is not especially price sensitive,
agricultural products, for example. ~" June 8, l979~
15. Earl Mazo, "The Export-Import Bank of the United
States, lg3~-l97~" (unpublished manuscript), 1976.
16. Telephone discussion `.iith Staff of the Department
of Agriculture.
PAGENO="0229"
225
Appendix 1
COUNTRY SUMNARY REPORTS
SPAIN
In Spain, tourism is a significant industry. In spite
of recent political turmoil and labor unrest, Spain still
has a travel surplus which has had a very positive effect on
the economy.
The tourism promotion efforts of both the public and
private sectors have been oriented primarily toward the inter-
national visitor.
National Tourism Policy
Without an explicit or mandated national tourism policy,
Spain's governmental tourism policy has tended to follow the
directives of ~national economic and social development plans.
The most recent objectives outlined in Spain's national
economic development plan include provisions to strengthen
the tourism industry in Spain. These provisions encourage
the tourist industry to promote greater income and employ-
ment; reduce regional and economic disparities; reduce sea-
sonal fluctuations in demand for services and increase recre-
ational and leisure facilities by preserving the countryside.
All of these measures should promote continued growth in in-
ternational visitor traffic to Spain.
Major Government Agencies and
Private Sector Bodies Involved
in Spanish Tourism
Located within the Ministry of Commerce and Tourism,
there is a Secretary of State for Tourism. This Department
is designed to promote tourism and regulate the tourist in-
dustry as well as develop, plan and provide educational and
technical assistance.
Many regional/local public and private sector bodies
exist which deal with tourism. The Interministerial Tourism
Commission is responsible for coordinating activities among
tourism agencies and other organizations.
PAGENO="0230"
226
FRANCE
HisLorically, domestic tounisn has been more important
to the French industry than foreign visitor traffic.
Due to the country's traditional attractiveness as a
tourist destination, France's balance of payments on tourism
has been consistently in a surplus position. One major pro-
blem confronted by the French tourist industry is the occur-
rence of seasonal peaks in demand for facilities - especially
during the annual French holiday season in summer.
National Tourism Policy
In 1937, a General Commission on Tourism was established
in order to promote international visitor traffic to France.
Recently these responsibilities were transferred to the
Ministry for Cultural Affairs and the Environment which re-
placed the former General Commission.
National random policy was defined in. the seventh five-
year economic and social develornont plan. This policy en-
couraged the tourist industry to improve rural areas; develop
leo-cost tourism facilities; ewuarid overaill demand for
tourism; and reduce the seasonal peaks in demand-
Major Government Agencies and
Private Sector Bodies Involved
in French Tourism
There is a Secretary of State for Tourism whose activities
focus on domestic and international promotion of tourism. This
agency upgrades hotel quality and trains personnel for the tour-
ist industry. In addition to the High Council, the National
Tourism Committee coordinates activities of public sector author-
ities with those of the private sector in tourist-related matters.
The Delegation for Regional Development and Promotion is one
national government agency which, among others, has direct involve-
ment in tourism development. Also, there are regional/local
public and private sector tourism bodies whose programs have a
major impact on tourism development.
Coordination among tourism agencies and other organizations
is carried out by the inter-minisleri-al coordination committee.
PAGENO="0231"
227
IRELAND
Tourism represents the second largest industry in the
Irish economy. This industry Provides Ireland with the
highest earnings per capita of any Western European country.
Tn the post-1969 years there has been a steep decline in
the number of foreign visitors to Ireland due to the onset of
ethnic and civil strife.
National Tourism Policy
Ireland has one of the most sophisticated national govern-
ment tourism programs. In 1939, the tourist act created the
Irish Tourist Board (ITB) whose members were all appointed by
the Ninister for Industry and Commerce.
This ITB is responsible for implementing national tourism
policy. National tourism policy objectives include: optirni-
zinc tourism's contribution to the national economy; improving
the quality of life bytaking measures to enhance the nation's
cultural heritage; conserving the nation's physical resources;
and promoting greater regional development.
Major Government Agencies and
Private Sector Bodies Involved
in Irish Tourism
The ITB (commonly known as "Bord Failte") has the prin-
cipal responsibility within the Irish government for develop-
ing tourism both domestically and abroad. Its planning tech-
niques include an overall tourism plan, a national tourism
development land-use plan; and an annual marketing plan.
The central government is actively involved in tourism
development through a program of state guarantees for private
sector loans for tourism development projects.
There is a Convention Bureau of Ireland which coordinates
meetings of state organizations with the private sector on
tourism matters. The Council for Education, Recruitment and
Training is responsible for the training of personnel for the
tourist industry.
Also, there are other government agencies, regional tour-
ism organizations and national private sector bodies having a
major impact on tourism development.
The means of coordinaticn among tourism agencies and
other organizations is inforr~il. Due to the compact size of
the Irish Republic, there are open channels of communication.
PAGENO="0232"
228
UNITED KINGDOM
Coupled with Britain's internal economic problems, the
onset of worldwide recession in 1973-1974 caused a steep
decline in the United Kingdom's domestic tourism market in
recent years.
On the other hand, overseas visitor traffic continued
to increase during the recessionary years; and since 1968,
Britain's international tourism balance of payments has been
in a surplus position.
National Tourism Policy
The governmental tourism policy in the United Kingdom
is defined by both the Development Tourism Act of 1969 and
the 1974 Policy Guidelines laid down by the central government.
The 1969 Tourism Act articulated measures to encourage
tourism development. These measures include: financing a
scheme of hotel development; giving selective financial aid
to particular projects; organizing the registration of tour-
ist accommodations, and creating new statutory organizations
to carry out tourism promotion functions.
The 1974 new policy guidelines were formulated by the
Department of Trade. These guidelines direct various boards
to concentrate efforts in developing areas which have suffered
from unemployment, depressed income and general underdevelop-.
ment.
Major Government Agencies and
Private Sector Bodies Involved
in United Kingdom Tourism
The British Tourist Authority (ETA), whose members-are
appointed by the Department of Trade and Industry, is respon-
sible for promoting tourism to Great Britain from overseas.
The English Tourist Board and other national tourist boards
perform research, planning, development and promotional func-
tions for England as a whole.
There are other central government agencies, regional/local
public and private sector tourism bodies, in addition to national
private sector bodies which have programs affecting tourism
development.
There is coordination among and between central government
agencies and tourism bodies at the regional and local level.
PAGENO="0233"
229
MEXICO
The foreign visitor traffic to and through Mexico has
had a significant impact on the domestic economy since there
is such a large disparity between the average disposable
income of foreign visitors and that of the Me~ican citizen.
Since the 1977 Lopez Portillo Administration, Mexico
has made a concerted attempt to refurbish her image as a
traditionally desirable tourism destination. The recent
devaluation of the peso has made Mexico even more competi-
tive with other foreign destinations on a cost basis.
Foreign exchange earnings from international visitor
traffic to Mexico have counteracted large Mexican balance
of trade deficits in recent years.
Although the Mexican government is working on a more
comprehensive tourism plan, the tourism industry is hampered
by the nverconcentration of resorts in some areas of the
country. This has caused an overload of capacity during
high tourist seasons or an idle capacity out of season. The
tourism infrastructure throughout the country still needs to
be improved and expanded.
- National Tourism Policy
In 19Th, the Law for the Promotion and Development of
Tourism provided enabling legislation for' implementing Mexi-
can national tourism policy. The Department of Tourism was
charged with certain responsibilities including: policy
implementation; the development of areas with tourist poten-
tial; the registration/regulation of prices in tourism ser-
vices; the encouragement of foreign investment and the train-
ing of tourism service personnel.
In 1977, the government emphasized tourism development
as a means for alleviating Mexico's severe balance of payment
problems. The 1977-1982 national tourism plan was a first
step in the reorganization of the federal government's role
in tourism.
Major Government Agencies and
Private Sector Bodies Involved
in Mexican Tourism
With the reform bill of the Mexican Congress in 1977,
the Secretariat of Tourism `,;as designated as a coordinating
body of tourism within the federal government. Essentially,
this body directs tourism policy and regulates the tourist
PAGENO="0234"
230
t1EX~CG (cont'd.)
industry. Also, the Secretariat provides development assis-
tance to the public and private sectors.
The National Tourism Council is a consultative body deal-
ing vith promotional functions for tourism. Its members are
appointed by the President of the Republic and there is one
-representative from the private industry.
FONATUR, the National Fund for the Promotion of Tourism,
is a development bank of the government. The National Fian-
ciere S.A. is a trustee for FONATUR since it is funded direct-
ly by the Mexican Government through the Ministry of Finance
and Public Credit. Currently, FONATUR is in the process of
trying to diversify its sources of funds from the public sec-
tor to the private sector as `.-~ell as international develop-
ment banks. -
FONATUR guides and promotes Mexican companies to invest
in ncv areas and tourist centers. FONATUR is also responsible
for acquiring and selling bonds.
The Nacionale Hotelera (NH) is a government-owned hotel
corporation which has plans for constructing additional hotel
corrplexes in new development areas.
There are other federal agencies, regional/local public
and private sector tourism bodies, in addition to national
private sector bodies which have a major impact on tourism
development.
PAGENO="0235"
231
CANADA
In Canada, both domestic and international tourism are
vital elements in the economy. Foreign tourism has been
Canada's fifth largest earner of foreign exchange.
Since the Canadian tourism industry has encountered a
significant increase in international competition, tourism
policy has been directed toward imProving the declining or
insufficient physical tourism plants in many areas.
National Tourism Policy
Due to the historic indemondence of Canada's provinces
there exists a federal as opposed to a national tourism
policy.
In the 1970's, the Minis~cr of the Department of Trade,
Industry and Commerce was charged with the responsibility
for directing federal tourism polIcy and development.
Major Governmnnt Agencies and
Private Sector Bodies Involved
in Canadian Tourism
The Canadian Government Office on Tourism (CGOT) is
the principal federal government agency which discharges
ministerial responsibilities and implements federal tourism
policy. The COOT has a marketing branch, a policy planning
branch, and an industry relations branch.
In addition to this federal agency there are other
agencies, regional/local public and private sector bodies
which have a major impact on tourism development. The
Travel Industry Association of Canada is another body which
represents an amalgamation of commercial and governmental
organizations directly involved with tourism.
Coordination Among Tourism Agencies
and Organizations
The principal tourism coordinating body is an inter-
departmental committee made up of representatives from
fourteen different departments whose programs relate to
tourism policy. This body is chaired by the head of CGOT.
Also, -there is coordination bctween federal agencies and
tourism bodies at the regional and local levels.
PAGENO="0236"
232
JA PA
Domestic tourism as well as international tourism are
important to the national economy. The vast majority of
foreign tourists travelling to Japan have usually confined
their visits to the large inter-urban corridor between
Tokyo and the Kyoto-Osaka area on the Southeast coast of
Honshu. There is little development of tourism facilities
in the interior of the country, due to the lack of visitor
traffic. There is little ecomcmic incentive for either the
central government or the private sector to facilitate
travel to those areas.
The Japanese balance of travel recoipts and expendi-
tures has been in deficit since 1968. This deficit grew
to serious proportions after 1971. However, during the
same period Japan was running a substantial surplus on its
current account balance, largaly counteracting the negative
impart of the travel balance deficit.
National Tourism Policy
The Japanese government has had a long history of in-
volvorent in tourism activities. A comprehensive policy on
tourism was not developed until the early 1960's. In 1963,
the Diet enacted the Tourism Basic Law which defines Japanese
national tourism policy. This law did not assign any addi-
tional responsibilities to the Department of Tourism within
the Transport Ministry beyond those stated in previous legis-
lation. This law delegated responsibility for implementing
national tourism policy to the DOT.
A Tourism Policy Council was created which was charged
with advising the Cabinet and Prime Minister on important
tourism and recreational matters when necessary.
The law describes national tourism policy in general terms
and does not go beyond the level of overall principles and aims.
The Cabinet and various ministries determine which specific
measures should be taken to implement policy over tine.
Major Government Agencies and
~eSectorBodies Involved
~aneseDourism~
The Department of Tou~ the Ministry of Transport
is in theory responsible verall administration of
the Japanese government'~ activities. Actually, the
Deparoraent does not atter ortake active coordination
of tourism policies and p a other departments and
ministries. To the extent odination does exist - it is
carried out by the Inter-I al Liaison Council.
PAGENO="0237"
233
JAPAN (cont'd.)
The Tourism Department does administer tourism policies
and programs carried out at the prefectural and local levels
and it sets policy guidelines for the Japanese National
Tourist Organization, responsible for international tourism
promotion.
The Japanese National Tourist Organization is a nonpro-
fit organization solely devoted to international travel pro-
motion. It is subsidized by the government and supervised
by the Ministry of Transport. JNTO has an administrative
council whici-i investigates important matters relating tQ the
operation of the organization's activities. JNTO maintains
six departments in the head office and sixteen overseas of-
fices in key cities of the world.
Other Central Government Agencies
~Imp~
on Tourlsm
The overall organization of tourism in Japan is elaborate
and involves at least fourteen other government agencies
whose programs are considered to have a major impact on tour-
ism development.
Although two formal mechanisms for interagency coordi-
nation exist within the Japanese government, the degree of
coordination reached in tourism programs is limited and hap-
hazard. Due to the consensus nature of nuch decision-nakiflg
in Japan, there is informal cormounication between government
agencies and industry tourism bodies on the regional and local
levels.
PAGENO="0238"
234
HONG KONG
- The Hong Kong government has not identified the actual
difference between government expenditures on tourism-related
activities and net receipts to the colony's economy from
tourism. Expenditures from tourism are a significant part of
Hong Kong's international trade balance. Tourism earnings
have recently offset the negative effects of Hong Kong's
severe trade deficits.
Due to the laissez-faire orientation of Hong Kong's
corn-sorce, there is a lack of direct involvement in tourism
polIcy unless strong economic or social pressures exist..
In the absence of strong economic or' political pressures on
the tourist industry, the government does not intervene and
does not have an active role in tourism policy.
In 1950, the government provided funds forthe establish-
ment of a Hong-Kong Tourist Association - a statutory quasi-
public agency. Since the government has no specific tourism
policy guidelines, individual policy issues and implementation
problems are influenced by prominent individuals in the pub-
lic and private sectors. Therefore, the unusual composition
of oNe colony's government and its traditional non-intervention
in commerce make tourism policy in Hong Kong unlike that of
any other government.
Major Government Activities
and Private Sector Bodies
Involved f~TFong Kong Tourism
The quasi-public Hong Kong Tourist Association remains
the major force in tourism promotion. Within the formal
structure of government, the Economic Services Branch has
overall policy responsibility for tourism.
The EKTA divides its activities into three major cate-
gories. They are: promotion, public relations, and "special
projects' which involve technical assistance provided to the
local tourism authority. The Association has membership
drawn from the tourist industry in Hong Kong and the govern-
ment provides more than 95% of the Association's annual
revenues.
The coordination between the HKTA and other agencies of
the Colonial government is for the most part informal, based
on personal ties among individuals.
PAGENO="0239"
235
JAPAN (cont'd.)
The Tourism Department does administer tourism policies
and programs carried out at the prefectural and local levels
and it sets policy guidelines for the Japanese National
Tourist Organization, responsible for international tourism
promotion -
The Japanese Mational Tourist Organization is a nonpro-
fit organization solely devoted to international travel pro-
motion. It is subsidized by the government and supervised
by the Ministry of Transport. JNTO has an administrative
council which investigates important matters relating to the
operation of the organization's activities. JNTO maintains
six departments in the head office and sixteen overseas of-
fices in key cities of the world.
Other Central Government Agencies
with Programs Having Major Impacts
on Tourism
The overall organization of tourism in Japan is elaborate
and involves at least fourteen other government agencies
whose programs are considered to have a major impact on tour-
ism development.
Although two formal mechanisns for interagency coordi-
nation exist within the Japanese government, the degree of
coordination reached in -tourism programs is limited and hap-
hazard. Due to -the consensus nature of much decision-making
in Japan, there is informal communication between government
agencies and industry tourism bodies on the regional and local
levels.
PAGENO="0240"
236
HONG KONG
The Hong Kong government has not identifled the actual
difference between government expenditures on tourism-related
activities and net receipts to the colony's economy from
tourism. Expenditures from tourism are a significant part of
Hong Kong's international trade balance. Tourism earnings
have recently offset the negative effects of Hong Kong's
severe trade deficits.
Due to the laissez-faire orientation of Hong Kong's
commerce, there is a lack of direct involvement in tourism
policy unless strong economic or social pressures exist.
In the absence of strong economic or political pressures on
the tourist industry, the government does not intervene and
does not have an active role in tourism policy.
In 1950, the government rrovided funds for the establish-
ment of a Hong-Kong Tourist Association - a statutory quasi-
public agency. Since the govsrnment has no specific tourism
policy guidelines, individual molicy issues and implementation
problems are influenced by proninent individuals in the pub-
lic and private sectors. Therefore, the unusual composition
of the colony's government and its traditional non-intervention
in commerce make tourism policy in Hong Kong unlike that of
any other government.
Major Government Activities
and Private Sector Bodies
Involved in Hona Kon° Tourism
The quasi-public Hong Kong Tourist Association remains
the major force in tourism promotion. Within the formal
structure of government, the Economic Services Branch has
overall policy responsibility for tourism.
The HKTA divides its activities into three major cate-
gories. They are: promotion, public relations, and "special
projects" which involve technical assistance provided to the
local tourism authority. The Association has membership
drawn from the tourist industry in Hong Kong and the govern-
ment provides more than 95% of the Association's annual
revenues.
The coordination between the HKTA and other agencies of
the Colonial government is fcr the most part infor'mal based
on personal ties among individuals.
PAGENO="0241"
237
Ms. MIKuLsKI. Now we are going to hear from those airplane
people we just heard about. Could the panel with the Air Transport
Association-Mr. Philion, Mr. Montgomery, Mr. Holt, and Mr.
Lewis-come forward. Would you introduce the members of the
panel.
STATEMENTS OF NORMAN PHILION, EXECUTIVE VICE PRESI-
DENT, AIR TRANSPORT ASSOCIATION OF AMERICA; JAMES
MONTGOMERY, SENIOR VICE PRESIDENT AND ASSISTANT TO
THE PRESIDENT, PAN AMERICAN WORLD AIRWAYS, INC.;
DAVID HOLT, VICE PRESIDENT, PASSENGER SALES, WEST-
ERN AIRLINES, INC.; AND ARTHUR D. LEWIS, PRESIDENT,
AMERICAN BUS ASSOCIATION
Mr. PHILI0N. My name is Norman Philion, executive vice presi-
dent of the Air Transport Association of America, which represents
the scheduled airlines of the United States. This is Mr. James
Montgomery, who is senior vice president and assistant to the
president of Pan American Airways, and this is David Holt, who is
vice president of passenger sales of Western Airlines.
Ms. MIKuL~sKI. Mr. Lewis is not with you?
Mr. PHILI0N. We understood he was to be a part of a transporta-
tion panel, but I do not see him.
Ms. MIKULSKI. Would you just proceed with your testimony. We
would like to welcome you here.
Mr. PHILI0N. Thank you. We appreciate the opportunity to pre-
sent the views of the airline industry on 5. 1097, the National
Tourism Policy Act. The airlines stongly endorse the bill, and we
urge its favorable consideration by the subcommittee.
Our statements for the record explain why we believe a national
tourism policy and a new Federal program to carry out that policy
are needed.
Our summary presentations this morning will concentrate on the
issue underlying most of the questions about the bill, and that is
whether and to what extent Federal funding is required, and we
will also offer four suggestions for amending the Senate bill that
we believe can make it more effective.
We will try to be as brief and responsive to the questions posed
by the subcommittee as possible. We hope that our prepared state-
ments will be made a part of the record.
Ms. MIKuLSKI. All prepared statements submitted by members of
the panel will be included in toto.
Mr. PHILI0N. Thank you.
Madam Chairman, in our opinion, the issue underlying most
questions about S. 1097 is whether and to what extent Federal
funding should be authorized. We believe that if a Federal travel
and tourism promotion effort is required in the overall public
interest-and in our opinion it is-then that effort should be at
public expense. There are several valid reasons for such expendi-
tures, and I think you have heard several of those this morning,
and we would like to touch on three of them.
First, the beneficiaries of travel to the United States are not just
those private companies actively engaged in travel promotional
activities abroad. Other domestic companies and interests, large
and small, also benefit even though they cannot or do not engage
B1_1L~L4 0 - 80 - 16
PAGENO="0242"
238
in foreign promotional activities. Indeed, the United States econo-
my is the greatest beneficiary of travel earnings, and that alone
justifies the Federal role in promoting travel growth and assuring
the widest possible distribution of its economic benefits. These are
among the basic purposes of the 1961 Act, and most certainly
should be a part of any successor legislation.
Second, government and private industry have quite separate
and distinct roles in overseas travel promotion. Last year, the
airline members of the Air Transport Association spent about $36
million for advertising in foreign countries to promote travel to the
United States. Other segments of private industry also are engaged
in extensive advertising and promotional efforts abroad.
But these very large expenditures are made to promote the
highly competitive travel products of individual companies, not the
overall national interest in strengthening the domestic and foreign
commerce of the United States, which is one of the underlying
objectives of the 1961 Act. Although private industry efforts un-
doubtedly contribute to that larger national interest, their bottom
line purpose, of necessity, is and must be to increase the business
of individual companies.
Third, private sector travel promotion expenditures, whatever
their magnitude, do not replace the need for a coordinated Federal
program to stimulate travel to all parts of the United States on the
broadest possible basis.
Nor do they diminish the need to encourage the sale of the entire
range of travel products and services available throughout the
domestic economy whether or not the domestic interests involved
are large or small, public or private, or whether they are able or
willing to promote their individual products and services in the
foreign marketplace.
In short, Federal endeavors do not substitute for the extensive
and highly competitive promotional efforts of private industry, and
the efforts of those in private industry who are able to promote
travel to the United States cannot be a substitute for the needed
Federal programs.
During Senate Commerce Committee consideration of S. 1097, we
were requested to explore alternative sources of funding for the
public corporation. As reflected in attachment A [see p. 252], we have
examined several such possible funding sources.
Our evaluation of alternative funding sources led us to conclude
that the appropriation of Federal funds is the only realistic and
equitable method of financing a program having such wide and
diverse national interests.
As illustrated in the attachment, each of the alternatives has
serious flaws. Some are inappropriate or unrealistic in legal, politi-
cal, or foreign relations terms. Some would raise too little money to
be worthwhile. A number of others are questionable simply be-
cause the private tourism industry permeates national economic
fabric so completely.
Many actual and potential beneficiaries of the Federal program
are literally impossible to isolate. Our conclusion remains that
general revenues constitute the only fair and meaningful source of
Federal travel promotion funding.
PAGENO="0243"
239
We have four suggestions for amending the bill for your consider-
ation. They relate to facilitating border-crossing requirements af-
fecting foreign visitors, assuring the full use of available marketing
opportunities in stimulating demand for travel to the United
States, encouraging the use of U.S. carriers, and adequate funding
for the corporation.
Section 101(b)(4) of the bill states that it is the purpose of the
National Tourism Policy Act to implement a national tourism
policy that will:
Encourage the free and welcome entry of individuals traveling to the United
States, in order to enhance international understanding and good will, consistent
with immigration laws, the laws protecting the public health, and the laws govern-
ing the importation of goods into the United States.
While that is a useful declaration of purpose, we do not believe it
is specific or strong enough to cure the host of entry and border-
crossing difficulties which frequently face U.S. visitors.
We believe the bill should recognize that it is the Government,
and our complex Agriculture, Customs, Immigration, Public
Health, and visa requirements and practices, which impose bur-
dens and delays on arriving visitors-inconveniences rarely en-
countered by visitors to other countries that compete in the inter-
national travel marketplace. If we are really serious about increas-
ing travel to the United States, then a serious effort is necessary to
simplify our entry procedures.
To that end we suggest that S. 1097 be amended to make abso-
lutely clear the Government's obligation to facilitate the entry of
foreign visitors and to simplify our border-crossing formalities.
The legislation should specifically require the corporation and
the council to initiate within 60 days, through appropriate adminis-
trative action, procedural changes providing measurable relief, and
to recommend legislation where needed action is prevented by
existing law.
Section 308(b) of the bill states that, "The primary purpose and
activity of the corporation shall be developing and administering a
comprehensive tourism program designed to stimulate and encour-
age travel to the United States by residents of other countries."
Then section 308(c) goes on to authorize specific corporation ac-
tivities in this connection. Missing from this list of authorized
activities, however, is any specific reference to the kind of market-
ing programs developed under the 1961 act, programs which must
be strengthened, rather than diminished, by any successor legisla-
tion.
To avoid any possible misunderstanding about the need for and
importance of such corporation sponsored marketing programs, we
believe section 308(c) of the bill should be amended to specifically
authorize, "establishing marketing programs to stimulate demand
for travel to the United States, including the use of all appropriate
public information and communication media."
Any legislation which does not address the subject of marketing
by specific reference would be seriously deficient, in our opinion,
and may result in questions in the future about the intent of the
law.
PAGENO="0244"
240
Third, among the corporate activities specifically authorized in
section 308(c) of the bill is "encouraging to the maximum extent
feasible travel to and from the United States on U.S. carriers."
The provision is identical to that contained in the 1961 act,
originally adopted in recognition of the fact that travel earnings of
U.S. carriers providing transportation to and from the United
States significantly contributed to the economic objectives of the
statute.
Moreover, it was widely recognized that the travel promotion
programs of other governments involved substantial efforts de-
signed to promote the use of the national carrier.
The effects of this provision of the 1961 act have not been signifi-
cant. Secretaries of Commerce occasionally have urged the use of
U.S. carriers as a part of periodic efforts to improve the transporta-
tion service account.
While the U.S. Travel Service has worked closely with the U.S.
carriers in the development and operation of various marketing
programs, U.S. Travel Service offices abroad, unlike their foreign
counterparts, have not strongly and openly urged foreign visitors to
use U.S. carrier service.
Perhaps this is because it was not considered feasible or that it
was better to be neutral in an effort to have friendly relations with
all carriers serving the U.S. market, including foreign carriers.
We believe thatthe corporation's marketing programs should be
as effective as those of foreign governments, including the encour-
agement of the use of national carriers.
Either the term "to the maximum extent feasible" should be
deleted from section 308(c), or the corporation at least should re-
ceive some other clear directive to promote the use of U.S. carriers
to the same degree it promotes the sale of other U.S. travel prod-
ucts and services.
Finally, section 312(b) of the bill authorizes an appropriation of
$9.5 million for the expenses of the corporation for the fiscal year
ending September 30, 1980. Section 312(a) requires the corporation
to immediately undertake a comprehensive study of future funding
requirements "p * * to effectively implement a comprehensive
tourism development program," as well as a study of alternative
funding measures.
The Senate concluded that while $9.5 million was adequate for
organizing the corporation, additional study and further congres-
sional consideration at some time in the future are necessary
before any final decisions can be made on funding requirements
and methods.
This overall subject matter has been under study for over 5
years, and there is ample material and data in the record on the
elements and costs of the effort necessary "~ * * to effectively
implement a comprehensive tourism development program," as re-
quired by section 312(a).
For example, on the basis of marketing plans and targets dis-
cussed during the course of the extensive ongoing policy review
hearings, we believe we fully justified a first-year authorization for
expenditures up to $48 million for corporation marketing oper-
ations.
PAGENO="0245"
241
While we would have hoped that the time had arrived to resolve
this matter, we understand the reasons for the Senate's conclusions
on the prudence of further study. However, the studies required
under section 312(a) should be accomplished and considered in the
shortest possible period of additional time.
We urge that section 312(a) of S. 1097 be amended to require that
a recommended budget formula for future years be based on a per
~apita, a proportion of sales, or some other similar sales expendi-
ture formula now utilized so effectively by other governments and
the private sector.
Madam Chairman, that concludes my summary presentation.
[Testimony resumes on p. 260.]
[Mr. Philion's prepared statement and attachment follow:]
PAGENO="0246"
242
Statement of Norman Philion
Executive Vice President
Air Transport Association of America
Before the Subcommittee on Transportation and Commerce
of the Committee on Interstate and Foreign Commerce
U.S. House of Representatives
on S. 1097
July 25, 1979
My name is Norman Philion. I am Executive Vice President of the Air Transport
Association of America, which represents virtually all of the scheduled airlines of
the United States. I am accompanied by James Montgomery, Senior Vice President of
Pan American World Airways, and by David Holt, Vice President-Passenger Sales of
Western Airlines.
We appreciate the opportunity to present the views of the airline industry on
S. 1097, the National Tourism Policy Act. The airlines strongly endorse S. 1097
and we urge its favorable consideration by the Subcommittee. Our statements will
concentrate on why we believe a national tourism policy and a new federal program
to carry out that policy are needed. We also will discuss the issue underlying most
of the questions about S. 1097 -- that is, whether and to what extent federal fund-
ing is required, and we will offer four suggestions for amending the Senate bill to
make it more effective.
In 1961, the United States joined the ranks of most of the world's advanced
nations in recognizing the social and economic importance to all segments of society
of increasing travel and tourism from other countries. With the enactment of the
International Travel Act of 1961, Congress decided there was a need for the Federal
Government to undertake an overseas travel promotion program to compete with
other governments for international tourism -- a program calling for the assignment
of personnel and the establishment of offices abroad, and the use of advertising and
PAGENO="0247"
243
other promotional efforts in foreign countries, all for the purpose of encouraging
travel to and within the United States on an official basis, and in behalf of all
U.S. interests. From the outset, this federal endeavor was intended, like that of
other governments, to supplement the extensive, but highly competitive promotional
efforts of private industry, and to assure that promotional activities which can only
be accomplished effectively under government auspices were carried out.
Thus, for nearly two decades, there has been a broad national recognition of
the importance of the U.S. travel promotion program, and of the need to assure its
adequacy and effectiveness. It was for this reason, and because of numerous questions
about related government policy coordination, that an exhaustive Congressional policy
review was initiated to consider ways to strengthen the federal role and to make it
more effective. This review, of course, has led to Senate passage of S. 1097, and
to your current consideration of the bill.
Need for New Policy and Program
During the several policy review and other related hearings over the past two
years, airline industry executives have strongly urged the adoption of a broad,
Congressionally-mandated national tourism policy, and the establishment of a cabinet
level coordinating council, as suggested in S. 1097. The need for such a policy and
a high-level coordinating body was most recently demonstrated when the Subcommittee
considered H.R. 2795 in response to another in a series of arbitrary policy shift
initiatives which would have eliminated all overseas promotion activities of the U.S.
Travel Service contrary to the 1961 Act.
The airlines agree with the conclusions reached during the policy review on the
the urgent necessity of making the federal program more effective by strengthening
its management, improving its resources, and assuring policy consistency and coor-
PAGENO="0248"
244
dination. Notwithstanding continuing Congressional support, the U.S. Travel Service
has experienced repeated and increasingly serioqs policy coordination problems, and
has faced numerous administrative and budget difficulties within the Executive Branch.
Solution of these problems and difficulties, in our opinion, requires a new national
policy statement making Congressional determinations about the public interest in
travel and tourism unmistakenly clear to all concerned.
The airlines also strongly support the public corporation concept of administer-
ing a federal travel promotion program. This was the approach suggested in the
Report of the Presidential Commission on Travel in 1968, and endorsed by nearly all
of the witnesses during the recent tourism policy review hearings. It is the concept
embodied in 5. 1097. Its basic purpose is to provide a means for performing a
function required in the public interest that is not generally considered a typical
government-type operation, and where business proficiency, quick and effective
response capability, and a minimum of unnecessary bureaucratic constraints are
essential. In short, we believe that where the government must become involved in
promotional and marketing activities, as it must here, a business-type management
system unique to government is required. A public corporation is the best means of
providing such system, in our opinion, and of assuring the employment of a staff of
experienced travel and tourism promotion professionals.
The Underlying Issue of Funding
The issue underlying most questions about S. 1097 is whether and to what extent
federal funding should be authorized. We believe that if a federal travel and tourism
promotion effort is required in the overall public interest, and in our opinion it is,
then that effort should be at public expense. There are several valid reasons for
such expenditures.
PAGENO="0249"
245
First, the beneficiaries of travel to the United States are not Just those
private companies actively engaged in travel promotional activities abroad.
Other domestic companies and interests, large and small, also benefit even
though they cannot or do not engage in foreign promotional activities.
Indeed, the United States economy is the greatest beneficiary of travel
earnings and that alone justifies the federal role in promoting travel growth
and assuring the widest possible distribution of its economic benefits.
These are among the basic purposes of the 1961 Act, and most certainly
should be a part of any successor legislation.
Second, government and private industry have quite separate and distinct
roles in overseas travel promotion. Last year, the airline members of the
Air Transport Association spent about $36 million for advertising in foreign
countries to promote travel to the United States. Other segments of
private industry also are engaged in extensive advertising and promotional
efforts abroad. But these very large expenditures are made to promote
the highly competitive travel products of individual companies, not the
overall national interest in strengthening the domestic and foreign commerce
of the United States, which is the underlying objective of the 1961 Act.
Although private industry efforts undoubtedly contribute to that larger
national interest, their bottom line purpose, of necessity, is and must be
to increase the business of individual companies.
Third, private sector travel promotion expenditures, whatever their magni-
tude, do not replace the need for a coordinated federal program to stim-
ulate travel to all parts of the United States on the broadest possible
basis. Nor do they diminish the need to encourage the sale of the entire
range of travel products and services available throughout the domestic
PAGENO="0250"
246
economy whether or not the domestic interests involved are large or small,
public or private, or whether they are able or willing to promote their
individual products and services in the foreign marketplace. In short,
federal endeavors do not substitute for the extensive and highly compet-
itive promotional efforts of private industry, and the efforts of those in
private industry who are able to promote travel to the United States
cannot be a substitute for the needed federal program.
During Senate Commerce Committee consideration of S. 1097, we were requested
to explore alternative sources of funding for the public corporation. As reflected in
Attachment `A', we have examined several such possible funding sources including:
* Issuance of bonds or stocks;
* Diversion of part or all of the revenue produced by an existing tax;
* A new tax on foreign tourists at whom federal marketing efforts would be
aimed;
* A new tax on U.S. citizens departing the country;
* Special federal sales taxes on tourist goods or services;
* Solicitation of subscriptions or memberships from firms in private industry
which might expect to profit from the federal promotion effort, and from
* governmental bodies of regions, states, counties, and municipalities where
economic benefit could be anticipated from increased tourist volume; and
* Income from miscellaneous revenue producing activities which might be
undertaken by the public corporation.
Our evaluation of alternative funding sources led us to conclude that the
PAGENO="0251"
247
appropriation of federal funds is the only realistic and equitable method of financing
a program having such wide and diverse national interests. As illustrated in the
attachment, each of the alternatives has serious flaws. Some are inappropriate
or unrealistic in legal, political, or foreign relations terms. Some would raise too
little money to be worthwhile. A number of others are questionable simply because
the private tourism industry permeates national economic fabric so completely. Many
actual and potential beneficiaries of the federal program are literally impossible to
isolate. Our conclusion remains that general revenues constitute the only fair and
meaningful source of federal travel promotion funding.
Suggested S. 1097 Amendments
We have four suggestions for amending 5. 1097 for your consideration. They
relate to facilitating border-crossing requirements affecting foreign visitors, assuring
the full use of available marketing opportunities in stimulating demand for travel to
the United States, encouraging the use of U.S. carriers, and adequate funding for the
corporation.
Section 101 (b) (4) of the bill states that it is the purpose of the National
Tourism Policy Act to implement a national tourism policy that will:
"Encourage the free and welcome entry of individuals traveling to the
United States, in order to enhance international understanding and good-
will, consistent with immigration laws, the laws protecting the public
health, and the laws governing the importation of goods into the United
States."
While that is a useful declaration of purpose, we do not believe it is specific
or strong enough to cure the host of entry and border-crossing difficulties which
frequently face U.S. visitors. We believe the bill should recognize that it is the
PAGENO="0252"
248
government, and our own complex Agriculture, Customs, Immigration, Public Health
and visa requirements and practices, which impose burdens and delays on arriving
visitors -- inconveniences rarely encountered by visitors to other countries that com-
pete in the international travel marketplace. If we are really serious about increas-
ing travel to the United States, then a serious effort is necessary to simplify our
entry procedures.
To that end, we suggest that 5. 1097 be amended to make absolutely clear the
governments obligation to facilitate the entry of foreign visitors and to simplify our
border-crossing formalities. The legislation should specifically require the corporation
and the council to initiate within 60 days, through appropriate administrative action,
procedural changes providing measurable relief, and to recommend legislation where
needed action is prevented by existing law.
Section 308 (b) of the bill states that "the primary purpose and activity of the
corporation shall be developing and administering a comprehensive tourism program
designed to stimulate and encourage travel to the United States by residents of
other countries." Then Section 308 (c) goes on to authorize specific corporation
activities in this connection. Missing from this list of authorized activities, however,
is any specific reference to the kind of marketing programs developed under the 1961
Act -- programs which must be strengthened, rather than diminished, by any
successor legislation.
To avoid any possible misunderstanding about the need for, and importance of
such corporation sponsored marketing programs, we believe Section 308 (c) of S. 1097
should be amended to specifically authorize "establishing marketing programs to
stimulate demand for travel to the United States, including the use of all appropriate
public information and communication media." Any legislation which does not address
PAGENO="0253"
249
the subject of marketing by specific reference would be seriously deficient, in our
opinion, and may result in questions in the future about the intent of the law.
Among the corporate activities specifically authorized in Section 308 (c) of
the bill is "encouraging to the maximum extent feasible travel to and from the
United States on U.S. carriers.' The provision is identical to that contained in the
1961 Act, originally adopted in recognition of the fact that travel earnings of U.S.
carriers providing transportation to and from the United States significantly contri-
buted to the economic objectives of the statute. Moreover, it was widely recognized
that the travel promotion programs of other governments involved substantial efforts
designed to promote the use of the national carrier.
The effects of this provision of the 1961 Act have not been significant.
Secretaries of Commerce occasionally have urged the use of U.S. carriers as a part
of periodic efforts to improve the transportation service account. And while the
U.S. Travel Service has worked closely with the U.S. carriers in the development and
operation of various marketing programs, U.S. Travel Service offices abroad, unlike
their foreign counterparts, have not strongly and openly urged foreign visitors to use
U.S. carrier services. Perhaps this is because it was not considered "feasible", or
that it was better to be neutral in an effort to have friendly relations with all
carriers serving the United States market, including foreign carriers. We believe
that the corporation's marketing programs should be as effective as those of foreign
governments, including the encouragement of the use of national carriers. Either
the term "to the maximum extent feasible" should be deleted from Section 308 (c),
or the corporation should receive some other clear directive to promote the use of
U.S. carriers to the same degree it promotes the sale of other U.S. travel products
and services.
Section 312 (b) of the bill authorizes an appropriation of $9.5 million for the
PAGENO="0254"
250
expenses of the corporation for the fiscal year ending September 30, 1980.
Section 312 (a) requires the corporation to immediately undertake a comprehensive
study of future funding requirements "to effectively implement a comprehensive
tourism development program, as well as a study of alternative funding measures.
The Senate concluded that while $9.5 million was adequate for organizing the corpora-
tion, additional study and further congressional consideration at some time in the
future are necessary before any final decisions can be made on funding requirements
and methods.
This overall subject matter has been under study for over five years, and there
is ample material and data in the record on the elements and costs of the effort
necessary "to effectively implement a comprehensive tourism development program",
as required by Section 312 (a). For example, on the basis of marketing plans and
targets discussed during the course of the extensive on-going policy review hearings,
we believe we fully justified a first year authorization for expenditures up to $48 mil-
lion for corporation marketing operations. While we would have hoped that the time
had arrived to resolve this matter, we understand the reasons for the Senate's con-
clusions on the prudence of further study. However, the studies required under
Section 312 (a) should be accomplished and considered in the shortest possible period
of additional time. And we urge that Section 312 (a) of 5. 1097 be amended to
require that a recommended budget formula for future years be based on a per capita,
a proportion of sales, or some other similar sales expenditure formula now utilized so
effectively by other governments and the private sector.
Conclusion
The U.S. Government is heavily involved in numerous international economic
activities to enhance the value of the dollar and to achieve a positive position in
PAGENO="0255"
251
our international transactions on current account. These activities include the
allocation of billions of dollars to support the U.S. dollar in foreign currency
markets, to support production of agricultural products for export, to promote the
sale abroad of U.S. manufactured products, and for financing the sale of U.S.
exports abroad.
Travel and tourism earnings can be a larger and a very quickly increasing source
of foreign exchange essential to U.S. international economic objectives. That is one
of the major reasons for a program to stimulate the demand for tourism. Stimulating
travel and tourism earnings is far easier to accomplish than are other programs to
strengthen the dollar and to improve our international economic position. Travel
earnings are not subject to the constraints placed upon the export and import of goods.
Huge capital investments by the government are not required. All that is required is
the effective selling of the United States on a coordinated national basis under a
concept such as that embodied in 5. 1097, with funding adequate to assure meaningful
marketing efforts and consistent policy implementation.
There are many reasons for supporting S. 1097. Most of them are set forth in
Section 101 of the bill. But its contribution to the attainment of vital U.S. economic
objectives alone justifies enactment of this legislation. The airlines respectfully urge
your favorable consideration of S. 1097.
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A~fACHMEN1 "A
Air Transport Association ata; OF AMERICA
1709 New York Avenue, NW.
Washington, D. C. 20006
Phone (202) 872-4000
March 22, 1979
Honorable Daniel K. Inouye
Chairman, National Tourism Policy Study
Committee on Commerce, Science, and
Transportation
United States Senate
Washington, D. C. 20510
Dear Mr. Chairman:
When Mr. Colussy and I appeared before the Subcommittee on March 2
during its consideration of the operating mechanism needed to implement a
National Tourism Policy, we were asked by Senator Warner for our thoughts
on " . . . how the quasi-public corporation might receive funds from other
sources than the Government.' We also were requested to consider the
possibility of a tax to help fund the corporation.
Senator Warner's questions related to the legislation proposed by Discover
America Travel Organizations (DATO) which would establish -- in addition to
a national tourism policy and a Cabinet level coordinating council -- a quasi-
public, non-profit corporation as an implementing agency to carry out national
tourism policy. The purpose of the corporation, to be known as the United
States Travel and Tourism Development Corporation, would be "to promote
and facilitate the orderly growth and development of travel and tourism and
to assist in the implementation of the national travel and tourism policy." Its
activities would focus on "developing and administering a comprehensive
travel development program designed to stimulate and encourage travel to
the United States by residents of other countries." The DATO-suggested
legislation provides for funding entirely by legislative appropriation. The
scheduled airlines supported this proposal at the hearings and pointed out
that a first year authorization of up to $48 million for marketing operations
was fully justified to make the United States fully competitive in the world
tourism market.
In response to Senator Warner's inquiry, we have examined several
possible funding sources which might be considered. These include:
1. Issuance of bonds or stocks;
2. Diversion of part or all of the revenue produced by an
existing tax;
3. A new tax on foreign tourists, at whom marketing efforts
would be aimed;
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253
4. A new tax on U. S. citizens departing the country;
5. Special federal sales taxes on tourist goods or services;
6. Solicitation of subscriptions or memberships from firms
in private industry which might expect to profit from the
promotion and from governmental bodies of regions, states,
counties, and municipalities where economic benefit could be
anticipated from increased tourist volume; and
7. Income from miscellaneous revenue-producing activities
which might be undertaken by the proposed corporation.
As outlined below, our evaluation of alternative techniques for tapping
these sources leads us to the conclusion that the appropat ion of' federal
funds is the only realistic and equitable method of financing a program hav-
ing such wide and diverse national interests.
1. Issuance of bonds or stocks
Issuance of bonds or stocks would be appropriate only if the uro-
posed quasi-public corporation were to become engaged in activities
with potential to produce substantial incore, such as hotel develop-
ment, airport or highway construction, public works, or the like.
The activities of the U. S. Travel and Tourism Development Corporation
are *envisioned as essentially promotional in a commercial sense.
But the rewards of the promotion would not accrue back to the
corporation, but rather would flow into the economy at large
through the hundreds of thousands of business enterprises serving
the tourism industry. Since the corporation itself could not expect
income sufficient to retire debt or to pay interest or dividends,
the proposed legislation wisely includes a provision that "the Corpo-
ration shall have no power to issue any shares of stock, or to
declare or pay dividends."
2. Diverson of earmarked tax revenues
Another alternative would be to earmark and divert port oi all of
the revenue from a specific tax before it flows into the general
fund. EXampleS would be use of gasoline tax revenues utilized for
federal highway construction, and use of revenues from the sale of
offshore drilling leases and other revenue sources which go into
the Land and Water Conservation Fund to finance special environ-
mental and land acquisition programs. Similarly, taxes on firearms
sales go directly to fish and wildlife conservation programs. It is
understood that certain of these taxes are generating income
significantly above current programmatic needs; the excea now
returned to the general fund might be earmarked for toujiam
promotion. Or, u new tax, such is one of those cliscuaced ~ri
subsequent sections, could be innatituled and the income diverted.
61-1~ C - 80 - 17
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254
There are those who apparently believe that the advantage of this
technique is the creation of an independent income source which
would assure funding without the necessity for submitting an annual
budget request to the Congress. The fact is, however, that the
necessity for annual Congressional approval could not be circum-
vented. The process would actually become more complicated, if
funds other than general revenues were involved, since budget
matters would be reviewed not only by the Committee on Commerce,
Science, a.] Transportation and the Appropriations Committees,
but also by the committees having jurisdiction over programs from
which funds would be diverted. Since matters of tax policy involving
Congressional tax committees also would arise, the process -- and
the number of committees -- would escalate rapidly. The concept
of diverting funds from an existing revenue source can be certain
to produce an outcry from those responsible for administering
programs for which the funding originally was established.
.3. A new tax on foreign visitors
Preliminary estimates of the U. S. Travel Service indicate that in
1978 the United States was host to 19.8 million foreign visitors
excluding transients and day-trip excursionists. On the surface, it
would seem that a relatively modest head tax levied at the point
of entry or departure on each of these visitors would be an appro-
priate and logical source of financing for overseas travel promotion.
However, closer examination of this concept reveals serious flaws.
According to current immigration law, the United States must
collect a fee when a visa is issued to any citizen of a country
where U. S. citizens pay a visa fee or arrival tax. The amount
of the fee is exactly reciprocal. Institution of an arrival tax or
visa fee by the United States, therefore, would raise questions
involving foreign relations. This could prove to be troublesome in
the current international environment.
Many foreign countries collect a head tax on departure rather
than on arrival in order to avoid the reciprocity principle embodied
in our immigration law. However, these departure taxes on foreign
visitors are extremely controversial and distasteful. Perhaps the
strongest negative argument is that such taxes are very unpopular
among travellers. At best, the necessity to pay a special tax
when leaving a country is a nuisance; at worst, the traveller,
embarrassed or annoyed by an unplanned expenditure, may be
seriously alienated at a critical point in his travels.
Utilization of the head tax on foreign visitors is most common
among developing countries and those whore tourism comprises a
high proportion of gross national product. Where, in such cases,
economic alternatives are limited, there is at least some understanding
PAGENO="0259"
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of the principle of taxing the comparatively wealthy foreigner to
help pay for essential infrastructure and services. It is more
difficult to develop reasoning to support imposition of a tax on
guests of one of the world's wealthiest nations.
It should be observed that administration of a tax on foreign
visitors is fairly simple when the vast majority of visitors arrive
by air and there are only one or two international airports, as is
true in most Caribbean islands. In contrast, tourists travelling by
air represent only about 35 - 40 percent of foreign visitors to the
United States. Processing of the tax at all international airports,
seaports, and border stations in the United States would be extremely
burdensome and costly. It would require either a new bureaucracy
or additional duties for immigration and customs officials or trans-
portation personnel. And if the tax was limited to air travellers
alone, it would be highly discriminatory, particularly since the
level of tax would need to be fairly high to produce a meaningful
yield.
Finally, it should be noted that all passengers departing the United
States by air, except those going to Canada, are presently required
to pay a departure tax of three dollars ($3). This tax is applicable
to both United States and foreign citizens departing the country
and was imposed, together with domestic air passenger and waybill
taxes, to support essential air traffic control and airport facilities
under the Airport and Airway Development Act. This tax revenue
should not be diverted from that critical program.
4. A new tax on U. S. citizens departing the country
A substantial head tax on U. S. citizens leaving the country has
sometimes been suggested on the grounds that those who are most
directly responsible for the `negative balance" iii the tourism
sector should help to pay for promotion of the United States as a
destination for foreigners. While it is possible that such a tax
might deter departures, it certainly would represent an infringe-
ment on the freedom to travel. Other arguments against a
departure tax to finance a promotional program are similar to
those detailed in the preceding section relating to head taxes on
foreign visitors. These include administration and processing prob-
lems, and outright discrimination if the tax were limited solely to
air travellers (about 8 million or roughly 25 percent of the 23
million U. S. travellers to foreign countries in 1977).
The possibility of increasing passport application fees or utilizing
customs duties collected from arriving passengers could not be
serious alternatives since the financial potential is extremely
limited in both cases.
PAGENO="0260"
256
5. Sales taxes on tourist goods and services
Another possible source of funding for the proposed corporation
would be a special tax imposed on basic goods or services pur-
chased by tourists. Again, the objective would be to tax the
special population of travellers, as contrasted with the general
public.
The basic problem encountered here is one pf definition. The
tourism industry is both complex and highly fragmented. Its ele-
ments encompass accommodations (hotels, motels, campgrounds,
etc.), eating and drinking places, public transportation (air, rail,
bus, taxi), recreation, automobile service establishments, and a
multiplicity of retail stores and other service establishments cater-
ing to the travelling public.
As was noted in the Report of the Presidential National' Tourism
Resources Review Commission, -
"Every facet of economic life is affected through the pur-
chases of goods and services by tourists and by industries
directly serving tourists. This can be demonstrated by tracing
the impact of these purchases through the economy. A tour-
ist's food purchases in a restaurant can be traced back through
the wholesale, food and kindred products industries to the
agricultural producer. Each supplier in turn will create demands
on his suppliers, generating further employment and income.
The farmer purchases fuel, fertilizer and equipment to meet
requirements generated by tourism expenditures, and his pur-
chases in turn give rise to employment and, income in those
industries supplying him, and so on."~'
Similarly, the path of a tourist's expenditure for a hotel room can
be traced through industries manufacturing furniture, linens, soap,
and plumbing supplies, etc., back to the basic raw materials from
which these products are made. If the pervasiveness of economic
benefit from tourism is accepted, the most efficient and equitable
way to fund the operation of a national travel promotion program
is through the use of general tax revenues since the national econ-
omy is the beneficiary, not the individual traveller.
It should also he noted that most elements of the tourism industry
are already subjected to sales taxes at the state and local levels.
For example, the percentage of taxation on hotel rooms and res-
taurant meals in many cities of the United States is already high
enough to be a travel deterrent which is a matter of serious concern
1"Da,tination U. S. A., Volume 5, Special Studies, Report of the National
`i'ouisrn l'icsour~es Reviess Commission, June 1973.
PAGENO="0261"
257
to those involved in travel promotion. The imposition of an
additional federal tax at a time when increased volume is desired
would be counterproductive, and it would involve the jurisdictional
complex of Congressional committees concerned with policy, appro-
priations, and tax matters.
6. Subscriptions or memberships from industry and government
A sixth alternative for evaluation would be to solicit financial
support in the form of memberships or subscriptions from industry
and from governmental bodies at the regional, state, county, and
local levels. A successful example of this concept at the state
level is the Hawaii Visitors Bureau, which secured $750,000 of its
$2.83 million 1978-79 budget from private industry memberships.
-At the municipal level, the Convention and Visitors Bureaus of
New York City and Washington, D. C., for example, receive some
support from city governments, but the bulk of financing is pro-
vided by private subscriptions.
These are examples of private organizations receiving substantial
financial support from government, not the reverse. Discover
America Travel Organizations, as a broadi',- based trade organiza-
tion, has both public and private sector memberships. Since the
visitors bureaus and DATO are private corporations, the parallel to
the proposed quasi-public corporation cannot be drawn directly.
There is some appeal in the concept of partnership with industry
and with state and local government. Also appealing is the idea
that executives from the private sector might be more willing to
contribute their expertise through advisory committee service
because of their financial stake in institutional objectives. On the
negative side is the fact that fundraising necessarily requires a
substantial staff effort and a significant budget to produce a
dollar objective which cannot be guaranteed or counted on until it
is actually achieved.
Upon further examination, however, the feasibility of translating
the partnership concept to the national level is subject to serious
question. Federal promotion will necessarily concentrate on the
attractions of regions, states, and cities as destination areas. And
it might be argued that these jurisdictions should contribute finan-
cially. Thei-e arc three principal contrary arguments. First, the
travel earnings objective of states, cities, and regions can be as
well served by attracting visitors from neighboring jurisdictions as
from abroad. While the prospect of attracting overseas visitors is
interesting, these government bodies can attain a far moic effee-
tive return per dollar of promotional expenditure by concentrating
on more accessible nearby areas capable of producing a high tourist
vol nine.
PAGENO="0262"
258
Secondly, since regions, states, and cities are not equally endowed
in terms of their accessibility, attractiveness to foreign tourists,
or financial capability, the idea of matching funds or grants in aid
for promotional projects is far more equitable than memberships
or subscriptions. The current financial conditions of most states
and cities make it more appropriate to think in terms of federal
grants to state and local bodies than in terms of federal solicita-
tion of contributions from such bodies.
With industry, the sheer number of firms and organizations involved
would present a formidable challenge to the job of solicitation.
Also, as shown in the table below, small business establishments
represent the overwhelming proportion of firms in the tourism
industry. To look for their direct support of a federal government
enterprise would be unrealistic. Yet the proposed corporation
would be open to criticism if financial support were solicited or
received only from big business or a few major industries.
NUMBER OF FIRMS AND PROPORTION OF SMALL BUSINESS FIRMS
IN THE TOURISM INDUSTRY -- BY TYPE -- 1972
Number of Firms
Industry Type
Total Small Business*
Eating and drinking places 327,190 324,990
Gasoline service stations 201,528 200,221
Amusement and recreation services 129,831 128,547
Hotels, motels and tourist courts 55,431 54,080
Trailer parks and camps 20,881 20,871
Intercity highway transportation 950 870
Air transportation 45 23
Source: U. S. Census Bureau, 1972.
*As defined by the Federal Government
On balance, general revenues would again seem the most appro-
priate source of financial support for the corporation. The con-
cept of partnership with industry and with state and local govern-
ment in cxccuting programs could be well served through board
and committee appointments, a matching funds program, and other
devices such as joint participation in trade shows, promotional
PAGENO="0263"
259
endeavors, etc. For these reasons, the proposed legislation would
prohibit the corporation from soliciting dues or memberships from
any state, city, or private agency, which we believe to be wise.
7. Revenue-producing activities
As reported by Arthur D. Little, Inc., in its study for the House
of Representatives Subcommittee on Transportation and Commerce,
national tourist organizations of some other countries engage in
revenue-producing activities. The British Tourist Authority, for
example, covered about 20 percent of its 1975-76 expenditures of
$16.1 million through revenues from advertising in publications
produced, sales of publications and cooperative advertising with
the private sector. Through similar means, the English Tourist
Board raised $700,000 of its $8 million in expenditures (8.75 percent).
It would seem appropriate that the proposed quasi-public corpora-
tion consider the possibility of revenue-producing activities as a
supplementary financing source. However, any decision should
await detailed study of economic feasibility and political ramifica-
tions, and the possibility that such efforts might conflict or com-
pete with the private sector. The financial potential should also
be quantified.
In summary, our evaluation of alternative sources of financing for the
proposed quasi-public corporation reveals that each has flaws. Some alterna-
tives are inappropriate or unrealistic in legal, political, or foreign relations
terms. Some would raise too little money to be worthwhile. A number of
others are questionable simply because the tourism industry permeates national
economic fabric so completely. Potential beneficiaries of the quasi-public
corporation's programs are literally impossible to isolate. Within that environ-
meat, our conclusion is that general revenues constitute the only realistic
and equitable source of funding.
We very much appreciate the opportunity to respond to Senator Warner's
questions and hope our evaluation of alternatives will be of assistance to the
Committee. -
Sincerely,
Norman J hilion
cc: Chairman Howard Cannon
Senator John Warner
Dan A. Colussy
PAGENO="0264"
260
Mr. PHILI0N. I do have one answer to provide for the record to a
question raised by the subcommittee concerning the number of
offices and personnel and budgets of the U.S. airlines abroad.
While our survey in this connection is not complete-and I will
supply the complete data to the subcommittee-I do have a pre-
liminary answer which may be of interest to the subcommittee.
Ms. MIKuIsKI. Would you share it with us at this point.
Mr. PHILI0N. Seventeen of the scheduled airline members of our
association operate regular scheduled flights to and from the
United States. The information I am about to provide comes from
14 of them, and as I said earlier we will have the complete data
shortly.
Of those 14 carriers, the preliminary data indicates that they
have 563 offices in 121 cities abroad: 277 of those offices are ticket
and information offices that are open to the public; 286 of those
offices are sales offices established for the purpose of promoting the
sale of airline services. That number, of course, does not include
the many hundreds of reservations and other offices that airlines
have abroad. These are offices comparable to offices that govern-
ments operate to promote travel.
Employed in those 563 locations are 2,450 airline personnel. The
1979 budget--
Ms. MIKuLsKI. They would tend to be foreign nationals?
Mr. PHILI0N. Some would. Others would be U.S. citizens. The
majority, I think-and Mr. Montgomery and Mr. Holt may want to
supplement what I have said-the majority would be foreign na-
tionals.
The 1979 budget of those 14 airlines for that operation is $92
million, of which about $30 million is for advertising to promote
travel to the United States.
[The following letter was received for the record:]
PAGENO="0265"
261
Air Transport Association ata OF AMERICA
1709 New York Avenue, NW.
Washington, D. C. 20006
NORMAN J. PHILION Phone (202) 872-4000
Executice Vice President
August 6, 1979
Honorable James J. Florio
Chairman, Subcommittee on
Transportation and Commerce
Committee on Interstate and Foreign Commerce
U. S. House of Representatives
Room 2125, Rayburn House Office Building
Washington, D. C. 20515
Dear Mr. Chairman:
In response to a question during my appearance before the Subcommittee
July 25 concerning S. 1097, I provided preliminary data on the number and
budgets of U. S. airline overseas offices. I also offered to submit more
detailed information for the Record. The following information, based upon
a July 1979 survey of 16 U. S. airline members of the Air Transport Associa-
tion of America, is therefore presented:
1. There are currently 303 airline overseas ticket offices which are
open to the public. These offices are located in 115 cities in 66
foreign countries.
2. There are currently 300 airline overseas sales offices promoting
the sale of U. S. airline services. These offices are located in
138 cities in 69 foreign countries.
3. A total of 3,146 personnel currently are employed at the 603 air-
line overseas ticket and sales offices.
4. The 1979 budget for the operation of the 603 airline overseas
ticket and sales offices is approximately $128 million, of which
just over $37 million is budgeted for advertising and similar
promotion of travel to the United States utilizing the services
of the U. S. airlines involved.
We greatly appreciated the opportunity to provide the Subcommittee the
views of the airline industry on S. 1097, and we respectfully urge your favor-
able consideration of this important legislation.
Sincerely,
PAGENO="0266"
262
Mr. PHILI0N. Madam Chairman, Mr. Montgomery of Pan Am
now will present the industry's views from the perspective of a U.S.
airline primarily concerned with international travel and tourism,
and he will elaborate on the airline view concerning the operations
of the proposed federally chartered corporation focusing on a sug-
gested marketing plan.
Thank you.
Ms. MIKuI~sKI. We all know Pan Am, with their aggressive mar-
keting strategy.
Mr. Montgomery, why don't you proceed.
Mr. MONTGOMERY. Madam Chairwoman, Mr. Arthur Lewis has
joined us.
Ms. MIKuLsKI. Yes, I want to welcome Mr. Lewis. Your wheels
never leave the ground, I hope.
STATEMENT OF JAMES MONTGOMERY
Mr. MONTGOMERY. Madam Chairwoman, and distinguished staff,
my name is James Montgomery. I work directly with Dan Colussy,
who is the president and chief operating officer of Pan Am, and as
his alternate, I have his complete authority to speak for him.
Ms. MIKuLsKI. I wish all assistants to the president could speak
with such assertiveness.
Mr. MONTGOMERY. Thank you.
First of all, I would like to say thank you very much for allowing
Pan Am to appear before your committee to present our views.
We do applaud the recognition that you and your staff have
evidenced of the need to consider now the U.S. position with re-
spect to tourism, particularly international tourism, its positive
impact on the U.S. economy, and its potential contribution to our
national wealth as an export of services.
Pan Am is recognized, I believe as the U.S.-flag carrier which in
its 50-year history has pioneered most overseas air routes. During
all of our history we have been essentially an overseas carrier,
with our domestic routes having been confined until recently to the
States of Hawaii and Alaska, and the overseas territories and
possessions of the United States.
It has been indicated that the travel tourism industry contribut-
ed about $115 billion to the economy of the United States in 1976.
Its current contribution appears to be above the $126 billion level.
A recent estimate puts the contribution to the world's economy,
made by both the domestic and international tourism industries of
all countries, in 1978 at a level over $488 billion.
It is a big, big industry which can continue to become increasing-
ly vital if it is stimulated properly.
At the heart of tourism activity for the United States and its
relations with the rest of the world is the U.S-flag air transporta-
tion system, of course. The development of a strong inbound flow of
tourism to the United States is the area which most needs and will
benefit most by the establishment of our national policy, adequate
coordination between the various involved U.S. Government de-
partments and agencies, and the Federal implementing corpora-
tion.
PAGENO="0267"
263
The United States finds itself actually in an enviable position
relative to other countries who find it necessary or desirable to
increa~e their visitor travel.
The U.S. domestic tourism industry is already a highly developed
business and takes little in the way of expenditure or effort by
Government or by the industry to meet the demands or service
requirements of a greatly increased number of foreign visitors.
To bring people in larger numbers to the United States there is a
well-developed transportation network, led by the U.S-flag airline
system, capable of meeting additional demand that is created.
Unlike many other developed and developing countries, the
United States finds itself in the fortunate position of not having to
invest excessive capital for the development of accommodations,
facilities, services, and attractions for foreign visitors.
Thus, there is no need to consider this now as a stated national
policy goal in the National Policy Act.
The U.S. Government does need to provide the most vital miss-
ing ingredient for a foreign visitor development program. This is to
finance an effective advertising and promotion effort to increase
the volume of foreign visitors as a matter of national policy.
Such a program to encourage increased foreign visitor travel
would bring positive results to the U.S. economy. The tourism
industry is not a production-oriented industry. Rather it is an
important labor intensive service industry with unutilized capacity.
It can be stimulated without creating significant inflationary
pressures, but with positive results for the public and private sec-
tors of the economy, particularly by creating more jobs, decreasing
public spending for income maintenance, and providing more tax
revenues.
A doubling of U.S. foreign exchange earnings would result in the
support of at least another quarter million jobs.
The bill we are discussing establishes a Federal nonprofit corpo-
ration whose primary purpose and activity is to be developing and
administering a comprehensive tourism program designed to stim-
ulate and encourage travel to the United States. It will be the
mechanism to implement this specific national policy statement in
this regard.
To do this the corporation must engage in commercial advertis-
ing, and thus it must be made clear that the corporation can utilize
all appropriate media of public information and communication.
In 1978 foreign governments alone, not counting the expendi-
tures of their national carriers, spent $32 millidn in the U.S. major
media, advertising their countries as a travel destination, while the
U.S. Government allocated at most a mere $2 million in counter-
vailing consumer and trade advertising in all the six primary
markets where there is a USTS presence.
We must stress the need for this new corporation to have a
marketing budget adequate to its task.
In 1978 the United States recorded $7.3 billion in sales of goods
and services exclusive of passenger fares to international visitors.
Many do not realize that these sales result in at least $900 million
in tax revenues to Federal, State, and local treasuries.
That same year we hosted about 20 million international guest
visitors. But there are at least 86 million individuals in countries
PAGENO="0268"
264
abroad with the financial means for travel to the United States-if
they only get the message.
The U.S. Conference on International Tourism held in Rome in
1963 arrived at guidelines for a Government promotion program
based on percentages of tourism receipts. One of them, the applica-
tion of 3 percent of receipts formula, would result in a U.S. budget
of $185 million.
Ms. MIKuLsKI. Mr. Montgomery, if I could interrupt for a second,
those three bells mean I have to excuse myself. I will go over and
vote, and then be back to resume your testimony.
Mr. MONTGOMERY. Surely. Thank you, Madam Chairwoman.
[Brief recess.]
Ms. MIKuL.sKI. I would like to resume the committee's hearings,
and apologize for the delay. This is a very busy time, and anything
we can do to expedite the proceedings would be appreciated.
Mr. Montgomery, would you want to continue with your testi-
mony, sir.
Mr. MONTGOMERY. Thank you, Madam Chairman. I would be
glad to expedite the few remaining sentences.
Over several months last winter, Madam Chairwoman, we did do
the work, in conjunction with the N. W. Ayer International Adver-
tising Agency, of developing a detailed marketing plan for the six
primary markets and the nine special markets as defined by the
USTS.
Mr. MONTGOMERY. With that I would like to conclude by saying
that to our mind the essential elements of the U.S. approach to
tourism appear to be well established in this proposed legislation
that we are considering. Thank you very much.
[Testimony resumes on p. 279.]
[Mr. Montgomery's prepared statement follows:]
PAGENO="0269"
265
STATEMENT OF
JAMES MONTGOMERY
SENIUR VICE PRESIDENT AND ASSISTANT TO THE PRESIDENT
PAN AMERICAN WORLD AIRWAYS, INC.
MR. CHAIRMAN AND DISTINGUISHED COMMITTEE MEMBERS AND STAFF:
MY NAME IS JAMES MONTGOMERY. I AM SENIOR VICE PRESIDENT
AND ASSISTANT TO THE PRESIDENT AND CHIEF OPERATING OFFICER OF
PAN AMERICAN WORLD AIRWAYS, DAN A. CoLussy, WHO AS PAN AM
PRESIDENT DIRECTS THE PATTERN OF OUR AIRLINE OPERATIONS AND
THE MARKETING OF OUR SERVICE PRODUCTS. As HIS ALTERNATE, I HAVE
FULL AUTHORITY TO SPEAK FOR HIM.
FIRST OF ALL I WANT TO VOICE MY THANKS FOR YOUR ALLOWING
PAN AM TO APPEAR BEFORE YOUR COMMITTEE TO PRESENT OUR VIEWS
ON A NATIONAL TOURISM POLICY, A CABINET LEVEL COORDINATING COUNCIL,
AND A NON-PROFIT CORPORATION AS AN IMPLEMENTING AGENCY TO CARRY
OUT THE NATIONAL POLICY.
MR. CHAIRMAN, WE WISH TO APPLAUD THE RECOGNITION YOU AND
YOUR COMMITTEE HAVE EVIDENCED OF THE NEED TO CONSIDER NOW THE
UNITED STATES POSITION WITH RESPECT TO TOURISM, PARTICULARLY
INTERNATIONAL TOURISM, ITS POSITIVE IMPACT ON THE U. S. ECONOMY
AND ITS POTENTIAL CONTRIBUTION TO OUR NATIONAL WEALTH AS AN
EXPORT OF SERVICES. YOU, MR. CHAIRMAN, HAVE TAKEN PERSONAL
LEADERSHIP IN THE DEVELOPMENT OF TOURIST ATTRACTIONS IN NEW
JERSEY WHICH HAVE DRAWN VISITORS FROM OVERSEAS IN TERMS OF
THOUSANDS. OUR TRAVEL INDUSTRY RECOGNIZES ITS LACK OF STRONG
LEADERSHIP, DESPITE ITS SIZE AND JOB-CREATING CAPABILITY, AND
WE LOOK TO YOU, SIR, TO IMPROVE THAT LEADERSHIP AND CONTRIBUTE
INDISPENSABLY TO IT IN THE UPCOMING YEARS.
PAGENO="0270"
266
QUALIFICATION OF PAN_AM
PAN AM IS RECOGNIZED AS THE U. S. FLAG CARRIER WHICH IN
ITS FIFTY-YEAR HISTORY HAS PIONEERED MOST OVERSEAS AIR ROUTES.
PAN AM HAS BEEN A LEADER IN DEVELOPING THE TECHNOLOGY WHICH
HAS MADE IT POSSIBLE FOR THE WORLD'S AIR TRANSPORT SYSTEM TO
PERFORM BENEFICIALLY FOR THE TRAVELING PUBLIC. WE STARTED
OPERATIONS BETWEEN FLORIDA AND CUBA IN OCTOBER 1927, CARRYING
OUR FIRST PASSENGERS IN JANUARY 1928. IN OUR FIRST YEAR OF
OPERATION WE CARRIED 1,18~ PASSENGERS; FIVE YEARS LATER, IN 1937,
100,000; IN 1978 MORE THAN 9.5 MILLION PASSENGERS WERE CARRIED
WORLDWIDE BY PAN AM -- AVERAGING ABOUT 26,000 EVERY DAY.
DURING ALL OF OUR HISTORY WE HAVE BEEN ESSENTIALLY
AN OVERSEAS CARRIER WITH OUR DOMESTIC ROUTES HAVING BEEN
CONFINED UNTIL RECENTLY TO THE STATES OF HAWAII AND ALASKA AND
OVERSEAS TERRITORIES AND POSSESSIONS OF THE U. S. WE NOW HAVE
SOME DOMESTIC FILL-UP RIGHTS, HOWEVER, WHICH BEGIN TO PLACE
US ON THE EQUAL FOOTING WITH OTHER DOMESTIC AND FOREIGN
CARRIERS WE HAVE LONG SOUGHT. WE RECENTLY REQUESTED APPROVAL
OF A MERGER WITH AN ESSENTIALLY DOMESTIC AIRLINE WHICH WOULD
CREATE A MORE VIGOROUS CARRIER ABLE TO COMPETE MORE EFFECTIVELY
DOMESTICALLY AND INTERNATIONALLY.
IF YOU ARE A U. S. FLAG AIRLINE THAT POSSESSES A DOMESTIC
SYSTEM, YOU HAVE A CUSHION AGAINST THE EFFECTS OF INEQUITABLE
MARKET ACCESS AND DISCRIMINATORY TREATMENT ABROAD. THIS IS
PAGENO="0271"
267
PARTICULARLY RELEVANT TO EFFORTS OF FOREIGN COUNTRIES TO EARN
FOREIGN EXCHANGE THROUGH SUBSIDIZATION OF THEIR NATIONAL CARRIERS.
ADDITIONALLY, THE FOREIGN-FLAG COMPETITOR NOT ONLY HAS CONTROL
OF DOMESTIC TRANSPORTATION WITHIN ITS NATIONAL MARKET AREA
BUT ALSO PRACTICAL CONTROL OF THE TOTAL MARKET THROUGH
GOVERNMENTAL HOLDINGS IN MANY OF THE RETAIL AND WHOLESALE TRAVEL
AGENCIES AND BOOKING AND TICKETING DISTRIBUTION SYSTEMS
INTERNATIONAL TOURISM MARKET
MR. CHAIRMAN, IT HAS BEEN INDICATED THAT THE TRAVEL!
TOURISM INDUSTRY CONTRIBUTED ABOUT $115 BILLION TO THE ECONOMY
OF THE UNITED STATES IN 1977. A RECENT ESTIMATE PUTS THE
CONTRIBUTION TO THE WORLD'S ECONOMY MADE BY THE DOMESTIC AND
INTERNATIONAL TOURISM INDUSTRIES OF ALL COUNTRIES IN 1978 AT
A LEVEL OVER $488 BILLION. IT IS A BIG, BIG INDUSTRY WHICH
CAN CONTINUE TO BECOME INCREASINGLY VITAL IF IT IS STIMULATED
PROPERLY. PRACTICALLY ALL LONG DISTANCE, INTERREGIONAL AND
INTER-CONTINENTAL TOURISM DEVELOPS THROUGH AND DEPENDS ON THE
WORLD'S AIR TRANSPORT SYSTEM. AT THE HEART OF TOURISM ACTIVITY
FOR THE UNITED STATES AND ITS RELATION TO THE REST OF THE WORLD
IS THE U. S. FLAG AIR TRANSPORTATION SYSTEM.
IT IS FOR THIS REASON THAT I WILL CONFINE MY TESTIMONY
TO THE AREA IN WHICH WE ARE MOST EXPERT -- THE DEVELOPMENT OF
A STRONG INBOUND FLOW OF TOURISM TO THE UNITED STATES. IT IS
ALSO THE AREA WHICH MOST NEEDS AND WILL BENEFIT MOST BY THE
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268
ESTABLISHMENT OF OUR NATIONAL POLICY, ADEQUATE COORDINATION
BETWEEN THE VARIOUS INVOLVED U, S. GOVERNMENT DEPARTMENTS AND
AGENCIES AND THE FEDERAL IMPLEMENTING CORPORATION.
EXPERTS IN NATIONAL AND INTERNATIONAL TOURISM ORGANI-
ZATIONS AGREE THAT GOVERNMENTS THEMSELVES MUST UNDERTAKE ACTION
IN THREE GENERAL AREAS:
(1) GOVERNMENTS MUST TAKE STEPS TO PROVIDE AN ADEQUATE
"TOURISM PLANT". THIS INCLUDES PROVISIONS FOR HOTELS AND
OTHER ACCOMMODATIONS, FOR ACCESS TO NATIONAL SCENERY AND
HISTORICAL SITES AND OTHER PLACES OF CULTURAL OR RECREATIONAL
INTEREST INCLUDING PRIVATE INDUSTRY ATTRACTIONS.
(2) GOVERNMENTS MUST FACILITATE AND REMOVE THE ARTIFICIAL
BARRIERS TO TRAVEL, MAKING IT EASY FOR PEOPLE TO DECIDE TO COME
AND TO EXPECT A WARM WELCOME WHEN THE VISITORS ENTER THEIR
COUNTRIES.
(3) GOVERNMENTS MUST VIGOROUSLY ADVERTISE AND PROMOTE
THEIR COUNTRY AS A DESIRABLE PLACE TO VISIT IN COMPETITION WITH
OTHER GOVERNMENTS.
U. S. POSITION IN WORLD TOURISM
THE UNITED STATES FINDS ITSELF IN AN ENVIABLE POSITION
RELATIVE TO OTHER COUNTRIES WHO FIND IT NECESSARY OR DESIRABLE
TO INCREASE VISITOR TRAVEL. THE U. S. DOMESTIC TOURISM INDUSTRY
IS ALREADY A HIGHLY DEVELOPED BUSINESS AND TAKES LITTLE IN THE
WAY OF EXPENDITURE OR EFFORT BY GOVERNMENT OR BY THE INDUSTRY
PAGENO="0273"
269
TO MEET THE DEMANDS OR SERVICE REQUIREMENTS OF A GREATLY
INCREASED NUMBER OF FOREIGN VISITORS. THERE ARE HOTELS, MOTELS
AND OTHER ACCOMMODATIONS IN ADEQUATE NUMBERS IN THE CITIES, ALONG
THE HIGHWAYS AND IN THE RESORT AREAS. THERE EXISTS A WIDE
RANGE OF PRICES AND MANY FACILITIES AND SERVICES ARE WELL
WITHIN THE ABILITY TO PAY OF THOSE WITH EVEN THE MOST MODEST
MEANS, THERE IS NO NEED TO ELABORATE ON THE FACT THAT THE UNITED
STATES OFFERS THE SCENERY, SUMMER AND WINTER RESORTS, RECREATIONAL
AND CULTURAL ATTRACTIONS TO ENTICE, DELIGHT AND SATISFY THE
VISITOR. THESE ARE READILY ACCESSIBLE BY ALL MODES OF TRANSPORT,
INCLUDING THE AUTOMOBILE, AND AT RELATIVELY LOW PRICES.
To BRING PEOPLE IN LARGER NUMBERS TO THE UNITED STATES
THERE IS A WELL DEVELOPED TRANSPORTATION NETWORK, LED BY THE
U. S. FLAG AIRLINE SYSTEM, CAPABLE OF MEETING ADDITIONAL DEMAND
THAT IS CREATED,
UNLIKE MANY OTHER DEVELOPED AND DEVELOPING COUNTRIES,
THE UNITED STATES FINDS ITSELF IN THE FORTUNATE POSITION OF NOT
HAVING TO INVEST EXCESSIVE CAPITAL FOR THE DEVELOPMENT OF
ACCOMMODATIONS, FACILITIES, SERVICES AND ATTRACTIONS FOR
FOREIGN VISITORS. THE U. S. GOVERNMENT DOES NEED TO PROVIDE
THE MOST VITAL MISSING INGREDIENT FOR A FOREIGN VISITOR DEVELOP-
MENT PROGRAM. THIS IS TO FINANCE AN EFFECTIVE ADVERTISING AND
PROMOTION EFFORT TO INCREASE THE VOLUME OF FOREIGN VISITORS,
61-14'4 C - 80 - 18
PAGENO="0274"
270
As MR. PHILI0N HAS POINTED OUT, THE U. S. GOVERNMENT ALSO NEEDS TO
PAY MORE ATTENTION TO THE FACILITATION AND WELCOME OF VISITORS
ENTERING THIS COUNTRY.
POLICY COUNCIL
WE HAVE EXAMINED THE PROPOSED POLICY COUNCIL ORGANIZATION.
WE UNDERSTAND ITS PURPOSE IS TO REFINE NATIONAL POLICY AND MAKE
CERTAIN POLICY IS ACTUALLY IMPLEMENTED BY ALL THE MULTITUDE
OF FEDERAL AGENCIES INVOLVED. THIS IS THE KEY TO BRINGING
COHESION TO THE EXTENSIVE FEDERAL INVOLVEMENT IN TOURISM AND,
WHILE THE ORGANIZATIONAL STRUCTURE MAY APPEAR TO SOME TO BE
UNWIELDY, IT SEEMS TO BE THE MOST PRACTICAL ARRANGEMENT TO
ELIMINATE THE LACK OF COORDINATION IN THE FEDERAL INVOLVEMENT
IN TOURISM.
MARKETING PROGRAM
AN EFFECTIVE PROGRAM TO ENCOURAGE INCREASED FOREIGN
VISITOR TRAVEL WOULD BRING POSITIVE RESULTS ON THE U. S.
ECONOMY. THE TOURISM INDUSTRY IS NOT A PRODUCTION-ORIENTED
INDUSTRY, RATHER IT IS AN IMPORTANT LABOR-INTENSIVE SERVICE
INDUSTRY WITH UNUTILIZED CAPACITY. IT CAN BE STIMULATED WITHOUT
CREATING SIGNIFICANT INFLATIONARY PRESSURES BUT WITH POSITIVE
RESULTS FOR THE PUBLIC AND PRIVATE SECTORS OF THE ECONOMY,
PARTICULARLY BY CREATING MORE JOBS, DECREASING PUBLIC SPENDING
FOR INCOME MAINTENANCE AND PROVIDING MORE TAX REVENUES.
PAGENO="0275"
271
THE BILL STATES IN THE POLICY SECTION THE PURPOSE
OF THE ACT IS TO USE ALL PRACTICABLE MEANS AND MEASURES INCLUDING
FINANCIAL AND TECHNICAL ASSISTANCE TO IMPLEMENT A NATIONAL POLICY
WHICH WILL AMONG OTHER THINGS OPTIMIZE THE CONTRIBUTION OF THE
TRAVEL AND TOURISM INDUSTRY TO ECONOMIC PROSPERITY, FULL EMPLOY-
MENT AND THE INTERNATIONAL BALANCE OF PAYMENTS OF THE NATION.
PUBLIC CORPORATION
THE BILL ESTABLISHES A FEDERAL NON-PROFIT CORPORATION
WHICH IS AUTHORIZED TO ASSIST THE CONGRESS, THE POLICY COUNCIL1
FEDERAL AGENCIES AND THE PUBLIC AND PRIVATE SECTORS OF THE
TOURISM INDUSTRY THROUGH ITS PRIMARY PURPOSE AND ACTIVITY OF
DEVELOPING AND ADMINISTERING A COMPREHENSIVE TOURISM PROGRAM
DESIGNED TO STIMULATE AND ENCOURAGE TRAVEL TO THE UNITED STATES
BY RESIDENTS OF OTHER COUNTRIES, IT WILL BE THE MECHANISM TO
IMPLEMENT THIS SPECIFIC NATIONAL POLICY, To DO THIS THE
CORPORATION MUST ENGAGE IN COMMERCIAL ADVERTISING AND THUS MUST
UTILIZE ALL APPROPRIATE MEDIA OF PUBLIC INFORMATION AND COMMUNI-
CATIONS TO ENABLE IT TO COMPETE WITH THE EFFORTS OF OTHER
GOVERNMENTS. IN 1978 FOREIGN GOVERNMENTS ALONE NOT COUNTING
THE EXPENDITURES OF THEIR NATIONAL CARRIERS, SPENT $32 MILLION
IN U. S. MEASURED MEDIA ADVERTISING THEIR COUNTRIES AS A TRAVEL
DESTINATION, WHILE THE U. S. GOVERNMENT ALLOCATED AT MOST A
MERE $2.0 MILLION IN COUNTERVAILING CONSUMER AND TRADE ADVERTISING
IN ALL THE SIX PRIMARY MARKETS WHERE THERE IS A USTS PRESENCE.
PAGENO="0276"
272
FUNDING OF PUBLIC CORPORATION
WE MUST POINT OUT THE NEED FOR THIS NEW CORPORATION
TO HAVE A MARKETING BUDGET ADEQUATE TO ITS TASKS -- PARTICULARLY
THE TASK TO SUBSTANTIALLY IMPROVE INTERNATIONAL TRAVEL AND
TOURISM'S CONTRIBUTION TO THE ECONOMIC PROSPERITY OF THE UNITED
STATES, ITS PUBLIC TREASURIES AND ITS INTERNATIONAL BALANCE
OF PAYMENTS, AS A MATTER IN THE NATIONAL INTEREST.
IN 1978 THE UNITED STATES RECORDED $7.3 BILLION IN SALES
OF GOODS AND SERVICES, EXCLUSIVE OF PASSENGER FARES.TO INTERNATIONAL
VISITORS -- A POWERFUL INFUSION OF OUTSIDE MONEY TO THE
ECONOMY WITHOUT INFLATIONARY RESULTS AND WITH A POSITIVE
CONTRIBUTION TO THE GOVERNMENT'S INTERNATIONAL BALANCE OF
PAYMENTS. MANY DO NOT REALIZE THAT THESE SALES RESULT IN AT
LEAST $900 MILLION IN TAX REVENUES TO FEDERAL, STATE AND LOCAL
TREASURIES, THESE ARE SIGNIFICANT SUMS BUT ONES WHICH MOST
BELIEVE COULD DOUBLE IN THE NEAR FUTURE WITH AN ADEQUATE
MARKETING PROGRAM,
THAT SAME YEAR WE HOSTED ABOUT 20 MILLION INTERNATIONAL
GUEST VISITORS, BUT THERE ARE AT LEAST 86 MILLION INDIVIDUALS
IN COUNTRIES ABROAD WITH THE FINANCIAL MEANS FOR TRAVEL TO THE
UNITED STATES -- IF THEY ONLY GET THE MESSAGE,
THE UNITED NATIONS CONFERENCE ON INTERNATIONAL TOURISM
HELD IN ROME IN 1963 ARRIVED AT GUIDELINES FOR A GOVERNMENT
PROMOTION PROGRAM BASED ON PERCENTAGES OF TOURISM RECEIPTS,
ONE, THE APPLICATION OF THREE PERCENT OF RECEIPTS FORMULA
PAGENO="0277"
273
WOULD RESULT IN A U. S. BUDGET OF $185 MILLION.
ANOTHER GUIDELINE IS TO COMPARE NATIONAL PRACTICES
FROM THE POINT OF VIEW OF TAXPAYERS. THE UNITED STATES NOW
SPENDS SIX CENTS PER CAPITA FOR TOURISM PROMOTION. SPAIN SPENDS
140 CENTS. OUR NEIGHBOR CANADA SPENDS 65 CENTS, IF THE UNITED
STATES WERE TO SPEND AT COMPARABLE LEVELS, ITS ANNUAL PROMOTION
BUDGET WOULD BE IN THE $85 ro $138 MILLION RANGE.
PRIVATE BUSINESSES ESTABLISH THEIR ADVERTISING AND
PROMOTION BUDGETS AS A PERCENT OF SALES. THE AIRLINES CONSIDER
1.5 TO 3 PERCENT OF SALES NORMAL. PAN AM'S $30 MILLION BUDGET,
FOR EXAMPLE, IS 1.68 PERCENT OF SALES. U. S. TOURISM "SALES"
RECEIPTS WERE $7.2 BILLION IN 1977 AND $8.5 BILLION IN 1978.
APPLICATION OF A 1.5 PERCENT GUIDELINE WOULD HAVE RESULTED IN
A BUDGET OF $108 AND $128 MILLION FOR WORLDWIDE PROMOTION IN
THE TWO YEARS.
CONTINUANCE OF USTS EFFORT
MR. CHAIRMAN, YOU INTRODUCED H.R. 14795 FOR THE PURPOSE
OF MAINTAINING INTO FISCAL YEAR 1980 THE FOREIGN FIELD MARKETING
OPERATIONS OF THE UNITED STATES TRAVEL SERVICE TOGETHER WITH
A SMALL STAFF PROVIDING DIRECTION AND MARKETING SUPPORT IN
ITS WASHINGTON HEADQUARTERS. THIS WAS YOUR COMMITTEE'S RESPONSE
TO THE ADMINISTRATION'S PROPOSAL TO ELIMINATE THE USTS. IF
THIS LEGISLATION IS SUCCESSFUL, IT WILL PREVENT THE IMMEDIATE AND
INEVITABLE CRUMBLING OF USTS PROGRAMS, FACILITIES AND SERVICES
AND RETAIN THEM INTACT UNTIL THEY ARE ASSIMILATED BY THE NEW
PAGENO="0278"
274
MECHANISM REFLECTED IN THE PROPOSED NATIONAL TOURISM POLICY
LEGISLATION. THIS WAS A WISE MOVE, IT PRESERVES A SUBSTANTIAL
INVESTMENT AND PROVIDES A BASE ON WHICH THE FEDERALLY CHARTERED
NON-PROFIT CORPORATION CAN IMMEDIATELY BUILD ITS MARKETING
OPERATIONS ABROAD,
THE HEARINGS ON H.R. 14795 CLEARLY ESTABLISHED THE FACT
THAT NOW IS NOT THE TIME TO DISCONTINUE THE OPERATION OF A FEDERAL
PROMOTION OR MARKETING PROGRAM. RATHER IT IS THE TIME TO EXPAND
THE PROGRAMS AND TAKE ADVANTAGE OF SUCH FAVORABLE ECONOMIC
FACTORS AS RISING DISPOSABLE INCOMES, PROMOTIONAL FARES AND
THE DECLINING VALUE OF THE U. S. DOLLAR AGAINST SOME FOREIGN
CURRENCIES. ACCORDING TO U. S. IMMIGRATION AND NATURALIZATION
SERVICE (INS) FIGURES, ALIEN (OR VISITOR) AIR TRAFFIC TO AND
FROM THE UNITED STATES DURING THE FIRST FIVE MONTHS OF 1979
INCREASED 28.3% OVER THE SAME PERIOD OF LAST YEAR, AS COMPARED
WITH AN INCREASE OF U. S. CITIZEN TRAFFIC OF ONLY 12.8%. As
MR. AL.Do PAPONE OF AMERICAN EXPRESS HAS ALREADY TESTIFIED, NOW
IS THE TIME TO INCREASE THE INVESTMENT OF RESOURCES TO SOLIDIFY
THAT POSITIVE TREND AND, IF POSSIBLE, TO DRAMATICALLY ACCELERATE
IT, A DOUBLING OF FOREIGN EXCHANGE RECEIPTS FROM OUR VISITORS
IN TWO YEARS NOW FALLS WITHIN THE REALM OF REASONALITY,
DURING THESE OUTSTANDING HEARINGS, WITNESSES FROM THE
TRAVEL INDUSTRY HERE AND ABROAD COMMENTED FAVORABLY ON ELEMENTS OF
THE USTS PROGRAM, HOWEVER, THE LACK OF ADEQUATE RESOURCES
PAGENO="0279"
275
APPLIED TO CERTAIN PROGRAM ELEMENTS WAS OBSERVED, ESPECIALLY
CONSUMER MEDIA, PUBLIC RELATIONS ACTIVIES, AND THE PROVISION
OF GROUND LEVEL SALES OFFICES OPEN TO THE PUBLIC. IT WAS ALSO
NOTED THAT AFTER YEARS OF ANALYSIS AND EXPERIMENTATION, USTS
WITH THE CONSTANT ADVICE OF INDUSTRY PROFESSIONALS HAS TAILORED
ITS MARKETING PROGRAMS FOR SPECIFIC COUNTRIES COMPRISED OF THE
FOLLOWING ELEMENTS: LOW COST TOUR DEVELOPMENT) CONSUMER AND
TRADE ADVERTISING OF THE UNITED STATES AS A DESIRABLE DESTINATION
TO VISIT IN COMPETITION WITH THE SIMILAR MESSAGES OF OTHER
COUNTRIES; THE PREPARATION AND DISTRIBUTION OF COLLATERAL
PROMOTIONAL MATERIALS, SUCH AS TRAVEL FILMS, BROCHURES, AND
DISPLAYS; CONDUCTING FAMILIARIZATION TOURS FOR TRAVEL AGENTS AND
JOURNALISTS DESIGNED TO SHOW THE U, S. TRAVEL PRODUCT AT FIRST
HAND; PROVIDING "VISIT-USA" PRODUCT INFORMATION TO THE VARIOUS
MEDIA AND TRAVEL WRITERS) CONDUCTING BROAD MARKET RESEARCH AND
EVALUATION) SOLICITING INTERNATIONAL ASSOCIATIONS TO HOLD
THEIR CONVENTIONS IN THE UNITED STATES; ENCOURAGING FOREIGN
ATTENDANCE AT CONVENTIONS HELD HERE.
NEW FIRST YEAR MARKETING PLAN
USING THE EXISTING USTS 1979 MARKETING PROGRAM BUDGET
SUMMARIES OF THESE ELEMENTS AS A BASE DOCUMENT, WE HAVE UNDER-
TAKEN THE WORK OF DRAWING UP A REVISED MARKETING PLAN AND ASSIGNING
BUDGET AMOUNTS TO CORRECT THE LACK OF ADEQUATE RESOURCES IN EACH
PRIMARY MARKET AND HAVE ADDED ACTIVITIES IN TWO NEW SPECIAL
MARKETS. FOR CONSUMER MEDIA WE USED A BUDGET FIGURE OF ROUGHLY
PAGENO="0280"
276
1,5 PERCENT OF THE REPORTED EXPENDITURES IN THE UNITED STATES
BY VISITORS FROM THE MARKET ABROAD IN HIGHLY CONSERVATIVE
ACCORDANCE WITH THE PARAMETERS I EXPLAINED ABOVE. ONE EXCEPTION
TO THIS WAS MADE FOR CANADIAN AND MEXICAN MARKETS WHICH ARE SPECIAL
MARKETING SITUATIONS AND REQUIRE SPECIAL AND LESS COSTLY STRATEGIES
TO INCREASE TRAFFIC FLOWS AND LENGTH OF STAY FROM SPECIFIC SEGMENTS
OF THE POTENTIAL MARKET
BUDGET AMOUNTS, IN THIS MARKETING PLAN, FOR COLLATERAL
PROMOTIONAL MATERIALS AND MAIL HOUSE SERVICES TO FULFILL REQUESTS
FOR OFFERS OF BROCHURES, FOLDERS AND THE LIKE HAVE BEEN
APPROPRIATELY INCREASED. IN ALL CASES, BUDGETS FOR THE MEDIA!
PUBLIC RELATIONS ACTIVITIES CARRIED OUT BY PRIVATE CONTRACTORS
HAVE BEEN INCREASED AND GROUND LEVEL CONSUMER INFORMATION
SERVICE OFFICES OPEN TO THE PUBLIC ARE BUDGETED ACCORDING TO
ESTIMATED COSTS OF APPROPRIATE OFFICE SPACE IN THE CITY,
INCLUDING THE ADDITIONAL PERSONNEL NEEDED,
THE N. W. AYER ABH INTERNATIONAL ADVERTISING AGENCY
AGREED TO GO INTO MORE DETAIL ON THE PROGRAM WHICH IS REQUIRED,
A PROGRAM TO WHICH THE CARRIER'S EFFORTS IN THIS CONTEXT CAN
ONLY BE REGARDED AS SUPPLEMENTARY. I HAVE A STATEMENT BY
THOMAS F. MAXEY, VICE PRESIDENT OF THAT FIRM, WHICH COULD, WITH
YOUR PERMISSION, BE ENTERED IN THE RECORD AT THIS POINT TO
COMPLETE MY STATEMENT.
THIS INITIAL FULL YEAR MARKETING PLAN WOULD REQUIRE
A BUDGET OF $148 MILLION TO PERMIT AN ADEQUATE PROMOTIONAL
OPERATION IN THE SIX PRIMARY MARKETS -- MEXICO, CANADA,
PAGENO="0281"
277
UNITED KINGDOM, FRANCE, WEST GERMANY, AND JAPAN, AND IN THE
SPECIAL MARKETS OF AUSTRALIA, ARGENTINA, BRAZIL, VENEZUELA,
BELGIUM, ITALY, THE NETHERLANDS, SWEDEN (FOR ALL THE NORDIC
COUNTRIES) AND SWITZERLAND.
WITH YOUR PERMISSION, MR. CHAIRMAN, THIS MARKETING
PLAN WILL BE ENTERED INTO THE RECORD OF THESE HEARINGS TO SERVE
AS A POSSIBLE GUIDE IN YOUR DECISIONS ON THE FUNDING OF THIS
PROGRAM AND AS AN ASSISTANCE TO THE NEW NON-PROFIT CORPORATION
AS IT ASSUMES ITS TASKS.
U, S. TRAVEL AND TOURISM CORPORATION
THE OPERATION OF A FOREIGN VISITOR MARKETING PROGRAM
CANNOT BE CARRIED OUT EFFECTIVELY AS AN ADJUNCT TO A FEDERAL
GOVERNMENT AGENCY.. THIS LEADS TO OUR SUPPORT OF A FEDERALLY
CHARTERED NON-PROFIT CORPORATION WHICH WOULD OPERATE THE PROGRAM
AS A BUSINESS WOULD. IT SHOULD BE SIMPLE AND UNTRAMMELED IN
ITS ORGANIZATION, WITH A BOARD OF DIRECTORS APPOINTED
BY THE PRESIDENT ON THE ADVICE OF EXPERIENCED TRAVEL INTERESTS;
A COMPACT STAFF, WITH THE ABILITY TO CONDUCT BUSINESS IN A TRULY
COMMERCIAL WAY; AND A RESPONSIBILITY TO REPORT AT LEAST ANNUALLY TO
THE PRESIDENT AND CONGRESS.
AFTER ALL, THE MARKETING OF THE UNITED STATES AS A
TRAVEL DESTINATION IS GOOD BUSINESS FOR THE GOVERNMENT. IT NOW
RESULTS IN OVER $7 BILLION IN SALES OF THE NATION'S PRODUCT, AND
MORE THAN JUSTIFIES ITS PROMOTION -- BY THE INCREMENTAL GAIN
IN TAXES INVOLVED.
PAGENO="0282"
278
IN SUMMARY, MR. CHAIRMAN, THE ESSENTIAL ELEMENTS
OF THE UNITED STATES APPROACH TO TOURISM APPEAR TO BE ESTABLISHED
IN THE PROPOSED LEGISLATION:
* A DECLARATION OF NATIONAL TOURISM POLICY BY
CONGRESS SETTING FORTH GOALS HAVING OBJECTIVES
WHICH MEET THE NATION'S ECONOMIC AND OTHER
INTERESTS AND THE NEEDS OF STATES, CITIES AND
THE PRIVATE SECTOR WITH RESPECT TO TRAVEL.
* CREATION OF A MANDATED CABINET LEVEL POLICY
COUNCIL TO COORDINATE ALL THE PROGRAMS AND
POLICIES OF THE U. S. GOVERNMENT RELATING TO
TRAVEL AND TOURISM, TO MONITOR THOSE EFFORTS
AND TO REPRESENT THE FEDERAL GOVERNMENT'S
INTERESTS IN THIS INDUSTRY.
* ESTABLISHMENT OF A FEDERALLY CHARTERED NON-
PROFIT CORPORATION WITH A MULTI-MILLION DOLLAR
BUDGET WHOSE PRIMARY PURPOSE WOULD BE TO SET IN
MOTION IMMEDIATELY THE INDISPENSABLE AND HIGHLY
COMPETITIVE PROMOTION EFFORT ABROAD OF SELLING
TRAVEL TO THE U. S., TO THE GREAT BENEFIT OF OUR
ECONOMY AND THE PUBLIC TREASURY.
THANK YOU.
PAGENO="0283"
279
Ms. MIKuLsKI. Thank you, Mr. Montgomery.
Mr. HOLT.
STATEMENT OF DAVID HOLT
Mr. H0LT. Thank you, Madam Chairman.
First I would like to apologize for not submitting a written
statement to the committee. When Mr. Philion asked me to be with
him on the panel I was involved in returning to service some of our
wide-bodied fleet. We were settling a strike in Mexico, a wildcat
employees strike. And Saturday, of course, the board denied our
merger, so I have not had time to prepare anything in advance, so
I promise you I will be very short and to the point.
Ms. MIKuLSKI. You have certainly had a lot of experience in the
problems that can be encountered.
Mr. HOLT. This is just the last week and a half.
I am vice president, passenger sales, of Western Airlines, and I
appreciate the opportunity to appear before you today, and to
support the testimony of Mr. Philion and Mr. Montgomery.
Having spent 25 years with Western Airlines in various market-
ing and sales positions, one absolute has guided every tangible
action, and that is that nothing happens until someone sells some-
thing, and this axiom holds true in Government as well as private
industry.
My purpose here today is to sell an involvement in tourism. The
newly formed travel advisory panel to the Senate committee will
give the industry a more direct participation in the processes of
Government, for many feel the travel industry is trivial and nones-
sential. Effective governmental leadership dictates a National
Tourism Policy Act that will direct the efficiencies gained through
use of public transportation, use of air, rail, bus, rent-a-car. Replac-
ing trips by private automobile contributes in a positive way to the
energy problems we must solve. Foreign travelers do this by neces-
sity, as well as contributing to our national economy.
In my brief remarks, I would like to enlarge upon Mr. Philion's
suggestion that you give consideration to amending Senate bill
1097 to assure the full use of available marketing opportunities
and stimulating demand for travel to the United States. Section
308(c) should list in detail the marketing programs that will acti-
vate demand for travel to our country. In other words, clear direc-
tion must be given to the establishment of marketing strategies
designed to outsell competing destinations.
Specific reference in section 308 should address the multifaceted
marketing opportunities. These include, but are not limited to,
trade missions, U.S. site selection for international conventions,
travel trade seminars, enhancement of receptive services, visiting
friends and relatives, special interest familiarization programs, as
well as use of all appropriate public information and communica-
tion media.
Each of you, I am sure, could contribute to this marketing man-
date, and only the seal of the U.S. Government will give these
opportunities the selling credibility necessary to insure success.
The travel industry will do its part, and with the help of Senate
bill 1097 and your help, citizens of the United States will be the
beneficiaries.
PAGENO="0284"
280
Thank you, Madam Chairman.
Ms. MIKuLsKI. Thank you.
Mr. Holt, before I go on to Mr. Lewis, is Western Airlines also
involved in international trade, or is it in iritra-American?
Mr. HOLT. Yes; in fact the two major importing countries,
Canada and Mexico, are both served by our company. We serve the
Provinces of British Columbia and Alberta and three cities in
Mexico, and we were recently awarded two more cities down there
this last Saturday, so we do have service between Canada and the
United States and Mexico and the United States in our route
system, and we recently came into Washington, as you know, on
June 15.
Ms. MIKuL5KI. Mr. Lewis.
STATEMENT OF ARTHUR D. LEWIS
Mr. LEwIs. Yes. Good morning, Madam Chairman. Thank you for
the opportunity to participate in these important hearings.
We support the establishment of an internal Government mecha-
nism for focusing the activities of the Federal Government on
tourism development and accommodation, the National Tourism
Policy Council, and an organization to promote foreign travel to
the United States, the U.S. Travel and Tourism Development Cor-
poration.
Needless to say, and I will not dwell on it, tourism is an extreme-
ly large and complex industry. Herman Kahn says it will be the
largest in the world by the year 2000.
However, until recent years, the United States has been a much
larger originator of world tourism than it has been a recipient.
Tourism has been an important internal industry in Japan for
many years, but it has not been large internationally until recent-
ly. Similarly, tourism in European countries has been large, but
only within Europe itself until the last few years. Elsewhere
throughout the world tourism is essentially fragmentary and local,
and international tourism does not exist except to and from local
countries.
However, rising affluence in many countries throughout the
world, the pervasiveness of worldwide communications facilities,
and the airplane's elimination of time as a deterrent to travel are
changing these characteristics radically. In recent years, Japanese
tourism to the United States has increased sharply and is now
approximately equal to that of U.S. citizens going to Japan. Simi-
larly, there have been significant increases in travel of Europeans
to the United States, partially balancing the heavy volume of U.S.
travel to Europe. We are now reaching a condition where market-
ing conditions are providing the basis for effective and rewarding
marketing efforts by this country in foreign areas.
The United States has not historically emphasized foreign trade
and exports as being vital to the health of this Nation. The relative
superiority of U.S. technology in the early years after World War
II, the relative volume of financial aid to purchasers throughout
the world, relative energy self-sufficiency, and heavy agricultural
exports have caused us to be relaxed about developing Government
programs to stimulate exports.
PAGENO="0285"
281
But that time has now passed. We are a major importer of oil,
our lead in technology has vanished and in many cases is now
lagging, and other nations are providing significant aid in financ-
ing exports. Agricultural exports are not sufficient in themselves to
counterbalance these and other adverse factors, and our foreign
trade balance is in permanent trouble. It will not be corrected by
continuing a policy of indifference to our trade balance. Now that
it is in a negative condition, this Government must become more
aggressive in stimulating exports and in creating a climate in
which exports will flourish.
Encouraging tourism to the United States from all foreign coun-
tries is an endeavor whose time has come. World conditions now
favor a major tourism development effort. In fact, world conditions
now force this country to be more aggressive in selling its rather
significant values as a tourist destination area. This is particularly
true since a very substantial number of countries are actively
promoting tourism and we are in competition with them in the
world marketplace. We not only need to sell the United States as a
destination in its own right, but we need to outsell other nations
actively competing with us.
The United States must develop substitute export products to
replace those which, in recent years, have become less effective in
competing in the international marketplace. We not only need to
become more aggressive in international competition than we have
been in recent years, we must visualize the need to compete for the
indefinite future.
Ms. MJKULSKI. Could you summarize? We welcome your entire
statement, but could you summarize your statement?
Mr. LEwIs. Yes.
The point I would like to get across is that this Government can
do this more effectively by entering into a joint venture with the
tourist industry. The airlines are the principal selling agents over-
seas today for the U.S. interests, but they compete with foreign
airlines operating into this country, which generally benefit from
national prejudices in carrier selection. Much of the advertising
must be directed to competitive themes rather than those which
sell the United States as a destination area. Thus we cannot
depend upon them solely for that effort.
Beyond that point, it is important for those who participate in
the benefits and are beneficiaries of tourism to participate in that
effort. The only way they can do that is through a joint venture in
which Government supplies some of the direct financing for that.
As a result, we strongly urge the establishment of the U.S.
Travel and Tourism Development Corporation.
We also are particularly concerned with the inefficiency of Gov-
ernment dealing with multiple agencies on complex industry mat-
ters, and we think that a mechanism for coordinating activities of
Government is absolutely essential, but we do not have an opinion
on the detail of this particular mechanism.
Thank you.
[Mr. Lewis' prepared statement follows:]
PAGENO="0286"
282
STATE~NT OF
ARTHUR D. LEWIS
PRESIDENT
A~IRICAN BUS ASSOCIATION
Mr. Chairman:
Thank you for the opportunity to participate in these
important hearings. The American Bus Association is the
national trade organization of the intercity bus idustry and
represents approximately 1050 privately owned intercity
bus companies in the United States.
The intercity bus industry is an integral part of the
tourism industry in this country. In 1978 privately owned
intercity buses carried 335 million passengers -- more than
any other mode of intercity common carriage -- for that matter
more than the airlines and Amtrak combined. In charters and
tours alone, we carried approximately 175 million people.
This figure excludes mass transit and school bus charters
which are local in nature. Charter and tour passengers
carried by the intercity bus industry constitute approximately
25 nercent of all intercity passengers carried by all common
carrier transportation services last year.
Te commend you and your committee for your interest
in and support of the goal of achieving a comprehensive
and incelligent national tourism policy and program for
tourism development. We support establishment of an internal
government mechanism for focusing the activities of the
federal government on tourism development and accommodation,
The yational Tourism Policy Council and an organization to
promote foreign travel to the United States, The United States
Travel and Tourism Development Corporation.
Tourism is an extremely large and complex industry,
ranking third in size of retail sales, exceeded only by retail
grocery and automobile sales. Tourism is not only very large
in this country, but it is an important world industry as well.
PAGENO="0287"
283
Herman Kahn states that it seems reasonable to assume
that by the end of this century (only 20 years away) tourism
will be one of the largest in the world, if not the largest.
However, until recent years, the United States has been
a much larger originator of world tourism than it has been
a recipient. Tourism has been an important internal industry
in Japan for many years, but it has not been large internationally
until recently. Similarly, tourism of European countries
has been large, but only within Europe itself until the last
few years . Elsewhere throughout the world tourism is
essentially fragmentary and local and international tourism
does not exist except to and from isolated countries.
However, rapidly rising affluence in many countries
throughout the world, the pervasiveness of world wide
communication facilities and the airplane's elimination of
time as a deterrent to travel are changing these
characteristics radically. In recent years, Japanese tourism
to the United States has increased sharply and is now approxi-
mately equal to that of U.S. citizens going to Japan. Similarly
there have been signtficant increases in travel of Europeans
to the United States , partially b~iancing the heavy
volume of U.S. travel to Europe. We are now reaching a
condition where marketing conditions are providing the
basis for effective and rewarding marketing efforts by this
country in foreign areas.
The United States has not historically emphasized foreign
trade and exports as being vital to the health of this nation.
The relative superiority of U.S. technology in the early years
after World War II, the relative volume of financial aid to
purchasers throughout the world, relative energy self-
sufficiency and heavy agricultural exports have caused us to
be relaxed about developing government programs to stimulate
exports.
PAGENO="0288"
284
But that time has now passed. We are a major importer
of oil, our lead in technology has vanished and in many cases
is now lagging. and other nations are providing significant
aid in financing exports. Agricultural exports are not
sufficient in themselves to counterbalance these and other
adverse factors and our foreign trade balance is in permanent
trouble. It will not be corrected by continuing a policy of
indifference to our trade balance. Now that it is in a negative
condition, this government must become more aggressive in
stimulating exports and in creating a climate in which exports
will flourish.
Encouraging tourism to the United States from all foreign
countries is an endeavor whose time has come. World conditions
now favor a major tourism development effort. In fact, world
conditions now force this country to be more aggressive in
selling its rather significant values as a tourist destination
area. This is particularly true since a very substantial number
of countries are actively promoting tourism and we are in
competition with them in the world marketplace. We not only
need to sell the U.S. as a destination in its own right,
but we need to out sell other nations actively competing with
us.
T~e United Etates must develop substitute export products
to replace those which, in recent years. have become less
effective in competing in the international marketplace. We
not only need to become more aggressive in international
conoetition than we have been in recent years. we must visualize
the need to compete for the indefinite future.
To do this profitably. it will be necessary for the
U.S. government to enter into a joint venture with our tourist
PAGENO="0289"
285
industry. The tourist industry as a whole cannot aggressively
market its services overseas as can manufacturing or agricultural
industries who sell and distribute overseas a specific
identifiable product The tourist industry provides services
to people who come from foreign countries and by and large
consume the products they buy in this country. The tourist
must be enticed to visit this country and this requires a
selling effort involving all the tangible and intangible
values a tourist will derive from his visit. Those persons which
benefit from his trip are not only ~our national transportation
companies who bring him here, but educational and cultural
institutions, local shops selling miscellaneous products,
restaurants, movies, theaters, tourist attractions, internal
travel companies anc~ the hundreds of thousands of vendors of one
kind or another who sell products directly or indirectly to
the visitor.
Other than the U.S. government today the international
airlines are the principal selling agents overseas. But, they
compete with foreign airlines operating to this country which
generally benefit from national prejudices in carrier selection.
Much of the advertising must be directed to competitive themes
rather than those which sell the U.S. as a destination area
competitively to other destination areas.
Thus, we cannot depend on U.S. international airlines
to mount the full selling effort required to make this country
competiti\'e to other destination areas. Others in our society
who benefit, including the average taxpayer who benefits a
great deal, must pay part of the cost of an effective selling
effort. This participation by all those direct and indirect
beneficiaries of tourism can take place only through the efforts
of the federal government. An active joint venture of this
S1_1L~4 0 - 80 - 19
PAGENO="0290"
286
government with the private tourist industry is necessary to
provide this broad support from those who benefit from world
tourism.
Thus, Mr. Chairman, we strongly urge the establishment
of the United States Travel and Tourism Development Corporation.
We also strongly support the establishment of some
internal mechanism in the federal government to consolidate
and focus government policies affecting the tourism industry
and to work to eliminate conflicts in federal programs and
policies which adversely affect tourism development.
I personally am not an expert in government mechanisms
to coordinate policy and thus, I will not comment on the
specific mechanism set up in S.1097. As a private citizen,
however. I am concerned with the need to make our government
more manageable and better able to execute government policies
involving more than one or two departments of the government.
The report accompanying Senate Bill S.l097 documents rather
thoroughly the extent of diffused involvement of many different
federal agencies in tourism. It also published the results of
a study which concluded that execution of tourism programs of
federal agencies has not been very effective.
I think one of the most serious problems of big government
is its difficulty in dealing with complex problems which involve
a multitude of federal departments and agencies. Something
needs to be done to make our government more effective in tourism
and this proposal may be it.
PAGENO="0291"
287
Ms. MIKuLsKI. Thank you very much, Mr. Lewis, and thank you
members of the panel. I would like to go on with some of the
questions.
Mr. Philion, I appreciated your testimony because of its detailed
analysis of the legislation, and both Mr. Montgomery's and Mr.
Holt's because of their practical expertise.
In terms of Mr. Holt and Mr. Montgomery, there are many of us
who really wish to compliment the private sector, particularly the
airline field, for exactly the point that Mr. Lewis articulated.
In effect, you have been the ones that have been marketing
America abroad, through your own private efforts. Yet, at the
same time from what we can gather from testimony earlier, you
have run into a variety of obstacles both within foreign countries
and within your own in terms of the issues of competition and
mobility.
I would like to ask both Mr. Montgomery and Mr. Holt some
questions-Mr. Philion, too.
Earlier in their proceedings, Mr. Danielian talked about the
unfair competition that exists in some foreign markets. This is a
concept that had not been previously brought to the committee's
attention in terms of the role of our own Federal Government to
perhaps help in a variety of ways with lifting barriers.
Could you comment on that issue?
Mr. PHILI0N. If I could lead off, Madam Chairwoman, perhaps
Mr. Montgomery and Mr. Holt can fill in some of the details. This
has been a problem for a long time.
As a matter of fact, about 5 years ago the Congress passed a
piece of legislation known as the International Aviation Fair Com-
petitive Practices Act to deal specifically with this broad problem.
It authorized the Secretary of State, Secretary of Transportation,
and the Chairman of the Civil Aeronautics Board, to undertake
certain studies, reviews, and retaliatory actions in some cases
where that was possible under the statute.
The range of problems included currency conversion restrictions,
discriminatory charges on U.S. airlines abroad, the whole range of
these kinds of problems.
We think the enforcement of that statute has been rather inef-
fective and, as a matter of fact, it is on the agenda for a Senate
Commerce Committee hearing next month on international avi-
ation policy matters, and we intend making some recommendations
to strengthen that statute.
Perhaps Mr. Montgomery would want to provide some details of
the kinds of practices by the airlines abroad in this connection.
Ms. MIKuLsKI. I would find it helpful.
Mr. Montgomery?
Mr. MONTGOMERY. I guess they fall into the following kinds of
categories, Madam Chairwoman. There are, of course, first of all
tariff violations. We operate under laws which say that when we
file a fare with the Government, that is what we must charge, no
more and no less.
Other governments do not seem to feel that the same integrity
has to apply to tariffs, and we run into that type of cutthroat
competition in several different countries.
PAGENO="0292"
288
Another competition which we do face is that the national car-
rier in all the cases I can think is government-owned and exercis-
ing a stranglehold on their local national market. That is done in a
variety of ways-through government pressure on business heads,
on labor union heads, through monopoly electronic reservation
devices, and the refusal to admit competitors like ourselves into
those devices.
Another illustration of the kind of barrier we face is that some
years ago, when we felt that the travel agency commission world-
wide was at an inadequate level, and we attempted to change it in
certain countries, we had our operating certificates conditioned
that if we did not bring ourselves back into line with what the
local government and the national carrier felt the commission level
should be, our operating rates would be withdrawn.
That was the result of a rather famous case where we took the
matter to court in the United Kingdom. We won in the commercial
court, and then lost in the court of appeals and were refused
admission to the House of Lords.
That is the kind of thing which I think describes the problems
that we are facing.
Another one I might add is that very often our routes depend on
the granting of fifth freedom rights; that is, between other coun-
tries not touching the United States. When we string a long line
out to Africa from the United States, we find ourselves dependent
on the continuance of those fifth freedom rights.
On recent QccasionS we have been running into Government
problems of lifting those fifth freedom traffic rights which are
granted in most cases by the United States in a vice versa position.
But we have had those rights either lifted or restricted, which
makes the whole route of doubtful economic value to us.
Ms. MIKuLsKI. Mr. Holt?
Mr. HOLT. Madam Chairwoman, our international routes are
unlike Pan Am. We are very small in that regard. But from a
marketing point of view, we have faced over the years time and
time again the loss of business through the commission means of
individuals making side deals over and beyond what our tariffs
would allow that are on file.
This has happened, and it does happen today primarily in the
Mexico markets where we are highly involved in bringing people
through eight flights a day into the United States and losing num-
bers of these people to the national carrier and the competitive
carriers down there through these types of arrangements.
This is very, very prevalent in our industry, and actually was the
harbinger that brought the open commissions in the international
market, the very fact that they should be put out on the table.
Ms. MIKuJ~sKI. Mr. Philion, you were talking about the oversight
hearing that the Senate is going to have on legislation that was
meant to come up with a more aggressive and coordinated policy.
Who was supposed to be the lead agency in coordinating that
effort? Was that out of Justice, State, or was it at the executive
branch level?
Mr. PHILI0N. As I recall, the primary re~pon@ibi1ity was on th~
Secretary of Transportation to make a finding based on complaints
PAGENO="0293"
289
filed by elements of private industry and in consultation with other
elements of Government.
I think if the individual problem was unsolvable in a negotiated
way then the Government was armed with powers to take certain
actions in retaliation.
While there have been some areas of progress, particularly in
discriminatory handling charges with some countries, it is very
difficult in the international aviation arena to come to grips with
some of these issues, where you can't get books to see how account-
ing practices are followed.
There is a piece of legislation pending in the Senate about which
these hearings will be centered, which among other things would
strengthen our opportunities as a government to look into these
matters and require the filing of records if that is important to
untangling the problem.
Ms. MIKuI~sKI. So the whole thrust of title 2 of the bill which
talks about the establishment of a coordinating council, Federal
agency coordinating council, really at a Cabinet level, to deal with
these issues-there would be issues relating to competitive prac-
tices, entry, currency, and so on-that you have outlined, both in
your testimony and in this inquiry, really indicate the need to have
this at a top level because although the Secretary of Transporta-
tion might find the facts to support your allegation, it is going to
be Justice, it is going to be Treasury, it is going to be State to carry
that out.
Very often the Secretary of Transportation has very little clout
with those international guys, international cabinets. Am I right in
that? They just say, "Wait a minute, we have to work out SALT,
and do this. What are you raising this for?"
Mr. PHILI0N. We agree with you completely. There might have
been some reaction on the part of some in looking at this bill,
wondering why this large coordinating council, and it does appear
awkward-as Mr. Toohey indicated, perhaps there is some cynicism
as to whether it can work.
Our industry is governed and affected by many, many branches
of government. It is hard to deal with these issues on an isolated
basis. We want a group that we among other elements of the travel
industry can go to and say there is a serious problem at a port of
entry, and it involves several agencies of the government and
somebody ought to do something about it. We cannot do that today.
Ms. MIKuLsKI. Well, what we saw in our initial view of the
subject is that there are 26 different Federal agencies, some of
enormous stature like the Department of State, and some much
more minor, Immigration, Justice, State, and so on.
I think that clarifies that part of my questioning.
The other thing I would like to ask about your view on the
Senate bill is the whole stimulation of the utilization of U.S. carri-
ers, whether it is air or sea or whatever. But primarily in this
instance would be air.
Are you satisfied with the language of the Senate bill to encour-
age the use of U.S. carriers? Do you think it needs to be more
aggressive, or do you think it is as well written as it can be?
PAGENO="0294"
290
Mr. PHILI0N. As I indicated in my prepared statement, it is
identical to the language that exists today in the 1961 Internation-
al Travel Act. It has not been very effective.
We offered two possible solutions. One is the removal of some
specific language in that provision, which is an escape clause-the
words are ~`to the maximum feasible." Dealing with that escape
clause may require the removal of that language.
But probably more important would be some clear direction,
legislative history in the report, that tells those who are responsi-
ble under this or a similar law to promote travel and tourism to
the United States, that promoting the use of U.S. carriers ought to
be engaged in to the same extent that the program envisions
promoting other U.S. travel products and services.
We really don't ask for anything more than would be done for
the whole travel industry.
Ms. MIKuLsKI. Would either of you two like to add to that?
I will be candid. I think the language is too wishy-washy. Yet,
short of establishing quotas which I would be very shy about, and
which I think would ultimately even destroy the bill, I am just
wondering how we can be aggressive.
My concern that is coming out about the earlier remarks that
you made is that that language is fine if we were in an atmosphere
of both free and fair trade. But given the fact of some of the
practices you have just alluded to, one of which is that you are
competing with airlines that are directly or indirectly subsidized by
their government, makes it difficult in many ways.
So, I am searching, one, to establish the legislative history that
you have just indicated and, second, if you have any other concrete
solutions, either in language or whatever that you might recom-
mend.
Mr. HOLT. Well, the carriers involved have a responsibility here,
too, in my opinion. It is incumbent upon us to work very closely
with those people administering these policies to make sure these
things don't happen too often. They will happen now and then,
there is no question about it.
Mr. PHILI0N. I think it would be difficult, Madam Chairman, to
come up with more precise legislative language. I will tell you why
I think so.
There is a provision of law today that requires U.S. Government
employees to use U.S-flag carriers. Regulations have been written
to implement that statute that have some escape clauses, because
it is not always possible to use U.S. carriers at a particular time
and at a particular place.
But Government employees generally, and many Members of
Congress, have been complaining about this provision. Now some
revisions are being considered which would substantially liberalize
that provision of law.
I guess what I am saying is if it is a problem for Government
employees, over which theoretically at least there is some control,
it would be difficult I suspect to convince the Congress as a whole
that there ought to be some stronger language for private citizens.
In short, we don't think any government should mandate the use
of national carriers by its citizens, but in this highly competitive
PAGENO="0295"
291
world of promoting travel and tourism, our Government's oper-
ation ought to be at least as effective as foreign governments are.
Mr. MONTGOMERY. I think Mr. Philion has said enough to illus-
trate how complicated it is. But certainly it might well be advisable
to put in the legislation a requirement that the corporation active-
ly and aggressively study this problem.
As the 0MB has pointed out on this very subject, there is reason
for concern about the fare gap as opposed to the travel gap in the
balance. I don't know myself. I don't have the expertise to think
out what measures could be applied.
But certainly the corporation and its staff should be able to do
so. Perhaps there are incentives for the use of the U.S.-flag carrier.
I do know this for certain. A U.S.-flag carrier cannot do it itself
marketingwise.
We have seen that happen several times, and there is always a
boomerang effect and the particular carrier becomes accused of
self-seeking, and American freedom asserts itself once more. So, it
has to be done well and delicately.
Ms. MIKULSKI. I appreciate that answer. You have to know that
one of the reasons I am so persistent in this is not only because of
employment opportunities and other obvious reasons, but also be-
cause I represent a major shipbuilding and maritime community in
the Port of Baltimore.
Here we are, one of the largest importers and exporters of goods
in the world, and yet our merchant marine fleet has sunk to an
alltime low, a low that I consider dangerous from the standpoint of
national security.
What I am concerned about, transposing this to this legislation,
is that our very success might work against us. If we have this
aggressive marketing policy, the energy thrust that Discover Amer-
ica folks were talking about, we will have more inbound traffic,
inbound people coming to the United States, and that there are
going to be a lot of countries saying wait, we want this on Air
Southeast Asia, or something else like that.
However, I think it is very difficult to write language. Perhaps I
am a victim of overanticipatory anxiety here. I think what we
would prefer at this point probably would be for the report lan-
guage to show that the committee will be very much interested in
the impact that this will have on American or U.S. carrier activity.
Then hopefully, if we pass this legislation, we' will come back in 2
years to see what we did with it. One of the things we are really
going to want to know is did American industry benefit by this
activity. Perhaps that would be a way of dealing with it.
I really don't have any other questions, other than the ones you
have heard me ask earlier, about the quasi-public corporation. Mr.
Lewis aptly said that he is as frustrated in dealing with Govern-
ment, and yet sees it as the main tool for accomplishing their
objectives, something I personally feel.
I wonder if you have any comment on whether we should have
the Federal agency versus a quasi-public corporation and which
would be the strengths or weaknesses of either one.
Mr. PHILI0N. Madam Chairwoman, as Mr. Toohey indicated,
many of us in the industry have spent long hours and many years
looking into this situation and looking at alternatives. We have
PAGENO="0296"
292
come down on the side that says of all the alternatives that we can
imagine, the public corporation concept appears to be the best.
While a lot of other governments don't have that kind of concept,
they have something that apparently we cannot have, and that is a
separate Cabinet Department headed by a minister who has powers
that we could not have in a government such as ours to coordinate
and to establish policy as affecting travel and tourism.
So long as our Government is organized the way it is, as broad as
it is, with so many agencies and departments having a direct
involvement in travel and tourism, the public corporation concept
is the only one we can see working.
Ms. MIKuI~sKI. When you saw this smile on my face, it was only
in response to the idea of establishing a new Cabinet office. After
we established the Department of Energy, I think many of us want
to have a moratorium on that effort. We are afraid you would go
back to hang-gliders if we did that.
Well, I would like to thank the panel for its testimony. It was
informative, very instructive and most appreciated. Thank you
very much.
The last witness will be Mr. William Walton of Holiday Inn.
You know, the very first time I visited Poland, which is the
family of my ancestors, I stayed at the Holiday Inn in Poland. I
just couldn't get over it. It was spelled the same way. I might add
the sauerkraut was very good that day.
STATEMENT OF WILLIAM D. WALTON, VICE CHAIRMAN OF
THE BOARD, HOLIDAY INNS, INC.
Mr. WALTON. Madam Chairwoman, my name is William B.
Walton. I am presently the vice chairman of the board of the
Holiday Inn Corp., and one of its three founders.
As I have been sitting here listening to your direct questioning
and your observations, from your dialog of directness, your under-
standing of the problem of travel and the tourism industry, and
what we are talking about, is obvious. I am moved to say to you
that, in addition to saying thank you for visiting the Holiday Inn
in Poland, which has been very successful, by the way, and we are
planning some others there-I am moved to say to you that I have
prepared a written statement which I would like to make a part of
the record, and then due to the lateness of the hour, and the fact
that my associates and members of the industry that have spoken
here already have covered the technical part of the considerations
of the day, I would like to just speak off the cuff and refer to my
written statement, and give you just a little bit of background as to
what this is really all about as far as I am concerned and my part
of the industry.
Ms. MIKuL5KI. Mr. Walton, why don't I accept your testimony as
written and enter that into the record Isee p. 295], and why don't
you proceed off the cuff, but on the record?
Mr. WALTON. Thank you very much.
In 1973, when we had the Arab embargo, I was comfortably
enjoying being president of Holiday Inn. Overnight we found our-
selves in a very difficult situation, having been declared a nones-
sential industry, and being p1~ced at the bottom of the allocation
list-a great portion of our system was in grave danger.
PAGENO="0297"
293
Our board met and considered the situation and out of that
meeting I wound up being assigned the responsibility of coming to
Washington to find out what we had done wrong in the industry.
I started with Secretary Dent. I went to see the good Secretary,
and I said, "Mr. Secretary, Holiday Inn has been very successful.
We have been able to build the largest system of its type in the
world in the last 16 years."
I was just giving him my little pitch real well. When I got
through, he stood up and he shook his finger at me and said,
Mr. Walton, let me say this to you. If your company and its attitude that you
were going to concentrate on building Holiday Inns and not be involved in the
government sector and the public enterprise sector, if you keep that attitude, this
free enterprise system that you and I appreciate and which has made it possible for
you to build a Holiday system 10 years from now is not going to be here. So, you
better get busy.
Then I went over to see Senator Inouye. Senator Inouye had just
experienced being on the floor, trying to do something for the
industry, and the industry had not backed him up. I happened to
walk into his office about that time.
He was ready to talk to me because he had been out on the floor.
When he turned around to see where the industry was, it wasn't
there. He said,
The hotel people are talking to the hotel people and the airlines are talking to the
airlines, and the travel agents are talking to the travel agents, and you don't
recognize yourself as an industry, there is no spokesman, no unity, there isn't
anything. You are going to have to get your act together.
Well, I thought maybe if I went over to the House side and went
to visit Congressman Santini that he would make me feel better
because he was younger and he would notice that I was older. But
he didn't help me a bit.
He said, "Mr. Walton, as I see the problem, there is not enough
unity of cooperation and action between government and industry,
and I suggest that you get busy and see what you can do about
that."
I visited then with Congressman Rooney, and thus began the
action that I have been involved in now for the last 6 years.
Now, as we have viewed what has gone on, we have had Senate
resolutions, we have had Senate Resolution 281 to recognize the
industry. We had the tourism bill that went through the Senate
and the House and the President signed in 1975.
Then we had Senate Resolution 347 to provide the money.
Ms. MIKULSKI. Mr. Walton, I welcome your testimony. I thought
you were going to summarize, and not have two sets of testimony. I
appreciate your own personal history of the subject, but I am going
to have to be at other legislative business shortly after 1. I don't
mean to in any way curtail you, but if you could--
Mr. WALTON. My purpose here was to try to give a background of
why we have come now with the quasi-public corporation.
After the study was conducted, 5. 347 in the Senate, we finally
looked at the study that was made, an investigation and testimony,
and we came up with the idea of this quasi-public corporation.
Now, we believe that the motivation that that corporation should
function just like any other commercial corporation, that the moti-
vation of the board of directors for capital productivity of money
PAGENO="0298"
294
involved should be the same as it is in a private type of corpora-
tion; that the mandate coming from the Congress as to what that
corporation should do would be the same as the mandate that
would come from the stockholders of a private corporation similar-
ly; that this corporation would be responsible to carry out the
mandates.
Those mandates should be those responsibilities to develop and
promote a travel and tourism industry to its maximum productiv-
ity toward the social well-being and the economic condition of this
country.
Then on a periodic basis, that the corporation would report back
to its so-called stockholders, the Congress, of its action. It is our
belief that such a corporation will join hands between the private
sector and the Government sector toward accomplishing a common
goal.
Thus, we came up with a recommendation from the industry,
and S. 1097 was adopted and presently, of course, is under consider-
ation here.
Madam Chairwoman, working with that quasi-public corporation,
there were some things that we considered. We don't want a new
endeavor into the bureaucracy. That we don't want.
We do not want to be involved in another regulatory agency. I
think it is important that we state what we do not want. We
believe that it is critically important that we have an excellent
capacity for advocacy, so that the travel and tourism industry is
right there when the President is considering legislation that will
affect this industry, that the industry is right there to be heard
from, and through the council that is suggested, and its connection
to the quasi-public corporation, we believe that that will be accom-
plished.
In our industry, we are in dire need of data base information,
operating statistics, just like any corporation must have informa-
tion to operate from, and that is sorely needed in this industry. We
believe that this quasi-public corporation will accomplish that also.
I won't go into the commentaries on the advantages of develop-
ing tourism outside the United States to the United States, and
developing the industry, as my colleagues have so well done al-
ready, and you understand remarkably well.
Ms. MIKuI.sKI. Mr. Walton, we do have a vote. Perhaps if you
could finish your testimony, we could have a little bit of a dialog in
the next 7 minutes and we would adjourn. Otherwise I will have to
go and come back and there will be 20 minutes of empty space.
Mr. WALTON. I will wind it up this way. When we get down to
the consideration of funding, it is important that we have sufficient
funding to do the job. That if we are going to put this thing in
place, we have got to put it in place with the momentum to make
it fly. I am convinced that it will fly. It will work, I believe, and I
support it wholeheartedly as does my company, Holiday Inns. I will
be happy to answer any questions that I can for you.
[Testimony resumes on p. 303.]
[Mr. Walton's prepared statement follows:]
PAGENO="0299"
295
STATEMENT OF
WILLIAM B, WALTON
VICE CHAIRMAN OF THE BOARD
HOLIDAY INNS, INC.
GOOD N'ORNING, I1~. CHAIRMAN, ~iy r~p~'~ is Wiuj~i B. WALTON, VIcE
CHAIRMAN OF ThE BOARD OF HOLIDAY INNS, INC., THE LARGEST FOOD AND LODGING
SYSTEM IN THE WORLD.
WE ARE ESPECIALLY PRIVILEGED AND PROUD TO BE WITh YOU TODAY AS THESE
HEARINGS ADVANCE THE LEGITIMATE ROLE OF TOURISM IN OUR NATION'S ECONOMY
AND FULFILL ThE MISSION OF ThE WATIONAL TOURISM POLICY STUDY,
MANY MAY VIEW YOUR WORK AS A CONCLUSION .. .A FINAL CONSIDERATION AND
REVIEW OF WORK BEGUN BY OThERS ... BUT I WOULD GO FURThER. l1R, CHAIRMAN,
YOU AND OTHER LEADING MEMBERS OF ThE HOUSE OF REPRESENTATIVES HAVE BEEN
PARTRERS WITh US FRC~1 ThE OUTSET, I ESPECIALLY RECALL ThE DILIGENT WORK
OF t'lR. SANTINI AND, OF COURSE, WE ARE ALL IN DEBT TO l1R. ROoNEY FOR ThE
YEARS HE PROVIDED LEADERSHIP. I TOLD ThE SENATE SUBCC~WITTEE IN FEBRUARY
THAT I FELT WE WERE SIGNALLING A "NEW BEGINNING." I BELIEVE WE ARE.
THUS WE ARE TRULY PROUD ThLAT TODAY'S HEARING CAN LAUNCH A NEV ERA OF COOPERA-
TION AND UNDERSTANDING BETWEEN ThE GOVERNMENT AND ThE TRAVEL AND TOURISM
INDUSTRY.
WE ARE AT AN IMPORTANT CROSSROADS IN THE TRAVEL AND TOURISM INDUSTRY.
OUR INDUSTRY . , . FRAGMENTED AND DECLARED "NON-ESSENTIAL" IN 1973
.HAS COME A LONG WAY. THREATS OF UNWISE ENERGY POLICY, OUR RALLYING POINT
DURING THE ARAB EMBARGO, ARE STILL WITh US, BUT WE ARE MUCH BETTER PREPARED
TO COPE ECONOMICALLY .. AND TO FIGHT POLITICALLY WHEN OUR LEGITIMATE
INTERESTS ARE THREATENED,
PAGENO="0300"
296
WE ARE ON ThE ThRESHOLD OF IMPORTANT MkJOR DECISIONS THAT WILL POSITIVELY
AND ERQD~JCTIVEL1 ENHANCE 11-US NATION'S ThIRD LARGEST INDUSTRY -- TRAVEL AND
TOURISM -- TO CONTINUE TO GROW AND CONTRIBUTE TO A HEALTHY ECONOMY,
TODAY, YOU WILL EXPLORE NB4 CONCEPTS, NEW WAYS OF LINKING ThE INDUSTRY
AND ThE FEDERAL ESTABLIS~1ENT INTO COOPERATIVE AND SUPPORTIVE ROLES.
TOMJRROWJ ALONG WITH LEADERS OF ThE TRAVEL AND TOURISM INDUSTRY WE WILL
CONVENE THE INAUGURAL MEETING OF ThE TRAVEL AND TOURISM AIDVISORY COUNCIL TO THE
Ca~T~ERCE COMNITTEE OF ThE U.S. SENATE, OUR FORMAT AND DIALOGUE MAY VARY
BUT OUR OBJECTIVES ARE THE SAME , . ,TO tO THE VERY BEST WE CAN FOR OUR COUNTRY
AND OUR FELLOW CITIZENS BY STRENGThENING ONE OF ThE VITAL ELEMENTS OF OUR FREE
MARKET SYSTEM - TOURISM
As WITh ~ST MATTERS OF MERIT AND SUBSTANCE, ThE PROCESS HAS BEEN A
LONG ONE. BEGINNING WITH THE NATIONAL TOURISM RESOURCES REVIEW COMNISSION
OF ThE EARLY 1970's, SENATE LEGISLATIVE INITIATIVES IN 197q, ThE IMPETUS
OF SENATE RESOLUTION ~47, THE DILIGENT WORK OF THOSE ~-1O LABORED ON ThE
~LATIONAL TOURIsr1 POLICY STUDY THE CONTENT OF TWO NATIONAL HEARINGS, AND
NOW THE CONSIDERATION OF 5. 1097 . . ,P~LL HAVE CALLED FOR A NEW AND t~'DRE
RESPONSIVE PARTNERSHIP BETHEEN GOVERNMENT AND THE TRAVEL AND TOURISM INDUS-
TRY . . .A PARTNERSHIP Ni-IICH RECOGNIZES THE INDUSTRY'S ECONOMIC STATURE AND
ITS CONTRIBUTIONS IN THE NATIONAL INTEREST.
THE AOMINISTRATION HAS ENDEAVORED TO ELIMINATE ThE U.S. TRAVEL SERVICE
AND IX~NGRADE ITS FUNCTIONS. THIS CaIIITTEE TOOK A DIFFERENT STANCE.
SURELY, ThE STAGE IS SET FOR CONSIDERATION OF N~L IDEAS, NEW AUTHORITY
AND AN APPROPRIATE PRESENCE FOR TRAVEL AND TOURISM A~ONG THE FAMILY OF
INDUSTRIES THAT INTERACT WITH GOVERNMENT. S. 1097 REPRESENTS SUCH A FRESH
APPROACH, AND WE URGE ITS ADOPTION.
PAGENO="0301"
297
THERE ARE SEVERAL IMPORTANT CONSIDERATIONS *IICH MUST BE VOICED AS
WE M3VE FROM S]]JDI TO ACTION, CONSIDER NEW LEGISLATION FOR TOURISM, LA~CH
NEW EFFORTS TO IMPLEMENT POLICY GOALS AND NEW MECHANISMS TO UTILIZE EXPER-
TISE ANt) INPUT.
IbRE AS A REMINDER TO OURSELVES THAN TO THE CHAIRMAN AND THIS CO~y1I1TEE,
IT IS USEFUL TO AGAIN STATE ONE OF ThE PRINCIPAL OBJECTIVES OF SENATE RESOLU-
TION 307 WHICH PROMPTED ThE rIATI0NAL TOURISM POLICY STUDY.
"(To) MAKE A FULL AND COMPLETE INVESTIGATION AND STUDY FOR ThE PURPOSE
OF DETERMINING A POLICY AND ROLE FOR ThE UNITED STATES WHICH WILL. ~JST EFFEC-
TIVELY ENABLE ThE II~)USTRY TO REPJJZE FULLY ITS POTEIfIIAL TO COcITRIBUTE TO
1W SOCIAL ~ELL-BEING, 1}E CUL11JR~ U~IDERSTANDIHGJ A~D ThE ECONOc1IC PPOSPE-
RITY OF THE UNITED STATES." (EMPHASIS ADDED.)
THE COIF1IUEE I~,ND ThOSE WHOSE ASSISTANCE THEY ENGAGED HAVE FULFILLED
THAT MISSION. A FULL AND COMPLETE INVESTIGATION HAS BEEN CONDUCTED. A
VIABLE NATIONAL POLICY FOR TOURISM HAS BEEN FORGED AND ARTICULATED A ROLE
OF COORDINATION AND FOCUS WIThIN ThE FEDERAL AGENCIES HAS BEEN SUGGESTED,
S. 1097 EMBODIES ThE POLICY O&JECTIVES OF ThE NATIONAL ToURISM POLICY
SnJDY . . .AND GOES ONE IMPORTANT STEP FURThER. IT CREATES A VIABLE NEW IN-
DEPENDENT ENTRY, THE U.S. TRAVEL AND TOURISM CORPORATION, TO FUNCTION OUTSIDE
OF GOVERNt1ENT BUT ABLE TO ACT IN DECISIVE WAYS ON BEHALF OF THE TRAVEL INDUSTRY.
As YOU DELIBERATE ThE MERITS OF 5. 1097 I ~ULD URGE ThAT WE BE MINDFUL
OF THE SAME CRITERIA BY WHICH WE IN THE INDUSTRY FELT ANY NEW "ENTITY" SHOULD
BE MEASURED:
PAGENO="0302"
298
1.) ~ THREAT OF REGULATION
THE INDUSTRY CAN IN NO NAY ESPOUSE ANY AGENCY OR ENTITY WI-UCH HOULD
IN TURN, SEEK OR ASSLI1E REGULATORY AUTHORITY OVER ThE VARIOUS INDUSTRY
C~1PONENTS
WE HAVE SAID SO OFTEN IN ThE PAST, ThE GOVERNMENT IS AN EVER PRESENT
FACTOR IN ThE BOARD ROOMS OF ~iERICA, AND WE CERTAINLY DON'T NEED WIDRE
BUREAUCRATIC INTERVENTION
C~JR EXPERIENCE I-lAS BEEN AS A ERYICE INDUSTRY ... THAT ThE NtARKET
PLACE IS A VERY EFFECTIVE AND SOMETIMES A SEVERE .. REGULATOR
FURThER, N-DLE LAWS EXIST GOVERNING ALL CORPORATE ACTIVITY TO PROVIDE
ADEQUATE SAFEGUARDS AGAINST QUESTIONABLE PRACTICES.
2.) [LC~pAC ITT FOR ADVOCACY
THE NEW ENTITY MUST BE ABLE TO PARTICIPATE ., AS AN ADVOCATE OF THE
TOURISM INDUSTRY *. IN ANY PROCEEDING BEFORE ANY FEDERAL AGENCY WHERE THE
INTERESTS OF THE TRAVEL AND TOURISM INDUSTRY ARE INVOLVED,
THE MISSION OF SUCH A tECF-LANISM WILL CLEARLY BE TO FURTHER ThE AIMS
ANT) OMALS OF ThE tLATIONAL TOURISM POLICY,
WE HAVE SEEN THAT AN UNCLEAR AND FUZZY VIEW OF ThE TOURISM INDUSTRY HAS
CAUSED OThER ELEXENTS OF ThE GOVERNMENT TO PRC~1ULGATE REGULATIONS AND POLICIES
WHICH ARE CLEARLY DETRIMENTAL TO OUR INTERESTS.
RAThER THAN FICUTING ThESE RATTLES IN ThE CONGRESS OR IN THE COURTS, WE
NEED AN C~1BUNSMAN OF OUR ~ . KNCY~LE~GEABLE AND SENSITIVE ... LINKED TO
ThE FEDERAL SYSTEM
PAGENO="0303"
299
3,) DATA EJ)EVELOPMEML
PNY NE%~ ENTITY OPERATING FOR TOURISM MUST BE PREPARED TO COLLECT,
INTERPRET AND PUBLISH VARIETIES OF INFORMSTION CRITICAL TO ThE TRAVEL
INDUSTRY.
THESE INCLUBE COMPREHENSIVE RESEARCH PROGRAMS GEARED TO: CONSURER
INFORMATION, PROTECTION AND EDUCATION) TRAINING AND EDUCATION EMPLOYMENT
TRENDS) FINANCIAL TRENDS) TECHNICAL ASSISTANCE AND TRAVEL DEMOGRAPHICS
LL) TOURISM DEVELOPMENT
OUR COUNTRY'S BALANCE OF PAYMENTS IS MEASURABLY AFFECTED EACH TIME WE
ARE ABLE TO INCREASE ThE FLOW OF INTERNATIONAL VISITORS TO ThE UNITED STATES
AS A DESTINATION.
NOT ONLY MUST WE BE ABLE TO DEVELOP AND COORDINATE A SENSIBLE COMPRE-
HENSIVE PROGRPfl OF INFORMATION ABOUT ThE UNITED STATES AND ITS TRAVEL
OPPORTUNITIES AIMED AT THE MOST LIKELY TARGETS WHICH CAN DELIVER ThE GREATEST
NIJ'~BER OF VISITORS . WE MUST ALS~ BE ABLE TO ENHANCE THAT VISITOR ACCEP-
TANCE AND CONTRIBUTE TO HIS EASE OF MOVEMENT AND OPERATION WHILE HE IS HERE.
THE UNFORTUNATE EFFECT OF INFLATION ON ThE VALUE OF ThE DOLLAR DOES
RENDER THE UNITED STATES AN IMPRO\'ED VALUE AS A TRAVEL DESTINATION. COUPLED
WITH RECENT REDUCTIONS OF VARIOUS AIR-FARE PACKAGES, WE ARE EXPERIENCING A
"MINI-BOOMt' IN INTERNATIONAL AS WELL AS DOMESTIC TRAVEL. FOR EXAMPLE, AL-
TMOUGH FOREIGN VISITORS EXPENDITURES IN ThE U.S. INCREASED ONLY 7,5Z IN 1977,
ThE FIRST QUARTER OF 1978 SHOWED A 19.5~ INCREASE IN THE NL~ER OF VISITORS
TO OUR COUNTRY .. CERTAINLY A PRODUCT OF ECONOMIC AS WELL AS PRC~TIONAL
FACTORS.
PAGENO="0304"
300
But, UNLESS WE SHOW OUR VISITORS A BETTER COORDINATION OF ALL TRAVEL
RELATED POLICIES VISA AND CUSTOMS, DRIVING LAWS, BILINGUAL CAPABILITIES
FOR MEDICAL AND FINANCIAL NEEDS, ETC ,., WE MAY GAIN AN UNWANTED REPUTATION
AS BAD HOSTS.
A NEW, INDEPENDENT ENTITY FOR TOURISM CAN ADDRESS ~Oft1 ENDS OF THE
TOURISM DEVELOPMENT SPECTRUM.
~. CHAIRMAN, AS MY COLLEAGUES AND I DEDATED LAST FALL OVER JUST WHAT
TYPE OF MECHANISM COULD IMPLEMENT A NATIONAL TOURISM POLICY ABOUT WHICH WE
ALL CARED DEEPLY ... AND FULFILL ThE CRITERIA I HAVE OUTLINED ABOVE ... WE
WERE CONSTANTLY STRUCK BY WHAT WE DID NOT WANT,
O THE CURRENT AGENCY, ThE USTS, WAS PLAGUED BY LOW VISIBILITY AND
AND FALSE STARTS.
O A CABINET LEVEL AGENCY WAS POLITICALLY UNWISE AND UNWORKABLE.
O I~ INDEPENDENT GOVERNMENT AGENCY MET SOME OBJECTIVES BUT HAD A
HIGH RISK OF SEEKING REGULATORY POWERS.
OUT OF ThIS DILEI~t~tA , AND THE RESULTING DIALOGUE ... BEGAN TO CRYS-
TALLIZE THE IDEA THAT WHAT WE REALLY NEEDED WAS A NEW ENTITY ... OUTSIDE
GOVERNMENT ,,, BUT CLEARLY LINKED TO THE FEDERAL PROCESS IN IMPORTANT,
INDELIBLE WAYS, OTHER INDUSTRIES HAD CLEARLY FACED SIMILAR IMPASSES
PUBLIC BROADCASTING, RAILROADS, CC~T~1UNICATIONS IN SPACE TO NAME BUT A FEW
AND OUR SEARCH FOR APPROPRIATE ~ODELS WAS UNDERWAY,
THE RESULTS OF THAT SEARCH AND THE DISCUSSIONS THAT FOLLOWED WERE
FIRST REPEATED IN A DRAFT LEGISLATIVE INITIATIVE TO FORM THE "UNITED
STATES TRAVEL AND TOURISM CORPORATION," LATER EXPLORED AND THOROUGHLY
PAGENO="0305"
301
DEBATED IN SENATE HEARINGS, S. 1097 EMERGED AS AN APPROACH FOR TRAVEL AND
TOURISM THAT IS POLITICALLY AND ECOND'IICALLY SENSIBLE * AND THAT MEETS
SO F1ANY OF OUR IMPORTANT NEEDS.
LET ME BE VERY CLEAR REGARDING OUR FEELINGS ABOUT ThE NEW CONCEPT -- A
PLIBLICALLY CHARTERED PRIVATE CORPORATION -- I ThINK IT'S GREAT!
IIANY TIMES IN OUR BUSINESS LIFE WE HAVE SEEN ThAT CRISIS OR ThREAT
BRINGS OUT THE BEST INTELLIGENCE, ThE MOST CREATIVE PLANNING AND ThOUGHTFUL
STRATEGIES, I BELIEVE WE HAVE IX)NE SO HERE. THE IMPERATIVE TO FORGE A
MECHANISM RESPONSIVE TO THE NEEDS OF THE INDUSTRY, CARRYING NO THREAT OF
BUREAUCRATIC EXPANSION AND REGULATION, BUT CLEARLY RALLYING OUR INDUSTRY'S
SEPARATE COMPONENTS HAS PRODUCED AN EXCITING PROPOSAL.
A PRIVATE ENTITY GOVERNED BY KEY IAANAGEMENT FROM OUR INDUSTRY CAN
ADDRESS ITSELF TO THE EXACT MIX OF NEEDS AND OPPORTUNITIES NECESSARY TO
FULFILL THE MANDATE OF NATIONAL TOURISM POLICY STUDY,
IT IS IMPORTANT TO EMPHASIZE SEVERAL OF ThE MAJOR POSITIVE FEATURES
THAT THE CONCEPT OF CREATING THE U.S. TRAVEL AND TOURISM CORPORATION
WILL PRODUCE FOR ThE TRAVEL I NIJUSTRY.
0 AS AN ENTITY OUTSIDE GOVERNMENL IT WILL HAVE NO REGULATORY
STANDING.
U ITS GOVERNANCE STRUCTURE CAN ATTRACT THE BEST TALENT AND
MANAGEMENT CAPABILITY AVAI LADLE I N ThE INDUSTRY,
0 As A SPOKESMAN FOR TRAVEL, ThE CHAIR~'AN WILL HAVE ACCESS TO
ThE HIGHEST LEVELS OF THE SITTING AOMINISTRATION.
b1~100 0 - 80 - 20
PAGENO="0306"
302
o THE MANDATE OF THE ENABLING LEGISLATION WILL BE TO REPRESENT
TRAVEL I NTERESTS WITH I N THE FEDERAL SYSTEM AND TO REPORT TO
CONGRESS AND THE I\OMINISTRATION REGARDING POLICY CONFLICTS IN
MEETING TOURISM'S NEEDS,
O THE CORPORATION BOARD CAN SET AND ALTER GOALS AND PROGRPJ~1S
CONSISTENT WITH THE ~LATIONAL TOURISM POLICY . TO REFLECT
REAL NEEDS AND WORLD ECONOMIC CONDITIONS.
IN OUR VIEW. THE PURPOSES OF THE QUASI-PUBLIC CORPORATION WILL BE TO:
1.) BE ThE PRINCIPA ENTITY FOC TOURISM INFORMATION, RESEARCH, FACILI-
TATION, ADVOCACY AND PUBLIC ENLIGHTMENT.
2.) IbNITOR THE PROORAMS AND ACTIVITIES OF ThE VARIOUS FEDERAL. AGENCIES
WHICH AFFECT TOURISM.
3.) BAKE DATA AVAILABLE TO THE CONGRESS AND THE PDMINISTRATION ON A
TIMELY BASIS.
Li.) ENCOURAGE TRAVEL TO THE UNITED STATES FROM FOREIGN COU~TRIES.
5.) DEVELOP IMPROVED SERVICES AND FACILITIES FOR FOREIGN VISITORS.
6.) COORDINATE AND CONSULT WITH BUSINESSES, ASSOCIATIONS AND ORGANIZA-
TIONS ENGAGED IN TRAVEL AND TOURISM TO OPTIMIZE ThE RECOGNITION OF
THE ECONOMIC IMPORTANCE OF THE INDUSTRY TO THE UNITED STATES,
HCLIDAY INNS SUPPORTS ThE CREATION OF A PUBLICLY CHARTERED BUT PRIVATE
SECTOR BASED U.S TRAVEL AND TOUQISM CORPORATION. SUCH AN ENTITY, EMBODIED
IN S. 1~B7 ADHERES TO THE CRITERIA NE HAVE OUTLINED.
BE UNGE THE CC~I~ITTEE'S SWIFT AND FAVORABLE ACTION ON ThIS LEGISLATION.
WE ALSO UOGE, IN THE OFTEN DELICATE MATTER OF BUDGET AND FUNDING RECOtIHENDA-
TION THAT THE CC~YUTTEE, WHILE EXERCISING NECESSARY PRUDENCE, NOT ALLOW THIS
PAGENO="0307"
30%
NEW EFFORT TO BE HAMPERED BY INADEQUATE FINANCIAL SUPPORT AFTER SUCH PAINS-
TAKING EFFORT OVER ThESE PAST YEARS TO REACH CREATIVE CONSENSUS, SEEING
SIXH A NEW ENTITY CRIPPLED BY AN UNThINKING STROKE OF ThE APPROPRIATIONS
PEN AND ~OMING IT TO UNFULFILLED EXPECTATIONS AND UNREALIZED DREANS V~ULD BE
SAD INDEED,
WE KNOW YOU WILL BE ThOUGHTFUL IN ThIS t'lt\TTER,
WE THANK YOU FOR THIS OPPORTUNITY TO SHARE OUR VIEWS AND WILL
WELCOME YOUR QUESTIONS,
Ms. MIKULSKI. First of all it seems like you do not get very good
receptions in the Congress. I hope you find this one at least a little
bit warmer if not brief.
Mr. WALTON. Madam Chairman, I am heartened by your under-
standing of the problem. Usually we spend so much time trying to
get someone to listen and understand what our problem is.
Ms. MIKULSKI. How many people does Holiday Inns employ?
Mr. WALTON. 160,000.
Ms. MIKULSKI. Throughout the United States?
Mr. WALTON. Throughout the system.
Ms. MIKULSKI. Similar inns that are your competitors, how much
employment do you think you would account for?
Mr. WALTON. Holiday Inns' size is the equivalent of the next
three of our competitors put together, and three times larger than
our nearest competitor, and I don't know what their--
Ms. MIKULSKI. We are really talking about the potential of
750,000 people?
Mr. WALTON. Yes, indeed.
Ms. MIKULSKI. And then your own role in the community is that
you obviously have a multiplier effect in terms of purchasing food,
laundry services, and so forth?
Mr. WALTON. Indeed.
Ms. MIKULSKI. Which is one of the points that everyone was
making. To really stimulate travel, and not only I don't want to
use the term recycled American travel, but quite frankly someone
coming from Poland to the United States means new money
coming in, rather than American money just being redistributed
geographically.
Mr. WALTON. That is correct.
Ms. MIKuLsKI. Which I am sure adds to our economy. Based on
your conversations over the past 6 years, do you feel that the board
of directors of this quasi-public organization. No. 1, would work
together and, No. 2, provide that spirit and energy to keep it alive,
so that it really meets the goals, and does not go off and develop its
own life the way so many of the ones we have created have?
Mr. WALTON. Six years ago I would have answered that question
negatively. Today I will answer it very positively. I believe we have
all learned our lesson, and I will inaugurate tomorrow the first
PAGENO="0308"
304
council of industry advisors to the Commerce Committee of the
Senate. Senator Inouye has appointed a council made up of the
chairman. vice chairman, the president's chief executive officers and
chief operating officers of all the major corporations of the indus-
try, to become an advisory council to the Senate Commerce Com-
mittee, and he has asked me to be its chairman.
I sent out a notice to these men, and called a meeting in a week's
time, and tomorrow we will have everyone there save two, and I
am greatly gratified at the response.
Here is a thought. You know in America today we have forced
retirement at 65, and most companies have what is known as wind-
down toward retirement beginning at about 61 or 62. In America
today. there are officers in my opinion that have the time to give to
Government, that can participate in such things as this advisory
council that we will inaugurate tomorrow.
Ms. MIKULSKI. That is an interesting concept, because what you
are saying is that your senior people, who have experience, season-
ing, and a variety of experiencing, because they will be retired,
they don't have the ax to grind of a particular company.
Mr. WALTON. That is right.
Ms. MIKuLsKI. But they have a life-long involvement and experi-
ence in the industry.
Mr. WALTON. I have the privilege of serving as deputy chairman
of the Federal Reserve Board of St. Louis, and I served with Chair-
man Miller. His attitude is that he wants to give something back to
his country in the twilight years of his--
Ms. MIKuLsKI. Mr. Walton, that is the second bell and it is the
final vote on Amtrak. Although I would love to hear more, I really
must excuse myself, given the other nature of legislative business.
Mr. WALTON. I understand.
Ms. MIKuJ~sKI. Although I am going to adjourn this meeting of
the committee, I think I speak in behalf of Mr. Florio, who did
want very much to be here, that even though we are adjourning
the committee this minute, we really see it not as adjourning or
terminating what we hope will be a long-term conversation in this
area, to promote tourism, and quite frankly to do what America
expresses. I am going to market America. Thank you very much
for those insights.
Mr. WALTON. Thank you.
Ms. MIKuJ~sxI. The committee stands adjourned to the call of the
Chair.
[Whereupon, at 1:05 p.m., the subcommittee adjourned, to recon-
vene at the call of the Chair.]
PAGENO="0309"
NATIONAL TOURISM POLICY
WEDNESDAY, AUGUST 1, 1979
HOUSE OF REPRESENTATIVES,
SUBCOMMITTEE ON TRANSPORTATION AND COMMERCE,
COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,
Washington, D.C.
The subcommittee met, pursuant to notice, at 9:30 a.m. in room
2322 Rayburn House Office Building, Hon. James J. Florio, chair-
man, presiding.
Mr. FLORIO. The subcommittee will come to order.
As you know, this is a continuation of our hearing on an effort to
develop a national tourism policy. There are two things that I
would like to bring to the attention of all in attendance:
First, and I suspect many of you know that the House and the
Senate Appropriations Committees have agreed to the $8 million
authorized by this committee to fund the U.S. Travel Service for
another year. This will allow the USTS to continue operating on a
scaled down basis through fiscal year 1980. By that time we are
hopeful that a new national tourism policy will have been enacted,
and these hearings of course are part of that process.
Second, I would like to read a letter that I sent to the President,
which is self-explanatory:
DEAR MR. PRESIDENT: On the 25th of June I wrote to your Assistant for Domestic
Affairs and Policy, Mr. Stuart Eizenstat, to request that a meeting be arranged
between officials who are members of this subcommittee, high-level administration
officials and representatives of the tourism-related industries, to exchange views
regarding a national tourism policy. To this date, I have yet to receive a response.
It is increasingly difficult to defend the administration against charges of callous-
ness toward the interests of this multifaceted industry. There appears to be little
concern or understanding within the administration as to the importance of the
tourism industry to our national economy. Everyday crucial Federal decisions are
made from energy policy, to parkiand use, which have a substantial impact on the
travel and recreation industry. Yet there is no explicit Federal policy on tourism,
nor any authorized Government entity which has responsibility for insuring that
legitimate interests of the traveling public and the industry are recognized.
As you know, the Congress is now considering legislation to establish a national
tourism policy. Additionally, it is my understanding that your administration is
considering a consolidation of various programs into a renamed Department of
Trade and Commerce. Some have suggested that a new tourism policy should be
implemented by this department.
In light of this departmental reorganization, and the legislation pending before
the Congress, it is imperative that a meeting take place in the immediate future to
discuss tourism issues and to exchange views on the appropriate role of the Federal
Government in this area.
In order to formulate the most effective policy, we need full cooperation between
the legislative and executive branches. I very much appreciate your prompt atten-
tion to this matter. I will be happy to assist you in any way I can.
As indicated at a previous hearing we have attempted to estab-
lish this meeting to get some discussion going, and the letter ex-
(305)
PAGENO="0310"
306
presses my unhappiness with the fact that we have not been able
to get the cooperation that we would have hoped for. I am hopeful
that the letter will evoke a response, and of course will make a
public statement as soon as we do receive a response. Hopefully it
will prompt the meeting we are talking about.
I think it is appropriate that we commence with the hearings.
We have a very impressive list of witnesses. Our first witness is
Mr. Jenrette, John Jenrette, a vital Member of Congress, who has
been helpful in other areas, and we look forward to your help in
the area of tourism.
STATEMENT OF HON. .JOHN W. JENRETTE, JR.. A REPRESENT-
ATIVE IN CONGRESS FROM THE STATE OF SOUTH CAROLINA
Mr. JENRErrE. Thank you, Mr. Chairman.
I appreciate the opportunity to appear before you. I shall not pre-
sent the full statement. I will paraphrase for the benefit of time,
but I do want to take this opportunity to commend you, Mr. Chair-
man, and the subcommittee for having the insight to seek a nation-
al tourism policy and what I believe will become a very farsighted
approach. The South is an area that has long been improperly
utilized as an economic benefit. I would like to say, with some
degree of hesitation, since the chairman is from a part of the
country that I happen to admire but was not raised in, that long
ago when I was growing up in the sandy areas near Myrtle Beach,
which is my home now, that we grew a great deal of cotton. We
knew very little about the tourism industry or the economic impact
of tourism. But I learned from my dad long ago. when we found
what Nature had given us and how well we could utilize it, that it
was a lot easier to pick the Yankee dollar than it was to pick
cotton. From that I found very well that the tourist industry in the
South, and South Carolina particularly, needed to be and has been
nourished to a great degree to provide a stronger economy for the
whole area by creating jobs from unskilled up to the highly skilled.
The fact that you have called this meeting, and that you are
considering, along with the other body, legislation that will pro-
mote throughout the Nation, and hopefully worldwide, an integrat-
ed and a very coordinated system of strengthening the tourism
industry in the United States I think you are to be highly com-
mended. I would like to be one of the first to strongly commend
your committee for taking the initiative in this area, and assure
you that I will do everything I possibly can to see that your efforts
go noticed, and that we together work to see that there is a strong,
aggressive policy.
I know of no pollution associated with tourism, other than maybe
some site pollution, as we try to induce individuals to go to our
particular resort, that is involved in the basics of tourism, and I
think it is an unpolluted dollar that we can very well find benefi-
cial.
Senate Bill 1097 is good in many instances, and I would like to
see its passage. However, I believe we in the House can with our
many capabilities improve on that. I think first that the improve-
ment would be that we should look toward bringing about a strong-
er input from the industry itself. Those that have felt, the trial and
PAGENO="0311"
307
error causes of failure and success and see that their input in
whatever program, we in the House provide for, is made, and that
they are given an opportunity to work very closely with any appa-
ratus established.
Second, as I see it, we are moving industrywide to the possibility
of a 4-day workweek, and at the same time we are moving toward
the human needs of varied recreational facilities. These can both
very well dovetail, at very little additional expense and very little
expansion via a national policy of tourism. We can provide varied
and active recreational facilities here in the United States, for our
people to utilize their time, so that they can be mentally alert and
better able to produce quality work.
I believe also that any Federal funding should be so designed to
insure it provides incentives to the private sector, so that they may
feel involved and actively participate. This will insure their Gov-
ernment is working with them rather than coming up with a total
new bureaucratic maze of a tourism committee or a tourism agency
in and of itself.
As your report very well states, over 90 percent, or approximate-
ly 90 percent, of those involved in the tourism industry are small
businesses. We in the Congress, and I know the chairman's very
keen interest in this, must see that the small businesses who are
not ofttimes represented by organized interest groups on the Hill
or the most informed individuals as far as the technicalities of
legislation is concerned, that these individuals are involved in any
decision or administrative mechanisms established via any new
tourism policy established.
In my home district in South Carolina, that I am very proud to
represent, we are very aggressively working for tourism on a
worldwide basis. I think that anything we do should be coordinated
with the various State travel services in other areas to insure that
we coordinate all efforts to see that we are more than competitive
nationwide.
I on the Appropriations Committee felt very strongly that we
should increase the amount of money to the U.S. Travel Service,
rather than to cut back in this area. Whatever program this sub-
committee establishes, Mr. Chairman, you can be assured that I
will help fund it, to see that we do have, and that we do compete,
with other countries as we each vie for that very unpolluted tour-
ism dollar.
Last, on July 20 I proposed that we form in the House of Repre-
sentatives-and we have so many caucuses now I hesitate almost to
do so; and I am a Member and I am charged each month by each of
them, because I believe they are worthwhile-a tourism caucus.
This caucus would allow the Members to come in and to help us
understand the national policy, bringing in outside individuals that
could help us in such a way that we would not be caught short by
an innocuous sentence in a long piece of legislation that might
adversely affect the tourism industry, and so forth.
I am still pursuing that goal. I would hope that this subcommit-
tee would look at the objectives from time to time and advise this
caucus, once established, how we can be of assistance to the sub-
committee. With that, Mr. Chairman, I close and say that I just
again commend you and the committee for looking into a matter
PAGENO="0312"
308
that I think is long overdue as far as it relates to the economics of
America. I believe that the 90 percent of small businesses that
have started basically from the mom-and-pop stores that we have
heard about so many times in every piece of legislation, the indi-
vidual that has a cavern in the hills that people have never been
able to see, to those that have bee hives that make honey that
individuals have never been able to see, all of those can be part of
a nationwide tourism program fostered and started by this commit-
tee. I am just proud that you would allow me to come and be with
you today.
I shall work with you in any way I possibly can because it is very
dear to my heart and to my ballot box. Thank you very much.
[Congressman Jenrette' s prepared statement follows:]
PAGENO="0313"
309
Statement Given by
Honorable John W~ Jenrette, Jr.
Before Interstate and Foreign Commerce Subcommittee
On Transportation and Commerce
National Tourism Policy
August 1, 1979
Mr. Chairman and Members of the Subcommittee: Thank you for
the opportunity to address you on the topic of the proposed National
Tourism Policy. I want to commend you for the fine work you and your
staff have done on this most important topic. You have amassed a
tremendous amount of data on the topic. As a result, I will not take
up your time with a reiteration of the massive amount of statistical
data which documents the tremendous importance and significance of the
Tourism Trade the world over. The information which you have been
studying well documents the fact that tourism is a big business, when
taken as awhole, and is one of the major components of our economy.
Unfortunately, these same statistics also point out the fact that we
in the United States have not taken full advantage of the true poten-
tial of tourism. Whereas other countries nurture and encourage the
trade, due to its many favorable economic characteristics such as:
unskilled, semi-skilled, and minority employment, over $115 billion
annually in consumer expenditures, a positive effect on balance of
payments, employment of over 6 million or close to 7% of the total
workforce, etc., we have treated it as a stepchild. We have for the
most part addressed it with many disjointed, uncoordinated programs
and have done nothing to develop a cohesive theme to provide direc-
tion and encourage its development. This I believe has been a
mistake and needs to be corrected.
For this reason, I want to encourage the subcommittee to develop
and adopt an aggressive, comprehensive and effective national tourism
policy that will allow the local, state and Federal levels of govern-
ment to join hands with the private sector in creating an environment
that will ensure the proper growth and development of the industry,
strenghten our economy and enhance the image of our great country both
from within and abroad.
I have studied the Senate version of a national tourism policy,
in the form of S-l097, and feel it has merit. Realizing there are
numerous approaches to accomplish our objectives of strengthening
and improving the tourism industry, and in turn our image and the
economy, I am not totally convinced the approach esposed in the form
of S-1097 cannot be improved. As a result, I would like to make the
following general suggestions.
First, wherever possible, I feel we should formally interject the
tourism industry itself into any apparatus established to nurture
and encourage growth in the tourism industry. I am a firm believer
that, wherever possible, we should allow the industry experts to be
directly involved in providing advice and assistance in developing
PAGENO="0314"
310
programs to accomplish our objectives. Government, in the form of
a national tourism bureaucracy, should be kept to a minimum. Govern-
ment should only be allowed to play the role of coordinator and fa-
cilitator. The private sector should be relied upon whenever and
wherever possible. It should be stimulated, encouraged and moti-
vated through government action, but should not be over come and
cnntrolled by a bureaucracy filled with technocrats. Lets keep
the government apparatus to a minimum and rely on the private sec-
tor as much as possible.
Second, I believe wherever possible, any Fedeal funding
arrangements should be provided in such a manner so as to pro-
vide incentive to the industry to provide matching funds from
the private sector. It has been my experience that wherever
and whenever government interjects itself and carries 100% of
the burden, human nature prevails, and the program becomes a
dole and a burden on the taxpayers instead of its intended pur-
pose. Whenever a business segment is required to invest some of
its hard earned income into a program and they are involved in
the policy making aspects of the program, their ingenuity and
resourcefulness will not only float to the top, as cream in milk,
but will be employed in such a manner so as to ensure efficient
and effective utilization of the taxpayer's funds and an even
better investment return on any expenditure.
Third, as you well realize a great majority of the businesses
composing the tourism industry, some estimates have it at close
to 90%, are considered small businesses which are oriented towards
family recreation. As a result, I believe it is of tremendous
importance to write into any policy provisions assurances that the
small businessman familiar with this segment of the industry is
well represented on any Tourism Development Corporation. I also
believe, to further ensure the small businessman is properly
represented, that the Small Business Administration should be
included in the list of those composing any Policy Council such
as that proposed in S-1097.
In summary, it is appropriate to once again thank you for
your interest in such a crucial issue. My home district's
economy in South Carolina, and hundreds like it throughout the
nation, depends on tourism. The tourism industry nationwide,
although a significant and important segment of our economy, is
disjointed and uncoordinated. It needs a coordinator and an
entity to provide overall direction, assistance and reinforce-
ment. Alone, the various businesses and areas of our country.
cannot provide the impetus required to ensure it remains a
viable and healthy segment of our society. Further, the industry
will never see its true potential fulfilled without help. We are
confronted with a tremendous opportunity, and I pledge my support
to assist you with your efforts to ensure it does not slip by.
PAGENO="0315"
311
Towards that end, I close with a special invitation to
each of my colleagues sitting on the Subcommittee who have not
already done so, to join with me in forming a Tourism Caucus.
On July 20, 1979, I sent out a letter to each member of the
House advising them of my interest to create a Tourism Caucus.
The purpose of such a caucus would be to bring together all
Congressmen having tourism interests in their home district to
work to ensure that the tourism industry's interests are taken
into consideration in the development and adoption of govern-
ment policies, to promote growth in the industry and to promote
increased tourism from foreign countries. The response thus
far has been good and in the near future we hope to have an
organizational meeting.
I look forward to working with you towards our common
objectives. Thank you for your time and consideration.
Sincerely yours,
Joh ~
xth Dist ict SC
JwJ
Mr. FL0RI0. Congressman, your forthrightness and candor is
always very refreshing.
Mr. JENRErFE. I will be happy to answer any questions.
Mr. FL0RI0. Let me just ask two questions. I know that many of
the States have developed tourism policies in a very sophisticated
way and actively and aggressively reach out to seek tourists. Does
your own State, or any State that you are familiar with, do any-
thing by way of attempting to attract foreign tourists to this coun-
try?
Mr. JENRETTE. We do. However, our efforts are minimal because
of budgetary constraints. In the State legislature I sponsored a bill
to establish an agency called Parks, Recreation and Tourism. We
brought in our parks and our recreational areas, with the tourism
aspect quite honestly to get the votes to have it passed. I was
interested in it being called Tourism, Parks and Recreation. I did
not prevail in that, but we have the agency. We do have and we
advertise in many of the international trade journals and actually
visit Canada to attract travelers to our area. We have had delega-
tions under the auspices of the Parks, Recreation and Tourism
working with our State development board, and our State Gover-
nor's office, to travel abroad, with the intent of bringing in tourists.
I think that we should expand on that. I think that the statistics
in your report show that we have done an aggressive job. Maybe
we stumbled on it, but I know in the United States, in one of the
streets in New York, and probably in many of the other metropoli-
tan areas, you can see agencies from other parts of the world. They
are aggressive, with door prizes, cocktails or anything else, when
you step off the plane, to induce the individual to come to their
part of the world. We need to do more of this and I would much
rather see our State agency work in concert with a Federal agency.
This would be much more effective if proper funding was available.
PAGENO="0316"
312
Let me add the caveat I am a States' righter basically, and I do
not want to see us taking away the rights of the State. There is a
great deal of overlapping, and I think there is a great deal of
duplication of services, and I would not think that I could bring, or
our tourism agency, or our State Governor could solely bring to
South Carolina a group of foreign individuals. I think that they
also would go to New Jersey or Colorado or somewhere else while
they were here. For this reason, I believe the national tourism
policy approach that you are looking into would greatly help us.
When we get them here, again the Yankee dollar, we must be
first I think prepared to accommodate them in a way that they
would want to be accommodated, and show them things that they
would not be able to see in their own home country, and I think
they will be willing to expend the necessary funds for that recre-
ational part of their lives.
Mr. FL0RI0. My last point, and perhaps you are not in a position
to give it to us now; you can send it to us: You mentioned the idea
or concept of Federal incentives to industry. I wonder if you would
be in a position to provide us with some specifics as to the types of
incentives that you have in mind?
Mr. JENRETTE. I will be more than happy to submit some exam-
ples for the use of the subcommittee.
[The following letter and attachments were received for the
record:]
PAGENO="0317"
313
)0HN %V. JENRETTE JR.
980?OCol.ooo, 300750475,07 f~U~ `3 ~ IA
(202) 225-3315
APP07OP1SIATION3 COMMInEE:
000L70355050505077EE C
P.O. BOo 1771
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DEPUTY MAJORITY WHIP ~ of ~epre~entatjba Ho,,~
C80,,~o C33575,,,33
Co,,,,o,~ So,o~, Co,a.,,,o 29528
~&s~itngwn, ~fC. 20515 (803) 222-4227
August 29, 1979
The Honorable James J. Florio
Chairman
Subcommittee on Transportation and Commerce
Room 3150 HOB Annex 2
Dear Chairman Florio:
You requested that I forward to you and the committee some
sp9cifics as to the types of incentives that the Federal Government
could use to encourage local participation. As a result, please
find the attached. This is an example of how the State of South
Carolina has provided incentive monies to encourage local publicity or
promotions of their tourism related fscilities. As I gather some
additional items or ideas, I will forward them to you for your review.
Should you have any questions concerning the attached, do not
hesitate to contact me.
Thanks for your assistance as it relates to the National Tourism
Policy.
Sincerel yours
~JEN~E, JR.
Nember of Congress
Sixth District, S.C.
Enclosures
JWJ/dwf
PAGENO="0318"
314
PRT~
April 23, 1979
Dear Friend In Tourism:
The South Carolina Department of Parks, Recreation and Tourism has recently
embarked on a new funds sharing program to aid coulTiunities and non-profit
organizations in the advancement and promotion of our states tremendous
tourism attractions and potential.
Requirements and guidelines for this new program were kept as simple and
reasonable as possible in an effort to help make it easy for anpropriate
groups and organizations to apply. I ass enclosing a copy of the final guide-
lines and an application form. Applications should be completed and re-
turned to my office no later than June 1, 1979. All questions on the appli-
cation form should be answered in typewritten or printed form. At the present
time we do not anticipate having actual state funds on hand to make grants
prior to August 1, 1979.
If you have any questions concerning this program, or if there is any way
my staff can be of assistance to you with this program feel free to call on
me.
Sincerely,
Robert G. Liming
Director of Tourism
RGL/bw
End osure
PAGENO="0319"
315
APPLICATION
SOUTH CAROLINA TOURISM FUND-SHARING
The South Carolina Department of Parks, Recreation and Tourism has been
designated by the General Assembly under Section 5 of the Permanent Provisions
portion of the 1978-79 Appropriations Bill as the agency to administer a funds-
sharing program to assist local tourism promotion organizations in the state.
The section specifies that funds derived from the admissions tax in Section
12-21-2420 and 12-21-2710 of the 1976 Code in excess of $3.5 million "shall be
used to advertise and promote the tourism industry of the state. The advertising
and promotion activities shall include paid media advertising and other promo-
tional projects of the department as well as the establishment by the department
of a matching funds program to assist local tourism promotion organizations in
the State."
WHO MAY APPLY
Any non-profit organization as defined in Section 501(A) of the Internal
Revenue Code or any governmental agency, board, comission or subdivision one
of whose primary functions is the promotion of tourism may apply.
WHERE TO SEND APPLICATIONS
Applications for participating in the program should be sent to:
Robert G. Liming, Director
Division of Tourism
South Carolina Department of Parks, Recreation
and Tourism
1205 Pendleton Street, Suite 113
Columbia, South Carolina 29201
AMOUNT AVAILABLE
The amount for each grant will be determined annually based upon the funds
available and the merits of the project. For groups representing more than one
county, the number of counties involved will be taken into consideration.
(1)
PAGENO="0320"
316
In providing the funds, major consideration will be given those organizations
who had not previously participated in the program and those groups serving multi-
ple areas.
APPROVAL
All applications will be reviewed by the tourism division which will make
recomendations to the PRT Comission for final approval.
MAY NOT BE USED
These funds may not be used to replace local funds or to match other state
funds; neither will the funds be used for administrative expenses, salaries,
travel or meals.
DEPOSIT REQUIRED
Each applicant must have its match funds on deposit before state grant funds
are released. Federal funds may be used to match the state funds. A firm federal
comitment to the project will satisfy the deposit requirement.
SOUTH CAROLINA REQUIRED
`South Carolina" shall appear on any brochure or projects approved. This
should be on the front page or the front or main side of any device, etc. that
results from the program. If any disagreeiient develops about the locations or
size of "South Carolina," the Division of Tourism and the applicant will mutually
make the final decision.
REPORTS AND AUDITS
Records of the project must be available at all times during normal working
hours of the applicant for inspection or audit by PRT or any authorized state
agency.
PAGENO="0321"
317
RETURN OF FUNDS
If work is not started wi thin 30 days of the date specified in the appli-
cation, an extension of time must be obtained from PRT or the state funds must
be returned.
Any state funds remaining after completion of the project must be returned
to PRT. If a project is abandoned or not completed, the remaining funds will
be returned to PRT. In addition, PRT must attempt to obtain the return of all
matching funds spend on the project.
COMPLETION
Projects under this program must be completed during the fiscal year in
which the grant is made unless otherwise authorized. Applications should be
on file with PRT by June 1 of each year.
Each application should contain:
(1) The name of the organization applying.
(2) Project for which grant will be used.
(3) Narrative description and justification for project.
(4) Plans, drawings, copy, layout, etc. for project.
(5) Proposed starting and completion dates.
(6) Budget for project.
(7) Name of project director.
(3)
61-144 0 - 80 - 21
PAGENO="0322"
j~APPLICATION
SOUTH CAROLINA TOURISM FUNDS-SHARING PROGRAM
Name of Applicant____________________________________
Address Zip ____________
Telephone No. ~ Project Director_
Name of Project
Project Start-Up Date ~ Project Completion Date____________________
* Sfate Funds~Requested Total Budget for Project__________________
~-Are Your Funds on Deposit?_________________________________________________
What Was The Source of Your Funds?_______________________________ ___________
If additional space is needed, please use another sheet. Please send this
application, along with any supportive material you think necessary to:
Robert G, Liming, Director
Division of Tourism
South Carolina Department of Parks, Recreation
and Tourism
1205 Pendleton Street
Columbia, South Carolina 29201
318
Description, Goals and Justification of Project
PAGENO="0323"
C1~rendon County Council Clarendon County Striped Bass
Festival (billboards, radio,
magazine newspaper, direct mall,
bumper stickers
AMOUNT AMOUNT AMOUNT
RFOIIFSTFD RECO~'t'1ENDED APPROVED
)UP SEEKING
FUNDS
P P Od F CT
AMOUNT
OF
PROJECT
COUNTIES
AFFECTED
Abbeville Development Board
.
Abbeville Square Restoration Project
(brochures and direct mail
$ 3,000.00
$ 1,500.00
$1,500.00
Abbeville
Atlantic Beach, Town of
Atlantic Beach Promotional Project
(brochures, billboards, bumper
stickers)
$ 2,179.00
$1,679.00
$1,679.00
.
Horry
Beaufort County Promotion
Committee
Beaufort County, S.C. Vacation
Guide
$19,000.00
$10,000.00
$10,000.00
Beaufort
Catawba Regional Planning
Council
Tourism Brochure for the Catawba
Region
$ 6,000.00
$ 3,000.00
$ 3,000.00
Chester
~a~icaster
Y~r~n
`Charleston County Parks,
Recreation & Tourism
Commnisslon
Newspaper, TV, Travel Show Display.
Audio Visual Presentation
Direct Mail
$40,700.00
$23,200.00
$23,200.00
Charleston
Cherokee County Chamber
of Conuiierce
~
S. C. Peach Festival, Inc. 1979
(leaflets, billboards, direct mail,
newspaper, radio, photos, posters)
$45,000.00
$ 6,558.29
$ 5,000.00
Cherokee
$10,000.00
$ 5,000.00
$ 5,000.00
Cl arendon
PAGENO="0324"
PAGE TWO
.
~
GROUP
`
,
SEEKING FUNDS PROJECT
AMOUNT
OF
PROJECT
AMOUNT
REQUESTED
AMOUNT
RECOMMENDED
AMOUNT
APPROVED
COUNTIES
AFFECTED
8. ColumbIa Chamber of Conm~erce
.
`~
9. Discover Upcountry Carolina
Association
Midlands Comprehensive Tourism Project
(calendar of events, brochures, radio,
direct mall, newspaper)
$54,000.00
$22,000.00
$22,000.00
Richland
Lexington
Promotion ol Upcountry Carolina
(brochures, slide show, direct mail,
displays, magazine, newspaper, radio)
$40,000.00
$20,000.00
$ 3,000.00
$20,000.00
Anderson
Cherokee
Greenville
Oconee
Pickens
Spartanburg
10. Fairfield County Chamber of
Cormicrce
Tourist Attractions Inventory and
Brochure
$ 6,000.00
$ 3,000.00
FaIrfield
11. Festival of Flowers
~
S. C. Festival of Flowers, Greenwood
$ 8,150.00
$ 6,000.00
$ 6,000,00
Greenwood
12 `Fine Arts Center of Kershaw
County, Inc.
~
Mad `80 PromotIons Project
(flyers, billboards, displays, radio
and tapes)
$ 1,200.00
$ 600.00
$ 600,00
.
Kershaw
13. Georgetown Chamber of
Conmierc e
Bill Board
$ 6,000.00
$ 2,100.00
$ 2,100.00
Georgetown
14: Greenville Chamber of
* * Conmierce (Leadership
Greenville Iv)
Discover Greenville South Tourist
Brochure
$ 600.00
~
$ 300.00
$ 300.00
Greenville
PAGENO="0325"
.
~ROUP SEEKING FUNDS PROJECT
AMOUNT
OF
PROJECT
AMOUNT
REOIJESTED
AMOUNT AMOUNT
RECOMMENDED APPROVED
PAGE THREE
COUNTIES
AFFECTED
15.
Hardeeville Area Chamber
of Conuiierce
Promotion of Tourism 1979
(flyers, posters)
$ 225.00
$ 112.50
$ 112.50
Jasper
16.
Hilton lead Island Chamber
of Coninerce
European Marketing Program
(brochures, direct mall, ads)
$19,550.00
$ 9,775.00
$ 9,775.00
Beaufort
17.
Historic Columbia Foundation
New Tourist Brochure for Historic
Homes
$ 4,567.00
$ 2,283.50
$ 2,283.50
Rlchiand
18.
Horry County Development and
Promotional Film - Grand Strand,
$10,000.00
$ 5,000.00
$ 5,000.00
Horry
Tourism Comisslon
S. C.
19.
Jasper County Chamber of
Jasper County Tourist Brochure
$ 5,000.00
$ 2,500.00
$ 2,500.00
Jasper
Commonerc e
20.
Kershaw County Chamber of
Publications and new brochures
$ 7,087.78
$ 3,543.89
$ 3,543.89
Kershaw
Conemerce
PAGENO="0326"
Hillcrest Recreation Facility
Brochure
S. C. Festival of Roses
Brochure
AGE FOUR
COUNT I ES
AFFECTED
RUIIP SEEKING FUNDS
PROJECT
AMOUNT
OF AMOUNT AMOUNT AMOUNT
PROJ ECT REOU E STEO RECOMMENDED APPROV ED
1.
Lake City Chamber of
The S. C. Tobacco Festival
$ 6,563.26
$ 4,000.00
$ 4,000.00
Florence
2.
3.
Comerc e
Lancaster Fall Festival
Lowcountry Council of
Governments
Lancaster's Fall Festival
(brochure, billboards, displays,
direct mall, newspaper, radio)
$10,000.00
$ 5,000.00
$ 5,000.00
Lancaster
Take A Side Trip Into History
(Lowcountry historic brochure)
$ 4,000.00
$ 2,000.00
$ 2,000.00
Beaufort
Colleton
Hampton
Jasper
~4.
Marion Chamber of
Marion S. C. Historical Booklet
$ 3,000.00
$ 1,500.00
$ 1,500.00
Marion
*
Coninerce
%~r1
25.
~:
Myrtle Beach Chamber
of Cormnerce
Myrtle Beach Convention Council
(brochures, magazine ads)
$50,000.00
$25,000.00
$25,000.00
Horry
26.
North Augusta Chamber
Greater North Augusta Brochure
$ 6,000.00
$ 3,000.00
$ 3,000.00
Aiken
of Coninerce
27. O~ang6burg, City of
$ 7,200.00
$ 3,600.00 $ 3,600.00
Orangeburg
PAGENO="0327"
AMOUNT
OF AMOUNT AMOUNT AMOUNT
PROJECT REOUESTED RECOMMENDED APPROVED
GROUP SEEKING FUNDS PROJECT
PAGE FIVE
COUNTIES
AFFECTED
28. Patriots Point Development
Authority
Patriots Point Traveling Promotional
Display Unit
$10,000.00
$ 5,000.00
$ 5,000.00
Charleston
29. Pendleton District
Historical and
Recreational Coninission
S. C. s Exciting Tn-County Pendleton
District (brochures)
$ 1,600.00
$ 800.00
$ 800.00
Anderson
Oconee
Pickens
30. Pickens County Planning and
Development
Inventory of Tourist Attractions and
Preparation of Brochure and Slide-
Tape
$ 7,000.00
$ 3,500.00
$ 3,500.00
Pickens
31. Riverbanks Park Conimission
Riverbanks Zoo Brochure
$ 6,000.00
$ 3,000.00
$ 3,000.00
Rlchland
Lexington
32. Rock Hill Chamber of
Coimnerce
Tourism Brochure, Conventions-
Tourism Pamphlet, Slide Presentation
$ 3,700.00
$1,850.00
$ 1,850.00
York
33. Santee Cooper Country
Promotion Commission
Santee Cooper Country Vacation Guide
$11,290.00
$ 3,500.00
$ 3,500.00
Berkeley
Orangeburg
Clarendon
Sumter
Calhoun
Swansea Jaycees
Swansea Flay Day Festival
$ 2,400.00
$1,200.00
$1,200.00
Lexington
34.
PAGENO="0328"
324
Mr. FL0RI0. Thank you very much. Mr. Madigan.
Mr. MADIGAN. I have no questions, except to say that perhaps
the tourism in this area would improve if we could reassure the
people that there aren't going to be any hurricanes down there.
Mr. JENRETTE. Mr. Madigan, I am told some of my friends in
some parts of the Nation know how to buy a fire. I have never
found a way to buy a hurricane or to stop one, but I assure you
that we have the finest civil defense agency in the Nation, we
believe; if you come to the South we will take care of you.
Mr. MADIGAN. I am going to come down there during my district
work period.
Mr. JENRETTE. It is a challenge I accept. Thank you very much.
Mr. FL0RT0. Thank you very much.
Our next witness that we are very pleased to have with us is
Congressman Pepper, a very valued Member of the Congress who
has been very helpful to this committee in a lot of other areas.
We appreciate your coming to see us this morning.
STATEMENT OF HON. CLAUDE D. PEPPER, A REPRESENTATIVE
IN CONGRESS FROM THE STATE OF FLORIDA
Mr. PEPPER. Thank you very much, Mr. Chairman and members
of the committee. I commend you for making this inquiry and
holding this hearing. At one time I was chairman of the Tourism
Committee, and had occasion to look somewhat into that matter,
and of course it is a matter of very vital concern to my State. I
have a little statement here, Mr. Chairman. I thank you very much
for giving me the privilege to appear before you today.
The benefits of tourism to our country are characteristically
diffuse, but its immediate results so obvious as to deceive most
casual observers. A group of tourists from Europe, say, arrives here
on board an American plane. In the United States they travel,
walk, use taxis to see various cities and the sights of each. Or they
share our beaches, wonderful natural attractions and relax. They
are not seen spending great amounts of money at a time, as a
businessman might, who trades with our firms, or invests in this
country.
Yet, to begin with, travel and tourism are the lifeblood of our
airlines, which are so meaningful to our economy. Money coming
from abroad, including American airline and steamship fees, can
be compared to a gift of energy. While we pay billions for foreign
oil, lowering the value of our dollar and helping to cause our
inflation from which people suffer, tourists bring us money merely
to be here and obtain the privilege of seeing this great country.
Their foreign exchange, estimated at $8.502 billion during 1978, by
the U.S. Travel Service, directly strengthened our dollar, mitigated
the rise of inflation and gave a boost to our GNP while doing the
above.
Tourism, domestic and international, contributes well over $100
billion to our economy and I have brought along a very eloquent
and informed statement in support of Federal help in attracting
tourists abroad, which was prepared by Mr. Lew Price, director of
our Metro-Dade County Department of Tourism. Written originally
to demonstrate the need for the U.S. Travel Service, I believe it
PAGENO="0329"
325
will be helpful in discussing the need for more and better coordi-
nated Federal sources of help for our domestic tourist industry.
I, too, believe in the competition of our private tourist-related
transportation packaging firms abroad through advertising. This
helps foreigners decide between them, as they plan their trips to
the United States. But no private firm has the research data,
worldwide integrated office capability and nationwide attraction
information, which a Federal agency can provide and has provided
on a limited basis in order to stimulate interest in the United
States as a tourist destination.
Private firms may serve a considerable segment of our Nation
and they do an excellent job, but they also serve travel between
countries, which do not include the United States at all. A national
tourism policy and a coordinating agency with offices abroad to
speak for all the States and focus solely on tourism to the United
States is needed and will be welcomed by our private firms.
I have not seen anyone advocate that the Government handle
ticketing, packaging, or such functions belonging to businesses. But
the Government can be of great value in stimulating the demand
for these services abroad and then let the tourists choose their
travel bureau, or transportation firm.
My area, which counted over a million and a half foreign tourists
last year, depends upon them, to a large extent, to hold the balance
between recession and a healthy economy. Tax money going from
these tourists into Federal and local treasuries would more than
pay for an increased and better coordinated Federal tourism pro-
motion effort.
I would just add this: I would like, if I may, Mr. Chairman, to
offer for inclusion in the record a statement by the director of
public information for Metro-Dade County in Miami, Mr. Lew
Price.
Mr. FL0RI0. Without objection, it will be entered in the record
following your statement.
Mr. PEPPER. Fine. Just let me add this in conclusion, Mr. Chair-
man. I think it is a mistake to abolish the National Travel Service
that we now have. It hasn't been able to solve all of the problems
of tourism, of course, and like most other agencies, it may not have
operated at maximum efficiency at all times. Like most other
agencies it has no doubt made some mistakes of policy and per-
formance, but on the other hand it is a good concept to have a
central agency of that sort, and I am pleased to see that provision
has been made for the $8 million appropriation necessary to assure
the extension of that service, but it is not enough. It is not all we
should have.
The idea of coordinating the travel services of the country, the
tourist agencies of the country, coordinating with the several
States, some States have one thing to offer and other States have
another, we have beaches and sunshine and we think the most
beautiful moon in the world, especially for the young. The other
States have their own attractions, mountains, vast prairies and
various other scenic attractions. The Federal Government should
encourage all of them, help them, stimulate them, give them what
assistance they reasonably can in doing a better job for their area,
PAGENO="0330"
326
for when you help any part of America, of course you are helping
the whole country.
I am glad that you are I hope preserving, attempting to preserve,
what we now have, improve its administration, but at the same
time the little recommendations I think are desirable. Try to bring
about a better coordinated pattern for mobilizing the attractions of
our whole country, to be presented to the people abroad. Get them
to come here to help us with the trade deficit we now have. They
make a very important contribution to that.
I thank you very much, Mr. Chairman.
[Mr. Price's prepared statement referred to follows:]
STATEMENT OF LEW PRICE, DIRECTOR, METRO-DADE COUNTY DEPARTMENT OF
TOURISM AND PROMOTION
Tourism-The historic mainstay of south Florida's economy, and tourist-related
industries, accounts for over half the employment opportunities in Greater Miami.
The business of Miami is tourism, and the success of this industry holds the balance
between prosperity and recession for 1 1/2 million people in Dade County.
South Florida's economy is now imperiled from two fronts. On the one hand the
impact of a national energy crisis threatens to discourage family vacationers from
driving to Miami, and indeed, threatens the entire $100 billion national domestic
tourist market. On the other hand, international tourism, which is less affected by our
domestic energy problems, is threatened by the Administration's proposed abolition
of the United States Travel Service's foreign marketing programs.
The national energy problem will not be solved quickly; that roadblock to a
continuing prosperous domestic tourism market, will remain a severe handicap to
the industry for some time to come. The international tourist market, which now
accounts for over $8.5 billion flowing into this country, can, and should be, expand-
ed. Unless a more effective Federal role in marketing international travel to the
United States can be developed by Congress, the USTS and its foreign marketing
programs, should not only be retained, but expanded, in the face of increasing
worldwide competition for the tourist dollar from countries which have multi-
million dollar promotional budgets. Even the tiny Bahamas now spends more on
tourism promotion than this year's entire USTS budget which includes not only
international promotion and the services provided by the six foreign field offices,
but also the coordination with all local tourism agencies, data collection and exten-
sive tourism research, and administration of all tourism-related Federal programs.
Last year, over a million and a half foreign tourists came to Greater Miami,
accounting for more than $1 billion in exogenous tourist dollars pumped into the
growing economy of Dade County, Florida. Our local tourist efforts have produced
these favorable results only with the full cooperation of the United States Travel
Service and the six international field offices which distribute Miami's promotional
materials and releases. Familiarity tours are arranged through the field offices,
international travel show arrangements are made through the field offices, trade-
related seminars are coordinated by the USTS field offices. Like so many other
areas around the country which depend on tourism for the bedrock of their local
economies, Greater Miami cannot afford to finance their own tourist bureaus
around the world; but rely upon the centrally coordinated efforts of the USTS to
assist in the ongoing effort to gain a greater share of the international tourist
dollar. The foreign marketing programs of the USTS are essential to the well-being
of my south Florida constituents, and the abolition of such programs can only result
in fewer foreign tourists coming to our shores. This, I believe, shall become apparent
with the discontinuance of our Federal foreign marketing programs, but then, of
course it will be too late. The closing down, the resulting drop in international
tourists, the inevitable decision to reestablish the USTS as a viable foreign market-
ing coordination unit, will be a costly proposition, far more so than the logical
continuation of a program which has proven itself over the years, and paid for itself
a thousand times over. How many comparable Federal programs do we now have
that demonstrate such excellent profitable results, from such a small investment?
Of the $8½ billion spent by foreign visitors to our country last year, over $900
million went to the public treasuries. The investment in this industry we ask you to
consider, is less than 1 percent of the tax monies generated solely by the expendi-
tures of international tourists.
PAGENO="0331"
327
Investments of public money, which result in a most profitable shift in the
balance of payments, can no longer be ignored. Retaining the United States Travel
Service and its current programs, including the six USTS international field offices
and foreign marketing programs, is an investment opportunity for this Congress
which has proven highly successful in the past. The allocations for the USTS
represent the efficient and effective leverage of public monies in order to generate
private profits, greater tax revenues, and general prosperity, not only for south
Floridians, but for all Americans, and I urge your carefully considered support of a
vigorous national tourism policy, as well as continued funding for the U.S. Travel
Service.
Mr. FL0RI0. Thank you. Mr. Madigan.
Mr. MADIGAN. Chairman Pepper, I assume that there is a lot of
tourism business in Miami that is represented by people coming
down from Canada?
Mr. PEPPER. There are a great many.
Mr. MADIGAN. And the Canadians actually have a lot of property
in that area?
Mr. PEPPER. They do.
Mr. MADIGAN. Are there many tourists from Europe coming
there?
Mr. PEPPER. Yes; we have an increasing number. During my last
campaign Senator Chiles and I were taking a little walk on part of
the Miami Beach area and we ran into a large busload of Germans
who were walking in the stores that we were visiting, looking
around, asking questions, and generally acting like tourists. They
were there from Germany. We have tourists. Of course we have an
enormous number of tourists from Latin America that come into
our area. They find a bilingual society there, and it has the color-
ation of Latin America about it in many ways. I don't know the
percentages, but we have tourists from all over the world.
Mr. MADIGAN. Are these people primarily coming there in the
wintertime, or do you have tourism on a year-round basis?
Mr. PEPPER. I think it was last summer that I was walking
around, Senator Chiles and I were walking around. The general
election is in November. This was during the early fall I guess this
was that I happened to see this group of Germans, but they come
during different seasons. We have, quite surprisingly to a lot of
people, a number of tourists in the summertime.
The accommodations are cheaper. The hotels charge lower rates
in the summer than they do in the peak of the season, say from
December to March, but you know there is one thing about our
climate that most people don't appreciate-the real virtue of our
climate is its mean temperature; it seldom gets over 90. It seldom
gets below about 40 or something like that. If it gets down to the
upper 30's it doesn't stay very long.
Then once you get in the shade, we have got a breeze that comes
off of the Gulf Stream that makes it in our area and to a lesser
extent in other parts of Florida, makes the summer climate not
anything like as undesirable as some people would think, that this
is a place that is hot all the time because it is warm in the winter,
but it is also reasonably cool in the summer, especially with the
breeze blowing.
Mr. MADIGAN. Does anyone in the local government there or in
the State government have any kind of breakdown on how much
you get in a year's time in tourist money, and where the people
come from?
PAGENO="0332"
328
Mr. PEPPER. Yes; I am sure they have it, because our public
authorities, in the first place the State of Florida has a tourism
function, and they spend a good bit of money, and I am sure they
would have probably all that information. Our area would break it
down. With Dade County we have a bedroom tax we call it, impose
a tax for publicity purposes on the bedrooms that are occupied
ordinarily by tourists, and then we use that money in trying to
attract tourists. Miami Beach has the Tourist Development
Agency, TDA, that spends I think it is more than $1 million, I
think it is $2 or $3 million a year, trying to attract tourists. Of
course we try to attract conventions as well.
Mr. MADIGAN. Would it be possible for you to get that informa-
tion?
Mr. PEPPER. I will do it with pleasure. I will get it from the
State, and from Dade County, and I will try to get the State to get
up as extensive information as we possess and give it to the com-
mittee.
[Testimony resumes on p. 432.]
[The following letter and attachments were received for the
record:]
PAGENO="0333"
329
STATE OF FLORIDA DEPARTMENT OF COMMERCE
Division of Tourism
Collins Building. Tallahassee 32304
August 08, 1979
Honorable Claude Pepper
Roan 2239
Bayburn House Of fi~ Building
Washington, D. C. 20515
Dear Representative Pepper:
Enclosed are the statistical reports profiling visitors
Dade County that you rezp~sted for Ca~ressman Florio.
additiaial ccç)ies for your use.
to Florida and
I have enclosed
The Of fi~ of Narketing Research will cxntinun sending you these data
as they beca~ available. If you are in need of additicnal inforinaticxi
please advise.
Sinosrely,
Elizabeth Finn
Statistician Supervisor
Florida Division of Tourism
Marketing and Research
EF/jlw
Enclosure
PAGENO="0334"
330
1976
FLOR IDA
TOURIST STUDY
AN
EXECUTIVE SUMMARY
In which is contained highlights of The Division of Tourism 1976 quarterly tourist
surveys and reports from certain selected government sources, noted within.
1
PAGENO="0335"
331
TABLE OF CONTENTS
Page
PREFACE 1
TABLE OF CONTENTS 2
A STATEMENT OF METHOD 3
VISITOR ANALYSIS 4
AIR VISITORS 5
AIR VISITORS (continued) 6
AUTO VISITORS 7
AUTO VISITORS (continued) 8
QUARTERLY VISITOR SURVEYS 9
PUBLICATIONS AVAILABLE 10
AWORD TO OUR USERS 11
2
PAGENO="0336"
332
A STATEMENT OF METHOD
The 1976 Annual Tourism Report is composed of survey data collected on a
quarterly basis. The Quarterly Surveys are designed as random, probability samples
of the total visitor or non-resident population of Florida. The primary goal of the
sample design is that every visitor to Florida from out~of-state has a known and
equal chance of being interviewed.
All interviews are conducted face to face. Each respondent has met one of two
conditions; they are more than 100 miles from their current or legal residence or
they have been in the State of Florida more than 24 hours. Commuters, military
personnel on transfer status and residents of Alabama and Georgia not meeting the
requirements for interview are excluded.
During 1976 12,289 randomly selected visitors were interviewed. The following
table presents the number of interviews by mode of travel and by quarters of the
calendar year.
Quarter Air Visitors Auto Visitors
First 1,108 1,832
Second 1,295 1,827
Third 1,195 2,005
Fourth 1,105 1,922
The size of the statistical bases for quarters will indicate the degrees of confidence
and reliability of the sample.
Interviews were conducted with exiting Florida visitors on the following highways:
-10, US-231, 1.75, 1-95 and US-i. Interviews were also conducted in the departure
lounges of non-stop flights leaving the state of Florida at the following airports:
Miami, Ft. Lauderdale, West Palm Beach, Orlando, Tampa and Jacksonville. Quotas
at each interview site were weighted according to traffic volume, air and auto.
Without the excellent cooperation of the Florida Highway Patrol, and the Florida
Highway Patrol Auxilary, and the Security Administrations of each airport, this
report would have been almost impossible to produce.
All questionnaires were pre-tested for maximum efficiency in data collection. They
were pre-coded for immediate transfer to computer tapes. The Statistical Package
for the Social Sciences (SPSS), a software program, was used in tabulation of the
data.
Because of budget restrictions, "Other Modes of Travel" were not included in the
personal interview schedule. Estimates of volume and visitor mix are not included
for "Other Modes of Travel".
During the past three years, a possible upward modal bias has been observed in our
expenditure information. This bias is historical and is currently being studied. In
1977 any revisions necessary will be made and included in the 1977 Executive
Summary.
3
PAGENO="0337"
VISITOR ANALYSIS
Al R 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Total
Expenditure/party/day 74.54 70.91 77.62 75.37 74.51
Number/party 1.9 2.0 1 .9 1.7 1 .9
Expenditure/person/day 39.23 35.46 40.85 44.34 39.22
Number of nights 13.7 12.9 7.4 8.4 11.1
Expenditure/person/trip 537.45 457.43 302.29 372.46 435.34
Number of Visitors 2.928,000 1,801,000 1,572,000 1,726,000 8,027,000
Total Expenditure $1,573,654,000 $ 823,831,000 $ 475,200,000 $ 642.866,000 $ 3,515,551,000
AUTO
Expenditure/party/day 60.49 57.09 65.53 54.49 59.60
Number/party 2.6 2.9 3.0 2.4 2.7
Expenditure/person/day 23.27 19.69 21 .84 22.70 22.07
Number of nights 19.4 22.7 7.1 10.0 14.7
Expenditure/person/trip 451.44 446.96 155.06 227.00 324.43
Number of Visitors 5,492,000 4,974,000 5,513,000 4,921,000 20,900,000
Total Expenditure $2,479,308,000 $2,223,179,000 $ 854,846,000 $1,117,067,000 $ 6,674,400,000
TOTAL
Number of Visitors 8,420,000 6,775,000 7,085,000 6,647,000 28,927,000
Expenditure/person/trip 481.35 449.74 187.73 264.77 352.26
Total Expenditure $.4,052,962,000 $3,047,010,000 $1,330,046,000 $1,759,933,000 $10,189,951,000
PAGENO="0338"
334
AIR VISITORS
ORIGINS DESTINATION
1. New York 1179,900 1. Dade 2,888.200
2. Pennsylvania 585,900 2. Orange 1,116,600
3. Ohio 561,800 3. Broward 1,000,100
4. Illinois 553,800 4. Pinellas 896,900
5. New Jersey 481,600 5. Hillsborough 686,300
6. Georgia 449,500 6. Palm Beach 640,100
7. Massachusetts 353,100 7. Duval 439,500
8. Michigan 288,900 8. Sarasota 222,800
9. North Carolina 136,400 9. Osceola 212,000
10. Connecticut 120.400 10. Brevard 210,800
REPEAT VISITORS 82.4%
PURPOSE OF TRIP Percent LODGtNG* Percent
1. Hotel/Motel 67.5
1. Vacation 40.4
2. Campground/
2. Personal 4.6 Trailer Park 1.5
3. Company or Government 3 Condominium 3.7
Business 23.8 4. Friends/Relatives 30.7
4. Personal Business ~ 5 Other 3 9
5. Convention/Conference
Trade Show 11.1% used some sort of package
6. Friends or Relatives 18.1 plan
7. Cruise i.o
Things people like about Florida*
1. Rest and relaxation 64.3
2. Beaches 58.3
3. Water sports 16.3
4. Sports to watch (baseball, football, auto racing, tennis) 13.2
5. Sports to participate in (golf, tennis, fishing, boating) 38.9
6. Camping 2.9
7. Florida attractions 35.6
8. Pari-mutuels 9.3
9. Cruises 8.1
10. Dancing, night life 20.7
11. Cultural or special events 8.8
12. Historical sites 12.5
13. Educational programs or exhibits 7.8
*May total more than 100% because of multiple choice.
5
PAGENO="0339"
335
AIR VISITORS
ATTRACTIONS AGE Percent
1, Disney World 1,637,500 1. 0-18 .9
2. Busch Gardens 714,400 2. 19-24 6.9
3. Sea World 537,800 3. 25-35 21.4
4. Cypress Gardens 313,000 4. 36-49 29.8
5. Miami Seaquarium 248,800 5. 50-64 30.8
6. Kennedy Space Center 216,700 6. 65 & Over 10.2
7. Sunken Gardens 128,400
8. Parrott Jungle 64,200 SEX Percent
9. Everglades Wonder Gardens 56,200
10. Lion Country Safari 48,200 Male 69.5
Female 30.5
INCOME Percent
1. $ 0.000- 4,999 .3
2. $ 5.000- 9,999 6.7
3. $10,000-14,999 12.2
4. $15,000-19,999 14.5
5. $20,000-24,999 17.8
6. $25,000-29.999 16.6
7. $30,000-34,999 10.2
8. $35,000-39.999 21.7
9. $40,000 & above 0
95.1% WILL RETURN TO FLORIDA
*May total more than 100% because of multiple choice.
6
PAGENO="0340"
336
AUTO VISITORS
ORIGINS DESTINATION
1. Ohio 1,797,400 1. Orange 3,395,100
2. Georgia 1,755,600 2. Volusia 2,990,700
3. Michigan 1,379,400 3. Pinellas 2,674,800
4. New York 1,337,600 4. Hillsborough 2,295,300
5. Alabama 940,500 5. Dade 1,290,300
6. Pennsylvania 794,200 6. Broward 1,110,400
7. Indiana 752,400 7. Escambia 1,090,000
8. Tennessee 752,400 8. Duval 1,028,800
9. Illinois 689,700 9. Sarasota 859,600
10. Louisiana 606,100 10. Bay 849,600
REPEAT VISITORS 84.4 Percent
PURPOSE OF TRIP Percent LODGING* Percent
1. Vacation 75.7 1. Hotel/Motel 59.3
2. Personal 4.8 2. Campground/
3. Company or Government Trailer Park 11.8
Business 3.2 3. Condominium 3.7
4. Personal Business 3.7 4. Friends/Relatives 26.9
5. Convention/Conference 5. Other 6.5
Trade Show 1 .6
6. Friends or Relatives 11.0
Things people like about Florida*
1. Rest and relaxation 75.4
2. Beaches 82.0
3. Water sports 14.9
4. Sports to watch (baseball, football, auto racing, tennis) 12.9
5. Sports to participate in (golf, tennis, fishing, boating) 42.6
6. Camping 10.8
7. Florida attractions 55.2
8. Pari-mutuels 10.2
9. Cruises 4.2
10. Dancing, night life 10.7
11. Cultural or special events 8.6
12. Historical sites 29.3
13. Educational programs or exhibits 7.0
*May total more than 100% because of multiple choice.
7
PAGENO="0341"
ATTRACTIONS
337
AUTO VISITORS
AGE
Percent
TOP FIVE ENTRANCE HIGHWAYS
TYPE OF VEHICLE
Percent
1. 1-75
2. 1-95
3. -10 16.3
4. us-i
5. IJS-231 .9
TOP FIVE EXIT HIGHWAYS
Percent
1. 1-75 37.1
2. 1-95
3. 1-10
4. US-i
5. US-331
1. Car
2. Recreation Vehicle
3. Truck
10.6% had no definite destination
but were touring.
*May total more than 100% because of multiple choice.
1. Disney World
7,962,900
1. 0-18
.4
2. Busch Gardens
2,700,000
2. 19-24
6.0
3. Sea World
1,776,500
3. 25-35
17.0
4. Cypress Gardens
815,100
4. 36-49
27.0
5. Silver Springs
710,600
5. 50-64
33.9
6. Kennedy Space Center
710,600
6. 65 & Over
15.7
7. Marineland
418,000
8. Circus Hall of Fame
334,400
9. Sunken Gardens
334,400
SEX
10. Miami Seaquarium
241,800
Male
89.5%
INCOME
Percent
Female
10.5%
1. $ 0,000- 4,999
2.4
2. $ 5,000- 9,999
8.4
3. $10,000-14.999
18.6
4. $15,000-19,999
28.7
5. $20,000-24,999
24.2
6. $25,000-29,999
10.8
7. $30,000-34,999
3.8
8. $35,000-39,999
3.0
9. $40,000 & above
.1
Percent
41.4
23.5
9.7
85.7
12.0
2.3
23.6
20.6
14.9
1 .0
8
PAGENO="0342"
338
The 1975 Florida Legislature granted the Division of Tourism the
authority to charge, on a cost basis, for detailed and customized
statistical information that is available through the division's research
program but for which there are no budget provisions. The legislation
specifically states that the division may charge and collect a fee equal
to the approximate cost to the state for researching or compiling
information, handling charges, publications, materials or services
which, in its judgment, should not be furnished gratis.
The Division of Tourism's Office of Marketing Research offers a
variety of information on the Florida visitor, available upon request.
Schedule in this brochure lists prices for specific publications.
FROM THE QUARTERLY VISITOR SURVEYS:
Demographics:
Age Sex
Employment status Marital status
Income/number contributing Type of vehicle
Party size
Behaviorial Characteristics:
Lodging type
State of origin
Major destinations
Major attractions
Mean daily expenditures
Mean trip expenditures
Expenditures (by type)
Mean number of nights
First/repeat visitors
Purpose of trip
Consideration of alternate vacation area
Planning time: median
Side trips
Car rental (air only)
Type of ticket purchased (air only)
Use of travel agent (air only)
Use of package plan (air only)
9
PAGENO="0343"
339
PUBLICATIONS AVAILABLE
(Or on Special Order)
1976/77 Quarterly Reports $ 2.50 Per Quarter
1976/77 County Reports* $ 2.50 Per County/Per Qtr.
1976/77 Canadian Reports $ 2.50 Per Quarter
1975 Executive Summary No Charge
1975 Quarterly Reports $10.00 Per Quarter
1975 Canadian Reports $ 5.00 Per Quarter
1974 Executive Summary No Charge
1973 Executive Summary No Charge
Please call us to discuss the availability of specialized information to
meet your travel research needs. 904/488-7641, 488-4299,
488-7081, 488-7665
*Dade, Broward, Palm Beach, Orange/Osceola, Pinellas, Hills-
borough, Duval. Additional counties are available depending on
sample size.
*U*N*UUUI*UUUUI*UUIUUUUUUIUU.U..S..UU.
MAIL TO: Florida Division of Tourism
* Office of Marketing Research
* Collins Building
Tallahassee, Florida 32304
* U
* U
* U
* Please send me report(s)~
:1 have enclosed a check in the amount of $
* U
* U
* U
*Please send me an estimated cost for a special report on:
* U
* U
* U
*NAME: U
* U
* U
UFIRM: U
:
*ADDRESS:
.UUUUUU*UU*UUU.*U.**U***U**************
10
PAGENO="0344"
340
A WORD TO OUR USERS
The office of Marketing Research exists to serve you. The
information we have on Florida's tourist is meant to be used as a
marketing tool. To maintain the utility and effectiveness of our
information, we need and solicit your ideas and your input. Please
feel free to call, write or visit our office to discuss your ideas and
needs concerning travel research. Our address and telephone numbers
are as follows:
The Office of Marketing Research
Division of Tourism
107 W. Gaines Street
Tallahassee, Florida 32304
904/488-7081, 7665,7641.
This Public Document was promulgated at an annual cost of $365.00, 1
or $.1460 per copy to provide the public with information about
Florida's Visitors in 1976.
11
PAGENO="0345"
341
38
37
36
35
34
33
C
0
C
0
>
30
29
28
27
26
25
24
PATTERNS OF FLORIDA VISITOR VOLUME 1970 - 1980
23
PAGENO="0346"
342
1977
FLORIDA
TOURIST STUDY
AN
EXECUTIVE SUMMARY
In which is contained highlights of the Florida Division of Tourism
1977 quarterly tourist surveys and reports from certain selected
government sources, noted within.
PAGENO="0347"
343
TABLE OF CONTENTS
Page
A STATEMENT OF METHOD 3,4
IMPACT OF TOURISM ON FLORIDA'S ECONOMY 5
VISITOR ANALYSIS 6
AIR VISITORS 7
AIR VISITORS (Continued) 8
AUTO VISITORS 9
AUTO VISITORS (Continued) 10
QUARTERLY VISITOR SURVEYS 11
PUBLICATIONS AVAILABLE 12
A WORD TO OUR USERS 13
2
PAGENO="0348"
344
A STATEMENT OF METHOD
The 1977 Annual Tourism Report is composed of survey data
collected on a quarterly basis. The Quarterly Surveys are designed as
random, probability samples of the total visitor or non-resident
population of Florida. The primary goal of the sample design is that
every visitor to Florida from out-of-state has a known and equal
chance of being interviewed.
All interviews are conducted face to face. Each respondent has met
one of two conditions; they are more than 100 miles from their
current or legal residence or they have been in the State of Florida
more than 24 hours. Commuters, military personnel on transfer
status and residents of Alabama and Georgia not meeting the
requirements for interview are excluded.
During 1977, 12,853 randomly selected visitors were interviewed.
The following table presents the number of interviews by mode of
travel and by quarters of the calendar year:
Quarter Air Visitors Auto Visitors
First 1,404 1,902
Second 1,046 1,503
Third 1,500 2,000
Fourth 1,500 1,998
The size of the statistical bases for quarters will indicate the degrees
of confidence and reliability of the sample.
Interviews were conducted with exiting Florida visitors on the
following highways: 1-10, US-231, 1-75, 1-95 and US-i. Interviews
were also conducted in the departure lounges of non-stop flights
leaving the State of Florida at the following airports: Miami, Ft.
Lauderdale, West Palm Beach, Orlando, Tampa and Jacksonville.
Quotas at each interview site were weighted according to traffic
volume, air and auto.
Without the excellent cooperation of the Florida Highway Patrol, the
Florida Highway Patrol Auxiliary, the Florida Department of
Transportation, and the Security Administrations of each airport,
this report would have been almost impossible to produce.
All questionnaires were pre-tested for maximum efficiency in data
collection. They were pre-coded for immediate transfer to computer
tapes. The Statistical Package for the Social Sciences (SPSS), a
software program, was used in tabulation of the data.
Because of budget restrictions, "Other Modes of Travel" were not
included in the personal interview schedule. Estimates of annual
volume and visitor mix are included for "Other Modes of Travel."
Expenditure estimates for this group could not be determined by any
reliable method.
3
PAGENO="0349"
345
During the past three years, overseas visitors to Florida have grown
to significant levels in the state's overall tourist picture. In 1978 the
Office of Marketing and Research will expand its efforts to profile
demographically these visitors. The 1977 Visitor Analysis does
include the total annual count of overseas visitors to Florida.
4
PAGENO="0350"
346
1977
IMPACT OF TOURISM ON FLORIDA'S ECONOMY
I. 1977 Tourist Generated Expenditures In Florida*
$11,274,435,885
II. 1977 Tourist Generated Business Receipts**
(Total travel expenditures less federal, state and local
retail sales and excise taxes)
$10,637,310,000
III. 1977 Tourist Generated Employment**
450,000
(This represents 12.7% of Florida's total work force)
IV. 1977 Tourist Generated Payroll**
$2,733,321,000
V. 1977 Tourist Generated State Tax Revenues**
$535,495,400
* 1977 Florida Division of Tourism Visitor Analysis
**Based on estimates from United States Travel Data Center
Publication: The Impact of Travel on State Economies
5
PAGENO="0351"
U. S. and CANADA
VISITOR ANALYSIS - 1977
AIR VISITORS 1st QUARTER 2nd QUARTER 3rd QUARTER 4th QUARTER TOTAL
Expenditure/party/day 80.71 70.44 77.66 79.07 77.08
Number/party 1.8 1.8 1.8 1.7 1.8
Expenditure/person/day 4484 39.13 43.14 46.51 42.82
Number of nights 11.6 12.7 8.4 7.3 10.1
Expenditure/person/trip 520.14 496.95 362.38 339.52 432.48
Number of Visitors 2,928,000 1,853,000 1,671,000 2,061,000 8,513,000
Total Expenditures $1,522,969,900 $920,848,000 $605,536,980 $699,750,720 $3,749,105,600
AUTO VISITORS
Expenditure/party/day 55.66 58.35 68.86 61.00 61.01
Number/party 2.4 2.6 2.9 2.5 2.6
Expenditure/person/day 23.19 22.44 23.74 24.40 23.47
Number of nights 15.7 28.9 9.0 9.3 15.7 -1
Expenditure/person/trip 364.08 648.52 213.66 226.92 368.48
Number of Visitors 5,366,000 5,153,000 5,419,000 4,724,000 20,662,000
Total Expenditures $1,953,653,280 $3,341,823,560 $1,157,883,365 $1,071,970,080 $7,525,330,285
TOTAL VISITORS
Number of Visitors 8,294,000 7,006,000 7,090,000 6,785,000 29,175,000
Expenditure/person/trip 419.17 608.44 248.72 261.12 386.44
Total Expenditure $3,476,623,180 $4,262,671,560 $1,763,420,345 $1,771,720,800 $11,274,435,885
OTHER MODES (U.S. and Canada) N/A N/A N/A N/A 589,000*
OVERSEAS N/A N/A N/A N/A 786,000*
TOTAL VISITORS 30,550,000
*Unitad States Travel Data Figures
PAGENO="0352"
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AIR VISITORS
ORIGINS DESTINATIONS
1. New York 1,262,300 1. Dade 2,838,600
2. New Jersey 716,800 2. Orange/Osceola/WDW 1,532,400
3. Pennsylvania 520,300 3. Broward 1,517,400
4. Georgia 452,500 4. Pinellas 1,017,200
5. Michigan 427,300 5. Palm Beach 754,800
6. Illinois 406,000 6. Hillsborough 714,100
7. Ohio 375,000 7. Duval 452,500
8. Canada 367,200 8. Collier 242,800
9. North Carolina 320,100 9. Monroe 207,300
10. Massachusetts 317,900 10. Sarasota 179,400
REPEAT VISITORS. . .84.2 %
PURPOSE OF TRIP Percent LODGING* Percent
1. Vacation 35.6 1. Hotel/Motel 66.0
2. Personal 5.3 2. Campground!
3. Company or Government Trailer Park 1.0
Business 25.3 3. Condominium 4.3
4. Personal Business 4.4 4. Friends/Relatives 33.1
5. Convention/Conference 5. Other 4.4
Trade Show 6.2
6. Friends or Relatives 22.7
7. Cruise .5 10.2% used some sort of package plan.
THINGS PEOPLE LIKE ABOUT FLORIDA:* Percent
1. Rest and relaxation 62.5
2. Beaches 48.6
3. Water sports 12.3
4. Sports to watch 5.7
5. Golf 12.4
6. Tennis 9.3
7. Fishing/Boating 14.6
8. Camping 1.9
9. Florida Attractions 29.7
10. Pari-mutuels 6.3
11. Cruises 5.6
12. Dancing, night life 17.7
13. Cultural or special events 6.1
14. Historical sites 8.3
15. Educational programs or exhibits 5.5
*May total more than 100% because of multiple choice.
7
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AIR VISITORS
ATTRACTIONS AGE Percent
(Head of Household)
1. WaIt Disney World 1,515,300 1. 0-18 .2
2. Sea World 536,300 2. 19-24 7.8
3. Busch Gardens 510,800 3. 25.35 21.8
4. Florida Cypress Gardens 255,400 4. 36-49 28.8
5. Kennedy Space Center 238,400 5. 50-64 28.9
6. Miami Seaquarium 229,900 6. 65 & Over 12.5
7. Parrot Jungle 59,600
8. Sunken Gardens 59,600
9. Everglades Wonder Gardens 51,100 SEX Percent
10. Circus Hall of Fame 51,100 (Head of Household)
Male 67.0
Female 33.0
HOUSEHOLD INCOME Percent
1. $ 0,000- 4,999 3.0
2. $ 5,000- 9,999 6.2
3. $10,000.14,999 11.1
4. $15,000-19,999 12.5
5. $20,000.24,999 14.6
6. $25,000.29,999 13.0
7. $30,000-34,999 10.5
8. $35,000-39,999 28.8
9. $40,000 & Above .3
97.3% WILL RETURN TO FLORIDA
8
~1_1L~L~ 9 - 80 - 3
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AUTO VISITORS
ORIGINS DESTINATIONS
1. Ohio 1,584,000 1. Orange/OsceoIafWDW 3,444,500
2. Michigan 1,405,900 2. Hillsborough 2,793,100
3. New York 1,314,000 3. Volusia 2,644,400
4. Georgia 1,312,300 4. Pinellas 1,924,500
5. Louisiana 1,096,400 5. Escambia 1,421,300
6. Pennsylvania 973,100 6. Dade 1,284,700
7. Illinois 875,700 7. Broward 1,234,400
8. Indiana 860,100 8. Bay 1,152,300
9. Alabama 855,000 9. Duval 1,046,800
10. South Carolina 841,400 10. Brevard 870,900
REPEAT VISITOR. . .87.2%
PURPOSE OF TRIP Percent LODGING * Percent
1. Vacation 77.6 1. Hotel/Motel 61.6
2. Personal 3.1 2. Campground!
3. Company or Government Trailer Park 11.1
Business 2.5 3. Condominium 3.9
4. Personal Business 5.5 4. Friends/Relatives 24.4
5. Convention/Conference 5. Other 6.1
Trade Show .9
6. Friends or Relatives 10.4
THINGS PEOPLE LIKE ABOUT FLORIDA* Percent
1. Rest and relaxation 85.6
2. Beaches 81.5
3. Water sports 18.3
4. Sports to watch 7.2
5. Golf 10.7
6. Tennis 4.0
7. Fishing/Boating 38.7
8. Camping 10.9
9. Florida Attractions 55.4
10. Pari.mutuels 6.0
11. Cruises 3.7
12. Dancing, night life 15.0
13. Cultural or special events 15.6
14. Historical sites 24.6
15. Educational programs or exhibits 9.8
*May total more than 100% because of multiple choice.
9
PAGENO="0355"
351
AUTO VISITORS
ATTRACTIONS
1. Disney World 7,686,300
2. Busch Gardens 3,388,600
3. Sea World 1,425,700
4. Cypress Gardens 1,033,100
5. Kennedy Space Center 702,500
6. Silver Sprin~ 516,600
7. Marineland 309,900
8. Circus Hall of Fame 206,600
9. Miami Seaquarium 186,000
10. Sunken Gardens 186,000
HOUSEHOLD INCOME Percent AGE Percent
(Head of Household)
1. $ 0,000. 4,999 1.6 1. 0-18 .5
2. $ 5,000- 9,999 8.5 2. 19-24 5.6
3. $10,000-14,999 19.1 3. 25-35 15.7
4. $15.000-19,999 28.8 4. 36-49 29.0
5. $20,000-24,999 22.4 5. 50.64 34.4
6. $25,000-29,999 11.1 6. 65& Over 14.8
7. $30,000-34,999 4.2
8. $35,000-39,999 4.3
9. $40,000 & Above a SEX: Percent
(Head of Household)
VEHICLE TYPE Percent Male 90.6
1. Car 85.7 Female 9.4
2. Recreation Vehicle 10.6
3. Truck 3.7
ENTRANCE HIGHWAYS Percent EXIT HIGHWAYS Percent
1. 1-75 42.4 1. 1-75 38.0
2. 1-95 24.8 2. 1-10 23.4
3. 1-10 18.2 3. 1-95 23.2
4. US 1-301 7.3 4. US 1-301 13.1
5. US.231 3.2 5. US-231 5.1
8.2%HAD NO DEFINITE DESTINATION BUT WERE TOURING
97.3% WILL RETURN TO FLORIDA
*May total more than 100% because of multiple choice.
10
PAGENO="0356"
352
The 1975 Florida Legislature granted the Division of Tourism the
authority to charge, on a cost basis, for detailed and customized
statistical information that is available through the division's research
program but for which there are no budget provisions. The legislation
specifically states that the division may charge and collect a fee equal
to the approximate cost to the state for researching or compiling
information, handling charges, publications, materials or services
which, in its judgment, should not be furnished gratis.
The Division of Tourism's Office of Marketing & Research offers a
variety of information on the Florida visitor, available upon request.
Schedule in this brochure lists prices for specific publications.
FROM THE QUARTERLY VISITOR SURVEYS:
Demographics:
Age Sex
Employment status Marital status
Income/number contributing Type of vehicle
Party size
Behaviorial Characteristics:
Lodging type
State of origin
Major destinations
Major attractions
Mean daily expenditures
Mean trip expenditures
Expenditures (by type)
Mean number of nights
First/repeat visitors
Purpose of trip
Consideration of alternate vacation area
Planning time: median
Side trips
Car rental (air onty)
Type of ticket purchased (air only)
Use of travel agent (air only)
Use of package plan (air only)
11
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PUBLICATIONS AVAILABLE
(Or on Special Order)
1976/77/78 Quarterly Reports $ 2.50 Per Quarter
1976/77/78 County Reports* $ 2.50 Per County/Per Qtr.
1976/77/78 Canadian Reports $ 2.50 Per Quarter
1975 Quarterly Reports $2.50 Per Quarter
1975 Canadian Reports $5 Per Quarter
1973 - 1977 Executive Summaries No Charge
Please call us to discuss the availability of specialized information to meet your travel
research needs. 904/488-4952, 488-7641.
*Dade Broward, Palm Beach, Orange/Osceola, Pinellas, Hillsborough, Duval. Additional
counties are available depending on sample size.
MAIL TO: Florida Division of Tourism
Office of Marketing & Research
Collins Building
Tallahassee, Florida 32304
Please send me _report(s~
I have enclosed a check in the amount of $ _____________
Please send me an estimated cost for special reports on:
NAME: -
FIRM:_________________________________________
ADDR ESS:
12
PAGENO="0358"
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A WORD TO OUR USERS
The Office of Marketing and Research exists to serve you. The
information we have on Florida's tourist is meant to be used as a
marketing tool. To maintain the utility and effectiveness of our
information, we need and solicit your ideas and your input. Please
feel free to call, write or visit our offices to discuss your ideas and
needs concerning travel research. Our address and telephone numbers
are as follows:
The Office of Marketing & Research
Division of Tourism
107 West Gaines Street
Tallahassee, Florida 32304
904/488-4952 or 904/488-7641
Public Document was promulgated at an annual cost of$1424.28,
or $.4069 per copy to provide the public with information about
LFlorida's Visitors in 1977.
13
PAGENO="0359"
355
Th,s projection does not include the effects of adverse weather or energy conditions.
PAGENO="0360"
356
1978
Florida
Tourist Study
AN
EXECUTIVE SUMMARY
In which is contained highlights of the
Florida Division of Tourism
1978 quarterly tourist surveys and reports
from certain selected government sources, noted within.
PAGENO="0361"
357
Table of Contents
Page
A STATEMENT OF METHOD 3
IMPACT OF TOURISM ON FLORIDA'S ECONOMY 5
VISITOR ANALYSIS 6
AIR VISITORS 7, 8
SURVEY QUESTIONNAIRES 9, 10
AUTO VISITORS 11,12
QUARTERLY VISITOR SURVEYS 13
PUBLICATIONS AVAILABLE 14
A WORD TO OUR USERS 15
2
PAGENO="0362"
358
A Statement of Method
The 1978 Annual Tourism Report is composed of survey data collected on a
quarterly basis. The Quarterly Surveys are designed as random, probability
samples of the total visitor or non-resident population of Florida. The
primary goal of the sample design is that every visitor to Florida from
out-of-state has a known and equal chance of being interviewed.
All interviews are conducted face to face. Each respondent has met one of
two conditions; they are more than 100 miles from their current or legal
residence or they have been in the State of Florida more than 24 hours.
Commuters, military personnel on transfer status and residents of Alabama
and Georgia not meeting the requirements for interview are excluded.
During 1978, 12,811 randomly selected visitors were interviewed (7,842
Auto, 4,969 Air). An additional 1,213 Latin and Central Americans were
interviewed at the Miami International Airport.
Quarter AIr Visitors Auto Visitors
First 1201 2004
Second 1197 2010
Third 1060 1986
Fourth 1511 1956
The size of the statistical bases for quarters will indicate the degrees of
confidence and reliability of the sample.
Interviews were conducted with exiting Florida visitors on the following
highways: I-b, US-231, 1-75, 1-95 and US-i. Interviews were also con-
ducted in the departure lounges of non-stop flights leaving the State of
Florida at the following airports: Miami, Ft. Lauderdale, West Palm Beach,
Orlando, Tampa and Jacksonville. Quotas at each interview site were
weighted according to traffic volume, air and auto.
Without the excellent cooperation of the Florida Highway Patrol, the Florida
Highway Patrol Auxiliary, the Florida Department of Transportation, and the
Security Administrations of each airport, this report would have been almost
impossible to produce.
All questionnaires were pre-tested for maximum efficiency in data collec-
tion. They were pre-coded for immediate transfer to computer tapes. The
Statistical Package for the Social Sciences (SPSS), a software program,
was used in tabulation of the data.
Because of budget restrictions, "Other Modes of Travel" were not included
in the personal interview schedule. Estimates of annual volume and visitor
mix are included for "Other Modes of Travel." Expenditure estimates for this
group could not be determined by any reliable method.
3
PAGENO="0363"
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Through a research grant awarded to the Department of Commerce,
Division of Tourism (STAR-Service Through Application of Research), the
Office of Marketing and Research was able to enhance our international
survey to include interviewing in four languages. A special report will be
made available through this office. An application has been submitted to the
Board of Regents to receive funding in order to continue to expand our
international survey in 1979.
PAGENO="0364"
360
1978 Impact
of Tourism on Florida's Economy
I. 1978 Tourist-Generated Expenditures in Florida*
$12,934,663,220
II. 1978 Tourist-Generated Business Receipts**
(Total travel expenditures less federal, state and local
retail sales and excise taxes)
$12,158,583,000
Ill. 1978 Tourist-Generated Employment**
497,487
(This represeits 13.5% of Florida's total work force)
IV. 1978 Tourist-Generated Payroll**
$3,104,319,000
V. 1978 Tourist-Generated State Tax Revenues**
$607,929,000
*1978 Florida Division of Tourism Visitor Analysis
**Based on estimates from United States Travel Data Center Publication:
The Impact of Travel on State Economies
5
PAGENO="0365"
Florida's Visitor Analysis-1978
AIR VISITORS let Quarter 2nd Quarter 3rd Quarter 4th Quarter Total
Expenditure/party/day 88.34 81.60 72.53 79.44 81.33
Number/party 1.9 1.8 1.8 1.6 1.8
Expenditure/person/day 46.49 45.03 40.29 49.65 45.61
Number of nights 10.7 10.8 8.1 8.2 9.6
Expenditure/person/trip 497.44 486.32 326.35 407.13 438.32
Number of Visitors 3,449,000 2,312,000 2,151,000 2,397,000 10,309,000
Total Expenditure $1,715,670,560 $1,124,371,840 $701,978,850 $975,890,610 $4,517,911,860
AUTO VISITORS
Expenditure/party/day 58.44 60.43 73.32 62.05 63.57
Number/party 2.5 2.6 3.0 2.4 2.6
Expenditure/person/day 23.38 23.24 24.44 25.85 24.15
Number of nights 18.0 28.0 8.4 9.3 16.0
Expenditure/person/trip 420.84 650.72 205.54 240.41 380.96
Number of Visitors 5,929,000 5,416,000 5,641,000 5,074,000 22,060,000
Total Expenditure $2,495,160,360 $3,542,299,520 $1,159,451,140 $1,219,840,340 $8,416,751,360
TOTAL VISITORS
Number of Visitors 9,378,000 7,728,000 7,792,000 7,471,000 32,369,000
Expenditure/person/trip 449.01 603.87 238.89 293.90 399.60
Total Expenditure $4,210,830,920 $4,666,671,360 $1,861,429,990 $2,195,730,950 $12,934,663,220
OTHER MODES
(U.S. and Canada) 187,560 154,560 155,840 149,420 647,380
OVERSEAS N/A N/A N/A N/A 1,003,860**
TOTAL VISITORS 34,020,240
*United States Travel Data Center Estimates
**United States Travel Service (U.S.T.S.) Projections
PAGENO="0366"
362
Air Visitors
Origins
1. New York
2. Illinois
3. New Jersey
4. Pennsylvania
5. Canada
6. Georgia
7. Ohio
8. Massachusetts
9. Michigan
10. Virginia
Purpose of Trip~
1. Vacation
2. Personal
3. Company or Govt. Business
4. Personal Business
5. Convention/Conference
Trade Show
6. Friends or Relatives
7. Cruise 1.1
Planning Time 1-2 Months
11.8% used some sort of package plan.
Reservations were made as follows:
Percent
Travel Agent 49.8
Through ,Airline 44.8
Other 5.4
Things People Like About Flonda:*
42.4% rented a car
Destinations
1,356,200 1. Dade 2,971,900
763,900 2. Orange/OsceolalWDW .. . .2,164,900
732,500 3. Broward 2,047,700
711,700 4. Pinellas 1,124,800
704,200 5. Palm Beach 919,900
484,900 6. Hillsborough 881,800
455,100 7. Duval 582,600
381,100 8. Volusia 308,100
363,200 9. Monroe 313,900
291,200 10. Sarasota 245,800
Percent Lodglng* Percent
.41.0 1. Hotel/Motel 63.9
.11.2 2. Campground/Trailer Park 1.0
.35.4 3. Condominium 6.0
4.5 4. Friends/Relatives 33.7
5. Other 2.9
6.6 Repeat Visitors 84.1%
.29.1 12.2 of these visitors had not visited
Florida in the past five years.
Ticket Information
One-Way Ticket 11.1
Round Trip Ticket 88.9
Percent
1. Rest and Relaxation 56.9
2. Sports to Watch 5.2
3. Florida Attractions 29.2
4. Pari-mutuels 5.0
5. Cruises 2.8
6. Dancing, Night Life 15.1
7. Cultural or Special Events 2.9
8. Educational Programs/Exhibits 2.6
9. Beaches 38.3
10. Fishing, Non-Boating 6.6
11. Boating 2.9
12. Camping 6
13. Historical Sites 3.8
14. Golf 9.2
15. Tennis 7.6
May total more than 100°C because of multiple choice.
7
PAGENO="0367"
363
Air Visitors
Attractlons*
1. Walt Disney World
3. Sea World
4. Cypress Gardens
5. Miami Seaquarium
6. Kennedy Space Center
7. Circus World
8. Parrot Jungle
9. Vizcaya
10. Silver Springs
Household Income Percent
1. $ 0,000- 4,999 2.5
2. $ 5,000- 9,999 4.1
3. $10,000-14,999 8.3
4. $15,000-19,999 12.7
5. $20,000-24,9g9 13.3
6. $25,000-29,999 14.4
7. $30,000-34,999 12.0
8. $35,000-39,999 32.4
9. $40,000 & Above 3
97.5% will return to Florida.
Age Percent
SeX Percent
(Respondent)
Male 67.7
Female 32.3
Occupation Percent
(Respondent)
1. Professional, Executive 40.8
2. Manager, White Collar 29.2
3. Blue Collar 12.0
4. Student/Homemaker/Military 3.3
5. Retired/Semi-retired 12.6
6. Unemployed 8
7. Other 1.3
*Figures reflect percentage share of market and not actual gate attendance.
2. Busch Gardens 632,400
.2,112,100 (Respondent)
1.0-18 6
2. 19-24 94
3. 25-35 22.8
4. 36-49 29.8
5. 50-64 27.2
6. 65 & Over 10.2
598,500
318,600
296,000
278,000
115,000
97,700
90,400
89,500
8
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oc~
c_\o
0 ~
0
9
PAGENO="0369"
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10
B1-i~-~ C - 80 - 2~
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366
Auto Visitors
Origins
1. Georgia 1,715700
2. Ohio 1,652,600
3. New York 1,435,100
4. Michigan 1,179,700
5. Louisiana 1,146,000
6. Pennsylvania 1,135,200
7. Alabama 1,068,300
8. Canada 909,900
9. Illinois 931,800
10. Indiana 859,300
Purpose of TrIp* Percent
1. Vacation 71.5
2. Personal 3.6
3. Company or Government
Business 4.3
4. Personal Business 4.8
5. Convention/Conference
Trade Show 6
6. Friends or Relatives 19.0
Planning Time 6 months-i year
6.6% had no definite destination but were
touring.
Destinations
1. Orange/OsceoIaJWDW ... 4,759,800
2. Volusia 3,019,000
3. Pinellas 2,554,200
4. Escambia 1,777,600
5. Broward 1,705,600
6. Hillsborough 1,636,400
7. Okaloosa 1,635,300
8. Dade 1,277,000
9. Bay 1,262,100
10. Palm Beach 981,500
Lodging * Percent
1. Hotel/Motel 54.1
2. Campground 10.8
3. Trailer Park 3.7
4. Condominium 3.0
5. Friends and Relatives 30.2
6. Other 8.3
Repeat Visitors 84.7%
8.9% of these visitors had not visited Florida
in the past five years.
Things People Like about Florida:*
Percent
1. Rest and Relaxation 70.2
2. Sports to Watch 8.2
3. Florida Attractions 50.6
4. Pari-mutuels 10.0
5. Cruises 5.1
6. Dancing, Night Life 14.2
7. Cultural or Special Events 8.8
8. Educational Programs/Exhibits 5.8
9. Beaches 69.4
10. Fishing 26.3
ii. Boating 5.6
12. Camping 16.5
13. Historical Sites 12.5
14. Golf 11.8
15. Tennis 3.8
*May total more than 100% because of multiple choice.
11
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367
Auto Visitors
Attractions*
1. Walt Disney World 9,751,100
2. Sea World 2,338,200
3. Busch Gardens 2,105,900
4. Kennedy Space Center ... 992,400
5. Circus World 901,700
6. Silver Springs 755,200
7. Cypress Gardens 676,200
8. Marineland 357,300
9. Sunken Gardens 262,400
10. Circus Hall of Fame 225,900
Household Income Percent
1. $ 0,000- 4,999 1.7
2. $ 5,000- 9,999 6.0
3. $10,000-14,999 16.3
4. $15,000-19,999 24.7
5. $20,000-24,999 21.3
6. $25,000-29,999 13.2
7. $30,000-34,999 8.9
8. $35,000-39,999 7.9
9. $40,000 & Above 0
99.4% will return to Florida.
Entrance Highways Percent
1. 1-75 38.1
2. 1-95 28.4
3. -10 19.5
4. US 1-301 6.4
5. US 331 2.6
Vehicle Type Percent
1. Car 85.8
2. Recreation Vehicle 11.3
3. Truck 2.9
Age Percent
(Respondent)
1. 0-18 2
2. 19-24 6.2
3. 25-35 15.9
4. 39-49 27.3
5. 50-64 32.0
6. 65 & Over 18.4
Sex Percent
(Respondent)
Male
Female
Occupation
(Respondent)
1. Professional, Executive 15.8
2. Manager, White Collar 23.9
3. Blue Collar 24.1
4. Student/Homemaker/Military 4.3
5. Retired/Semi-retired 26.4
6. Unemployed 7
7. Other 4.8
Exit Highways Percent
1. -75 31.3
2. -95 28.5
3. 1-10 25.2
4. US 1-301 11.7
5. US 331 1.8
Figures reflect percentage share of market and not actual gate attendance.
90.6
9.4
12
PAGENO="0372"
368
The 1975 Florida Legislature granted the Division of Tourism the authority to
charge, on a cost basis, for detailed and customized statistical information
that is available through the division's research program but for which there
are no budget provisions. The legislation specifically states that the division
may charge and collect a fee equal to the approximate cost to the state for
researching or compiling information, handling charges, publications, mate-
rials or services which, in its judgment, should not be furnished gratis.
The Division of Tourism's Office of Marketing & Research offers a variety of
information on the Florida visitor, available upon request. Schedule in this
brochure lists prices for specific publications.
From the Quarterly Visitor Surveys:
Demographics:
Age
Occupation
Income/number contributing
Sex
Marital status
Type of vehicle
Party size
Behavioral Characteristics:
Lodging type
State of origin
Major destinations
Major attractions
Mean daily expenditures
Mean trip expenditures
Expenditures (by type)
Mean number of nights
First/repeat visitors
Last visit
Purpose of trip
Consideration of alternate vacation area
Planning time: median
Side trips
Car rental (air only)
Type of ticket purchased (air only)
Use of travel agent (air only)
Use of package plan (air only)
13
PAGENO="0373"
369
Publications Available
(or on Special Order)
1976/77/78/79 Quarterly Reports $ 2.50 Per Quarter
1976/77/78/79 County Reports* $ 2.50 Per County/Per Qtr.
1976/77/78/79 Canadian Reports $ 2.50 Per Quarter
1977/78/79 International Reports $ 2.50 Per Quarter
1975 Quarterly Reports $ 2.50 Per Quarter
1975 Canadian Reports $ 5.00 Per Quarter
1973-1978 Executive Summaries No Charge
Please call us to discuss the availability of specialized information to meet
your travel market research needs. 904/488-4952, 488-7641.
*Dade Broward, Palm Beach, Orange/Osceola, Pinellas, Hillsborough,
Duval. Additional counties are available depending on sample size.
MAIL TO: Florida Division of Tourism
Oftice of Marketing & Research
Collins Building
Tallahassee, Florida 32301
Please send me ___________________- _~~reports.
I have enclosed a check in the amount of $ _____
Please send me an estimated cost for special reports on:
NAME: _______ ___~~~~--------.
FIRM: _________
ADDRESS: _____________
14
PAGENO="0374"
370
A Word to Our Users
The Office of Marketing and Research exists to serve you. The information
we have on Florida's tourist is meant to be used as a marketing tool. To
maintain the utility and effectiveness of our information, we need and solicit
your ideas and your input. Please feel free to call, write or visit our offices to
discuss your ideas and needs concerning travel research. Our address and
telephone numbers are as follows:
The Office of Marketing and Research
Division of Tourism
107 West Gaines Street
Tallahassee, Florida 32301
904/488-4952 or 904/488-7641
This public document was promulgated at an annual cost of $1158.00, or
$5790 per copy to provide the public with information about Florida's
visitors in 1978.
15
PAGENO="0375"
56
54
52
50
48
46
44
42
40
~39
~38
37
36
34
33
32
31
30
29
28
27
26
25
24
23
371
PATTERNS OF FLORIDA VISITOR VOLUME 1970-1985
U.S. AND CANADA - BY ALL MODES OF TRANSPORTATION
1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985
This projection does not include the effects of adverse weather or energy conditions.
PAGENO="0376"
372
1ST. QUARTER 1973
NUMBER OF VISITORS 3,449,000
PURPOSE OF TRIP
1. Vacation
2. Personal
3. Corspany/Oovernront
Purina as
4. Personal Business
5. Convontooo/Confarence/
Trade Show
6. Visi t Friends or
Relatives
7. Cruise
Now long sinoe your last
1. 1-6 months
2. 6 months - 1 year
3. 1 year - 5 years
4. 5 years or more
EXPENOITURE,'PARTy/DAY
NUMBER/PARTY, `I
EXPEMOI TUUE/PEP~OU/UAV
NUMBER OF UIORTS III FlORIDA
EXPEUOITURF/PSRSOU/TRIP
TOTAL EXPENDITURE 1ST. QUARTER
L000ING*
1. Hotel/Motel
2. Campground/
Trailer Park
3. Condominium
4. Friendl or
Relatives
5. Other
REPEAT VISITORS
$ 88.34
1.9
$ 46.49
10.7
$ 497.44
$1,715,670,060
TOP TEU ORIOIM STATES
New Yor:-;
11110~OI 3
1.
2.
3.
4.
I.
7.
5.
9.
10.
Pears `scenic
0010
Mass a oh ueetts
Miohioan
lout are
Marvtaoc) -
TOP TEN DESTINATIONS
1. Rade
2. ~B,ra~ard -
Oranne
4. PeinThesrh
5. Pin~l1as
6. Hhllsbnrnugji
7. Volusia
8. Duval
~. Monroe
10. ____________
14.7 %
Th
Th
-w
3.2 6
49.0 %
2.3 %
23.2 6
4.3 8
4.8 8
20.8 8
.8 8
visit to Florida?
22.7 8
25.5 8
39.4 8
___22_,6~
__,__2,0_~l~
-~%
35.7 8
2.88
85.9 8
Most vacationers began Dlannino
their 1st, guarter trip l-2nonrhs
before they came.
EXPENDITURES ADVANCE LODGING
TRANSPORTATION
GASOLINE
FOOD (GROCERY)
F000 (RESTAUPE,NT)
$
$
$
$
10,32
2.17
2.32
26.31
LODGING
ENTERTAINMENT
GIFTS
OTHER
$ 25.57
$ 11.34
$__j~
$ 4.07
61.1 8
add to more then 100% because of multiple ohnice.
PAGENO="0377"
TOP TEN ATTRACTIONS*
373
AIR SURVEY
- 1ST. OUARTER 1978
1. Disney World _22~S~
2. Sea World
3. Busch Gardens ~
4. Cypress Gardens __3~~5~%
5. Kennedy Space Ctr. .___~.2~
6. Miami Seaguarjurn _~j%
7. Silver Springs ___J_~Q~%
8. Circus Nail of Fprse_,J_%
9. Circus World
10. Other
3.4% of the visitors wrote
for information on Florida to
the following places. *
1. FL. Div. of Tourism
2. Chamber of Commerce
3. Attraction/Hotel/Motel
4. Other
If Vacation: 6.0% considered
another state or country.
TICKET: Reservations
as follows:
1. Travel Agent
2. Through airline
3. Other
~jj__% bought one-way tickets.
THINGS PEOPLE LIKE ABOUT FLORIDA*
1. Rest & relaxation
2. Sports to watch
(baseball, football, racing)
3. Florida Attractions
4. Pari-mutuels
5. Cruises
6. Dancing, night life
7. Cultural or Special Events
8. Educational programs/exhibits
9. Beaches
10. Fishing, non-Boating
11. Boating
12. Camping
13. Historical sites
14. Golf
15. Tennis
54.0%
7.7%
-~%
-~%
.3%
-~%
9.6%
1.3 %
1.9 %
.5 %
were made
_~_% bought round trip tickets.
44.5 % rented a car.
14.2% used some sort of package
plan.
1. Bahamas
2. Puerto Rico
3. Mexico
4. South America
SIDE TRIPS
3.0 %
2.5 %
.2 %
.2 %
5. West Indies
6. Other
7. No side trips
1.2 %
91.2 %
*Mey add to more than 100% because of multiple choice.
PAGENO="0378"
374
AIR SURVEY
1ST. QUARTER 1978
AGE (RESPONDENT)
1. 0-18
2. 19-24
3. 25-35
4. 36-49
5. 50-64
6. 65 & Over
.7 %
8.7 %
20.4 %
30.1 %
29.9 8
10.2 %
INCONE (total family annual incorne)
1. $0,000-4,999
2. $5.000-9,999
3. $10,000-14, 999
4. $15,000-19,999
5. $20,000-24,999
6. $25,000-29,999
7. $30,000-34,999
8. $35,000-39,999
9. $40,000 & above
1.7 %
4.2 8
9.6 8
11.8 5
14.3 %
__~3 :~%
-
31.0 %
.9 %
SEX (RESPONDENT)
MALE 69.8%
FEMALE 30.2%
OCCUPATION (RESPONDENT)
1. Professional, Executive
2. Manager, White Collar
3. Blue Collar
4. Student/Homemaker/Nilitary
5. Retired/Semi-retired
6. Unemployed
7. Other
MARITAL STATUS (RESPONDENT)
1. Married 75.9%
2. Single 14.7%
3. Other 9.4%
41.9%
26.7%
13:3%
.7%
1.6%
~% contributed to the
total annual family incone.
~% under 16.
96.9% WILL RETURN TO FLORIDA
*May add to more than 100% because of multiple choice.
PAGENO="0379"
375
AUTO SUJIVOY
J.ST. QUARTER 1978
NUMBER OF VISITORS 5,929,000
PURPOSE OF TRIP
1. Vacation
2. Personal
3. Company/Government
Business
4. Personal Business
5. Convention/Conference!
Trade Show
6. Visit Friends or
Relatives
How long since your last visit to Florida?
1. 1-6 months 16.6%
2. 6 months - 1 year 21.3%
3. 1 year - 5 years 39.0%
4. 5 years or more
EXPENDITURE/PARTY/DAY
NUMBER/PARTY
EXPENDITURE/PERSON/DAY
NUMBER OF NIGHTS IN FLORIDA
EXPENDITURE/PERSON/TRIP
TOTAL EXPENDITURE J,~ QUAST~R
LODGING*
1. Hotel/Motel
2. Campground/
Trailer Park
3. Condominium
4. Friends or
Relatives
5. Other
REPEAT VISITORS 83.8 %
Most vacationers began planning
their 1st. quarter trip 6mo-lyr.
before they came.
$_ 58.44
2.5
$,. 23.38
18.0
$ 420.84
$2,495,160,360
Oh
Canada
Pennsylvania
TOP TEN ORIGIN STATES
1. We,.,Vnrk
10:
Mi ehi
Georgia
New Jersey
T,,M
Ti 1
TOP TEN DESTINATIONS
1. Orange
2. Pinellas
3. Volusia
4. Broward
5. Hillsborouqh
6. Dade
7. Escainbia
8. Palm Beach
9. Lee
10. Brevard
8.5%
7.2%
7.0 %
6.3 9
5.5 %
4.2 %
3.9 %
3.8 8
3.7 8
72.3 6
3.9 %
4.3 %
4.7 %
.9 8
21.4 8
15.8
12.6 1
10.8 1
10.4 3
8.8 1
8.1
7.5 1
7.0 %
5.9 1
5.2 8
57.6 %
13.2 %
3.5 9
29.3 5
7.7 1
EXPENDITURES
TRANSPORTATION
$
73
LODGING
S
15.40
GASOLINE
FOOD (GROCERY)
9
9
7.53
3.15
ENTERTAINMENT
GIFTS
$8.98
$ 3.34
FOOD (RESTAURANT)
$
15.78
OTHER
9
3.53
*May add to more than 100% because of multiple choice.
PAGENO="0380"
376
AUTO SURVEY
1ST. QUAPTEE l97_~_
TOP TEN ATTPJ~CTiONS*
1. Disp~y_~3'or1d
2. Busch Gardens
3. Sea World
4. Kennedy Space Ctr.
5. Cypress Gardens
6. Silver Springs
7. Miami Seaguarium
8. Sunken Gardens
9. Circus World
10. Marineland
30.7
11.2
8.2 9
4.6 6
2.2 %
1.7 %
1.3 9
1.2 9
1.1 %
1.1 9
THINGS PEOPLE LIKE ABOUT FLORIDA*
1. Rest & relaxation
2. Sports to watch
(baseball, football, racing)
3. Florida Attractions
4. Pari-mutuels
5. Cruises
6. Dancing, night life
7. Cultural or Special Events
8. Educational programs/exhibits
9. Beaches
10. Fishing, non-Boating
11. Boating
12. Camping
13. Historical sites
14. Golf
15. Tennis
TOP FIVE ENTRANCE HIGHWAYS
1. 1-75
2. 1-95
3. 1-10
4. US-l-301
5. US-331
TOP FIVE EXIT HIGHWAYS
1. 1-75
2. 1-95
3. 1-10
4. US-1-301
5. US-331
18.0 ~ of the visitors wrote
for informatrou or. Florida to
the following places. *
1. FL. Div. of Tourism
2. Chamber of Commerce
3. Attraction/Hotel/Motel
4. Other
90.6 6
14.8
54.0
16.4
5.6 6
20.7
16.2 9
10.6 6
53.3 9
27.0 9
12.7 %
12.5 %
17.2 9
39.6 9
33.2 9
14.4 %
5.9 9
1.5 9
34.8
28.3
-n~-
.9 %
2.0 6
15.6 6
2.3 6
36.5 9 Visited a Welcome Station
If Vacation: 7.3% considered
another state or country.
8. 5 6 had no definite destinati~on
but were touring. *
*May add to more than 100% because of multiple choice.
PAGENO="0381"
377
AUTO OURVLY
1ST. QUAUTER 1978
AGE (neaci of household)
SEX (R~soondcnt)
1. 0-18
2. 19-24
3. 25-35
4. 36-49
5. 50-64
6. 65 & Over
MALE 90.2
.
FEMALE 9.6
INCOME (total family annual income)
OCCUPATION (head of household)
1. $0,000-4,999 2.3%
2. $5,000-9,999 7.1%
3. 010,000-14,999 17.5%
4. $15,000-19,999 22.5 5
5. $20,000-24,999 20.7%
6. 625,000-29,999 13.8%
7. $30,000-34,999 8.7 6
8. 635,000-39,999 7.5%
9. $40,000 & above 0%
1. Professional, Executive
2. Manager, Mhite Collar
3. Blue Collar
4. Student/Homemaker/Military 42
5. Retired/Semi-retired
6. Unemployed .5
7. Other 3.6
MARITAL STATUS (head of household)
1.5 % contributed to the
total annual family income.
1. Married
. 2. Single
3. Other 2.3
1.7 % under 16
TYPE OF VEHICLE
99.8 % WILL RETURN TO FLORIDA
1. Car 81.3
2. Recreational Vehicle 54~4
3. Truck 4.2
* May add to more than 100% because, of multiple choice.
PAGENO="0382"
378
AIR SURVEY
~ QUARTER 1978
NUMBER OF VISITORS 2,312,000
PURPOSE OF TRIP
1. Vacation
2. Personal
3. Company/Government
Business
4. Personal Business
5. Convention/Conference!
Trade Shcw
6. Visit Friends or
Relatives
7. Cruise
Mow long since your last
14.3%
.9%
vi~T~t~~t6* Florida?
LODGING*
1. Botel/Motel
2. Caispground/
Trailer Park
3. Condominium
4. Friends or
Relatives
5. Other
32.0%
16.0 %
37.6%
13.8%
EXPENDITURES
EXPENDITURE/PARTY/DAY
NUMBER/PARTY
EXPENDITURE/PERSON/DAY
NUMBER OF NIGHTS IN FLORIDA
EXPENDITURE/PERSON/TRIP
TOTAL EXPENDITURE ~ QUARTER
$ 81.06
1.8
$ 45.03
10.8
$ 486.32
$ 1,124.371,840
TOP
TEN ORIGIN STATES
~j%
4.3%
~
~
~
TOP
TEN DESTINATIONS
1.
New Yorh
1.
2.
3.
4.
5.
6.
.7.
8.
9.
10.
narie
Rrcm,ard -
nr~g~
Pin~iiac
Hillshnrrmgh
Palm Rea,'h
Duval
Collier
Osceola
Sarasota
2.
Illinois
3.
4.
Canada
5.
Pennsylvania
6.
Georcia
7.
Ohio
8.
Massachusetts
9.
Virginia
10.
California
__1L._5_~
__2._L_~
___2...2_~
69.4 %
.9 %
4.8 %
27.9 %
62.4 %
80.6 S
ADVANCE LODGING
REPEAT VISITORS
1. 1-6 months
2. 6 months -
1 year
Most vacationers began planning
3. 1 year - 5
4. 5 years or
years
more
their 2nd.. quarter trip ~
before they came.
TRANSPORTATION
S
10.01
LODGING
S
22.71
GASOLINE
5
1.83
ENTERTAINMENT
$
9.88
FOOD (GROCERY)
FOOD (RESTAURANT)
$
$
2.38
23.75
GIFTS
OTHER
$
S
5.41
5.O~9
*Nay add to more than 100% because of multiple choice.
PAGENO="0383"
If Vacation: 5~.% considered
another state or country.
379
AIR SURVEY
2ND. QUARTER 1978
SIDE TRIPS
88.7% bought round trip tickets.
TOP TEN ATTRACTIONS*
Disney World
1.
6.0%
2.
Busch Gardens
3.
4.
Sea World
Cypress Gardens
5.
Miami Seaguarium
6.
7.
Space Ctr.
Circus World
1.9%
1.8%
8.
9.
Sunken Gardens
Vizcaya
.8%
10.
Other
THINGS PEOPLE LIKE ABOUT FLORIDA*
1. Rest & relaxation
2. Sports to watch
(baseball, football, racing)
3. Florida Attractions
4. Pari-mutuels
5. Cruises
6. Dancing, night life
7. Cultural or Special Events
8. Educational programs/exhibits
9. Beaches
10. Fishing, non-Boating
11. Boating
12. Camping
13. Historical sites
14. Golf
15. Tennis
-w
.6 %
1.6 %
6.5 9
7.0 %
3.2 % of the visitors wrote
for information on Florida
to
TICKET: Reservations
were made
the following places.*
1. FL. Div. of Tourism
2. Chamber of Commerce
~%
~j%
as follows:
I. Travel Agent
2. Through airline
3. Other
51.4 %
~
3. Attraction/Hotel/Motel
4. Other
11.3% bought one-way
tickets.
1. Bahamas
2. Puerto Rico
3. Mexico
4. South america
2.4 %
3.0 %
.1 %
.5 %
41.9% rented a car.
15.5% used some sort of package
plan.
5. West Indies
6. Other _L.Q....8
7. Ho side trips
*May add to more than 100% becauke of multiple choice.
PAGENO="0384"
1.3 % contributed to the
E~t~Tannual family income.
1.6 % under 16.
380
AIR SURVEY
2ND.QUARTER 1978
1. Married
2. Single
3. Other
72.0 %
18.5 8
9.5 %
AGE (RESPONDENT)
1. 0-18
2. 19-24
3. 25-35
4. 36-49
5. 50-64
6. 65 & Over
.4 8
9.3 6
27.0
26.0 6
24.8 %
12.5 6
INCOME (total family annual income)
1. $O,000-4,999
2. $5,000-9,999
3. $lO,000-14,999
4. $15,000-19,999
5. $20,000-24,999
6. 925,000-29,999
7. $30,000-34,999
8. $35,000-39,999
9. $40,000 above
SEX (RESPONDENT)
MALE
FEMALE _L~~
OCCUPATION (RESPONDENT)
1. Professional, Executive
2. Manager, White Collar
3. Blue Collar
4. Student/Homemaker/Nilitary
5. Retired/Semi-retired
6. Unemployed
7. Other
MARITAL STATUS (RESPONDENT)
3.2 %
5.5 6
9.9 6
13.9 6
13.5 %
15.9 6
10.2
27.9 %
0 %
38.8
28.6
13.8 9
2.7 9
14.7 9
.39
1.19
97.2% WILL RETURN TO FLORIDA
*May add to more than 100% because of multiple choice.
PAGENO="0385"
NUMBER OF VISITORS 5,416,000
PURPOSE OF TRIP
1. Vacation
2. Personal
3. Company/Government
Business
4. Personal Business
5. Convention/Conference/
Trade Show
6. Visit Friends or
Relatives
1. 1-6 months
2. 6 months - 1 year
3. 1 year - 5 years
4. 5 years or more
18.5 %
22.9 %
35.5 %
9.3 %
LODGI NG*
1. Hotel/Motel
2. Carspground/
Trailer Park
3. Condominium
4. Friends Or
Relatives
5. ~Other
60.43
__________ 2.6
$~~iii~4
28.0
$ 650.72
$ 3,542,299,520
*May add to more than 100% because of multiple choice.
TOP TEN ORIGIN STATES
Ohio
New York
Louisiana
Michigan
Georgia
_~Lhi5 Si ppi
Illinois
381
AUTO SURVEY
2ND QUARTER 1978
TOP TEN DESTINATIONS
1. ,Q~pge
2. Volusia
3. Pinellas
4. Escaribia
5. Okaloosa
10.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Alabama
Canada
Pennsylvania
Bay
HJllsbpcough
_B~~ward
Palm Beach
Dade
7.7 %
6.8 %
-m
6.3 %
4.9 %
4.7 %
4.7 %
4.4 %
4.3 %
75.4 %
4.1 %
4.1 %
___a,±_~
.5 %
15.8 %
18.2%
12.9%
11.2%
9.3%
9.2%
66%
43%
53.7%
11.4%
3 %
22.9%
14.9 %
85.6%
How long since your last visit to' Florida?
REPEAT VISITORS
Most vacationers began planning
their 2ND quarter trip 6rronths-lyear
before they came.
EXPENDITURES
TRANSPORTATION
GASOLINE
FOOD (GROCERY)
FOOD (RESTAURANT)
EXPENDITURE/PARTY/DAY
NUMBER/PARTY
EXPENDITURE/PERSON/DAY
NUMBER OF NIGHTS IN FLORIDA
EXPENDITURE/PERSON/TRIP
TOTAL EXPENDITURE 2ND QUARTER
$
LODGING
$ 15.92
$
3.51
ENTERTAINMENT
$8.8]
$_~___~~~_44
OTHER
$
441
RI_IlL, - 87 - 21
PAGENO="0386"
382
AUTO SURVEY
2ND QUARTER 1978
TOP Ti7i ATTSACTTO~S* __________________________________
1. Disney World 33.6%
2. Sea World _~_~__%
3. Busch Gardenu 7.9%
4. Cypress Garuens
5. . ` ci~ Spac~
6. ~jver~.pr i ned~~
7. Marjneland 1.3%
8. Circus Hall Fame .9 1
9. St. Augustine Gtr.Farrn.E%
10. Other 11.5%
11.3 1 of the visitors wrote
for inforoation on Florida to
the following places. *
1. FL. Div. of Tourism ________
2. Chaober of Coru-nerce _________
3. Attraction/Hotel/Cotel _________
4. Other
TOP FIVE EXIT HIGHWAYS
1. 1-75 31.7%
2. 1-10 27.3%
3. 1-95 -T:i%
4. US 1-301 11.4%
5. US 331 -T:~%
THINGS PEOPLE LIRE ABOUT FLORII3A*
1. Rest & relaxation
2. Sports to watch
(baseball, football, racing)
3. Florida Attractions
4. Pari-mutuels
5. Cruises
6. Dancing, night life
7. Cultural or Special Events
8. Educational programs/exhibits
9. Beaches
10. Fishing, non-Boating
11. Boating
12. Camping
13. Historical sites
14. Golf
15. Tennis
TOP FIVE ENTRANCE HIGHWAYS
1. 1-75
2. 1-95
3. i-lu
4. USI-30l
5. US 331
94.7%
10.5%
50.2%
10.4 1
3.1%
15.1%
9.1%
-Th
75.3%
23.2%
20.4%
7.6%
8.8%
-~%
36.7%
26.1 %
21.4%
6.7%
4.1%
.9 %
2.3 0
9.1 8
1.5 8
35.6% Visited a Welcome Station
If Vacation: 56% considered
another state or country.
5.3% had no definite destination
but were touring. *
*May add to more than 100% becauSe of multiple choice.
PAGENO="0387"
.22~.!._% WILL RETURN TO FLORIDA
383
AUTO SURVEY
2ND QUARTER 1978
AGE (head of household)
1. 0-18
2. 19-24
.s. 25-35
4. 36-49
5. 50-64
6. 65 & Over
.5 %
272%
INCOME (total family annual income)
SEX (Respondent)
MALE
FEMALE
OCCUPATION (head of household(
1. Professional, Executive
2. Manager, t3hite Collar
3. Blue Collar
4. Student/1Jomernaker/r.~ilitary
5. Retired/Semi-retired
6. Unemployed
7. Other
1.6%
6.7%
__J_L.5~
220%
0%
90.. 0 %
10.0 ~
14.6 %
24.4 8
21.3 %
-~%
29.3 %
.8 %
4.2 %
1. $0,000-4,999
2. 05,000-9,999
3. $l0,000-14,999
4. $15,00o-1g,9~
5. $20,000-24,999
6. $25,000-29,999
7. $30,000-34,999
8. $35,000-39,999
9. $40,000 & above
1.5 % contributed to the
total annual family income.
1.9 % under 16
MARITAL STATUS (head of household)
1. Married
2. Single
3. Other
TYPE OF VEHICLE
1. Car
2. Recreational Vehicle 10.4%
3. Truck 3.0%
*Nay add to more than 100% because of multiple choice.
PAGENO="0388"
384
AIR SO yES
3R0.QUART:R 1978
0021505 OF VISITORS _2~1Sl,OS7
ORIGIN STOOlS
TOP TEN DESTINATIONS
1. New York
2. Canada
2. New Jersey
4.
2. Illinois
6. j~7~s~yania
Ohio _________
6. N~ian
9. Foreign
7. Cooneotinot
PURPOSE OF TRIP*
Vis:t Friends or
Re: at i Va a
LODOINO*
1. FIotel/Rotel 62.8%
2. Carspgroond .2%
3. TiFailer Park .3%
4. Condorniniom
~. Friends and relatiyjl]57S%
6. Other
ow boa sinna your last visit to Florida?
I . S oontha
2. 1 roar
4. 3 caere
2000 PFSTAOP.AJIT)
o:poNoITopt~pARTy/oAy
0211006/lOFTY
.\P1021T000 PERSON/OAT
our~ota 0: NTOPTS IN FOORSOA
YPt0010'FF ~`PtoSON/TRIP
:0000 t2.2tOOlTORSy~OUARTER
Most vacationers began planning
their 3rd. qoarter trip 1-2 months
before they came'
AOVANCS LODGING
$~. 72.53
1.3__
9.1
$ 326.35 _________
-
12.4%
8.9%
8.0%
- 6.1%
6.1%
6.0%
3.9%
3.2%
3.1%
3.1%
1. Dade 35.0%
2. Sroward 20.2%
3. orange/Osceola/WOb4DTfl
4. Pinellas 10.8%
5. Hillsboroogh 10.3%
6. Palm Beach 7.6%
7. Ooval 7.3%
8. Monroe 3.4%
9. Sarasota 2.6%
10. Collier 9
2.
6.
7.
32.2
-m
23.0
4.2 5
3.5 5
19.7 6
iiJIIi~ REPEAT VISITORS
45.6~
24.0%
-m
82.6%
EXPEROITOREB
1
9.91
LODGING .
$
17.71
S
~
S
2.~1
2.79
21.39
ENTERTAINSIENT
CIFtI
OTRER
$
S
5
9.11
4.70
4.31
PAGENO="0389"
385
AIR SI~VEY
3RD. QUAIl [ER 1978
TOP TIM ?.TT ROCTIONS*
1. DISNEY WORLD 18,8
2. ~DENS ~ 2:
3. MIAMI SEAQUARIUM . % 3.
~* .Sa~ Wns~ü
~ JIFEN0I770.E/PtESON;T015 $
TOTAL EXFENDITUP.E QUARTER $
224.48
5S252,5t0
*May add to more than 100% because of multiple choice.
PAGENO="0421"
25.0% of the visitors wrote
for information cc Florida to
the following places. *
AUTO SURVEY
DADE COUNTY
THINGS PEOPLE LIKE ABOUT FLORIDA*
1. Rest & relaxation
2. Beaches
3. .;ater Snorts
4. Sports to catch
(baseball, football,
5. Golf
6. Tennis
7. Fishing
8. Charter Boating
9. Florida Attraction
(Incluc1es Sightseeing
10. Pari-mutuels
11. Nature Studies
12. Dancinu, :uuht Life
13. Cultural or Special Events
14. Historical Sites
15. Educational Programs
or Exhibits
90.2 8
93.5
31.5 8
auto racing) 4.3
8.7'
2.2
30.43
Cruises) 57.65
14.1%
14i~
10.98
TOP FIVE ENTRANCE HIGHWAYS
~ __________
2. 1-75
3. 1-10
4. US1-301
47.3
31.9 8
45.1_% Visited a Welcome Station
If Vacation: 3.3% considered
another state or country.
How would a shortage (Not price increase)
in gasoline affect your future Florida
Vacation?
1. 1-95
2. 1-75
~ __________
4. USO-801
29.3%
15.2%
417
3RD QUARTER 1978
TOP TEN ATTRACTIONS*
1. Disney World
2. Busch Gardens
3. Sea Sorid
4. Miami_Seaous'~iur
5. ~5 Fun i~o~se
6. Siehtseejne Csuise
42.4 8
16.3%
16.3 8
14.1 8
8.7 %
4.3 8
9.8 %
1. FL. Div. of Tourism 1.1 %
2. Chamber of Commerce ~2~2%
3. Attracticn/Hotel/Motel ~ 6
4. Other 0 %
TOP FIVE EXIT HIGHWAYS
1. Hot Sure
2. Would choose an alternate
of transportation
3. Would not come to Florida
ALTERNATE OTTHOD/TRANSPORTATION
45. 7%
met1~3~
35.9%
18.5%
1. Fly/Drive
2. Auto-Train
3. Amtrak
4. Bus
5. Other
29.3 8
L.L%
22%
1.1%
1.1%
*May add to more than 100% because of multiple chOice.
PAGENO="0422"
AGE (Respondent)
1. 0-18
2. 19-24
3. 25-35
4. 36-49
5. 50-64
6. 65 & Over
1.6 % contributed to the
total annual family income.
1.9 % under 16
100.0% WILL RETURN TO FLORIDA
AUTO SURVOY
3RD QUARTER 1978
DADE COUDTY
SEX (Respondent)
0%
-~%
31.6%
13.0%
418
MALE
FEMALE
INCODE (total family annual income)
OCCUPATION (Respondent)
1.
2.
3.
4.
5.
SO,000-4,999
55,000-9,999
$10,000-14,999
$15,003-10,999
$20,00024,999
3.3%
3T%
~
~%
~
1. Professional, Executive
2. Manacer, White Collar
3. Blue Collar
4. Student/Honemaker/Military
5. Retired/Semi-retired
6.
$25,00029,999
6. Unemployed
7.
8.
9.
$30,00034,999
$35,000-39,999
$40,000 & above
12.0%
i~Tö%
~%
7. Other
MARITAL STATUS (Respondent)
91.3 %
8.7 ~
16.3 %
22.8 %
26.1 %
3.3 5
1.0 %
12.0 %
90.2 ~
8.7 %
1.1 %
87.0 %
9.8 %
3.2 %
1. Married
2. Single
3. Other
TYPE OF VEHICLE
1. Car
2. Recreational Vehicle
3. Truck
* May add to more than 100% because of multiple choice.
PAGENO="0423"
419
AIR SURVEY
~TTTT7~7~OTE S ]
NUNBER OF VISITORS 747,900
TOP TEN ORIGIN STATES
1. Canada
2. .t~ew Yor(:
3 ~tese~jersey
4. Illinois
~* Penns7l~ania
6. Georgia
7. Misconsi n
8. Virginia
9. Tennessee
10. Foreion
04.8%
11.1%
7.8 %
6.7 9
6.1 %
5.9 9
5.4 %
4.1 %
3.7 %
3.0 9
How long since your last visit to Florida?
l. 6 months
2. i year
3. 2 years
4. 3 years
5. 5 years or more
44.9 %
25.5 %
12.1 %
6.8 9
10.7
PURPOSE OF TRIP *
1. Vacation
2. Personal
3. Company/Government
Businesa
4. Personal Susiness
5. Convention/Conference
Trade Show
6. Visit Friends or
Re latives
7. Cruise
LODGING *
1. Hotel/Motel
2. Campground
3. Trailer Park
4. Condominium
5. Friends or Relatives
6. Other
ADVANCE LODGING*
REPEAT VISITORS
LODGING
ENTERTAINMENT
GIFTS
OTHER
Most vacationers began planning
their 4th. nuarter trip 1-2 months
before they came.
EXPENDITURES
33.l~'
34. Si
11.39
14.69
80. 59
2. 8~
70.15
87.29
$ 28.37
$ 7.1
$ 4.79
$ 5.80
TRANSPORTATION $ 11.33
GASOLINE $ 2.00
FCOO (GROCERY) $ ij~
FOOD (RESTAURANT) $~T.l9
EXPENDITURE/PARTY/DAY
$
92.16
NUNBER/PARTY
1.5
E1PENUITURE/PERSON/DAY
8
61.44
NUMBER OF NIGHTS IN FLORIDA
6.2
:NPENDITUPE/PERSON/TRIP
$
380. 93
TOTAL EXPENDITURE 4TH. QUARTER
$284,897,547
* 5Nay add to more than 100% because of multiple choice.
PAGENO="0424"
420
DADE COUNTY
AIR SURVEY
4TH, QIJASToS 1975
T77Nc4 PEOPLE 1.111 ABOUT FLOOIDA*
1. Pact & relaxation
2. Beaches
3. water Sports
4. Srcrts to watch
(baseball, football,
5. Golf
6. Tennis
7. Firhing
8. Charter Beating
9. Plereda Attraction
(Includes Sightseeing
10. Parn-eutuols
11. Nature Studios
12. Canring, Nicht Lffo
13. Cultural or Special Events
14. iisrariaal Sites
15. Cdaaatnonal Programs
or Exhibits
3.7 9 wrote far infornatien on
Plaraha to the following places:
3.4 9 Sf vaastiorera considered
araahar state or coantry.
__7ti~ used sono sort of package
TOP TEN ATTSSCTSONS*
1. Eisa-n': Vrrld
S. :-:ar-- 1 _______
75%
4.0 9
3U 6
97.0
41.4
10. 6
auto raoing) 4.5
-fl
7.t
6.6
2.1
Cruises) 17.6
6.8
-n
-fl
-fi.
3.8'
1. FL. Civ. of Tcurisn
2. Charhar of Corr~orro
3. Attraat:rcr/Vala 1/Motel
4. Other
TICKET: Reservations wore made
as follows:
1. Travel Agent
2. Through airline
3. other
7.9 8 bought one-way tickets.
~7V% bought round trip tickets.
38.0 % Ranted a Car.
5. West Indies
6. Other
7. No side trips
1. Eahanas
2. Puerto Eioo
3. Naxaco
4. Sauth :`ucorioa
48.6 %
43.5 5
7.9 6
1.3 %
89.1 %
RICE TRISS
4.7 %
.6 %
.2 %
1.5 %
`May add to oars than lISt because of nultapla ohooce.
PAGENO="0425"
421
DADE COIJNTY
AIR S000C{
4ARTCR 19 ~
3.0 % wrote for information on
Florida to the following places:
1. FL. Div. of Tourisn
2. Chamber of Commerce
3. Attractions/Hotel/'1otel _j~~_%
4. Other
3.4% If vacationers considered
another state or country.
7.4% used some sort of package
plan.
THINGS PEOPLC LINE ADCCT FLOriIDA*
1. Pest & relaxation
2. Beaches
3. Hater Sports
4. Sports to watch
(baseball, football,
5. Golf
6. Tennis
7. Fishing
8. Charter Boating
9. Florida Attraction
(Inc].udcs Sightseeing
10. Pari-mutuels
11. Nature Studies
12. Dancing, Night Life
13. Cultural or Special Events
14. Historical Sites
15. Educational Programs
or Exhibits
TICKET: Reservations were made
as follows:
1. Travel Agent
2. Through airline
3. Other
7.9 % bought one-way tickets.
~0Tr~ bought round trip tickets.
38.0 % Rented a Car.
48.6 8
43.5 9
7.9 1
5. West Indies
6. Other
7. No side trips
1.3 %
2.6 %
89.1 8
TOP TEN ATTRRCTIONS*
1. Disney World
2. Miami Seanuarium
3. Vizcaya
4. ~ Cruise
5. ~tJ~:nle
6. Cypress Gardens
7. Sea World
8. Kennedy Soace Ctr.
10. Other
3.0 1
1.9 %
1.5 6
1.3 %
1.1
97.0%
4] . 4%
10.6%
auto racing) 4.59
7.6%
6.6%
2 . 1%
Cruises) 17.6p
6.6%
3.0%
3.8%
1. Bahamas
2. Puerto Rico
3. Mexico
4. South America
SIDE TRIPS
4.7 8
.6 %
.2 8
1.5 %
*~1ay add to more than 100% because of r.:ultiole choic'e.
PAGENO="0426"
97.4% WILL RETURN TO FLORIDA
422
AIR SIPUNY
DADE COUNTY
4TH. QUIRTUS 1978
AGE (Respondent)
1. 0-18
2. 19-24
3. 25-35
4. 36-49
5. 50-64
6. 65 & Over
.2 %
5.5 6
20.0 1
33.1 0
30. 3 0
10.4
INCOSI (total family annual income)
1. $0,000-4,999
2. $5,000-9,999
3. $10,000-04,999
4.915,000-19,999
5. 920,000-24,999
6. $25,000-29,999
7. $30,000-34,999
8. $35,000-39,999
9. $40,000 & above
SEX (Respondcnt(
MALE
FEMALE
OCCUPATION (Respondent)
1. Professional, Executive
2. Manager, Rhite Collar
3. Blue Collar
4. Student/Horeemaker/Military
5. Retired/Semi-retired
6. Unemployed
7. Other
MARITAL STATUS (Respondent)
1. Married
2. Single
3. Other
1.4%
3.4%
6.2 8
12 . 0 6
10.8%
10.8%
14.3%
411%
1.3% contributed to the total
annual family income.
1.8 % under 16
50.9 5
27.9 1
6.8 9
1.3 9
11.5 5
1:1 %
76.2 8
7.29
*May add to more than 100% because of multiple choice.
PAGENO="0427"
423
DADE COUNTY
AUTO SURVY
4TH. QUARTER 1978
NUMBER OF VISITORS 294,300
Most vacationers began planning
their 4th. quarter trip 6rnonths-lyear
before they ca,oe.
EXPENDITURE/PARTY/DAY
NUMBER/PARTY
EXPENi ITURE/PERSON/DAY
NUMBER OF NIGHTS IN FLORIDA
EXPENDITURE/PERSON/TRIP
TOTAL EXPENDITURE 4TH. QUARTER
LODGING*
1. Hotel/Uotel
2. Carnpqi-oucd
3* Trailer Park
4. Condominium
5. Friends or Relatives
6. Other
REPEAT VISITORS
$ 69.96
2.5
$ 27.98
8.2
$ 341.22
$ 100,421,046
71.3
9.6
37~79
TOP
TEN ORIGiN STATES
10.6%
8.8%
7.1%
5.3 %
5.3%
4TTt
~
~TT%
T~%
T5%
1.
2.
3.
4.
5.
6.
PURPOSE OP TRIP*
Vacation
Personal
ComPany/Government
Business
Personal Business
Convention/Conference
Trade Show
Visit Friends or
Relatives
34.8'.
4.4
7.0%
~
8.8 %
1.
Ohio
2.
Pennsylvania
3.
Nee York
4.
Canada
5.
6.
Vermont
North Carolina
7.
South Carolina
8.
lest Virg-nia
9.
Georgia
10.
Mi oh jean
How long since your last visit to FL.
1. 6 months
2. 1 year
3. 2 years
4. 3 years
5. 5 years or more
21.9 9
19.3
14.0
9.6 6
14.9 %
EXPENDITURES
78.9 %
TRANSPORTATION
$
1.09
LODGING
$
15.48
GASOLINE
$
9.66
ENTERTAINMENT
$
11.52
FOOD (GROCERY)
$__4.15
GIFTS
$
6.40
FOOD (RESTAURANT)
$
17.55
OTHER
$
4.11
*May add to more than 100% because of ~nultiple choice.
PAGENO="0428"
424
DADE bUtTE
AUTO_st~t:i
4CR. QUARTER 5575
THINGS PEOPLE LIKE ABOUT FLORIDA5
1. Rest & relaxation
2. Leaches
3. Nator Sports
4. Sports to watch
(baseball, football,
5. Golf
7. Fishing
8. Charter Ecating
9. Florida Attraction
)sncludes Sightseeing
10. Feri-ootuols
11. Nature Studies
12. lancing, Night Life
13. Cultural or special Events
14. Historical Sites
15. Educational Programs
or Exhibits
1c.~ ~ of the visetors wrote
for infernatien on Florida to
the follneing places. *
1. FL. tie. of _______ _________
2. Chanber of Cenraroa
3. Attrscteun/UctolYyctel _______ __________
4. Other ________
45.1 8 Visited a Netcome Station
If Vacation: 7.9 5 considered _________
anet):er state or country. __________
Hoe weuld a shortage Not price increase) ALTERNATE OSETHOO/TEANSPORTATION
in gasotene affect stir future Florida
vacation? 1. Fly/Drive
2. Auto-Train
1. Not Sure 3. Amtrak
2. Nouli cheese an alternate 4. Sus
of transpertntisu 5. Other
3. Nculd ::et cone to Florida
TOP TEN ATTIABCTIOUS5
1. lessee Nettd
10. Other -
37.7%
14.9
11.7 S
6.8%
53%
6.1%
7.15
6.1%
5.3 5
87.7
79.8
11.4
auto racing) 5.3
12.1
28.1
1.8 5
Cruises) 52.6
T2~%
i4.3~
18.4
4.4 8
.9 8
~.s ~
1.9 5
i.e 8
TOP FIVE ENTRANCE IIIOHV7AYS
1. 1-95
2. I-IS
________ 3. 7-13
________ 4. 15-1-301
TOP FIVE EXIT HIDEE:'AYS
1. 0-95
2. 1-75
3. 5-13
4. UE-1-301
45 5 5
36.3
29.8
23.7
10.5
28.8%
nethod
51.4%
19.8%
46.5 %
1.8 8
1.8 5
0 5
*Nay add to mere than lCOt because of multiple chaice.
PAGENO="0429"
425
DADE COUNTY
AUTO SURVEY
~ATR. QUARTER 1978
AGE (Respondent)
1. 0-18
2. 19-24
3. 25-35
4. 30-49
5. 50-64
6. 65 & Over 19.3%
INCOME (total family annual income)
16.8 6
10.6 %
13.3 6
1. $0,000-4,999
2. $5,000-9,999
3. $10,000-14,999
4. $15,000-19,999
5. $20,000-24,999
6. $25,000-29,999
7. $30,000-34,999
8. $35,000-39,999
9. $40,000 & above
1.5 % contributed to the
total annual family income.
1.6 6 under 16
SEX (Respondent)
MALE
95.6 %
FEMALE
4.4 %
OCCUPATION (Respondent)
1. Professional, Executive
14.0
2. Manager, Rhite Collar
3. Blue Collar
21.9 6
4. Student/}:cnenaker/Eilitary
1.8
5. Retired/Seni-retired
6. Unemployed
22.8%
7. Other
10.5
MARITAL STATUS (Respondent)
1. Married
80.7 6
2. Single
15.8
3. Other
3.5%
TYPE OF VEHICLE
1. Car
83.2
2. Recreational Vehicle
9.7
3. Truck
7.1
96.4 % WILL RETURN TO FLORIDA
* May add to more than 100% because of multiple choice.
PAGENO="0430"
426
NUMBER OF VISITORS 1~265,OOO
TOP TEN ORIGIN STATES
1. ~`s~_
7.___
8. j/~OU~I
9. *.O?T~ L'~~GL.INA
10. LEGPC-IA
how long since your last visit to Florida?
1. 6 months
2. 1 year
3. 2 years
4. 3 years
5. S years or nore
Host vacationers began planning
their 1st, cuarter trip 1-2 `TOTHS
before they cane.
EXPENDITURE/PARTY/nAY
NUMBER/PARTY
EXPENOITUPI/PIIRSON/DAY
NUMBER OF NIGHTS IN DADE COUNTY
EXPENDITURE/FE RSON/TRIP
TOTAL EXPENDITURE J~J,~QUARTER
PURPOSE OF TRIP *
1. Vacation
2. Personal
3. Company/Government
Business
4. Personal Business
5; Convention/Conference
Trade Show
6. Visit Friends or
Re lets yes
7. Cruise
LODGING*
1. Hotel/Hotel
2. Campground
3. Trailer Park
4. Condominium
5. Friends or Relatives
6. Other
$ 1fl~.~1)
$
il
$ L11Th71
~ ~Is ,t~rJ
$ ~UP
$
TRANsPORTATION
GASOL INU
FOOD (GROCERY)
FOOD (RESTAURANT)
EXPENDITURES
$ ~7,1F.
$ Lf-~
$ 1L'3
$ 32,L~.
ADVANCE LODGING*
REPEAT VISITORS
LODGING
ENTERTAINMENT
GIFTS
OTHER
**Nay add to imore than 100% because of multiple choice.
PAGENO="0431"
TOP TEN ATTRACTIONS*
1. MIAMI SEAPUARIUN 7,7 %
2. VISNEY WORLD %
3. PARROT JUNGLE _3~ft_%
4. LVERGLADES
5. SIGHTSEEING LRUISE ~
6. VIZCAYA 1 9 %
7. LUSCH JARDENS -
8. T~1~UEDY SPACE LENTER %
9. SEA QRLD %
10. LION LOUNTRY _~9_%
2,7 % wrote for information on
PT6~T~a to the following places:
1. FL. Div. of Tourisn
2. Chamber of Coernerce
3. Attractions/Hotel/Motel %
4. Other _~$,_%
11.2% used some sort of package
plan.
THINGS PEOPLE LIKE ABOUT FLORIDA*
1. Rest & relaxation
2. Beaches
3. Water Sports
4. Sports to watch
(baseball, football,
5. Golf
6. Tennis
7. Fishing
8. Charter Boating
9. Florida Attraction
(Includes Sightseeing Cruises)
10. Pari-rnutuels
11. Nature Studies
12. Dancing, Night Life
13. Cultural or Special Events
14. Historical Sites
15. Educational Programs
or Exhibits
TICKET: Reservations were made
as follows,
1. Travel Agent
2. Through airline
3. Other
~9_% bought one-way tickets.
_9~J,% bought round trip tickets.
_~L~ Rented a Car.
SIDE TRIPS
1. Bahamas
2. Puerto Rico
3. Mexico
4. South Annetica
5. West Indies
6. Other
7. No side trips
427
IJP.DE cov~:iY
~SIIR"
1ST. PU.~RTER ~
auto racing) 2~
22.0'
3.0 % If vacationers considered
~ state or country.
*May add to more than 100% because of multiple choice.
PAGENO="0432"
AGE (Respondent)
1. 0-18
2. 19-24
3. 25-35
4. 36-49
5. 50-64
6. 65 & Over
428
PAJE COrft~
~TP~Y~
]~T. nLtA[~1E7. 1979
INCOME (total fanily annual income)
1. $0,000-4,999
2. $5,000-9,999
3. $10,000-14,999
4. $l5,000-19,999
5. $20,000-24,999
6. $25,000-29.999
7. $30,000-34,999
8. $35,000-39,999
9. $40,000 & above
1,3% contributed to the total
annual family income.
1.5 % under 16
97.7% WILL RETURN TO FLORIDA
OCCUPATION (Respondent)
1. Professional, Executive
2. Manager, White Collar
3. Blue Collar
4. Student/Homemaker/Military
5. Retired/Semi-retired
6. Unemployed
7. Other
MARITAL STATUS (Respondent)
1. Married
2. Single
3. Other
.2 %
~n q
SEX (Re~pondcnt)
MALE 72.7 %
FEMALE
*May add to more than 100% because of multiple choice.
PAGENO="0433"
429
DADE COUNTY
ADO SUPATY
1ST QUARTER 197~3
NUMBER OF VISITORS 390,600
TOP TEN ORIGIN STATES
1. DEW YORK
2. OHIo
3. CANADA
4. (~EORNIA
5. PENNSYLVAN!A
6. [1ASSACHUSETTS
7. LICHIGAN
8. 1:Ew JERSEY
9. TENNESSEE
10. VERMONT
PURPOSE OF TPIP*
1. Vacation
2. Personal
3. Company/Government
Business
4. Personal Business
5. Convention/Conference
Trade Show
6. Visit Friends or
Relatives
How long since your last visit to FL.
1. 6 months
2. 1 year
3. 2 years
4. 3 years
5. 5 years or more
Most vacationers began planning
their _j~~ quarter trip E~rw1THc-1vFAg
before they came.
EXPENDITURE/PARTY/DAY
NUMBER/PARTY
EXPENDITURE/PERSON/DAY
NUMBER OF NIGHTS IN DADE COUNTY
EXPENDITURE/PERSON/TRIP
TOTAL EXPENDITURE _j~j]~ QUARTER
LODGIN Ge
1. Hotel/Motel
2. Campground
3. Trailer Park
4. Condominium
5. Friends or Relatives
6. Other
REPEAT VISITORS
$ 7.83 -
.7
$_____________
$___________
$ U
*May add tD more than 100% because of multiple choice.
-~%
I
EXPENDITURES
TRANSPORTATION
$
~fl(~
LODGING
GASOLINE
FOOD (GROCERY)
FOOD (RESTAURANT)
$
s
$
7 7L~
3:06
22Ji2
ENTERTAINMENT
GIFTS
OTHER
B1-1~44 - - 23
PAGENO="0434"
430
~UTC SU2VEY
P~DE COL~TY
1ST RUPJ~TER 1979
TOP TEN ATTRACTIONS*
1. DISIFY ~OR[ P
2. R1JscH (ASDF~S
3. ~Je~'J SF~GJJLRLI1
4. kFNSFflY ~ACC ~E~TP
5. iYSTE'Y OiFSE
6. tE~I ~PLI
7. ~ARROT JU-LE
8. CYPRESS `:A5IENS
9. ~VERGLA~E$
10. ~JJ~~P ~`PP~NGS
17.~ % of the visitors wrote
for information on Florida to
the following places. *
1. FL. Div. of Tourism
2. Chamber of Commerce
3. Attraction/Hotel/Motel
4. Other
THINGS PEOPLE LIKE ABOUT FLOPIoA*
1. Rest & relaxation
2. Beaches
3. Water Sports
4. Sports to watch
(baseball, football.
5. Golf
6. Tennis
7. Fishing
8. Charter Boating
9. Florida Attraction
(Includes Sightseeing
10. Pari-mutuels
11. Nature Studies
12. Dancing, Night Life
13. Cultural or Special Events
14. Historical Sites
15. Educational Programr
or Exhibits
TOP FIVE ENTRANCE HIGHWAYS
1. -~
2. -
3. -
4. S-J-~U1
11)7
How would a shortage (Not price increase) ALTERNATE METHOD/TRANSPORTATION
in gasoline affect your future Florida
vacation?
1. Not Sure
2. Would choose an alternate
of transportation
3. Would not come to Florida
37 5 %
auto racing)
Cruises)
1) %
D.2 %
1/,L4 %
U %
_______% Visited a Welcome Station
If Vacation: considered
another State or country.
TOP FIVE EXIT HIGHWAYS
1. .~C1
2. -7
-~S~3~1
method
1. Fly/Drive
2. Auto-Train
3. Amtrak
4. Bus
5. Other
*May add to more than 100% because of multiple choice.
PAGENO="0435"
AGE (Respondent)
1. 0-18
2. 19-24
3. 25-35
4. 36-49
5. 50-64
6. 65 & Over
431
1~3~;cP ~~cw
~
n %
-w
INCOME (total family annual income)
56%
-~%
1. $0,000-4,999
2. $5,000-9,999
3. $10,000-14,999
4. $15,000-19,999
5. $20,000-24,999
6. $25,000-29,999
7. $30,000-34,999
8. $35,000-39,999
9. $40,000 & above
1.5 % contributed to the
total annual family income.
2.1 % under 16
SEX (Respondent)
MALE
FEMALE
OCCUPATION (Respondent)
1. Professional, Executive
2. Manager, White Collar
3. Blue Collar
4. Student/Homemaker/Military
5. Retired/Semi-retired
6. Unemployed
7. Other
MARITAL STATUS (Respondent)
1. Married
2. Single
3. Other
TYPE OF VEHICLE
1. Car
2. Recreational Vehicle
3. Truck
9,7%
?c q ,
~`~r 4
2~
I %
E,U %
¶~
2.~ %
98,6 % WILL RETURN TO FLORIOA
* May add to more than 100% because of multiple choice.
PAGENO="0436"
432
Mr. MADIGAN. Thank you very much, Mr. Chairman.
Mr. PEPPER. Thank you.
Mr. FL0RI0. Mr. Pepper, we thank you very much. We look
forward to working with you.
Mr. PEPPER. Thank you very much, Mr. Chairman. I appreciate
being with you.
Mr. FL0RI0. Our next witness is Mr. William Edwards, president
of the hotel division of the Hilton Corp.; and Mr. Joseph McCarthy,
president of Quality Inns International.
Gentlemen, we welcome you to the committee. Please proceed.
STATEMENT OF WILLIAM EDWARDS, PRESIDENT, HOTEL DIVI-
SION, HILTON HOTELS CORP., AND JOSEPH McCARTHY,
PRESIDENT, QUALITY INNS INTERNATIONAL, ON BEHALF OF
THE AMERICAN HOTEL & MOTEL ASSOCIATION
Mr. EDWARDS. Mr. Chairman, we thank you and members of the
subcommittee. My name is William Edwards, president, hotel divi-
sion, Hilton Hotels Corp. I am also past chairman of the American
Hotel & Motel Association's Industry Advisory Council. Accompa-
nying me is Joseph McCarthy, president of Quality Inns Interna-
tional, who also is a member of the Association's Governmental
Affairs Committee and Industry Advisory Council.
The American Hotel & Motel Association's Industry Advisory
Council is a group of association members made up of corporations,
independents, and resort properties.
We both appear before you this morning as representatives of
the American Hotel & Motel Association.
The American Hotel & Motel Association is an association of
8,500 hotel and motel properties, accounting for approximately 1
million rooms with State associations located in the 50 States.
Inclusive in our membership are all the major hotel and motel
companies within the United States.
It is our intention to express the association's views concerning
the continued need for the Federal Government to be involved in
the area of promoting international tourism at these hearings on
S. 1097.
We have followed and participated in all phases of the national
tourism policy study and are aware of this subcommittee's effort to
seek House approval of H.R. 2795, a bill which will permit the U.S.
Travel Service to continue its present international marketing pro-
grams for fiscal 1980, with an $8 million budget and a 60-percent
reduction in its Washington staff.
May I commend you for the action you announced this morning
whereby H.R. 2795 was passed. We are very pleased to hear that
news.
International tourism to the United States, which is often a
direct result of the promotional activities of the USTS, is an impor-
tant governmental function.
All of us in tourism recognize that almost every foreign govern-
ment now views the promotion of international travel as an inte-
gral part of their public policy. Approximately 112 nations have
national tourism offices which aggressively seek the travel dollar
and it should be noted that when we talk of the travel dollar we
PAGENO="0437"
433
are talking about $156 billion. The United States last year took in
$8.5 billion or a paltry 5 percent.
It would indeed be a misfortune if America, the No. 1 destination
of foreigners, would abandon its international travel promotion
role when the opportunities are so great.
Mr. McCarthy and his company have only recently entered into
an agreement with the Mexican Government that bodes well for
tourism to the United States and for better international relations
between the countries. Considering Mexico's importance as a
future energy supplier, good relations between historical neighbors
is especially important at this time.
Mr. McCarthy will elaborate now on his views concerning the
importance of international tourism promotion. Thank you
Mr. MCCARTHY. Mr. Chairman, in a world of ever-increasing
turmoil where competition between opposing social orders is a
constant threat or opportunity, it would seem that the United
States should associate more priority to the promotion of our soci-
ety and the quality of life our form of government and economy
provides.
What better way to demonstrate that circumstance than by per-
sonal observation-by inviting as many foreign visitors to our
shores as are willing to travel and see for themselves what Man-
hattan, Cape Cod, New Orleans, and California are all about.
With the recommended abolishment of the USTS by the adminis-
tration-and we join in the comment by Mr. Edwards-we would
be unique among most other national governments in not recogniz-
ing the social and economic value of tourism in our country.
Our company recently embarked on a development program in
Mexico. One could not help but be impressed by the interest,
cooperation, and involvement of various Mexican governmental
agencies in assisting in this project. In Mexico, as in many coun-
tries, they are aware of the benefits of foreign travel, the Ministry
of Tourism is one of the key cabinet positions in that Government.
That cabinet-level officer was personally involved in formalizing
our development plan along with the former President of Mexico
who now heads their tourism council.
The United States is the most important market for travel to
Mexico as Mexico is second only to Canada as a market for foreign
travel to the United States. The Mexican Government has made
available millions of investment dollars to assist individuals and
private corporations to develop travel related projects in their
country.
More than ever, when we are trying to establish ties with both
Mexico and Canada, greater emphasis on travel by residents of
these countries should assist in building goodwill and better under-
standing amongst our peoples.
Tourism definitely has social/political benefits as well as obvious
economic considerations. In terms of timing, the economy of
Mexico has strengthened and will continue to improve with the
announcement of the potential of their oilfields. The number of
travelers who will be able to afford travel to the United States for
many years to come represents an exceptional opportunity for our
industry and our country.
PAGENO="0438"
434
Mr. EDWARDS. Mr. Chairman and members of the subcommittee,
I can most emphatically echo the views of Mr. McCarthy. Hilton
Hotels has been experiencing substantial increases in occupancy
from overseas travelers. We see this trend increasing in the imme-
diate future, but we also have some long-range concerns.
There is no doubt that some foreign travel to the United States has
been the direct result of lower air fares. However, it is becoming
increasingly well known that U.S.-flag carriers are in the process of
upgrading their fleets. This is going to cost money and it may have to
come from higher fares.
Likewise, the increased fuel cost is going to cause higher fares.
Therefore, it is not unrealistic for those of us in the hotel and
motel business to have concern about foreign travel if we see
coupled with possible higher fares an abandonment of the U.S.
overseas promotional efforts. It is also true that the devaluation of
the dollar made America a more attractive destination. But I believe,
I know others have my view, that when conditions move in your
favor that is the time to increase your participation.
Considering the importance we place on government promotion,
we feel that the time is ripe for the U.S. Government to dramati-
cally change its role vis-a-vis tourism.
Tourism is becoming big business. In America alone tourism is
responsible for approximately $125 billion to the U.S. economy and
it employs over 5 million workers. Our industry, which is a sub-
stantial part of the tourism industry, is approximately $16 billion
and we employ in the neighborhood of 1 million workers. Of those
workers large numbers are women, minorities, and the handi-
capped. We are responsible partners in upgrading urban areas and
providing needed employment in rural areas.
According to Herman Kahn, of the Hudson Institute, a noted
futurist, tourism may well be the No. 1 industry worldwide.
For reasons such as these, the U.S. Government does have a
continuing role to fulfill in the tourism picture. We believe much
good was derived by the undertaking of both the Robert Nathan &
Associates and the Arthur D. Little Co., in their work for the
House and Senate Commerce Committees on the tourism study.
The study focused our attentions on the problems tourism faced in
the Federal heirarchy. It made all of us in tourism aware that
some change was in order.
Therefore, AH&MA and I believe many others in tourism are in
general agreement that the approach found in S. 1097 for establish-
ing a nonprofit corporation, which would exist independent of the
Department of Commerce and be free from most of the bureaucrat-
ic constraints of other U.S. agencies, merits consideration.
This corporation could be structured along the lines of the Public
Broadcasting Corp., and would have a board, its own officers and
certain specific functions.
Speaking for the lodging industry, you can be assured that our
representation on any board of this type would indeed be filled by
a senior executive with wide support in the industry.
In addition, we believe that the quasi-public corporation should
have as its primary purpose and activity the developing and admin-
istering of a comprehensive travel development program designed
PAGENO="0439"
435
to stimulate and encourage travel to the United States. It is our
belief that this corporation would establish branch offices in foreign
countries and facilitate services at U.S. ports of entry.
We also see a need for the corporation to consult with foreign
countries on tourism matters, develop needed data, and monitor
proposed programs affecting travel and tourism before Federal
agencies to ascertain whether, insofar as consistent with other public
policy objectives, they are in furtherance of the objectives of our
national tourism policy.
Last, in addition to our supporting the corporation, we strongly
favor a cabinet-level coordination council. This council approach has
received the American Hotel & Motel Association's strong support
throughout the period of the study.
Mr. McCarthy has firsthand knowledge of what happens to
highway-oriented properties when Government officials, without
any concern for tourism, are permitted to implement misguided
policy.
Mr. MCCARTHY. I have submitted in the statement a number of
statistics relative to various properties in our company that experi-
ence significant shortfalls, which we would just like to introduce for
the record [see. 436].
There are two that I would like to comment on, however, a small
property in Williamsburg, Va., with 59 rooms that back in the
1973-74 crisis in one particular period its revenue dropped from
$5,700 to $1,900, and another small property in Cave City, Ky., with
only 101 rooms, who historically experienced an occupancy during
the months of February and January of 41 percent that dropped to
26 percent during this crisis.
I mention these two specific properties because while Quality Inns
is a large public company we are made up of some 326 small
independent business people who cannot afford the kind of drops
that we experienced in tourism when such energy crisis comes along
as we have experienced recently.
I would like to coment also that just during the months of June
and July some properties in locations such as Santee, S.C., their
occupancy is down 31.5 percent since the energy crisis came upon
us; Hagerstown, Md., 30 percent; Winter Haven, Fla., down 31.6;
Knoxville, Tenn., down 39 points in occupancy since the beginning
of June.
These are the kinds of drops that the small businessman in the
hotel and motel community will experience with the threat of
energy which could be supplemented by promotion abroad, increas-
ing foreign travel to the country.
I would like if I could, Mr. Chairman, there were two recent
articles in the New York Times newspaper that describes very
aptly the fears over gas-cutting in the United States and its impact
on tourism, and especially the impact on the road, the tourist
places that are hurting. If I can possibly get these articles intro-
duced into the record [see p. 438] we would be grateful.
Thank you very much, Mr. Chairman.
Mr. EDWARDS. As for the National Tourism Policy Background
report, I would like to commend very highly the work done in this.
It is outstanding. It tells the background that is needed to under-
stand what is tourism and what makes it tick and why we are here
PAGENO="0440"
436
this morning. I am certainly going to try to get copies of this report
for distribution throughout our entire company because I think it
is that important that our executives have this reference material
for their guidance.
In conclusion, we both very much appreciate the opportunity you
have afforded us to express the views of the lodging industry at
these hearings on S. 1097. A.H. & M.A. hopes its comments will
prove helpful to the subcommittee and looks forward to working
with you in the future. We will be very happy to answer any
questions that you may have. Thank you.
[Tne s~.ti.~,Lics and newspaper articles referred to follow:]
STATISTICS RELATIVE TO VARIOUS QUALITY INN PROPERTIES
Quality Inns is very much oriented to the highway traveler. Our company had
provided in November of 1974 information to the American Hotel & Motel Associ-
ation that showed the impact some of our properties had experienced on weekends
because of problems encountered during the Arab Oil Embargo.
Here's what happened then:
Quality Inn-Colony. Williamsburg. Va. (59 rooms); not open in January. Open
one less day in February 1973 than in February 1974.
February 1973-gross room revenues-55.744.
February 1 974-gross room revenues-S 1,990.
The gas situation has had a devastating effect on weekend business at this
property. During the weekend of February 8-9, 1973, they rented 24 rooms. This
same weekend in 1974, they rented 9 rooms.
During the Washington Birthday 3-day weekend 1973 (February 15-17) they
rented 114 rooms. During this same weekend in 1974 they rented 23 rooms. During
the weekend of February 22-23, 1973, they rented 45 rooms. During this same
weekend in 1974, they rented 9 rooms. During the weekend of March 1-2, 1973, they
rented 45 rooms. During the weekend of March 4-5, 1974, they rented 7 rooms. As of
March 3, 1973, they had already booked 33 rooms for Good Friday (Easter weekend).
As of March 4. 1974, they have booked 3 rooms for Good Friday (Easter weekend).
Quality Inn. Cave City. Ky. (101 rooms); this motel historically is 85 percent
transient business and 15 percent commercial.
January 1974-gross room revenues-26 percent less than January 1973.
February 1974-gross room revenues-41 percent less than February 1973.
Occupancy is off similarly. The Saturday-Sunday weekend business during the
December 1973-February 1974 time period had an occupancy of 11 percent, whereas
the December 1972-February 1973 time period had an occupancy of 45 percent. The
drop-off in business here can be pinpointed directly to the gas shortage. The Decem-
ber 1973-December 1972 time period was off by 24 percent.
Restaurant.'
December 1974-December 1973-gross room revenues-off 18 percent.
January 1974-January 1973-gross room revenues-off 20 percent.
February 1974-February 1973-gross room revenues-off 20 percent.
Work force:
Previously employed 6-7 maids-now employ 3.
Previously employed laundry workers on a 6-day week. Now they work a 3-day
week.
Previously employed 2 front desk clerks in the morning and 2 in the evening.
Now employ only 2 in the morning and 1 in the evening.
Maintenance:
Previously employed 1 full-time maintenance worker plus a helper. Now employ 1
part-time maintenance worker.
Waitresses:
Previously, based on 3 shifts, employed 18. Now employ 13.
Managerial trainee:
Previously employed a managerial trainee. This position has been eliminated.
Quality Inn-Hal Orrs. Rocky Mount, NC. (52 rooms).
January 1973-gross room revenues-520,776.
PAGENO="0441"
437
January 1974-gross room revenues-$14,372.
February 1973-gross room revenues-$20,274.
February 1974-gross room revenues-$ 10,962.
1973 calendar year room revenues-$240,000.
Projecting on this basis of the first two months of this year, the 1974 gross is
£140,000. The voluntary Sunday closing of gas stations has effectively harmed their
Friday, Saturday and Sunday business. Before the closings, this motel's theory was
that weekends should be off but that weekdays would be up, thereby having a
normal effect.
On Friday, Saturday and Sunday, this motel is averaging 10 rooms per night.
Saturday was previously a 100 percent occupancy day. This was because Rocky
Mount, North Carolina, is a natural mid-way point. This is where 1-95 terminates
for people traveling from the metropolitan Washington, DC area to Florida. People
would leave on Friday and would stop in Rocky Mount for their first night en route
to Florida. Similarly, with people who were winding up their vacations in Florida
and driving North, the same reasoning would apply.
Work force:
Previously employed 13 hourly people on the motel payroll. They have had to
terminate 5 . . . 3 maids, 1 housekeeper, and 1 laundry operator. Of the 4 maids
remaining, whereas they used to be on a 40-hour week, they are now a 35-hour
week.
Restaurant:
In the restaurant in this particular motel, their business is off 40 percent from
January-February 1974, or $25,000. The restaurant was normally open, and had
been for the last 20 years, 7 days a week from 6:00 a.m. to 9:00 p.m. Now the
restaurant is closed each day from 2:00 p.m. to 5:30 p.m. They used to employ 17
full- and part-time people in the restaurant. They now employ 7.
Kitchen staff
Previously employed 8 employees. Now it totals 3.
Waitresses:
Previously employed 8-10, some part-time. They now have 3 full-time.
Because of this situation, they have already applied for and have received a 6-
month moratorium on mortgage payments from their local bank. All of their
corporate assets (owned by a family corporation which are readily converted to cash
have been exhausted.
Quality Inn, Florence, S.C.; approximately 90 percent of their business is transient
tourist. This is an 1-95 property.
January 1973-gross room revenues-$3 1,715.
January 1974-gross room revenues-$17,323.
February 1973-gross room revenues-$36,803.
February 1974-gross room revenues-$ 16,674.
January 1973-occupancy-64.6 percent.
January 1974-occupancy-39.2 percent.
February 1973-occupancy-85.5 percent.
February 1974-occupancy-42.7 percent.
December 1972-Saturday occupancy-75 percent.
December 1972-Sunday occupancy-46 percent.
December 1972-Monday occupancy-43 percent.
Decemberl973-Saturday occupancy-18 percent.
Decemberl973-Sunday occupancy-12 percent.
Decemberl973-Monday occupancy-22 percent.
January 1973-Saturday occupancy-79 percent.
January 1973-Sunday occupancy-54 percent.
January 1973-Monday occupancy-7 1 percent.
January 1974-Saturday occupancy- 17 percent.
January 1974-Sunday occupancy-il percent.
January 1974-Monday occupancy-44 percent.
February 1973-Saturday occupancy-98 percent.
February 1973-Sunday occupancy-76 percent.
February 1973-Monday occupancy-72 percent.
February 1974-Saturday occupancy- 13 percent.
February 1974-Sunday occupancy-9 percent.
February 1974-Monday occupancy-37 percent.
PAGENO="0442"
438
The preceding figures have purposely been set forth as they have to dramatize for
the members of this Subcommittee the severe drop in occupancies for January and
February 1974 when compared with the same months in the preceding two years.
Work force:
February 1973 payroll was approximately $5,600. February 1974 payroll was
approximately $4,400. It has added to it a wage increase of about 5 percent as
compared to February 1973.
The number of people on the staff has been reduced, and they are bringing in
people on a day-to-day basis to fill their needs.
Restaurant:
Percentage-wise it is off by approximately the same percentage as the room
revenues. This being an Interstate motel, the volume of food is almost in direct
proportion to the volume of room sales. The restaurant had been open from 6:00
am. to 10:00 am. and from 4:00 p.m. to 10:00 p.m.
It should be pointed out that for many en route to Florida, this motel has served
as a first-night home away from home. Because of the ban on Sunday sales, week-
end business, as you can see. has been totally wiped out.
Now, let's look at some recent Quality Inn figures from June and July of this year
which show occupancy drops. (Number of rooms occupied compared to last year.) It
should be noted that gasoline was in adequate supply in the vicinity of most of these
properties. Unfortunately, the Department of Energy allocation rules made the
public, especially in the east, afraid to travel.
June 1.979
Percent
Santee, S.C -31.5
Chattanooga, Tenn -23.7
Knoxville, Tenn -19
Hagerstown, Md -30.1
Ocean City. Md -30
Winterhaven, Fla -31.6
Folkstown, Ga -29.4
Salt Lake, Utah -13.3
Arlington, Va -18
Mobile, Ala -14
July 1979
Percent
Southpine, NC -17
Tampa. Fla -27
Knoxville, Tenn -39
Nashville, Tenn -22
Towson, Md -20
Anaheim, Calif -15
Dallas, Tex -11
Denver, Cob -23
Salt Lake, Utah -24
[From the New York Times. July 30. 1979]
BUT ON THE ROAD, THE TOURIST PLACES ARE HURTING
(By Ralph Blumenthal)
YONKERS-' `We re getting a lot more neighborhood people, Yonkers folks-a lot
them-people who ordinarily might have been somewhere else," said Eddie Ward,
manager of the Howard Johnson's restaurant on Central Avenue along the New
York State Thruway. But, he said, they have not been enough.
On a normal summer weekend, the Howard Johnson's might feed 3,000 people,
most of them New Yorkers streaming to and from the country. But this has not
been a normal summer, and patronage has been significantly off, Mr. Ward said-
an estimated 20 percent or more.
Throughout the tristate metropolitan area and in a wider arc around the North-
east and Central Atlantic region, it is not just tourist traffic and the tourism
industry that have been dislocated by the gasoline shortage.
Almost everything on the road has been affected.
PAGENO="0443"
439
EVEN TOLL ROADS AFFECTED
Roadside fruit stands and farmer's markets, fast-food wagons, diners and fancy
restaurants, motels, museums, ferries, antique shops and craftsmakers-these and
many other establishments are feeling the effects of reduced auto travel.
The major toll roads themselves are suffering, with potentially serious implica-
tions for bondholders. In its just-issued survey report for June, E. F. Hutton report-
ed the following declines in toll-turnpike vehicles compared with totals in June
1978: Pennsylvania Turnpike, 12 percent; New Jersey Turnpike, 7.3; Massachusetts
Turnpike, 5.9.
Figures for the Thomas E. Dewey Thruway in New York State were not available,
but a spokesman said revenue for their first 13 days of July was down $1 million
over the same period last year, 16.5 percent decline.
The roadside chains, too, have felt the impact. Howard Johnson's, which operates
1,420 motels and restaurants around the nation, estimated its restaurant receipts
nationally were down 20 to 25 percent earlier this month, with business at present
still off as much as 12 percent.
Marriott, which runs restaurants on the New Jersey Turnpike, confirmed that its
business was down but declined to reveal any figures.
But in many ways it is the small road-side businesses that have been hardest hit.
On Route 35 near the Manasquan Circle in New Jersey, Jane, and Jack Horton's
Carvel ice-cream stand saw business fall by $150 a day when the gas lines were at
their longest. Lately business has picked up again, but the Hortons now have a keen
sense of their vulnerability.
Similarly Thomas Jesualdo, general manager of Delicious Orchards on Route 34
in Colts Neck Township, N.J. watched his sale of fruits, juices and homemade pies
plummet 25 percent.
On Route 9 north of Peekskill, N.Y., The Bird and Bottle, an inn and restaurant
in a former tavern dating from 1761, found its Sunday guest list dropping from 100
to 35 or 40.
Further away from the city, the impact on roadside establishments has been more
extreme, although many entrepreneurs now report some recovery.
Among the severest hit have been the traditional tourist areas around Gettys-
burg, Pa., and, across the Susquehanna River, the Amish country. The entire region
suffered what residents describe as a one-two-three punch: first the nuclear accident
at Three Mile Island, then the polio scare among the Amish and finally the gasoline
shortage.
Around the historic Civil War battlefield site, motels, campgrounds restaurants
and museums report business down as much as 90 percent.
PEACHES BUSINESS ROTTING
Peach growers near Gettysburg are approaching the peak of a 700,000-bushel
harvest, but the Crestmont Orchards near Biglerville, the market manager, John
Tyson, said he was throwing away more peaches ever day than he was selling.
"People from Maryland and Virginia are not driving out here to buy fresh fruit," he
said.
In the Amish area on Route 30, Jacob Zook, a 14th-generation Pennsylvanian
whose hex-sign shop west of Paradise once sold as many as 120,000 of the brightly
colored souvenirs a year, told of empty days without customers. "The other day all
we sold was a 15-cent get well card," he said, still, he said he counted himself
luckier than compatriots all around who recently have expanded their motels and
restaurants and were now facing financial ruin.
The quilt-sellers and antique dealers, too, have been taking a beating. "I lost
$2,000 in two months in canceled reservations-plus lost sales," said Jeanne L.
Hartung, owner of Pandora's, an inn and antique shop in a 1725 tavern west of Bird
in Hand, Pa. She said she has sent a letter to Vice President Mondale complaining
of delays in extending disaster loans to area business people
Those who are visiting the Amish country tend to be from nearer-by, day-trippers
or weekend travelers. "Ordinarily we might be in California or Vegas," said Joe
Mantz of Nesquehoning, Pa., as he and his wife, Lucy, joined strangers at one of the
long tables in Plain and Fancy, a traditional family-style Amish restaurant along
Route 340.
"But," Mr. Mantz added, "I'll only take trips with a tankful of gas. I take life one
tankful at a time."
PAGENO="0444"
440
F runt the New York Times. July 2ft l979~
FEARS OVER GAS CUrFING INTO U.S. TOURISM
BY MICHAEL KNIGHT)
BOOTH BAY HARBOR. Maine, July 23-This is the season of their dismay, these
people who make their living selling fried clams and sno-cones, parking cars, rent-
ing rooms and boats and bicycles and selling T-shirts that tourists will be ashamed
to wear when they get home.
From the Smiling Cow gift shop on Town Square here to the converted tugboat
that serves as the centerpiece of the Tugboat Inn at the foot of Commercial Street
in this picture-book seacoast village where the movie "Carousel" was filmed in 1956,
the explanation is the same.
"It's the gas.' said Kristy Weston. who parks cars for the tourists along the
waterfront and had half a parking lot left empty all last weekend. "It's the gas,"
said Richard Spacer. who sells tickets for the boats that take tourists on harbor
cruises and last weekend ran half empty.
SHORTAGE OF TOURISTS
From the brightly painted lobster buoys of coastal Maine to the beaches of
Southern California, and from Walt Disney World in central Florida to the giant
drugstore that stands alone on the prairie alongside Interstate 90 in Wall, S.D., this
is the summer the tourists are staying away.
Attendance at amusements and attractions, bookings at hotels and motels and
meals at restaurants are off by 10 to 20 percent across the country this summer and
by up to 30 percent on the East Coast as tourists remain fearful of not being able to
find enough gasoline.
Not even the widespread availability of gasoline now and the advertising cam-
paigns mounted by everyone from state tourist bureaus to hotel chains seem to have
been able to erase the memory of June's shortages at gas station lines.
Summertime tourism is a 8155 billion-a-year industry, according to estimates by
the Federal Department of Commerce, and if the trend continues into August and
September, despite some initial signs of a turnaround in the last half of this month,
the economic effects are expected to be severe.
The strongest recovery so far has been in the New York metropolitan region and
in New York City in particular, according to Peggy Bendel of the State Division of
Tourism, "Hotel rates are back up to 100 percent here again, and all of the state is
starting to come back except the Adirondacks, which were the hardest hit and are
the slowest to recover because they are the farthest from urban centers," she said.
Occupancy rates there have increased from 80 percent of normal to only 82 percent
in the last two weeks, she said, while other areas of the State have improved even
more.
The larger tourist attractions, such as Disney World, where attendence is down 15
percent, and King's Dominion in Virginia, which laid off 500 workers and shortened
its hours earlier this month, are expected to survive easily because of their size and
financial resources.
But hundreds of thousands of "mom and pop" motels, restaurants and stores that
operate on small margins and must make their money in the brief summer season
are expected to be in serious trouble.
"We are principally an industry of small businesses, and a 10 or 20 or 30 percent
falloff in the peak months is often the difference between profit and loss," explained
Douglas Frechtling, the Director of the nonprofit U.S. Travel Data Center in Wash-
ington." We may see a lot of these smaller properties changing hands before the end
of the year if this keeps up," he added.
What has frightened tourists are experiences like those encountered by Connie
and Wayne Pifher of Verona, N.J., who earlier this month drove from their home to
Williamsburg, Va. "All along the road we saw stranded cars, we must have seen 15
or 20," Mr. Pifl~er said. "We were scared." The couple almost ran out of gas in
northern Virginia and refueled only with the help of the local police and the
connivance of a gas-station attendant.
AREAS WITH GAS ALSO AFFECTED
Even in areas of the country that never experienced a gas shortage or gasoline
lines, the story is the same. In Cheboygan, Mich., Andy Grown, the manager of a
linen company that supplies sheets and towels to about 100 motels, said his business
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was down severely. "Normally, I buy from ~,5(1() to 4,~00 new sheets each summer,
but so far I have had to buy only 300 or 400," he said.
In South Tahoe, Calif., not far from the state line and the Nevada gambling
casinos, Randy Evans, the owner of a small coffee shop, said his business was down
by 40 percent. "If this keeps up, I may have to leave the area," he said.
And at Wall Drug in Wall, S.D., an enterprise advertised for hundreds of miles
along the interstate highway and that is totally dependent on long-haul drivers,
William Hustead talked of a national mood of depression, "If this trend continues
through August, we'll end up in the fall with a lot of merchandise and no money to
make it through the winter." said Mr. Hustead, the store's owner. He said his
business was off 28 percent this month and he had not hired 35 summer workers
this year, bringing his total down to 165.
Despite their fears of a gasoline shortage, Americans are not staying home,
however. Tourists at attractions and resorts a tankful of gas away from major
population centers report good crowds, especially where public transportation sys-
tems are available or cars are not needed.
"When things are looking down, when money is short or Europe is sour or
anything bad like that, we seem to do better than other places," said Arthur W.
Young Jr., the owner of the luxurious Harborside Inn on Massachusett's Martha's
Vineyard, where crowds are slightly lighter than last year.
Airline travel is up 10 to 12 percent over last year's record levels, although it is
impossible to tell how much of that stems from deregulation of the industry and
cut-rate fares, and how much is because of fears of a gasoline shortage.
But cities that are traditionally strong tourist attractions that are also well served
by the major airlines report record crowds.
San Francisco is "absolutely mobbed" with tourists, according to spokesman for
the city's Visitors Bureau. "The hotels are 100 percent booked and you cannot get
on a cablecar," he said.
In Boston, Jeffrey Miller, an official of the Grayline Bus Company, said his
sightseeing tours were booming, and Earl Duffey, manager of the Park Plaza Hotel,
said that summertime business was unusually good this year. "We used to dread
July and August, but now it's a busy period," he said.
For those who do venture out on the nation's highways-the more secure and
brave souls," according to Glenn Redcay, the manager of a Howard Johnson's Motor
Lodge near Lancaster, Pa-the downturn has meant an unexpected bonus in un-
crowded highways, widely available hotel rooms and uncrowded attractions.
Mr. FL0RI0. Thank you very much. We certainly appreciate your
coming.
I have just two questions or observations I would like to make.
One is, I think we all share an appreciation of the importance of
the industry. Likewise the industry and this committee share the
feeling that the U.S. Government has a continuing role in attempt-
ing to encourage tourism, particularly with regard to promotional
activities overseas, but I am just wondering if the establishment of
a quasi-public corporation that is really a nonprofit private corpo-
ration is not going to reinforce the inclination that some may have,
particularly in the executive branch, that that is not an appropri-
ate role for Government, that is to say to the degree that we are
giving those in Government who do not feel that Government
should be involved, particularly in overseas promotion, an out by
saying that this quasi-public-private corporation is going to have
that responsibility. Aren't we in fact letting people off the hook
from not accepting the responsibility that we feel logically and
appropriately should be given to Government?
Mr. EDWARDS. Mr. Chairman, I might comment on that. I think
tourism is a mystery to many and most, and I think our biggest
problem is to educate people on what is tourism. But the best way
perhaps to administer tourism is to have the professionals in the
business from all of the segments coming under the umbrella of
tourism, and that goes from transportation through lodging, rent a
car, travel agencies, and all the rest of the segments, coordinating
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442
with Congress to assure a well-informed and professional tourism
program. It would be difficult to bring together these diversified
services under a Federal administration, and not have profession-
als from business in there to serve as advisors and consultants. We
would want the quasi-public corporation to be responsible and ac-
countable certainly to the Congress. That is the intent and purpose
of this program being advanced this morning.
Mr. FL0RI0. You have made the point, and very effectively, par-
ticularly with reference to Mexico, that we are talking in other
countries about an effective governmental function that is lifted to
the point of importance by virtue of those particular Governments
realizing how important tourism is, and overseas promotion of
tourism. What some of us have said is that we do not think there is
that same sense of priority, and it is just not this administration. It
has been past administrations as well. There isn't that sense of
importance that exists in the executive branch, and therefore what
I am saying is that there are two approaches.
One is to attempt to encourage, however we do that, the execu-
tive branch to have a greater sense of importance placed in tour-
ism activities, or the approach that is being suggested now, which
is, in a sense, to give up the battle in terms of trying to make the
executive branch be more aware of the importance, and places it
into a separate entity that is not in the Government as such.
I am concerned not only about the inclination to give up the
battle, but more importantly, and I would like your thoughts on
this, are you at all concerned about the question of the statute of
this nonprofit corporation, or the legal authority of this nonprofit
corporation, to deal with foreign governments if this all comes to
pass, on a government-to-government basis?
We are going to be talking about a quasi-public corporation with
what are governmental powers dealing with governmental agen-
cies, ministries of tourism or whatever it happens to be, and I am
concerned and want some information. Hopefully we will obtain
this information as to the legal authority, and perhaps even more
important than the legal authority, the effectiveness of such an
approach on the part of our tourism industry being represented by
a nongovernmental body, in dealing with governmental entities.
Mr. EDWARDS. Mr. Chairman, a national tourism policy is being
established. That is the first and foremost. That is the most impor-
tant thing. Those tourism policy guidelines would be followed cer-
tainly by this creation that we are talking about in the form of the
nonprofit corporation, so that we would be following those guide-
lines as a recommendation certainly subject to the Congress and
take guidelines from the Congress on what authority they would
ask us to perform in that role, but it would not be a takeover in
any sense of the word, but rather would be coordination, and serve
as an interpreter of the tourism industry so that when we do go to
foreign countries we do know what we are talking about in the way
of tourism and how to create it and bring it back to the United
States. The professionalism is needed to make the program effec-
tive and it is there as advisory not legal to act on and in behalf of
the tourism policy as established by Congress.
We as individual companies are respected when we go overseas
and meet with government agencies of other countries and I will
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let Mr. McCarthy comment on that because he has had this experi-
ence.
Mr. MCCARTHY. I would like to say one thing, that some in our
industry had supported a recommendation a year or two ago that a
Cabinet-level position on tourism be established within the Govern-
ment, but that recommendation did not get very much support.
Whether or not the need to bring so many agencies of Government
together in terms of their involvement in tourism is possible, as
another member of the governmental bureaucracy, we don't know.
I think what we are suggesting is that we are at least proposing
an alternative to what we have experienced so far, where, for
whatever the reasons, the U.S. Travel Service and the tourism
efforts have not been well integrated in Government. This is an
alternative.
Certainly if tourism were to receive the priority in any adminis-
tration that we in the industry believe it should have, that would
be an adequate and perhaps preferred alternative, but to date that
has not worked very effectively.
Mr. Madigan.
Mr. MADIGAN. Mr. McCarthy, both Mr. Oglesby and myself, Mr.
Oglesby being my assistant on the left here, were in State govern-
ment in Illinois. At the time that we established offices of Illinois
to be located throughout the world for the purpose of promoting
business for the State of Illinois. Whether that was sales of corn or
soybeans or farm tractors or Caterpillar tractors, whatever it was,
we have an office in Brussels, we also have an office in Hong Kong,
we have an office. in Brazil as well. These are all State government
functions. Were you aware of this, a State like Illinois is doing
things like that?
Mr. MCCARTHY. Yes.
The State of Massachusetts, where I am from originally, has a
very active international effort sponsored by the Massachusetts
Port Authority. Many States have State tourism functions that are
very specific in terms of tourism promotion, that we think do an
effective job on a regional basis, but no single State in our opinion
has the capacity to reach out and market the world to the United
States.
No single company, a company as large as Hilton, does not have
the capacity to market the world to all the destinations that are
available here in the United States. We think that this job, the
potential, the market is so big and the potential is so great for our
country, from an economic point of view, that only an agency
supported by the Government can really undertake that type of
responsibility.
Mr. MADIGAN. To give you some idea of how successful that has
been for Illinois, if Illinois were now ranked as a nation it would
rank fifth among the nations of the would in export sales. There
are only four countries in the world that now have more export
earnings than the State of Illinois, so there has been a very suc-
cessful endeavor on the part of State government, and it adds
credibility to the argument that there is a role for Government in
promoting any-thing overseas, whatever that might be.
Those State offices are not promoting tourism; they are promot-
ing export sales. But they have been extremely successful, and it
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has been a magnificent moneymaker for the jobholders and busi-
ness owners and everyone else in the State of Illinois.
The Agriculture Committee, of which I am a member, last year
established eight overseas Government offices, U.S. Government
offices, for the purpose of exporting or promoting the export sales
of American agriculture commodities overseas. Are you aware of
that development?
Mr. MCCARTHY. No, I am not personally.
Mr. MADIGAN. As a matter of fact, that legislation calls ultimate-
ly for the establishment of somewhere between 25 and 40 U.S.
Government offices located in various parts of the world, solely for
the purpose of promoting the sale of American agriculture com-
modities. I personally don't see anything wrong with the U.S. Gov-
ernment doing that with tourism, and we have discussed that at
earlier meetings of the subcommittee.
I do find some evidence that the people who benefit from that
kind of activity are more willing to put up some money to enjoy
the benefits than any witnesses that I have heard so far from the
tourism industry. For example, in the case of meat producers, they
have a beef checkoff.
There is actual money taken out of the sale of any cattle at the
livestock market, and that money is set aside and goes into this
overseas promotional effort. The same thing is true with soybeans.
There is a soybean checkoff. There is a Cotton Council that we
have all heard a lot about, but cotton producers put some money in
that.
What I am waiting for is some evidence from your company, and
your company and all of the companies involved in tourism, that
you all want to put some money in this too, and when are you
going to testify to that, Mr. McCarthy?
Mr. EDWARDS. Congressman Madigan, I had the pleasure of being
in Illinois and Chicago for 17 years, and I am well aware of the
aggressiveness of that activity in Illinois. I think you yourself,
however, in your comments have indicated the very problem, and
that is that they were talking about exports in all form except
tourism, and that was a neglected item that did not get the atten-
tion it should have gotten.
I do believe the only way that tourism can be promoted is univer-
sally, as a Federal Government, to say to the people overseas we
want your business, we want you to visit us, and that you are
welcome, but the tourism program must be a Federal program with
a universal national administration. There has got to be multilin-
gual interpreters; there has got to be available multilingual read-
ing material they can understand; and we must be sympathetic to
their problem when they are in our country. If we traveled abroad,
we know what it is in reverse to have somebody sympathetic to our
needs and take the mystery out of foreign travel. That is the
program we are suggesting.
To answer your question, Hilton has done a great deal of work
overseas. I personally have conducted a seminar in Japan. Barron
Hilton just finished a seminar in London and in Europe. We go
over and do this regularly with our marketing staff. We have staffs
that are in place in Frankfurt, in Tokyo, and other locations. We
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are doing all we can do, but there is a certain amount of coordina-
tion that we can't do, but our Federal Government should do.
As you can understand as competitors, individual hotel compa-
nies cannot get together to try to do what the Federal Government
could do and should do as a Federal promotional program and we
need that interfacing with the overseas traffic. Therefore we are
pleading for this governmental program to supplement and coordi-
nate what we are already doing as individual companies.
As for the potential of business from South America we can
reflect on the flow of tourism into Florida. I can tell you that
business coming in from Argentina right now in July, which is
supposed to be low season, has put us 10 points over occupancy at
the Fontainbleau-Hilton, which we manage. This is a welcome
surprise and this trend is accelerating. Some of it isn't even on
advance reservation, if you can believe that. They want to enjoy
their vacations in the United states, and they love our dollar.
Mr. MADIGAN. I am suggesting, and I have stipulated at the
outset that I think that this is a legitimate area for Federal Gov-
ernment involvement, and I think that Federal Government in-
volvement ought to be worldwide, but I think you are going to
benefit more from it than I am, and you ought to somehow be
willing to cooperate with this Federal involvement, the Federal
Government being out there in front. You ought to be willing
somehow to share in the expense of that. He ought to make some
contribution.
Mr. EDWARDS. We already are, Congressman, in the sense that
we have local, city, and state room taxes, as mentioned by the
previous witness, and Congressman Pepper, as you will recall, men-
tioned the room tax or bed tax, as he referred to it. That tax is 6
and 7 percent of room rental charges in a lot of areas. Most areas
have the bed tax, so we are contributing now to tourism and/or
convention promotion through that tax, and that is the specific
purpose of that tax.
Mr. MADIGAN. But just so that you understand what I am
saying-and I apologize for cutting you off because I am abusing
the time of the subcommittee up here-we have limits, I think you
ought to contribute to this particular effort. If we are going to set
up some mechanism, which I hope we do, to promote tourism, and
have the Federal Government doing that, you ought to help under-
write those costs with direct contributions to that, whatever it is.
Mr. EDWARDS. All right, I will go out on a limb, Congressman,
and I do this personally and not as Hilton or as the AH & MA. I
would say that if a room tax federally were to be added, if it went
for the purpose of tourism and was directed, funneled into that
purpose, there is no reason why it shouldn't be given consideration
as a means of allocating it according to your size hotel, room units
that you have, and the business you do.
The room tax is the best way, because it is taxed on the basis of
how many people come in, and they may tax on the number of
beds they occupy, and if this would be an answer to your question,
I am sure the industry could take this into consideration at a
future meeting, and discuss it. We would be happy to do so if you
feel that is the approach However, with other countries funding
- 8j~ -
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their own programs, we question why our Government cannot
support tourism on a comparable basis.
Mr. MADIGAN. I just think we ought to spend a lot of money.
Mr. EDWARDS. It would take a lot of money if this program is to
be successful.
Mr. MADIGAN. I don't think it ought to be $8 million or $40
million. I think it ought to be a lot of money. In other words, to
buy television time in European capitals, South American capitals,
that we ought to really make an effort, but I do not think we can
ever get the money for that kind of effort from Congress.
Mr. MCCARTHY. Mr. Madigan, I share your opinion when I see
that a country such as Canada spends $15 million just in the
United States to attract U.S. tourists to Canada versus what we are
spending in Canada to attract Canadians here, but I don't think
industry has as yet been asked to contribute. I think certainly the
question is a fair and reasonable one.
I think it wouldn't be a question of being unwilling to contribute.
I think trying to come up with a formula for contribution for all of
the elements of tourism would be difficult at first blush, but what-
ever benefits we as an industry achieve from increased business, of
course 50 percent of that is flowing back to the Federal Govern-
ment in any event, and probably another 8 percent back to the
various States that we do business in, so we are going to be part-
ners in any incremental benefits that we derive as special interest
in improvements in tourism in either event.
Mr. EDWARDS. Congressman, DATO, which is present here, repre-
sents development of the entire tourism industry and DATO could
bring together discussion of this from all segments, and maybe
DATO would like to give thought to this question.
Mr. FL0RT0. We have a vote pending. We will go vote and be back
in 5 or 10 minutes and continue with the questioning, if you don't
mind.
Brief recess.]
Mr. FL0RI0. The subcommittee will reconvene.
I will now recognize the gentleman from Nevada, Mr. Santini.
Mr. SANTINI. Thank you, Mr. Chairman.
I want to commend both of our witnesses for their comments. I
want to endorse, from this individual member's perspective, and I
believe from the committee as a whole, the support of the general
objectives that are well enunciated in 5. 1097.
It does seem that since we share that common ground of support
for the concepts or efforts offered, that we should do our best to
scrutinize and analyze either their frailties or their strong points,
and determine if we can take some good suggestions and make
them better.
I expressed with some degree of vigor and vehemence at the last
hearing my concern about the National Tourism Policy Council as
a mechanism that as a practical matter would be able to achieve
the national goal and objectives that you have so well defined here
for us this morning.
I do know in the context of this committee's most recent experi-
ence with the domestic policy council, when we attempted approxi-
mately 2 months ago, by letter, to have a witness from the policy
council discuss with us the merits or demerits of this piece of
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legislation, that there is a person on the council assigned the
responsibility of tourism. When the question of his possible contri-
bution to this hearing came up, he said-and I am reconstructing
the conversation with perhaps imaginary flair, but I think the
substance is essentially the same-"I don't know anything about
tourism. We have to find somebody in Government that knows
something about tourism.
So, they lumber about in their pursuit of somebody who knows
something about tourism, come up with the name of a very distin-
guished person that is with us, Elsa Porter, this morning, in the
lower echelons of survival in the Department of Commerce, and
offer the name of this distinguished person as a substitute for
somebody coming from Domestic Policy to testify.
It seems to me if we set in place a structure-and certainly it is
not unique to this administration, it was equally true in previous
administrations, as you well appreciate having to do with the obliv-
ions of the past and the oblivions and differences of the present-it
seems to me if we put a mechanism in place that already has
established itself as monumentally indifferent to this major retail
industry in the United States of America, we are building in a
basic organizational failure into the structure before the structure
is ever constructed.
I would appreciate your sentiments or thoughts about that.
Mr. EDWARDS. Congressman, just one comment. By creating a
nonprofit corporation you have professionals from all avenues of
tourism. Remember again that there are a number of segments
within the tourism industry-it is transportation, lodging, feeding,
restaurants, it is travel agencies, wholesalers, et cetera.
There are so many people involved in this that it is very com-
plex.
Therefore, if we made a nonprofit corporation up of members
representing all segments of this industry, it would work with the
Cabinet-level coordinating council to educate as to the problem and
the solutions and see that we had coordination that we don't have
now, except through trade associations which are heard sometimes
and sometimes not.
But this would be an official capacity that would be available for
the very purpose you are talking.
Mr. SANTINI. So the bottom line in terms of your evaluation of
possible weaknesses that might exist at the council level is that the
council would be pushed or educated, as the case may be, by the
Tourism Development Corporation, and that would be the catalyst
that would overcome the indifference, ignorance, or resistance that
might exist within the Policy Council?
Mr. EDWARDS. And these people would represent industry's full-
time people on this nonprofit corporation in the sense of being
available where they don't have any representation now, except
through trade associations, again, and they do an excellent job,
A.H. & M., DATO, and so on.
The point is that this is needed, and I think the answer is a
nonprofit corporation to coordinate this whole thing back to what
you are asking for.
Mr. MCCARTHY. I am reflecting as I sit here on an appropriate
answer, with all of the pitfalls that might be included. But I can
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OfliV reflect on the many commendations again, if I may, and I
have no particular brief for them, but the frequency with which
the Massachusetts Port Authority, which is a similar type agency
on a State level in terms of being a quasi-private or public corpora-
tion, is far more effective in its responsibilities than an agency
within the State government, for whatever intertwining or inher-
ent problems are built into the bureaucracy.
Their organization is staffed and recruited by professionals, prob-
ably at a salary level that is different than the salary level that is
in the Government structure. I think that is what we are probably
suggesting, in spite of the fact that it may not be a popular propos-
al, that an agency that does not have to have, except in the
ultimate sense, in its ultimate responsibility to Congress, to con-
cern itself with its actions from a Federal agency point of view
versus a private sector point of view.
Mr. EDWARDS. To get back to Congressman Madigan's earlier
question. as far as funding by the private sector, I think that much
was discussed at the time of Senate bill 1097 about this very
participation as well.
I think the other countries that are certainly going through an
excellent promotional program for tourism have solved this prob-
lem one way or another as to the funding. I would suggest that we
make a study of what is being done by these 121 other countries
that are in this tourism industry and doing it right to get business
out of our country to go visit their country. This is our competition.
Our Government should meet this competitive challenge likewise
by funding to create jobs and reduce the imbalance in the deficien-
cy of trade payments.
Mr. FL0RI0. Would the gentleman yield.
It is my understanding-and I thought your testimony reinforced
this point-that in other countries, for the most part, this is an
exclusively governmental function. In many instances there is a
ministry or a cabinet position that deals with this.
Of course, this resolves the question of accountability. It also
resolves the question of financial responsibility.
What is being suggested here is a bit different than that, that we
are talking about quasi-government, quasi-public corporation, to be
financed by the Government, the theory being that the council, as
opposed to the corporation, would be the link.
Yet, Mr. Santini has expressed his apprehension about the effec-
tiveness of that council as a link. You have then responded by
saying that you don't look forward to the council being too terribly
much of a link, that in fact the corporation will drive the council
rather than the council being a link with the corporation.
So, there are substantial differences in what apparently is done
around the world from the proposal that is being put forth here. I
think that we just have some questions with regard to the integrity
of the concept, that it really is saying, if one wants to be, in a very
simplified way, we are saying it will be a private initiative, which
is fine, publicly supported, with very little accountability.
Some of us are concerned about, not that a new approach of that
sort should be immediately rejected out of hand, but I think we are
concerned about the ramifications and would look to some alterna-
tives perhaps.
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Mr. EDWARDS. Well, a nonprofit corporation certainly has ac-
countability for the funds that would be provided and report to
Congress on how they spent those funds. So there would be ac-
countability.
We have no question about that in our minds. Certainly if proper
programing were set up and legislated and put into effect, I am
certain that the private sector would be glad to try to find a way,
even though they are all diversified in different interests, to see
how they might enter the scene and enhance that further with
private sector involvement.
Mr. FL0RI0. Let me ask a very blunt and direct question. Would
this concept be equally as feasible if there was no Federal financial
involvement; that is to say, the concept of the corporation perhaps
having some mantle of legitimacy being given to it by virtue of
being incorporated as a private, nonprofit corporation, that would
still be there, but the fact of the matter is, assume that there is no
money provided by the Federal Government, and let's assume that
the constituent industries or members would be willing to pay for
the operation of this corporation, would you regard that as equally
effective but for the fact of the financing?
Mr. EDWARDS. Mr. Chairman, I would have to say that I know of
no way that all the segments of this industry could sit down and
agree on how you are going to allocate the expense of all this, and
how you are going to do it without the Government being the
catalyst for this to happen with this corporation we are discussing.
Mr. FL0RI0. For the question of financing, if some way that could
be resolved as to how to finance this quasi-public corporation, but
for that difficulty-and I am appreciative of the fact you have a
very unusual industry that is multifaceted, and there are a lot of
different components-but of that one conclusion, with regard to
financing it, do you feel that if that question was resolved the
corporation could function equally as effectively as it could with
Federal funds?
Mr. EDWARDS. No, I think Federal funds are very necessary.
Those are our tax dollars that have been paid in, and tourism
benefits the entire country on employment and jobs. So I think
there is a justification for Federal funding to that point.
If private sector involvement, privately done now, is not enough,
then more could be considered and the industries would have to
figure out how they are going to do it individually.
Mr. FL0RI0. I am looking at it more in terms of not the social
decision or the policy decision, as to whether it is appropriate or
inappropriate, to finance such an entity with public funds.
Mr. EDWARDS. The application of public funds to improve the
economy and create jobs is not a precedent-it is needed and has
been done before.
Mr. FL0RI0. That is another question. I am looking more toward
the effectiveness of such a corporation were public funds not pro-
vided to it.
Mr. EDWARDS. It will not happen.
Mr. FL0RI0. That is your concern, that without Federal commit-
ment of dollars to operate this corporation it would not happen.
PAGENO="0454"
450
Mr. EDWARDS. There has to be a program. Somebody has to bring
it together and make it happen. The Federal Government is the
only one that can make it happen.
Mr. FL0RI0. So if some way could be evolved-and I am not sure
what it is-that the Federal Government would be in a position to
coordinate, put together, enunciate a policy, and even pass a law
necessary to have such a corporation put into operation, but fell
short of coming up with the moneys to operate it, you still do not
think that there would be a feasible prospect of getting such a
corporation.
Mr. EDWARDS. I think Government funding is absolutely essen-
tial. If private sector involvement is necessary to supplement that,
that is something that can be considered by the individual indus-
tries. We cannot speak to that here this morning because I cannot
speak for--
Mr. FL0RI0. Do you make a distinction between public funding
for purposes of start-up money, for purposes of that amount of
money needed to initiate a process, and a corporation, as opposed
to public money needed for the continuing ongoing operation of
this corporation?
Mr. EDWARDS. I am saying ongoing operation. Maintaining offices
overseas, being a liaison with those people that visit our country
and understand us, for all the purposes that serves, of internation-
al relations.
So I think there is a good reason for our Government to partici-
pate with our dollars out of the tax money. Yet, we can also put
our moneys in as we are now. We are not deficient in this area. We
are in business to make a profit. We have to put our moneys out.
Mr. SANTINI. But please understand. I appreciate the diverse and
in some instances uncontrollable elements that go together to com-
promise what we call the tourism industry. They are not simple
analogies to cotton-they just don't quite fit.
Tourism as a $100 billion plus industry a year, doesn't have one
producer or manufacturer identified as the components of that
industry. I know how extraordinarily difficult it is to get a consen-
sus on any kind of tourism because everyone within that industry
is affected differently by national decisionmaking.
Please understand. I suggest that there is an infirmity in having
a structure at the top that is by past precedent and performance
totally indifferent to the tourism, if not hostile or negative, to the
tourism industry.
No. 2, I would suggest to you that if you build a structure that is
totally dependent upon its success or failure on Federal dollars,
given again the past history and performance of administrations,
Republican and Democrat, on issues related to tourism, that they
will make sure that you are either rendered ineffectual by virtue of
nonexistent leadership at the top, or by withheld financial support
at the bottom, and we find ourselves stagnated in organizational
structure before we ever get off the ground.
0MB, over recent years, as you gentlemen appreciate, and in a
different kind of legislative context, has time and again wielded the
axe, willy-nilly, indifferent to the real economics of the tourism
industry.
PAGENO="0455"
451
That same 0MB, those same decisionmakers are going to be in
place. If we set up a corporation or structure, $40 million, $100
millon, whatever dollars-guess what the first recommendation of
the 0MB is with respect to cutting and budget saving across the
board.
I think we have to explore every facet possible. We are on the
right track with this kind of approach, it seems to me.
Mr. EDWARDS. Congressman, we have an energy problem. It is
going to be with us for our lifetime and children beyond us and
grandchildren, et cetera, et cetera. That has been said many times.
The fact is we have a lot of petro-dollars going out of this country.
It would seem to me the people you are talking about should be
interested in bringing those petro-dollars back in the form of an
export unit in the form of a tourist coming to our country.
That is a justification for investment by our Federal Government
to bring some of that dollar back and get this balance of payment
thing corrected. It won't be corrected overnight because energy
won't be corrected overnight.
Mr. SANTINI. I think that is eminently logical, sound and irrefut-
able. Yet this administration and past administrations refuse to
accept the validity of that economic case.
For every one Federal dollar we invest overseas we get $18 back.
That figure stands unrefuted. 0MB looks to eradicate what the
vestige of governmental organization called the U.S. Travel Serv-
ice, and the Government representative that comes forward-the
service which has such a high profile, I keep forgetting its name-
the Government representatives come forward to recommend the
extinction of the one entity that is left in Government that is
supposed to do anything to rectify the problem that you so well
expressed just a minute ago about balance of payments.
Mr. MCCARTHY. We would agree if you were to create this quasi-
private corporation, without changing anything else, exactly what
you have dramatized would evolve. But of course this is recom-
mended in conjunction with Congress adopting a travel policy.
We would presume that the adoption of a policy of the Govern-
ment relative to tourism would give the emphasis that these var-
ious other agencies would have to take action consistent with what
has been determined to be that policy toward tourism.
Mr. FL0RI0. Would the gentleman yield.
The obvious observation. The policy, by definition, is a general
statement, and the key is going to be the implementation of that
policy. So that another point that has got to be considered is who is
it that is implementing the policy.
I have no difficulties with the high degree of professionalism. I
think we should have that high degree of professionalism in the
governmental agency that is dealing with tourism, along with the
private sector contribution.
I think the philosophic point we have in question now is whether
there is going to really be a public interest, not in any way to
connote or imply that your perception of the public interest is not
in accordance with the public interest in a more abstract way.
But what I am suggesting is that it is not sufficient as far as I
am concerned to say that because we are going to have, hopefully,
a clearly enunciated and enlightened statement of what tourism
PAGENO="0456"
452
policy should be for this Nation, that that is the end of it, it is
going to be easy, we are just going to implement and carry it out
from that point forward.
The implementations we have seen in so many areas of govern-
ment can be totally opposed to the actual statement of policy. So I
am concerned that we put together a structure that is fully ac-
countable to the public interest.
That is why I think it is important that we have this conversa-
tion, we have these hearings, to resolve how best we can evolve a
good public interest tourism policy, and then make sure that we
have the structure necessary to implement it in terms of industry
professionalism, and offer all governmental or public accountability
a~ well.
Mr. EDWARDS. Well, I would say the nonprofit corporation, if I
may emphasize it one more time, is the interface between the
public and the taxpayer and the Federal Government, to justify the
program. Nothing happens until somebody sells something, has
been said many times, but it happens to be true.
We would have a function in that nonprofit corporation of going
back to the public to teach them what tourism is, and what it does
for them, and what it does in creating jobs. So this interface is
necessary, and it has to be professional.
We cannot expect that anyone else other than people involved in
the profession of tourism is going to be able to speak for tourism,
and sell it back to the people of the United States.
Mr. FL0RI0. The point I have raised maybe a couple of times, is
that other countries do it in a public capacity. I am just not sure
why-maybe we will get some answers from other witnesses here
today-we are not in a position to do it.
Mr. EDWARDS. Because we are doing nothing.
Mr. SANTINI. If the chairman would yield-to Mr. McCarthy. The
reason we seem to do nothing there is this fixation within leader-
ship echelons of Government, certainly in recent years, that some-
how tourism is a self-fulfilling enterprise, that Government doesn't
have any role or place in the tourism marketplace.
That differs radically with some country examples, and you sug-
gested Canada as an experience which we see with other countries.
If we pursue the study that you so logically offered, Mr. McCarthy,
we would come back with a realization, one of the bottom line
realizations-that the Government from top to bottom has an en-
tirely different attitude with regard to the importance of the tour-
ism business and its relationship to a healthy economy in that
nation.
As long as we have this malaise abroad in the bureaucracies to
contest with, and in some instances outright antagonism with
regard to any role of government in this industry, we have got a
very substantial and serious battle on our hands.
Here with us in a moment to testify is Elsa Porter. The first half
of the testimony you could probably chalk up in the category of
just administration flim-flam. But the second half of it comes down,
I think, and poses some very serious and substantial questions
about how this corporation could work, how could it interface, how
would it interact with the Department of State concerning the
multinational scope and condition of the problems.
PAGENO="0457"
453
What it suggests to me is that already in place in our Govern-
ment we have the forces that are setting about structuring some
very substantial barriers that would, to my third point, insure its
failure because of the interaction problems that inevitably would
occur with this entity.
It is going to be a tremendous challenge to make this entity
work. We want it to, however it comes ultimately to be defined.
But there are GS 14's in place who have a fixation-possibly 13-
that Government has no role in tourism and will do everything,
whether it is 0MB, Department of Commerce, Domestic Policy
Staff personnel as well, to insure the ultimate defeat and demise of
this entity.
So, we have to at the outset make it as strong and resistant to
these kind of internal attacks as we can. That is a real challenge.
One way to do that is remove Federal funding. That would take
0MB out of the picture. It makes it easier to pass a bill if you don't
have $9 million attached to it, and it makes it less susceptible to
get cut off at the pass later on.
Now, we have to dream of a mechanism that would go to the
private sector and say finance your own advancement. That is not
very easy It is easier to impose a room tax in Las Vegas, Nev. than
to impose a Federal tax at the Federal level and create the mecha-
nism for collection and recovery of that.
But I am tantalized and challenged by this idea because I think
there are some really good ideas afloat here. I just want to do
everything I can to make sure that they can succeed.
Mr. EDWARDS. Congressman, there is one thing you believe in,
the administration and the entire Congress believes in, and that is
if we are in a recession-and they tell us we are-and the hotel
industry is the last rather than the first on the down, but also the
last on the up, in the turn of the economy.
Let me say this. If you believe in jobs-and this is a good time to
believe in jobs, because unemployment is going to increase if we go
into a recession-then you have to figure out a way to create jobs,
and the best way I know of is to create more tourism to our
country-to put it very simply, for every 15 hotel rooms occupied,
one more maid has a job.
So if we bring more people from overseas, we create those jobs in
all avenues of the tourism industry. That to me is the strongest
point that can be made in a plea for some kind of interface here.
Mr. MCCARTHY. I think if I might, the last thing you do when
you leave Mexico as a foreign traveler is to leave $4.50 at the
airport in a departure tax for the pleasure of having stayed in
Mexico.
The last thing you do in the Bahamas, and the last thing you do
in many international destinations, is to leave your departure tax
at the airport.
Many countries use that departure tax for the very purpose of
promoting new tourism to their countries. There is a tax that is
imposed on the foreign traveler. It is on the way out so it really is
not an economic factor on the way in. It might be one way of
considering funding such an organization.
Mr. SANTINI. That is an intriguing idea. I would hope that there
are also intriguing ideas afloat in the private sector whereby we
PAGENO="0458"
454
might find a rational mechanism for making contributions directly
from the private sector, so that we could make that a part of this
too.
When you realize it, you make a case that I think is so self-
apparent. But it is resisted at almost every turn within the admin-
istration, since the contribution of tourism to the economy, and
jobs, is overlooked when we face a very serious energy crisis.
On June 25 the chairman of this committee sent a letter to Mr.
Eizenstat and said we need a meeting to talk to you, because this
energy crisis is impacting perhaps most adversely on this $100
million industry, employing 6 to 7 million people.
What i; the response of the administration? To date we have not
even got a reply to the letter. That is the high sense of profile and
concern this whole question has.
That is the very real problem that we are dealing with as we try
to create the machinery to make this thing work, because I do not
believe that this indifference is characteristic just of this adminis-
tration. It typifies the history of governmental responses to con-
cerns about the tourism industry in the United States of America.
And we want to try to turn that around.
But it is a policy statement and concocting a new entity on a
piece of paper alone is not going to do it, or providing a few
Federal bucks is not going to do it. It is really going to take some
considerable ingenuity to make sure this thing can endure with all
the resistance it is going to receive in the bureaucratic superstruc-
ture.
Mr. EDWARDS. Until we get interface with Government through
this nonprofit corporation, I don't think there is going to be an
understanding of what tourism is. The U.S. Travel Service has
done an outstanding job. There are those who are critical. But our
travel marketing staff in Hilton have traveled with the U.S. Travel
Service representative's to try to endeavor to help and assist in this
effort.
I can commend them for their efforts. But I also must be critical
of the lack of support it got other than money up to the point of its
budget, because no one cared what USTS did nor were they weigh-
ing too carefully what was done. Their 1977 annual report is an
excellent report, and carries a lot of information that would be of
benefit if it were read. They have done a great deal, but they
cannot do it without a lot of support. And it has to come from
everybody-particularly our Federal Government.
Mr. SANTINI. Well, can you appreciate the pathetic specter of the
last remnant in terms of leadership of that entity in government
coming in and recommending their own self-destruction, coming in
before this committee, lighting the fuse on a bomb that would blow
up to destroy what last elements are left there? And taking those
marching orders for self-destruction from the Office of Manage-
ment and Budget-not having a real choice, and having to come in
and defend the indefensible, because they are given the order from
on high, you go in and recommend your own self-destruction. But
the problem is really sizable and inherent in the governmental
structure.
PAGENO="0459"
4~5
I agree with you on the interface. That is a good start. But they
are tougher, they are there longer, and more persistent. We are
going to have to make a strong and persistent effort.
Mr. EDWARDS. Congressman, that is why we are here.
Mr. SANTINI. Good. Thank you, Mr. Chairman.
Mr. FL0RI0. Mr. Madigan.
Mr. MADIGAN. Mr. Edwards, you are with the Hotel Division of
the Hilton Corporation. Can you tell me what the gross income of
the Hotel Division was in calendar year 1978?
Mr. EDWARDS. We are approaching about $500 million. But you
have got to recall in the consolidated statement we have a lot of
hotels that are joint ventures and otherwise that don't come into
those revenues.
Mr. MADIGAN. Can you tell me what the total tax liability to the
Federal Government of the Hilton Corporation was on its $500
million revenue from the Hotel Division?
Mr. EDWARDS. Obviously we are in the 47 percent area. So that
percentage of tax has to be computed. I would have to get the
figures for you, if you want the specific figures.
Mr. MADIGAN. You would not represent to the subcommittee that
you actually paid 47 percent of $500 million to the Federal Govern-
ment in Federal income taxes.
Mr. MCCARTHY. It is a percentage of the profit, not the revenue.
Mr. EDWARDS. If you are asking for revenue, that is the figure I
am giving you.
Mr. MADIGAN. What I am doing, Mr. Chairman, is disabusing the
subcommittee of the notion that you earlier suggested, that the
Federal Government is getting 50 percent back of anything that
came into the country.
Mr. MCCARTHY. I can tell you categorically that our company
will pay 48 percent of its earnings to the Federal Government.
Mr. MADIGAN. On its net.
Mr. MCCARTHY. On its net earnings. We have no tax dodges, no
tax shelters, other than straight depreciation on our property.
Mr. MADIGAN. I am not suggesting any shelter.
Mr. MCCARTHY. I think it is a legitimate statement that approxi-
mately 50 percent from any incremental earnings would go to the
Federal Government. I think that is a fair statement.
Mr. MADIGAN. Which might be 50 percent of 5 percent of the
actual earnings of the corporation?
Mr. MCCARTHY. If you only earned 5 percent, it would be 50
percent of 5 percent. But it would be 50 percent of exactly what the
shareholders received.
Mr. MADIGAN. But it would not be 50 percent of the total dollar
volume of the corporation?
Mr. MCCARTHY. No.
Mr. MADIGAN. Your earlier statement would have suggested that
for all the money that came into the tourism industry in the
United States as a result of promotion, the Federal Government
would collect half of every dollar. And I do not think that is what
you would want to leave stand on the record here.
Mr. MCCARTHY. I certainly would want to correct the record. I
thought I said every dollar of incremental profit. But if I did not,
that is what I intended.
PAGENO="0460"
Mr. MADIGAN. Could you provide-is it at all possible to provide
to the subcommittee a breakdown on how much of your dollar
revenue presently is generated from tourism business originating
outside the United States?
Mr. EDWARDS. Mr. Madigan, I have asked that question of our
own people, if I may say. It is awfully difficult to identify the
overseas business, because many people make their reservations
independently. We don't have any way of measuring, unless we
listen to them in the elevator, speaking a foreign tongue, that they
happen to come from overseas origin.
I am interested in that figure, because of this very discussion this
morning, as to how much business are we doing now, and how
much more is there out there, and how much more can we get into
this country, into our hotel company and other hotel companies.
But it is a very difficult measure to take. But I can tell you, if you
step in the lobby or elevators in Beverly Hills, or in Chicago, or in
New York City, or Washington, the foreign tongues being spoken
tell you people are coming on their own. They may come as tour-
ists, or as individual guests. It is tremendous the amount of traffic
that is beginning to generate, that we never saw before.
Mr. FL0RI0. Will the gentleman yield?
How, then, do you evaluate the effectiveness of your own over-
seas promotional activities? Certainly a corporation as sophisti-
cated as your own has some way of tracking and has some way of
evaluating the cost effectiveness of such a program.
Mr. EDWARDS. Absolutely. We have a reservations system that
would report the source of the reservation, and we would be able to
measure up to that extent. But not everyone goes through that
system. It is just a partial number. So it would not be a conclusive
figure, except it is conclusive to the point it is growing. They like
our dollar again.
Mr. FL0RI0. In other words, that evaluation would be the mini-
mal effort expended, minimal return on your overseas-you go
from there up. That would mean someone made a reservation
through a local company or firm.
Mr. EDWARDS. It would go up. We know-again, Argentina is
providing us in Florida with 10 points of additional occupancy we
did not expect to get. We can define it because suduenly it comes
in, and we can measure it during the month, because this added
business from South America caused us to exceed forecast. We like
to know where it is coming from, so we can measure it and go after
more of it.
Mr. MADIGAN. I think that the three members present of this
subcommittee could be characterized as being relatively young.
Mr. SANTINI. Thank you.
Mr. MADIGAN. Relatively aggressive, and anxious to do some-
thing very constructive in the subject area that we have before us
this morning. We are in this unfortunate position of having to deal
with the Budget Committee that does not think the United States
even has enough money to build an aircraft carrier, that does not
have enough money to do the things that it ordinarily ought to be
doing and historically has done.
So it is very difficult for these three relatively young and rela-
tively aggressive members of this subcommittee to go convince this
PAGENO="0461"
457
Budget Committee, which already faces a deficit in excess of $30
billion, that we should put millions of dollars of money in some-
thing new, untested, untried, at least from the U.S. Government
point of view, when we do not have the money to do the other
things that we ought to be doing, or that more members think we
ought to be doing.
It is going to be necessary, I am convinced of this, for us to be
able to say that the people who are in this industry believe in this
concept so strongly that they are willing to put this money into it,
and willing to channel this money through this mechanism that we
would establish to prove to you members of the Budget Committee
and you people down at the Office of Management and Budget that
this thing will work, and that it will be an earning institution for
the U.S. Government.
And short of having that kind of participation, I think that we
are going to continue to stumble along here, which is not the type
of thing that any of us up here want to do. We think that we can
draft a piece of legislation that your industry would certainly
admire, and think would be a constructive first step.
But I at least don't think we can get the kind of funding for it
that I believe would be necessary to make it as successful as the
tourism initiatives of other nations have been. And that is partly
because the other countries that you might compare the United
States to, Canada being the example that you used a little bit
earlier-Canada has had for the last 20 years a balanced budget in
all but two of those 20 years.
The United States hasn't balanced its budget at any time in the
last 20 years. The Federal debt, the national debt of the U.S.
Government has doubled in the time that these three members of
this subcommittee have been Members of Congress.
We don't run on that. That is not part of our reelection cam-
paign. But it is a fact of life. And it is very difficult for me to think
of a way that we can overcome that to invest substantial amounts
of money in promotion, when we cannot say, look, these are the
number of people who are already visiting the hotels in the United
States, because you cannot give us those numbers. So we are going
to have to have some money, and you are going to help us find
some way to get the money out of your industry.
Mr. MCCARTHY. I think if we could get the cooperation of an-
other governmental agency, that that cooperation is important for
this kind of data. But I would certainly think that the Customs
Department would be able to tell us how many foreign travelers
came into the United States during any given period.
And one could presume that would be some kind of a benchmark
that could be established in trying to determine whether or not
your dollars are being properly invested in terms of tracking the
incremental increases in the amount of foreign travel as it must
register on the way in. Not all of them are tourists, but certainly a
high percentage of them would be.
Mr. MADIGAN. But the people with whom we must argue could
argue that is going to happen anyway. They can argue that the
carnings of the Ford Motor Co. outside the United States are
currently greater than the earnings of the Ford Motor Co. inside
the United States. And the U.S. Government did not do anything
PAGENO="0462"
458
to help the Ford Motor Co. accomplish that. They did it on their
own initiative.
And so they can argue back at us, if the Ford Motor Co. can do
that, Hilton and Quality Inns can do that. Now, we would like to
help you. And I think that we can establish governmental mecha-
nisms to do that. But I do not think we can get the kind of funding
that you believe ought to exist and that I believe ought to exist
from a Congress and administration that already is as strapped
financially as they can be. We cannot get them to experiment.
Mr. MCCARTHY. I don't think, as I mentioned previously, that the
tourism industry would be unilaterally opposed to making any
contribution. I think we have observed that the first reaction is the
logistics of trying to allocate such a contribution formula might be
difficult, but not impossible. Certainly sitting as an individual rep-
resenting one company, I would have no objection to making a
contribution or matching fund contribution if a formula could be
established that positioned our company in terms of its potential
benefit against the other contributors. So I do not think categori-
cally that would be rejected. Perhaps we should be having a con-
tinuing dialogue as to what the tourism industry would consider or
how they would react in that regard.
Mr. MADIGAN. I think that is very important.
Mr. EDWARDS. Congressman, we are not asking for charity in
business. We are only asking for assistance out of the tax funds
which we are partly paying into the total fund. We want some of it
diverted back to create business to come back into this country, to
pay more taxes, to give us more money and more jobs. And all of it
is too logical, as you said. So I don't like to repeat it more than
three or four times. But the fact remains there are reasons why we
feel strongly.
Mr. MADIGAN. And we agree with all those reasons. We just
simply point out to you that the Government is now over $800
billion in debt, and I know you as a businessman are familiar with
these figures.
Mr. EDWARDS. You bet. And we are concerned about it.
Mr. MADIGAN. The Government has only balanced the budget
once in this country since I was a freshman in high school. And it
has in excess of a $30 billion deficit this year. And the chairman of
the Budget Committee reminds me of my grandmother, with her
little purse with the snap on the top of it. I don't think we can get
a big amount of money for this purpose.
Mr. EDWARDS. I would hate to think our Government would turn
its back on the potential to do business. That is all I can say. The
potential to do business creates taxes and money in the economy
and creates jobs. I am going to repeat it again for the record,
because I think it is important.
Mr. FL0RI0. Gentlemen, we thank you very much.
Mr. EDWARDS. Thank you very much for having us.
Mr. FL0RT0. I am going to now exercise the prerogative of the
Chair by changing the agenda. I think as a result of some of the
comments we have heard, it might be appropriate and logical to
call on the representative from the administration, Mrs. Elsa
Porter. We would ask her to come forward. You may proceed as
you see fit.
PAGENO="0463"
459
STATEMENT OF ELSA A. PORTER, ASSISTANT SECRETARY FOR
ADMINISTRATION, DEPARTMENT OF COMMERCE, ACCOMPA-
NIED BY JEANNE WESTPHAL, ACTING ASSISTANT SECRE-
TARY FOR TOURISM
Mrs. PORTER. Thank you very much, Mr. Chairman and members
of the committee. I am accompanied by Jeanne Westphal, the
Acting Assistant Secretary for Tourism in the Department of
Commerce.
My remarks this morning, Mr. Chairman, refer specifically to S.
1097, the bill which would establish a national tourism policy, a
cabinet-level National Tourism Policy Council, and a quasi-public
U.S. Travel and Tourism Development Corporation.
I would like to reaffirm the administration's support for a strong
tourism sector within the U.S. economy. Tourism is one of the
Nation's largest and most vital industries, and it clearly warrants a
high level of concern from public officials at all levels of
government.
As you know, Mr. Chairman, the administration has recommend-
ed the creation of a Bureau of Tourism in the Commerce Depart-
ment's Industry and Trade Administration. In ITA the tourism
function would focus on data gathering, research, policy analysis,
technical assistance and coordination of governmental organiza-
tions involved in tourism. While the conference committee yester-
day approved an appropriation of $8 million for six overseas offices
to promote tourism, no funds in the President's 1980 budget have
been requested for tourism promotion or the operation of foreign
tourism offices.
This position was taken for the following reasons:
The private sector has very substantial resources, expertise and
commitment to attracting foreign visitors to this country. For ex-
ample, in 1978 U.S. airlines spent $305 million on advertising, plus
$40 million on other types of promotion.
There is little correlation between the present U.S. Travel Serv-
ice overseas promotional efforts and either the number of visitors
to America or the level of dollar earnings from overseas travelers
to the United States.
An increasingly larger share of the overall travel deficit is tied to
the transportation component, which we believe is less affected by
Federal promotional programs than through policy and coordina-
tion efforts with the transportation industry.
An overseas tourism promotion effort is not consistent with the
administration's present export strategies which primarily empha-
size data gathering and dissemination, market analysis, technical
assistance, policy analysis, overseas facilitation, and host country
contact.
I think, Mr. Chairman, those functions are proper governmental
functions, and they are the functions which the Carter administra-
tion would like to see carried out effectively for the tourism
industry.
President Carter has recently proposed a major reorganization to
strengthen the Federal Government's international trade func-
tions. Under this proposal, the Commerce Department would have
responsibility for U.S. commercial attaches, which are now in the
State Department. There would be created in the Department of
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460
Commerce an Undersecretary for Trade who would be responsible
for both the Bureau of Tourism and the commercial attaches.
There are many potential benefits which can be gained from this
arrangement. In developing comprehensive country commercial
programs, we would have a greater opportunity to integrate tour-
ism concerns with other trade areas. Through the commercial atta-
chés and the Industry and Trade Administration's 43 district of-
fices in the United States, we believe that the Department could
facilitate State, regional, municipal and private sector tourism ef-
forts much more effectively than is being done today.
The points that I have just discussed indicate what we believe
the Federal role in tourism should be. And now I would like to
comment on 5. 1097.
The first of the three titles in S. 1097 calls for the establishment
of a national tourism policy. This policy would provide basic guid-
ance to those governmental agencies which have programs that
impact on tourism. In my view, that policy statement is fundamen-
tally sound since it includes consideration of the major public
interests that can be linked to tourism. The national tourism policy
statement is also appropriate at this time because it can help to
insure that tourism is given its proper weight in deliberations
relating to the development of our national energy policies.
We would, however, take issue with that part of title I which
calls for the use of "all practicable means and measures including
financial and technical assistance to implement a national tourism
policy. * *
Title II of 5. 1097 calls for creation of a National Tourism Policy
Council. The council would be composed of 17 heads-or their
alternates-of key departments and Federal agencies, and would be
the principal coordinating body for policies, programs and issues
affecting tourism. I believe that the council would be managerially
unworkable, and would not achieve the coordination results
desired. It has a number of limitations which I would like briefly to
describe.
It calls for representation by a relatively large group of impor-
tant government officials who have a wide range of duties and
responsibilities. These individuals for the most part have limited
time and it would be difficult to convene a meeting of all council
members. Stressing much the same point, Mr. Aldo Papone, in his
testimony before this subcommittee on July 25, placed a great deal
of importance on the "need to streamline existing administrative
functions and to consolidate tourism-related activities as reason-
ably and efficiently as possible."
The second point is that it is anticipated in the bill that the
council will be meeting approximately four times a year, at least
every 90 days. Such infrequency of council meetings would make it
very difficult for the council to address substantively important
issues affecting travel and tourism.
Finally, the existence of such a structured coordinating council
means that issues which might quickly be resolved through direct
agency-to-agency contact would be deferred until the council could
consider them. And this tendency to defer issue and problem reso-
lution can mean deferring decisions on important travel and tour-
ism issues of the day.
PAGENO="0465"
461
I would like to note that these views are expressed on the basis
of my experience of 22 years in the Federal Government. During
that time I have found that coordinating committees, particularly
those in which membership is limited to the highest level officials,
are effective for dealing only with very short-term or one-time
issues. Tourism is neither a short-term nor a one-time issue.
However, coordination is nonetheless necessary, and I would like
to propose a vehicle which I think would be flexible enough and
conducive to getting relevant agencies to participate.
I would propose the establishment of an interagency committee
composed of relevant representatives from the major agencies con-
cerned with tourism, such as the Departments of State, Interior,
Transportation, Energy, and the Civil Aeronautics Board. This
would be a standing, nonstaffed committee, and issues or problem
areas to be resolved would be identified on an ad hoc basis. Other
relevant agencies would be involved as needed. The committee
would be chaired by the Director of the Bureau of Tourism in the
Industry and Trade Administration. Coordination of tourism pro-
grams and policies is certainly a role that is appropriate for Gov-
ernment, and one which can only be effectively done within the
Federal community.
In the third of its titles, S. 1097 calls for the creation of a U.S.
Travel and Tourism Development Corporation. This organization
has commonly been referred to as a quasi-public corporation. Other
nations have utilized this organizational form in the area of tour-
ism, and the provisions of title III aim to establish a similar organi-
zational mechanism.
I am concerned that the quasi-public structure being proposed is
significantly different from that employed by other nations. To be
specific, the U.S. Travel and Tourism Development Corporation is
proposed to be created as a District of Columbia nonprofit organiza-
tion. Most other so-called quasi-public corporations are not private
nonprofit organizations but are in fact agencies of national
governments.
To quote from the national tourism policy study, "In most cases,"
the study says, "the quasi-public tourist enterprise is responsive to
a bureaucratic office within a government department or ministry
which in effect has the real political authority and influence
* * `." The study further states that such organizations look to a
government department for policy guidance. They are titled quasi-
public organizations since typically their operating pattern and
organizational structures vary somewhat from those of the agencies
of their governments. The Irish Tourist Board and the Australian
Tourism Commission are two examples of this latter type of quasi-
public organization.
Is the difference beween the proposed U.S. Travel and Tourism
Corporation structure and the organization patterns of other na-
tional tourist offices significant? The answer in the administra-
tion's view is definitely `~Yes." It is our belief that having the
corporation outside of the Federal Government will mean greater
expense and/or significantly more difficulty in completing success-
fully a number of tourism program activities particularly in the
nonpromotional support areas. More specifically:
PAGENO="0466"
462
If the committee favors the establishment and/or maintenance of
overseas promotional offices, it should note that a privately operat-
ed corporation, even a nonprofit corporation which is federally
chartered, may have considerable difficulty in establishing
branches and doing business in foreign countries. For example:
(a) In some countries branches of American corporations have to
be incorporated under local law. Such an incorporation can be both
time consuming and costly.
(b) American employees in foreign countries have to pay income
tax under local law as well as under U.S. law. Under reciprocal
treaty agreements, U.S. Federal employees stationed abroad pay
only U.S. taxes.
(c) The dissemination of informational materials about the
United States would present another problem. Under reciprocal
treaty agreements, literature published by the U.S. Government is
exempt from customs duties in entering foreign countries. Also,
mail is entered in diplomatic pouches. Under the nonprofit organi-
zational form, customs duties would have to be paid by the corpora-
tion seeking to bring its materials into each foreign country. Such
an expense could obviously be very sizable.
We further believe that the assignment of certain policy and
representation functions to the U.S. Travel and Tourism Develop-
ment Corporation-an organization which is not an agency of the
Federal Government-would inevitably result in reduced U.S. par-
ticipation and influence in international and intergovernmental
organizations whose policies affect the travel industry.
(a) In a letter dated June 8, 1979, which I would be happy to
provide for the record if you like, the State Department advised
that officials of the nonfederal corporation could not head U.S.
delegations participating in intergovernmental meetings, and
might be precluded from representing the United States at inter-
governmental technical meetings and bilateral negotiations.
(b) Further, we feel that other nonpromotional activities such as
agency monitoring and data collection will prove more difficult for
a non-Federal organization. Another concern is that the small busi-
ness viewpoint may not be sufficiently represented by the corpora-
tion.
Mr. Chairman, for these reasons we believe that the Federal
Government should have a direct role in travel and tourism that is
confined to what we can do best. The administration's proposal
plus the establishment of an interagency committee would have
many advantages. These proposals would:
Continue to provide analytic support on tourism for use by U.S.
representatives in intergovernmental organizations and in bilateral
negotiations;
Integrate tourism concerns with country commercial planning;
Provide effective and manageable machinery to deal with policy
issues impacting on tourism through travel research programs and
associated programs affecting tourism at other levels of govern-
ment; and
Permit a reduction in the level of Federal resources committed to
the undertaking of travel industry programs while at the same
time improving the cost effectiveness of the funds allocated to
programs conducted in this area.
PAGENO="0467"
463
Mr. Chairman, that concludes my testimony. I will be pleased to
answer any questions that you may have.
Mr. FL0RI0. Thank you very much. You have certainly raised
very legitimate questions, questions this committee will have to
address itself to. I was just interested in your concerns or your
statement on title II of the legislation. I was very impressed when
you effectively challenged the effectiveness of the coordinating
committee, but then you offered in its stead an interagency com-
mittee that you see as being a nonstaffed committee, that will deal
with problems on an ad hoc basis.
It seems to me all the criticisms that you raised appropriate for
the coordinating committee can be equally raised with regard to
your suggestion. How do you see your interagency committee being
any different in terms of its potential ineffectiveness because it is
not an ongoing staffed committee, then the criticism could be
raised about the coordinating committee?
Mrs. PORTER. Our proposal is that the Bureau of Tourism, the
Director of the Bureau of Tourism, would have responsibility for
coordinating governmentwide activities that affect tourism, the
tourism industry, and that that person would have the authority to
call together those representatives of other agencies at the staff
level or the decisionmaking level that is important for that
activity.
Now, this has in effect been going on, Mr. Chairman, and I
believe that in the last year particularly, Miss Westphal and the
U.S. Travel Service have done a very, very effective job of coordi-
nating Government agencies at the appropriate level on issues
where coordination is needed. I might ask her to describe some of
that activity, to give you a flavor of what can be done without
setting up a big structure and a staff, but by using the staff of
USTS or the Bureau of Tourism that is already there for coordinat-
ing- not just setting it up as something different.
It is a function of the Federal Government to coordinate. We
have not done an effective job of it in the past. We are beginning to
do it now very effectively, and I think that ought to be continued.
Miss Westphal.
Miss WESTPHAL. Mr. Chairman, as you are aware, we have been
very much involved with Mexico. President Carter, when he met
with President Lopez Portillo, raised a number of issues as a result
of which some consultative mechanism committees were estab-
lished. I head up the Tourism Committee of the United States-
Mexico consultative mechanism operation.
We have been in discussion with the Mexico tourism authorities,
and met with them in June of this year; and the agencies that
were represented in that meeting included the Customs Service,
the Southwest Border Regional Commission, Immigration and Nat-
uralization, in the Department of State-the Office of Mexican
Affairs, the Office of Air Transportation of the Department of
Transportation, the International Transportation Officer of the De-
partment of State,and the Civil Aeronautics Board. We are meeting
again next week, when additional agencies will be represented,
which include the Department of the Interior, the Endowment for
the Arts, Amtrak, and the General Services Administration.
PAGENO="0468"
464
After our meeting next week, we then will set up an implemen-
tation of the types of activities that would be needed to be carried
out, which address the items set forth in the tourism agreement
that was signed between Mexico and the United States. After that
time we will be meeting with representatives of the States and
cities along the border, with their Mexican counterparts, to see
how we can implement the programs.
Mr. FL0RI0. This raises a question, a specific point that came to
the committee's attention not too long ago dealing with our
Amtrak deliberations. That there may be coordination going on
among some, but the Department of Transportation felt very defi-
cient with regard to its communication with Mexican officials, and
the coordination of train schedules.
Amtrak has brought to our attention, and some of our colleagues
from the Texas delegation have brought to our attention, the defi-
ciencies in terms of the customs coordinating effort between both
sides of the border, to the point where this particular train, which
is certainly a good vehicle for facilitating tourism, is now in jeop-
ardy, that is the continuation of it is in jeopardy in many respects,
because of the absence of coordination.
If in fact you feel that some things are changing, that is fine. But
to this point, I am talking about this point being just a few weeks
ago, there was a strong feeling that there had not been coordina-
tion and cooperation on both sides of the border, to the point of
jeopardizing the existence of the Inter American train, which in
turn would have an adverse impact upon the tourism industry
between the two countries, which is what we are trying to encour-
age. There has not been the appropriate coordination between the
different governmental agencies on our side of the border and
between agencies beween the two countries.
Miss WESTPHAL. I recognize this, and this is the reason why we
are taking a representative of Amtrak with us to the meeting next
week. so that he can meet his counterpart on the Mexican side.
Through this, establish communication now between Mexican and
United States counterparts so that we can start realizing what the
problems are, and taking steps on both sides to see that they can
be solved.
Mr. FL0RI0. I might make a gratuitous suggestion. You may
want to make a point of contacting some of the members of the
Texas delegation, to inform them of these initiatives, because they
are convinced that nobody in the Government has any concern
about preserving that train.
Miss WESTPHAL. As you may be aware, the person who has been
designated as the special ambassador for this Mexico-United States
consultative organization is Mr. Fobert Krueger from Texas, and I
am meeting with him this afternoon, so therefore I will take that
into consideration.
Mr. FL0RI0. Mr. Santini.
Mr. SANTINI. Thank you, Mr. Chairman.
Welcome again, Assistant Secretary Porter, Miss Westphal. I
gather that your testimony before our committee today indicates,
Secretary Porter, that you are the person in Government that is
the tourism advocate; is that true?
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Mrs. PORTER. I am a tourism advocate. I am not the only tourism
advocate in the administration, Mr. Santini.
Mr. SANTINI. Who are those other tourism advocates?
Mrs. PORTER. They are widespread, including the President of the
United States.
Mr. SANTINI. The President of the United States?
Mrs. PORTER. And the other officials in the White House and
0MB. Our difference is---
Mr. SANTINI. Who is the advocate for tourism in the 0MB? I
would like to know.
Mrs. PORTER. The people in 0MB have not been against tourism.
They have been, as I have been, not impressed with the structures
for Government assistance to the tourism industry.
Mr. SANTINI. But, Secretary Porter, who is the person in tourism
that is the advocate? Who is the person in 0MB that is an advocate
of tourism?
Mrs PORTER. Well, sir, I think Mr. McIntyre is an advocate of
tourism.
Mr. SANTINI. Who is the person on the Domestic Policy Staff that
is the tourism expert?
Mrs PORTER. The Director of the Domestic Policy Staff, Mr. Ei-
zenstat, is an advocate of tourism, and all other industries that
help the economic vitality of this country.
Mr. SANTINI. So Mr. Eizenstat would be the person on the Do-
mestic Policy Staff that you identify as the advocate for tourism?
Mrs PORTER. Yes; the entire Carter administration, Mr. Santini,
is an advocate of strengthening the tourism industry.
Mr. SANTINI. He is the same advocate that recommended week-
end gas station closings. That is a rather strong voice for tourism
at work in the domestic policy level.
Mrs. PORTER. And it was accompanied by concern over the
impact of the energy shortage on the tourism industry, and par-
ticularly on small business people.
Mr. SANTINI. I am sure that expression of concern was well
received by those who contemplated that this industry might be
decimated by this kind of administration decisionmaking. If that is
the person on the Domestic Policy Staff that is the advocate for
tourism, who are the enemies of tourism?
Mrs. PORTER. I don't think that there are friends or enemies, Mr.
Santini. I think that there are very great differences beween this
administration and some Members of Congress in terms of how to
structure effectively, most effectively, the Government's support
for and facilitation of the tourism industry, both domestically and
abroad.
Mr. SANTINI. Can you assist me in understanding the process of
governmental decision making? When the weekend closing decision
was made, did you actively participate in that weekend gas station
closing decision?
Mrs. PORTER. I personally did not; no, sir.
Mr. Santini. Did you have an opportunity to comment in writing
on that decision?
Mrs. PORTER. Yes, we did have an opportunity to comment in
writing on that decision. That was a standby energy policy decision
that was presented by the Department of Energy, and the Depart-
PAGENO="0470"
466
ment of Commerce commented very vocally when that policy was
proposed long before the crunch came. We have made very clear to
the administration the very severe impact that such a policy would
have on the tourism industry.
Mr. SANTINI. And what was the position of the Department of
Commerce with regard to the proposed closing of gas stations on
weekends?
Mrs. PORTER. Sir, we feel that the energy policy which was in
most cases a local option was something that we certainly did not
advocate, but faced with the shortages in energy, that is one of the
difficult decisions that State and local officials would have to make.
Mr. SANTINI. Assistant Secretary Porter, did the Department of
Commerce oppose in writing the proposed weekend gas station
closings?
Mrs. PORTER. The Department of Commerce did not oppose. We
do not oppose. We commented upon, and we pointed out that this
would have very serious adverse effects, of course. Everybody
knows that the effects of such a policy fell most heavily on the
tourism industry. That is something that we are very concerned
about.
Mr. SANTINI. I fully appreciate, Secretary Porter, that you are
hardly the culprit in this deficient administration approach to this
very critical industry. It is hardly this administration that could be
exclusively singled out for condemnation, because it has character-
ized other administrations in the past. Now we are trying to deal
with the possible legislative solution, that it might offer some relief
from the dismal record of noninvolvement in performance in pres-
ent and past administrations on problems related to the tourism
industry.
It seems to me that in your testimony you made some very
telling points, particularly on pages 8 and 9 of your testimony, and
10. But it seems to me that the bottom line of your testimony
comes down to a recommendation of the status quo, essentially
very low in terms of significant changes proposed here.
You suggest some sort of ad hoc apparatus that will involve the
individual agencies or departments of government, that somehow
gets together and dramatically addresses the major problems con-
fronting our tourism industry as the problems erupt, but has no
staff, no budget, and other than a general policy statement, has
nothing to support it in its efforts to try and combat those forces of
either ignorance or indifference or hostility within other entities of
government on the tourism-related questions.
I think it is doomed to failure before it ever gets off the ground,
because it is so devoid of any ongoing substance or structure to
perpetuate it. I would appreciate your thoughts or sentiments on
how it is going to be a viable active part of Government decision-
making, given those kinds of limitations.
Mrs. PORTER. Mr. Santini, my expertise is not tourism per Se, but
my expertise is the functioning of Government organizations effec-
tively. My responsibility in the administration has been to look at
the appropriate role of the Federal Government in support of the
tourism industry, and to make recommendations for better organi-
zation and functioning of those services.
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467
Now we applaud the National Tourism Policy Study, and its
identification of those specific functions that the Federal Govern-
ment only can perform and ought to do. The problem has been that
the way tourism functions are now organized in the U.S. Travel
Service is inappropriate. We think that tourism would be strength-
ened by moving those most needed functions into the Industry and
Trade Administration in a Bureau of Tourism, where tourism
would be recognized as it is, as one of the major industries in this
country. A separate agency is not a good advocate for tourism that
is not linked to the data collection, the industry analysis, the high
Government policy coordination activities that go on for other in-
dustries. Tourism should be brought into, in effect, the mainstream
there.
There would be a separate Bureau of Tourism. It would be under
the direction of an Under Secretary for Trade. The foreign dollar
earnings of the tourism industry would therefore be recognized as
they are, a very, very important souce of earnings to us to help
correct the trade imbalance. That is the organization which also
would have the representation overseas, in terms of commercial
attaches, and the local district offices throughout the country,
which can be put at the service of the tourism industry.
Now that is what we have lacked in the past, and we think that
this is a very significant change-one that will put tourism out
front where it ought to be, and provide the very skills to assist the
tourism industry that the previous witnesses suggested that they
needed. For example, commercial representation abroad is an ap-
propriate Government function, and we should pay for it out of the
general revenues.
Mr. SANTINI. May we pause just a moment, Secretary Porter, so
that I might explore your general conclusion that this is a very
significant change. I would respectfully take issue with that conclu-
sion. I don't see how creating a standing-and I am reading from
your testimony on page 6, creating "a standing, nonstaffed commit-
tee, the issues and problems would be resolved and identified on an
ad hoc basis * * * ." That is a committee that wouldn't even have
a capacity to mail a letter, because it wouldn't have a stamp or a
typewriter in place. That is a committee that is a sham, a facade of
a committee with no substance to support it or perpetuate it, it
seems to me.
Mr. FL0RI0. Would the gentleman yield for some clarification?
Mr. SANTINI. Sure.
Mr. FL0RI0. I think what you are saying, you said something
different in your testimony, not that there is an inconsistency, but
my recollection is your testimony is offering the interagency coordi-
nating council in lieu of the proposal in title II, but what you just
said, it seems to me, is that what you are advocating is really a
new position or new bureau within the new Cabinet position.
I get the distinct impression that your interagency proposal is
not really the highest priority. It is certainly going to be a function
of this new bureaucracy, but if I am correct, you are not offering
this interagency coordinating council, the ad hoc nonstaff council,
as the major initiative for tourism. Am I correct in that?
Mrs. PORTER. That is right. An interagency committee, which
would be made up primarily of the major representatives from
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agencies whose policies affect tourism, would be a standing commit-
tee. We have many such committees that are active and that are
effective in the Federal Government today, and the staff, support
would be a function of the bureau.
Mr. FL0RI0. I understand.
Mrs. PORTER. What I am trying to say is that it does not need a
special staff. It does not need a new heavy structure.
Mr. SANTINI. I understand. What you are saying, then, I think
the major point you are making here today is that you forsee,
rightly or wrongly, that tourism will be emphasized in this newly
reorganized department?
Mrs. PORTER. That is right.
Mr. SANTINI. My only difficulty is I thought you said that it
would be under the direction of an undersecretary or a deputy
secretary in charge of trade. My concern would be that with all of
the new trade initiatives, with the new treaty concerns, that tour-
ism once again is going to get lost as we deal with the more visible
ramifications or the more visible manifestations of our newly ex-
panded trade policies.
Mrs. PORTER. I believe that would not happen, Mr. Chairman.
The reason is this. The key really is the work of commercial
attaches overseas and the analysis of trade opportunities in foreign
markets. Now what we see is that tourism is a primary and very
important market overseas. What has been happening in those
countries where the Ambassadors have been left to their own de-
vices, if you will, to develop country marketing plans for the work
of the commercial attaches abroad, there have been some Ambassa-
dors who have seen tourism as clearly the primary opportunity for
foreign currency earnings.
It is trade, and it should be viewed in that fashion. In terms of
laying out a marketing plan for a country, tourism in some cases is
the No. 1 activity for the commercial attaches. We would see then
a regular systematic assessment of tourism/trade opportunities
across the world, and we would begin then to plan very systemati-
cally for those activities.
Then as we look at our marketing opportunities, the barriers to
achieving those goals would be made visible, and those problems
would become the problems that we would deal with on an inter-
agency basis. The policy decisions in transportation, in energy and
so forth, that would affect those trade, tourism, foreign currency
earning opportunities, let me put it that way, would then be
brought to the very, very highest level. We think that the Presi-
dent's reorganization proposal is a significant step forward in put-
ting tourism into the mainstream, into the top consideration of top
policymakers.
Mr. FLORIO. If the gentleman will yield for just one more ques-
tion.
Mr. SANTINI. Yes.
Mr. FL0RI0. You have dealt with title III in a very effective way
by pointing out a number of deficiencies in the proposal. What, if
any, role do you feel that the private sector should have in the
tourism area with regard to the new entity that is being created, in
a more structured way?
PAGENO="0473"
469
I am sure you could tell us there should be high degrees of
cooperation and things of that sort. Do you feel that there is a need
for a structured involvement by the private sector under this new
alinement of functions to be contained in the new Department of
Commerce?
Mrs. PORTER. We feel that the idea of a quasi-public corporation
might be a very good way to get the private sector and parts of the
public sector-not the Federal level, not with general revenues,
but, for example, regions, States, and municipalities-to work coop-
eratively together on the promotion aspects. By promotion I mean
the direct advertising.
Our position is that it is inappropriate for USTS offices to do
direct advertising, because the beneficiaries of that direct advertis-
ing, as Mr. Madigan pointed out, are disproportionate.
Mr. FL0RI0. Why do other nations do with, governmental entities
directly promoting tourism in their countries? I mean, isn't it the
same situation that private entities would be beneficiaries? What is
so unique about our approach to the problem that seems to be
rejected by everyone else?
Mrs. PORTER. I do not know. Miss Westphal would like to answer
that.
Miss WESTPHAL. I might comment on that, because in other
countries the private sector is not as strong as we have here in the
United States, and as well organized. The hotel industry, the air-
line industry, the car-rental industry, they are successful oper-
ations.
Mr. FL0RI0. Many of these entities are multinational corpora-
tions, so you are talking about identically the same.
Miss WESTPHAL. Yes, but in other countries a number of the
airlines are subsidized by the government, because of the fact that
they cannot, have not been able to operate independently and
make a profit, and therefore they are subsidized by the government
in many instances. I think in the United States we do have a
successful private sector industry, and therefore they can work
cooperatively with the Government.
Mr. MADIGAN. If the gentleman would yield, that begs I think a
very obvious question. There are Hilton hotels and Sheraton hotels,
Playboy Clubs, any number of enterprises like that in London
which obviously benefit from the promotional efforts of the British
Government. Those are U.S. corporations making dollars in Great
Britain and as a country, as a nation, as a government, is promot-
ing tourism. Why is it so evil for the United States to do the same
thing for the benefit of U.S. corporations that Great Britain is
doing for the benefit of U.S. corporations?
Ms. WESTPHAL. Well, in Great Britain, they do get some funds by
selling advertising in some of their publications, so that there is a
revenue that they do get outside of just their own government
funds.
But the second part of your question, it is not evil. But I think,
as you pointed out, the Federal Government must look at how it
spends its money. And therefore in the Federal Government we
feel we have a role to play. We can work closely with the private
sector in doing certain things. But when it comes to the actual
advertising, that should be the responsibility of the private sector.
PAGENO="0474"
470
Mr. MADIGAN. I sense you are on both sides. You are saying that
they get money from sources outside the government that they use.
And you are saying that the U.S. Government should be very
selective in how it spends its money. But I understood Mrs. Porter
to say a moment ago that it would be wrong for the U.S. Govern-
ment to solicit or accept money from anyone to promote travel in
the United States at overseas locations.
Mrs. PORTER. I did not say that it would be-I didn't mean to
imply that. You mean in terms of the private sector organizations
paying for the services of the Federal Government?
Mr. MADIGAN. Promoting travel within the United States at
overseas locations. A moment ago there were some people from my
State, who are very active in agriculture promotion, in the back of
the room. Unfortunately they had to leave to be at a meeting. But
I went back to talk with them to find out exactly how this is done.
Are you aware that there is a Foreign Agricultural Service in
the U.S. Department of Agriculture?
Mrs. PORTER. Oh, yes, indeed we are.
Mr. MADIGAN. And that that is an instrumentality of the Federal
Government of the United States?
Mrs. PORTER. That is right.
Mr. MADIGAN. And exists for the purpose of promoting overseas
the sale of U.S.-produced agricultural commodities?
Mrs. PORTER. Yes, Mr. Madigan.
Mr. MADIGAN. Now, let me ask you one more question. Are you
aware that the Foreign Agricultural Service on a regular basis
accepts contributions from organizations like the U.S. Feed Grains
Council, the American Soybean Association and other organiza-
tions like that to pay for the promotion of this overseas activity on
the part of the U.S. Government?
Mrs. PORTER. Yes.
Mr. MADIGAN. You are aware of all that.
Mrs. PORTER. Yes. And that is precisely the model for the reorga-
nization of the trade activities and the reason why its success is
really one of the arguments for moving the commercial attaches
from the State Department to the Commerce Department, so that
we can provide to U.S. business people, except in agricultural
areas, the same kind of service that the Foreign Agricultural Serv-
ice provides to the agricultural sector.
Mr. MADIGAN. Do you endorse the practices of the Foreign Agri-
cultural Service?
Mrs. PORTER. Indeed, we do.
Mr. MADIGAN. Do you have any objection to us structuring a U.S.
Travel Service that functions exactly the way the Foreign Agricul-
tural Service does?
Mrs. PORTER. That is what we are trying to do in terms of trade
at large, and with tourism as one of the marketing opportunities
that the Federal Government should promote in the sense of facili-
tating, of providing technical assistance, and of identifying mar-
kets. Where we stop is in direct advertising, which we think that
either the regions or the States or the industries should pay for.
Mr. MADIGAN. But the Foreign Agricultural Service has soybean
fairs. The Foreign Agricultural Service has booths at the Canton
Fair in China. The Foreign Agricultural Service goes all over the
PAGENO="0475"
471
world engaging in all kinds of promotions on behalf of U.S. agricul-
ture. And they advertise where they are going to be, and they
advertise what they are going to do, and they advertise at all these
agricultural fairs. And they do all these kinds of things.
They take money from associations of agricultural producers. As
a matter of fact, Mrs. Porter, every soybean grower in the State of
Illinois contributes to the activities of the Foreign Agricultural
Service on the basis of so much money from every bushel of soy-
beans that he or she grows being set aside to go to the Foreign
Agricultural Service to promote these activities on the part of our
Government.
Mrs. PORTER. Yes, sir. And the Industry and Trade Administra-
tion, in cooperation with the State Department in the past, has had
that same arrangement for the remainder of U.S. industry.
Our problem has been that they have not been effective. We
have trade centers abroad. We bring American businessmen
abroad. And we collect fees.
Mr. MADIGAN. But you are not talking about tourism.
Mrs. PORTER. In some cases, in some countries, tourism has been
part of that marketing plan. And what we are saying is we should
recognize tourism as important and increase our activity to pro-
mote tourism.
Mr. MADIGAN. I have been in those countries. I was in London
when you were going to close the office of the U.S. Travel Service.
I have been in Rotterdam. And I had to walk down an alley and
get on a freight elevator, off an alley entrance, and go upstairs
over a shoe store, in the largest seaport in the world, to find the
office of the U.S. Consul in Rotterdam-upstairs off an alley, over
the back end of a shoe store. And you know where the office of the
U.S. Travel Service is in the largest seaport in the world? It doesn't
exist. That is your record.
What you are proposing now, which is considerably different
than your attitude earlier in the year-and I endorse and whole-
heartedly support the difference-is only a response to the fact
that the Senate has passed a bill. That doesn't encourage me to
believe that you are really into that now, Mrs. Porter.
Mrs. PORTER. At the time that I testified before this committee
earlier, before the President made a decision on trade reorganiza-
tion, we were in consultation with the State Department to at-
tempt to change the priority given within the State Department to
tourism in the country market plans, tourism and other industries
in country market plans.
We have been supporters of tourism facilitation overseas, and the
use of what we consider the appropriate mechanisms; that is to
say, our overseas commercial officers carrying the message for
American business people.
Mr. MADIGAN. Mr. Chairman, I yield back the balance of my
time.
Mr. FL0RI0. Mr. Santini.
Mr. SANTINI. I reclaim the balance of mine, whatever it is.
I hope you can appreciate, Assistant Secretary Porter, why at
least some members of this committee, and I would assume some of
those in the tourism industry as well, would not greet with glowing
expectations the prospects of creating an interagency committee
PAGENO="0476"
472
comprised of the Departments of State, Interior, Transportation,
Energy, and Civil Aeronautics Board, to deal with the problems on
an ad hoc basis. It is because all of these entities of Government
have contributed by either indifference or inaction or non-response
to the pathetic state of government relationships vis-a-vis the tour-
ism industry in the United States of America today.
It seems to me very much just a superficial attempt to respond to
prior legislative mandates and to a suggestion that there is a need
for change or improvement.
I am disturbed with your conclusion, the first paragraph on page
6, when you state that "Coordination of tourism programs . . . is
one that only can be effectively done within the Federal com-
munity."
I would suggest, realizing it is not your isolated point of view but
an administration posture, that this is the same kind of blind alley
deductive process that has left the United States in a pathetic state
of affairs that it is in promoting and advocating tourism in the
marketplace. And it ignores completely the plea and concerns of
the gentlemen who preceded you, Mr. Edwards and Mr. McCarthy,
when they said there needs to be a more active and direct involve-
ment of the private sector, interfacing, was Mr. McCarthy's word, I
believe, with the Government to help bring more dynamism into
the tourism marketplace and more rational direction in terms of
the Government's role in that marketplace.
I cannot accept, because I think it is logically impaired, the
contention, Miss Westphal, that somehow we have a viable tourism
industry in the United States of America that is stronger than the
tourism industry in foreign competitors, and that therefore that
suggests a much reduced role of the Government in tourism. Be-
cause if that were true, we also have a very vital agricultural
industry, we also have a very vital production industry across the
board in the United States of America, and on a comparative basis
we would outdo most of our foreign competitors in that context.
But that does not discourage the Government becoming very
active, very much involved, very aggressive, in trying to promote
foreign trade.
But when you start talking about foreign tourism, somehow the
reasoning processes collapse completely, and then it becomes a role
exclusively for the multifragmented tourism industry.
I think if anything there is more need for assistance in tourism,
given its diverse nature, and its multifaceted involvements in tour-
ism, than in all the other industries, because they are focused, they
are one industry, one entity-based, and not hundreds of entity-
based.
I don't consider this proposal to be anything more than cosmetic
at this point.
I would appreciate any thoughts or responses you might wish to
offer.
Mrs. PORTER. Well, if you deduce from my statement that we did
not think we needed to cooperate with the industry or consult
them, that is quite wrong. We obviously would. I was really refer-
ring to policy coordination within the Federal agencies, which has
been such a troublesome area for so long. I believe that that has to
be done inside. One thing is that the policy statement, the tourism
PAGENO="0477"
473
policy statement, would be very, very useful, because it will high-
light for other Government agencies the importance of tourism. I
think that it would help the Department of Commerce, particularly
the head of tourism in the Department of Commerce, in giving that
person the responsibility for policy coordination within the Federal
Government. That I think has to be done there.
I am opposed to highly structured, high-level committees which
fall of their own weight, which are very unwieldly. I prefer, rather,
the establishment of committees at lower levels, with decision-
makers on the issues; and because they are so diverse, not all of
those committee members are always involved in all of the policy
decisions. So that is what I mean by an ad hoc address to the
tourism-related issues that arise.
Mr. SANTINI. What specific organizational structure do you pro-
pose to insure the active involvement and participation of the
private sector in the Government decisionmaking as it relates to
tourism?
Mrs. PORTER. We now have the Travel Advisory Board, which
has been a very effective mechanism of providing advice and coun-
sel to the Secretary, to the Department, on tourism issues.
Mr. SANTINI. How are we to judge that very effective mecha-
nism? By results?
Mrs. PORTER. Yes, sir.
Mr. SANTINI. And those results are?
Mrs. PORTER. And those results are, I think, visible in the kinds
of changes that we are now proposing for the Federal involvement
in tourism. We have recognized that things were not working well.
This administration has known, as the Congress has known, that
the USTS was not the most effective mechanism. It has done a
very, very effective job, we think, in the last couple of years in
showing what can be done. But it has not been in a position within
the Department of the strength that we now propose to make it.
Mr. SANTINI. Thank you, Mr. Chairman.
Mr. FLORT0. Thank you very much.
You were not here early in the session, Mrs. Porter, when I read
a letter that I had directed to the President once again requesting,
as we requested in the past, an opportunity for a meeting with the
highest level official who might be available so that this committee
and industry could come together and discuss this matter.
I think you have received previous requests from me.
In light of what you state is a new, perhaps more enlightened,
approach by the administration, we would appreciate anything you
can do to assist in getting this meeting put together as rapidly as
possible and we would expect that you would be in a position to be
helpful. So we would appreciate your support.
Mrs. PORTER. We will do that, Mr. Chairman.
Mr. FLORIO. Mr. Madigan.
Mr. MADIGAN. No further questions. If we have abused you in
any way whatsoever, it is only that you are here and readily
available, and then that gives us somebody on which we can take
out our frustrations. We did not intend to abuse you. We think you
are both very lovely ladies. I am very pleased you are with us this
morning. Thank you.
Mrs. PORTER. Thank you.
PAGENO="0478"
474
Ms. WESTPHAL. Thank you.
Mr. FL0RI0. Our concluding panel will be exactly that. In view of
the lateness of the hour we are going to call all of our witnesses as
a panel. We have four witnesses who will present their testimony
in panel form.
Mr. Michael F. Sarka, president of Travel South-USA; Donal
McSullivan, director, Irish Tourist Board; Mr. Voit Gilmore, former
director of the U.S. Travel Service; and Mr. J. W. Horrocks, direc-
tor of the Public Citizens Visitor's Center.
Gentlemen, would you come to the table and identify yourselves.
Your statements will be entered into the record in their entirety.
We would appreciate your proceeding with a summary of your
statements. Perhaps we could call on Mr. Sarka to initiate the
testimony.
STATEMENTS OF MICHAEL F. SARKA, PRESIDENT, TRAVEL
SOUTH-USA; VOlT GILMORE, COCHAIRMAN. AD HOC COMMIT-
TEE ON THE NATIONAL TOURISM POLICY STUDY, AMERICAN
SOCIETY OF TRAVEL AGENTS. INC.; DONAL MCSULLIVAN,
VICE PRESIDENT, UNITED STATES AND CANADA, IRISH
TOURIST BOARD, ON BEHALF OF THE AMERICAN SOCIETY
OF TRAVEL AGENTS, INC.; AND J. N. HORROCKS, JR., DIREC-
TOR. PUBLIC CITIZEN VISITORS CENTER
Mr. SARKA. Thank you, Mr. Chairman. I will be brief.
Travel South USA is the regional travel organization that repre-
sents Alabama, Arkansas, Florida, Georgia, Kentucky, Mississippi,
South Carolina, Virginia, Louisiana, North Carolina, and Tennes-
see.
Earlier today Congressman Jenrette mentioned that the 11
States of the South represent this Nation's No. 1 regional destina-
tion for United States and Canadian travelers. We laud the efforts
of your committee to hold these hearings and to receive input, not
only here in Washington, but in the field, on this important issue.
I know you have heard several times about the prospects for
international tourism. That is discussed in my full statement [see
p. 476].
One thing I would like to advise you of, and that is there is only
one State in the Nation that has maintained a full-time travel and
tourism development office in Europe since 1976.
Governor Julian Carroll in September of that year opened the
Kentucky International Tourism Office in Brussels, Belgium. Cur-
rently that office operates with three full-time staff and an annual
budget of approximately $150,000.
The leadership exercised by Governor Carroll in the State of
Kentucky in beginning this effort has shown positive results. How-
ever, these results, a minimum of an additional 23,000 room nights
last year alone, are due to continued coordination of their efforts
with the U.S. Travel Service offices in Europe.
Another point. The State of Georgia allocates a portion of the
effort in their industry and trade office in Brussels, Belgium, to the
promotion and development of tourism. They also rely on the ef-
forts of the U.S. Travel Service to pave the way for their efforts.
It is difficult, in fact almost impossible, for a regional organiza-
tion like ours, State or local destination to market alone in the
PAGENO="0479"
475
international arena without complementary efforts on behalf of the
Nation.
I would like to underscore one of the points involving interna-
tional travel trade, the point about foreign visitor facilitation. That
and other important items are in my full statement.
In 1978 in our 11-State region every $29,700 in travel purchases
directly supported one job at the retail level and nearly another
half job among suppliers.
International tourism expenditures are estimated for the same
year at $2 billion for our region.
Therefore a number of jobs are dependent on international tour-
ism revenue, and any increase in international expenditures would
create additional jobs for the region.
In summation, we support the concept and scope of 5. 1097. The
successful implementation of the recommendations outlined in
S. 1097 will create a positive impact on the economy and employ-
ment of this country and the li-State region of the South.
Thank you.
[Mr. Sarka's prepared statement follows:]
PAGENO="0480"
476
STAT~ENT OF
MICHAEL F. SARJsts. T~ United States Travel Service reperts that the niir~er of
international visitors is expected to reach the 21 million mark in 1979,
a 6 percent increase over the 1978 vo1un~. This ~uld be the first tima
overseas arrivals W3u1d break the 20 million figure.
In 1977, U.S. residents spent $11.9 billion for international travel
as oppesed to $10.9 billion in 1976, according to the Bureau of Econcinic
Analysis, U.S. cepartsent of Transportation. The 1977 expenditures
consisted of $7. 5 billion spent in foreign countries, a 9 percent
increase over 1976, with $2. 8 billion paid to foreign sea and air
carriers, and $1.6 billion paid to U.S. carriers, up 11 and 13 percent
respectively. -
U.S. receipts from foreign visitors have been steadily increasing
over the last few years. In 1976, U.S. receipts from foreign visitors ~re
PAGENO="0493"
489
$6.7 billion; in 1977, thay were $7.2 billion; and in 1978, they were
$7.5 billion)~" The United States Travel Service estimates that the total
receipts frco international visitors to the United States in 1979 sbould
arrouat to $8.73 billion, a 19% increase ompared with 1978. When
transpertation receipts are added, the total receipts figure is expected
to reach $10.2 billion.
It has been estimated that the travel industry, in 1978, contributed
about $115 billion annually to the econoury of the United States, and
supForted approximately five million jobs. There has been a three-fold
increase in tourien in the United States since the end of W~r1d War II.
Furtharnore, it has been estimated that over 90% of the public recreation
lands are utilized alrrost entirely by tourists.~7
Alti-ough all these figures appear to be large, they are actually a
mnall percentage of the total eiount of ironey spent througi-out the w~r1d on
international tourien. Last year, tha pemple of tha ~.orld spent $156 billion on
travel, Of this anount, little core than five percent was spent on international
Research conpiled by U.S. Travel Data Center; Volirre 7, Number 8: Aug. 1978.
Research conpiled by Cc~rrnerce, Science, and Transpertation Cciirriittee:
released September 7, 1978.
PAGENO="0494"
490
travel to the United States - a pitifully small figure when one considers
this nation's bapacity to service travelers, its attractions and its share
of the market in other major catn~rcial categories. ~ have only begun to
develop and profit fron travel as one of ~zrerica's great renewable resources.
If the U.S. Governrrent ~ould recognize the potential of tourism and
accept its proper role in marketing the United States as a destination,
wa at ASTA are confident that our international tourism receipts can be
doubled in the near future, with obvious benefits to the ecorxxtr)r and
crztrrerce of the United States.
The International Tourism ~t of 1961 is the basic statute fron which
the present U.S. C~verrarent policy tc~ards tourism is derived. It
authorizes the Gz~verrm~nt to prarote travel to the U.S. This function was
to be carried out by the Secretary of Carrrerce.
The decla red purpose of the statute was to: `strengthen the dczrestic
and foreign carrrerce of the United States by encouraging foreign
residents to visit the United States and facilitating international travel
1/
generally.
The Act instructs the Secretary of Catirerce to 1) develop, plan, and
carry out a carprehensive program designed to stinulate and encourage travel
to the United States by residents of foreign countries; 2) encourage the
1/
Section 2121 of Qiapter 31, United States Code
PAGENO="0495"
491
developient of tourist facilities, 1CM cost unit tours, and other arrang~tents
within the t~ited States for n~eting the r~uiraients of foreign visitors;
3) foster and encourage the widest possible distribution of the benefits
of travel at the cheapest rates between foreign countries and the United
States consistent with sound ecoi~nic principles; 4) encourage the
sinplification, reduction, or elimination of barriers to travel and the
facilitation of international travel generally; and 5) collect, publish
and provide for the exchange of statistics and technical infonnation.
The United States Travel Service was established within the Catinerce
Depart~rent to carry out this policy. Fkwever, no effective ccxrdinating
mechanism was established within the Federal &verrient to carry out this
mission. Cons~uently today, as the ~rthur D. Little stuly illustrates,
we have core than 100 tourism and travel related prograirs in 50 different
agencies of the United States Government dealing directly or indirectly with
tourism, yet there is no unified coordination of policy. This causes
serious repercussions in the industry.
It is quite evident that the present syst~n within our government of
carrying out the ~rthy goals of tourism, as outlined in the International
Travel ~ct of 1961, has not succeeded in its mission. The United States
Travel Service has became an ineffective political bedy lacking sufficient
clout to be a positive voice for the travel and tourism industry
PAGENO="0496"
492
within the (kvei-icent. U.S. T . S. is unable to alert the unite House arid
the C~ngress of the serious inpact various proposals would have on the
tourism industry such as the Governrrent' S recent draft plans for gasolina
rationing and waekerid closings of stations in the event of an energy
~rergency.
Lacking an effective federal oxrdinating rrechanism, U.S.T.S. has fallen
prey to the decisions of other governrrent offices. For exarrple, the London
of f ice of U.S.T.S. was scheduled to be closed before the Secretary of
Carrrerce was even inforrred of the Qovernrent' s intent to do so. It is
disgraceful to think that the United States (kvernrent wants to eliminate
its only tourist office in Unglarid. Sixty-six countries operate national
tourist offices in London. Even Lichtenstein maintains a ground-floor
office open to the public there, whereas the United States Travel Service
is up tseo flights of stairs with a notice "Not open to the public".
I cannot overerrphasis the ir~xrtance of creating a strong and effective
national tourism policy, a program which private enterprise alone cannot
accorrplish. (Xir country can only benefit fron it. The prirrary caipetition
for international travelers is acong governrrants. Throughout the ~rld
today, over 120 nations operate national tourist offices aired at generating intound
tourism and the resulting foreign exchange earnings. (X~r close neightors
and allies all have national tourism offices which their governuents
strongly supuort.
PAGENO="0497"
493
Canada is a good example. The Canadian ~verrimant Office of Touri~n
has 14 locations througlout the United States, and ~Tploys over 322 people.
A major porticn of their efforts are directed towards helping the U.S.
travel agent with advertising, publicity, and assistance programs. Fbr
further impact this yeer, they wrote three million P~noricans personally
addressed letters telling then to see their travel agent abnut a vacation
in Canada.
The consortium concept was launched in Canada in 1975 to coordinate
the efforts of federal and provincial governrrents, territories, carriers,
whelesalers and others in giving Canadian tourism a greater impact on
the agent. Seminars in the forni of marketplaces for agents were launched
across the United States. In 1977, seminars -- frcei breakfast ceetings to
full marketplaces -- were held in 170 Merican and Canadian cities, and
20 cities in Europe. They were attended by 10,000 travel agents. There
were 103 seminars in the United States alone. This example is only
illustrative of their effort in Arrerica. They launched similar efforts in
cost of the OFX2D countries. ?~anwhfle, our Qnvernrrent' s tourism effort
in Canada consists of one United States Travel Service office in Thronto,
with a staff of four.
Individual states within the United States clearly believe in the
benefits of tourism. In fact, they have increased their spending on
Addressed by T.R.G. Fletcher, Assistance Minister, The Canadian Govt.
Office of Thurism, for the Arrerican Society of Travel Agents a~ard of
Directors Meeting: Thronto, Canada September 9, 1978.
PAGENO="0498"
494
tourisii arxi tourismrelatei activities t~' 67% since 1974. Scxne, such as
New York State, are even advertising on tha major nets~orks.. As a result
of the states' efforts, touri~n has rx~ bexxr~ tha ntrn.ber ore, ~= or
thr~ industry in 46 of the 50 states.
Investing nor~y in marketing definitely pays off. It is trost
significant to rote that for every dollar U.S.T.S. spent on its
international tour developrent, conventions and incentive programs, there
was a return of $18.50. Very few Govemrent programs can claim a cost,!
benefit ratio of 18.5 to 1.
renal MSullivan, Vice-President, NDrth Arrerica, of the Irish I~urist
Board, can further illustrate the success of sound marketing investments.
Ireland's National `Iburist Board is a highly efficient organization, and
extraTely successful in its mission of praroting Ireland. They have
experimented with various programs and have determined that it takes rrore
than just a beautiful country to sell Ireland as a destination. Proper
marketing and praiotion, with the full supprt of governrrent, are the
necessary ingredients. Ireland is considered by the ~rld tourisi~ industry as
operating one of the irost si~ccessful tourisri offices. Phe United States
Thavel and `Iburiam DevelopTent Corpration, which we are reczirrrending and
suppDrtng today, is very similar in structure to the Irish `Iburist Board.
PAGENO="0499"
495
It is clear to AS'rA, whose rrenbers in 120 countries around the world
cbserve first-hand the benefits of a positive governxrent-supported
national tourism policy, that our country needs one. ~ at ~STA have
given serious thought as to what rrechanisrn would cost effectively irrpl~rent
a strong national tourism policy in the United States. (~e proposal of
the ~rthur D. Little study is the creation of an independent cabinet-level
agency to deal with all aspects of the tourism industry. P~STA' s fear is
that this particular proposal of creating a n~ federal agency might bog
dcMn with the sane lack of interagency xxnn~nicatian and bureaucratic
processes that crippled the United States Travel Service. If this was
the case, the travel and tourism industry would once again be left without
a strong, independent voice in the Governrrent.
Thus, AST7~ believes that the only route to take to inpl~rent a cost-
effective, administratively sound national tourism policy would be to
create a quasi-public, non-profit corporation. This corporation would
be run by professionals fran the travel and tourism industry.
The corporation, entitled the United States Travel and~4~~vel
cent Corporation, would coordinate the efforts of the public and private
sectors of the tourism industry to encourage the orderly gra~th and develop-
cent of travel and tourism to and within the United States. The Corporation
would have a Board of Directors consisting of fifteen combers appointed by
the President. These certhers would be selected fran citizens who are
experienced in and respresent the travel and tourism industry.
PAGENO="0500"
496
Corporation prporans which prove to be unsuccessful ~uld be dropped
irrrr~diately. Personnel se~uld be hired solely for their expertise and
ability in a given area. If they s.~re unable to assist the Corporation
in its goals, they too ~ould be di~issed. Since these e~loyees ~uld
rot be covered by Civil Service, the Corporation's dismissals ~uld rot be
ccxTtplicated. This ~ould clearly give the Corporation the necessary
tools in run an aggressive, efficient operation to rreet successfully
goals that the Corporation, with the assistance of the travel and
tourien industry, ~ould set.
ASTA, along with the rest of the travel and tourien industry, also
supports the proposal of creating a Cabinet-level Coordinating Council
whose Director is the President s Chief Ecorornic Advisor, as outlined
in the Arthur D. Little study, which ~ould also be ccTnprised of experienced
travel and tcuri en professionals, who could advise the White House and
Congress on tourien related rrotters as well as coordinate efforts with
the Corcoration.
The creation of such a Coordinating Council and Corporation would
ensure the travel and tourien industry that their concerns will be heard
at the highest levels of Government, and he given a fair hearing. ASTA
is preoared to assist this Comnittee in every way to effect legislation
which will bring this abrut.
PAGENO="0501"
497
In conclusion, I would like to relay to the Caimittee AS'rA' s concern
that the additional funding request to retain the overseas operation of the
U.S.T.S. cost be acted on intrediately. The press-it law applicable to U.S.T.S.
calls for the atolitice of its overseas operation if ro goverrirrent funds
are appropriated by Sept~nber. It is thus inperative that the matter be
put on the ~buse calendar for action. ASI~A would appreciate any effort
either you or the CoriTnittee takes to effectuate this funding request.
Thank you Mr. Chairman. If you have any questions, I or Mr. ~Sullivan
would be happy to answer tbrsn.
Mr. FL0RI0. Mr. McSullivan.
STATEMENT OF DONAL McSULLIVAN
Mr. MCSULLIVAN. My comments are on the record so I will be
very brief. I am responsible for the United States as a market for
tourism in Ireland, and I would be happy to share with you briefly
how we go about developing tourism from outside to Ireland.
First of all, how much money does it take? Where should it be
spent? What percentage is spent on development and what percent
is spent on marketing? How do we plan our strategies, et cetera, et
cetera? How do we plan 4, 5, and 6 years ahead? This is all in a
document we have drawn up called our tourism plan.
The funding is virtually 100 percent Government funding. It is
run by a chairman and a directorate who are appointed by the
Government, and they operate very independently, I assure you of
that, which is different than the comments made by the Govern-
ment supporter in her document. It is a quasi-public organization
as we call it, a semigovernmental organization.
Just a couple of things. In the United States alone we have a
staff of well over 40. The Irish Tourist Board spent about $5 million
here, and most of that is spent on advertising, very unlike USTS.
We have five offices, and in addition to our direct advertising we
have other direct promotions both to the travel industry and to the
consumer, but primarily to the consumer.
We coordinate our efforts with the private sector in many ways;
with the provision of purchasing tours, educational visits, et cetera,
and also information as a result of our findings from the marketing
research. We issue publications to the private sector to help them
coordinate and direct their efforts in the right area, and I have two
publications I would also submit to the subcommittee, which are
publications for the benefit of the private sector of the tourism
industry.
PAGENO="0502"
498
This all adds up to the following, just three points I would like to
make which I think are very important. In relation to the U.S.
market for tourism to Ireland for every $1 the Irish tourist spent
in the United States, $20 are returned to Ireland. That is exclusive
of carrier receipts. The cost to me of getting a tourist to Ireland is
$13, and we use that figure as a way to measure our efficiency. For
every 15 Americans that visit Ireland, one new full job or job
equivalent is created within the country. Tourism is very labor
intensive and has a short leadtime in terms of job creation. It
provides a valuable tool for generating employment. Furthermore,
because of the short timelag, government expenditure is more than
recouped in terms of exchequer receipts, within 12 months of the
initial tourist expenditure.
In Ireland we believe that tourism does not just happen. It has to
be made to happen and we make it happen, and I believe in
support of the ASTA points that the United States can also benefit
from this.
Thank you, Mr. Chairman.
[Mr. McSullivan's prepared statement follows:]
PAGENO="0503"
STATEMENT OF DONAL IIcSULLIVAN, VICE PRESIDENT UNITED
STATES AND CANADA, IRISH TOURIST BOARD, ON BEHALF
OF TUE AMERICAN SOCIETY OF TRAVEL AGENTS
My name is Donal McSullivan. I am Vice President United States
and Canada of the Irish Tourist Board.
As mentioned by Mr. Gilmore, the proposed structure of the
Corporation entitled the United States Travel and Tourism
Development Corporation is similar to that of the Irish Tourist
Board. I will, therefore tell you a little about the Irish
Tourist Board.
First let me state the overall natural objective of the
Irish Tourist Board.
It is:
To optimise the economic and social benefits to Ireland
gained by the promotion and development of tourism both
to and within the country taking account of:
- the balance of payments
- the quality of life and the development
of the community
- the enhancement and preservation of the
nation's cultural heritage
- the conservation of the physical resources
of the country
- tourism's contribution to the progress of
regional development
The development task, in pursuing that objective, is to meet
future needs of tourists by providing tourism amenities,
facilities and services of the right quantity and quality in
the most appropriate locations.
The above objectives and the pursuit
clearly outlined in a document which
and development guidelines, entitled
is a four year plan which is updated
Irish Tourist Board.
I submit for the records a copy of our latest edition of the
Tourism Plan.
499
of these objectives are
embraces the marketing
"The Tourism Plan". - This
on an annual basis by the
PAGENO="0504"
500
The Irish Tourist Board is an agency of the government of Ireland,
totally funded by public funds. It is directed by a Chairman and
a Board of eight Directors, appointed by the government. These
Directors are all from the private sector and are in the main related
to the tourism industry in their full time occupations. They are
not howevet, necessarily representative of a cross section of the
industr~'. Th~-~ people determine policy and direction for the
promotion and development of tourism to and within Ireland.
Some of the areas they concern themselves with are:
1. Tourism to Ireland in terms of invisible exports.
2. Balance of payment
3. Employment content
4. Regional distribution of income
5. Multiplier or indirect income generating effect
6. Protection of Ireland's environment and cultural
heritage.
I would like to isolate some facts that will put in perspective the
value of Tourism to Ireland, some facts relating to the United States
markets as follows:
- For every promotional dollar spent by the Irish
Tourist Board in the U.S., $28 are returned to
the Irish Community in the form of tourism revenue
(exclusing carrier receipts).
- The cost of getting a tourist to Ireland from the
United States market is $13 per tourist visit and
the promotion/marketing effort addresses itself in
part to keeping this cost down.
PAGENO="0505"
501
- For every fifteen Americans that visit Ireland,
a new full time job is created.
- Tourism is the second largest industry in Ireland -
second to agriculture.
In the United States we have four offices, a staff of over 40 people
and a budget of over $4 million dollars. Besides promoting we also
help co-ordinate the promotional efforts of the private sector inter-
ested in selling Ireland for their own commercial goals. The Industry
is also co-ordinated and informed in Ireland should they wish to direct
any of their marketing promotional resources so to "piggy-back" on the
efforts of the Irish Tourist Board.
We publish and distribute a news-letter, intitled "Link" and I submit
for the record a copy of the January 1979 issue.
The Irish Tourist Board believes that tourism just does not happen,
but has to be made to happen. To enhance our efforts in Ireland in
1978 we embarked on an educational campaign, to advise the community
of the true value of tourism. Presentations were made to Government
representatives and school groups among others. The presentation in
audio visual form clearly illustrated the value of tourism. To inform
the coxt~iunity in Ireland of the value of tourism and the important
role each individual plays in ensuring tourists get a friendly welcome,
The Irish Tourist Board ran a series of ads in Ireland, emphasizing
these facts and the necessity for a warm and friendly attitude towards
visiting tourists. In Ireland tourism is a very serious business and
its value is appreciated.
PAGENO="0506"
502
Mr. FL0RI0. Mr. Horrocks.
STATEMENT OF J. N. HORROCKS
Mr. HORROCKS. Good afternoon, Mr. Chairman. You have my
statement [see p. 503].
Mr. FL0RI0. Yes. Your statement is available to the committee.
We have had the opportunity to read through it. It will be entered
into the record in its entirety. We would appreciate your proceed-
ing in a summary fashion.
Mr. HORROCKS. I would like to then speak to you, to use Mrs.
Porter's phrase, ad hoc. I, like Mr. Gilmore, was shocked by the
new revelations of the day. Whereas Mrs. Porter was I think proud
of her 22 years of Government service, I have had 30 years of
Government service. As you may know, I am a retired Navy cap-
tain. I have been with Ralph Nader now for the past 6 years. I
have seen firsthand, too, the workings of the bureaus, the Bureau
of Navy at one time and then the Department of Defense. I think
her proposal put before this committee is simply dealing from the
same deck of cards. Instead of leading with the nine of clubs, this
time she is going to lead from the jack of spades or something, but
basically it is the same old ball game.
Now being in the so-called private sector, the public interest
sector to be exact, I can't see where anything would change from
its present very ineffective state. We have become-by "we" now I
am speaking of the Nader organization-very cognizant of the
importance of the travel industry over the past 5 or 6 years, and as
a matter of fact in the past 3 years I have made it my business to
become very involved with the private sector.
I have spoken at great length with committees, both the Senate
and the House, with DATO, with Mr. William Cobb of the Mexican
Travel Bureau and other members of the travel industry, and it
becomes more and more apparent that, as Herman Kahn pointed
out, we are talking about something which in the 21st century is
going to be the No. 1 industry in this country. And how I say we
have become more aware of it is we get more and more letters of
complaint about it.
Our No. 1 complaint sector is still the automobile industry. No. 2
is food and drugs, and now coming up quickly on the horizon is the
travel industry, which is indicative of the fact that consumers are
becoming more and more involved. Consequently we feel very
strongly that this proposal of the quasi-public organization is an
excellent idea, because it enables immediate involvement of the
consumer element within the industry.
As my written testimony indicates, the Senate bill has now ex-
panded the language to include the presence of a consumer advo-
cate/ombudsman on the board of directors of this corporation. I
think, as Mr. Gilmore just said a few moments ago, that the time
has come for a very positive move toward the travel industry, of
setting it up whereby the consumer, the end beneficiary of the
whole industry, has a chance to really become represented and
given an avenue of redress, which is where I come into the act. We
as such deplore the administration position of sort of status quo,
and applaud the new proposition before this committee of the
corporation idea.
Thank you, sir.
[Mr. Horrocks' prepared statement follows:]
PAGENO="0507"
503
TESTIMONY OF T.N. "MIVE" HORROCKS, .Ir,
Director, Ralph Nader's ~`UBLIC CITIZEN VISITORS CENTER
before
HOUSE SUBCOMMITTEE ON TRANSPORTATION AND COM1'~RCE
HONORABLE JAME~ 1. FLORIO ~`-NJ), CHAIRMAN
AUGUST 1, 1979
Good morning, Mr. Chairman.
It is a pleasure to appear before your Committee again because, in view of
the apparent urgency for legislative action pertaining to the travel industry, we
of the Nader organization feel that certain salient points need re-emphasizing
and clarification:
1. We applaud the Administration's desire to tighten the budget belt, but
we disagree with the Administration's position and its rationale to eliminate the
U.S. Travel Service and its international travel marketing programs. A previous
witness referred to this technique as, "Throwing out the baby with the bathwater."
2. We support the travel industry's basic assumption that the Federal
government should take a stronger (not weaker) role in international tourism
marketing. And, consequently, reject the Office of Management & Budget's uni-
lateral thesis that, "Promoting the U.S. as a destination for foreign travelers
is a job that can be left to the private sector."
3. We are aware of the prevailing sentiment that anything which even hints
of government regulation and/or "control from Washington" is, per se, "bad,"
but the International Travel Act of 1J61 gives the Federal government a mandate
to develop and carry out a comprehensive plan to stimulate travel to the
United States by residents of other countries.
4. The recently completed National Tourism Policy Study shows that it is
clearly in the national interest to strengthen the foreign commerce of the
United States. Certainly, encouraging foreign residents to visit this country
is a significant way to achieve that goal. How significant? Well, our 1977
PAGENO="0508"
504
international tourism receipts were 7.2 billion dollars. This sustained 270000
jobs in travel-related industries. They also generated almost a billion dollars
in Federal, state and local taxes. The ironic `other side of the coin," however,
is that 7.2 billion dollars represents only 5.4 percent of the total world's
international tourism expenditures of 134 billion dollars. In other words,
Uncle Sam got only a piddling l'22th of the international tourism pie: This
indicates, to anyone who can tote up a balance sheet, that we need more, not less,
emphasis on encouraging foreign travel.
5. Those in government who develop public policy must be made aware that
tourism is not synonotnous with frivolity. The travel industry is no more frivolous
than the clothing industry or the cosmetics industry. It should be emphasized
that tourism is now our third largest industry. Last year it contributed 115
billion dollars to the~conotny of the United States and supported approximately
5 million jobs. According to estimates by Herman Kahn, by the 21st century, the
travel industry may saul be our #1 industry--outranking even the automobile and
retail grocery industries~
So much for the groundwork. If these statistics rang a familiar bell with
D'our Committee, Mr. Chairman, it indicates that you are aware of the enormous
size and gigantic potential of the travel industry.
We hope, too, that the Committee shares our opinion that so vast and complex
an industry requires Federal regulation and or supervision rather than being left
exclusively to the private sector. The Nader organization does not pretend to
possess expertise on the esoterica of a total product which includes transportation,
lodging, restaurants, retail shops, theaters, cultural events, scenic wonders and
scenic rollercoasters. We do think, however, that we have a good idea of the
volume and variety of the consumer complaints which emanate from these items!
PAGENO="0509"
505
Mr. William Toohey, in his role as the industry's spokesman, has ennunciated
his Association's belief that international tourism marketing is too important
a factor in our Nation's economy to be left only to the hotels and airlines. We
concur. We believe the concept of a non-profl2 corporation to be known as the
U.S. Travel & Tourism Development Corporation provides a logical means for the
Federal government to complement, ass.ist and support private corporate endeavors
to their mutual benefit. It also affords consumers an established, organized,
impartial avenue for redress in the event of fraud, misrepresentation or contract-
ural failure.
This Federally-chartered corporation (not, I might add, another agency) fits
appropriately within the free-enterprise system and, with its Presidentially
appointed Board of Directors, -i11 enjoy the mature supervision of senior ex-
ecutive officers of travel and tourism corporations plus industry representatives
in the fields of transportation, lodging, wholesale and retail travel sales,
employee relations, heritage resources, c'~nvention & visitors bureaus, etc.
In our opinion, it lacked only one vital element--it foiled to provide for
a member of the Board of Directors who is specifically a consumer advocate!
ombudsman and who is independent of the travel industry.
The Chairman of the Senate Subcommittee on Merchant Marine and Tourism,
Senator Daniel Inouye, agreed with our reclama and requested that I draft some
~anguage for the Senate bill that would "fit our requirements."
Subsequently, this amendment was adopted. It read as follows: "At least
one member of the Board shall be a consumer advocate/ombudsman from the non-
profit sector of the organized public interest community.
It should also be noted that under the section of the Senate bill delin-
iating the purposes and activities of the Corporation, it reads: Developing
PAGENO="0510"
506
and administering a comprehensive program relating to consumer information,
protection and education..
The National Tourism Policy Act (S. 1097) was passed by unanimous vote in
the Senate on May 14, 1979. The legislation establishes a national tourism
policy; a cabinet-level coordinating council to harmonize the Federal involve-
ment in tourism; and a quasi-public,non-profit C.rporation as an implementing
agency to carry out the national tourism policy.
This legislation is the culmination of more than 5 years study and has the
unanimous, enthusiastic support of the private sector of the tourism industry,
the Governors, organized labor and the Ralph Nader organization. Senator Inouye
humorously remarked that it must be a good bill because it might be the first
time in history that such a diverse group of interests were in such complete
mgreement.
We urge upon your Cormittee, Mr. Chairman, your favorable consideration of
similar legislation and, in particular, in the course of your deliberations,
those sections dealing with consumer advocacy. Thank you.
Mr. FLORTO. Thank you very much, gentlemen.
Just a few questions, perhaps to Mr. Horrocks first. I am sur-
prised in some respects about your unreserved enthusiasm for the
establishment of a nonprofit corporation that may have a lot of
virtues, and hopefully will, should it be enacted into law. I am just
wondering if you are in any way concerned about the fact of the
potential of this less responsive nonprofit corporation becoming
captive of the industry, and somehow, in some way, not being as
responsive as it could be to the public interest, or do you see the
presence of this one consumer representative being sufficient pro-
tection against the potential perversion of the corporation to the
special interests, if I can use that term?
Mr. HORROCKS. Yes, I understand your statement, Mr. Chairman.
We feel that at least this way we have got a foot in the door. As it
is now, we do not even know where the door is.
Mr. FL0RI0. Who is "we"?
Mr. HORROCKS. The public interest community. At present if
someone feels he has been ripped off, he really has no source of
appeal. Where does he go, to the U.S. Travel Service? As far as I
know, they don't even have an office of consumer affairs there. He
can appeal to the good nature, the good business sense, the good
judgment of the industry itself, but still there is no binding rule or
legislation that a person must be given a fair shake.
If I could give you an example of this, we have engaged in a long
series of correspondence with an attorney in these United States
PAGENO="0511"
507
who was guaranteed a room accommodation in one of the Hyatt
hotels, I guess the Hyatt Acapulco. Upon arriving there he found
out there was no room at the inn, and of course he was exceedingly
upset, because he had planned his vacation around this, and he
finally just returned to his home, and began writing a series of
letters. This is an attorney now, mind you, a man skilled in litiga-
tive techniques.
He found out very quickly that if Hyatt wouldn't give him a fair
answer to what he considered a logical complaint, he had nowhere
to go. We think that with the formation of a corporation here,
there will be not only the member of the board involved in sort of
protecting the consumer interest, but within the corporation itself
a consumer section, which would deal with common complaints of
this nature.
I might say Atlantic City is getting its fair share of letters now
from us, not all of them of course logical. Congressman Santini,
you must have a good technique out there in Las Vegas. We get
very few letters from Las Vegas, so I think New Jersey had better
learn your technique, but the latest one we had from Atlantic City
was an attorney who wrote us, calling a blackjack table an "attrac-
tive nuisance," because his client was walking to take a seat, and
at the moment she was trying to get into this seat a man in a
wheelchair came roaring up and ran into her ankle, and she was a
diabetic, and it caused complications. She has now incurred some-
thing like $1,800 worth of medical expenses. The question is, Who
is responsible for her injury, the International Resorts where it
occurred, the man in the wheelchair, the people who blocked her
view off from the table, the dealer, who? This is what I talk about,
that there is no recognized avenue of address now.
Mr. FL0RI0. The answer, of course, for an enterprising attorney
is all of the above.
Mr. HORROCKS. Right, or, B, none of the above.
Mr. FL0RI0. Mr. McSullivan, you have described your entity as a
semigovernmental entity. Can you just give us a little bit of elabo-
ration You are fully funded by the Government, governmental
employees?
Mr. MCSULLIVAN. The Minister for Tourism in the country ap-
points a chairman and a board of directors to direct the Irish
Tourist Board. They in turn appoint a chief executive and he
appoints his management and staff, and the chief executive is
appointed by the chairman, and then all other appointments are
made by the chief executive, so all other appointments are non-
governmental, non-civil service, and it is a non-civil-service organi-
zation. One of the main reasons for structuring the Irish Tourist
Board in this manner was to provide flexibility and responsiveness
unfettered by civil service bureaucracy, to let it operate almost, I
use the word "almost," a commercial organization that has goals
and can measure its performance and its results.
The directorate people are all from the private sector. By and
large they are involved in tourism in one way or the other.
Mr. FL0RI0. The directorate would be sort of a board of directors?
Mr. MCSULLIVAN. Board of directors, right, so they know what is
going on in the private sector, and they know where the emphasis
should be. In other words, should the emphasis be in developing
PAGENO="0512"
508
tourism in the off season, the season, or whatever, and they direct
by definition the overall effort of the organization.
Mr. FL0RI0. Would you be in a position to submit to the commit-
tee an organizational chart or the statutory language creating this
body? We would appreciate having an opportunity to take a look.
Mr. MCSULLIVAN. I would be very happy to, Mr. Chairman.
[The organizational chart referred to follows:]
PAGENO="0513"
)RGANISATIONSTRUCrURE
)ECEMBER 1977
.1 ~.is
TAi%YIFX~w
- -AIUS~TMlT
3roup Managers ~
=~, =:
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)epartments
~Q- A~
TN~OST
~FINCE NP~USII~
& N~WTPVE
~
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LA~um&
- IVALUATION VNfl~ TRAO
- ACUVITI($ SNNVICU
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PE~SON~IIL
MANAO~fi.
D RsiMw~
=~` ~i4r~_
N SNS~D ~I, -
NARNIT$ ~ - -`
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HOME M~I~T
N- -
D.~,.m T~INNdpC. NM~
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S,,ft
0
PAGENO="0514"
510
Mr. FL0RI0. I have no further questions. Mr. Santini.
Mr. SANTINI. Thank you, Mr. Chairman.
I have been impressed by the comments of each of the individual
members of this panel. Perhaps in the wake of your predecessor,
any testimony would seem innovative and positive, but I was indi-
vidually impressed, Mr. McSullivan, with the statistics that you
have quickly shared with us on the economies of investment, of tax
dollars for the purpose of tourist stimulation. I would appreciate a
repetition of those.
If I understand you correctly, for every-what would be the
equivalent of our dollar-for every $1 invested you have $28 re-
turned; is that correct?
Mr. MCSULLIVAN. For every $1 invested in the U.S. market,
$28--
Mr. SANTINI. That is just the United States?
Mr. MCSULLIVAN. Just the United States.
Mr. SANTINI. And how many people, do you have another statis-
tic?
Mr. MCSULLIVAN. The three statistics for return on investment
there, what the cost of doing business is, which is $13 per person,
and the last one was for every 15 Americans that visit Ireland, one
new permanent year-round job is created.
Mr. SANTINI. For how many people?
Mr. MCSULLIVAN. Fifteen Americans.
Another point. When a tourist goes to Ireland, they spend, for
instance, $300 or $400, the average American spends about $400 in
Ireland, that money turns over in the economy.
Mr. SANTINI. Is the multiple four?
Mr. MCSULLIVAN. It is about four. It is very hard to get agree-
ment on that. It is about four.
Mr. SANTINI. What is the basis of financing the Irish Tourist
Board?
Mr. MCSULLIVAN. We have to make a case. Initially when it was
first set up, it was set up on the recommendations of some study
that was done saying you should start at this level, and after that
it found its own level, and we have to make our case every year.
Right now, which is August, we are making our submissions for
budget funding for calendar year and fiscal year which are the
same for us for 1980, commencing January 1, 1980, and we have to
make a case to the Government, saying that we expect inflation to
be so much, and we would like to get the additional number of
dollars to contract inflation on the one hand and contract the
increased cost of doing business in the markets where in fact the
money comes from, where the return is from. We have to make a
very sound case and it has to stand up to arguments from econo-
mists and the critical eye of Government.
Mr. SANTINI. So 100 percent of your operating budget is Govern-
ment origin?
Mr. MCSULLIVAN. One hundred percent of the promotional
budget. There is a small area, I don't really want to take the time
of the subcommittee, but there is a small area in regional parts of
Ireland where the local merchants, who benefit directly from tour-
ism, would contribute some money back to help attract tourism to
a particular area.
PAGENO="0515"
511
Mr. FL0RI0. If the gentleman will yield.
You heard one of the previous witnesses, Mrs. Porter, state that
the justification in foreign countries for doing things the way they
do was making governmental expenditures out of a government
entity, is because the private sector is not as well developed. In
fact, she made reference to national airlines and so on. What is the
situation in your country? Is there a national airlines?
Mr. MCSULLIVAN. There is a national airline but it stands abso-
lutely on its own two feet. I think you cannot take that into
account. What she said was that the private sector was strong
enough in the United States and not strong enough elsewhere.
Well, the answer to that, of the private sector, is how strong is
strong? The private sector is also quite strong in Ireland, but we
make it much, much stronger. It is the multiple effect of the
tourism dollar coming back that gets into the community, and by
injecting cash in we get many, many multiples of that back in,
whereas you could not rely on the private sector to increase it or
stimulate it above and beyond what we are talking about.
The private sector will not advertise or promote in the off season,
because the return is not justified. That is an area where the Irish
Tourist Board or a government agency would have to advertise,
and there are many, many reasons why you cannot rely on the
private sector alone because the private sector acts by definition
for its own selfish goals in the final analysis.
Mr. SANTINI. I concur, Mr. Gilmore, with your well-summarized
sentiments about the alternate proposal that was offered to us by
the Assistant Secretary. I hope that you will use your considerable
insight and past experience to assist this committee in trying to
address some of the potential apparent limitations of the structure
as proposed in S. 1097. I think we can improve on the mechanism. I
think given your past experience, we could benefit by suggestions
that you might offer on the organizational front and on the financ-
ing.
I very much hope that part of the response of the private sector
to these hearings today is going to be some aggressive brainstorm-
ing efforts to try and devise a financial support system from that
private sector.
The chairman is going to carry a considerable burden in going to
the House floor with the proposal of a new quasi-governmental
entity, and the expenditure of $9 million. Knowing his abilities
with Amtrak, and if he can keep the trains rolling he can accom-
plish anything, but I do worry about the vulnerability on the
Government spending front, because they simply will not accept at
face value the case that is so well made by previous witnesses and
that you expressed with regard to the Irish experience, the return
on dollars. Once that is rejected out of hand, then you have just a
naked expense and it is going to come out of the General Treasury.
If the private sector was willing to come back with some kind of
demonstration that we will participate, perhaps it has to be joint,
perhaps Government funding at the outset has to be 100 percent
and then 75, then 50 and whatever, we could work a mechanism
that would tell our fellow members of the House of Representatives
that the private sector believes so strongly in this that if the
Government will simply help them get this thing supported and
PAGENO="0516"
512
underway and working, that they will ultimately assume a respon-
sibility in financing it, it would certainly make our legislative
persuasive load that much lighter.
Mr. FL0RI0. If the gentleman will yield.
Just to reinforce the point, this member and I suspect others
have some difficulty even philosophically, invoking as you did, the
principles of free enterprise at the same time one is asking for a
permanent governmental subsidy to operate this corporation,
which is going to assist in the private sector.
I don't have any difficulties in terms of more limited involve-
ment or joint involvement or up-front demonstration money to get
something started, but to effectively say that this is going to be a
permanent governmental function removed from full public ac-
countability and we are going to do it in the name of free enter-
prise, that I have a little bit of difficulty with.
Mr. SANTINI. I would appreciate any thoughts or sentiments you
might have in response to that.
Mr. GILMORE. Thank you very much. Today I am saying thank
goodness for Congress, because I have sensed very sound and per-
ceptive points of view in questions from your committee, as against
what we heard from the administration.
I do not believe that we have got a black or white case here,
where just this is the only way. Heaven knows it is not, and I think
that this testing, this probing that is going on by you, is terribly
important, and I think you have challenged private enterprise and
you have certainly challenged the American Society of Travel
Agents to be specific, to work with you, and I am grateful for the
letter that you followed up with to 0MB, so that these things can
really be brought to the table, and the best judgment of a lot of
sound witnesses that you have had bring the private enterprise
people in to say to you, yes, we will do certain things that will put
our money where our talk is.
I have some personal philosophy about this, perhaps for a small-
er group, when we can really put together what you think is
salable on the floor of the House, and that would be acceptable as
part of a Senate package, and I really believe that private enter-
prise, having said to you sequentially here that question, the
hotels, the airlines and the others putting millions of dollars on the
line believe enough in this that they can be brought tQ some kind
of a bargaining position to let Congress see, to let the American
public through you see, that there would be a cooperative effort
here, that perhaps along something of the pattern of the Irish
board, but with cooperative funding as well as personnel would
bring us to a solution, because industry really wants this thing to
happen, and it is really ready to work hard to see it happen,
because collectively we can lick the world on this travel business,
and we just see it out there enough to the point that we can get
some money on the line.
Mr. SANTINI. I hope you succeed, and that your enthusiasm is
transmitted, and that it translates into specific proposals to this
committee for possible avenues of financial assistance from the
private sector, financial assistance, because two or three ideas have
already been thrown out that might have feasibility and that you
might want to run with.
PAGENO="0517"
513
I think there are a lot of them, and there are no more it seems to
me imaginative, aggressive minds in American industry today than
those involved in promotion and advancement of tourism causes by
the nature of that industry. If you do not have a little imagination
and aggressiveness you are buried ultimately in terms of the suc-
cess of your competitors. I think the talent and experience is there,
and that we just need to benefit and to share some of that with
you.
Mr. GILMORE. I am glad you said that, because America just
looks pretty sick around the world these days. I have just finished
going halfway around it, and our posture is pretty sad. Yet we
know here that we have got in this very industry the imagination,
the creative ability, to market a product like nobody else in the
world. Our airlines are out there, our know-how is out there, and
we can follow it through with something that will just open up the
world for U.S. travel to the United States. I think you are putting
the challenge just right, and I believe free enterprise in hand with
Government, in a cooperative way, can step up to this one. I think
it is a good challenge, and I certainly, for the voice in the industry
that I have, will take your challenge.
Mr. SANTINI. Mr. Gilmore, I hope you have a lot of supporters in
your enthusiastic effort. Thank you for your testimony.
Mr. FL0RI0. Thank you very much.
The committee stands adjourned, subject to the call of the Chair.
[Whereupon, at 1 p.m., the subcommittee adjourned, subject to
the call of the Chair.]
PAGENO="0518"
PAGENO="0519"
NATIONAL TOURISM POLICY
WEDNESDAY, AUGUST 15, 1979
UNITED STATES HOUSE OF REPRESENTATIVES,
SUBCOMMITTEE ON TRANSPORTATION AND COMMERCE,
COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,
Atlantic City, NJ
The subcommittee met, pursuant to notice, at 10 a.m. at the
Resorts International, Atlantic City, N.J., Hon. James J. Florio,
chairman, presiding.
Mr. FL0RI0. The subcommittee will come to order. I would like to
convene this, the third session of our hearings on tourism, the
hearings being conducted by the Subcommittee on Transportation
and Commerce.
I would like to welcome the members of the New Jersey Tourism
Advisory Council who I understand are in the audience as well as
representatives from other organizations that we have with us.
I believe it is obvious to say that we all here recognize the
economic and social benefits of a vigorous tourism industry for our
State of New Jersey as well as for the country. Many regions of the
country depend entirely upon tourism for their livelihood. When
considered as a single retail industry, it is the third largest in
terms of sales and accounts for millions of service-related jobs.
Additionally international travel provides important assistance in
reducing our balance-of-payment deficit.
Tourism has traditionally been a vital segment of the economy of
New Jersey and it is appropriate therefore to be holding these
hearings in New Jersey and particularly appropriate to be holding
the hearings in Atlantic City, an internationally recognized tour-
ism center.
With regard to its present revitalization, tourism has and is
going to continue to play a very important role in the economic
well-being of Atlantic City.
One of the most significant markets for tourism, nationally and
regionally, is the promotion of foreign travel to the United States.
The past record of the executive branch of Government regardless
of the administration has not been good in terms of recognizing the
importance of tourism for the economic health of this Nation.
As you may know the Congress is presently undertaking a com-
prehensive review of Federal tourism activities. This committee
must consider and decide what the specific goals of a national
tourism policy should be and more importantly what role if any
the Federal Government should play in the promotion and coordi-
nation of tourism activities, domestic and foreign.
I am hopeful that the deliberations of this subcommittee will
bring a new sense of enthusiasm and a new sense of importance as
(515)
PAGENO="0520"
516
10 vhat the role of tourism should be in building a healthier
econom\ in this Notion.
We are here in the congressional district of my colleague, Wil-
liam J. Hughes who plays a ver important role in the Congress in
general and plays a very important role with regard to tourism in
particular because of the impact tourism has upon the well-being of
his own constituents. I am pleased to be here and I am very
thankful to Congressman Hughes for the role he has played in the
past and of course the role he is going to play in participating in
these hearings and accordingly I would like to introduce and ask
Bill if he would like to say a few words.
Mi. HUGHES. Thank you, Mr. Chairman. I apologize for being a
little late but it was IU o'clock and they opened up the floodgates
so people could go into the casino. I was caught in that crowd.
Mr. Chairman. first I want to thank you for this opportunity to
join with you and your distinguished subcommittee in this effort to
lay a foundation for a new national policy on tourism. I wish to
congratulate the subcommittee for their interest in this important
subject which has too often been neglected by, I think, past admin-
~strations and Coni~resses.
With each passing year the role of tourism in our country has
taken on increasing importance. Once thought to be a luxury re-
served exclusively for the wealthy. vacationing and travel are now
pleasures available to a substantial majority of people. Increased
leisure time and personal income over the past few decades has
resulted in a tremendous growth in tourism and not just in our
country but throughout the world.
In New Jersey alone over IOft000 jobs are directly attributable to
travel and tourism and many hundreds of thousands of jobs indi-
rectly result from tourism as well as nearl .~3 billion in travel
cenerated revenues. Nationwide tourism and travel are among the
top three industries in all .~O States and account for approximately
7 percent of our country's total gross national product.
From these simple f~acts alone it is abundantly clear that tourism
in our country is no longer if it ever was a minor industry, rather
it is one of the mainstays of our country's economic strength and
employment as well as an important source of recreation and
enjoyment for our citizens.
To the extent that Federal policies can foster and encourage the
growth of tourism, it is clear that the national interest will be
served. Internationally, with proper planning and effort, it is like-
`vise clear that an increase in foreign visitors to our country will
have a beneficial effect on our economy. foreign exchange and
international goodwill.
I look forward, Mr. Chairman, to hearing the suggestions from
our many fine witnesses today so that we in Congress will be in a
better position to develop the types of policies and coordination
that is needed at the Federal level to foster the tourist industry.
I note among our witnesses today we have a number of public
officials and representatives of private business in the south Jersey
area, a region which is famous for its many fine attractions and
n~tura~ r@soure~s.
Mr. Chairman. I look forward to hearing from even a broader
spectrum of' witnesses that will bear upon tourism. I know a lot of
PAGENO="0521"
517
witnesses would like to have been heard that will not he able to be
heard from today and I am sure they will he permated to submit
statements and we can hear from them also.
Because of their long involvement with the affairs of a tourist
dependent area. I know these representatives will have some very
worthwhile suggestions. I also look forward to hearing from the
many other fine areas of our country outside of south Jersey which
has substantial amounts of tourism.
Mr. Chairman, we are pleased to have you in Atlantic City and I
look forward to many more sessions like this so we can build the
kind of tourist oriented program that I think is needed for our
country.
Thank you.
Mr. FL0RI0. Thank you very much.
Just by way of a housekeeping detail, the limitations on time
precludes having a more extensive list of witnesses. I would suggest
if there are individuals or organizations particularly in the local
area that have an interest in submitting statements for the record,
they can feel free to do so either through the committee staff or
perhaps through the Congressman's office. I think it would be
appropriate that those comments and remarks and statements be
submitted to us for inclusion in the record.
Our first witness we are very pleased to have before the commit-
tee, the chief executive of the city of Atlantic City who has obvious-
ly a great investment in terms of the city's well being in having a
national tourism policy that is conducive to the development of the
city's resources.
It is my pleasure to now introduce the mayor of Atlantic City,
the Honorable Joseph Lazarow. Mayor, we welcome you to the
coin mit tee.
STATEMENT OF HON. JOSEPh LAZAROW. MAYOR. ATLANTIC
UITY. N.J.
Mr. LAZAROW. Good morning, Congressman Florio and Congress-
man Hughes and members of the committee. I would like to thank
you very much for coming to Atlantic City and for inviting me and
giving me the opportunity to speak in favor of a nationally coordi-
nated tourism policy as embodied in Senate bill 1097.
At present Atlantic City is in the midst of the most dynamic
tourism experiment in America. The passage of casino gambling
has engendered this economic turnaround. Atlantic City has long
realized that casino gambling must be incorporated into a total
tourism industry which also promotes our area's outstanding natu-
ral attractions such as ocean and beaches while promoting the
convention industry and attracting family visitors and those tour-
ists interested in the many historical and cultural attractions our
area has to offer.
At present Atlantic City is already in the process of creating a
regional tourism promotional enterprise with representatives of
Philadelphia. This is a combined effort which would utilize the
financial, cultural, and tourist attractions of' the Philadelphia and
Atlantic City areas to encourage worldwide tourism in this direc-
tion.
PAGENO="0522"
518
I think it is a natural extension of such an undertaking that the
Federal Government of the United States also participate in this
enterprise just as the Federal Government participates in commu-
nity efforts in housing, environmental protection, employment, and
countless other social programs.
Tourism is New Jersey's second largest industry. Tourism is
Atlantic City's primary industry. As such it is vital to our exist-
ence.
A national policy instituted and active]y promulgated by the
Federal Government can be a major impetus toward vaulting U.S.
tourism into the forefront of world consciousness.
Specifically I support a statement of a national tourism purpose
and policy; the creation of a cabinet level national tourism policy
council and the establishment of a nonprofit tourism corporation.
All of these elements are spelled out at length in Senate bill
1097. In addition I would further add that I am in full concurrence
with the remarks and testimony delivered by William D. Toohey,
president of Discover America Travel Organization, Inc. before this
subcommittee on July 25, 1979.
Let me say that no city and no State and no private enterprise
can single handedly undertake the worldwide promotions which
the Federal Government is capable of instituting. Implementation
of individual local and State efforts could benefit greatly by coordi-
nation at the Federal level. In addition there are specific problems
which arise with regard to international travel and tourism which
could be more readily resolved if there existed informed individuals
at the national level to which tourist groups had ready access.
Such problems range all the way from passports and visas to the
distribution of gasoline and the closing of service stations on week-
ends.
A national tourism council could also promote and enhance the
already established ties which bind foreign cities with American
cities as embodied in the sister cities program. This is a productive
and beneficial people to people program which ought to be given
additional support in the future.
I believe that matching funds and grants for promotional activi-
ties which make use of local, State, and Federal funds is another
area which offers avenues of rich dividends in the worldwide pro-
motional market. I think the Federal Government could do a geat
deal to encourage regional cooperation whereas in fact many pro-
motion efforts today even within the same State are fragmented
and tentative.
As mayor of a tourist city, I believe that international tourism
properly organized and promoted by the United States could help
local areas and the overall Nation during a period of economic and
social crisis. People from other countries could and should be en-
couraged to visit America especially at a time when their own
currency buys more in the United States than ever before.
The tourist industry ought to take advantage of this situation.
Local areas may not be able to do so. If such areas could form a
pavthe?~h1p with th~ F~d~al Government 1 believe that they couTid
reap substantial benefits from such a worldwide tourist promotion-
al campaign.
PAGENO="0523"
519
In short, Atlantic City is preparing to meet the challenge of
worldwide tourism. We are beginning to put together an attractive
tourist and convention package which would highlight the historic
and cultural attributes of Philadelphia along with the outdoor
recreation and excitement of casino gambling as offered by Atlan-
tic City. We are looking to provide a total entertainment package
covering an area of some 75 miles around Atlantic City which a
visitor could cover in a typical 7-day vacation.
Such an imaginative and innovative approach to tourism de-
mands that we have the active cooperation and understanding of
many Federal agencies, including the Federal Aviation Administra-
tion, the Department of Transportation, the Department of Energy,
the Army Engineers, the Environmental Protection Agency, and a
whole host of other agencies.
Only a national tourism policy with a cabinet level coordinating
council and a nonprofit corporation as an implementing force can
help turn Atlantic City and all of South Jersey into the economi-
cally viable and stable area it once was.
To provide jobs for our unemployed and to provide housing, to
preserve and enhance our natural environment and to restore an
entire region to economic health, I strongly urge the adoption of
Senate bill 1097.
Atlantic City is actively engaged in a massive program of self-
help in the area of tourism. We have turned the initial corner in
our battle to create a self-sustaining dynamic economy. If we are to
fulfill the limits of our potential, we will need the active assistance
and unifying strength of the Federal Government to push our
programs worldwide.
In short, the logical extension of a regional approach to tourism
is to welcome the Federal Government as an active partner in
promoting the enormous attractions which we as a nation have to
offer to people all over the world.
By doing so we promote and publicize not only a specific local
area but the American way of life itself. We have our national
parks, our scenic wonders, and our exciting attractions but in the
competition between ideologies, Ameriéa~ and Americans them-
selves are our most important product.
I think we should show Americans off to the world. We have an
outstanding product and this would help us go out and sell that
product to the world.
Thank you.
Mr. FL0RT0. Mayor, thank you very much.
Congressman Hughes?
Mr. HUGHES. Thank you, Mr. Chairman. Thank you, Mayor, for a
very fine incisive presentation.
I was wondering as you were testifying whether Atlantic City
endeavors in any way to try to identify the number of foreign
visitors to your resort.
Mr. LAZAROW. I can only say that a very large percentage of our
visitors come from Canada. That has unfortunately fallen off a
little this summer because of the gasoline shortage. There is not a
large percentage from other countries.
I will say I had the opportunity to be in France in May and the
U.S. Travel Service with an office there was very helpful. They
PAGENO="0524"
520
came to interview me several times. They took pictures of the
casinos and so forth and then sent me publications which came out
subsequently promoting the new Atlantic City.
I know the Acting Secretary for Tourism, Jean Westphal, is here
and I want to thank her and her organization for the job they have
been doing.
Mr. HUGHES. Has Atlantic City ever promoted tourism in foreign
countries aside from Canada where I know some advertising and
promotion is done?
Mr. LAZAROW. No. not much effort.
Mr. HUGHES. Do you envision that would be a whole new market
which could be tapped by cities like Atlantic City in trying to
attract foreign visitors to our country. If in fact we had a national
policy that provided grants or otherwise gave incentives for cities
like Atlantic City to promote tourism in sister cities in other parts
of the world?
Mr. LAZAROW. Congressman, as you know it used to be there
would be buses of Atlantic City people going up to Broadway and
New York to enjoy the afternoon. Now the trend is reversed. They
take buses of people from New York to come to see Atlantic City
shows.
Likewise we have been tourists in Europe and have seen all the
crowds there and would like to see that picture reversed and we
would like to see the people of Europe come here. The effort has
only been a drop in the bucket. We could get millions of visitors for
this country if it were actively promoted.
Mr. HUGHES. It seems to me with people becoming much more
affluent around the world and more travel oriented that does rep-
resent a whole new market that we could tap with proper promo-
tion.
Do you agree?
Mr. LAZAROW. I agree it is a tremendous market and I think it
would even help the peace in the world to establish better relations
and let the people see just what Americans are like.
Mr. HUGHES. It might even help our balance of payments a little.
Mr. LAZAROW. Yes.
Mr. HUGHES. Thank you. Mr. Mayor. We appreciate it.
Mr. FLoRTo. Mr. Mayor, if I could ask two questions. One is with
regard to the initiative you have undertaken with Philadelphia to
have a regional joint venture so to speak.
What form is this taking in terms of a mechanism for working
Out the cooperation between these two municipalities? Is there a
structure? Is there an office? Who is it that is coordinating this
act ivit v
Mr. LAZAROW. Some very well-known Philadelphians. Thatcher
Longstreth is one. There is a committee which is also including the
State of Delaware in this program. We met last week. There is a
very strong Board which is actively promoted out of the mayor's
office. They have raised funds of ~1 million a year for the next 3
years and they are seeking private industry in this area as well as
the city to combine with them in the joint promotional effort.
Mr. FL0RT0. We are talking about a nongovernmental committee
which has been established between the three entities? You say the
State of Delaware. Philadelphia and Atlantic City.
PAGENO="0525"
521
Mr. LAZAROW. Yes. Its roots were out of' the mavor~s office in
Philadelphia, Mr. Lasola from that office is very active. It is gov-
ernment promulgated and promoted but it is actually an organiza-
tion of private people.
Mr. FL0RI0. The financing is not public money, it is private
money? You said $1 million. Where is that coming from?
Mr. LAZAROW. That has been raised by the various industries in
the Philadelphia area.
Mr. FL0RI0. Industries I assume which are related to tourism
such as hotels?
Mr. LAZAROW. Yes.
Mr. FL0RI0. The last point I would like to raise is Atlantic City
has a convention bureau. Is that a totally private operation or is
there any citywide input in terms of financing or in terms of
membership and participation?
Mr. LAZAROW. It is financed in itself. The city does not provide
any funds for that organization. It has been doing a terrific job
particularly recently under Mr. Calper's direction. They very re-
cently have instituted an information by phone service and make
many reservations for hotels and that is the source of their income.
They promote conventions and set up the conventions.
It is not connected with the city. We are seeking to coordinate
with them for the future and they are part of this promotion with
Philadelphia.
I think eventually the city and the private interests will have to
raise money together and go into a much larger promotion cam-
paign. The convention bureau would certainly be a very strong
part of that.
Mr. FL0RI0. Mr. Mayor, we thank you very much for your assist-
ance and certainly your hospitality in welcoming us here to Atlan-
tic City and we look forward to working with you.
Mr. LAZAROW. Thank you very much.
Mr. FL0RI0. Our next witness is Mr. Stephen Richer, the acting
director of the New Jersey State Division of Travel and Tourism.
Mr. Richer?
STATEMENT OF STEPHEN RICHER. ACTING DIRECTOR. NEW
JERSEY STATE DIVISION OF TRAVEL. AN!) TOURISM, REPRE-
SENTING lION. JOHN J. HORN, COMMISSIONER OF LABOR
AND INDUSTRY, STATE OF NEW JERSEY
Mr. RICHER. Good morning, Mr. Chairman and Congressman. I
am pleased to be here this morning to present the statement of
Commissioner John J. Horn of the New Jersey's Department of
Labor and Industry.
I will now proceed to read the statement into the record.
I am John J. Horn, New Jersey Commissioner of the Department of Labor and
Industry.
Tourism has become a vital element in the United States economy. Practically
every State, 46 out of 50, in this country can count tourism as one of their top three
industries. Here in New Jersey that situation is particularly true. The revenue
produced from tourism and its rippling effects throughout New Jersey make tour-
ism at least the second largest industry in the State.
Important as this may be it does not tell the entire story for tourism has become
the leading growth industry in our state. With national interest focused on the
Meadowlands, the Pinelands, Liberty State Park and the rejuvenation of Atlantic
City. New Jersey has become a new destination for all travelers and tourists. Of
PAGENO="0526"
522
particular importance is the attraction our coastal area holds for international
travelers around the globe.
An entire market of international travelers, neglected for so long by this country,
can provide a tremendous boost in improving our nation's economy and reducing its
balance of payments deficit. if proper action is taken. That is why I am pleased to
have the opportunity to tell you that in the future our economy can draw even
greater support from tourism, support which ca~i start right here in New Jersey.
As you well know. tourism presently provides many benefits to the economy.
Nationally. as the third largest single retail industry in terms of sales, tourism
produces over ~115 billion annually in consumer expenditures. These revenues
provide jobs for more than 5 million people. many of whom are low skilled with few
job alternatives. The taxes generated from these revenues provide key sources of
funds for States and cities throughout the country.
For example. New Jersey receives 8 percent of State taxes from tourism and
travel. During 1976 we ranked tenth in the Nation in terms of travel generated
employment, employing over 100.000 people in a wide variety of areas. In that same
year in-State expenditures by travelers in New Jersey reached $3.1 billion, a figure
which grows when the multiplier effect is realized.
It is apparent that the industry is already a strong one. With the recent success of
several casinos and the expected arrival of additional gaming and resort facilities
the potential is unlimited. The key to this potential will be those untapped markets
particularly the international ones which have not been promoted in New Jersey
before.
I believe that promotion of foreign travel to the United States is essential and
must be provided in some form whether through the United States Travel Service
foreign offices or the newly proposed corporation.
Since I am not completely familiar with the operation of the corporation I cannot
comment as to its future effectiveness. I will state my belief that a vehicle for
promoting international travel to the United States is necessary.
It is with some worry that I read of the administrations intention to allocate no
funds for the USTS. in effect recommending that the promotion of travel by foreign
residents to this country be eliminated. This would mean closing foreign offices in
six countries and marketing efforts in nine other countries which USTS has estab-
lished.
Your subcommittee's statement that nearly $10 of foreign exchange for each
Federal dollar expended by LTSTS and an increase in foreign tourism receipts from
$6 billion in 1977 to $7.3 billion last year show that international travel to the
United States is improving.
Testimony by foreign nationals directing travel business in Paris and Mexico City
strengthens my belief in the need for promotion of international travel to the
United States. They state if the USTS offices in foreign countries close, tour opera-
tors who promote travel to the United States in close collaboration with the USTS
will within a few months channel their efforts to other destinations under the
pressure. encouragement and financing of other national tourist offices which will
remain. These thoughts are underscored by the fact that if USTS is eliminated the
United States will become the only industrialized nation without a national tourist
office in foreign countries.
Perhaps the USTS has not satisfied everyone in the tourism industry but have
they really received the support. direction and requests from the proper sources
which would enable them to do so? At this point I must agree with your subcommit-
tees contention that it would be a waste of valuable resources to eliminate the
USTS before the Congress has been able to review and consider our national
tourism policy and decide what the appropriate Federal role should be.
Although important. promotion of international travel to the United States is but
one part of the tourism industry. As Commissioner, I am aware of the need for a
national tourism policy which will provide direction for the effective promotion of
the tourism industry. I strongly endorse the effort to establish such a policy which
will improve the tourism industry's contribution to the economy, full employment
and the Nation's international balance of payments. Other factors which will bene-
fit are accessibility of tourism resources to our citizens, improved entry of travelers
visiting the United States and preservation of historical and cultural sites. The list
of potential benefits is endless. A national tourism policy is long overdue.
Once a national policy is adopted. it will be necessary to utilize a body which can
carry out the objectives established. It is my understanding that the proposed
National Tour~m Policy Council will be charged with monitoring Federal agencies'
compliance with national tourism and recreation policy and coordination of the
policy's interpretation with other national interests. With over 100 programs admin-
PAGENO="0527"
523
istered by 50 agencies involved in tourism related activities the need for coordina-
tion of programs and resolution of conflicts is obvious. I strongly support the
creation of such a council and look forward to the benefits it will provide.
In short, national tourism has a greater potential as a major factor in our
Nation's economy in the coming decades, especially at this time with the devalu-
ation of the dollar but several steps must be taken. A national tourism policy must
be developed and implemented. The creation of a national tourism policy council is
needed to provide implementation of this policy.
Finally, some mechanism must be maintained to insure adequate promotion of
international travel to the United States whether through the proposed new corpo-
ration or funding of the USTS foreign offices. The international traveler is an
integral part of the future of America's tourism industry.
We in New Jersey understand this contention and sincerely hope others will as
well.
Thank you very much.
Mr. FL0RI0. Thank you. Congressman Hughes?
Mr. HUGHES. Thank you, Mr. Chairman.
Mr. Richer, what is the budget for promotion of tourism at the
State level?
Mr. RICHER. The current budget for fiscal year 1980 in New
Jersey is approximately $1.35 million of which there is approxi-
mately $600,000 allocated for advertising. There are other costs
involved in printing and the staffing proportion of that operation is
approximately half a million dollars.
Mr. HUGHES. How does that compare with the last fiscal year?
Mr. RICHER. The budget is slightly less then the amount to be
expended in total as opposed to last fiscal year when some was
returned to the State treasury.
Mr. HUGHES. Is any of that $600,000 used to promote travel
abroad-that is for the international traveler?
Mr. RICHER. We have taken advertising in Canadian newspapers
in the past fiscal years and are presently analyzing wholesale
publications in European and Japanese markets to try to familiar-
ize the wholesalers abroad as to the travel opportunities here in
New Jersey and particularly in conjunction with other major at-
tractions on the East Coast, specifically New York, Philadelphia,
and Washington, D.C.
Mr. HUGHES. The State does recognize perhaps the wisdom of
investing some promotion moneys in some European markets.
Mr. RICHER. We think the potential for European, Japanese, and
Latin American travel to New Jersey with Atlantic City as a very
strong catalyst is outstanding. We are looking very hard into the
opportunities for using the international market as a way to at-
tract more expenditures in New Jersey and to help our national
balance of trade deficit.
Mr. HUGHES. Will that be the first time New Jersey has actually
invested any promotional money abroad in Europe or other mar-
kets?
Mr. RICHER. I believe that would be the first time. We have a
very unique situation here in the State of New Jersey. Unlike the
past 200 years of the United States history when New Jersey was
the corridor between the two great cities of New York and Phila-
delphia, we now have what is truly recognized to be an internation-
al destination city in Atlantic City. That opportunity is one that we
hope can be easily translated into a travel opportunity for all of
the destinations in the State of New Jersey as we draw people to
PAGENO="0528"
524
the magnet of Atlantic City and then encourage them to visit other
sites within our State.
Mr. HUGHES. Is it your expectation that any promotion abroad
would be out of the ~1.:~5 million or so which has been allotted for
this fiscal year or do you envision an increase in the budget for
your division?
Mr RICHER. Any activities this year would be out of that budget.
I must also state that there is excellent cooperation within the
State of New Jersey in the various components of the travel indus-
try.
For example. the Atlantic City Convention and Visitors Bureau
is attending some international trade shows which the New Jersey
Division of Travel and Tourism cannot attend but we are working
in conjunction so that the States interests are represented when
someone from New Jersey might go to a show in Paris or Berlin or
Munich Other shows are being considered in Latin America and
Japan as we go along.
We are finding ways within the industry and its representatives
in the State of New Jersey to make the contacts one way or the
other.
Mr. HUGHES. Is there much coordination with some of the other
tourist oriented areas of the State and the State division?
Mr. RICHER. Yes. I am very pleased to say we have actually
encouraged active participation in the tourism program of the
State in all 21 of the States counties. Some counties are further
along in their activities. I would cite specifically Cape May County,
Ocean County. Monmouth County and Sussex County who have
tong been interested in this area and have taken the lead in
mobilizing the industry.
We have made other contacts so that all of New Jersey can
benefit from the influx of travelers. It is a statewide effort. All of
us realize that Atlantic City is the magnet. We fully expect if we
can get people to come into this area, that will mean good things
for the accommodations and attractions all throughout southern
New Jersey and if we can properly package our State, it will also
mean good things for skiing opportunities in the northwestern
corner. sports attendance at the Meadowlands, visitors who want to
learn about immigration who go through Liberty State Park and
Ellis Island and many other of the historic sites in New Jersey
which go back to the revolution and Victorian period, the days of
Woodrow Wilson. et cetera.
Mr. HUGHES. Would you agree that some degree of coordination
on the part of the Federal Government in any tourist policy would
also be important if we were to maximize our efforts in this coun-
try and try to attract the international traveler?
Mr. RICHER. I would state that emphatically. While New Jersey
is beginning to have additional resources, it is impossible for us to
reach out to all the potential markets and particularly since major
attendance to New Jersey attractions will be generated by those
people attracted to our sister States and cities.
We need to have a national policy in order that people will come
to New .Jersey when they hear about things to see in New York,
Philadelphia. Washington. Boston. Atlanta, or Chicago. We want to
PAGENO="0529"
525
be part of a travel opportunity for the people who are coming from
very long distances.
Mr. HUGHES. Finally, Mr. Chairman, tourism being the second
largest industry in New Jersey, can you give us some idea how
New Jersey stacks up against other tourist oriented States as far as
moneys committed for promotion of tourism?
Mr. RICHER. We are average in the amount of dollars appropri-
ated to operate our tourism office in State government. I think if
you take into accc~int the expenditures by other members of the
public sector and the private sector, we probably are moving right
to the top very quickly.
I would also like to add, Congressman, in the testimony of Com-
missioner Horn, he cites that tourism is at least the second largest
industry in the State. Those figures are based on 1977 sales tax
receipts wherein tourism was ranked second in the number of
dollars generated behind petrochemicals. It preceded the advent of
casino gaming which as we know as a matter of record has pro-
duced a tremendous amount of revenue and it is logical to assume
that when the next set of figures are provided that it may in fact
be the leading industry in the State of New Jersey.
Mr. HUGHES. The reason I asked that question is we are talking
about a $3 billion industry in N!ew Jersey making it the second
largest and yet we only commit at the State level $1.35 million for
promotion of that industry. Given the fact that for every dollar we
expend, it generates about tenfold as I understand the data, that
seems to be a i'ather modest commitment to tourism.
Mr. RICHER. Congressman, the New Jersey Division of Travel
and Tourism is in its infancy. We have yet to lay all of the
foundation work necessary in our organization of travel opportuni-
ties, tour packages, contacts within the industry and the fact that
we had more money appropriated last year and were unable to
spend it is indicative of the plans we have to go through in order to
do a proper job.
I would suggest that we probably will be growing as our ability
to function within the market grows.
Mr. HUGHES. We are going to have to put you in closer contact
with Len Connors and Mayor Lazarow. I am sure they can help
you spend that money.
Thank you, Mr. Chairman.
Mr. FL0RI0. Thank you.
Mr. Richer, I would like to elaborate on one of the questions that
Congressman Hughes asked you and that is to get a clearer picture
of what the relationship is between the Siate agency and entities
such as the Atlantic City Convention Bureau.
You have stated that there is coordination which takes place and
they represent you I assume unofficially at overseas functions.
Is there any structure which exists for this coordination or is this
just informal coordination?
Mr. RICHER. There is a structure in the State of New Jersey,
many of whom are here in the room which is the New Jersey
Tourism Advisory Council. There are representatives from the key
tourism areas by statute on that council. They help to set the
policy on an advisory basis for the activities of the division.
PAGENO="0530"
526
We do have constant contact with all of the major components of
the industry and in fact have served as the catalyst to bring the
components in.
Mr. FL0RI0. Is that a policymaking board or just an advisory
board?
Mr. RICHER. Advisory. They do meet on a monthly basis. They
are here with us today. They are in the hearing presently from
which we will be adjourning as soon as the testimony is completed
for our regular meeting.
Mr. FL0RI0. Does that board have a staff?
Mr. RICHER. It is the staff of the New Jersey Division of Travel
and Tourism which is approximately 25 individuals.
Mr. FL0RI0. It is not a separate entity as such. The staff is not a
separate entity as such. They are staff of other ongoing functions
and as one of their collateral duties, they provide the staff needs
for this advisory board?
Mr. RICHER. The advisory board works with the New Jersey
Division of Travel and Tourism. That is the way the legislation was
established. They do not have a separate staff. We like to think we
are the staff and it is not a separate type of situation.
They are advisor to the executive branch of government and we
are the executive branch of government.
Mr. FL0RI0. In terms of formal relationships with an entity such
as the Atlantic City Convention Bureau, there are no direct formal
relationships but inasmuch as the convention bureau perhaps has
some input through the advisory board and the advisory board is
charged with the responsibility of dealing with the State govern-
ment and that is the way there is any official communication and
coordination? Is that accurate?
Mr. RICHER. There is communication through the tourism adviso-
ry board. If you want to really delve into the structure of the staff,
we have individuals, tourism representatives assigned to each of
the counties so there is almost daily input from all of the counties
on things which are happening plus the input which I receive
directly from the key industry leaders.
Mr. FL0RI0. I suppose the point I am trying to develop is what if
anything is done in terms of private input into actual policymaking
decisions at the State level? It would appear that there is no entity
comparable to what we are talking about in the Senate bill, that is
to say any sort of quasi autonomous entity or agency that the
private sector has some input into and the public sector has input
into, that actually makes policy.
Mr. RICHER. The Tourism Advisory Council does by statute have
representation from the public sector and from the private sector,
part of the public sector represented are counties and municipal-
ities expending money on tourism. The private sector is represent-
ed by statute. We have people here from ASTA, from the New
Jersey Hotel/Motel Association. They are on the Tourism Advisory
Council. That body is charged by statute with the development of
the New Jersey tourism master plan which probably is the most
important piece of policy which will be developed regarding how
tourism will grow in the State.
They are advisory in terms of their function but their input
certainly is the most valuable that we have and it is by statute
PAGENO="0531"
527
that they do represent the private and public sectors appropriately
for the tourism interests in the State.
Mr. FL0RI0. What role if any do you see the States playing in the
nonprofit corporation that the Senate bill embodies?
As of now we are talking about the private sector. We are
talking about the Federal Government. To this point the State
governments in a sense have been on the front line in our tourist
activities.
Do you see there being a need for institutionalizing the State
government role in such an autonomous agency?
Mr. RICHER. I do not think I can speak with authority on the
subject because I am not fully familiar with how the corporation
would be structured. I would hope that there would be some way in
which the States' voices can be heard and possibly through the
collected representation of the State travel directors.
Mr. FL0RI0. What do you think would be the response to any
proposal that the States being the beneficiaries in part of an ex-
panded Federal tourism presence should contribute to the funding
of the Federal nonprofit corporation?
As of now it is contemplated under the terms of the Senate bill
that the Federal Government would be the major if not exclusive
source of funding for this entity.
Do you feel there would be any favorable response from the
States if they were asked to contribute to the funding of such a
private corporation or nonprofit corporation?
Mr. RICHER. I think that would be very difficult unless the States
had an explicit role over the expenditure of those moneys.
Mr. FL0RI0. Mr. Richer, I would like to express my appreciation
for you coming to the hearing on behalf of Commissioner Horn and
to say our committee fully intends to keep in contact with you as
we develop a national tourism policy.
I happen to believe there is a very important role for the States
to play, that they have developed a high degree of expertise. There
is a need for local input. The idea of a Federal entity is something
that is desirable but I think there is no question that the condi-
tions vary from State to State depending upon the different circum-
stances and therefore the formulation of national policy and per-
haps even more significant than the formulation, the implementa-
tion of an ongoing national policy requires some sensitivity as to
different conditions around the country and the States are prob-
ably the most appropriate body in terms of the public input in
implementing that policy.
I would just like to express my appreciation on behalf of Con-
gressman Hughes and myself for the State input and to say we
anticipate continuing to have relationships with your office.
Thank you very much for your presence.
Mr. RICHER. Thank you.
Mr. FL0RI0. Our next witness is the Honorable Leonard T. Con-
nors, Jr., the director of the Chosen Board of Freeholders of Ocean
County and also the mayor of borough of Surf City.
Mr. Mayor, we appreciate your presence and welcome you to the
committee.
PAGENO="0532"
528
STATEMENT OF LEONARD 1. CONNORS. JR.. DIRECTOR. OCEAN
COUNTY NEW .JERSEY BOARI) OF CHOSEN FREEHOLDERS
Mr. CONNORS. Thank you. Congressman Florio and Congressman
Hughes. Good morning.
I want to thank you for inviting me to comment on the proposed
legislation to establish a national tourism policy for the United
States.
I am Leonard T. Connors. Jr., director of the Ocean County
Board of Chosen Freeholders. My responsibilities include that of
liaison to the Ocean County Tourism Advisory Council.
The ;3~().00() citizens of Ocean County, N.J.. are vitally concerned
with the progress of the legislation being considered at these hear-
ings. Ocean County is one of the fastest growing counties in the
Nation with a 60-percent increase in the population since 1970. It is
the fastest growing county in the State of New Jersey.
Tourism is Ocean County's largest industry and its waters are an
invaluable natural asset.
Ocean County is uniquely situated just 65 miles from both Phila-
delphia and New York. We like to say if Sun and surf are what you
crave. Ocean County has it with a variety that is hard to beat.
The countys 50-mile coastline has some of the world's finest
beaches and a string of resort towns that offer everything from
quiet bathing and sunning to action-packed amusement areas.
Much of this outdoor playland is on the long strip of barrier beach
with sheltered bay bathing and water sports only a short way away
from the booming surf and the broad white beaches on the ocean
side.
Ocean Countys temperature climate also makes it possible to
enjoy the areas beaches beyond the traditional summer period.
September is beautiful in Ocean County.
On the mainland behind the beaches lies one of America's
unique wilderness areas, the pine barrens. Stretching for miles, the
barren. sandy soil grows environmentally unique pine and other
flora sheltering a wide variety of animal life.
In the pine barrens of Ocean County are several State and Na-
tional parks, fish and wildlife management areas and a national
wildlife refuge. Here truly is something for everyone, the hiker, the
camper. the birdwatcher. wildlife photographer, the cyclist, or the
canoer who wants to paddle up a pineland river in water so clear
and pure it is unbelieveable. Without a doubt the key to all of
these activities is the cleanliness of the water in Ocean County.
It wos not too many years ago that the bay and ocean waters
were becoming so filled with inadequately treated sewage from
local systems and thousands of individual septic tanks that our
beaches were becoming severely hurt and much of the waters were
closed to shellfish harvesting.
Things have changed since the Ocean County Utilities Authority
began operating just a few short years ago in 1976.
While this water clean up did not happen overnight the clean
beaches and clean water came to pass quickly when one considers
the magnitude of the problem.
in 1~6T the U.S. Environmental Protection Agency issued an
enforcement action ordering the cleanup of New Jersey's coast via
the development of regional sewerage systems designed on the
PAGENO="0533"
529
effective and unique concept of having such systems serve the
natural geographical drainage basins rather than being limited by
artificial political boundaries.
To comply with this Federal action the Ocean County Board of
Chosen Freeholders created the Ocean County Utilities Authority
in July of 1970 to develop a regional sewerage system for the
county.
Not too long ago after the first regional system became oper-
ational in 1976 in Ocean County a visitor wrote to the editor of the
Newark Star Ledger, `I was absolutely amazed and delighted at
the cleanliness of the water."
When the final portion of the regional system is operational later
this year, it will serve approximately 300,000 people in an area of
560 square miles. The system has the capacity to serve future
populations for generations to come and has been designed to
permit virtually unlimited expansion when the need arises.
In addition, the Freeholders have implemented a section 208
Wastewater Management Planning Agency under the Federal
Clean Water Act to insure clean water for the future. Thus, Ocean
County can count on having clean water for home use and for
recreational and industrial use for generations to come.
As I mentioned earlier, tourism is the lifeblood of Ocean County.
Speaking for the Ocean County Tourism Commission and the thou-
sands of Ocean County citizens whose livelihood depends on tour-
ism, we want to go on record as wholeheartedly endorsing the
concept of the proposed legislation establishing a national tourism
policy. We also support the purposes of the bill as defined in title I.
We agree that the activities of the Federal involvement in tour-
ism should be so conducted and coordinated to meet the needs of
the State and local governments and in the private sector.
We enthusiastically support the functions of the tourism council
as defined in title II particularly the provisions saying that the
Council shall "p * * seek and receive views of State and local
governments and the private sector with respect to Federal pro-
grams and policies deemed to conflict with the orderly growth of
and development of tourism *
We also support the congressional declaration of policy as stated
in the bill, `that orderly growth and development of tourism de-
pends on the efforts of the public and private sectors of the indus-
try; that it furthers the national interests to assure that the exten-
sive Federal policy is responsive to the needs of the public and
private sectors of the industry; and that it is necessary for the
Federal Government to assist and support mechanisms that will
most effectively assure implementation of the national tourism
policy *
We feel that some aspects of the bill should be amended to make
the intent of Congress realistic and acceptable to the Nation's
travel and tourism industry.
For example, we recommend that a vehicle be established within
the legislative framework, to allow the private sector of tourism
and recreation industries to participate directly a~ members of the
National Tourism Policy Council as well as members of the board
of directors as is currently provided for by section 3U4 of the act so
PAGENO="0534"
530
that their invaluable management experience and advice would be
directly available to the council.
We would further recommend to the subcommittee that the Na-
tions tourism and recreation industries participate in the funding
of this highly important program through whatever type of vehicle
the industries themselves and the Federal Government feel appro-
priate and timely.
We would like to offer the subcommittee the assistance and
cooperation of Ocean County and we wouJd hope that an Ocean
County representative would be included as a member of the Na-
tional Tourism Policy Council's directors.
Our experience in working with our Federal partners in improv-
ing the quality of life for our citizens and protecting their environ-
ment has been a mutually rewarding one. We believe that the
people of Ocean County can and should make an important contri-
bution to our national tourism policy.
In summary, Ocean County, where the cleanest water on the east
coast can be found, pledges active support of the proposed bill and
the concept of the national tourism policy and we shall be prepared
within our means to work with the Policy Council, the committees
established by the bill and the proposed Tourism Development
Corporation to achieve the worthwhile goals and purposes of the
legislation.
Thank you for this opportunity to testify on behalf of my county.
Mr. FL0RI0. Thank you very much. Congressman Hughes?
Mr. HUGHES. Thank you, Mr. Chairman.
Thank you, Mr. Connors, for a very enlighting and comprehen-
sive statement on behalf of your tourist commission.
You suggest a couple of amendments and I think they are very
constructive and well taken. My only question would be what role
would you envision for the States in participating in any nonprofit
corporation or council?
You have suggested that the private sector be represented and
you hope that perhaps the council would look to counties like
Ocean County for representation.
Would you envision any type of an institutional role for the
various States that have large tourist industries in any nonprofit
corporation or council?
Mr. CONNORS. Yes, I would, Congressman. Perhaps if I give you a
history of what Ocean County has done very briefly. We have a
tourism council. In 1978 we appropriated $100,000 toward the pro-
motion of tourism. We in the council had actually spent $60,000
which left a residue of $40,000. In 1979 we reappropriated $25,000.
We feel in Ocean County and I should not limit it to only Ocean
County because I think South Jersey should be included in that
statement but we feel that our counties are suffering because
through the 1978 survey which was taken by Eagleton Institute we
found that a great many of our people who visit Ocean County and
South Jersey come from the metropolitan area but there is a vast
majority of people that have been visiting particularly Cape May
from Canada.
We feel that market is worthwhile and this is in concept and in
concert with what the proposal is of Senate bill 1097.
PAGENO="0535"
531
In answer to your question I think people from all walks of life
should be brought in. Our tourism commission is not made only of
mayors and committeemen throughout our county. It is made up of
hardnosed businessmen who appreciate and know what the worth-
while contribution is of a tourist dollar, that being the cleanest
dollar that industry can bring.
Mr. HUGHES. Thank you, Freeholder Connors.
I want to also publicly commend you and members of the Board
of Chosen Freeholders of Ocean County for their action during the
recent shortfall of gasoline in this region. You mobilized your
forces rapidly. You appropriated funds to try to do the kind of
promotion which was needed, to try to encourage people particular-
ly in the Philadelphia and the North Jersey-New York market to
travel to Ocean County. You are to be commended for the work
you have done as a county in promoting the mainstay of our
economy, tourism.
Mr. CONNORS. Thank you, Congressman. We appropriated
$20,000 in emergency funds for media-television in promoting
Ocean County. We asked the State of New Jersey to join us as well
as other counties.
We feel in Ocean County and I do not mean this as a criticism
but we feel we could have been given more support. One thing I
will say is our businessmen in Ocean County have come through
with almost $10,000 in private money in support of that promotion.
There is a partnership there between government and the private
sector. The promotion on television was well received. There were
180, 30 second time slots split between Philadelphia and New York.
Our businessmen and our banks have made substantial contribu-
tions in the amount which nearly totals $10,000 right now and it is
an ongoing program.
I think that partnership is what we are looking at and I think
this is what the Senate bill 1097 addresses itself to, to having
people from the private sector come in and assist us and direct us.
Mr. HUGHES. I think you are right. I think that particular crisis
pointed out the need for both a regional program where we bring
all the resources of all the communities and counties which have a
tourist industry as well as the State and national resources to bear
on the types of problems we suffered in late June and particularly
early July.
I want to commend you and the Board of Freeholders and assure
you that I look forward to working with you in trying to develop a
good national tourist policy for this country.
Thank you, Mr. Chairman.
Mr. FL0RI0. I would just like to make two observations.
One is you are certainly to be commended for the sensitivity
with regard to environmental concerns. All too frequently too
many people think that concern over the environment is somehow
antithetical to interests in tourism and that is clearly not the case.
You have stated very well the argument of the need for sensitivity
to scenic and pure water considerations and certainly that is long
overdue in appreciation of that fact in certain areas.
I am not sure if you have read our minutes of the previous
hearings we have had in Washington but if you have not, you are
certainly on all fours with the feeling of the committee when you
PAGENO="0536"
532
advocate that the Nation's tourism and recreational industries par-
ticipate in the funding jointly with the Government in this highly
important program.
You struck a very responsive chord on the part of the committee
members, the lee] ing that there is a need for joint cooperative
ettort. not only in terms of management and not only in terms of
the fdrmulat ion of tile policy but perhaps sharing the burden of the
costs of this initiative which is coming out of the Congress.
I would just express my appreciation for your very good testimo-
n\ and to thank ou on behalf of the committee for your contribu-
t ~(T' fl.
Mr~ CONNORS. Thank you.
\lr. FL0RT0. Our next witnesses comprise the first of two very
distiriauished panels which we will be hearing from this morning.
The first panel is made up of Mr. Charles Gillett. the president of'
the New York Convention and Visitors Bureau and chairman of
the National Council of Urban Tourism Organizations; Mr. Eugene
C. Hosmer, Jr., president of the Philadelphia Convention and Tour-
~t Bureau: and Mr. Robert H. Sullivan. general manager of the San
f'cancisco Convention and Visitors Bureau.
Gentlemen. we welcome you to the committee. You may feel free
to proceed in summary fashion if you see fit or read your state-
ment. We would ask that for the record you would introduce your-
self and proceed as you see fit.
~TATEMENTS OF' CHARLE~ (;ILLETT. PRESIDENT. NEW YORK
(~)NVENTION AND VISITORS BUREAU. AND CHAIRMAN. NA-
`FIONAL (`OUNCII. OF URBAN TOURISM ORGANIZATIONS:
ELGENE C. HOSMER. JR.. PRESII)ENT. I~HILADELPHIA CON-
\ENTION AN!) VISITORS BUREAU: AND ROBERT J. SULLIVAN.
(;ENERAI MANAGER. SAN FRANCISCo CONVENTION AND
VISITORS BUREAU
Mr. GILI.ETT. I would like to read my statement. It is a very short
one. I think it summarizes succinctly my feeling about the testimo-
ny.
Mv name is Charles Gillett and I am president of the New York
Convention and Visitors Bureau. I also am chairman of the Nation-
al Council of LTrhan Tourism Organizations.
The Council is an organization linking both the 126 tourism
marketing organizations in cities in the United States which are
members of the International Association of Convention and Visi-
tot' Bureaus and other urban tourism entities which belong to the
Discover America Travel Organizations.
The council thus speaks for the major urban tourism centers
throughout the Nation. Today I am privileged to appear brefore
this subcommittee to comment from the perspective of these urban
areas. the centers of tourism in the United States. A large percent-
age of' these organizations are private nonprofit corporations.
For many years our industry has struggled to gain the high level
of recoonition that it merits in terms of economic impact and the
national interest. \Ve have also searched deeply to define a market-
ing and promotion strategy and organization to compete effectively
in a global arena in which other countries invest extensive re-
PAGENO="0537"
533
sources to attract tourists with resulting broad benefits to the
economies of these countries.
All of us in the cities, in Discover America Travel Organizations.
and in the International Association of Convention and Visitor
Bureaus, are highly encouraged that our long effort has reached a
point where the Senate has approved legislation in response to the
challenges and opportunities of tourism. We are deeply apprecia-
tive that this august subcommittee of the House has invested so
much time and effort in considering companion legislation to that
passed by the Senate.
We have come a long way since the days earlier in the decade
when Congress financed a National Tourism Resources Review
Commission to report on tourism needs and resources.
At hearings at that time I testified that the report was seriously
flawed because of its failures to understand urban tourism and its
pessimistic projections of the future of cities. The report was subse-
quently discredited, in part because of these failures. Happily, his-
tory proved the report to be incorrect. Urban tourism is stronger
now than ever before. In New York City as an example we have
enjoyed a series of excellent years in tourism traffic. The year 1978
was the best year for tourism in the history of our city. So far in
1979 we are running ahead of the record levels of last year.
I refer back to the National Tourism Resources Review Commis-
sion report as a means of emphasizing the importance of under-
standing the role of cities as the hubs of tourism in this country. It
is also extremely pertinent to the legislation now under considera-
tion to recognize that nearly all of the convention and visitor
bureaus in this country are private, nonprofit organizations sup-
ported in part by local government funds hut operating under the
banner of private industry. They are not city governmental organi-
zations and they differ from State tourism bodies which on the
whole are agencies of State governments.
For more than a decade I have consistently advocated establish-
ing a nonprofit organization outside Government to build tourism
traffic to the United States from abroad. Such an organization
should be responsible to Government, funded by Government but
free of the shackles of Government limitations that are the antith-
esis to effective marketing.
My advocacy of this approach is based on firsthand knowledge of
how cities successfully market tourism through private nonprofit
organizations supported in part with Government funds. It is based
on my observations of how limited the U.S. Travel Service market-
ing program has been, largely because of the heavy constraints of
excessive Government control and restriction.
The concept of a nonprofit corporation now outside Government
is an idea whose time has finally come. It is an integral part of the
legislation now under consideration by this subcommittee.
While I support this legislation as a long step forward in our
effort to capitalize on tourism as a nationai resource. I have certain
reservations and disappointments.
I am disappointed and dismayed that nowhere in the legislation
are the words `marketing" or `sales' used.
In the section of the legislation describing the purposes and
activities of the nonprofit corporation terms are used such as
PAGENO="0538"
534
cilitating." `consulting," "participating," "monitoring," "inform-
ing," and "encouraging" but not `selling."
What we seem to have here is a corporation oriented to service
and information. I am not against consulting, informing, and co-
ordinating. Frankly. in a marketing organization these are support
functions. Where are the basic marketing responsibilities, direct
sales, advertising, promotion and publicity? Selling our superb
tourism product-that is the bottom line.
Section 308(b), purposes and activities of the corporation, reads
as follows:
The primary purpose and activity of the Corporation shall be developing and
administering a comprehensive tourism program designed to stimulate and encour-
age travel to the United States by residents of other countries * *
This is the most definitive statement in the legislation regarding
building visitor traffic but I think most people reading this lan-
guage would have to agree that it is quite broad in scope and not
precise. Certainly in the description of nine activities of the corpo-
ration that follows this statement there is nothing that I can see
that explains how "comprehensive tourism program designed to
stimulate and enc rage travel" will actually be accomplished.
I understand that in developing legislation it is sometimes neces-
sary to avoid explicit commitments because these can be limiting
in nature and practice. I respectfully suggest that in this legisla-
tion the failure to define a marketing function is in my opinion a
very serious shortcoming.
I am encouraged to see the heavy emphasis on programs abroad.
Generating business from overseas is key to building increased
returns from our Nation's tourism investment. The United States
has thousands of highly successful professional local and regional
organizations that do an excellent job in marketing tourism domes-
tically. On the other hand this is a big country with diverse tour-
ism attractions and a nationwide approach to marketing tourism
abroad can be achieved only with strong Federal support.
Now for the first time we have defined a sound approach toward
a national tourism policy. The time is right to transform this policy
into an active program implemented by the U.S. Travel and Tour-
ism Development Corp. with a mandate that will make it an effec-
tive marketing organization.
We look to you, the members of this subcommittee and to the
House to endorse this approach with legislative action in the na-
tional interest.
Thank you.
Mr. FL0RI0. Thank you. Mr. Hosmer?
STATEMENT OF EUGENE C. HOSMER. JR.,
Mr. HOSMER. Congressman Florio, Congressman Hughes, ladies
and gentlemen of the panel, I would too like to read a prepared
report which is reasonably brief.
My name is Eugene C. Hosmer. I am appearing in my capacity of
representing the Council for Progress of the city of Philadelphia
and the Philadelphia Convention and Visitors Bureau of which I
am president. I have also had the pleasure and opportunity of
testifying as president of the International Association of Conven-
PAGENO="0539"
535
tion and Visitor Bureaus before the U.S. Senate Committee on
Commerce, Science and Transportation.
I am here, Mr. Chairman, to testify on behalf of the national
tourism policy and also the mechanisms needed to coordinate and
implement such a policy. We feel strongly on this issue for reasons
that probably have been evinced before but which I should like to
repeat:
No. 1, in past years we have narrowed the Nation's balance of
payments deficits during the 1950's and 1960's when the Govern-
ment sought to discourage international travel by the U.S. resi-
dents by imposing a punitive exit tax.
Second, in its plan to beautify the environment, the Government
sought also to ban advertising on the Nation's highways.
Third, some 5 years ago certain Government officials called
travel "nonessential" and proposed energy policies that would
serve to the disinterest to promote tourism.
Fourth, in 1976 the administration planned to severely limit tax
deductions for legitimate business travel and entertainment.
And fifth, now there is a tax law to discourage Americans from
participating in business conventions abroad.
It appears to us that this is a disservice of an industry that is the
second or third largest in 46 States and one that exceeds $115
billion a year in expenditures and which as you know employs over
5 million American citizens.
We highly recommend that there be a law covering a national
statement of policy regarding tourism and that there should be
enacting legislation creating a high level policy council headed by a
cabinet rank advisor to the President to coordinate policies, pro-
grams or issues relating to the tourism industry.
We also believe that the establishment of a quasi public corpora-
tion is the most effective means of implementing a tourism devel-
opment program with international marketing as its primary pur-
pose. We propose the creation of an implementing body capable of
gaining the confidence of the administration and of obtaining a
budget adequate to achieve the objectives of a national tourism
policy. We believe a new approach is needed and one that can best
be promoted by an organization accountable to but outside the
framework of the U.S. Government.
We believe the answer to this is a U.S. Travel and Tourism
Development Corp. The corporation would be governed by a Board
of Directors and the selection of those directors should come from
highly qualified individuals within the private sector of the travel
industry, labor, environmental, and consumer organizations.
We believe the board should include those with the most creative
talent in the industry and the expertise to make the corporation's
programs successful and effective. We also see the board to elect a
full time president with overall operational responsibilities.
Congress would have annual budgetary oversight and it would
support an independent audit. We believe the corporation would be
required to submit an annual report to the President and to the
Congress. We see the corporation monitoring all Federal programs
affecting tourism for duplication, effectiveness and compliance with
the objectives of the National Tourism Policy Statement.
PAGENO="0540"
536
Further. as we see it. the corporation would be authorized to
conduct a broad range of activities to make sure that the growth
and development of tourism remains strong: to operate offices in
other countries: develop a tourism research and statistical pro-
gram: training and education; providing technical assistance; and
provide consumer information to travelers.
Mr. Chairman, where the people of the world today spend in
excess of $156 billion on international tourism and where at this
moment less than 5 percent or about $8.5 billion was spent on
international travel to the United States, there seems there was
further credence lent to the need for such a national tourism
policy.
It is to the national interest to promote international travel to
the United States yet the Government has at times believed that
such promotion should be handled by State, local and private sec-
tors alone. The role of the Government is to expand a Nation's
share of the total market for international tourism.
There are few companies in the private sector that could pro-
mote international tourism by themselves. Almost all of the 1.4
million tourism related businesses in the United States are small
ones.
We respectfully ask that you enact into law a national tourism
policy, a policy council and a quasi-public tourism corporation.
Mr. Chairman. that concludes my statement and thank you.
Mr. FL0RI0. Thank you. Mr. Sullivan?
STATEMENT OF ROBERT J. SULLIVAN
Mr. SULLIVAN. Chairman Florio and Congressman Hughes, my
name is Robert J. Sullivan. I am general manager of the San
Francisco Convention and Visitors Bureau. I currently serve as a
member of the Travel Advisory Board, U.S. Travel Service, Depart-
ment of Commerce and as a member of the Travel and Tourism
Industry Advisory Council to the U.S. Senate Committee on Com-
merce. Science and Transportation.
Mv appearance before you today is on behalf of the International
Association of~ Convention and Visitors Bureau of which I am the
immediate past chairman of the hoard.
\Vhile IACVB is an international organization its membership
represents 1i(~ cities in the United States. It is on behalf of these
cities that I speak before you today.
in previous testimony on September 26, 1978, before the Senate
committee considering the national tourism policy, I attempted to
focus on the scope and importance of tourism as an economic and
employment factor in American cities. For a moment I would like
to reiterate this impact for the record of your House of Representa-
tives Subcommittee on Transportation and Commerce.
The cities and metropolitan areas of our country represent 73
percent of the population. Within the next 30 years this percentage
~s anticipated to reach ~ percent. In polling the U.S. members of
the Internationaj Association. 90 respondents represented a popula-
tion in excess of ~7 million and a combined economic impact of
over ~30 billion last year.
Tourism by our definition consists of the organized convention
and trade show as well as the individual and family vacation
PAGENO="0541"
537
visitor. The 90 city convention and visitors bureaus received
~45,718,000 in direct State and local tax dollars to market and
promote tourism to their respective cities.
As a source of employment, local government has observed the
service industry as a key element in their strenuous efforts to
provide meaningful jobs to the unskilled, semi-skilled and minority
populations within their cities. Tourism is a prime factor in rejuve-
nating the center city by developing a large census of visitors
requiring the goods and services located therein, accommodations,
restaurants, retail stores and service enterprises. This activity not
only increases the economic viability of the city but insures a
continuing tax base to the local jurisdiction.
Mr. Chairman, having attempted to relate the significance of
tourism to the cities of America, I now wish to respond to the
thoughtful questions posed by the Subcommittee on Transportation
and Commerce of the House Committee on Interstate and Foreign
Commerce as they affect the national tourism policy.
In our opinion it is essential that the Federal Government
assume the leadership role of marketing our country as a travel
destination and facilitating the movement of visitors from other
countries to the United States.
This is a most legitimate function of government as it benefits
the general welfare of all of our citizens, aids in our Nation's
foreign exchange earnings efforts and assists local government to
maintain a healthy tourism industry. Foreign visitors to the cities
of America are annually becoming a more important factor in the
total tourism receipts of our communities.
In the case of San Francisco, recent studies indicate that over 22
percent of all visitors to San Francisco are from outside the United
States. This percentage translates to over 600,000 visitors and that
only serves as an example of one city in America.
Having served as a member of the Travel Advisory Board for
many years, it has been my experience that a Federal agency
restricted in its activities and procedures cannot achieve the objec-
tives that can best serve our national interest. International tour-
ism is a most competitive activity and an agency functioning under
Civil Service and bureaucratic restraints cannot respond to the
sudden shifts of sales and marketing required to grasp opportuni-
ties and to maximize targets of opportunity that world economics
and travel patterns demand. This factor becomes most obvious in
the area of soliciting and arranging for international conventions
to be held within our country.
While almost all international meetings held in the United
States take place in cities and utilize the great range of public
auditoriums, convention halls, arenas and exhibit facilities built by
the communities of our country. the solicitation and pursuit of
these international conferences, congresses and trade shows re-
quires an official invitation by the United States of America and a
coordinated effort of the U.S. affiliate organization and the U.S.
members of the international body. This can be best done by the
proposed development corporation.
As a nation we lag substantially behind all other sections of the
world and most individual nations in hosting these most important
meetings. No city in America ranks in the top 10 most frequented
PAGENO="0542"
538
cities and only 4 American cities rank in the top 25 most selected
cities for international meetings. An individual city does not have
the resources or the international contacts to aggressively market
international meetings but could through the coordinated effort of
the proposed U.S. Travel and Tourism Development Corporation
mount a most effective program that would benefit our national
interest and the cities of the United States.
I have no concerns that this corporation would compete with any
State, city or private agency but rather would be totally compli-
mentary to their existing efforts and enable these jurisdictions to
do a more effective and meaningful job.
This corporation as the official agency of the U.S. Government
responsible directly to the Congress can represent our Nation at
international meetings, conferences and expositions as effectively
as a Federal agency representative. I can assure you on behalf of
the cities of America, Mr. Chairman, that if a position on the board
of directors of the proposed corporation were available to a repre-
sentative of our cities, it would be filled with an enthusiastic pro-
fessional willing to perform all duties as a director without concern
for compensation.
Specifically in the case of international congresses and meetings
but equally important, in the case of individual or group recre-
ational travel is the underlying concern that tourism must be
treated in a different manner than the general Government poli-
cies on exports and trade. In these areas a product or service is
manufactured, sent to the foreign country, sold and the receipts
returned to the American company. Tourism is just the opposite.
The destinations of America, be they the national parks, the re-
sorts or the urban sectors of our Nation, are the product. Only by a
strong and aggressive marketing program can we expect to entice
the individual or organization from other countries to come to the
United States and spend money in our tourism industry plant.
The U.S. Travel and Tourism Development Corporation parallels
very closely both in structure and in activity with the charters of
most city convention and visitors bureaus.
As in the case of San Francisco, the convention and visitors
bureau is a private nonprofit corporation established under the
laws of the State of California and the regulations of section 501-c
of the Internal Revenue Code. It is the official agency of the gov-
ernment of the city and county of San Francisco to promote con-
ventions and tourism to our city. It is funded primarily by tax
revenue appropriated to our agency. It is governed by a board of
directors of travel industry professionals and the policies, proce-
dures and expenditures of funds are scrutinized closely by our
elected and appointed government officials.
There is complete cooperation between the public and private
sectors of our community in developing the most effective program.
All staff of our organization is responsible to the board of directors
who are most knowledgeable professionals in their specific areas.
The San Francisco Convention and Visitors Bureau has existed
since 1909 and is only one of many examples among cities of
America of a coordinated program involving both the public and
private sectors that enhances the economic well being of our city
and the employment of our residents thus ensuring a continuing
PAGENO="0543"
539
high level of utilization of our center city and making a major
contribution to the tax base of our community.
Translating this effective mechanism to the Federal level assures
me that the proposed U.S. Travel and Tourism Development Corpo-
ration is a valid concept when linked with a meaningful national
tourism policy; that it will serve as a catalyst for greater activity
by local government and the private sector to redouble their efforts
in the marketing and promotion of the United States for their
individual interest. Further, with direct oversight of the activities
and budget of this corporation by the Congress it will be and would
remain totally responsive to your intent and function in our Na-
tion's best interest.
The American cities represented in IACVB wholeheartedly sup-
port the testimony presented by William D. Toohey on behalf of
Discover America Travel Organizations at the July 25 hearing held
in Washington, D.C.
The purpose of the cities' desire to testify before you today is to
underscore our great concern for an adequate tourism policy, the
implementation of a meaningful coordinating council and an ag-
gressive professional and responsive entity to represent our Nation
in the most competitive international tourism and convention
arena.
We the cities of America urge you to enact into law a federally
chartered Travel and Tourism Development Corporation.
Thank you.
Mr. FL0RI0. Thank you very much. Congressman Hughes?
Mr. HUGHES. Thank you, Mr. Chairman.
I would like to thank the members of the panel for excellent
statements.
I wonder if perhaps Mr. Hosmer and also Mr. Gillett could give
us some idea of the structure of your convention bureaus, nonprof-
it, profit, how they are funded and so forth.
Mr. HOSMER. Congressman, the Philadelphia Convention and
Tourist Bureau is a not for profit organization. It is funded rather
well in that we are funded by the city of Philadelphia. We are
funded rather generously by a very involved, a very elaborate and
a very productive matching funds program from the State of Penn-
sylvania and then thirdly but not necessarily in the importance of
their order, from the private sector of which there are over 500
subscribers which contribute annually.
The overall budget is $1.2 million. As was previously testified by
Mayor Lazarow earlier this morning, you heard him comment on
$1 million which has been raised and is being raised by Philadel-
phia business people and the city. It is $1 million for each of 3
years; $750,000 of that to be spent on the promotion of conventions
and tourism with an 80/20 split in favor of tourism; a quarter of a
million dollars of that million dollars for each of the 3 years to be
used for promotion of economic development.
Mr. FL0RI0. Will the gentleman yield?
Mr. HUGHES. I would be happy to yield, Mr. Chairman.
Mr. FL0RI0. The contributions from the private sector, is there a
formula that is used or is it just a voluntary system where people
contribute what they feel is appropriate?
PAGENO="0544"
540
Mr. HOSMER. It closely borders that. Mr. Chairman. Actually the
only formula which is used in the private sector is with hotels on a
percentage of money. dollars paid per room per year. The other is a
minimum corporate membership which actually exists of £250, the
maximum is £l0,0~0 of which three banks in our city contribute
that amount.
Mr. FI.oRJo. We are talking about banks and hotels. What other
types of classifications of groups or industries?
Mr. HOSMER. Theaters, hotels, restaurants, banks, insurance com-
panies are very heavy contributors.
Mr. FL0RI0. Transportation entities of any sort such as bus com-
panies and airlines?
Mr. HOSMER. Transportation, nearly all of the airlines; detective
agencies. those who supply materials and supplies, glasses and such
to a hotel or restaurant. The restaurants are very big supporters
and those who benefit directly or indirectly from the visitor busi-
ness. Obviously the retail stores are heavy contributors as being
one of the prime and first beneficiaries of this unusual business.
Mr. FL0RI0. Is there a coordinating body, a chamber of commerce
or something of that sort which coordinates the private participa-
tion?
Mr. HOSMER. No. The Philadelphia Convention Visitors Bureau
is separate and apart from the chamber of commerce. Their roles
are very different They both function independently of each other.
As I said earlier we are a not-for-profit organization designed and
created for the purposes of going out aggressively seeking the
highly competitive business which we have talked about this morn-
ing, experienced by i4~ cities now in 10 countries.
Mr. FL0RT0. Thank you.
Mr. HUGHES. Thank you, Mr. Chairman.
How about the con tr~bution by the State, is that based upon a
formula, a matching grant or just based upon what is appropriated
from time to time dv the legislature?
Mr. H0SMER. It is fi'om time to time by the legislature which at
times makes it rather hazardous as you can appreciate. It went
from ~i.7 million 2 years ago to £2.1 million last year. Three weeks
ago it went to $2.9 million which means that 54 what we call
tourist promotion agencies within the State of Pennsylvania are
the beneficiary of these funds. The have to match the funds from
other sources, one on one, no separate tourist promotion agency by
law can receive more than 20 percent of the allotted funds.
in that case to be succinct it means that Philadelphia will bene-
fit by £5~0.000.
Mr. I-IUGHES. Do you have any idea what the size of the total
budget is for the State in promoting tourism in Pennsylvania?
Mr. HOSMER. It was just passed. They have £1 million in promo-
tion and £900,000 as an operating budget.
Keep in mind that the matching funds is also part of the overall
thrust of bringing tourism to Pennsylvania and that is a $2.9
million item as I mentioned previously.
Mr. HUGHES. What is the size of the tourist industry in Pennsyl-
van ía?
Mr. HOSMER. It is the second largest.
Mr. HUGHES. The same as New Jersey.
PAGENO="0545"
541
Mr. HOSMER. Yes.
Mr. HUGHES. Thank you. I wonder if you could do the same thing
for us, Mr. Gillett. Try to give us some idea of what the structure
of the New York Travel and Tourist Bureau is.
Mr. GILLETT. Perhaps I can gave you a little historical perspec-
tive. Most convention and visitor bureaus in the United States
were started originally as a small department in a chamber of
commerce going back many years.
As the visitor industry grew and as the diversity of interests
grew. the convention bureaus separated from chambers of com-
merce and indeed in many cases are now larger than the respective
chambers of commerce in their cities.
In New York City, we are a private nonprofit organization com-
pletely independent. We raise private industry money from many
of the same sources Mr. Hosmer mentioned. We also receive from
the city of New York now 50 percent of what we raise. It is almost
50 percent. We are still raising more from private industry than we
are getting from the city government.
What makes this unusual in a sense is I do not have to further
elaborate to alert Congressmen of the financial needs of New York
City and the problems we have had there--
Mr. HUGHES. We both voted for the New York assistance legisla-
tion.
Mr. GILLETT. I only mention that in the fact that New York City
in the past year increased the appropriation to the New York
Convention and Visitors Bureau based on the fact that they real-
ized this was one of the best ways to bring new money into the city.
Going back further I would say in most cities the original stimu-
lus to a convention and visitors bureau has been the hotels them-
selves. Today there still persists this myth that only the hotels
benefit from visitor industry or that the hotels are the top benefac-
tors from this industry.
We busily tried to expel this idea because indeed the entire
community benefits from the visitor industry as we know and what
has not really been spelled out is the turnover of the dollar. We are
talking really now in terms of the first recipient of the visitor
dollar. Let's say the bellman of this hotel who lives 20 miles from
here goes to the local grocery store and buys milk. The milk in
turn is bought from a dairy company located there. The point is if
the dollar was not spent here to begin with, that dairy company
would not be selling that much milk.
In New York City, for example, last year the total expenditures
of visitors in New York was ~ billion. That turned over three
times and we use that as a conservative turnover which amounts to
nearly ~5 billion which New York City received.
Mr. HUGHES. Thank you.
Do any of your agencies spend money abroad in promoting inter-
national tourism?
Mr. SULLIVAN. Yes, sir.
Mr. GILLETT. Yes; we do in a limited way.
Mr. HUGHES. Can you give us some idea of what percentage of
your overall budget is committed to marketing in Europe?
PAGENO="0546"
542
Mr. GILLETT. It is difficult because so many of the expenditures
that we make are overlapping. That is the printing of literature,
the administrative running of the operation, and so on.
I would say in our case it would be perhaps less than 5 percent
which we are spending overseas although we have been very active
overseas as much as we can be. We have recognized the market for
many years long before it broke wide open with the decline of the
dollar.
In 1978 we had 2 million overseas visitors who came to New
York City. This is double the number that visited New York City
in 1968. We are well aware of that.
On that point and this has not been stressed at any of the
hearings today, what has not been stressed is the red hot nature of
this market now. We are dilly dallying with a red hot market. We
do not know how long this is going to last. I think it is necessary to
move quickly to take advantage of this red hot market.
Mr. HUGHES. Mr. Chairman, I know I am beyond my time but I
wonder if the other two gentlemen from Philadelphia and Califor-
nia would indicate whether they spend any of their dollars abroad
in promoting tourism.
Mr. SULLIVAN. Yes, Congressman, we do. We have had an office
in the Orient for a period of time until it got excessively expensive
and we could not justify it for our own individual operation. We
had to rely on the U.S. Travel Service.
We annually will spend in the area of $125,000 to $150,000 in
overseas promotion which is basically outside of North America.
We wish we could spend more because it is a very viable and
lucrative market for the United States and for the city of San
Francisco. Our resources just do not allow us to do it.
One thing that I would like to say is in all these conversations
about the private sector and its involvement in this program, I did
not hear in the hearings in Washington nor today the concept of
in-kind services. Many of our promotions overseas and most of the
successful activities that we are able to have for the city of San
Francisco is the cooperative effort of the carrier, the American-flag
carrier and the hotel chains located in San Francisco.
In receiving waivers from the CAB they are allowed to carry
these travel agents, tour operators, decisionmakers, mind changers,
international association executives, to our city at no cost to the
government and no cost to the city.
The hotels will complement their accommodations in our city.
The local transportation companies will provide transportation. We
are able as a city to have a much greater presence in a market
because of the in-kind services. This has also taken place on a
Federal level. The international pow wow of the joint effort of the
U.S. Travel Service and Discover America is taking place in New
Orleans next month.
All of the operators who are coming over to sign up for package
programs for next year, visits to the United States, are carried by
American-flag carriers not only to the United States but within the
United States at no cost to the Government or to the sponsoring
organizations.
This in-kind service in the case of San Francisco last year just on
airlines and hotel rooms amounted to over $300,000 which we
PAGENO="0547"
543
would have had to pay out of tax funds or private subscriptions
were it not for the private sector's contribution.
Mr. HUGHES. Thank you.
Mr. HOSMER. Congressman, we have not been as active on the
international level as we would like to be or probably as we should
be.
We have had certain problems just domestically in building up
the bureau and permitting Philadelphia in the past 3 years. Our
strategy document and market plan for 1981 does call for extensive
funding and manning and promotion of the international visitor in
that year. In that strategy document it calls for an office represent-
ing Philadelphia in the area of tourism and conventions in 1981.
Mr. HUGHES. Thank you very much. Thank you, Mr. Chairman.
Mr. FL0RI0. Mr. Hosmer, you made reference or implied that
there would be some difficulty if you had to rely upon the Pennsyl-
vania State government for your source of funding because of the
changing attitudes and budgetary constraints from time to time.
That reflects this committee's concern about exclusive reliance
upon the Federal Government particularly in light of the past
history at the executive branch particularly where there has not
been any great enthusiasm for funding for tourism, the feeling
being expressed by some that tourism is kind of a frivolous activity
and is not highly deserving of a high priority of dollar allocations.
It is because of that concern and the feeling that this committee
has that tourism is something that is important and should be
provided with some degree of stability in terms of funding for any
new type of entity and the feeling seems to be emerging from this
committee that there should be a Federal role in funding and it
should not be the exclusive source of dollars for the funding of this
whole new body.
Does that strike a responsive chord in your thinking?
Mr. HOSMER. Yes, to this extent, Mr. Chairman. I did not mean
to suggest or imply when I used the word "hazardous" incorrectly
in State funding. The amount is the only part that is hazardous.
Pennsylvania was the pioneer in matching fund programs to
promote tourism. It did so probably starting some 16 to 17 years
ago. I believe six States are studying the legislation that put that
kind of law into effect.
I did not mean to say that it was unstable or created a risk. I
simply meant to imply that we never know how much money is
coming but for each of those 16 years we have been generously
funded. The example I gave for this past year, $580,000, coming to
one city out of 54 areas of Pennsylvania promoting tourism, it was
a big step from $237,000 last year. That is all I meant to say.
I do not think it is hazardous. I do not think it is risky. I think it
is as stable as any of the 148 bureaus including New York and San
Francisco who at times find their budgets varying from year to
year.
Mr. GILLETT. I would like to add to his comments. If you will
study the history of all of the private nonprofit convention and
visitor bureaus in the United States you will find all of them have
had problems in raising funds from governmental agencies. If you
will study that further you will see that over the past 20 years this
has evolved to the point where all of them are receiving anywhere
PAGENO="0548"
544
from upward of 2.i to .~i0(~ percent higher than they received 20
years ago.
In essence all of them now are receiving much more. As Mr.
Hosmer said. the amount may vary but tourism has caught on and
its importance has caught on in governmental agencies and in the
municipal agencies. It is universal now and recognized.
It was considered frivolous and unnecessary and especially in
New York City we had the disadvantage of this great wonderful
city that people felt sold itself. Nothing sells itself as the national
advertisers have found. As great as the United States is, it too does
not sell itself.
Mr. FL0RI0. I would only take issue to this one extent that it
may cccv well not be the case that it has totally caught on, that is
that tourism s importance has totally caught on.
As you know. h months ago. the administration was proposing to
eliminate even the modest proposal of the modest body we have at
the Federal structure and at the Federal level for the continuation
o~ Federal input into tourism policy. There is really still some
question as to whether there is a full appreciation by all govern-
mental entities as to the importance of tourism.
Mr. GILLETT. I would take slight issue with you on that for only
this reason. that the very fact that these cities have done so well
and the States have done so well has perhaps weakened in a sense
the Federal constituency. It has worked in a rather vicious circle
that way.
Mr. FLORIO. I would like to ask a question of Mr. Sullivan. You
stated you felt the establishment of this nonprofit corporation
would be beneficial because in a sense it would be used as the
official governmental entity in dealing with foreign governments.
That premise was put into direct question at our July 25 hearing
by officials from the Department of Commerce in raising the point
this would not be an official governmental entity and accordingly
as you may have read in the testimony there was the feeling there
would be a great number of problems generated because we will
not be dealing gocernment to government with other national gov-
ernments and in fact there would be some serious difficulties
brought about because this nonprofit corporation with great au-
thority would not be able to deal on an equal basis with other
governments.
How would you respond to that?
Mr. SULLIVAN. Mr. Chairman, it is not the intention of anyone
who has been involved in this concept for a number of years that
we have become a party to SALT II. The idea is strictly that as an
official representative of the citizens of the United States of Amer-
ica operating under the umbrella of a congressional act that official
invitations to come to the United States and to meet in the United
States and to hold an international congress in the United States
can be extended.
This is not taking the place of the State Department in any
manner. shape. or form. This is strictly a mechanism in the com-
netitive marketing area. All other countries do it. They do it in a
`.ariety of ways.
We have had extreme difficulty in getting any kind of official
invitation where the United States says we would like to host your
PAGENO="0549"
545
international congress on ophthalmology in 19~. There is not a
mechanism at the present time which allows this to happen be-
cause of the complexities of government.
We are simply saying that as a marketing tool that through this
development corporation with the oversight of Congress in its poli-
cies and activities and the board of directors, there is an avenue to
get into this frame of reference.
We in no way are trying to become nor is this an act to try to
become another official government spokesman on an intergovern-
ment level.
Mr. FL0RI0. The point which was made by the Department of
Commerce spokesperson at the hearing in Washington was that for
the most part tourism initiatives in other nations are in fact gov-
ernmental initiatives or governmental proposals, administrative
tourism or whatever. Specifically, there was a reference to the
Mexican Government. I think that was the context we discussed
this point in.
I do not think it is appropriate here. The Department of Com-
merce then went down a list of specific problems that would be
entailed if in fact the quasi-governmental corporation was to be the
semiofficial governmental entity that was going to be the spokes-
man for tourism in this Nation.
I would like for the representatives here at the table and per-
haps any other organization in the audience to provide to this
committee if they see fit, after reviewing that testimony, their
direct responses to those points. That was something which was
very troubling to the committee. The points that were raised were
specific and they appeared on their face to raise some legitimate
questions to the degree that you gentlemen and your organizations
or any other organizations feel qualified to respond to those points,
it would be very helpful to this committee.
Mr. GILLETT. I feel qualified now to make one comment about
that testimony which I did read and study. I would simply say this
was bureaucratic nonsense. I do not agree at all with it. I do not
agree with the premise about the foreign governments. I do not
agree with the fact that we should be looking to foreign govern-
ments as the sine qua non of what we should he doing.
I think there is a great deal of investigation going on the face of
it. Some of that sounded like it made sense. When I read it, it
made no sense whatsoever to me. I do not know how I could be
stronger.
Mr. FL0RI0. We appreciate your succinctness in summarizing
your thoughts. Perhaps if you did see fit to elaborate a bit more,
we would appreciate it.
Mr. GILLETT. I will be happy to.
[The following letter was received for the record:]
PAGENO="0550"
546
u 1, mc Cot votioo and \iotort hurvau Inc. `,o East g:nd Street, New York, N.Y. 10017 i5~-i 100
August 22, 1979
Son' rabo James C. Florio
Chairman. Subcommittee on
Transportation and Commerce
... ....,,.., `.f nbc Committee on Interstato
and Coroigr. Commerce
P..'oo lli0
~`. "` Houso Ctitc'e Building Annex No. 2
.~. .. Sasltingtnr. P.C. 20515
Peat Mr. Chairman.
As :na:rnan of the National Council ot Urban Tourism
Crganizatf~.rs I deerly appreciate the opportunity to
rest If: Ce~ore the Subcommittee on Transportation and
or. Au'gu°t 15 in regard to a national tourism
r.c7ICC and a supporting mechanism to eftectuste that
I also melcome tour request to comment on the testimony
ot Eloa Porter. Assistant Secretary of Administration,
U. S. P':partm.ent oi Crt~erce.
Mrs. Porter is a highly respected government official
and et t e a expre sed in the testimony before
your Subcommittee. reflect the views of the Administration.
These arc hasically the views that have been expressed
by Mrs. Porter in earlier testimony.
vIsas desorve nerfoua consideration and I do not
`~ear I : denigrate Mrs. Porter or anyone else in the
Pepsrtment oi Commerce or elsewhere in the Administration.
Homever. I want to state, as I have on other occasions,
that these viems are contrary to the basic conclusions
that have evslved from years of study and a tremendous
investment of time and effort.
Mrs. Porter has stated support for a strong tourism
sector, hut her recormmendatiens are that tourism be
relegated to the province oi a bureau within the Commerce
Pemarrnents Industry and Trade Administration.
a further downgrading of tourism from even the
sx:srnne Cnfred States Travel Service, which has been
fnelfootfva largely because it has been hamstrung by
vernment restrictions and policy.
PAGENO="0551"
547
The lesson we have all learned through years of effort
invested in the USTS is that the United States caonot
have an effective program totally within government
to market visitor traffic from ahroad.
I might add that me have learned that lesson, too, in
cities throughoot the country -- and that's why the
really successful urban tourism programs are operated
hy private, non-profit organizations.
I note also that Mrs. Port or suagest s that tic bureau
of Tourism in the Comnerce Peparcmont `5 Industry and
Trade Administration focus on data gathering, research,
policy and analysis, technical assistance and coordination
of government agencies. She specifically states that
the Administration continues to ml ieve that direct
advertising, direct tourism promotion is not consistent
with government export policy.
As I stated in my testimony, if we are to have a meaningful
tourism progmam -- with pus it ive impact on tic balance
of payments government must find a mechanism to
aggress nvely market cur superb tourism product . The
quasi-public corporation in the legislations now under
consideration gives us the basis for estahtisttinc such
an organization, largtly free of c'vernment bureaucracy
that is the antithesis of successful marketiac.
Mrs. Porter raises a number of a-hat I consider minor
problems involved in establishing a quasi-public corpor-
ation. I cannot say that I have the sped fic answers
to these probtems, but it is clear that cur government
with ifs prestige and economic influence should have
no difficulty resolving these minor prebtems. tie should
remember that the key markets for travel fo the United
States from abroad are the very same count rids which
benefit most from travel originating in the United States.
That certainly gives us tremendous clout in arranging
reciprocal agreements. The corporation, although a
private, non-profit agency, would he a totally affiliated
agency of government and certai clv would he recognized
ant1 respected as such.
I respect fully reiteraf,' ny lenc-held and oil-,-xe.-ess'd
conviction that-only a -rivate, non-profit agenc'.- can
carry out a marketing futer ion abroad for fourier-
the cat ion ` s effort . I f we are f e relegate t hi
of fort to a minor bureau and concent rate on research
and other support fund i ms -- rather than di ret
market ing -- then we a-i 1 1 fail to capital i ze fut Iv
on ccc of this nation's most import ant economic
resources.
Sincerely,
Chart os Pitt or
President
PAGENO="0552"
548
Mr. SULLIVAN. Mr. Chairman. one point is this legislation encom-
passes three concepts. One is the national tourism policy. One is a
consultive mechanism that is in government and the other is a
marketing-sales corporation to effect incoming tourism5 balance of
payments and this kind of thing.
The questions which Mrs. Porter was raising more rightly fall
into the second category of the consultive mechanism which ~L
government and is intergovernment and has its representatives of
State and all the other departments. To put that burden on the
marketing part of this total concept I think the focus is in th.e
wrong place. The focus belongs in the consultive mechanism.
Mr. FL0RI0. I think ~ou are probably correct with regard to the
focus. One point which comes to my recollection was she was
saying if in fact in the course of marketing that the public corpora-
tion or the quasi-public corporation has the need to set up an
overseas fair and overseas symposium that they might be pre-
cluded from doing that by virtue of being a nongovernmental
entity.
I am suggesting to you that this committee would really value
your specific responses to those points.
Let me raise one last question to Mr. Gillett. You advocated sales
as a function of the corporation. Could you elaborate on what you
consider is the sales function of the corporation?
Mr. GILLETT. I consider that the main function of the corporation
in the sense that its whole purpose is to attract increased visitor
business from overseas.
Mr. FL0RI0. Generalized promotion or specific?
Mr. GILLETT. I am talking about every tool of marketing, every-
thing from advertising, public relations, merchandising, sales, all
down the list. I think sales encompasses all that but sales is th.e
primary factor.
Mr. FL0RI0. I suppose what I am asking for is inasmuch as th.e
total industry will be represented by this corporation, are we talk-
ing specifically about providing the corporation with the where-
withal to go and sell specific airlnes or airlines in general?
Mr. GILLETT. No. This also applies to every city, especially the
three cities represented here.
All of us are spending the Convention Bureaus' money to pro-
mote, using all the tools of marketing. This is augmented by all the
airlines in our respective communities, all the hotels in our com-
munities. the major department stores in our communities. In the
case of New York City. it is the theater industry and so on. It is all
working together which makes it really amount to something.
I would imagine that would continue the same way on a Federal
basis. I think the importance of the Government role is the fact
that the Government is really the catalyst to pull all of this togeth-
er. I think otherwise private industry would not have to be going t.o
the Government to do this.
Mr. FL0RT0. Do you see any possible difficulties with regard t.o
industry versus industry competition or geographical area versus
geographical area competition within the context of this corporate
proposal?
PAGENO="0553"
549
Mr. GILLETT. Not any more than the cities face. We have a
Macy's and a Gimbels. We have a Waldorf-Astoria and a Biltmore.
We are selling all of these properties. We have the various airlines.
We, and I am sure the other gentlemen would say the same
about their organizations, are completely impartial in our sales
programs. We do not push Macys over Gimbels. To do this, you
have to set that up as a primary creed of the organization to start
with, in the same way the Federal Government would not be
selling Arkansas over Missouri.
On the other hand, the Federal Government should be conscious
of the fact-and the corporation would be in a better position to do
this than a Government agency-that New York City is still the
No. 1 visitor goal of the world. I know I will elicit smiles with this.
In essence what I am saying is the corporation would not be
trying to spend equally for Arkansas and New York but would
realize more should be spent in New York than should be spent in
Arkansas.
Mr. FL0RIO. I would note that you did not get smiles but you got
some frowns.
Mr. HOSMER. I think analogous to Mr. Gillett's remarks, in Phila-
delphia and this was hinted at by Mayor Lazarow earlier this
morning, when the group of 12 Atlantic City people and the 10
Philadelphia people got together last week, it was a union to try
and sell the overall communities of both Philadelphia and Atlantic
City.
While at first glance it would seem to some people in our city
that why promote an area that is high competition for Philadel-
phia. We believe today and I think the mood has changed so that
we are selling the overall destination and we are trying to make
people mobile. We would like to have them in Philadelphia for 10
to 12 days as a tourist but know that probably is not going to
happen.
If we can have them 41/2 days or 5 days, fine. If we can combine
the advantages of an area like Philadelphia and Atlantic City, we
believe it is in the interests of both those cities. Similarly we do the
same thing with Valley Forge and we have just this year started a
package plan promoting Philadelphia and Atlantic City.
We are not selfish in that respect but the point is we try to make
the visitor mobile, feeling there is enough business around for all
of the communities. I think other cities are doing this also.
Mr. FLORTO. Gentlemen, let me express my appreciation and the
appreciation of the subcommittee for a very informed and knowl-
edgeable testimony which is going to be very helpful. We appreci-
ate your cooperation.
Mr. GILLETT. I would like to add one comment, Mr. Florio, so that
we will be completely understood on this marketing aspect.
I believe that the United States should use the same marketing
skill of a large corporation selling its products. What I said before
about New York City and these other States. I could compare it to
the Ford Motor Co. The Ford car itself is its best selling product.
That does not mean they spend more money promoting the Conti-
nental. They still spend more money promoting the Ford because
that is how they should be promoting.
PAGENO="0554"
550
In essence what I am saying is the same skills that a large
corporation uses should be used effectively to promote the United
States.
Mr. FL0RI0. We are very happy you took Ford as the example.
Gentlemen. thank you very much.
Our last panel will be comprised of Gary Shaw, the chairman of
the board of directors of the New Jersey Hotel-Motel Association;
Mr. Steven Norton, vice president, Resorts International, Inc. and
president of the Atlantic City Hotel Association and Mr. William
Weinberger, president of Bally's Park Place, Park Place and Board-
walk of Atlantic City.
Gentlemen, we appreciate your coming forward.
STATEMENTS OF (;ARY M. SHAW. CHAIRMAN, BOARD OF DI-
RECTORS. NEW JERSEY HOTEL-MOTEL ASSOCIATION; H.
STEVEN NORTON. VICE PRESIDENT. RESORTS INTERNATION-
AL. INC. AND PRESIDENT. ATLANTIC CITY HOTEL/MOTEL AS-
SOCIATION: AND WILLIAM WEINBERGER. PRESIDENT,
BALLY'S PARK PLACE
Mr. SHAW. Mr. Chairman and members of the committee, I am
Gary Shaw, chairman of the board of directors of the New Jersey
Hotel-Motel Association, a statewide trade association representing
nearly 90 percent of the first class hotels and motels in the State.
In addition to serving as chairman of the board, I was recently
appointed by Governor Byrne to serve as the chairman of the
Tourism Advisory Council to the New Jersey Department of Tour-
ism. I am also chairman of the New Jersey Hotel/Motel Associ-
ations legislative committee and hold the same position with Holi-
day Inns, Inc.
Both our association and I participated in the preliminary data
gathering phase of the national tourism policy study as conducted
by Arthur D. Little for the joint congressional Committees on
Commerce, Science and Transportation. It is a pleasure for me to
have had this opportunity to represent the lodging industry, the
backbone of the New Jersey tourism industry before this vital
hearing on the national policy study as it relates to Senate bill
1097.
Tourism as you are aware, Congressman Florio, is the third
largest industry in our country. Since you represent the citizens of
the Garden State's first congressional district, you full well know
that the tourist industry in our State is the second largest industry
and predicted by some to be the No. 1 industry by 1980 with the
advent of casino gaming.
For the record I would like to emphasize the size and dimensions
of the New Jersey segment of the industry as it relates to the
proposed national tourism policy.
Tourism provided $87 million in New Jersey sales tax revenue in
fiscal year 1977. Total tourism income for the same year approxi-
mated $8 billion. Twenty to twenty-five percent of the total work-
force in New Jersey is employed in the tourist industry.
According to the New Jersey Department of Tourism and I
quote:
When we add other tourist related income, e.g., boating, fishing, sporting goods,
transportation and gambling to the S~.3 billion dollar sales by restaurants, hotels/
PAGENO="0555"
551
motels, theatres and sporting events, it results in a total income of over ~1() billion.
When we take this figure and generate it just once we can call this a ~2O billion
industry making it the top industry in our State.
From the winter of 1973 during the Arab embargo to the
summer of 1979 we have witnessed a transformation in public
policy from an attitude of classifying the lodging industry as non-
essential to a new era of cooperation classified by the originator of
the largest hotel corporation in the world, Holiday Inns, as linking
the tourist industry and the Federal Government as "partners in
progress."
There is near uninimety of thinking from all sectors of the
industry on the subject of a national tourism policy. We whole-
heartedly support the passage of S. 1097 so that we may establish a
national public policy supporting the orderly development and pro-
motion of tourism and create a quasi-public corporation to carry
out the stated public policy.
Congressmen, I want to extend to you the sincere thanks of our
industry for blocking the Office of Management and Budget propos-
alto eliminate the U.S. Travel Service earlier this year. In addition
we echo your chastisement of the administration as a slap in the
face to the tourist industry and "an excellent example of how to
lose lots of money by saving a little."
During this perilous time of double-digit inflation, negative bal-
ance of payments, a monumental energy crisis and a projected
recessionary economy, tourism looms as a possible "savior." Your
revelation of a return on investment of 20 to 1 from the foreign
spending on "a pitifully small budget" and I quote you, seems to
portray better than I am able the "sleeping giant," economic
growth potentials open to the United States through 5. 1097.
Our major competitors for the illusive tourist dollar, Canada,
Mexico, France, and Japan, just to mention a few, have long since
adopted and legislated construtive and helpful tourism policies.
One hundred million world travelers and tourists think it was a
good idea. I think so too.
Our country must not only react but we must take a positive
approach immediately in the establishment of our own counter
offensive to reverse our pitiful balance of payments shortfalls.
I predict that if we do not act and act immediately, we may be
relegated forever to our current ranking of low man on the totem
pole in relation to all offshore and international governmental
tourism promotion.
Please do not misinterpret my previous statement as a plea to
curtail the travel of the citizens of our country. I am pleading for a
sagacious posture in both thought and deed which will arouse and
stimulate those from other countries to share in the beauty of our
land. We are ready, willing and, with the passage of 5. 1097, able to
assume our manifest destiny of being a host to the world traveling
corn mu n ity.
There is a crying need to consolidate and redirect the activities
of the 50 or more Federal agencies administering over 100 separate
programs which have both direct and indirect impacts on the tour-
ism industry. One single agency ministering to the needs of the
tourism industry is of paramount importance, not to create new
and more restrictive regulations but rather to work hand in hand
PAGENO="0556"
552
with us in the cultivation of our country's near natural resource,
tourism.
I believe I need only mention a few deterents to tourism and
travel to prove how our current public policy undercuts the basic
fabric of the industry.
The Environmental Protection Agency regulations impede the
construction of new properties.
The Department of Labor increased the minimum wage substan-
tially and is currently proposing a 40 percent increase in adminis-
trative base salary while the Council on Price Stability restricted
increases in prices which are needed to cover these mandated costs.
The Department of Transportation has regulated the removal of
roadside billboards directing the traveler to tourist destinations.
Unfortunately sometimes it appears to me that Government is
saying fill our unquenchable thirst for coppers but do it without
our help or support.' Do it with the weight of 50 or more agencies
and their conflicting rules and regulations strangling us.
I believe that a vote in favor of S. 1097 is imperative if we hope
to eliminate gross overregulation, duplication of effort and action
and a commitment to allow our country to compete effectively in
the all important tourist market.
In conclusion. I want to emphasize that our national organiza-
tion, AH'vIA. every major hotel corporation and indeed the New
Jersey Hotel Motel Association, appreciates your committee's ef-
forts on our behalf. We stand ready, willing, and most anxious to
help you reach your stated goal of the enactment of a national
tourism policy.
I know I speak for the entire industry when I urge your commit-
tee's rapid and positive action regarding passage of the bill we are
discussing today.
On behalf of this State's fastest growing industry, I thank you for
providing me the opportunity to address you today.
Mr. FL0RI0. Thank you very much. Mr. Norton?
STATEMENT OF H. STEVEN NORTON
Mr. NORTON. I am Steven Norton, vice president of Resorts Inter-
national. Inc. and president of the Atlantic City Hotel/Motel Asso-
ciation. I want to take this opportunity to welcome you, Congress-
man Florio and Congressman Hughes, to Atlantic City and to
Resorts International. We wish to express how honored we are to
have such a distinguished gathering here today.
In Atlantic City, private enterprise is working together with the
State. county. and city governments in rebuilding a city and serv-
ing as an economic stimulus in revitalizing the tourist and travel
industry of New Jersey. Simply stated, the aim of a national tour-
ism policy should be to bring more foreign tourists to the United
States and to keep more U.S. tourists from going abroad.
The major problem that I see with previous Federal assistance
for tourism is that there were too many committees, too many
studies. too many policy statements. and not enough hard sell
action.
For example. in reviewing the top 25 top ranked tourism and
travel needs as compiled under phase 2 by Arthur D. Little, Inc.,
PAGENO="0557"
553
the word "action" was never mentioned. The emphasis was rather
on "planning." Let me quote.
A need for planning. A need for greater research. A need for assessment. A need
for development of contingency plans. A need for higher priority. A need for more
extensive data collection. A need for streamlining. A need to insure uniform statisti-
cal collection. A need to establish guidelines.
When we are through with all the time and money that this
research and planning takes, we are even further behind our com-
petition than we are now and we have spent so much in research
and development that we have little left to advertise or promote in
these countries.
Let's come up with a few more acceptable verbs like `sell,"
"promote," "advertise," "experiment," "take action."
I realize that a Government bureaucracy cannot react the same
as private enterprise but with this draft legislation we are propos-
ing a tourism development corporation that must act quickly to
turn the tide of tourism to our shores rather than from them.
I am sure we all recognize that the U.S. dollar has been severely
devalued in relation to the pound sterling, the German mark, the
Japanese yen, and the franc. This means we have a much better
travel bargain in the United States than in England, Germany,
France, Japan, or Switzerland but because of the dollar's recent
value it now takes considerably more foreign visitors to the United
States to generate the same tourism revenues as Americans vaca-
tioning abroad.
In your national tourism policy background report you compare
tourism promotion budgets for those countries that heavily solicit
the U.S. traveler. Canada, Mexico, the United Kingdom, Ireland,
France and Spain all spend from $16 to $25 million annually to
attract foreign travelers to their countries. Much of this is spent in
the United States appealing to the adventurous nature of our
citizenry.
In the Bahamas, where I personally spent 20 years in the resort/
travel field, 70 percent of the Bahamas' annual budget comes di-
rectly or indirectly from tourism. The Bahamas through its Minis-
try of Tourism and through three area promotion boards spends in
excess of $16 million annually now for tourism promotion and will
attract nearly 2 million travelers to its shores in 1979.
This $16 million does not sound like a large amount but when
population and areas to be promoted are compared with other
tourism oriented countries, then the Bahamas' expenditure is enor-
mous. The results show a great return on investment of well over
1,000 percent.
The United States spends 6 cents per capita on tourism. The
United Kingdom spends 7 times that figure and Canada 18 times
this amount. The Bahamas spent more than 1.200 times per capita
what the United States spends, better than $70 for each of its
citizens.
Stating it a different way, the Bahamas with a population of
220,000 persons is spending more annually promoting their three
distinct areas, Nassau, Freeport and the out islands, than the
United States with 220 million people spends to promote a vast
country of 50 States with its myriad of vacation, sport, and histori-
cal experiences.
PAGENO="0558"
554
It is easy to be critical but to be constructive, what can we do to
improve our foreign visitor totals and their spending while in the
United States? First we have to ask ourselves several important
questions.
One, do we have a travel product that foreign visitors want to
buy?
Two, are there adequate means of transport with available capac-
ity to allow foreign visitors to get to the United States?
Three. do we have an adequate number of hotel/motel rooms
with excess capacity in our more desirable cities and resorts?
Four, do we have the travel means with available capacity
within the United States that would allow foreign visitors to move
from destination to destination in comfort?
Five, can our travel programs be competitive with our major
travel neighbors?
The answer to all of~ the preceding questions is an unqualified
yes. We have an exciting product with much greater variety than
any of our primary competitors. We have plenty of available rooms
with certain exceptions like New York City. We have unoccupied
airplane, train, and bus seats both to the United States and within
the country, with the capacity to easily expand the numbers availa-
ble and with an undervalued dollar we can develop packages that
are far less expensive than our Western European and oriental
neighbors.
Now that these responses have indicated a superb tourism infra-
structure, what can be done to increase tourism to the United
States and to encourage Americans to take more trips within the
United States and North America and fewer abroad?
One, we should provide cooperative advertising funds to United
States or foreign tour operators who are willing to risk charter
tour programs out of new overseas markets to the United States.
Two, we should experiment with a large advertising and sales
expenditure in one or two international test markets and monitor
the results.
Three, we should provide cooperative advertising funds to any
airline, United States, or foreign, that will develop special low cost
promotional fares to the United States from meaningful foreign
markets.
Four, we should promote an American rail, bus and/or air pass
similar to Eurailpass available only to foreign visitors while in the
United States
As for promoting Americans to stay in North America we should
provide cooperative advertising funds or other meaningful incen-
tives to Eastern United States tour operators or airlines if they will
switch some of their emphasis from Western Europe to Western
America or to their Western counterparts if they will promote our
eastern shores rather than the Orient.
We could also promote fewer vacations of longer duration utiliz-
ing mass transport to assist in the fight against energy waste.
What is our competition up to? Look at TV, read a newspaper or
magazine and you see actor Robert Morley giving details on a
myriad of tours to England and Scotland. Be enthralled about how
"It's Better in the Bahamas'~ or enticed by the excitement of the
Concord flights to Paris or London.
PAGENO="0559"
If a foreign country was attacking us with guns or bombs we
would immediately retaliate but we have been under attack by
foreign nations through a 2()-vear media seige by our travel com-
petitors, principally Canada, Mexico. Western Europe. and the is-
lands. We cannot see the whites of their eves on the battlefield but
we do see daily the black and white ad messages that encourage
our citizens to leave these shores for an obstensibly more exciting
overseas destination. It is incredible to me that we let other coun-
tries beat us at our own game, free enterprise, while at the same
time increasing our trade deficit and ultimately further devaluing
our own dollar.
The eminent historian Arnold Toynbee once said, "To be able to
fill leisure intelligently is the last product of civilization."
If we can meet the challenge by bringing more tourists from
abroad to the United States and in fact encourage our citizens to
visit other parts of our country, we can benefit not only economi-
cally but by improving the awareness of our citizens for their own
country.
Rather than budgeting $25 million for the U.S. Travel Service to
keep our country from falling even further behind in our tourism
trade deficit, we should be investing 100 million or more to create a
substantial impact in Britain, Germany, Japan, Canada, and possi-
bly other countries, to immediately increase the demand for travel
to North America.
The National Tourism Policy Act, section 101(b) reads:
It is the purpose of this Act to use all practicable means and measures including
financial and technical assistance to implement a national tourism policy that will
optimize the contribution of the tourism and recreation industries to economic
prosperity, full employment and the international balance of payments of the
Nation.
We cannot increase the demand for North American travel by
just planning, study and research. We need quick and decisive
action with a powerful team of tourism professionals and a budget
that indicates a willingness to fight for our fair share of the inter-
national tourism dollar.
Let's fight. It might be `Better in the Bahamas" but with our
tremendous variety of vacation experiences, it is `sensational in
the States."
Thank you.
Mr. FL0RI0. Thank you very much. Mr. Weinberger?
STATEMENT OF WILLIAM WEINBER(;ER
Mr. WEINBERGER. Congressman Florio, Congressman Hughes,
ladies and gentlemen, speaking after my two distinguished col-
leagues, I feel like one of' the opening acts that resorts bill or
following Joe DiMaggio in a batting lineup.
I have briefly outlined the reasons why the United States should
continue to staff foreign offices to promote international tourism.
The foreign offices could serve as a clearinghouse for sales and
marketing personnel in the gaming industry. While gamblers are
the mainstay, hotels must operate at a profit and Park Place is
committed to booking conventions and group travel tours. The
foreign offices could assist us in making contact with those private
agencies and corporations interested in bringing people stateside.
PAGENO="0560"
556
These offices could also funnel us information on seminars, trade
shows and exhibitions so that our representatives could make per-
sonal contact.
Item 2. If foreign travelers are aware of the gaming activities on
the east coast. then they could book their travels to New York
which is the port of entry and schedule a side trip to Atlantic City
and other shore points. This would benefit not only the gaming
industry but all the resort communities.
The Governors Tourism Council could work with the U.S. for-
eign offices in coordinating promotions. There are the international
groups. primarily in the academic. science, arts, and medical areas
that do come stateside for meetings. With proper promotion they
could be persuaded to visit Atlantic City as a side excursion from
their activities in New York, Boston. or Washington.
This is standard practice for national conventions. For example,
the American Hotel/Motel Association last year held its conven-
ion in Seattle then scheduled a 1-week tour through western
Canada for its members.
In Las Vegas the convention bureau there provides detailed mar-
keting information about convention goers. With similar informa-
tion about foreign travelers, whether in groups or alone, a good
effort could be made to attract the international traveler.
The United States should encourage the foreign traveler to come
here as a way to balance the trade deficit. According to current
data the travel accounts portion of our balance of payments in-
creased from £1.3 billion in 1960 to over £3 billion in 1972.
In 197~, the difference between American money spent abroad
and sums spent by foreigners in this country was $2.9 billion. No
more is there Europe on £5 a day for the American traveler. The
dollar is much stronger overseas. The foreign traveler is buying
American goods. hotels and food at a discount.
The U.S. foreign offIce could aid cultural and trade missions by
making sure their people are furnished with armloads of updated
information about points of interest, hotel rates, transportation
and so forth. Traveling in America is not as difficult, risky or as
expensive as foreigners believe.
When I was president of Caesars Palace in Las Vegas, we initiat-
ed a marketing program of going to foreign countries and enter-
taining prospective gamblers. These international parties opened
new markets for us. There is nothing better than a warm hand and
a smile to encourage foreigners to come to this country for a visit.
First you like the people then you like the country.
I might add when we started this program which was in 1973, we
had a one-half of 1 percent of in-house guests that we serviced. In
197.4 after initiating this program and going to Tokyo, London,
Mexico City, Vancouver. and several other places, our in-house
number of guests increased to 6 percent in 1 year. We considered
the program a great success.
I might add that the U.S. Travel Service in all these areas where
we visited were a great help to us in contacting local dignitaries,
telling us the protocols in the various countries. We spent the
money hut they gave us all the help we could possibly use.
As for the legislation itself, the quasi-public corporation is a good
way to approach marketing abroad. The corporation should have
PAGENO="0561"
557
paid executives who can be fired if results are not obtained or
explained. You cannot get rid of someone with a civil service rating
as easily.
These executives should adhere to a tough code of ethics so there
can be no accusations of favoring certain travel agencies or airlines
or flights through certain cities. The corporation should be run like
any business, it should be a giant travel agency. It should know
what the market share is, how to improve it, what is the strikes
against it, what can be done to attract more visitors, and where the
market is changing.
The National Tourism Policy Council would be a mistake. The
corporation should be free standing and not bogged down in mas-
sive Government bureaucracy. The corporation should be responsi-
ble to Congress or a committee but making it an arm of the council
would mire it in politics and special interests.
Thank you.
Mr. FL0RI0. Thank you very much. Congressman Hughes?
Mr. HUGHES. Thank you, Mr. Chairman.
I just want to thank the panel for some very excellent sugges-
tions. The testimony is extremely comprehensive and I know it will
be very helpful to the subcommittee.
Mr. Chairman, I note it is 12:15 p.m. We are running out of time.
I am not going to ask any questions. I just want to thank you, Mr.
Chairman, for inviting me to participate in today's hearing. Al-
though I am not a member of this particular subcommittee I do
hold a great interest in tourism since tourism is the largest indus-
try in my congressional district.
Thank you again for inviting me to participate.
Mr. FL0RI0. Thank you.
I really have just one or two questions and perhaps on the last
point you made, Mr. Weinberger.
My understanding is to the Senate's intention with regard to the
national policy council that it is really not to provide it with the
authority to control or dictate to the nonprofit corporation but
rather to have it as a liaison with the various governmental agen-
cies that have an impact upon tourism, to act as a coordinating
task force.
We know there are energy policies that have ramifications for
tourism. There are foreign policy considerations that have an
impact upon tourism.
The council, as I understand it, is designed to coordinate the
various governmental policies toward the end of maximizing the
benefits to tourism.
Saying that, it raises some questions in the minds of some indi-
viduals that maybe there should be more control.
There are some people who say that any involvement in the
corporation's business is too much involvement. On the other hand
there are those who say that, in fact, if we are talking about public
moneys that are going to be spent by the corporation, there is a
need for a higher degree of public accountability.
We are going to try to strike a balance between those two coun-
tervailing concerns.
I would really like to ask all three individuals for their thoughts
on this one last point. The feeling of the subcommittee as expressed
PAGENO="0562"
558
in the last hearing we had was there is a need for some direct
private involvement in the financing of this corporation, that the
financing should not be done exclusively by the Federal Govern-
men t.
The difficulty of course is how do you go about arranging that
and not even the commitment by the industry because the unoffi-
cial comments we have received since that time in July, when we
had this discussion was largely a favorable one from the industry
saying yes, we are not unalterably opposed to making contributions
but what is the system or how do we go about doing that.
There is precedent for this type of public or non-quasi-public
corporation. There are cotton councils. There are grain councils
whereby grain people and cotton people contribute to promotional
activities along with the Federal Government.
The difficulty that immediately leaps out is when you talk about
cotton producers, they are fairly easy to identify and you can have
some sort of a system, some sort of a formula in terms of productiv-
ity or whatever.
When we talk about the multifaceted industry such as tourism
with airlines, with restaurants, with hotels, and everybody else
really, we are having some difficulty coming up with an approach
that would provide for a rational system for contributions from the
private sector.
I would ask that at this point if any of you gentlemen have any
thoughts and realizing this is a very difficult question, that after
this hearing if you have the resources to devote to giving this some
thought, if you would be inclined to send to us your thoughts on
this subject, we would be happy to receive them from you.
I ask if any of you have any thoughts at this point?
Mr. SHAW. Yes, Congressman. I may stand alone. I am opposed
to a funding of public money by the corporation system. I believe
we need an intelligent input of knowledge. We need people on a
public quasi-corporation that have the knowledge of the tourism
industry.
To unfairly tax, for instance, the hotel corporations, the Hilton,
Holiday Inn, et cetera, when a guest comes to a hotel in the United
States, he is liable to order flowers for a room. Does the flower
shop then become a tourism mechanism that should be contribut-
ing to tourism? If he goes to a liquor store for outside liquor or a
drug store or whatever.
It is the feeling possibly of our association that we should go to
and I was just discussing this with our executive director, Charlie
Davis, a departure tax in the United States of all citizens leaving
the United States and fund that through a departure tax, where
those individuals leaving the country actually fund us.
It is our feeling that we are already taxed to the hilt in New
Jersey, as I have said in my statement. We put in somewhere about
~87 million in taxes and this is a guess, a 1977 figure. It is not since
the gaming industry in Atlantic City.
It is our feeling that there may be better ways to tax this than to
go after the public corporations which may have an unfair burden
on tourism. How are you going to get to theme parks? They are
individually operated. How are you going to get them to contribute
to this tourism mechanism of the corporation?
PAGENO="0563"
559
It is very easy to identify Holiday Inns, Inc. It is easy to identify
Hilton Hotel Corp. and Marriott and Pan American Airways and
National. It is hard to attack the smaller corporation that is de-
pendent upon tourism to fund that.
A good example in New Jersey would be Vernon Valley, owned
by a group of individuals and not a major corporation. How would
they contribute? They are going to benefit by it. We feel their tax
dollars may already benefit that particular corporation.
Mr. FL0RI0. Mr. Norton?
Mr. NORTON. I have one comment in that respect. In light of our
own corporation's experience in the past year, one ending June 30,
we have actually paid to the Federal Government over $50 million
in tax revenues which are entirely from travel and tourism. That is
what we have paid to the Federal Government plus another $30
million to the State of New Jersey.
We may have already paid a great deal more, one corporation, in
travel and tourism, then we are talking about as an annual
Federal budget.
If the Federal Government can act as the impetus to bring more
tourism into the States then those tax dollars are going to become
even greater. I think we are losing sight in the bureaucratic way of
thinking that this is an investment and we are looking for a return
on investment. We are not asking for a budget that is going to go
out and spend dollars that are going to see no return on invest-
ment. We are asking for an investment of tourism, advertising,
expenditures that are going to bring tenfold back to the United
States what went out. That is going to mean substantial tax dollars
for Uncle Sam and substantial tax dollars for the individual States.
If you have to have some sort of formula perhaps you can think
in terms of providing matching funds to States or regions or au-
thorities that are spending money overseas. Perhaps if the Federal
Government came and said we will match dollar for dollar any
program that you put on in Canada or in England or in France or
Germany, perhaps some of our authorities or convention bureaus
or State promotional agencies would try to find additional dollars
in order to promote foreign tourism.
Mr. FLORIO. Mr. Weinberger?
Mr. WEINBERGER. I will have to give it some consideration.
Mr. FLORIO. All right.
Mr. SHAW. Congressman Florio, may I add one fact to clarify a
point on Acting Director Richer's statement earlier that you made
a comment on?
Mr. FL0RI0. Certainly.
Mr. SHAW. Although the budget this year is $1.3 million and it is
down, I think it is important for the committee to understand that
2 years ago we had a $200,000 budget. We are up substantially.
Two years ago tourism did not play a part in the State of New
Jersey. Today it is a division level.
Mr. Norton points out about the tax revenue. Let me explain one
thing in the State of New Jersey. The division of tourism asks that
one penny of the gasoline tax collected on New Jersey Turnpike
and Parkway from the Department of Transportation and the
proper turnpike and parkway authorities be sent to the division of
PAGENO="0564"
560
tourism to be invested strictly in the promotion of tourism, there-
fore creating a domino effect.
We cannot even get a penny of the gasoline tax to help us with
the promotion of tourism in this State.
Mr. FL0RI0. Let me just respond to the last bit of conversation
and the conversation got off in the area of taxes which is certainly
one possible option for raising money but for the most part the
discussion at the committee level was designed to talk about volun-
tary efforts because the industry has expressed a willingness to
partake in a voluntary assessment mechanism and the difficulty is
in coming up with a fair equitable formula for such an assessment
and then how to go about determining who it is to be assessed.
As you point out the most visible parts of the industry are the
hotels and the airlines but there are other beneficiaries and we
have not worked out or even given too much thought as to how to
get to those other portions of the industry that may very well
desire to voluntarily be assessed because as they can appreciate,
the investment would yield great dividends in terms of a return on
investment.
This is something this committee is devoting an awful lot of time
on. Mr. Madigan has great expertise in the area of the grain board.
There is apparently an entity that is already operating fairly effec-
tively that is a privately and voluntarily funded board. We are
looking into that as a potential precedent example in the past.
Mr. HUGHES. Would the chairman yield?
Mr. FL0RI0. Certainly.
Mr. HUGHES. Actually I think there is even a broader question
than that and that is what role the private sector is going to play
really with the corporation in marketing overseas for instance, as
to how cities or industries can plug into the information booths,
and promotion areas set up overseas by such a corporation.
I think in addition to the question of financing you have the
broader area of how the private sector is going to interface with
any nonprofit corporation set up as part of a national policy.
I would likewise think that would be of interest in trying to
receive suggestions from the industry as to how they feel they are
going to fit into the overall picture. what their role is going to be in
any dealings with the corporation in trying to achieve the kind of
marketing we want overseas.
It is a lot broader. I think, than just the financial aspect of it.
Mr. NORTON. I just wanted to mention that you are our speaker
today at the Hotel Association luncheon in Atlantic City which is
going to take place in about 5 minutes. I have set aside a couple of
tables for anyone here who would like to attend. It is a very nice
luncheon and a very inexpensive luncheon. You are all invited. I
just hope there are enough seats.
Mr. FL0RI0. We thank you for the invitation.
Gentlemen. we appreciate your contribution and we thank you
for your appearance today.
The subcommittee stands adjourned.
[The following statements and letters were received for the
record:]
PAGENO="0565"
561
- STATEOFOKLAHOMA
OFFICE OF THE GOVERNOR
GEORGE ~GH OKLAHOMA CITY
July 30, 1979
This statement is submitted to The Honorable James J. Florio,
Chairman, Subcommittee on Transportation and Commerce to record my
support for the National Tourism Policy Act.
As past chairman of the Tourism Task Force of the National Lt.
Governors Conference, and now Chairman on the Subcommittee on Travel
and Tourism of the National Governors Association, I have a strong
committment to the tourism and leisure time industry. I am also
pleased to have been invited by Senators Daniel K. Inouye, Chairman
of the Subcommittee on Merchant Marine and Tourism, and John W. Warner,
Ranking Minority Member of the Subcommittee to serve on the Travel
and Tourism Industry Advisory Council which will advise the Senate
Commerce Committee on matters relating to travel and tourism.
Having been Lt. Governor, who in Oklahoma, serves as chairman
of the Tourism and Recreation Department, I have long felt the need
for a National Tourism Policy, and so indicated when I attended regional
hearings to make a study and recommend to Congress, a bill to enact
a National Tourism Policy.
One of the brightest lights in the American economy today is
the significant contribution being made by the tourism industry.
Lumping both international and domestic tourism together, this
industry is responsible for more than $100 billion in business
each year.
Yet the magnitude and economic importance of tourism still
has not made a significant impact upon the American public or
our governing institutions. With some exceptions, tourism is
still viewed as a pleasant pastime and peripheral activity of
minor consequence to the national economy.
Such thinking; of course denies the very fundamental contribu-
tions which tourism is making to employment, particularly the employ-
ment of minorities, the underskilled and women. Tourism directly
generates nearly four million jobs in our economy--or, nearly five
per cent of total non-agricultural payroll employment. In Oklahoma
alone, a preliminary 1976 study placed travel-generated jobs at more
than 60 thousand.
We have every reason to believe these figures are steadily growing,
as all indicators show an increase in the number of visitors to our
state. More visitors, obviously, require more services and that means
more jobs for Okiahomans. Incidentally, Oklahoma enjoys one of the
nations lowest unemployment ratings and I consider the growth of the
travel, tourism and leisure time industry as an integral part of our
good employment picture.
PAGENO="0566"
562
Travel & Tourism
July 30, 1979
Page two
In 1979 we will celebrate the 100th anniversary of the birth
of Will Rogers, a great Oklahoman and a great American whose wit
and wisdom made him one of the nations most respected and most
neloved heroes. The Will Rogers Centennial Celebration will be
marked by exhibits, programs, events and tributes throughout
the state, throughout the year, honoring this famed cowboy philosopher.
Because the Will Rogers celebration will help generate a sub-
stantial increase in the number of tourists in Oklahoma, we expect
a fast finish to this decade of growth in the economic benefits of
travel and tourism within our state.
An industry with such potential cannot be ignored. Nor should
~t be relegated to the sidelines of our economic game. A brief
look at the growth of international travel to the U.S. confirms this.
Ten years ago, in 1969, overseas visitors to the United States
number only slightly more than two million. This year we can expect
nearly six and one-half million such visitors.
During the same time period, Mexican visitors have increased
from less than 1. 1 million to an estimated 2.6 million, and Canadian
visitors jumped from 8.6 million to an estimated 12 million.
Some of this dramatic increase can be accounted for by lower air
fares which have reduced the cost of visiting the U.S., particularly
for European visitors. Another portion can be accounted for by the
increased value of the Japanese yen and some European currencies.
This factor has made the U.S. a much more affordable destination for
these international visitors.
While Oklahoma's blend of many cultures--particularly our exciting
Cowboy and Indian heritage--made this state an attractive travel destina-
tion, we have not been able to allocate sufficient resources to developing
strong international marketing programs. Therefore, we must rely on
other avenues of ~dmmunication with travel wholesalers, tour operators,
travel agents and travel writers in foreign nations. This brings us to
the nned for a strengthened Federal program, as realized through Senate-
cassed bill, S. 1097.
The programs of the U. S. Trade Service have been very important
to Oklahoma, providing a cooperative program for not only Oklahoma
but other states and cities to enhance their marketing programs and
increase consumer demand for our travel products.
Within our state, we have similar cooperative effort and feel
that much of the growth in tourism in the past few years has come
about because of these cooperative programs.
Our state has a great variety of historic, cultural, recreational
and scenic attractions. This variety is so diverse that it has been
extremely difficult for the Oklahoma Tourism and Recreation Department
to develop a comprehensive marketing image which would accurately
project our travel product.
This problem has been met by geographically dividing Oklahoma into
six countries for tourism promotion efforts, and allocating a portion
of our resources to each of the countries for specific promotion programs
on their part of the state. Our "Oklahoma--State of Many Countries!
theme allows us to use a portion of the available manpower and funding
to promote the entire state, while each of the six "countries--by
PAGENO="0567"
563
Travel & Tourism
July 30, 1979
Page three
matching appropriated funds with private dollars and volunteer
government in implementing a comprehensive tourism promotion
effort for the benefit of the entire state.
This type of coordination, integration of effort, this
synesgism, is possible on the national level through the National
Tourism Policy Council and the United States Travel and Tourism
Development Corporation. This joint partnership of public and
private resources and commitment will strengthen the benefits of
tourism and recreation.
The United States can expect to earn an estimated $8.7 billion
from some 20 million foreign visitors this year. No maf~~h~t
yardstick is used, $8.7 billion has a tremendous impact on our
economy. It provides jobs, contributes to the profits of U. 5.
businesses, and pays a portion of the taxes which create schools,
roads, and a host of other public services.
Yet some believe that the federal role in tourism is unneces-
sary at best. They are wrong.
We are on the verge of dramatic increases in both the number
of foreign visitors to the United States and travel receipts
generated by those visitors. We need even stronger and more
vigorous tourism programs which will benefit every state and locality.
No regional, state or local tourism organization is sufficiently
strong ~pursue the international tourism market to the benefit of
all. I hope all elements of the tourism indus~y will continue to
support a federal role in tourism, particularly the creation of a
system whereby realistic and reasonable policies may be established
to coordinate the myriad governmental programs which impact on our
travel, tourism and recreation industry.
Having been involved over the years with the development of
tourism at the state level, I clearly see the need for support at
the National level. Growth can continue with a cooperative and
coordinated effort as called for in 1097. I have no reservation
whatsoever in urging passage of this bill.
PAGENO="0568"
564
National Campground Owners Association
The National Trade Association of the Commercial Campground Industry
PLEASE REPLY TO:
STATEMENT OF
THE NATIONAL CAMPGROUND OWNERS ASSOCIATION
ON S. 1097
BEFORE THE
HOUSE INTERSTATE AND FOREIGN COMMERCE COMMITTEE
$UBCOMMITTEE ON TRANSPORTATION AND COMMERCE
T~e Nuora Cam~around Oaners Association NCOA) is a trade
association o~ 1°c cn~menca campground industry representing more
than 2700 o~ the ration s most successful private campgrounds and
croydina nationai repre~entation fo~ 39 individual state campground
assoc ations. The pH vate campground ndustr~ believes it imperative
Hat some mechanism he implemented to coordinate the myriad tourism
ntenests. both pub ic and private. NCOA strongly supports S. 1097,
the Nahcnai Tourism Po!ic~ Act.
NCDA agrees c°olebeartedi\ zHtn Title I of the bill, the
Nationa TouHsm Dcc: anc 5 encouraged to see this policy
ncuOec t~e . a*co~oe np this :egisiation, Congress will
~cn~nH. acnnoaedce :~e ~mOortance o~ tourism to the citizens of
~a:ior and to ~e econom~ . Tourism, ahich is among the top
ifl~CC ~cust~es n most states. nas ong needed this congressional
~ecocn ton. B~ enact: ng tre Nationa Tourism Policy as part of S.
1097. Congress demonstrates its support for the tourism industry.
II of this Act wou~d establish a National Tourism Policy
Counci~. This i5 pnecisei~ what is needed to coordinate the diverse
nte~ests in the tourism industrs . Bringing together on a regular
basis a cross~secLcn of goue~nment agencies concerned with tourism
in mere ccmmun:cohon and coordination among all tourism
nteneots.
Tne Cc~nc a be pa~t:culanly significant for small
ndepencen: ousresses H tourism. Businessmen including private
cumpancu~c oa~ers ~H oe neard and car use the Council as a
source of i nfonmat on on bun sm-neiated issues.
Toe lace of coondination among tourism interests, especially
those : n Inc ~edena government, creates a great potential for
contradictory information. This situation is especially difficult for
sma:l businesses. IndeDendent businesses with limited resources often
cannot cooe with the bureaucracy. The National Tourism Policy
Ccuncii should help to recti5\ this problem by bringing together
those agenc es concenned ~itb toursm. Title II should encourage
goeennment agencies ~ith ~~nf:i~~ng noicies to reconcile them in the
nteest a ~at:ona cc
PAGENO="0569"
565
As an example of federal agencies which seem to be working at
odds, please consider federal competition in the campground i ndus-
trs. The government continues to subsidize public l\ -operated camp-
grounds in national parks and national forests so tees to campers
are minimal. It is therefore considerably more economical to camp in
a publicly-operated -- and federally subsidized -- campground than
to stay in a private campground. Private campgrounds, primarily
family-owned and operated, are not subsidized. Fees must be charged
which provide a profit with which to support the owner s family, in
addition to covering costs of land acquisition, maintenance, and
operation.
While the government continues to support publicly-operated
campgrounds, the Small Business Administration recognizes that pri-
vate campgrounds are among those small businesses which are
adversely affected by federal competition. The SBA is currently
investigating the hardship of such competition on small businesses.
NCOA supports the SBA a examination of the adverse effect of
federal competition on small businesses. We hope that the National
Tourism Policy Council will include such matters within its scope.
The federal competition matter clearly indicates the need for a coordi-
nated tourism policy.
Numerous other examples of lack of coordination among federal
agencies can be cited. Among the proposed solutions to the gasoline
shortage was a plan to abolish weekend gasoline sales. Here the
interests of the tourism industry, which makes significant contribu-
tions to the nation's economy, were ignored. Weekend closings would
have had a catastrophic effect on the campground industry and on
other sectors of the tourism industry as well. A National Tourism
Policy Council could have insured that the interests of the industry
were considered from the beginning, before such ill-advised propo-
sals were made. That there is a need for a National Tourism Policy
Council is an understatement.
NCOA also supports Title Ill of S. log?, which would establish
the United States Travel and Tourism Development Corporation. Small
businesses often lack the financial resources to promote themselves
international l~ and private campground owners are no exception.
Private campgrounds offer alternative lodging and a new and re-
warding experience to overseas visitors that should not be over-
looked. A coordinated public relation's effort on behalf of U.S.
tourism, such as that possible under the U.S. Travel and Tourism
Development Corporation, would benefit all sectors of the industry.
Mr. Chairman, NCOA encourages approval of 5. 1097, the
National Tourism Policy Act, by this subcommittee. When enacted this
Act will improve coordination among the various interests in the
tourism industry. Conflicting policies should be resolved under the
Act. Government agencies and private businesses should be brought
together in the interest of a national tourism policy. Such coordina-
tion of tourism interests will result in benefits to the industry, to
the economy, and to the nation as a whole.
PAGENO="0570"
566
~$1ERIt~I~RESS
~:c K S~EE~ NW ISSHINGTON DC 20006
WFAM~~EKE
Hororanle Jases J. Florio
L. S. House or Hopresentatives
hasrir~ton, ii.C. 20515
toar ~1r. Florlo:
July 23, 1979
Thank you for your July 16
concerning Titles II and III of
Tourrsi~. POi1CV ~ct.
letter enclosing questions
S. 1097, The National
Encloses are cur answers to these questions. Rather
than as~erirr~ ead~ guestiaC individually, I ha~ provided
a general statenent for each group of questions ~knich
addresses the various issues raised.
I ho~ this raterial is helpful to you. If I can
provide any additional inforrration, please let ne know.
Sincerely,
Will ian
Rac los ures
PAGENO="0571"
567
QUESTIONS REGARDING A FEDERAL INTER-AGENCY CXX)RDINATING CoUNCIL FOR IOURISM
ANSWER: All your questions dealing with the Federal inter-agency coordi-
nating council touch cri the efficacy of coordinating nechanisms in
general and on the efficacy of the structure of S.l097 in partic-
ular. Let ire make one point first: I realize that people can de a
bed jcb of coordination, especially when it involves large organi-
zational entities, ~.kiether they be public or private in nature.
Nonetheless, there are substantive benefits to be realized fran
effective coordination and there is merit in trying to achieve it.
If the national policy statement is strorg and clear, then effec-
tive coordination should be sore feasible. As to streamlining the
Council, wo would be gIsi to work with the Casrrittee to streamline
the coordinating rrechanism.
QUESTIONS REGARDING A FEDERAL TOURISM CDRFORATION.
ANSWER: In answering your numerous questions on the tourism prarotion cor-
poration -- its mission and structure --, I would like to eddress
three areas: the appropriateness of the Federal role, what specific
functions the corporation should have, and r~at our crinpany already
does in this area.
1) Crily the Federal Government is charged with the conduct of
international econcsnic and political policy. The prcxno-
tion and increase of inbound tourism is international
econcxnic and political policy, and it is therefore appro-
priate for the federal government to conduct this activity,
as federal level entities cb in over 100 other nations.
State governments (e.g. Virginia, Wew York) prcirrote
tourism internally in the U.S., not abroad. Private
canpanies prcrote their c~n tours or their special flights
or their special hotel rates, but not the U.S. itself as a
destination point. No deubt this explains in part ~y
foreign inbound tourism receipts as a percentage of total
U.S. tourism industry receipts are declining (1977-1978)
fran a paltry 6% to an even trace paltry 5%.
2) As to the structure and activities of the corporation, and
to hce~ costs and personnel would b allocated to certain
activities, American Express' primary interest is in the
creation of a streamlined, results-oriented marketing
mechanism. The U.S. needs to be marketed abroad as a
prime tourism market, just as scores of other nations
pranote their countries as destinations. How that effort
could best he counted, staffed and expenuhe would depend
on the corporation's marketing plan. We at American
Express believe the marketing plan to be critical. We
advocated to the Senate that the corporation's first order
of business be to assemble the best marketing talent
available to develop a comprehensive marketing plan and to
present it to the Congress. Until r~e have the plan, how-
ever, n~e cannot specify staffing and expense details.
3) As to what American Express does in this area, I touched
on this on page 7 of try testirrony and made clear how
heavily our effort is skewed to U.S. tourists travelling
abroad and U.S. citizens travelling within the U.S.
PAGENO="0572"
568
o5 5MU56~~
INTERNATIONAL ASSOCIATION
OF AMUSEMENT PARKS AND ATTRACTIONS
7222 Vies: Ce'rnak Road. Suite 303
No'th RiQerside, Illinois 60546
312l 442-5866
August 2, 1979
Honorable James 0. Florio, Chairman
Cuooorxtittee on Oransoortation and Cotmoerce
Committee on Interstate and Foreigu Commerce
Boom 3150 - Anne:c 2
U. 2. House of Henresentatives
`Oashinotom, 2.0. 20515
SUBJECT: HEARINGS ON - 5109?
one International Assooiaticn of Amusement Parks and Attractions
IKAJA) is the only trade assooiation for permanently located
amusement faoilities throughout the world. Founded in the early
0900's as the National Assooiation of Amusement Parks, the IAAPA
is nor oomposed of over 1,000 nether parks, attractions, manufacturers
and individuals vith a vested interest in the industry. Approx-
imately 375 of these are astually &muserent facilities.
lttraotions and amusement marks are an inirortant component of the
nation's 561 billion a year travel-tourist industry. Our
oontribute substantially to the emr1o~tnt of nearly
four million Jnerioans in the tourist industry, as well as provide
mraotioal benefits, omlues and ionrovements in our quality of life.
Obey extend reouired relief by may of relaxation to the working
mopulatiom. Suth relief is more nesessary than ever in times of
Ia, as an association, fully suprert a National policy on travel
and tourism, and a meohanian to implement and coordinate that policy.
Naturally, n-c are disappointed that the AAministraticn has seen
fit to reooimo.emd ohs abolisbmumt of the United States Travel Service,
but me are appretiativa of antion of this Suboomuittee in approving
15.2705, a bill mhioh would reduce the Bashington Staff of USTS, but
mhith mould oiermit it to oontinua the International 2Jarketing Progran
thth an Sight lbllitn budget for fiscal 1980. Hopefully, the full
House of Representatives nil he able to act on this measnire before
Ceptomber 30.
Eu dJ a Rb/H 8/
PAGENO="0573"
569
Honorable fares C. Florio, Chairman, oontinued
Hubcoaaoittee on Transmortation and Coocseroe
Washington, D.C. 2C51d
In the neentine, we believe it is imperative that Congress apProve
as early as possible legislation establishlnC a quasi-aublis
oorperation outside the family of government, and outside the
oorporate family, but nevertheless related and inter-twined with
both. S1D9T will accomplish this by determining and administering
a comprehensive travel and tourism policy whioh will most
effectively enable the Industry to realise fully its ns~ential.
The U. S. Travel and Tourism Corporation is the proyer vehicle to
promote international tourism, to monitor the yrogran and activilies
of the various Federal Agenoies affeoting tourism, to provide in-
formation, researoh and other data te Congress, the Administration
and the publio and to advanoe to its proper role the sooial and
economio value of tourism in our country.
As a large employer of the youth of our Hation and as an industry wtiich
stands ready to open up new and expanded oeportunities for those
least able to obtain enplo~rsent, we welcome what we have reason to
believe will be a strong advocate of our industry and of tourism and
travel, in general. In furtherance of having a wore info~d and wore
responsive Government, we also strongly favor a cabinet level coordinating
Ceuncil.
We request that this staterrens be made part of the HearinC record on
GiGS?.
Very truly yours,
~ ~
Robert H. Dlundred
PAGENO="0574"
570
August 15, 1979
The Honorable dares florio
Chairnan, Cuncomnittee on Transportation
and Connerce
Interstate and Foreign Commerce Committee
souse u:ece su100rne annex n. C
Co senaif o: the 13 international unions we represent,
an enclcs:ns a atatenent we have developed on the aubjeot
of a natienel tourian roticy. Cur department, which represents
2.75 million neniero in the food, tourism and allied aervioe
trades industries, has naintabned an on-going interest in
tourism. We respectfully reqoest that our statement be
suinitted for the record.
Cf we can assist the corecittee in any way at all please
Cirent r of Pesearch
& Communications
PAGENO="0575"
571
The Food and Beverage Trades Department, .~FL-CIO, would like to
thank the House Subcommittee on Transportation and Commerce, House
Committee on Interstate and Foreign Commerce, for the opportunity to
present its views on S. 1097, the National Tourism Policy Act.
This department represents 13 affiliated unions in the food, tourism,
and allied service industries.1 Our members number almost 3 million and
work in many industries dependent on the tourism dollar.
We have closely followed the tourism hearings in both Senate and
House. During this time, a cross-section of industry representatives
have testified that tourism plays an integral role in both our society
and our economy, and that it has developed despite, rather than due to,
theactivities of the federal government. Many of these witnesses
have called for a new, federal involvement, along the lines outlined in
S. 1097, in the tourism industry. We fully support these proposals.
As a labor organization, our primary concern is jobs. Jobs are
the lifeblood of the American economy. The establishment of a national
tourism policy, with its cabinet level coordinating committee and quasi-
public corporation, could go a long way in strengthening the industry.
Among the expected benefits would be the insurance that tourism would be
given equal consideration with other major interests in the formation of
national policy -- so that never again would the iodustry be treated as
"non-essential".
1 Affiliates of the Food and Beverage Trades Department, AFL-CIO, are:
Bakery, Confectionery & Tobacco Workers International Union; Barbers,
Beauticians and Allied Industries International Association; Distillery,
Wine and Allied Workers International Union of America; International
Union of Operating Engineers; Glass Bottle Blowers Association of the
United States and Canada; American Federation of Grain Millers: Hotel
and Restaurant Employees' and Bartenders' International Union; United
Food and Commercial Workers International Union; Laundry and Dry
Cleaning International Union; United Association of Journeymen and
Apprentices of the Plumbing and Pipe Fitting Industry of the United
States and Canada; Retail, Wholesale and Department Store Union;
Seafarers Inteinational Union of North America; Service Employees
International Union.
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Further, active promotion of our country as a travel destination for
foreigners, would be a new, constructive investment in economic development
and international dialogue. When our great country, with its wonderful
and varied sights, attracts only five percent of the world travel dollar
we know teat an cooroved federal effort should mean a big return.
That the tour:sm collar contributes mightily to the American economy
is only recently realizec ice few quarters. In states like Florida and
Hawaii, tourism nsa eractacally constituted the local economy. Dade County
officials estimate bat 35 percent of total employment in the county is
related to the tourism oncustry. Unercployment in Hawaii would be about
50 percent if cot for tourism's contribution. Further, neither local
figure takes account of the multiplier effect. When a tourist stays at
a hotel, the collars cc spends their are in turn used by the hotel to
pay for essential oPerating services -- like paying for dry cleaning. To
meet its increased demand, dry cleaning establishments then spend the hotel's
dollar (and the travelerci to meet its operating costs. This may mean
imProving the ventilation system, in which case those dollars would pay
pipofitters. The smallest end most obscure business probably could trace
some of its income to tourism.
Tourism also plays important roles in many states less known for
their attractions than Florida and Hawaii. The state of Virginia is a
prime example. That state has published an excellent booklet titled
"Travel in Virginia 1977, An Economic Analysis". This report cogently
summarizes the effect the tourist expenditure has had on a "low tourism
profile" state economy. Anong the highlights of the report are:
-- Total eneloyrent in travel related businesses for
1977 was 157, 1Sf, or one but of six employees in
private commerce.
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-- The tourist dollar significiantly suppcrtc component
industries -- Lodging, Food and Beverage, Arrusement
and Recreation. Ninety-five percent of lodging industry
receipts, thirty-three percent of eatinc and drinking
receipts, arid forty percent of recreation services and
movie receipts come from tourist spending.
-- Twenty-four percent of state government revenues were
collected from firms and individuals engaged in travel
related services.
-- Forty-five cents from each dollar in travel related
businesses pays for the cost of goods and services
purchased from other industries. These purchases
created a market of $1.97 billion for producers and
wholesales and for a wide range of services, such as
power, fuel, advertising, laundry, and other expenses
in operating travel accoinodations.
Recent attempts to close gas stations on weekends in case of
shortages, once again point out the low priority which government has
traditionally imposed upon the industry. If the diverse elercents of the
industry had not jointly called attention to the drastic effect closings
would have on the industry, thousands of people would have lost their jobs.
The U.S. TraveiData Center estimated that 316,000 jobs would be lost with
weekend closings. If a national tourism policy existed, such an out-
`ageous wound to the economy probably never would have been proposed.
No finer reason exists for a national tourism policy than the protection
of thousands of jobs.
Our department applauds the efforts this committee has made on behalf
of tourism. A national tourism policy, something many other countries
have, is long overdue. Benefits associated with the policy -- more jobs,
a stronger dollar, and the pride associated with the promotion of our
country are in the best interests of all Americans. We respectfully urge
your commitee to favorably report a strong national tourism oct to the
House of Representatives.
[Whereupon, at 12:30 p.m., the subcommittee was adjourned.]
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