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UNITED STATES DEPARTMENT OF COMMERCE

UNITED STATES TRAVEL AND TOURISM ADVISORY BOARD

JANUARY 19, 2006

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The inaugural meeting of the U.S. Travel and

Tourism Advisory Board was held at the New Orleans

> Marriott Hotel, 555 Canal Street, New Orleans, Louisiana, on January
> 19th, 2006 at or about 8:00 a.m.

BOARD MEMBERS IN ATTENDANCE:

James Rasulo, Board Chairman, Chairman, Walt Disney

Parks and Resorts

Marilyn Carlson-Nelson, Board Vice-Chair,

Chairman and CEO, Carlson Companies, Inc.

Rex D. Johnson, President and CEO, Hawaii

Tourism Authority

Lawrence K. Katz, President and CEO, Dot\'s

Diner Restaurant Chain

Jonathan M. Tisch, Chairman and CEO,

Loews Hotels

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BOARD MEMBERS IN ATTENDANCE cont\'d:

Chris von Imhoff, Board Member, The

Anchorage Convention and Visitors

Bureau

Robert Taubman, Chairman, President and CEO, The

Taubman Centers

Albert A. Frink, Assistant Secretary of

Commerce for Manufacturing & Services

GUEST SPEAKER:

Honorable Carlos M. Gutierrez,

Secretary of Commerce

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23 REPORTED BY:

24 Gail F. Mason, RPR

Certified Court Reporter

25 Certificate No. 96004

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1 BY MR. RASULO:

2 I would like to welcome everyone

3 to the inaugural meeting of the Travel and

4 Tourism Advisory Board meeting of January 19th,

5 2006. Many of you were members of our previous

6 board which was the Promotion Advisory Board

7 which, frankly, had a far narrower mandate than

8 the Board does this year.

9 In 2003, we were asked to provide

10 the Secretary of Commerce on a destination

11 marketing campaign that was designed to develop

12 \-- to encourage individuals to visit the U.S.

13 We did an effort in the UK. We\'re going to

14 learn a little bit more about that later.

15 We\'ve also decided this year to expand that

16 knowledge from the UK to Japan.

17 This new Board has a much more

18 broader mandate, and I believe a much more

19 important one, which is to really advise the

20 Department of Commerce on the creation of a

21 national strategy around travel and tourism.

22 And in my opinion \-- and I know that all of you

23 around the table agree with me on this \-- that

24 the timing of this could not be more critical.

25 The world tourism market is

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1 growing and expanding rapidly. Other countries

2 are getting more competitive in attracting

3 international visitors and international

4 travelers. And most importantly, and a bit

5 alarming, the U.S.\'s share of the U.S. travel

6 market has dropped over the last 15 years

7 almost 35 percent. And that drop continues

8 even in the last five years where our share of

9 international travelers has diminished by about

10 20 percent.

11 So this Board really is charged

12 with recommending a national strategy to

13 compete for international travelers and,

14 hopefully, with the outcome of increasing that

15 share to where it once was, about 8 and

16 one-half percent from where it is today, in the

17 low 6\'s in terms of percentage, and really take

18 our fair share, given the assets of the U.S.

19 and the interest around the world in the U.S.,

20 of visitors coming to the U.S.

21 So the real questions that I hope

22 that we can provide answers to, we\'ll talk a

23 little bit about the structure around which

24 we\'ll try to do that is how can the U.S. really

25 develop a well-funded national coordinated

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1 destination marketing campaign. And there are

2 many facets of that, everywhere from how that

3 can be administered, how it can be funded, what

4 its target should be, what its timing should

5 be, and what the rhythm over the coming years

6 should be to establish or re-establish, I

7 should say, our presence as a country, as a

8 destination in international travel markets,

9 but also encourage visitors in increasing

10 numbers to come to our shores and experience

11 what all that our country has to offer.

12 Secondly, how do we continue to

13 seek that balance between having secure borders

14 but having an open door at the same time. Of

15 course, as John said last night, a huge step

16 was made this week in that regard with the

17 Rice-Chertoff statement, the summit and

18 recognition of this as a level of importance

19 not only to our mission but, in fact, in the

20 entire public diplomacy realm. And I think to

21 minimize that would be foolish, and I think to

22 incorporate that into a part of a national

23 strategy behind tourism and travel is

24 absolutely central.

25 And, lastly, what\'s the best way

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1 to ultimately make the case by proving and

2 designing a methodology to show, what I believe

3 will show, over and over in a resounding

4 fashion that this kind of investment by our

5 country is well worth it, that there are huge

6 returns, economic returns, returns in terms of

7 job creation and ultimately, I hope and

8 believe, returns in terms of the image of our

9 country around the world, which at the end of

10 the day is probably more important than both of

11 those things, but certainly contributes to the

12 desire of people to visit the U.S. or the

13 desire to experience the assets of this great

14 country and people of this great country.

15 So this morning I\'d like to think

16 that we\'re making a bit of a down payment on

17 establishing a groundwork for this kind of

18 work, to talk a little bit about our objectives

19 here from the Board members about opinions

20 about how we should go about this and sort of

21 start to hone this over the coming months

22 through a subcommittee structure to achieving

23 those goals.

24 But before we start that, let me

25 introduce our honored guests, and I\'m thrilled

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1 that he\'s here today, Secretary of Commerce

2 Carlos Gutierrez. As all of you know,

3 Secretary Gutierrez was CEO and Chairman of the

4 Kellogg\'s Company for a long time, obviously

5 now as a core member of President Bush\'s

6 economic team. And we are at the edge of our

7 seats and welcome you here today.

8 BY SECRETARY GUTIERREZ:

9 Thank you, Jay. I appreciate

10 that. And welcome to the new members who are

11 here and thank all of you for your service. We

12 often forget that this is what you do at night.

13 You have plenty of work to do in the daytime,

14 and you\'re very, very busy. You\'re running

15 businesses, but at the same time you\'re serving

16 your country. So I want to thank you for your

17 service.

18 I was told the other day, as I

19 was talking to a business owner, actually, in a

20 small part of the country, and he was saying

21 that the great part about tourism is that you

22 use existing assets. So you use assets that

23 are already in place. You use assets that you

24 don\'t have to depreciate. You leverage things

25 that already exist.

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1 So a starred place and a starred

2 site that a country has is an incredible asset.

3 The question is, are we using it? Are we

4 exploiting it? Are we leveraging it? And I

5 think about just that thought when he was

6 thinking about a small town and the fact that

7 he had some historical sites; and because he

8 had some historical sites, that made him or his

9 town a potential tourist destination.

10 And I think in a bigger picture

11 what we have is a country with natural

12 resources: The historical sites, the

13 entertainment, the cities. And I just can\'t

14 think of why we should be comfortable with

15 losing market share and why we wouldn\'t be

16 gaining market share at a time when people are

17 moving around the world so quickly and so

18 easily. It should be a time to discover

19 America as opposed to any other part of the

20 world. So I\'m looking forward to attacking

21 that with you and getting our heads around it

22 and making tangible progress.

23 It\'s interesting that the big

24 discussion today on the Hill and in Congress,

25 in business circles is our economy and whether

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1 our economy is a service economy or whether

2 it\'s a manufacturing economy and whether we are

3 going to turn into a country of

4 hamburger-flippers and we\'re going to lose

5 manufacturing. And I think that the debate

6 tends to miss the point that there is no

7 manufacturing without services and there are no

8 services would you manufacturing. And I think

9 the tourism industry very clearly highlights

10 that.

11 The numbers I saw have been 2 to

12 2 and one-half to 6 percent GNP, but the amount

13 of business that you generate, the amount of

14 indirect business you generate is about a

15 trillion dollars. A lot of that is

16 manufacturing. So, interestingly, many

17 manufacturing jobs in the country wouldn\'t

18 exist without the tourism industry. And I

19 think we need to help people think that way,

20 that it\'s not \-- that it\'s all intertwined.

21 It\'s all one big massive economy and that

22 tourism is incredibly strategic.

23 We\'ve all heard and talked about

24 our trade deficit. And one area of our trade

25 where we have a surplus is in services. This

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1 was clearly an area we\'re making progress.

2 It\'s clearly an area where we are exporting

3 more than what people export to us, which is

4 actually quite rare because we are such a large

5 and fast-growing market. It\'s always easier to

6 export to the U.S. than having the U.S. export

7 to a smaller country. But we have a surplus in

8 services. And I also understand that tourism

9 is about 27 percent of our service exports \-- I

10 hope I\'ve got these numbers right \-- but it\'s a

11 significant portion of it.

12 And then the other fascinating

13 thing is, we get concerned about the dollar

14 flow and the capital flow throughout the

15 country. We import items. The dollars leave.

16 But then very interestingly tourism,

17 international tourism, is a way of bringing

18 dollars back. So there\'s so many reasons why

19 this is a strategic industry and so many

20 reasons why I am just delighted to be able to

21 work with you and to do what we can to get that

22 market share rising \-- the profitable market

23 share rising.

24 New Orleans can\'t be rebuilt by

25 tourism. We know that. I believe we have

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1 announced we\'re going to give half a million

2 dollars for the Gulf Coast travel and tourism

3 and minor contributions. But, again, any

4 amount counts. And anything that we can do, we

5 want to do. I would hope that we can take

6 advantage of the moment and take advantage of

7 the support. There\'s no question in anyone\'s

8 mind or anyone who is in Washington that the

9 rebuilding of New Orleans is a big priority for

10 the President. And he makes it very clear

11 anytime he has his cabinet with him. And

12 that\'s an important moment to realize and to

13 capture.

14 I think there\'s also a great call

15 to action, a bit of a moment of positive

16 crisis, in fact, that we have lost market

17 share, to be able to speed up whatever we\'re

18 doing.

19 So we had talked about developing

20 a one-year national strategy \-- or, sorry \-- a

21 national strategy within one year. And we had

22 talked about developing a strategy for New

23 Orleans within six months. And I would just

24 throw out a challenge given the opportunity,

25 given the moment that we bring that forward and

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1 say let\'s have a strategy. Let\'s have a

2 national strategy in six months. It may not be

3 as perfectly designed as it would have been if

4 we waited a year, but I would just ask you to

5 think about what we\'re going to lose by waiting

6 another six months instead of getting started

7 earlier. And I think the sooner, the better.

8 So I would ask that you think

9 about it and that you take up the challenge of

10 having the strategy back in six months and

11 having a strategy for New Orleans in three

12 months. Again, we need something practical

13 that we can run with, not something that will

14 get a high GPA in a Harvard business class.

15 So as long as we can start moving

16 and be practical about it, we have the full

17 commitment of the Congress. We see this as a

18 very strategic industry. We see this as a very

19 symbolic industry at a time that we want people

20 throughout the world to know that we are the

21 best country in the world. There are things

22 that are standing in the way of that and

23 perceptions that are wrong. Tourism, again,

24 plays another role in that.

25 So you have the full attention of

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1 the Congress department and we are ready to

2 serve and to work with you. So thank you for

3 that.

4 BY MR. RASULO:

5 Thank you, Mr. Secretary. I\'d

6 like to take the opportunity while the

7 Secretary is with us to open up the floor to

8 the Board members for either questions about

9 the Secretary\'s comments or comments related to

10 that in the development of this national

11 strategy. I will start, Mr. Secretary, with a

12 little bit of a question as opposed to a

13 statement.

14 One of the things that we know \--

15 and those of us who have been speaking publicly

16 on this subject and have been in the halls of

17 Congress and spoken with the administration \--

18 is what we refer to as kind of a seat at the

19 government\'s table. How do we \-- and the facts

20 that you\'ve mentioned and there are many many

21 others that are equally concerning and create

22 the word that you use, which is we shouldn\'t be

23 comfortable. Discomfort often brings change \--

24 but how do we bring a level of recognition of

25 the importance of this industry \-- of all the

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1 industries that we represent around this table

2 \-- to the highest levels of attention within

3 the administration on Capital Hill, because I

4 think the fact that we\'re at a point of crisis

5 is a little bit of a secret. We\'re trying to

6 make that less of a secret. But any advice

7 that you have or any \--

8 BY SECRETARY GUTIERREZ:

9 Well, I think this is an

10 important forum. The question would be what

11 more can we do with this forum to elevate the

12 awareness of the industry. And I would elevate

13 the awareness of the positive aspects of the

14 industry. The crisis is something we can

15 manage. But I think this forum here is

16 something we have in place and how much more

17 can we build it.

18 The other part of the moment,

19 which is an opportunity, is the Secretary Rice

20 and Chertoff announcement, which means they\'re

21 also engaged and they also understand. They\'re

22 going to create an advisory panel. And I would

23 hope that there would be strong linkage between

24 this group and that panel. That\'s also a

25 forum, and that\'s also an opportunity to ensure

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1 that the State Department and the Homeland

2 Security Department have tourism at the top of

3 their mind.

4 And then in terms of other things

5 that we can do, we will take that away as our

6 own challenge and think about what steps we can

7 make to really elevate how critical this

8 industry is for our country.

9 BY MR. RASULO:

10 Thank you. And with that, let me

11 open it up to my colleagues.

12 BY MR. TISCH:

13 Mr. Secretary, yesterday I had a

14 chance to tour parts of New Orleans prior to

15 getting to our hotel. We were talking last

16 night that usually we think that TV exaggerates

17 things. In this case, my sense is it\'s an

18 undershowing of the reality of what\'s going on

19 here in New Orleans. And the scale and the

20 scope were quite apparent to me and at the same

21 time quite daunting.

22 We got back to our hotel where \--

23 we used to have about 250 employees. We\'re

24 down to about 115. And the one issue that

25 remains foremost in their lives and our ability

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1 to bring on additional staff members is the

2 question of housing. And what can we do as an

3 industry working through Commerce to assist in

4 that process? Obviously, it\'s an extremely

5 complicated issue. There are so many aspects

6 of the administration or the government that

7 are working on that.

8 But to a person, they said, we

9 need a place to live. It just struck me as

10 such a core place to begin this discussion, to

11 begin the rebuilding process. And as an

12 industry, maybe there is something we can do

13 working through Commerce to help in that

14 process.

15 BY SECRETARY GUTIERREZ:

16 Yes, this is something that we

17 had talked about with local officials, that it

18 seems that part of the problem was, one, houses

19 weren\'t being built quickly enough. And in

20 this case, that houses are being trailers. And

21 then they were being built in the wrong places.

22 So people are trying to work on the east side

23 and somehow their housing ended up on the west

24 side.

25 I don\'t know to what extent you

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1 have a window into the urban planning process,

2 and that we surely do have at least, you know,

3 a say at the table where urban planning is now

4 being done, that the Mayor is now planning.

5 And I\'m sure there are some technical

6 practicalities about where houses can be built

7 because of the electrical grid, the sewage

8 systems.

9 So, you know, there are some

10 urban planning aspects to it. But I think it

11 would be very helpful if we were able to be a

12 part of that group, and I don\'t know to what

13 extent you are. But we have to continue to

14 push FEMA and say move faster and get them out

15 faster. But I think the longer term solution

16 is that you play a role in where these houses

17 and those homes will be built so that it makes

18 sense from the standpoint of getting people

19 back to work.

20 I\'ll probably have a better

21 answer after I meet with the Mayor this

22 morning, but I think it\'s a great point.

23 BY MS. NELSON:

24 I\'d just like to say thank you.

25 We\'ve looked for a long time for someone to

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1 help us to bring those together who we need to

2 have collaborate. And I think the

3 Rice-Chertoff joint vision is extraordinary in

4 terms of recognizing the kind of

5 interrelatedness of these things, that we\'ve

6 had few times that we\'ve had anyone really

7 articulate how the impact of what was happening

8 in that arena on visitors and the perception

9 and the willingness to come.

10 So as we move through this and we

11 organize our subcommittees, I hope that you

12 will help us to actually do exactly what you\'ve

13 mentioned, to make certain that those

14 committees are populated with people with these

15 other kinds of experience so that we don\'t just

16 develop a promotion or an ease of travel

17 committee that has its own \-- where we just

18 exchange data that we\'ve been exchanging with

19 each other for a long time, opening this up and

20 collaborating and helping us to articulate the

21 fact that our \-- that we are a means to some

22 very important ends outside of our industry,

23 which you\'ve acknowledged. And I think that\'s

24 very very important for us. So thank you.

25 We\'re so grateful. This is an important

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1 opportunity, I think, for our industry.

2 BY MR. TAUBMAN:

3 I don\'t know how much this ground

4 has been covered in previous discussions, but

5 clearly you\'re talking about a seat at the

6 table, Jay. And it really is sort of a baby

7 step, as we talked about last night, of this

8 whole process that we\'ve been through over the

9 last several years. We\'ve been a committee now

10 for three years. And this is now, I guess,

11 three years.

12 It really feels \-- you know, at

13 one time we had allocated \$50 million as sort

14 of the initial step. And there were really

15 really high hopes that this would develop into

16 a very substantive campaign given how much

17 others around the world advertise here in this

18 country to bring us to their countries. And I

19 think we\'re all sort of sitting at the table

20 trying to find a way to really show the

21 importance of this industry to the overall

22 economy in those halls of Congress as Jay talks

23 about.

24 And I just want to impress again,

25 \$4 million \-- you know, obviously, we\'ll try to

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1 find the best options that there is amongst us.

2 But it really is such a small step as to what

3 needs to happen, and recognizing there are many

4 pressing needs in government especially today.

5 But somehow or another it can\'t be lost, that

6 this is such insufficient funds.

7 BY SECRETARY GUTIERREZ:

8 And I agree with you. I think

9 given my knowledge and my previous work, the

10 budget for fruit is a lot higher than \$4

11 million.

12 BY MR. TISCH:

13 The study of fruit was a lot

14 more.

15 BY SECRETARY GUTIERREZ:

16 The point, I think, that we need

17 to talk about is that this is \$4 million and

18 this is all our money. If it\'s a great idea,

19 why isn\'t the industry paying part of it? And

20 I wouldn\'t bank on the government continuing to

21 come through for our advertising industry. And

22 I say that respectfully, and I say that as just

23 understanding how we think about government is,

24 let\'s set the stage for industry.

25 I just wonder if the industry

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1 couldn\'t team up and realize that this is good

2 for you and increase that 4 million as opposed

3 to \-- and I want to be realistic in this day

4 and age when we\'re trying to cut deficits.

5 We\'re trying to keep tax rates low. There is a

6 lot of discretionary and mandatory money being

7 cut. It\'s very hard for me to commit to

8 increasing that. And, perhaps, there is a way

9 of getting the industry to contribute.

10 BY MR. TISCH:

11 There have been times where the

12 industry has done that, and there have been

13 times of dire need. Mr. Marriott put together

14 a fund after the first Gulf War working with

15 the first President Bush, and we responded.

16 New York City, we had funds put together after

17 the tragedy of September 11th. But I think,

18 especially to focus on New Orleans, sometimes

19 we\'re going to need government to jump start

20 that effort. And in talking to Steve Perry

21 (phonetic) last night, they have no money now

22 to spread the message that the French Quarter

23 is mostly open and is rebuilding.

24 And I don\'t disagree with you

25 that the private sector needs to show their

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1 responsibility, understanding their

2 responsibility in coming up with dollars. But

3 we also know that the countries that we\'re

4 competing with are spending far in excess of

5 what we\'re spending.

6 BY MS. NELSON:

7 I actually think two things.

8 When I was chairing the travel industry, we

9 went through an effort where money was

10 disappearing, and we decided as an industry to

11 create a demonstration project. And we did

12 raise funds, and we created this advisory USA.

13 And we targeted the UK. We went to Brazil and

14 Japan as a kind of demonstration project.

15 But maybe the problem that we

16 have is when we think of the kind of promotion

17 activity that we\'re looking for, it\'s a little

18 bit different. Perhaps it isn\'t promoting our

19 industry. Perhaps it\'s promoting our nation.

20 Our nation. And we can come in and ask for the

21 order in terms of visiting Disney or visiting

22 the upper Midwest and the Oregon Trail, but

23 that invitation \-- right now the world seems to

24 be longing to hear that the United States cares

25 and that we welcome them.

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1 And for us to do just kind of

2 general advertising that says, you know, we\'d

3 like you to come because we\'ve got a beautiful

4 country, it\'s really too far from the kind of

5 order we have to ask for which is much more

6 specific. And I think \-- so I think that

7 sometimes what happens is people see this as an

8 industry asking for itself.

9 And I think that your enlightened

10 statements at the beginning acknowledged the

11 fact that what we\'re talking about is something

12 very different. We\'ll step up and get people

13 to come to New York and to Minnesota. We\'re

14 doing it. What we don\'t have is any official

15 way to tell the world that this is a place that

16 really welcomes travelers, that all of the

17 little pieces of true or untrue that they\'re

18 hearing about the difficulty of entering, of

19 how we suspect them, whether or not \-- you

20 know, I had an elderly Norwegian who has flown

21 all over the world tell me she didn\'t want to

22 come to the United States anymore because she

23 thought that we thought she was a criminal.

24 And I said, Titty, what do you have to worry

25 about? She said, oh, it makes me uncomfortable

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1 to think of those men seeing me that way.

2 Well now, I don\'t see how even

3 our largest corporations with our largest

4 advertising budgets can start at that point

5 with saying this is a place that we want to

6 roll out the carpet. We had at one point \-- I

7 think it the first George Bush who actually did

8 a PSA that, you know, said to the world we have

9 a beautiful place and we would welcome you and

10 we\'re wonderful people and we\'ll take care of

11 you. Then we can come in and say we can get

12 you there, we can provide this experience.

13 But we need this kind of umbrella

14 that changes \-- that creates a context for our

15 proposition.

16 BY SECRETARY GUTIERREZ:

17 And I don\'t know if the umbrella

18 approach has actually proved to be effective

19 and voted us the way to go, and some were

20 thinking about the best strategy for patience.

21 BY MS. NELSON:

22 We have to come in behind it with

23 the private sector. I mean, there has been a

24 linkage.

25 (Inaudible discussion.)

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1 BY MR. TAUBMAN:

2 I mean, the sense of what Marilyn

3 said is that we were there to test. I think

4 the tests were very favorable, as I understand

5 it.

6 BY MS. NELSON:

7 Yes.

8 BY MR. TAUBMAN:

9 And it raised awareness in a very

10 positive sense throughout the UK, and we

11 increased tourism as a result. It is an

12 institutional ad campaign. At the end of the

13 day, I mean, you at Kellogg did very specific

14 advertising and I\'m sure you did institutional

15 advertising as well. Walt Disney does all

16 kinds of advertising. Take the UK we talked

17 about last night, and they draw customers and

18 tourists here. And they spend in the

19 restaurants. They spend on the airlines. They

20 spend in hotels. They spend in the gift shops.

21 They spent all over the place.

22 And we are the only country, in

23 substance, anywhere in the world who does not

24 advertise their country. And this is one of

25 the most important industries to our economy

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1 that exist. And, I mean, I\'m in the retail

2 business. And the number one activity for

3 tourism is to go shopping. So the spin-off

4 opportunities and how synergistic it is to get

5 that customer here to all the economy is

6 tremendous.

7 So while I recognize sort of the

8 call to action, as it were, of the industry in

9 a broader sense, I think the industry has been

10 doing its part and it continues to do its part.

11 I think it needs \-- it\'s sort of the

12 institutional program in order to help it, you

13 know, go beyond. And I would almost argue that

14 this \$4 million is so small that \-- and I don\'t

15 know what the appropriation allows \-- that if,

16 in fact, what you\'re really sending us is a

17 signal that we should be happy that this \--

18 this is what we\'ve got and we\'re never really

19 going to get up to the bigger numbers.

20 When we started this, that

21 initial \$50 million was meant to be a baby step

22 at that time. And the expectation was that

23 this would grow into a several-hundred-billion

24 dollar budget, you know, a \$500 billion plus

25 kind of budget, which on any scale, any scale

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1 basis is not enough. I mean, it really should

2 be a trillion-dollar-plus budget in the context

3 of the importance of this sector to the economy

4 and in the context of the need for placement

5 through out the world.

6 So I would almost argue that this

7 \$4 million should not be spent on advertising,

8 you know. If you\'re really sending us a signal

9 that this is what we\'re going to have, then we

10 ought to sort of drop back and say what else

11 can we do that is more industry-related,

12 because we\'re really not going to get to the

13 end game that we really need to hope to get to

14 when we started this three or four years ago.

15 BY SECRETARY GUTIERREZ:

16 Yeah, I\'m just trying to be

17 realistic and tell you what I think I know.

18 There is an agenda here sending a message. We

19 have \$4 million. They\'re appropriated more

20 than \$4 million for next year; is that right?

21 BY UNIDENTIFIED SPEAKER:

22 \$4 million is it.

23 BY SECRETARY GUTIERREZ:

24 So \$4 million is it. Let me just

25 tell you that the pressure we get back on these

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1 original cuts, and that\'s just one of our

2 realities. So at an easier meeting, I could

3 say, hey, we can go out and try \-- and we will

4 try. And I\'m thinking, perhaps, there\'s

5 something in the State Department, some

6 interest in the State Department because there

7 is a public diplomacy aspect to this, perhaps

8 they would be interested.

9 BY MS. NELSON:

10 I think that is exciting. If you

11 could think of that in homeland security

12 measures. We could think of transportation.

13 Everybody is going to be impacted in some

14 aggregate small amounts, and we could probably

15 get enough that we could start to move.

16 BY SECRETARY GUTIERREZ:

17 The other thing I want to \-- so

18 I\'ll take up that challenge and see what we can

19 do. But would the industry contribute? Is

20 there a way that we can get enough industry

21 participation? As you say, there\'s so many

22 industries that rely on this. Could we get

23 both sides wanting to make a contribution for

24 something in a bigger way.

25 And I will go back and see what

29

1 we can do and make a very impassioned plea for

2 it. But I think we should work together.

3 There\'s a part in here for a contribution from

4 everyone.

5 BY MR. RASULO:

6 I think, Mr. Secretary, that the

7 fact is, I think all of us around the table

8 have come kind of to the same point that asking

9 for appropriations and expecting them and as a

10 lynch-pin to our success probably is not the

11 right thing right now. And I think that we \--

12 to use Bobby\'s expression \-- we kind of have

13 dropped back and asked ourselves if someday we

14 think that\'s important \-- and I think a

15 destination marketing campaign is a vital

16 importance. It\'s not the only thing we need to

17 do, but it is one thing we need to do. And it

18 does need to be funded and capitalized \-- what

19 are the steps that we can take to change the

20 dialogue a little bit and have our government

21 look and say the right things and take the

22 right actions, not writing a check as the first

23 action but bringing us enough together to

24 galvanize what is, as I mentioned to you last

25 night, a conglomeration of industries that

30

1 employ 16 million people and have a vital role

2 in our economy.

3 And I think that what we feel

4 we\'ve been \-- as an industry we\'ve been lacking

5 is a sense in government that we are high on

6 the agenda, even if it isn\'t high on the

7 budget, high on the agenda of, hey, this is

8 important. How \-- whatever it is. How does it

9 effect tourism? How can we continue to make

10 statements to encourage our tourism industry,

11 that it is wise to spend over seas because if

12 they spend overseas, they\'re not going to have

13 water problems. They\'re not going to have

14 passport problems, et cetera, et cetera, et

15 cetera.

16 So I think \-- what I\'d like to

17 think of as this national strategy is more than

18 the obvious, which is that we\'ll find a

19 destination marketing campaign and we need help

20 in launching it as a starting point and having

21 it long-term partnering \-- in part capitalized

22 by the government, but that there are \-- that

23 we can point out a series of other steps to

24 kind of bring the tourism agenda hire on the

25 government\'s agenda because, frankly, there

31

1 will always be near-term competing priorities

2 for appropriations for Congress. I think we\'re

3 fully cognizant of that. We know it is tough

4 to step up and say, hey, if we don\'t invest

5 this year in tourism, five years from now or

6 share will look worse than it is today. Not a

7 very compelling argument.

8 But I think if you made that

9 argument about other industries out there \--

10 other industries seem to get more share of mind

11 in the government as part of the public agenda

12 than travel and tourism. And I think we can

13 take a huge step if we remember that that is a

14 drum that needs to be beat, because it seems to

15 be taken \-- and each of my colleagues have

16 their own perspective I\'m sure \-- but we seem

17 to be taking it for granted because we\'re

18 always there, we\'re always \-- we have sort of

19 big names with a lot of marketing behind them.

20 How could that company be hurting? How could

21 that industry be hurting?

22 But, in fact, we are hurting, and

23 I think maybe we\'ve been a little bit too shy

24 about that in the past, particularly in the

25 halls of government. And if we say one thing,

32

1 we should state it out there. You know what?

2 We do need help just like the manufacturing

3 industries need help. Just like other

4 industries of vital importance need help, we do

5 too. It doesn\'t mean that when you\'re standing

6 at the door with our hands out \-- and I think

7 our industry is waiting for a spark to be

8 galvanized that \-- so that when myself or Bill

9 Marriott or John or everybody else sitting

10 around this table stares in the face and says

11 am I willing to put \$10, \$20 million behind

12 sort of a general national marketing campaign,

13 I am because I know behind me is the force of

14 our government, the force of other things to

15 help push me over the finish line.

16 Today we\'re not there, and I

17 think we all face those decisions on a regular

18 basis. Generally we say, no, we\'re not doing

19 that. So I think that\'s a little bit what

20 Bobby was saying and John was saying about the

21 help we need to kind of get there.

22 BY SECRETARY GUTIERREZ:

23 It seems to me that we have an

24 opportunity with the strategy, national

25 strategy. So there will be a reason for

33

1 getting people a room, for exposing this for

2 making a pitch, for showing enough information,

3 enough data that actually can jolt people to

4 realizing that this is a huge opportunity. I

5 don\'t know to what extent you do spend time on

6 the Hill, but I\'m sure that there are states in

7 the country where you probably have a lot of

8 clout and a lot of use.

9 So my suggestion would be that we

10 need to go back and talk to others and see if

11 we can get some scale at the federal government

12 level. But it would seem to me that if we work

13 on this \-- and that\'s why I think six months is

14 better than a year, four months is better than

15 six months \-- the quick we do it, if we can get

16 a forum, so that we can expose a strategy, the

17 data situation. Perhaps we can get some

18 traction. But I see that as an opportunity

19 there.

20 BY MS. NELSON:

21 Would it help \-- I serve on the

22 board of the Mayo Clinic Foundation \-- and I

23 know John and his family is very involved in

24 that \-- there are a lot of issues both in

25 academic \-- in the academic world and the

34

1 health industry where people who used to come

2 aren\'t coming. And what\'s happening is a

3 clinic like Mayo and Johns Hopkins and the

4 Cleveland Clinic are actually opening

5 satellites so that they can keep their customer

6 base or patient base.

7 But satellites, they don\'t bring

8 the families here. They don\'t \-- so in the

9 sense we have allies, I think, there, we also

10 have allies in academia because we\'re aware \--

11 I serve on the Singapore Tourism Board, and

12 they\'re so proud of the fact that \-- the fact

13 that people are not wanting to come to the

14 United States to study or not \-- feeling

15 unable, Singapore is opening a whole new

16 center. They\'re going places like China.

17 They\'re targeting the brightest Chinese

18 students and bringing them to the university in

19 Singapore. And our universities are opening

20 satellites in Singapore in order to train

21 people who used to come to Minnesota or Harvard

22 or Columbia.

23 And so could we help you to help

24 us to pull together this, if we were to

25 mobilize some of the academic implications, the

35

1 implications for that particular sector or the

2 health sector? The problem sometimes I worry

3 about is that we, the tourism, has some

4 implications that may be more like ledger in

5 which we all appreciate, but the implication on

6 education and health are equally as important

7 perhaps in the long term even more important

8 because we\'re just not getting the best and the

9 brightest here, because a lot of them are not

10 certain they\'re welcome.

11 BY SECRETARY GUTIERREZ:

12 And to that point, I think

13 there\'s a certain wisdom and timing of today as

14 advertising have people come over and they

15 can\'t get visas. It\'s a little bit like

16 advertising a product that you can\'t get on the

17 shelf. So in the sense that we do have the

18 Rice-Chertoff, that\'s going to really give us

19 tangible results. And this is the right time.

20 It\'s also a reason to get a strategic plan to

21 our people.

22 BY MR. TISCH:

23 Mr. Secretary, if you look back

24 over the last 11 years where our industry was

25 and where we\'ve come, the results and

36

1 acknowledgement of what we\'re doing on Capital

2 Hill have been pretty outstanding. Ten years

3 or 11 years ago with the White House\'s

4 conference on travel and tourism which brought

5 together 1500 leaders in the industry, but it\'s

6 the first time any type of gathering of that

7 sort have been put together.

8 And right after that, the travel

9 business round table was formed. We now work

10 very closely with the Travel Association of

11 America, one former chair and the current chair

12 of that organization. But it was also during

13 that time that the \-- I guess you might say the

14 predecessor to this group, the USTTA was put

15 out of business.

16 And our mission all along was to

17 raise the visibility of our industry amongst

18 our elected officials. And I think this week

19 is probably historic with respect to that. You

20 convened this meeting here on the heels of the

21 Rice-Chertoff initiative. And I\'m proud to say

22 that I think a lot of what was included in that

23 issue was because of our prodding and our

24 pushing.

25 BY SECRETARY GUTIERREZ:

37

1 Sure.

2 BY MR. TISCH:

3 Jay and others. We went to

4 Capital Hill. We met with you, actually in

5 your office in June. We met with Secretary

6 Rice\'s team. We met with DHS. And I think

7 that we\'ve accomplished a lot, but we can be

8 doing so much more. And when you think about

9 maybe we don\'t have the absolute dollars to go

10 out and make a dent, but we live in a world of

11 media, what gets the media\'s attention?

12 Politicians and celebrities. And we should be

13 looking as to how we can combine those two.

14 How can we bring together politicians, the

15 ultimate politician, or get the ultimate leader

16 as the President? How can we combine the free

17 resources we have to draw attention to our

18 industry and what we can do for this country.

19 I also know that we\'re working

20 with Condelezza because she is the one that has

21 been asked by President Bush to deal with a lot

22 of issues that we\'ve discussed here this

23 morning. And we need to continue to apprise

24 her of what we can do by working together.

25 And when you think about what has

38

1 to happen in New Orleans, because you\'ve also

2 asked us to focus on those challenges, you can

3 filter it down to use a lot of the same

4 resources we did in New York City. We mounted

5 a campaign with celebrities, you may remember.

6 It was right after September 11th. We had

7 Henry Kissinger, Billy Crystal and Joe Torre.

8 And it made a difference. We got money from

9 the state, from Giordano, Governor Portachi.

10 And it made a difference. And I think those

11 are the kinds of things that we need to look at

12 that we can help with here in New Orleans.

13 As I said, New Orleans\' tourism

14 is ready to welcome visitors. We had a whole

15 theme in New York City. We talked a little bit

16 about it when we had a chance to sit with you

17 at dinner of having a trade commission in New

18 Orleans. You organize other trade commissions

19 in other parts of the world. Let\'s have a

20 trade commission in New Orleans to talk about

21 what we as Americans can do to help rebuild

22 this industry.

23 So I think there are parallel

24 tracks whether it\'s on a national level or to

25 help them here in New Orleans that we can be

39

1 thinking about by working together.

2 BY MR. IMHOFF:

3 Mr. Secretary, would you be

4 willing to lead a trade delegation maybe to

5 some of the major countries that we have

6 identified such as Great Britain, Germany or

7 Japan? I think that, again, due to the fact

8 that we do not have the funds to do the

9 marketing, but that would raise the awareness

10 that the United States is welcoming visitors.

11 I think that travel with our

12 Governor on trips like that where we used the

13 embassies for receptions and invited all the

14 top media and government officials, and it

15 really got the message across. And there were

16 people really willing to step up to it.

17 So I was wondering if your time

18 would permit sometimes to visit a few of the

19 chief foreign countries to really raise the

20 level of awareness.

21 BY SECRETARY GUTIERREZ:

22 We do today at least one big

23 delegation a year. We had thought about India

24 this year. I don\'t know if that coincides with

25 what you said. When we could do is when we

40

1 visit countries, and we do it all the time, is

2 find a way of tapping into our counterparts

3 there and talk about issues as to why weren\'t

4 more people traveling to the U.S. But I think

5 it\'s something that we can definitely do. We

6 don\'t do enough of it today. When we go to

7 foreign markets, we don\'t think about, hey,

8 let\'s get together with your counterparts or

9 with the tourism agency or the department.

10 BY MR. IMHOFF:

11 Really, it would give us

12 tremendous publicity and it really shows that

13 we really mean it and a high level of

14 representation to the U.S. government itself

15 that would really give that credibility that we

16 really mean it. And that\'s where I was hoping

17 that if time permits, you\'d consider that.

18 BY SECRETARY GUTIERREZ:

19 When you talk about campaign, is

20 it \-- we did some work in the UK and Japan.

21 And that was basically advertising in foreign

22 markets to come.

23 BY MR. RASULO:

24 Yes. And it was very much the UK

25 kind of umbrella campaign about visiting the

41

1 U.S. We thought that the UK was a receptive

2 market to that message. When we started, I

3 think we were in the market at the right time

4 of the year. It was this time of year, the

5 booking period for people in the UK. It was

6 cinema television. It was \$6 million. So it

7 wasn\'t a lot of money or any of those things.

8 But we think \-- we think it moved an eagle,

9 although I\'ll be the first to admit that I\'m

10 not sure we used all the arcenics we should

11 use. We tend to want to look at the end

12 product which is, well, how many more people

13 from the UK crossed the border. But, you know,

14 intention added to all of those things are kind

15 of important. We probably \-- as part of our

16 charter, you know, I think nothing demonstrates

17 \-- nothing speaks to future success and more

18 than demonstrates success. And if you go with

19 kind of a scorecard that says, hey, these are

20 things that are important and this is how we

21 score it is vital to encourage further

22 investment down the road.

23 But we decided to extend it to

24 Japan under the same launching and continuing

25 to the UK because we all agree that one year

42

1 was not enough, but also extended to Japan as

2 the second market, a slightly different twist

3 to the campaign. But be that as it may, we

4 were singularly focused that that was our

5 charter to focus on promotion.

6 I\'m thrilled that the charter

7 that you\'ve given this time around is much

8 broader because I think promotion is one piece

9 of it. I think there are lots of other aspects

10 that we need to talk about.

11 And to Jonathan\'s point, when you

12 lack money \-- any emphasis in our business,

13 when you lack advertising dollars, you look for

14 below the line. And below the line is all

15 about PR. It\'s about people. And it\'s about

16 the president, yourself and others in the

17 administration taking the opportunity to make

18 statements when in front of the media that\'s

19 cost UK in a way but vitally important to UK

20 because that\'s what gets written up. And what

21 gets written up \-- if the message could be over

22 and over how interested the U.S. is in

23 welcoming foreign visitors, that\'s as valuable

24 or more valuable than advertising. We all know

25 that people don\'t believe advertising anyway,

43

1 half of them anyway, because it\'s so

2 self-perpetuating.

3 But if the government makes a

4 statement, look \-- like the government does on

5 many things \-- we\'re in the UK meeting on a

6 completely different subject, take the

7 opportunity because it\'s high on our agenda,

8 like we do on many other things, to mention

9 tourism, to mention that we are \-- our doors

10 are wide open for tourists, for students to

11 experience our great medical centers. I think

12 that can go far, and it doesn\'t cost anybody

13 anything. And it\'s a start.

14 BY SECRETARY GUTIERREZ:

15 How many shoes do you pay?

16 BY MR. RASULO:

17 Well, we looked at \-- I think we

18 started with the philosophy of fishing where

19 they are, you know. The UK represents a huge

20 amount of tourism. It\'s a viable market. We

21 thought that many of the tour operators that

22 had moved a lot of their air seats to the

23 Mediterranean and elsewhere away from the U.S.

24 after 9/11 or on the brink of a making decision

25 to bring that back if it sought the demand,

44

1 bring it back to the U.S. And we looked at the

2 UK not only in terms of numbers but in terms in

3 spending. It\'s a very big market.

4 Language was part of the \-- we

5 think \-- the success of the campaign. But we

6 listed four or five countries, the UK, Japan,

7 Australia, France, Germany I think were the

8 five we had on our list when we had \$50

9 million. When it was reduced to really a

10 bottom program at \$6 million, even though at

11 \$50 million in some sense was a pilot market \--

12 we chose one market, the UK. And I think it

13 was the right decision.

14 Does anybody remember any of the

15 situations?

16 BY MR. TAUBMAN:

17 It was the highest-spend market

18 by far in terms of overseas. I think it has 3

19 and one-half or 4 million visitors a year

20 coming here who will spend much higher. And

21 the second country was way down on the list.

22 So it was an idea to be able to sort of move

23 some people\'s decision-making in a moment in

24 time. And, you know, we spent a lot of time on

25 metrics to try to understand how to measure the

45

1 program.

2 But, you know, frankly, when it

3 got cut to what it got cut to, it was just hard

4 to do at all.

5 BY MR. RASULO:

6 You can see the UK is very high

7 in terms of international departures and out

8 spends Germans here in the U.S. and I think

9 it\'s all destinations \-- but out spends the

10 Germans here in the U.S. And also, as I said,

11 we want to \-- if you have a pilot and you

12 believe that you want to demonstrate success

13 and you want to pick a market where we thought

14 we could demonstrate success because the

15 conditions with there, visa waivers, all of the

16 things that make ultimately \--

17 BY MR. KATZ:

18 Yes, thank you. Kind of aside, I

19 live in New Orleans. The closest restaurant I

20 have to downtown New Orleans is probably almost

21 15 miles away. And so you wouldn\'t think that

22 when a city is full that it would necessarily

23 effect me one way or another. But the

24 interesting thing I\'ve learned over the years

25 is when the city\'s downtown is full, those are

46

1 my busiest weeks. And I know the Essence Fest

2 and the Jazz Fest and certainly Mardi Gras, but

3 the Bayou Classic, football games, when the

4 town is full, it goes way out. I\'ve got a

5 restaurant 35 miles away that\'s packed. So the

6 trickle-down even expands a lot further than \--

7 those of you that are in the direct travel

8 industry, you can realize.

9 But go going to the funding, I\'m

10 looking at it as I\'ve looked at my business.

11 And what I\'m doing is what all those people do

12 is set aside a minimal level of funding,

13 quantity it, and as the business goes up,

14 dedicating a percentage of future revenues.

15 And then that would ease \-- this is

16 quantifiable. The success of this program is

17 quantifiable.

18 And starting with something,

19 whether it\'s 10 or 20 or \$5 million for one

20 year, nothing for a year or two, and then again

21 \$20 million in year three is tantamount to

22 almost doing nothing. And so my suggestion

23 would be setting up a formula, one\'s a minimum.

24 It\'s a little longer-range plan, but I think

25 it\'s one that will reap the success, setting up

47

1 a formula that as the results grow as the

2 successes grow that more funds go into it.

3 It\'s self-perpetuating. No one has to go back

4 each year, each administration, and that the

5 industry knows that they\'ve got a set amount of

6 money that\'s going to go into this national

7 program.

8 BY SECRETARY GUTIERREZ:

9 We don\'t have a session schedule

10 six months from now, but perhaps we can do that

11 in the discussion of the role-out plan.

12 BY MR. RASULO:

13 We can certainly look towards a

14 session. I thought we would have our next

15 session in April around our big conference in

16 Washington where a lot of the industries get

17 together, around the World Travel and Tourism

18 Conference. And then we certainly in June

19 would be a good timing for another one. So six

20 months from now I think would be easily done

21 and a good idea.

22 BY MS. NELSON:

23 Jay, how could we \-- the World

24 Travel and Tourism Conference is such an ideal

25 moment for UK. I wonder if we should think a

48

1 little bit about what we\'d like to get done in

2 order to make our case clearer.

3 BY SECRETARY GUTIERREZ:

4 I wonder if there\'s a way, using

5 that, to bring forward a couple months.

6 BY MR. RASULO:

7 Yeah. Look, we\'ve all been in

8 this industry for a long time. We know when

9 our CEO goes out in the market, he\'s got a card

10 that has a key message on it. And I think that

11 we need to get our key messages ready for that

12 conference because, first of all, the President

13 has been invited to speak, another one of your

14 colleagues have been invited to speak at

15 different parts of that.

16 I think that that can be an

17 incredibly and well-orchestrated messaging a

18 very loud physical commitment from the very top

19 to tourism and travel, to the strategy that\'s

20 being developed. So even if the strategy is

21 not completely based, it will not be \-- I think

22 we ought to be sure that we are all on the

23 messages, and I hope that you can take those

24 forward to the administration to get those

25 messages out there.

49

1 BY SECRETARY GUTIERREZ:

2 I tell you, you gave a speech a

3 couple weeks communicating at the seat of the

4 table facilitating people who were there, and

5 you can build on those three. It seems like

6 that\'s got to be a good platform.

7 BY MR. TISCH:

8 I think what we\'re looking to

9 create is the ultimate public/private

10 partnership. And that is the private sector

11 helping government change the image of

12 Americans abroad. And the way we do that is by

13 bringing them to this country and they see the

14 Americans are good, hard-working people who

15 want to take care of their families and educate

16 their children.

17 And one of the reasons that we

18 are actively meeting and will continue to meet

19 with Condelezza is to, once again, express

20 ideas that the private sector can help in that

21 regard. That is the real opportunity. And we

22 stand ready to help with her activities and

23 change the image that we have overseas which

24 right now is not particularly a good one.

25 Keith Rinehart who set up the big

50

1 business diplomacy, that\'s his mission. And

2 those of us in the private sector can help in

3 that process. And, once again, many of us for

4 years have been calling for something along the

5 lines through the travel, we\'ve been calling

6 for a presidential advisory counsel on travel

7 and tourism. I\'m sure, Mr. Secretary, you

8 travel around the world. You know that when

9 you\'re at the head of tourism in the countries

10 that we compete with, in many instances that\'s

11 a cabinet-level position. And that is not the

12 case in this country.

13 Certainly this body goes further

14 than has happened in decades to get us to that

15 place. I don\'t think anybody is kidding

16 himself that tourism will become a

17 cabinet-level position in this country. But if

18 we can take what we\'ve created through your

19 efforts, the Commerce Department, and your

20 associates and push even harder for a

21 presidential advisory council on travel and

22 tourism, that makes a statement also.

23 BY MR. RASULO:

24 Any other comments. If not, I

25 think we\'ll, first of all, thank the Secretary

51

1 for your presence and for your commitment

2 that\'s clearly indicated by your presence. And

3 I think we\'ve got some clear take-aways for

4 April and then June. But anyway, I\'d like to

5 take a break for a few minutes.

6 BY SECRETARY GUTIERREZ:

7 If I may, two things I wanted to

8 put on your list of agenda items. One is, of

9 course, immigration which I\'m sure is an

10 industry you have an interest in. The

11 immigration reform is now in Congress. You

12 have all heard the enforcement. I\'m sure that

13 you\'ve heard a lot about the important part \--

14 enforcement part is very important. But the

15 President has said that immigration reform

16 would include enforcement and some kind of a

17 guess workers code.

18 And I want you to know that that

19 continues to be the division of the

20 administration and that at some point we \-- I

21 would assume that we\'re going to be working

22 together to get that message out because that

23 would be devastating to \-- you know, the

24 problem here is that a solution is being held

25 up because there are people who are insisting

52

1 on this, and extremes will never happen. One

2 extreme being amnesty, just give everybody a

3 passport. That\'s not going to happen. The

4 other extreme is we\'re not going to round up 11

5 million people and put them on buses and kick

6 them out of the country. And as long as we

7 continue to believe that that\'s what needs to

8 be done or said, we\'re not going to get the

9 solution.

10 So I would assume that\'s

11 something that\'s on your agenda, but we\'re

12 going to need your help as well to get that

13 message out.

14 Then the final thing was just

15 something to put on your radar screen. But

16 there\'s a lot of press about the Asian flu.

17 And what I would just suggest to the extent

18 that you haven\'t done so as individual

19 corporations that you have preparedness plans

20 without, you know \-- without raising a red

21 flag. We don\'t want to say anything is going

22 to happen. It\'s happened three times in the

23 last century, so at some point it\'s probably

24 going to happen again.

25 We believe that industry can play

53

1 a big role by assuming a certain responsibility

2 for their part of the economy. For your

3 employees, what can you tell employees, how do

4 you take care of the employees. In the event

5 that something like this happened, it would be

6 powerful for us to be prepared. And I would

7 just throw that out as something to think about

8 whether your individual companies have any

9 preparedness training in the event that

10 something would happen.

11 BY MR. RASULO:

12 Thank you very much. I think the

13 Board members here would like to take a picture

14 with the Secretary and then we\'ll reconvene in

15 20 minutes or so. Thanks everybody.

16 (A BREAK WAS TAKEN.)

17 BY MR. RASULO:

18 So as we start to settle back in,

19 I\'d like to introduce and welcome, although

20 he\'s been here the whole time, Al Frink from

21 the U.S. Department of Commerce. Al is the

22 Assistant Secretary for Manufacturing and

23 Services. And before joining the Commerce

24 Department, Al was a businessman like many of

25 us in California. I\'m proud to say, and he\'s

54

1 proud to say, he started off his business with

2 a small business administration loan, grew it

3 enormously, by many many folds, to create a big

4 company in the carpet industry headquartered

5 out in California. And since 2004 when he was

6 selected by President Bush to be the Assistant

7 Secretary for Manufacturing and Services, he\'s

8 been doing that. He\'s been shoulders to the

9 wheel with us in our last effort, and I\'m happy

10 to say he\'s going to, in fact, step up his

11 activities with us this year.

12 So, Al, I\'ll turn the floor over

13 to you.

14 BY MR. FRINK:

15 Thanks very much. Needless to

16 say, like the Secretary is pleased, I\'m pleased

17 to be here. Coming from the private sector 30

18 years ago in manufacturing, I clearly

19 identified \-- and I didn\'t think about it when

20 I was in the business \-- but looking at our

21 company as a total, our manufacturing component

22 was really about 15 percent, not far from the

23 GNP for manufacturing. The other 85 was

24 services.

25 We manufacture carpet. It had to

55

1 be sold in retail stores. That\'s a service

2 center. It had to be shipped. That\'s

3 transportation. It had to have packaging. It

4 had to have advertising, promotion. And the

5 elements of running a business, accounting,

6 legal insurance. So I understand the area of

7 services as important.

8 I traveled for 21 years around

9 the world. I\'ve logged seven million miles.

10 That\'s more than Bob Hope. And I know the

11 value of travel as a part of what we did and so

12 many companies that are out there today. It\'s

13 more important today as I see it because we\'re

14 entering into a global economy. Travel has

15 taken on a whole new meaning. It is not an

16 option so much for future business. It is part

17 of what you\'ll have to do.

18 So your work and what \-- what I

19 will be doing as I more forward is to give a

20 lot more attention, a lot more priority to your

21 sector, travel and tourism. That is good

22 business, and it\'s from the heart. And I\'m a

23 marketing man. I think probably the biggest

24 factor for our success in California was it

25 easy for us to add value.

56

1 You cannot lower costs, I

2 believe. All the efforts of government, all

3 the expectations of my position will not be

4 enough if you have to lower costs sufficiently

5 to make it possible for many companies to

6 succeed. The only area I see really hopeful is

7 to raise the level of added value. And I do

8 that in manufacture. You do it with

9 innovation. You obviously need to build a

10 great product and have a good infrastructure to

11 build a trust. Good business is like building

12 a good friendship. So I\'m moving forward very.

13 Passionately.

14 I think some of the comments that

15 were made, I like Larry\'s comments especially

16 because it was a businessman\'s view of catching

17 whatever allocations to a growth formula so

18 that it would grow with performance. There\'s a

19 lot of good ideas that came from that

20 discussion with the Secretary that I think

21 could benefit going forward.

22 One of the points that was

23 brought up \-- and I\'m not sure if Jay brought

24 it up \-- but it was the idea that our teams as

25 they move around the country \-- and we have a

57

1 lot of them \-- added \-- well, I think the

2 Secretary suggested that. He suggested that we

3 start bringing tourism as a component of our

4 travel.

5 I did that actually a couple

6 weeks ago at the CES, the Computer Electronic

7 Show. And I was thinking about this is a town

8 of tourism. And what I believed the importance

9 of innovation to be in combination with lower

10 taxes \-- and that\'s what Las Vegas in which

11 that venue took place was all about.

12 So I led my conversation with a

13 reporter on tourism. And, whereas, many others

14 were out on the street making comments about

15 the economy, which I was doing, and it actually

16 included a graphic artist on the cover of the

17 business section where a senior government

18 official lodged tourism. It really was a good

19 segway and a good example. Although not

20 necessarily intended for this meeting, it was

21 somewhat coincidental with my sales methodology

22 knowing that if I used that component that it

23 would raise the level of what I had to say

24 afterwards. And it worked. It made the front

25 page, and I got, I think, exceptional copy.

58

1 But, actually, if you looked at

2 the total context of that, I\'d say 70, 80

3 percent of what I had to do was around tourism

4 and why Las Vegas serves as a benchmark for

5 what we can do. Disney probably did the best

6 job of promoting itself with the happiest place

7 on earth.

8 I read the comments of the

9 Secretary\'s talking points prior to this event,

10 and he didn\'t use one of the components, which

11 was along with celebrities both at the

12 entertainment level and the political level,

13 one of our great celebrities are the people.

14 We have the happiest people in the world.

15 Where do you find \"have a nice day.\" It is a

16 benchmark of American attitude. And everybody

17 who travels to America, especially to

18 California \-- and for my East Coast friends,

19 they always say everybody seems so happy out

20 there. Can I help you? We need to build on

21 that friendly nature.

22 Anyway, this is just a few

23 off-the-cuffs, from-the-heart comments. I\'ve

24 got some points I want to go over to set the

25 tone for what we\'re going to be talking about.

59

1 I was very pleased that the Secretary made it

2 here, especially in view of the recent events.

3 I don\'t have to remind you that he\'s a CEO, a

4 businessman, as most of the people are in this

5 administration. There are fewer attorneys and

6 more businessman in this administration maybe

7 in American history. So there\'s a lot of

8 people that get it. That doesn\'t mean there

9 aren\'t political assets to it. But the basic

10 business instincts are in the nature of most of

11 the people in important positions in government

12 today. Even our Commander of Defense, who is a

13 former manufacturer. So we have it.

14 Tourism, as everybody knows, it\'s

15 the number one largest percentage of the

16 service sector. It\'s one of the biggest

17 contributions to our economy. So the fact that

18 it\'s important is certainly understandable.

19 And his legend support, I have been around the

20 Secretary enough times to talk about it. He

21 became very much intimately engaged and wanted

22 to be able to do something. I know wheels will

23 turn after this meeting. I\'ll make sure that

24 we don\'t stop, keep the involvement and the

25 engagement.

60

1 As you know, the statistics for

2 inbound international are continuing to

3 improve, and I think we\'re confident that the

4 tourism campaign that was launched last year

5 continues and will serve to booster those

6 improving numbers. I think we have to do a lot

7 better, obviously. I think that this last

8 event that took place in October with the

9 government as a Cultural Heritage Tourism

10 Center, that was a big step in the direction to

11 being \-- putting tourism on the radar, because

12 the First Lady is very engaged in that,

13 historical preservation, preserving culture.

14 And this area has had a big impact on just the

15 importance of that.

16 As a matter of fact, the tragedy

17 of New Orleans and this surrounding area has

18 probably brought tourism to the forefront more

19 than any other single event because of its

20 influence. It was clearly identified as to

21 what kind of impact tourism had on this region.

22 That\'s the kind of relevance that needs to be

23 driven to show tourism\'s impact to our economy.

24 At that event there was like 400

25 professionals that were there. And I

61

1 understand I was not at it. The people that

2 were there told me it was a good start with

3 knowledge that a lot more work needs to be

4 done. The government and the private sectors

5 who spoke at that program challenged the

6 attendees to continue the dialogue that was

7 started as a result of that summit.

8 I think what was brought up about

9 us needing to connect with these other groups

10 and efforts is important because that way the

11 voice of what we have in the message will start

12 to funnel and resonate in a more collective

13 matter. So much of what our problem is is our

14 words are splintered, much like manufacturing.

15 You have it spread all over the country. You

16 can bring the voice and the issue of

17 manufacturing to a higher level.

18 As I mentioned in our break,

19 agriculture does. You want to see a benchmark

20 for getting attention, match it after

21 agriculture. One and one-half percent of our

22 GNP is tourism. Tourism is 1 point higher.

23 Manufacturing is 13 points. And yet

24 agriculture gets billions. We should look at

25 what they do and try to more model what they do

62

1 to do a better job. After that, those are

2 successful.

3 First, I\'d like to see that all

4 of this work is an ongoing process, especially

5 for the small travel and tourism. I think that

6 all these efforts \-- everybody knows that the

7 travel industry is made up of small companies.

8 That\'s the same thing in manufacturing. It\'s

9 very similar in many respects as I\'m listening

10 to the discussions.

11 I think that we need to work for

12 that so that they can be able to give all

13 positions compete in both the domestic and

14 international market. I was privileged to be a

15 part of that kickoff in the UK. And that was

16 in December of \'04 where we successfully, I

17 think, did a pretty good role-out of an

18 advertising campaign with our British

19 colleagues amid of backdrop of removing

20 national treasures.

21 I think it was a very successful

22 role-out for the dollars we had available. It

23 also reminded me of beating our country as I

24 was looking at all these media clips and seeing

25 America through the eyes of promotion. It

63

1 reminded me \-- and I think so many people \--

2 that that campaign would do well in this

3 country just to show what we have to offer to

4 people that travel more within the country.

5 Anyway, that\'s a perfect segway

6 of, I think, a good time to talk about that

7 campaign and its results. So I\'d like to at

8 this time bring in the Director of Strategic

9 Planning from M&C Saatchi, and that\'s Kate

10 Bristow. And Kate is going to provide some

11 highlights of the first year\'s campaign, the

12 results thus far. And as you hear from Kate,

13 we still have one more step to go and that\'s

14 the development implementation of a conversion

15 study that was carried out in the UK later this

16 year.

17 So, Kate, the floor is yours.

18 BY MS. BRISTOW:

19 Thank you. Thank you very much.

20 As we all know, in 2004 Congress appropriated

21 \$6 million. As we\'ve heard this morning, I

22 think none of us in this room felt that it was

23 obviously enough. It\'s probably a drop in the

24 bucket. However, I think even an objective

25 analysis would say that we use the money as

64

1 wisely and as effectively as we possibly could

2 given the limitations that we have.

3 What I\'m going to do this

4 morning \-- I think I\'ve got 30 minutes \-- I\'m

5 going to start off with just a couple minutes.

6 I\'m going to review year one to share again

7 with the room where we started, why we started

8 at that place. And then I\'m going to move on

9 and talk about year two, which is in fact now.

10 The second role-out in the UK is happening as

11 we speak. It\'s currently going on. So I\'ll

12 talk a light bit about what we\'re doing in the

13 UK at the moment and some earlier results from

14 that.

15 And then the third presentation,

16 I\'m going to review Japan, which as we\'ve heard

17 this morning, is going to be happening later in

18 this year, 2006. In fact, I\'m going to fly to

19 Japan at the end of this weekend, spend a week

20 there just finalizing some of the negotiations

21 with the Department of Commerce. And then

22 finally I think we\'re going to be talking a

23 little bit later on about the \$4 million that

24 we\'ve heard quite a bit about this morning.

25 So, first of all, just reviewing

65

1 the UK year one campaign, it\'s interesting that

2 celebrities came up this morning as something

3 that is very powerful for the U.S. brand. That

4 is indeed exactly what we discovered when we

5 did our initial research. And, in fact, we

6 chose the UK as our launch market when we knew

7 we had the \$6 million.

8 The entertainment industry is

9 actually one of the U.S.\'s more powerful

10 industries. Despite some of the perceptions

11 that people might have in other parts of the

12 world of the U.S., people still love the U.S.

13 entertainment industry. They love the movie

14 industry.

15 And just talking about the UK

16 particularly, nine out of ten movies in the UK

17 are Hollywood movies. They\'re American movies,

18 and people still love going to the movie

19 theaters to see those movies. So the strategy

20 was to harness the power of that very powerful

21 industry and use it to tourism\'s advantage.

22 So just to start off just to

23 remind you by showing you the 50 second and 30

24 second commercials that ran in the UK.

25 (THE COMMERCIALS WERE SHOWN.)

66

1 BY MS. BRISTOW:

2 Indeed, we talked this morning

3 about why the UK was chosen. It was chosen for

4 a number of reasons, as Mr. Rasulo went through

5 this morning. One of the other reasons the UK

6 seemed to be the best market is because it\'s

7 one of the few countries which we could have

8 gone in where we could buy a national

9 television buy and reach 50 million people, the

10 population of the United Kingdom with national

11 television. There aren\'t many countries left

12 where one can do that. In fact, it\'s a very

13 efficient media buy in the UK.

14 And the other key part of the

15 media strategy were billboards, outdoor

16 posters. We focused on London, which is a key

17 local market. And we ran both above-ground

18 billboards and the main archeries around London

19 going in and out of the city. And,

20 importantly, we ran under-ground billboards.

21 The London underground, when it\'s not on

22 strike, is an incredibly powerful medium for

23 reaching the kind of audience that we were

24 looking to reach.

25 And we had \-- in fact, I think we

67

1 had three original billboard executions. One

2 of them, as we know, we had to pull because of

3 the Tsunami which happened the day after we

4 launched the campaign. But we had Spiderman

5 which was, in fact, launching in the UK

6 December 2004, and the campaign was launched,

7 and Thelma and Louise, which was the other

8 execution.

9 I\'m not going to go through the

10 whole activity from year one, but I think

11 anyone, as I said, will objective and say that

12 with the \$6 million gross, we actually did do

13 quite a lot and extended the campaign for a

14 considerable amount of time. We launched in

15 December of 2004. We had a wonderful consumer

16 launch event. And Disney was very kind and

17 actually gave the UK National Treasure as the

18 film for that launch event, which was highly

19 successful with the media in the UK.

20 We managed to run national

21 television. We then had satellite television

22 as well. We used the SKY. We did a couple

23 very good deals with SKY on SKY travel for a

24 month, SKY box office using the Hollywood

25 connection. With TIA we managed to \-- in fact,

68

1 USA/UK, we managed to run a cooperative

2 campaign. In fact, the cooperative campaign,

3 further to some of the comments that were made

4 this morning, we did actually have 13 premier

5 partners from the private sector come into the

6 cooperative campaign, and that helped us raise

7 another \$2 million for the campaign and,

8 indeed, helped us to run the website for a

9 considerable length of time during 2005.

10 As I mentioned, we had outdoor

11 posters. And, indeed, the campaign then was

12 continued after the advertising had finished

13 because we had three very powerful consumer

14 promotions that happened. We did a tie-up with

15 First Choice, which is one of the strongest

16 national travel companies in the UK. We did a

17 week-long promotion on TMTV, which is the UK\'s

18 premier breakfast show on television using the

19 Oscar tie-up. And we did a radio promotion

20 talking about some of the key pillars of why

21 someone would come to America.

22 So all in all, the activity was

23 managed to, I think, reach a lot of people and

24 spread over a considerable length of time given

25 how small that budget actually was. And just

69

1 to share with you some of the results from year

2 one, just to remind everybody, the media

3 campaign reached 87 percent of the target

4 audience. As I said, that\'s one of the reasons

5 the UK was chosen. It is easy relatively in

6 the UK to reach a large number of people with

7 that kind of budget. From Longwood\'s

8 international research study that we conducted

9 pre and post the campaign, we discovered that

10 12.8 million travelers were aware of the

11 campaign.

12 In other words, the people who

13 are local travelers knew about the campaign,

14 knew that it was happening. Public relations

15 in addition reached 11 million adults an

16 average of six times each. And I totally agree

17 with Mr. Rasulo, public relations a crucial

18 part of this kind of activity because the media

19 write-ups you get really helps to spread the

20 word about visiting America.

21 In the Longwood Study \-- and,

22 again, it\'s being discussed already this

23 morning - this isn\'t just about getting people

24 to come once. I think more importantly this is

25 about changing perceptions. It\'s the public

70

1 diplomacy effort as much as anything else. And

2 we did in those research studies look at

3 perception shifts. We wanted to know did the

4 people who saw the campaign change their

5 perception. And, indeed, the results of the

6 post benchmark suggest that they did. Those

7 who were aware of the campaign were more likely

8 than those who were unaware of the campaign to

9 now have a better overall image of the United

10 States, 73 percent to 67 percent. And

11 importantly, of course though, it did show an

12 increase intent to visit as well.

13 So, again, those who saw the

14 campaign significantly increased their intent

15 to visit the United States. The Longwood

16 study, there were nearly 2 million additional

17 trips intended from the UK to U.S. as a result

18 of the campaign. Now, intent is obviously one

19 thing. What we\'re about to do is do our

20 conversion study to go back to those people in

21 that piece of research that said they intended

22 to visit within the next 24 months and find out

23 how many of those people actually did go ahead

24 and visit the U.S. within the first 12-month

25 period. If they didn\'t, we want to know why they

71

1 didn\'t. So whatever factors came in the way

2 and stopped them from fulfilling that intent.

3 Finally on year one, we did have

4 a successful cooperative program within the

5 limitations of the budget and the time we had.

6 The website did generate a database of 55,000

7 registered visitors, people that wished to

8 continue to have a dialogue with us about

9 visiting the states.

10 As I mentioned, we managed to

11 raise \$2 million in cash in incline

12 contributions that allowed UK to continue the

13 campaign with the promotions that I mentioned

14 early on, the holidays we could offer, the

15 flights we could offer, et cetera.

16 So I think overall for what was

17 relatively a small budget, it certainly shows

18 that doing some kind of umbrella-brand campaign

19 for tourism could have an impact, could

20 actually have an impact on people in the UK in

21 getting them to want to come to the U.S.

22 Now, in 2005 Congress then

23 appropriated \$10 million which, again, we\'ve

24 been talking about this morning. The decision

25 was then to take that \$10 million and, in fact,

72

1 try and go into a second market. We all agreed

2 that the UK was worth supporting for year two.

3 As all amongst here in the room know, it\'s

4 pointless doing a launch campaign and then

5 never coming back into the market again. So we

6 wanted to follow-up with the year-two campaign.

7 And then we selected Japan, which we\'re about

8 to launch now in 2006.

9 Just to share with you a little

10 bit about the year-two campaign in the UK.

11 First of all, advertising, we\'re continuing

12 with the advertising. Any mathematician in the

13 room will know that if you have only \$10

14 million and you divide it between two markets,

15 that is, of course, less than we have in the

16 new one for the UK. But one of the reasons we

17 were able to sustain the campaign was that we

18 continued to use the television advertising.

19 We had already produced. We\'re running a

20 mixture of 30 and 50 seconds commercials.

21 The campaign started on the 18th

22 of December last year. It\'s continuing now

23 throughout January. It will continue until the

24 end of January. And, again, we had such a

25 successful partnership with SKY satellite in

73

1 the UK that we continued that into year two of

2 the program. And we\'re running with both SKY

3 box office which are movies that people rent,

4 on-demand movies, and also SKY travel where

5 we\'re going to be running specific U.S.

6 programing relevant films on SKY box office and

7 running bumpers, ten-second bumpers in advance

8 of, during, and following those specific

9 programming. So that\'s something that, again,

10 will enable UK to continue the campaign on

11 satellite as well as having our national

12 programing and advertising.

13 Posters proved to be a very

14 successful support medium. The Longwood\'s

15 independent research showed that those that saw

16 the posters, in fact, have a higher intent to

17 visit than those that just simply saw the TV.

18 So poster really added something to the

19 campaign. So, again, we continued were that.

20 We don\'t have the budget to do

21 above-ground, but the London underground

22 posters proved to be very effective last year,

23 so we are continuing to do that. We have 125

24 posters in the London underground. We managed

25 to get a two-week campaign in the London

74

1 underground. In fact, they have just come down

2 this week, in fact. The two executions, we

3 have Forrest Gump, which in the previous

4 research we\'d done proved to be an enduring

5 movie and one, of course, that interestingly

6 shows the whole of America within that movie as

7 he runs several times across the states during

8 that movie. And it\'s filmed in various

9 locations.

10 And we were also had a tie-up

11 with Universal. King Kong, as you know,

12 launched in the UK just before Christmas. And

13 we managed to get King Kong into our campaign

14 as well. It\'s a very topical and tactical use

15 of that film which was launching to such

16 fanfare in the UK at the same time we were

17 launching.

18 It was a strategic fit for the

19 target audience. It did allow us to add to

20 this message of excitement and coming to

21 America, and it did leverage the \$6 million

22 that was being spent in the UK for King Kong at

23 that time.

24 Again, we said earlier, public

25 relations absolutely crucial. Advertising

75

1 alone cannot do everything in a brand-umbrella

2 campaign. We\'ve got a phase build-up of

3 activity. We are going to hopefully build some

4 bus boards for an extension of the advertising

5 campaign. There are four things that we\'re

6 currently working on. Some of the things have

7 already happened.

8 We did do a tie-up with the

9 theatrical release of King Kong with Tomson in

10 Holidays, a big travel company in the UK, and

11 View Cinemas. The idea was that everybody that

12 bought a ticket to King Kong, first of all,

13 would not only get \$100 voucher from Tops and

14 towards a holiday in the states, that was

15 pretty good, but also won a chance to win a

16 trip to New York. And I think there was one

17 given away throughout the length of the

18 campaign.

19 So that was a pretty powerful

20 incentive for people to then go to Thompson and

21 book a vacation. And on top of that, there

22 were postcards made, e-mailings, website

23 support. It was a very very big promotion.

24 Continuing GNTV partnership that

25 we had last year, the breakfast television

76

1 partnership, indeed the filming is happening as

2 I speak across the state. Again, we\'re

3 visiting five locations that have movie

4 connections. And pre-Oscar week on GNTV every

5 morning on breakfast television, there will be

6 a promotional segment which will talk about the

7 various locations where the presenters are.

8 They\'ll be talking about movies that were shot

9 there, and there will be a competition for

10 people to come and visit the states. You\'ve

11 seen the films now, visit the set. And the

12 filming is taking place in Hawaii, Jackson

13 Hole, Chicago, Philadelphia and North Carolina.

14 So a big variety of sceneries and types of

15 places that one can visit. The promotion

16 starts airing in February.

17 We\'re currently in our final

18 negotiations on doing another travel

19 partnership with a big travel distributor

20 where, again, we will have a U.S. month

21 throughout their stores nationally in the UK.

22 That will be in March. And then, again, to

23 extend the campaign to another month, we\'re

24 going to do an entertainment week of promotion

25 with DVD, a tie-up with DVD in April. So,

77

1 again, we\'ll manage to have got pretty much a

2 four-month campaign out of what was a lower

3 budget than last year. But, obviously, we did

4 have some momentum because we did launch last

5 year. So now we\'re continuing to build on

6 that.

7 I think one of the reasons we

8 managed to stretch the budget is TIA. TIA came

9 in with us in year two and said we\'ll manage

10 the website. So TIA are running the on-line

11 cooperative program. That\'s really allowed us

12 to continue the campaign in the UK in year two.

13 So the Department of Commerce is

14 supporting that website with funding for

15 on-line media buys to drive people to the

16 website. But I think it\'s that partnership

17 that\'s really allowed us to continue this. So

18 we\'re very grateful to TIA for that.

19 And I think what\'s interesting

20 about this campaign, and the same thing

21 happened last year, is it\'s not just the TIA

22 website that gets visitors, hits, people

23 wanting to find out more, we found that other

24 industry websites when the campaign launches

25 actually grow their visitors and hits too. In

78

1 fact, Visit USA have been sending us the data

2 from their websites. This year they\'re getting

3 record hits. As the campaign started, they

4 started getting record visitor numbers, record

5 brochure requests. So clearly, as soon as the

6 campaign started, you can see their numbers

7 start rising. And those numbers have been

8 building day on day, week on week. Three weeks

9 now into the campaign and they\'re seeing

10 numbers they have never seen before on their

11 website.

12 So I think there\'s a real

13 momentum that started, and they\'re very very

14 happy. And I\'m sure that a number of other

15 industry websites in the UK are seeing the same

16 thing. So there is a momentum happening.

17 Japan, as I said, this is very

18 much a preview. We\'re still planning Japan.

19 I\'ll be there next week with the team, the

20 Department of Commerce team. And we\'re

21 finalizing a lot of the negotiations on some of

22 the promotions. But to give you an idea about

23 what we\'re actually going to be doing in Japan,

24 just to sort of go back a little bit.

25 The reason Japan was brought in

79

1 as the second market \-- with the advisory board

2 we had a lot of discussions about the five

3 markets. We did a lot of in-market research in

4 these five markets to see where the money would

5 be best spent. Japan was chosen for a number

6 of reasons. As you all know, it\'s the highest

7 revenue generator per person. When the

8 Japanese tourist comes to the USA, they spend

9 more money than anyone else. The numbers have

10 been falling, and it was a worry to the

11 industrial that the numbers had been falling.

12 We really wanted to try and get those numbers

13 back up again.

14 Japan is crucial, particularly

15 for the West Coast of America. It\'s a very

16 crucial inbound market. And, interestingly,

17 we\'ve discovered that in our creative research,

18 the creative strategy that we developed \--

19 you\'ve seen the film, now visit the set \--

20 resonated brilliantly in Japan. They really

21 loved the strategic thought. They bought into

22 it. They wanted to see more. Hollywood is

23 very powerful in Japan. There\'s a real synergy

24 there. So it seemed to us that we could

25 probably do something with a small budget in

80

1 Japan.

2 I should say at this point that

3 when I say Japan, I\'m talking Tokyo. So one of

4 the ways we managed to make the budget stretch

5 is by focusing it on Tokyo. So this is not a

6 national campaign the way it is in the UK where

7 we truly are talking to the whole country.

8 This is very much Tokyo focused.

9 So as I said, the research that

10 we did in Japan when we finally chose that as a

11 second market, it really emphasized that for

12 the Japanese, long-distance traveler, local

13 traveler, the core values that we identified in

14 the UK were the same core values for the

15 states, excitement, popularity and diversity.

16 We need to show that the USA for the Japanese.

17 We need to show that it\'s popular with other

18 people. Popular is something that is very

19 important to them. They want to know that

20 people think it\'s a popular destination.

21 And diversity, yet again as it

22 was in the UK, was very important. They wanted

23 to see the diversity, not just the destinations

24 they knew about but places that they didn\'t

25 know about. That was very important to them we

81

1 found. And as I said, that creative concept

2 really did seem to work very well in the

3 Japanese market when we did the quantitative

4 research testing.

5 Tokyo is the dominant region for

6 long-haul travelers. Fifty-four percent of

7 travel from Japan comes from people who live in

8 the great Tokyo are. So it seems to make sense

9 to us to focus the dollars on Tokyo. Again,

10 we\'re using television as the key medium.

11 Print, again, becomes an important support

12 medium. In Tokyo the really powerful use of

13 print is in station posters. I don\'t know how

14 many of you have been to Tokyo in the last

15 three or four years, but station posters really

16 are the way to go in Tokyo.

17 As you know, Tokyo is a commuter

18 market. People don\'t drive to work in Tokyo.

19 They travel by underground train, and they\'re

20 very efficient. And the other thing that makes

21 space so important to us is that the travel

22 agencies are all in stations. So there\'s a

23 tie-up there between the travel industry and

24 the stations in Tokyo. So we\'re doing a lot of

25 work with them as well to make the campaign

82

1 very synergistic.

2 The timing, we\'ll be going into

3 Japan in July of 2006. Initially, we would

4 have gone in a little bit earlier. We would

5 have gone in after Golden Week, the end of May,

6 June. The issue this year is that the World

7 Cup is about to happen. As you know, the

8 Japanese love soccer. And a number of

9 advertisers will be using that opportunity to

10 advertise during the month of June. Some of

11 the station costs are going to be up as a

12 result because of supply and demand. And,

13 indeed, we happen to know that Germany will be

14 doing a particularly good push in its tourism

15 during the month of June, understandably so.

16 But with the budget we have,

17 given the share of what is very important,

18 we\'ve decided to launch the campaign just as

19 the World Cup finishes. So we\'re going to go

20 into July. We know from our research that

21 now-a-days the Japanese long-haul traveler is

22 planning about 60 days out. The average

23 planning cycle is about 60 days from deciding

24 to go to actually taking the trip. So that

25 puts us with some \-- hopefully some boost in

83

1 September, October which, indeed, is always \--

2 particularly September traditionally being a

3 very high month for Japanese travel to the

4 states. So that works very well.

5 Again, the advertising activities

6 will be supported by retail promotions, public

7 relations, the bulk of which we\'re going to be

8 finalizing next week when we\'re there. And,

9 again, thanks to TIA, because the continued

10 partnership means TIA will be managing the

11 T-America, dot, JP website as our call to

12 action for the campaign in Japan. It\'s a TIA

13 site managed on-line coop program in Japan.

14 Again, the Department of Commerce will be

15 supporting that website with on-line media buys

16 in Japan. So it\'s a very synergistic

17 relationship again in Japan.

18 Assistant Secretary, I don\'t know

19 if you want to talk about the budget options.

20 BY MR. FRINK:

21 Well, I think that we all know we

22 have \$4 million to work with. And the decision

23 needs to be made as to where that \$4 million

24 goes, either it\'s split between the two

25 countries or it\'s focused on Japan or the UK.

84

1 You have the number. Why don\'t you just go

2 ahead.

3 BY MS. BRISTOW:

4 Okay. Again, it\'s been talked

5 about this morning. The team \-- the marketing

6 team found out a few weeks ago that there was

7 the possibility of the \$4 million extra

8 funding. We\'ve had a few weeks to make some

9 preliminary assessments to see where we think,

10 perhaps, it would best be spent. I think it\'s

11 clear I should say upfront, \$4 million is not

12 sufficient to take on a third market.

13 Again, I think anyone in the room

14 in marketing knows that. It\'s not enough money

15 to try to do a launch into another market. So

16 it really does leave us three options if we are

17 to spend the money in a similar fashion to the

18 way we spent it currently.

19 We either split the funding

20 between the UK and Japan which would allow us

21 to increase coverage of the UK this year and

22 add a little bit to year one in Tokyo. The

23 second option is to take the \$4 million and

24 allow us to do a year three in the UK. That is

25 an option. Or we take the \$4 million and allow

85

1 us to spend more money in Japan either by doing

2 a second wave of the launch campaign, perhaps

3 into year two or adding, perhaps, another

4 market. And I\'ll just share with you some of

5 the initial assessments that we\'ve done on

6 those three options.

7 If we took the \$4 million which,

8 of course, is a gross figure and if we said

9 let\'s split roughly \$2 million in the UK and \$2

10 million in Tokyo, that \$2 million would have to

11 include media, production costs and

12 administration costs. So the actual \$2 million

13 is not very large sum of money as everybody in

14 the room knows.

15 The \$2 million additional budget

16 in the UK, clearly we\'re currently in the

17 campaign, so we can\'t boost of the current

18 campaign because it\'s already happening. So

19 the time isn\'t there for us to do that. So all

20 we\'d be able to do is actually do a limited TV

21 version later this year, perhaps September or

22 October. We could think about doing a very

23 small terrestrial television burst. It

24 wouldn\'t be a lot. We wouldn\'t get a lot of

25 ratings. But we do could do a follow-up burst

86

1 in September or October in 2006.

2 If on the other hand we took the

3 \$2 million and we said, well, let\'s put it into

4 Tokyo, again, our analysis \-- we deliberately

5 chose Tokyo as a limited market for the launch

6 in Japan because we knew we could get the

7 ratings. We could deliver the ratings in

8 Tokyo.

9 The media company in Tokyo do not

10 feel that we need to particularly increase the

11 amount of money that we\'re already spending in

12 Tokyo. We could, but we probably don\'t need

13 to. So we could take that \$2 million, and we

14 could afford again a second limited TV burst in

15 Tokyo in the fall of 2006.

16 Unfortunately, Osaka actually is

17 a more extensive television market than Tokyo

18 cost per GRP, so we can\'t \-- \$2 million will

19 not buy a launch way in Osaka, which would be

20 the second market that we\'d want to go into.

21 Tokyo accounts for about 56 percent of

22 long-haul travelers in Japan. Osaka is 24

23 percent. It\'s the next largest. We can\'t

24 afford to do that, not on the \$2 million gross

25 figure.

87

1 So the pros and cons of splitting

2 the funding, it clearly does allow us a limited

3 second burst this year in both the UK and

4 Tokyo; however, those bursts will be limited in

5 reach and frequency. It will not allow us to

6 have any promotional activity or share activity

7 underneath that, which we\'ve shown in the UK is

8 essential. You do need to have more than just

9 advertising to make this thing work.

10 And, therefore, our view is, the

11 marketing team\'s view is, that an additional \$2

12 million split is not going to greatly impact

13 the effectiveness. So I think someone said a

14 little earlier you might as well not spend it.

15 Frankly, it\'s not really going to increase

16 dramatically.

17 If on the other hand we took the

18 \$4 million and said, well, let\'s try and

19 allocate that money to the UK for year three.

20 Again, it\'s a gross figure, \$4 million, and we

21 do have to include everything in that. The

22 really good news in the UK \-- again, I know

23 some of you are international marketers and you

24 do advertise in the UK\-- the television market

25 in the UK is actually collapsing, which for

88

1 hours in advertising is a result. It means

2 that, in fact \-- our current analysis now that

3 we are 12 months out \-- but our current

4 analysis suggests that we \-- our current TV

5 spends this burst in \$2.7 in U.S. dollars for

6 the same amount of money in December for a year

7 three will actually buy us a stronger campaign,

8 as it happens. We can buy more ratings on that

9 budget.

10 So you can cut that two ways.

11 You can either spend the same amount of money

12 and get more ratings or you spend money

13 differently. You need to spend slightly less

14 to get the same TV ratings that we have this

15 year. So that\'s actually a pro for the UK.

16 So the positives of this option

17 is it does allow us to continue for a third

18 year. And we spent some time this morning

19 saying why is the UK such an important market

20 to tourism. It is a very important market in

21 tourism.

22 I think the second point in favor

23 of this option is that we have proof from the

24 Longwood\'s information certainly that the

25 campaign did have an impact. We\'re about to do

89

1 the conversion study, so we\'ll be able to see

2 what the impact of the campaign was. It\'s a

3 proven market for us with this campaign.

4 I should also say that the \"X\" UK

5 figures for the first quarter of last year were

6 up 15 percent for the U.S, the January ratings

7 to March 2005. So, you know, it\'s interesting

8 that it seems to us that the campaign did work

9 in the UK. So that\'s a positive. And, of

10 course, it does take advantage of the better

11 television medium in 2006 and 2007 as we\'re

12 currently predicting.

13 Again, the negative \-- and it

14 does need to be considered \-- is that if we put

15 all this money into media, there\'s no

16 guarantee, even if when you negotiate very

17 well, that there will be a lot left over for

18 promotions and PR. There may be some. But,

19 again, we do need some other elements under the

20 campaign. So then probably the question then

21 becomes: Do we just spend it all on

22 advertising if we don\'t think we can get

23 consumer promotions underneath that?

24 And looking at the third option.

25 If we put \$4 million into Japan \-- and, again,

90

1 it\'s a gross figure just so that everybody

2 understands that \-- actually, this allows us

3 two options. There are a couple things that we

4 can do initially with the \$4 million. We could

5 either add a second burst to Tokyo so that we

6 could support the campaign maybe in September

7 or October, 2006; or if the Board and the

8 industry said, no, let\'s wait, we could push

9 that to spring of 2007 and run another very

10 substantial burst in Tokyo with that funding,

11 or we could add Osaka, because \$4 million would

12 allow us to add a second cultivation. And as I

13 said earlier, Osaka is the second long-haul

14 market at 24 percent.

15 Now, the pros, clearly option one

16 allows us to extend the campaign into the

17 second year possibly, which means we won\'t have

18 just launched in vein. We can continue the

19 campaign at least for a second year or expend

20 into another district in Japan.

21 I think the two disadvantages, we

22 don\'t have any results yet in Japan because we

23 haven\'t done the campaign yet for year one. So

24 by the time the decision would need to be made,

25 we wouldn\'t know whether the campaign worked.

91

1 But our gut feeling is that it would be

2 actually great to be able to continue the

3 campaign into a second year or into a second

4 market in Japan, which is a very important

5 market for us.

6 And, again, with that budget, we

7 don\'t know \-- we can\'t guarantee how much

8 additional support we\'d be able to generate on

9 that budget as to how many or if at all we\'d be

10 able to do some consumer promotions as, indeed,

11 we\'re doing at the moment. We don\'t know yet.

12 It\'s depending on the negotiations of the

13 second burst.

14 So I think in summary and,

15 clearly, we really need the Advisory Board\'s

16 input and help on this, I think there are three

17 points to be made, really. I don\'t think the

18 \$4 million is sufficient to launch in any

19 market. I don\'t know what the Board feels, but

20 we feel it\'s really insufficient. So you\'re

21 really torn between shifting that budget

22 between the two, which in our professional

23 opinion is not going to substantially increase

24 the effectiveness of the campaign in either

25 market, or the third option is to actually give

92

1 that money to the UK and/or \-- or Japan and

2 actually be able to have some effect in both of

3 those markets with \$4 million. Thank you.

4 BY ASSISTANT SECRETARY FRINK:

5 I would just add. On the first

6 page, have you done any assessment of the media

7 costs for Japan?

8 BY MS. BRISTOW:

9 For the current year \--

10 BY ASSISTANT SECRETARY FRINK:

11 Yes.

12 BY MS. BRISTOW:

13 \-- or for the coming-up year? We

14 have. These options are based on analysis that

15 we\'ve done in the last few weeks. Once we

16 found out about the \$4 million, we were charged

17 to go and look initially at the media costs.

18 We already know what we need to spend in Tokyo.

19 The media budget in Tokyo at the moment in July

20 is \$2 million. That\'s the current \-- \$2.1, I

21 think, million in Tokyo.

22 Now, clearly, we\'re assessing \--

23 we\'re looking at 2006/2007. We were making our

24 best professional estimate based on where we

25 think the market is going in 12 month\'s time.

93

1 But where we think the market is going, we

2 think the \$4 million we can afford \-- the

3 options are slightly more complicated than

4 that, as I\'ve outlined.

5 With the \$4 million in Japan, we

6 could probably afford to do SKY cap and another

7 burst in Tokyo next year, actually, but \--

8 depending on the negotiations with the TV

9 companies. But it would allow us to do that.

10 Osaka is a more expensive market than Tokyo,

11 surprising.

12 BY ASSISTANT SECRETARY FRINK:

13 Now, before I just turn it over

14 to the Chairman, the only thing I would want to

15 add is that in the past, I think, the office \--

16 our office of tourism has had, I think, a

17 decision of final determination where markets

18 should be pursued. I think that\'s not where it

19 should be. I think it should be driven by your

20 input. And I\'ll turn it vote to the Chairman

21 for you to discuss where you think that \--

22 where those funds should be spent. I know our

23 office senses that Japan, putting all that

24 money in Japan, would be the preferred place.

25 But I think that at the end of the day, you

94

1 folks are the people in the forefront of your

2 industry, and you should make that

3 determination and hopefully get some matching

4 funds if it\'s possible.

5 One thing that the Secretary was

6 clear in pointing out is that his empathy lies

7 in an industry that matches government. And in

8 every sector of granting that I\'ve experienced,

9 there\'s always a matching. Sometimes it\'s

10 one-third government and two-thirds private

11 sector divided by states and local industry.

12 I think that as it was pointed

13 out by Bobby in terms of the amount of benefit

14 that retailers stand to gain by tourism, that

15 the research industry has a stake in tourism

16 and any other states that need to be

17 identified, including manufacturing, which was

18 mentioned earlier. And we can talk \-- and

19 we\'ll think about how we can synergize that

20 moving forward.

21 There\'s a lot of benefactors on

22 the sidelines of what tourism does.

23 Identifying the multiplier factor, who are the

24 main stakeholders could be a big part of the

25 strategic plan. And looking for those

95

1 individuals and, perhaps, coming to the table

2 and help drive these kinds of efforts with

3 limited government funds.

4 So I\'ll turn it over to the

5 Chairman and let him hash that out amongst you

6 folks and come back to us with your

7 recommendations.

8 BY MR. RASULO:

9 Thanks, Al. First of all, are

10 there any questions quickly about her

11 presentation?

12 BY MR. TAUBMAN:

13 Well, I want to be clear that

14 there was \$10 million. And the \$10 million is

15 being split 5 million and 5 million between the

16 UK and between Japan, roughly. This additional

17 \$4 million comes in in theory to boost that

18 campaign. Is an absolutely that those \-- the

19 two campaigns or whatever we decide here.

20 Is it clear that we have to use

21 this \$4 million for one, in essence, the things

22 shown here. I mean, we could go to another

23 market, but aside from that, can we take the \$4

24 million and use it for something else?

25 BY MR. RASULO:

96

1 Well, I think that question sort

2 of leans into the question I was going to raise

3 before we discussed the expenditure, which is

4 media is an options. I think there are \--

5 given what we are trying to do by April or

6 June, is it better to spend some or all of this

7 money doing other things other than media?

8 I think we need to at this point

9 step back and think about our entire agenda,

10 only a piece of which is about a designation

11 marketing campaign. I think there are many

12 other things that we should consider. And I\'d

13 love to hear your input on what other options

14 there are for the expenditure of this money

15 towards the bigger agenda, which is developing

16 a strategy \-- a national tourism strategy which

17 a piece of which will probably be and should be

18 destination marketing.

19 But I hope that we\'re not going

20 to put all of our eggs into that basket. So

21 this is obvious. The options are drawn out.

22 We know how to spend \$4 million this year. But

23 are there other options in terms of where we

24 ought to be thinking about that money.

25 BY MS. NELSON:

97

1 Well, one of my questions \-- and

2 I salute you because it looks like you\'ve

3 really tried to get a great impact on this

4 small amount of money. And I think we\'re all

5 impressed about that.

6 But one of the questions I had as

7 you talked about the brand over excitement of

8 the popularity and diversity, and I was sitting

9 here asking myself about the broader

10 responsibility of the committee of how much

11 we\'ve looked at, what are the barriers to

12 completing? You talked about those who intend

13 and the possibility of going back.

14 But it feels to me that we may

15 need more information. We have some \-- we have

16 a sense that there\'s people who have a desire

17 to come here. Are they worried about safety?

18 Are they worried about entry and exit? How

19 could we \-- do we need more fact-based data to

20 support this proposal, the Rice-Chertoff, for

21 example, so that we can actually help to drive

22 the efficiency of this particular approach? I

23 mean, we just need facts so that we can have

24 fact-based policy.

25 BY MS. BRISTOW:

98

1 Thank you for asking that

2 question because, in fact, in our market

3 research that we did originally when we were

4 trying to define what the five markets that was

5 mentioned earlier on, it was interesting.

6 Another reason why the UK was such an obvious

7 choice is because they didn\'t have a lot of the

8 barriers that a lot of the other markets did.

9 And that\'s surprising to me. In

10 some cases there was a visa issue. Now, this

11 was over 12 months ago. So now the visa waiver

12 and the whole issue of fingerprinting, that

13 might have changed that. But certainly at that

14 time security wasn\'t an issue for the UK

15 traveler. Visa wasn\'t an issue for the UK

16 traveler. Perception really wasn\'t an issue.

17 So, in fact, the UK was a very promising market

18 for that reason. They didn\'t have all the

19 barriers.

20 Interestingly, just to share with

21 you some of the other markets we\'ve looked at.

22 When we were comparing Canada and Japan for an

23 argument, when we were trying to look at what

24 the second market would be, the Canadians have

25 a bigger issue on some of these things than the

99

1 Japanese did. So the Canadians had a bigger

2 issue about the border, some of the issues of

3 whether they were welcome and \-- you know,

4 there was some other issues, other barriers

5 that some of the people we interviewed in

6 Canada had that the Japanese simply didn\'t

7 have. They didn\'t have some of these

8 perceptions. So I think it\'s a very valid

9 point.

10 BY MS. NELSON:

11 But I think it would be very

12 helpful \-- and, perhaps, all of you have seen

13 that \-- but the data of where there are those

14 perceptions. We know that Canada is a huge

15 travel market for us. So in terms of this

16 broader assignment, understanding how the

17 various markets perceive us, there may be a

18 piece of getting us to support the ease of

19 travel issue \-- and the public diplomacy issue

20 ends up being a little more different because

21 that might drive us to areas where we can \--

22 where our nation\'s image was not what we\'d like

23 it to be, that might not be necessarily the

24 highest concern to the long-haul traveler.

25 So there may be some friction

100

1 there between where we put our funds, one, and

2 what the objectives are.

3 BY MS. BRISTOW:

4 And, again, I think I mentioned

5 that in the conversion study, which is

6 happening in April in the UK \-- we\'ll be

7 finding out those that didn\'t convert, what

8 were the barriers. Why was it? It could be

9 they couldn\'t get a flight, they went somewhere

10 else. What were the issues that stopped them

11 converting. For the UK, at least in the

12 conversion study, we\'ll get that information.

13 BY MS. NELSON:

14 But what about what worked for

15 those who came?

16 BY MS. BRISTOW:

17 Right. Both sides of that coin.

18 Both the ones that came and their perceptions

19 and the ones that didn\'t come and why not. So

20 that will be the result of the conversion

21 study. But eventually that\'s only in the UK.

22 BY MR. TISCH:

23 Jay, is there a way based on the

24 Secretary\'s comments and all of our

25 understandings of how the government works

101

1 today \-- is there a way to test, using some of

2 these dollars, how we might go out and get a

3 private sector match? Is there a way to take a

4 portion of this? Whether it\'s breaking down to

5 a city level or a state level where they do

6 have some dollars available and say let\'s take

7 a quarter million dollars and hang it out there

8 and say which state would come forward \-- and

9 I\'m pointing to New York City, LA \-- and see if

10 we can test the waters in terms of creating

11 more of a private partnership?

12 BY MR. RASULO:

13 I think that thinking about

14 spending this money in a compelling,

15 promotional way might incite a matching by

16 private industry or by \-- you know, local

17 destinations is a very interesting idea. We

18 know that if we put this in the media that

19 there\'s not a compelling matching proposition.

20 We know that for a fact.

21 Some companies will put, you

22 know, their own private promotions behind

23 making it easier to get from the UK to U.S.

24 destinations, et cetera, et cetera. But

25 there\'s no \-- this money spent in media is not

102

1 part of the private public partnership. It is

2 straight up, you know, easy spending.

3 So I think that\'s a very good

4 idea, to think about what would be a compelling

5 promotional idea behind it. I also think \--

6 and, Marilyn, to your point \-- that I\'m not

7 sure how much money in development of this

8 national strategy where research funding is

9 going to come from.

10 In other words, you simply want

11 to do some research behind that. We need to do

12 the research. So it has to come out of this, I

13 presume.

14 BY ASSISTANT SECRETARY FRINK:

15 Yes.

16 BY MR. RASULO:

17 So that\'s another thing that I

18 think we need to think about. We did some

19 research, but the research we did before was

20 specifically in support of a media campaign and

21 specifically in support of the destination

22 marketing idea. It did not address some of the

23 infrastructure questions, barrier questions per

24 se, et cetera, et cetera. And we know, at

25 least from what we learned from Terry Busse\'s

103

1 office, that this model airport campaign, it\'s

2 mentioned in the Rice-Chertoff paper, that this

3 is something that is a great idea, but I\'m not

4 sure where it\'s going to be funded from.

5 BY MS. NELSON:

6 Do you think they have done

7 research at \-- Homeland Security research or

8 the state? If not, that would be a place where

9 if we asked them to piggy-back with us when we

10 go back to a couple of these areas and said,

11 you know, we can extend this questionnaire on

12 the conversion, for example, I mean, we may

13 find a way to collaborate on that.

14 What about on the math question,

15 what about in-market partnerships? I mean,

16 Thompson, that means so many things to me

17 there. U.S. Thompson is the biggest sort of

18 package tour, multi-tour in the UK, at least in

19 a lot of UK business comes from vertically

20 integrated partnerships. And it seems to me

21 that people like the Japan TV, who is one of

22 the largest in Japan, it\'s almost easier to ask

23 to match in some ways than the diffused kind of

24 opportunities on the receiving end, because

25 they would be the ones who have the voice

104

1 there. They\'re the ones who book the travel.

2 It would be interesting if Thompson funds these

3 dollars \--

4 BY MS. BRISTOW:

5 Oh, yes, it would. And when we

6 \-- I should clarify, perhaps, for everybody

7 that when I talk about us spending just over \--

8 in fact, it\'s slightly under \$5 million,

9 because, you know, there are research costs,

10 for example, which come out of that \$9.6

11 million as well. So it\'s \-- there are other

12 figures.

13 But the budget itself did not

14 fund all those things in the sense that the

15 budget was amplified by Thompson\'s View

16 Cinemas. They\'re the people that came in and

17 allowed us to do that. So the postcards we

18 sent out in support of that campaign, the

19 website, the on-line advertising, the e-mails

20 that got to their database, their points of

21 sale in their stores, that\'s a joint

22 partnership. So they\'re bringing to the table

23 money to allow us to do this.

24 So, in fact, the value is \-- and

25 I think someone said earlier on added value.

105

1 The value is much greater, actually, because of

2 the tie-up with something like Thompson View

3 Cinemas. Simply the GNTV doing that one-week

4 breakfast television promotion, Monday to

5 Friday are the biggest shows in UK television.

6 They are bringing to the party funds. I mean,

7 their crew is shooting at the moment in the

8 states. So that\'s added value.

9 So you\'re absolutely right.

10 There are other people who are bringing money

11 in to this.

12 BY MS. NELSON:

13 So that would argue that you \--

14 that if there is a better chance of leveraging

15 this money in the UK market or at least

16 researching in Japan, who will step up to an

17 extent to help us to determine where we\'re

18 going to have the loudest voice?

19 BY MR. TISCH:

20 Maybe through TIA as they\'re set

21 up for it. We do a challenge grasp. We say to

22 TIA members, 2600 TIA members, this is the

23 money that\'s available. Tell us how you would

24 match with us, and see which convention bureau

25 or which states would step forward and say this

106

1 is how we\'re going to take our dollars and

2 we\'ll match 2 to 1, 3 to 1 or 4 to 1.

3 BY MS. NELSON:

4 And we could even do it \-- and

5 also with TTC, because the question is who out

6 funds from India would like to play, who out

7 funds from Japan would like to play. And that

8 might be an interesting opportunity with TTC to

9 say we can help you, we\'re willing to help you

10 bring travelers here.

11 BY MR. TISCH:

12 I\'m wondering if there\'s also

13 another opportunity to take some of the money

14 and publicize to the public some of the points

15 in the Rice-Chertoff initiative. We\'ve got the

16 model airport programs, and we want them to be

17 successful. It\'s incumbent or it\'s in the best

18 interest of the industry and the country that

19 they\'re successful. And would a public

20 relations, slash, advertising campaign to

21 promote what has been called for in the

22 initiative be helpful?

23 I\'m just now talking out loud,

24 but there\'s some real salient points in the

25 initiative that we\'re now in this week that

107

1 might be helpful in promoting using some of

2 these dollars.

3 BY MR. TAUBMAN:

4 Jay, I would \-- sort of drifting

5 a little bit off the subject. I had somewhere

6 in my head earlier today that \$4 million was

7 really to use it to study. And because \$4

8 million is not going to get us anywhere. And I

9 didn\'t mean billions before, but hundreds of

10 millions of dollars we need to find. And, you

11 know, it\'s, in essence, stuffing all the

12 pickets. Where are all those pockets?

13 And it\'s not so much using that

14 \$4 million right now for this minute. A

15 million dollars that we can then leverage 3 or

16 4 to 1, which is important, but at the very

17 least saying, okay, we hope to have a \$10

18 million allocation. And I don\'t know the

19 mystery of allocations or appropriations of

20 Congress.

21 But part of my problem has been

22 with this \$4 million in delaying it, maybe, in

23 Japan, for example, is that maybe encouraging

24 somebody else in Congress to say, well, they

25 have 10 coming. Let\'s take the 4 off and give

108

1 them 6.

2 So, you know, my sense is that if

3 we have, quote, \$10 million in the budget

4 coming to us, let\'s take a big chunk of this

5 dough and really maybe studying all of these

6 things. But at least take a chunk of it and

7 study how can we leverage the \$10 million

8 that\'s coming and make the \$10 million 40 next

9 year or 30.

10 And, you know, I don\'t know where

11 the places are to go. I mean, you guys would

12 know a lot better than I would, whether it\'s

13 the retailing industry, whether it\'s the

14 manufacturing industry, whether it\'s the

15 hospital or health care industry, whether it\'s

16 academia, wherever it is, that, in essence,

17 we\'re going to have \$10 million.

18 And then if you go to Congress

19 and say you give us \$10 million, we\'re going to

20 get \$40 million spent, that starts to

21 boot-strap us into a pattern that \-- I think a

22 healthier pattern that is in the direction of

23 what the Secretary said this morning, how can

24 private industry really make this their problem

25 and how can government help you boot-strap it

109

1 up.

2 So I would advocate that we spend

3 as much of the \$4 million understanding how we

4 can, in fact, coop other sources to leverage

5 the money rather than using the money today and

6 trying to make \$4 million into 8 today.

7 BY ASSISTANT SECRETARY FRINK:

8 If I could comment. I think that

9 our office would play a role in that if you can

10 identify the areas of analyzation work that you

11 need. We have \-- a big part of what we crank

12 out of our sectors is information of that

13 nature depending on the tenet of what you come

14 back with as to whether we have to bring in an

15 outside contractor, which some of our research

16 work does require because we\'re getting cuts

17 all the time and we have to do more with less.

18 So I think one of the challenges

19 would be for you to identify the areas of

20 research information, and we can look at it

21 from within our current researches and come

22 back with an estimation of what that would take

23 and to follow through on that.

24 And Jay mentioned at the very

25 outset that we\'ve lost 35 percent in the last

110

1 15 years. So we\'ve lost of lot of business

2 before that. And, I don\'t know, does anybody

3 have a number or a reason for that? Identify

4 the work? Why we\'ve lost that loving feeling

5 in this country?

6 And, obviously, once we do, we

7 can start \-- you can start looking at where the

8 efforts need to be put to get it back. We can

9 work on the analytical information. That\'s one

10 thing we do at government is crank out numbers.

11 So give us some direction on that, and we\'ll go

12 to work on it.

13 BY MR. TISCH:

14 I don\'t know if government

15 agencies have the ability to work together so

16 well, but I will give our friends at Homeland

17 Security and, particularly, Al Martinez, a huge

18 amount of credit for his leverage in the

19 business community. And he listens to our

20 issues and then incorporates them into policies

21 that he adjusts.

22 I\'m curious if there\'s any added

23 benefit in going back to Al and saying, can we

24 leverage some of the commerce department money

25 in working with DHS to solve some of the joint

111

1 problems that we have to deal with as an

2 industry and as to government agencies.

3 BY ASSISTANT SECRETARY FRINK:

4 I sat next to Al at the tourism

5 luncheon. And we \-- it not the first time we

6 met. It was actually gratuitous because we had

7 a chance to really look at each other\'s

8 background and created a lot of common ground.

9 I think so much of what we\'re doing in the

10 manufacturing sector is some inner agency work,

11 crossing each other\'s areas to see where we can

12 work as one within our offices.

13 So I would be happy \-- and I have

14 a commitment to getting it launched with all of

15 that. I think that you bond and build a

16 relationship with business. You can do that in

17 government and see what you can do. I\'d be

18 happy to help drive that.

19 BY MS. NELSON:

20 So it sounds like we need to come

21 up with a strategy in pretty short order. And

22 we\'ll end up with some kind of positional

23 statement where we research a statement that

24 supports what we\'re talking about. There must

25 be a fair amount of existing research that

112

1 could be brought together in a way that

2 indicates this kind a statement but in a

3 broader \-- a little bit broader than we have

4 traditionally used in the industry. I would

5 guess that between state and Homeland Security,

6 they\'ve got to have some attitude about

7 people\'s attitude towards the U.S. Now, that\'s

8 not the targeted long-haul travelers, but it\'s

9 conceptual for us.

10 BY MS. MORANO:

11 Mr. Chairman, this is Helen

12 Morano speaking. I would like to at least

13 interject here that all the ideas are so

14 explanative and have potential for being able

15 to provide some extra bolstering with the

16 Rice-Chertoff initiative.

17 But one of the things that we ask

18 you be mindful of is the language in which the

19 appropriation was made. And I just have to

20 clarify that the tape that you went through

21 using this funding, for instance, for the

22 Rice-Chertoff, it would be outside the confines

23 of how it was stated in the budget as an

24 appropriation toward the account of the U.S.

25 Travel and Tourism promotion.

113

1 So I don\'t say that it can\'t be

2 done. I\'m just giving you a feel for what it

3 would take to be able to find what is the

4 leverage that we have to expand that

5 appropriation framework. Okay? I just put

6 that on the table so that it\'s understood that

7 as we go forward, whichever way you direct us

8 to provide, there\'s a resource in whatever

9 avenue you want us to do to make sure that we

10 can manage that.

11 BY MS. CARLSON-NELSON:

12 How broadly can we define

13 promotion?

14 BY MS. MORANO:

15 Well, I think that\'s what I\'m

16 saying is that we would have to investigate

17 that, how broadly it would be defined. Okay?

18 It\'s not a counter. It\'s simply a

19 clarification.

20 BY MR. RASULO:

21 Great. Well, we won\'t debate

22 that, but I think that there has got to be

23 something. I think we shouldn\'t limit

24 ourselves.

25 We have two representatives from

114

1 state organizations. Any comment, the

2 likelihood of success, ideas for success of how

3 we can use this money to encourage \-- to pilot

4 \-- and, by the way, I completely agree with

5 what Bobby Talbot said about the notion of

6 trying to imagine spending this money with

7 direct results on destination marketing should

8 probably be the second chair to try to spend

9 the money to figure out what would work if you

10 had enough money or more money.

11 But part of that being a notion

12 that we really do need \-- we\'ve heard it before

13 that if we do not use this money in our

14 thinking to put together a sustainable matching

15 program either from private players or from

16 state and other destinations, we will hit a

17 brick wall with the federal government. They

18 will basically say you\'re not doing what it

19 takes to help yourself.

20 Our basic philosophy is that

21 either we\'ll jump start, we\'ll get money out

22 there, but it really is \-- we won\'t be very

23 encouraged to do that without a sustainable

24 matching comparable. So maybe you can give us

25 a little bit of insight into how you \-- you

115

1 know, what you think are compelling ideas to

2 make that happen from your perspective, what

3 would motivate your guys to act in your

4 industry.

5 BY MR. JOHNSON:

6 Well, I\'ll start. Our market

7 folks just don\'t think this is big enough to

8 make much of an impact. We look at it mostly

9 from a Japan standpoint because that\'s our

10 closest market and a very big market for us.

11 And our marketing folks don\'t think that this

12 is going to make much of an impact on a solo

13 basis.

14 And I think it would be \-- from

15 on overall standpoint, we\'d be much happier if

16 we were coming up with an overall strategy to

17 get the federal government \-- hello, Helen \--

18 to get the federal government involved in what

19 is the longer-term aspects of the international

20 market. So that\'s \-- what you guys are talking

21 about would certainly make us happy.

22 And then the key to it would be

23 coordination of, say, the state agency that

24 spends substantial amounts of dollars in the

25 Japan market in whatever campaign that this was

116

1 going to come, them going hand-in-glove as they

2 march down the road and decide what\'s the

3 proper campaign to go through. So that\'s our

4 position.

5 BY MR. TAUBMAN:

6 Rex, let me ask you. You said

7 earlier, I think, that you have \$11 million

8 campaign?

9 BY MR. JOHNSON:

10 Yes. We have an \$11 million

11 international budget. Eight and a little bit

12 of change goes to Japan. The rest we spread

13 around other \-- India and possibly New Zealand,

14 Europe.

15 BY MR. TAUBMAN:

16 Does the state of Hawaii augment

17 that or is that their budget?

18 BY MR. JOHNSON:

19 That\'s our budget from the state.

20 BY MR. TAUBMAN:

21 They don\'t spend additional

22 dollars on top of that? That\'s how much they

23 allocate for the \--

24 BY MR. JOHNSON:

25 That\'s how much of our \$62

117

1 million budget goes to international at this

2 point in time.

3 BY MR. TAUBMAN:

4 So if the campaign that we

5 viewed, just like Universal did the King Kong

6 thing and the billboard effort, if there was a

7 way to do the same kind of thing for Hawaii,

8 you know, surfing and \--

9 BY MR. JOHNSON:

10 Well, there was until that

11 Tsunami hit last year. We were involved with

12 those folks.

13 BY MR. TAUBMAN:

14 Oh, there was. All right. But

15 let\'s say there was something more direct for

16 you, more to Jay\'s question, would you say that

17 on a 3 to 1 basis come up with the dough on a

18 coop basis so that they can extend their Japan

19 buy?

20 BY MR. JOHNSON:

21 Probably not on a 3 to 1 basis,

22 but we would certainly be interested in sitting

23 down and doing our campaign together with

24 theirs. God only knows how large it would get.

25 But if you were to take the Japan \-- you\'re

118

1 talking about right now \-- 4 million bucks just

2 for Tokyo, I don\'t think we\'d hang in there

3 unless we totally agreed. I mean, we wouldn\'t

4 come with \$4 million and trash what we have

5 been doing as an individual destination to

6 market the overall U.S.

7 We\'d certainly be involved

8 somehow. But that money, remember, gets spent

9 on our destination. And as we talked about

10 earlier, the umbrella here is what I think you

11 want to talk about. We\'ve already disagreed

12 with that, that you need to get more specific

13 from a destination standpoint, because that\'s

14 how we spend our money. So we\'re stuck in that

15 mode.

16 But we wouldn\'t take that big of

17 a hunk out of our Japan budget and match it

18 with their \$4 million dollars unless we had

19 some control of where is was going to an Hawaii

20 destination rather than the overall United

21 States.

22 BY MR. RASULO:

23 Fair enough. Chris?

24 BY MR. IMHOFF:

25 Well, I personally feel that with

119

1 the limited money we have, that is what we

2 started off with when the Advisory Board was

3 formed, I almost feel better that we would

4 invest more in the public relations for the

5 United States\' travel and tourism by promotion.

6 As Marilyn said, a lot of people

7 vote for Europe and even other parts that are

8 still concerned about coming to the United

9 States for various reasons. And that\'s why I\'d

10 rather invest in \-- really, into the PR

11 campaign, that the United States is open for

12 business and we\'d welcome the foreign visitors

13 and make it as easy as possible to travel to

14 the United States.

15 And I think then maybe meeting a

16 couple trade merchants here and there, mining

17 both with the state and federal government and

18 private sector, I think we could really

19 probably get more for our monies worth. I know

20 especially in Japan, the media cost is

21 horrendous, even in Europe, that it\'s much

22 worse than the United States.

23 So it really would be a drop in

24 the budget. So that\'s where the research

25 really has to tell us what is the most

120

1 effective way to get the message out to the

2 world or to specific destinations how we can

3 attract more business.

4 BY MR. TISCH:

5 We have one other representative,

6 Neville Bugwadia who\'s sitting over there, runs

7 the \"I Love New York\" campaign for New York

8 state.

9 BY MR. BUGWADIA:

10 I think that we might be

11 interested in doing a coop campaign, certainly.

12 Our tourism budget is very limited. It\'s \$11

13 million for the entire state of New York

14 compared to the amount that Hawaii, for

15 example, spends. And out of that, we spend a

16 very small percentage of it internationally,

17 really, for trade promotion purposes as opposed

18 to consumer.

19 But I think that we would be very

20 interested from our standpoint in bringing some

21 coop dollars to the table if New York were

22 represented in a US-based promotion.

23 BY MR. RASULO:

24 What would compel you to think

25 about matching that? When you say \-- and Rex

121

1 said the same thing. If we had some control or

2 Hawaii were represented. You just said it.

3 Help us think about that what means. I mean,

4 you saw the kind of \-- you know, sort of

5 destination campaign that we put together.

6 BY MR. BUGWADIA:

7 Sure. Probably in two ways. I

8 think one is that we should be in the creative.

9 If it\'s a TV ad, then we want images of New

10 York in ad at the very least. And the other

11 would be probably in the payoff where you have

12 the website, See America, dot, org, dot, UK.

13 If there\'s a specific button for New York, for

14 example, that takes you to our website, where

15 you have some exposure on the \"See America\"

16 website, that might be another.

17 BY MR. RASULO:

18 When you said be involved, what

19 did you mean?

20 BY MR. JOHNSON:

21 Well, we \-- as we sent through

22 this process, we have had several meetings

23 between our marketing contractors in what\'s

24 called Aloha Tourism in Japan and the people

25 that were working on the thing. And we seemed

122

1 to not be singing off the same song sheet;

2 thereby deciding we\'d kind of go on our own

3 with the campaign that\'s up and running and

4 continuing with the third year in a row now,

5 which we\'re pretty happy with because it has

6 increased visitation.

7 So there wasn\'t much connection

8 there, I think, between, say, this group, part

9 of Commerce and the state of Hawaii and where

10 we\'re trying to go. I mean, they had different

11 objectives. In the state of Hawaii, we raise

12 these monies to market the state of Hawaii. I

13 would be very happy \-- and I can\'t tell you

14 unless we grow the number \-- we\'d be very happy

15 to be involved from an overall United States of

16 America standpoint, but we believe very

17 strongly that getting to a strategy where the

18 federal government is in the game \-- and

19 somebody mentioned it earlier today \-- with

20 some kind of a formula that can grow that

21 number.

22 The goal is to get the federal

23 government in the same game that the state of

24 Hawaii is in for its particular destination or

25 the Disney folks are in for their destination.

123

1 And we think that\'s very important, and money

2 should be spent \-- or I think that\'s very

3 important that money should be spent, expanding

4 the role of how the federal government or

5 Department of Commerce looks at the overall

6 business of tourism.

7 BY ASSISTANT SECRETARY FRINK:

8 I think that if the Secretary

9 were to knock on the door of states that were

10 more institutional, because rather than target

11 an area where the state\'s market is very

12 concerned about changing the perception, as

13 Homeland Security would be, they\'re both

14 desensitized considerably of late over that

15 issue.

16 BY MR. JOHNSON:

17 Do we know from all of our

18 customers like New Orleans, the number one

19 issue when they are making travel decisions,

20 the number one issue is safety and security.

21 All over the place. That\'s East Coast. That\'s

22 Japan. The number one issue of making those

23 decisions is safety and security. So you would

24 think that the combination of these two things

25 would really fit well together.

124

1 BY MR. RASULO:

2 Well, I do think that to the

3 extent that \-- and you brought it up and the

4 Secretary brought it up \-- we know that this is

5 a bigger issue than just tourism. We know that

6 the image of the U.S. is a bigger issue than

7 the destination, doing business overseas and

8 doing business for experts here in the U.S.

9 And I think that unless we figure

10 out a formula institutionalized in some way, we

11 will not be able to tap into what is a much

12 larger interest group than just travel and

13 tourism. And we ought to figure out how to do

14 that. It\'s obvious maybe in retailing. It may

15 not be as obvious for other companies. But it

16 can be made obvious.

17 And I think that whether John\'s

18 idea about promoting Rice-Chertoff or whether

19 it\'s an idea about promoting how important this

20 issue is to other industries, I\'d like to

21 imagine that none of us go out and try to sell

22 anything, whether it\'s a partnership, whether

23 it\'s closing a deal, whether it\'s to sell

24 business to business without some sort of

25 funding, a sales campaign of some sort. And

125

1 that sales campaign includes ideas. Sometimes

2 it includes media. Sometimes it includes

3 collateral. But you basically get your ideas

4 and your \-- the proposition that you\'re selling

5 honed down to a compelling argument.

6 And you can\'t do that without

7 money. We can sit around all day as senior

8 executives willing to donate their name and

9 donate our staff\'s time, but at the end of the

10 day something is going to go on the road with

11 something, I hope, other than a bunch of ideas

12 that they may or may not articulate well.

13 And I do believe that we ought to

14 spend \-- invest this money and not spend it.

15 Spending it is fine on media. Investing it is

16 coming up with a series of tools that end up

17 making us in six months able to not only have a

18 blueprint for a strategy, but have the

19 materials to sell that strategy, whether we\'re

20 selling it to the state department, whether

21 we\'re selling it to Homeland Security, whether

22 we\'re selling it to the private sector, whether

23 we\'re selling it to states and, you know,

24 eventually convention and tourism bureaus or

25 whether we\'re selling it to outbound

126

1 international partners, I think we need \-- you

2 know, we need to catalog this.

3 BY MR. TAUBMAN:

4 As somebody was saying earlier,

5 in Germany or Europe or some place, because

6 they don\'t like Americans. And it\'s just

7 impacting every aspect. I know I had this

8 conversation with several people. But the

9 whole idea of institutional advertising, why is

10 GE, you know, this super power in many areas,

11 why are they this huge company advertising?

12 Because they want people to feel good about GE.

13 It\'s the same thing. So I wholeheartedly agree

14 with that.

15 BY MR. RASULO:

16 So leave it as a take-away for

17 the Commerce folks to figure out where we can

18 \-- how broad the notion of promotional spending

19 for the United States can be. I know every

20 single one of us does this as part of our

21 marketing promotion budget, so I\'d be very

22 surprised if we can\'t be convincing in

23 basically getting this \-- first of all, how

24 these \$4 million can be \-- and I\'ll repeat \--

25 invested and not spent, particularly as the

127

1 development of this national tourism strategy

2 ultimately is about promoting the United

3 States. I think it ought to be pretty

4 straightforward, but we\'ll leave that to you.

5 BY MR. TISCH:

6 Just one thing before we get off

7 this point. The reason that travel and TIA are

8 working so closely with business for diplomatic

9 action, the organization that was set up to

10 discuss these issues of corporate American\'s

11 challenges overseas is exactly to all these

12 points. This group has researched. They are

13 very well-run. And they are in place. And TIR

14 and TIA work very closely with them. They will

15 be very involved with the TCC in April to

16 investigate this very issue.

17 BY MS. NELSON:

18 So it\'s maybe we need this

19 positional statement because I said promoting

20 the United States, but maybe we need the rest

21 of that to be completed as a place to visit, as

22 a place to do business, as a good partner in

23 dealing with the world\'s issue in that somehow

24 with particular strategies against each of

25 those issues.

128

1 And on the \-- specifically on the

2 travel, both, I think Rex and Chris and Neville

3 all spoke about the trade. And I really think

4 any of us who are specifically dealing in those

5 markets are so aware that if you can get into

6 the trade heads, they\'re the people who can

7 also amplify our message dramatically, the

8 trade market, because we can advertise all we

9 want, but in the end when someone sits in front

10 of a travel agent or works with something in

11 trade, they\'re the people who are going to say,

12 oh, you don\'t want to go there, it\'s too hard

13 to get a visa or they\'re going to say that\'s a

14 great place, I can facilitate your visa.

15 They\'ve done a lot of things to change that.

16 This is a good time to go because of where the

17 dollar is.

18 So somehow I agree that among all

19 these other ideas, that some kind of trade

20 mission where we partner with our tourism

21 colleagues around the world to understand that

22 as they come, we\'ll also be sending travelers

23 there. This is the kind of energy that we need

24 to get going among the trade around the world.

25 BY MR. RASULO:

129

1 I agree. I think I\'d like to

2 move into the subject of subcommittees and the

3 subject of \-- in the development of sort of

4 this national strategy and work that\'s ahead of

5 us. In your books \-- I think it\'s at Tab E in

6 your books in front of you, there are five

7 suggestions \-- well, it\'s a little more than

8 suggesting \-- for Advisory Board subcommittees

9 that I would set up now. Marilyn and I talked

10 about them at length. We\'ve also talked about

11 them with some of the folks at the Commerce

12 Department in preparation for today\'s meeting.

13 And, anyway, I think this page is

14 a bit self-explanatory. It really is kind of

15 breaking down the task at-hand. But I would

16 love to take any suggestions on either

17 refinement of the descriptions as you see them

18 here or additions. I think they\'re too

19 fractured because there are too many of us.

20 There\'s a commitment to getting to be part of

21 these. And I\'m requesting if some of you

22 received notes from me about a request for you

23 to chair, we\'ll go through that in a second.

24 But I\'ve love to start out by

25 saying, are these the right subcommittees? Are

130

1 we missing anything obvious? Is this going to

2 cover the ground in the development of a

3 national strategy? Marilyn, anything to add

4 from your perspective of that?

5 BY MS. NELSON:

6 No, but maybe as people look at

7 them and they\'re thinking and kind of forming

8 in their minds what do we need \-- I think

9 Jonathan reminded us we really need partners.

10 So in terms of return on investment, I would

11 hope that part of that would be to look at

12 others having a return on the investment and

13 develop a kind of partner case of that, because

14 we talk about return on investment in all \--

15 shopping, the retailers or others. Let\'s look

16 at who might be partners and how to articulate

17 that and try to broaden that particular

18 assignment.

19 BY MR. TISCH:

20 Jay, a question that I would have

21 as we form these, our committee itself is not

22 huge, which is probably beneficial. Are we

23 allow to \-- or should we be making suggestions

24 of others who are not specifically on the

25 committee?

131

1 BY MR. RASULO:

2 You know, Mark is going to talk

3 about how the subcommittees \-- why don\'t you

4 talk a little bit about how the subcommittee

5 structure works, a part of it. And then we can

6 come back to the details.

7 BY MS. AKER:

8 Under all of the U.S. Advisory

9 Committees, we function and are governed by the

10 Federal Advisory Committee Act, FACA, which

11 tells us, basically, give us guidelines for how

12 we can form the subcommittees. If you want to

13 turn to the next page in Tab E, there\'s a

14 diagram that\'s pretty self-explanatory. And as

15 you can say, there\'s the parent committee which

16 was formed here today. That\'s all the

17 principals. And everything pretty much comes

18 back up to the parent subcommittee here.

19 And then below that \-- below the

20 five subcommittees are made up of all

21 principles. The staff reps obviously can work

22 very closely with their principals on all the

23 recommendations that go forward, but all of the

24 subcommittee\'s recommendations go to the parent

25 committee. So everyone will see all the

132

1 recommendations before. They\'re pre-decisional

2 or preliminary sort of recommendations.

3 So even though it\'s comprised of

4 all the principals in the subcommittees, they

5 must go to the full board. And if necessary,

6 below that you\'ll see that there\'s working

7 groups. And those have to be chaired by a

8 principal, but you can bring in other

9 individuals, you know, technical consultants,

10 whatever it may be to provide you with more

11 information.

12 Those working groups do not

13 advise the government directly. And,

14 obviously, we encourage you to work within the

15 subcommittees as much as possible. But if you

16 need an ad hoc sort of working group, that\'s

17 absolutely appropriate. Then even below that

18 to kind of a last player is a round table.

19 It\'s very much separate from this Board in

20 general. That\'s really just a fact-finding

21 sort of informational round table. You can

22 bring in industry or whatever, but that

23 doesn\'t, obviously, advise the government

24 directly either.

25 So the only one that advises the

133

1 government directly are the parent committee

2 and then the subcommittee through the parent

3 committee. Is there any questions?

4 BY MR. CARY:

5 Can I put a real-world example on

6 it? When we come to ease of travel, that\'s

7 going to have a lot to do with airport

8 facilities, with enter and exit requirements,

9 those types of things. The working committees

10 could involve, perhaps, the air transportation

11 association or other airlines as an industry

12 body who would all have that common interest

13 with, I think, United being the only

14 representative on this committee. So that the

15 working group would be the place where that

16 kind of communication would happen and filter

17 back through the subcommittee.

18 BY MS. AKER:

19 That\'s exactly right.

20 BY MR. TISCH:

21 The good news of these committees

22 is that we\'ve CEOs. The bad news you\'ve got

23 CEOs. But I just lay that out there.

24 BY MS. AKER:

25 Well, that\'s the other side. I

134

1 know a lot of you have multiple people working

2 with you more on the policy side. So, you

3 know, if you do want to be on two

4 subcommittees, that\'s absolutely permissible.

5 If you want to have different people sort of

6 advising you on each of the different

7 subcommittees, you\'re absolutely right. That\'s

8 going to be a time commitment, and that\'s

9 tough. Is there any other questions?

10 BY MS. NELSON:

11 I didn\'t quite understand the

12 answer to the question about building \-- so

13 often I think when we\'re trying to make

14 something happen, we kind of build the

15 engagement and the involvement from the

16 beginning. And a lot of what we\'ve talked

17 about today is issues that have been

18 implications beyond our particular industry.

19 This all principals, does that

20 mean that those committees can\'t actually have

21 someone from Homeland Security or

22 representatives of someone, or would we have a

23 commerce representative as well as possibly

24 asking you to help us to recruit the

25 appropriate people to collaborate from the

135

1 beginning, because then we\'re not going over or

2 imposing our final plan on others but we\'re

3 beginning to develop then from the beginning.

4 BY MS. AKER:

5 As I said, I think the

6 subcommittees \-- and, Mark, correct me if I\'m

7 wrong \-- but I think the subcommittee does have

8 to represent the principal through the working

9 group. You can go out and find out the other

10 information, include people from other

11 companies, that sort of thing. And then those

12 work very closely with the subcommittees so

13 that the subcommittees are actually making

14 recommendations to the parent committee, not

15 the working group, not the people outside of

16 the Board. Because we really want this to be

17 the Board\'s recommendations from the

18 subcommittees up through the parent committee.

19 But we absolutely encourage

20 everybody \-- I know through the export council,

21 you know, that they go out \-- they get a lot of

22 other input through you. But, unfortunately,

23 this is the system that we have to abide by.

24 Any other questions?

25 BY MR. JOHNSON:

136

1 Sara, one quick thing or remark.

2 When we talk return on investment and so on and

3 so forth, I\'ve got to assume that Commerce just

4 has more data on those types of things than

5 anybody else in the world. So the return on

6 investment committee would be largely driven by

7 data that we have probably not had a real easy

8 time presenting and need to figure out a better

9 way to present it to constituents that we may

10 be trying to influence. But a large amount or

11 a huge amount of that would come from Commerce.

12 BY MS. AKER:

13 Absolutely. And I think we\'re

14 willing to help in any way possible. And I

15 know in Homeland, we have a lot of contacts

16 there. We encourage you to use all of the

17 government people or individuals that you can

18 to help you with that through the subcommittees

19 and kind of more importantly through the

20 working groups. We can help in any way

21 possible to get you the information that you

22 need. You can go to Homeland Security and ask

23 for certain things or people to be a part of

24 the discussion.

25 BY MR. JOHNSON:

137

1 Well, even further than that, as

2 John mentioned, we\'ve got two problems.

3 There\'s one good and one bad that\'s, actually,

4 our CEOs. And I\'m assuming that Commerce will

5 staff a lot of this stuff from a data-gathering

6 and trying to figure out how to present it so

7 we can make a stronger case.

8 BY MS. AKER:

9 That\'s a lot of it \--

10 BY MR. JOHNSON:

11 Yeah, or work on particularly the

12 return on investment stuff.

13 BY MS. AKER:

14 Right.

15 BY MR. JOHNSON:

16 I want to know how many hours

17 you\'re going to work me from Honolulu a day to

18 come up with something that we\'re going to try

19 to do a little better job of explaining to

20 everybody how valuable this industry is.

21 BY MS. AKER:

22 Right. Well, and I think your

23 travel and tourism office \-- and, Mark, if you

24 want to chime in \-- we have a lot of resources

25 available. And I understand. But I don\'t

138

1 think that we at Commerce can staff the actual

2 subcommittee in terms of actually putting

3 people on them. I mean, our resources are

4 available.

5 But under these guidelines, the

6 subcommittees \-- parent committees have to be

7 all principals. That\'s the unfortunate part

8 since everyone\'s time is all stretched very

9 thin. But, as I said, through whatever means

10 possible, we\'ll provide the assistance and help

11 through the travel and tourism office, through

12 Al\'s office, through my office.

13 So I don\'t know if that answers

14 your question; but, unfortunately, we can\'t \--

15 we can do a lot of the work for you, but not

16 necessarily \-- the recommendations coming from

17 the subcommittees, they need to be made by the

18 principal.

19 BY MR. RASULO:

20 And it sounds like the work needs

21 to be organized by the subcommittees but that

22 as indicated in the title, the working groups

23 need to do the work because it won\'t get people

24 around the table. And I\'m sorry to put it so

25 bluntly.

139

1 BY MS. AKER:

2 That\'s part of the new charter.

3 That\'s part of the new charter here is that

4 there really is a lot more work and

5 responsibility and a lot more progress,

6 hopefully. But, as you said \-- but I think the

7 subcommittees, they do need to be all

8 principals. But I know through the reps \-- the

9 staff reps do so much of the work through the

10 principals. And the people within your company

11 or organizations do a lot of the work, and then

12 that comes up through the subcommittees.

13 But it just has to be the

14 principal making the recommendations to the

15 parent committee. But a lot of the work,

16 obviously, like you\'re saying is in the

17 subcommittee level and the working group level.

18 But, obviously, we have to keep it within the

19 subcommittee level within your organization.

20 BY ASSISTANT SECRETARY FRINK:

21 It ultimately gets down to the

22 work level where things get ironed out. I

23 think one of the things that you probably want

24 to do is, Jay, put down some areas that he

25 thought were places to look with regard to

140

1 return on investment. You may want to know

2 what limited resources we\'re going to have and

3 then identify where your priorities are and,

4 perhaps, within some of these recommendations.

5 Perhaps pick apart where you may need specific

6 \-- what specific information that we can take

7 within our capabilities and, in some cases,

8 with a little bit of research we have together,

9 we have to look at that as part of the research

10 costs if it\'s acceptable to use those costs.

11 BY MS. NELSON:

12 And in terms of this promotional

13 budget, Helen, if we came together and had a

14 kind of format that we wanted to use for the

15 final articulation and publication of some

16 strategy in an easily accessible form that

17 could be used on the Hill and other places, can

18 we use some of the promotional dollars to work

19 with some professional firms to help us talk at

20 the very beginning about this format so each

21 committee would sort of be driving towards, you

22 know, a three-page or a four-page articulation

23 of their piece with some template that the

24 committees could use in their thinking since we

25 have a very short period of time, so we

141

1 organize around whether somebody tells us if we

2 want to make four or five points we want you to

3 cut down by possible partners that would might

4 be brought in to help amplify this particular

5 piece. What needs to be? What action needs to

6 be taken? Who are the partners that we need to

7 take that action, et cetera?

8 I think some thought to the

9 format of the report and strategic articulation

10 would help each committee to be more efficient

11 in a short period of time rather than us giving

12 a lot of work, bringing it all up to this level

13 and then we\'ve got piles of data that we have

14 to organize to make a case statement. We can

15 just start with that objective.

16 That would be a thought to help

17 us be much more efficient and drive faster,

18 because we\'ve got a lot of data that various

19 organizations have put together, if we can pull

20 it together in a better way to make our case.

21 BY MR. TAUBMAN:

22 Jay, are we correct to understand

23 here that there\'s 15 members of each committee.

24 There are five committees. And you want, in

25 essence, under the federal guidelines or

142

1 policies that you want three principals in each

2 one of these subgroups and you want to

3 establish someone as sort of the subcommittee

4 chairman. And you would certainly help those

5 individuals. If there was a working group

6 under it, that they would find a way to staff

7 hopefully without the Commerce Department. Is

8 that simplistically \--

9 BY MR. RASULO:

10 Simplistically, yeah. I think

11 that\'s right. And I, frankly, imagine that the

12 subcommittee work is done by telephone for the

13 most part, that there are a couple of

14 organizing phone calls and that whoever steps

15 up to chair these really sort of encourages

16 their colleagues, as I have and as I think most

17 of you around the table have, to dedicate some

18 members of your staff to actually work with

19 Commerce in a working group formality to

20 basically be able to do the legwork behind sort

21 of the organizing principals by the

22 subcommittees.

23 I think in the development of a

24 strategy you have \-- to get it done, you have

25 one of two options. Either we all commit to

143

1 meet weekly or we have to break up the work

2 into smaller groups. We\'re not going to meet

3 weekly, so we\'ve got to break the task into

4 component parts. And I\'m absolutely receptive

5 to the fact that maybe five is too many. But

6 the fact is if you make it three, it puts the

7 \-- it raises the burden on the three.

8 I\'ve tried to make it \-- Marilyn

9 and I discussed it. We started with four, and

10 we added one because it still seemed like a

11 pretty broad request for the four groups to

12 really put together the elements that we

13 ultimately were called on for an advisory

14 strategy to the Commerce Department which is a

15 pretty big industry.

16 But I don\'t think, frankly,

17 beyond some dedicated conference call time that

18 we\'re asking people to actually do too much if

19 they\'re willing to put some staff against it.

20 BY MR. TAUBMAN:

21 Are we still in agreement that

22 after today\'s discussion that these five

23 subcommittees are the ones that are going to

24 get to the issues that you talked about today?

25 BY MR. RASULO:

144

1 Well, that\'s probably what I\'d

2 like to spend our time \-- some of our time

3 talking about today, all of those five. I

4 can\'t say we\'ll spend our lives working on it,

5 but we did spend some time thinking about it.

6 The Commerce Department has spent time thinking

7 about it and thought these were the elements,

8 you know, the broad categories that would

9 comprise an ultimate recommendation of strategy

10 on track in tourism. I am happy to hear

11 others.

12 If you all think something is

13 missing based on our discussion over the last

14 hour, I\'d rather add it to the purview of one

15 of these. I think there\'s six or seven

16 subcommittees. We won\'t even able to organize

17 them. But if there\'s things \-- clear things

18 that in the articulation of what we think the

19 task is here \-- and by the way, if the

20 subcommittee can decide what they think the

21 tasks are, then I\'m happy to hear it.

22 But these are \-- starting with

23 product promotion, clearly public diplomacy

24 which we can also call U.S. imagine, we can

25 call that a lot of things, ease of travel which

145

1 has to do with border crossings and all that

2 and then, ultimately, I think we all agree that

3 we need a measurement device or we need a

4 recommendation as to an ongoing measurement

5 device to keep focused and to keep the ball

6 moving forward. Is there something that you

7 think is missing or anybody thinks is missing?

8 BY MR. TISCH:

9 I think that based on the

10 Rice-Chertoff, a lot of what they focus on

11 deals with ease of travel. And maybe you could

12 combine ease of travel with public diplomacy

13 and then just add one sentence at the end that

14 this committee would work with the state

15 department and DHS, because there is some

16 overlap there.

17 BY MR. RASULO:

18 Perhaps. Sure. Marilyn, you

19 have had a strong point of view about the

20 public diplomacy piece of that.

21 BY MS. NELSON:

22 I don\'t object to that. I guess

23 I had two thoughts on that. One was whether

24 the public diplomacy piece that was articulated

25 could help us to find funding from some other

146

1 areas of the government that were not as

2 directly tied to a measure of how many trips we

3 generate, because it\'s a concern. There\'s a

4 lag, I\'m willing to bet. That\'s why I don\'t \--

5 I\'m hesitant about working off from the UK

6 altogether, that there is a lag. They develop

7 product. They develop their materials, kind of

8 in our heads in terms of trade. So there\'s a

9 lag.

10 And we don\'t \-- and so my concern

11 a little bit was if we put measures in, which

12 we all are trying to do to make sure we\'re

13 getting leverage return on our dollar, then the

14 public diplomacy piece is going to be a little

15 harder to measure. So whether that \--

16 hopefully another example. Maybe this is too

17 anecdotal.

18 But I\'ve seen a concern and maybe

19 a pattern in our business that Islamic nations

20 or travel to Islamic nations, you go to Turkey

21 and you\'re surprised. They have the lowest

22 intake of U.S. travelers they\'ve ever had. And

23 they have the highest tourism increase that

24 they\'ve ever had. And there\'s something a

25 little concerning. I find that this sense that

147

1 the world is dividing even in terms of what

2 we\'re exposed to our comfort level, people not

3 feeling welcome.

4 So that might lead to public

5 diplomacy. That might lead us to try to tell

6 our story in the market that we\'re probably not

7 the biggest source market right now but where

8 our story needs to be told.

9 So that was a little of my

10 concern about this week. We can go to the

11 source markets. We can go to the UK. We know

12 they\'re pretty friendly, maybe we help because

13 we want to make sure that they stay that way.

14 But then you think of some of these other

15 markets that aren\'t friendly to us. Our hotel

16 was one that was bombed in Jordan, you know. I

17 really would like to make sure that in some of

18 those markets we have a voice.

19 We have to be very thoughtful of

20 how we position ourselves in those markets.

21 It\'s not a blanket positioning around the

22 world. So that was my concern. Maybe it\'s too

23 \-- the next step. I\'m not sure. And I\'m not

24 sure that if it\'s specifically with the

25 Commerce. But even in terms of doing business

148

1 in these markets, for our business people to

2 feel comfortable there and visa versa. It\'s

3 becoming a major issue that we have to maybe

4 get on the table somewhere.

5 BY MR. RASULO:

6 Well, I think you\'re absolutely

7 right, but that doesn\'t mean you shouldn\'t have

8 a strategy. I think all of these small steps

9 lead to a polarization, ultimately, to show up

10 in numbers where, by the way, the fact that no

11 \-- that less and less people from the U.S. go

12 to those countries and less and less of the

13 travelers from these countries coming to the

14 U.S. will inevitably lead to a polarization

15 that would be universal.

16 So, look, I have no objection to

17 combining those two things, particularly as the

18 government has them. Maybe it\'s the most

19 effective way to approach that subject. And

20 that\'s fine with me. Any other suggestions

21 before we decide on the subcommittees and leave

22 them at that, because we\'ve spent too much time

23 on housekeeping.

24 BY MR. JUSTICE:

25 Jay, just the counter argument

149

1 before we make that decision. I think while

2 Rice-Chertoff is a great step, the real

3 tactical steps to ultimately get to ease of

4 travel are going to be \-- it\'s going to be a

5 long laborious process with a lot of engagement

6 with DHS. And I wouldn\'t want to dilute these

7 two very important and distinct activities that

8 I think are going to require very different

9 actions on the part of that subcommittee.

10 So I would see it as \-- if we

11 merged it, it\'s going to have really a dual

12 role with very distinct, although inter-related

13 activities. So I think I would come out on the

14 side of leaving them independent because I

15 think the activities are going to be quite

16 different.

17 BY MR. TISCH:

18 Against my own argument,

19 certainly when you say that, that probably

20 makes sense.

21 BY MR. RASULO:

22 Why don\'t we just take an

23 informal vote. Who thinks we need five

24 committees?

25 BY ASSISTANT SECRETARY FRINK:

150

1 The House is going to make the

2 decision, but here\'s what I think. I just

3 would \-- I heard several things, valuable

4 pieces of information at this meeting. One of

5 them is the purpose of tourism\'s impact to the

6 economy and its far-reaching aspects. I just

7 would only want to encourage that within these

8 subcommittees to have work that will address

9 that issue, it\'s far-reaching impact.

10 The issue of getting help and

11 support from other places is so dependent upon

12 your compelling message that tourism has so

13 many tentacles of effect on the economy, and

14 that almost could be a committee in itself to

15 focus on that.

16 But I think if you have that

17 within all those and you feel comfortable, I

18 just want to make sure that that was something

19 that you addressed because it was discussed to

20 such an extent in many different ways at this

21 event.

22 The other is that you\'ve been

23 challenged by the Secretary to put together a

24 strategy for tourism through these

25 subcommittees, kind of summit parts, that would

151

1 really add up to a strategy. And if you feel

2 so, then I think you should feel comfortable

3 with the committees.

4 BY MS. NELSON:

5 Do you think we need more

6 reference to sort of best practices or not?

7 You know, as an industry we\'ve tended to point

8 to Australia campaign at one point or France,

9 the amount of money that France spends and

10 various small countries a huge number of

11 dollars, \$79 million or something. So we need

12 to support our argument with some of these

13 examples? Who is helpful, because if we don\'t

14 reference that \-- but I don\'t know that it gets

15 hurt. I mean, this is a question of \--

16 BY ASSISTANT SECRETARY FRINK:

17 I would only argue that someone,

18 maybe a funding capability, might say, well,

19 Australia is not a good example because their

20 economy does so much more on travel or, rather,

21 their economy is a much more diverse economy.

22 That\'s why it\'s so important, I

23 think, for you to show the broad-reaching

24 effect that travel and tourism has on a macro

25 level, just thinking visionary. So, I mean, if

152

1 you feel okay with these in terms of the

2 context of what I just stated, then I just

3 wanted to make sure.

4 BY MR. RASULO:

5 Well, remember, at the end of

6 this day it\'s this group that will put the

7 individual parts together and we can play a

8 role and I hope will play a role in honing the

9 message. So I don\'t think it all will be lost.

10 I think that\'s probably more of a message point

11 than \-- I don\'t think we have to \-- I don\'t

12 think there\'s a lot of work that needs to be

13 done to demonstrate the importance of travel

14 and tourism in the economy.

15 I think it\'s been done by the

16 trade associations. I think we have ad

17 nauseam. I think it\'s been articulated well at

18 times, but probably could be better. I think

19 the issue of some of these are much more green

20 field in terms of different kinds of works that

21 needs to be done. But I personally see that as

22 a communication point and not a strategy. You

23 wouldn\'t recommend as part of a strategy the

24 importance of travel and tourism in the mecca.

25 You can articulate it, but you wouldn\'t

153

1 recommend it. These things are more along the

2 lines of development and strategy and

3 recommendation.

4 So I don\'t think we need that.

5 And the other one, Marilyn, to your point on

6 best practices, somebody be looking at that?

7 Yeah, probably. Probably. But I would say

8 along the lines that we discussed, whether it\'s

9 somewhere between promotion and product

10 development. The problem is it falls in there

11 somewhere.

12 So before we \-- before I ask you

13 to fill these forms out \-- what are those forms

14 called?

15 BY MS. AKER:

16 They\'re the preference for your

17 subcommittees. You put them in order of

18 preference. They\'re in the front of your

19 binder.

20 BY MR. RASULO:

21 I\'d like you to think about that.

22 Let\'s make a decision about the election forms,

23 something to do with the election form. I\'d

24 like to make a final decision on whether we

25 should combine some things to align ourselves

154

1 with the government or are distinctly large and

2 distinct enough to keep them separate. Can I

3 just have a show of hands to keep them

4 separate?

5 (A VOTE WAS TAKEN.)

6 BY MR. RASULO:

7 No, we should divide them. A

8 show of hands should we divide them?

9 (A VOTE WAS TAKEN.)

10 BY MR. RASULO:

11 We should divide them. So we\'ll

12 wind up with four subcommittees. I sent out a

13 couple of notes to a few of you. Actually,

14 Jerry Jacobs asked to chair one of them, public

15 diplomacy. So it was a little bit out of that

16 field.

17 BY MR. TAUBMAN:

18 He\'s not here, so you can give

19 him the big one.

20 BY MR. RASULO:

21 He asked for it and he\'s not

22 here, so that means he\'s got that. And he\'s a

23 pretty persuasive guy and he knows about

24 cross-checking and all that stuff.

25 Rex, we asked you to take the \--

155

1 given that you\'ve been so successful in getting

2 \$62 million from the government of Hawaii,

3 we\'re going to ask you. You must have been

4 very persuasive in figuring out some internal

5 measures. So we\'re going to ask you to do

6 that.

7 BY MR. JOHNSON:

8 That\'s fine with me, with the

9 Department of Commerce.

10 BY MR. RASULO:

11 So now the ease of travel is now

12 part of Jerry\'s thing. Andrew Taylor, I asked

13 you to look at promotion.

14 BY MR. TAYLOR:

15 And since you sent that e-mail,

16 I\'ve not had a chance to get with him. I\'m

17 sure he\'ll be receptive of that.

18 BY MR. RASULO:

19 Great. On Chris on product

20 development and sustainability.

21 BY MR. IMHOFF:

22 I\'ve got some real challenges

23 with that one because that looks like a big

24 mouthful, a lot of work. And I\'m a little

25 concerned that I can\'t devote the time. I

156

1 could use a specific examples like in Alaska\'s

2 Heritage Center and the Polynesian\'s Heritage

3 Center. But what you\'re describing here looks

4 like a major thesis for a Ph.D. to put this all

5 together.

6 BY MR. RASULO:

7 Well, it is a cold winter in

8 Alaska and all that stuff, so it shouldn\'t be a

9 problem.

10 BY MR. IMHOFF:

11 It looks like a good government

12 project.

13 BY MR. RASULO:

14 Well, we\'ll talk about it. But,

15 anyway, if you could fill out these forms, and

16 don\'t overcommit yourself. I think we\'ve seen

17 how much work this is.

18 BY MR. TAUBMAN:

19 Whatever you want us to do, I\'m

20 sure we\'ll do it. But why don\'t \-- now since

21 you have your chairs, why don\'t you figure out

22 what you think makes the most sense. Put us

23 where you need us to be, because there\'s five

24 committees \-- four committees I guess now.

25 There\'s 15 people. If you don\'t want to do it

157

1 that way, that\'s fine.

2 BY MR. RASULO:

3 Well, I think some of our \-- and

4 I\'ll speak for myself. I think some of us,

5 some of our people probably have some interest

6 in being directly involved. So we\'ll do a

7 combination. Fill these out in terms of your

8 preference. No guarantees. And we\'ll

9 ultimately decide, and you\'ll hear back from

10 us. And I hope Commerce will help work on

11 this.

12 BY MS. AKER:

13 And if you are very ambitious and

14 you want to go on two different ones, that\'s

15 something you can note and fax it to us.

16 BY MR. RASULO:

17 I like that optimism. I applaud

18 it. So are there any public comments? In the

19 past, we took those in advance. Is there other

20 public comments today?

21 One minute on future meetings.

22 We heard from the Secretary that his view that

23 we have a real opportunity around the WTTC

24 conference in April. I think those dates are

25 the 11th through the 14th.

158

1 BY MR. WAGNER:

2 The 10th through the 12th.

3 BY MR. RASULO:

4 The 10th through the 12th. So,

5 anyway, we\'ve got to look on the front-end or

6 the back-end to get together. I think the

7 back-end would be useful to regroup and get

8 together after that conference. And, anyway,

9 most of us will be there. If you\'re not

10 planning to be there, I encourage you to be

11 there because I think it will be a very

12 important \-- another important milestone for

13 us. And I think it\'s coming together, those of

14 us who are directly involved with putting

15 together. It\'s coming together really well.

16 And I think it\'s going to be a great session.

17 BY MR. TISCH:

18 One little avenue yet. I just

19 noticed that the 12th when the conference ends

20 is the first night of Passover.

21 BY MR. RASULO:

22 Well, maybe we\'ll front-end it.

23 Sure. We\'ll figure it out one way or the

24 another. I think we also \-- we won\'t get it on

25 the calendar, but we\'ll look for June to do

159

1 certain pre-summer \-- I hope if we are

2 ambitious, put ourselves in the six months at

3 least draft a recommendation paper to the

4 Commerce Committee that will give us a good

5 time frame to get that done before it really

6 gets hard to get together once the summer

7 starts.

8 Other than that, is there any

9 other \-- are there any other administrative

10 matters?

11 BY ASSISTANT SECRETARY FRINK:

12 Just the fact that we\'re going to

13 have a staff rep conference call the second

14 Thursday of each month.

15 BY MR. RASULO:

16 What\'s that?

17 BY ASSISTANCE SECRETARY FRINK:

18 Staff rep conference call?

19 BY MR. RASULO:

20 Oh, sorry. Staff rep. Sorry.

21 Excellent. Please mark those on your

22 calendars.

23 BY MS. AKER:

24 We did that for the President.

25 We have conference calls monthly or meetings

160

1 monthly.

2 BY MR. RASULO:

3 Do you now have official staff

4 reps waiting for every board?

5 BY MS. AKER:

6 For the most part, yeah. And I

7 want to emphasize this as we\'ve talked about it

8 earlier, this is going to be somebody that

9 you\'re going to lean on a lot. So make sure

10 it\'s somebody that you can \-- is real familiar

11 with the issues.

12 BY MR. RASULO:

13 The second Thursday of each

14 month.

15 BY MR. JOHNSON:

16 Are you going to e-mail that

17 stuff too?

18 BY MS. AKER:

19 Absolutely.

20 BY MR. RASULO:

21 We\'ll look at those.

22 BY UNIDENTIFIED SPEAKER:

23 Quick question for Jay or Al or

24 Sarah, what\'s the role of those of us who are

25 sitting here during these meetings? Should we

161

1 chime in from time to time? Should we \--

2 BY MR. RASULO:

3 Oh, yes. Yes. There have been

4 meetings when you\'re the only thing we\'ve got.

5 So if you don\'t chime in, I\'ll be talking to

6 myself. So please feel free to fully

7 participate. But I should have said you can\'t

8 say a word because the principals here, which I

9 really do encourage, you know, we are all

10 believers and that\'s why we\'re around this

11 table, that by virtue of our titles and our

12 positions, we do have a voice. And, you know,

13 every single person that sits around this table

14 leaves more able to articulate the point that

15 we need to articulate. And the principals on

16 the board do have the opportunity to do that

17 over and over and over.

18 So not to say that I don\'t

19 encourage the principals to come, but if they

20 can\'t, they can\'t. I encourage all of you to

21 represent them if you don\'t know somebody with

22 the industry. So, yes, please feel free to sit

23 at the adult table or we can make it small.

24 But we usually make you sit at the adult table

25 and participate as, actually, the principal

162

1 would.

2 BY MS. NELSON:

3 Did we indicate enough direction

4 or where will that come from for her?

5 BY MR. RASULO:

6 Yeah, it sounds like we are \--

7 we\'ve got to come back to do a full suggestion,

8 but it doesn\'t look like it\'s going to be me.

9 So does anybody disagree with that as an

10 outcome? I think we want to use this to kind

11 of experiment to try some things we haven\'t

12 done before and feel like, yes, it could be

13 intelligently spent, but the incremental impact

14 of the spending versus what we could do with

15 it, et cetera, I think we\'re all clear on that.

16 BY ASSISTANT SECRETARY FRINK:

17 I\'d just ask that for our

18 follow-up work that we do within our office,

19 follow-up and following this meeting, that you

20 clearly \-- if you could clearly articulate that

21 on a piece of paper.

22 BY MR. RASULO:

23 That\'s our recommendation, as our

24 formal recommendation.

25 BY ASSISTANT SECRETARY FRANK:

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1 The kind of work that you see us

2 taking forward.

3 BY MR. RASULO:

4 Then you\'ll do the legal work

5 behind that?

6 BY ASSISTANT SECRETARY FRINK:

7 Yes. And just remember, speaking

8 about the point of the importance of tourism,

9 that talking points, my experience in the

10 government is that talking isn\'t as effect as

11 quantifying the numbers. That is powerful in

12 this world. So when you talk about its

13 importance, showing numbers that are

14 far-reaching really draws the attention.

15 BY MR. TAUBMAN:

16 Jay, you really are convinced

17 that the travel industry has done a good job of

18 doing that?

19 BY MR. RASULO:

20 I think the information \-- I

21 think whether the argument has been as cogently

22 put together as it could be, I think the

23 elements are there, you know. Should we all

24 have it like on a laminated card around our

25 belts and be able to reel it off one after

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1 another, yeah. But I think the numbers \-- I

2 don\'t think we need to do any research. I

3 welcome you to chime in. Do you think we need

4 to do any more work on that subject? You all

5 know Chuck Merin? The man represents both TRA

6 and TER in Washington.

7 BY MR. MERIN:

8 John and Jay and I have had this

9 conversation a bunch of times. I don\'t think

10 the government gets it, with all due respect.

11 And I\'ve made this recommendation to TIA.

12 There\'s a look, and I\'ve had these a hundred

13 times over the years when I\'ll talk to them. A

14 good example.

15 The Commerce Department and TIA

16 strongly produced a study of travel and tourism

17 on the American economy, a breakdown by jobs,

18 payroll taxes, net revenues. It\'s a joint \--

19 and, Helen, you\'re on the phone. And I took it

20 to the Hill, and I met with members of

21 Congress. They\'d say, isn\'t this astonishing,

22 you\'ve got 18,525 people in your Congressional

23 district who are appointed to travel and

24 tourism. They go great, and then there\'s the

25 look. And I\'d say travel and tourism, and they

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1 look at me. And I\'d say, do you have a

2 restaurant in your district? They\'d say we\'ve

3 got the best restaurants in my state. You\'ve

4 got hotels in your district? Yeah, we\'ve got

5 hundreds of hotels. Have you got shopping

6 center? We\'ve got the biggest shopping centers

7 in the entire state. You go through it.

8 And then you say to them, what do

9 you think is travel and tourism? And it\'s only

10 at that moment \-- the failure isn\'t numbers, to

11 answer your question. It\'s that, with all due

12 respect, people in Congress and the

13 administration cannot see the whole. They see

14 segments. They see the restaurant industry.

15 They see the shopping center industry. They

16 don\'t see the independent entity.

17 And unless and until we as an

18 industry can succeed in connecting these dots

19 for you guys, not you, but for the

20 administration and the Congress, we\'re never

21 going to maximize our potential, because I do

22 represent the straight independent segment of

23 the industry, the restaurant association and

24 everybody else. I can go back to members about

25 the restaurant industry, and they didn\'t see

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1 it. It\'s too big. It\'s too enormous.

2 So it\'s not \-- the numbers are

3 not known. It\'s the people, your colleagues

4 and people in Washington don\'t see what they

5 need to see, which is the larger picture.

6 That\'s the burden that I think industry has to

7 bear.

8 BY MS. NELSON:

9 But maybe it\'s the figures that

10 we have. I know WTTC does it a lot. There\'s

11 the core direct travel and tourism, and then

12 there\'s the ancillary things that get us to a

13 big number. But these ancillary things, are

14 they clearly not being articulated by people

15 like Bob Taubman on behalf of that segment.

16 And, you know, some \-- we have to be selling

17 these other sectors on talking about travel and

18 tourism when we talk about returns, you know,

19 not just \-- not just aggregate and all this

20 sort of peripheral measures but actually start

21 to quantify them, look to manufacturers, look

22 to construction, look to the architects in what

23 we\'re doing, because they\'re not helping.

24 BY MR. MERIN:

25 But I hope TIA is going to get

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1 the \-- we\'ve proposed to them that, and I think

2 they\'re seriously considering the other two

3 peer industries. And by that I mean one

4 campaign aimed at uniting everyone (inaudible.)

5 The second element is the inside

6 the Beltway campaign aimed at defining who we

7 are to people inside the Beltway. They seem to

8 fuel it: And roads and bridges you go through.

9 You know, what I\'m talking about Hawaii,

10 Alaska, the federal government has got hundred

11 billion of tax receipts filtering through.

12 They don\'t get it. The Secretary of Treasury

13 doesn\'t get that (inaudible.)

14 And I\'ll ask the same question:

15 Who at the Department of Treasury is in charge

16 of policy effecting travel and tourism? They

17 stare at each other, and there was silence. He

18 said to me: What\'s your point? He said steel

19 is a dying industry. Tourism is a booming

20 industry. Don\'t you think somebody with the

21 federal government ought to be thinking

22 proactively about policies about travel and

23 tourism? There was silence.

24 My great frustration is they

25 still don\'t see the significance, with all due

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1 respect. The Commerce, you guys have been

2 great. Too many people in Washington still

3 don\'t see the connection. So they see a

4 threat, but they don\'t see a travesty unless we

5 force that agenda. A lot of it has nothing to

6 do with Commerce.

7 But I\'m long-winded. They\'ve got

8 all the data. They\'re self-evident.

9 BY MS. NELSON:

10 Has anybody ever written a case

11 statement on 9/11 because that\'s \-- we can\'t

12 always directly tie it. But 9/11 turned off

13 the travel and tourism. And then it was pretty

14 clear that there was a variable that was with

15 clarity. And have we aggregated that? Would

16 that be a case statement that would help us to

17 show the relationship effect?

18 BY MR. TISCH:

19 We, as Chairman of the FIC travel

20 and tourism, we have a \-- more of a documentary

21 retelling of what your industry went through.

22 It\'s not there with absolute numbers, but it

23 talks about how no other industry in New York

24 was effected so immediately. Which industry

25 came forward and said we\'re going to help the

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1 city rebuild because we can bring our resources

2 together for the industry. So we do have that,

3 and it\'s helpful.

4 BY MS. NELSON:

5 Well, it seems like we\'ve got \--

6 there hasn\'t been a lot of hotel building for a

7 while. It\'s starting. There are a lot of

8 repercussions that probably haven\'t been

9 articulated. Thing have sort of slowed down as

10 we\'ve now tried to build back up and absorb the

11 capacity that we had before, you know.

12 BY MR. JOHNSON:

13 But the world has become a lot

14 more fragile, at least with our industry, since

15 then. We\'re now faced with airlines that are

16 having their problems. World events effect us

17 all. And when you see the emergencies in the

18 business, that\'s one of the ways that you get

19 it. It\'s a very very fragile industry. And we

20 have \-- Hawaii has very very good numbers on

21 exactly what happened. We know that stuff, and

22 it just killed us all.

23 BY MS. FROELICH:

24 To switch gears, I was wondering,

25 the Secretary mentioned in his remarks a half a

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1 million dollars that was going to be spent on

2 the Gulf Coast regarding travel and tourism.

3 Does anyone from the Commerce staff have a

4 little bit more information about that?

5 BY UNIDENTIFIED SPEAKER:

6 Yeah, the economic development

7 administration is going to be soliciting

8 business for a grant, a \$500,000 grant that

9 will be matching. It\'s up to \$500,000. It\'s

10 going to go toward the recovery of the travel

11 and cruise industry in the Gulf Coast states:

12 Alabama, Mississippi, Louisiana. Other than

13 that, it\'s a little more broader. We had to

14 reach out to the EPA office in Atlanta,

15 Georgia. They\'re the ones that are

16 administering this grant. And they will be

17 publicizing this today. Today is the first day

18 we\'re announcing it.

19 BY MS. FROELICH:

20 So in total it will be a million

21 dollars?

22 BY UNIDENTIFIED SPEAKER:

23 In total it\'s \$500,000. That

24 will be matched by private industry up to a

25 million dollars. So combined it would make a

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1 million.

2 BY MR. RASULO:

3 So unless anybody is determined

4 to take us to noon, I\'m looking for a motion to

5 adjourn.

6 BY MR. JOHNSON:

7 So moved.

8 BY MR. TISCH:

9 Second.

10 BY MR. RASULO:

11 Thank you. See you soon.

12

13 (AT THIS TIME, THE PROCEEDING

14 WAS CONCLUDED AT OR ABOUT 11:45 A.M.

15 AND THE RECORD WAS CLOSED.)

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1 REPORTER\'S CERTIFICATE

2

3 I, Gail F. Mason, RPR, Certified Court

4 Reporter in and for the State of Louisiana,

5 Certificate No. 96004, which is current and in

6 good standing, as the officer before whom this

7 proceeding was taken, do hereby certify that

8 this proceeding was reported by me in the

9 stenotype reporting method, was prepared and

10 transcribed by me or under my personal

11 direction and supervision, and is a true and

12 correct transcript to the best of my ability

13 and understanding; that I am not related to

14 counsel or to the parties herein, nor am I

15 otherwise interested in the outcome of this

16 matter.

17

18

19

20

Gail F. Mason, RPR, CCR

21 Certificate No. 96004

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