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U.S. TRAVEL AND TOURISM ADVISORY BOARD MEETING

PENINSULA HOTEL

108 EAST SUPERIOR STREET, BALLROOM II

CHICAGO, ILLINOIS

JULY 13, 2006 \_ 3:30 P.M.

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PARTICIPANTS

Travel and Tourism Board Members:

Private Sector

Board Chairman: Jay Rasulo

Chairman, Walt Disney Parks & Resorts

Board Vice Chair: Marilyn Carlson_Nelson

Chairman and Chief Executive Officer

Carlson Companies, Inc.

Charles Gargano, Chairman and Chief Executive

Officer, Empire State Development Corp.

Jeremy Jacobs, President and Chief Executive

Officer, Delaware North Companies, Inc.

Larry Katz, President and Chief Executive

Officer, Dot\'s Diner Restaurant Chain

Robert Taubman, Chairman President and Chief

Executive Officer, Taubman Centers, Inc.

Andrew Taylor, Chairman and and Chief Executive

Officer, Enterprise Rent_a_Car

Glenn Tilton, Chairman, President and Chief

Executive Officer, UAL Corporation and

United Airlines, Inc.

Ex_Officio

Karen Christensen, Department of State

Tara Riordan, Department of Homeland Security

Department of Commerce:

Hon. Carlos Gutierrez, Secretary of Commerce

Hon. Albert A. Frink, Assistant Secretary for

Manufacturing and Services

Ana Guevara, Deputy Assistant Secretary

for Services

Sarah E. Ellis

Cary Justice

Attending on Behalf of Principal:

Chuck Merin (Jonathon Tisch)

Meryl Levitz (Manny Stamatakis)

Advisory Council on Historic Preservation

John Nau, III (Guest speaker)

Michael Erdmann, Longwoods International

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CHAIRMAN RASULO: I\'ve never seen a room

come to order quicker. Fantastic. Well, I\'d

like to say good afternoon and welcome and thanks

as always for all being here, and I\'d like to

officially call this meeting of the Travel and

Tourism Services Board to order. I don\'t happen

to have a gavel, but I\'d say that suffices.

Today, obviously, our purpose at the

USTT meeting is to advise the Secretary on the

development of a national strategy and regular

contact between the government and the travel and

tourism industry.

Today we have the opportunity to

discuss our recommendations with the Secretary,

which you\'ve all received in advance, and I hope

we have a good conversation of it.

Before I begin, it is my honor and I

would like to introduce our honored guest and the

first speaker at our meeting today. It\'s my

pleasure to introduce Secretary Carlos Gutierrez,

the 35th Secretary of the U.S. Department of

Commerce, the voice of business in government.

As the members of the Board all know

and many of you around the room, the Secretary

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has really been an important ally of our

industry, and we\'re certainly grateful for his

leadership.

So on behalf of the entire Board,

Secretary, thank you, welcome, and I\'ll turn it

over to you.

SECRETARY GUTIERREZ: Thanks, Jay. I know

we\'ve got limited time, and so I want to thank

you again for your time and your service and

everything that you\'re trying to do.

I want to be very practical about what

I talk about so that we can, you know, keep it to

the level where there\'s tangible progress that we

can make. And you\'re in business, so I know that

you think about it in terms of what are we

getting done, what are we moving forward, and

what are we getting accomplished.

I believe that there are two areas

where we can be of help. One is in the area of

visas because, you know, if we could do one

single thing for your industry and we could

somehow find ways to improve the flow of visas in

a way that maintains all of our national security

objectives, that would be \_\_ I think that would

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be the single biggest thing we could do for you.

So that\'s one area that I would like

to open up today, and I just I want to let you

know that this is not going to be resolved

because we talk about it. It\'s going to require

a lot of follow_up, it\'s going to require a lot

of pushing with our partners at Homeland

Security, with the State Department because we\'re

dealing with a lot of people, we\'re dealing with

a lot of conflicting priorities.

And we can tackle this if we hear from

you that this is something that you recognize

that over time with focus we can make progress,

but I do want to let you know that we\'re not

going to come back in three months with a

solution for you. And we just need to know that

and have a sense that we\'re going to stick to

this and, hopefully, make some progress over

time.

The second area where I believe we

can be of help is in exposing you to the right

people. We at the Commerce Department may not

have all the strings, we may not have all the

departments reporting in to us, but we can give

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you access to people who make decisions, who can

hear your concerns, who have the ability to

address some of your concerns.

So one example of that is today we do

have people here today from the Rice_Chertoff

team, and perhaps you can raise your hand because

I\'m not sure that \_\_

(Karen Christensen and Tara Riordan

raising hands)

SECRETARY GUTIERREZ: Thanks. Thanks for

being here. There\'s some discussion about the

Gulf Coast, and I was thinking that a very good

next step, one of the next steps for that

strategy would be if you meet Chairman Powell and

some of his team, that these are the folks who

are in charge of the Gulf Coast reconstruction

and, obviously, people like Ray Nagin, Mayor

Nagin, who can have an impact on your business

and who has an interest in seeing you succeed.

Those are the two areas. I know that

there\'s a lot of discussion, a lot of interest

about the promotion campaigns, and I continue to

think that where we can be of a lot of help is in

those two areas as opposed to funding promotion.

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We can talk about it if you like. I think you

know where I stand, but, again, let\'s be

practical, let\'s be realistic, and let\'s use our

time wisely.

We do have with us today folks from

Rice_Chertoff. I think this is a very big

opportunity. If we can make a dent on a few

companies and enable them to have more tourists

coming through and actually improve the flow of

tourism from key countries, then I think we\'ve

done a great service to your industry.

And what we\'d like to hear from you is

what are the countries where we should be

focused, where should we be focusing our efforts,

we can go in and look at it analytically.

We were just in Brazil a couple weeks

ago, and I can tell you what the problems in

Brazil are. There\'s very specific problems in

Brazil. There are probably some very different

problems in China, very different problems in

Korea, but we\'d like to agree with you what those

priority countries are so that we can go in

there, do an analysis and come out with an action

plan.

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So those are the two areas where we

think we can make a real impact on your business,

a real \_\_ have an influence on your business. We

want to be helpful. Tourism is an area that we

all believe in. We have a trade surplus in

tourism. It\'s an area that we believe in with a

certain amount of passion, and we want to work

with you.

We want to hear from you that you\'re

interested in those two areas and that you really

want to work with us in going the full length of

the way in seeing this through, and it\'s going to

take quite a bit of time and it\'s go going to

take some significant focus.

But we are prepared and ready to go

along with Homeland Security, the State

Department to do everything we can to have a

positive influence on your business.

So I thank you again for your time,

for your interest, and I look forward to working

with you.

CHAIRMAN RASULO: Thank you, Mr. Secretary.

Six months ago, the Board had its

first meeting in New Orleans, and, of course, you

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were there. And at that time, you challenged us

to apply our best thinking towards two things:

First, towards the Gulf Coast region, which we\'d

spoken about at our last meeting, but also

towards the creation of a national tourism

policy.

We all believe that the timing for

that could not be more critical. It\'s safe to

say that the world is now entering what we think

is a golden era for travel and tourism. The

confluence of developments are fueling that

growth, which is likely to drive a sizable share

of the world\'s future job creation and job growth

and probably tax revenues to governments around

the world. Simply put, travel and tourism is one

of, if not the most, significant growth industry

in the world today.

Within this fast_growing market,

consumer expectations, behaviors, booking

patterns, et cetera are evolving at break neck

speed, and consumers expect nations to kind of

compete for their business in a way that they\'ve

never competed before.

We happen to believe, and I believe

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this personally, that countries that evolve

toward that new reality will reap incredible

windfall in terms of job creation and economic

development, and those who don\'t evolve will

simply be left behind like in any competitive

business.

Not only are the economic rewards

significant, but we believe so are diplomatic

rewards, and that is the obvious and

statistically proven fact that people who visit

our country simply leave with a better feeling

about it.

I think the act of simply asking

people to come in, demonstrating that not only in

words, but in friendlier borders and everything

that accompanies a visit to our country speaks

volumes to accomplishing that goal and will

demonstrate to the world that we are an open and

warm society, which we know we are.

That\'s why we truly need the national

tourism strategy, Mr. Secretary, that you\'ve

asked for. And this reality has really given us

as an industry a sense of urgency, and we\'ve

worked over the past six months, many people in

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this room, many people not in this room, towards

developing a framework for the development of

such a strategy.

So, firstly, the Board identified

three subcommittees to pursue the major aspects

of this work, and those subcommittees were each

asked to, first of all, assess the current

environment of the work behind the subcommittee,

to identify gaps in U.S. competitiveness along

those fronts and to, lastly, formulate, and most

importantly, recommendations as to how to address

those gaps.

Each of the subcommittees has

forwarded its recommendations to be included in

the White paper that we\'re going to discuss

today, and each of you have received that. In

total, this document really does represent a

roadmap for how the government can work with

industry to make the United States the premiere

travel destination in the world.

Before I introduce the first

subcommittee to make its report, I would like to

add that this document isn\'t an end, but really

it\'s just a beginning. Once we\'ve agreed to its

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contents, I believe that we have to have a

vigorous discussion with the Secretary on how we

can move these recommendations forward, and

that\'s where, as you just said, Mr. Secretary,

the real work will begin.

At this time, I\'d like to call on each

of the three subcommittees for their reports, and

I\'d like to start with Glenn Tilton from United

Airlines to report on the Ease of Travel

Subcommittee.

MR. TILTON: Thanks, Jay. Mr. Secretary, on

behalf of the members of the subcommittee and the

individuals who have worked hard to put the

subcommittee\'s work and report together, I\'m sure

they were pleased to hear that you acknowledge

the importance of ease of access to the country

and the visa initiative as one of the things that

we can work together with the Department on along

with Rice_Chertoff to facilitate.

It is, as Jay said a moment ago, clear

that the United States has become uncompetitive

in competing for its share of travel and tourism

worldwide. Failing to be competitive yields a

result that we\'re all familiar with regardless of

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our industry.

From the perspective of my industry,

it siphons passengers away from United Airlines

and other U.S. carriers to our foreign

competitors. As far as travel and tourism

companies and related businesses across the

country who are represented here today, and as

Jay said a moment ago, it undermines public

diplomacy efforts on behalf of all of us whether

we be in the public sector or private sector

since our research has shown that those who visit

this country leave with a good impression of our

country.

The Subcommittee worked hard and it

identified four categories of recommendation that

Jay mentioned to address the economic and

diplomatic problems caused by the failure to

effectively compete for internatonal business and

leisure travel.

First, creating institutions to insure

that the administration, with your advocacy,

Mr. Secretary, is aware of the industry\'s views

and travelers\' needs.

We support as an industry group the

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recommended establishing of the presidential

advisory council on travel and tourism that would

include both the public and private sectors. We

applaud the efforts of Rice_Chertoff, and we

recognize that the vision is an appropriate one,

which seeks to simplify visa applications and to

improve the entry process at airports, which

links directly to our second category of

priority, and that is said simply making it

easier for legitimate travelers to visit our

country.

We could start with the fact that the

high cost and inconvenience of applying for

U.S. visitor visas discourages travelers. United

regularly sees international groups cancel

reservations to the United States due to long

waits for successful visa application.

The Subcommittee has made eleven

specific recommendations, Mr. Secretary, about

the visa process centered on using technology and

technical information, refocusing on customer

service, and enhancing coordination within the

various agencies of the government, as you

mentioned.

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Inadequate staffing of customs and

border protection and TSA at our airports is a

critical barrier to attracting international

visitors and creating a positive impression of

our country.

In addition, Board members have

offered to make their experts available to

government agencies to advise them on the matter

of hospitality.

Hospitality is in fact the driver of

our third category of work within the

subcommittee. We choose to provide simply a warm

welcome to arriving international visitors.

Arriving international visitors deserve more than

a patent processing due to inspections. Although

that\'s entirely aspirational at this point,

visitors to the United States deserve a genuine

welcome from all of us.

The key in getting this right is

establishing performance metrics on both an

agency and an individual level within DHS to

insure that the staffing levels and performance

are appropriately focused on the needs of the

travelers from other countries. We believe much

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more could be done in this regard.

As to getting simply the basics right,

we also recommend that U.S. Government agencies

redouble efforts to communicate clearly with

prospective visitors about travel requirements.

Our surveys showed that visitors do not

understand entry requirements, and it discourages

inbound travel.

The fourth category, avoiding taxes,

fees and regulations that unjustly target the

business of travel. This industry is too

frequently subject to special taxes and fees,

simply because it\'s convenient, that fund general

priorities from national security to building

stadiums.

There\'s no logic to the taxes and fees

imposed by every level of the U.S. and foreign

government. The increase to cost of travel

serves further dampen it. The Subcommittee asks

the Secretary and our Board colleagues to seek to

contain or eliminate taxes to fund priorities

unrelated to the business of travel.

We know, as you mentioned,

Mr. Secretary, that some of these issues are far

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more complex than others, and we do really want

to focus our efforts, but we need action and we

need results. Otherwise, I think we\'re going to

incur fatigue.

We recommend the U.S. Government push

forward with a sense of urgency, as we mentioned

this afternoon, in imposing each of these

categories individually and effectively

aggressively.

United and our colleagues on the

Subcommittee, Jay, are ready to help make the

future of an efficient and warmer welcome to our

country a reality. It shouldn\'t be that

difficult.

We look forward to your reaction,

Mr. Secretary, and to continuing to cooperate

with you to make the United States competitive

for international travel once again as it should

be. Thanks, Mr. Chairman.

SECRETARY GUTIERREZ: I thought maybe what

we could do is \_\_ do we still have further

subcommittees to report back?

CHAIRMAN RASULO: Yes.

SECRETARY GUTIERREZ: And I definitely want

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to be here for this presentation. Let me just

ask you, the rationale for a presidential

advisory committee, let me know if I should be

going back to Washington and making, you know,

some recommendations in trying to get that.

MR. TILTON: I think, in effect, during your

opening remarks, Mr. Secretary, you spoke to it.

It is simply an attempt by all of us to focus our

efforts at the one point in the executive branch

where you as cabinet members all come together.

And we recognize that asking you and

the Department of Commerce to navigate the

labyrinth of conflicting priorities that you

mentioned in your earlier remarks, it is a very

difficult one for you, and those of us that spend

our time in Washington talking to both yourself

and your colleagues and the other departments of

interest including Security recognize that it\'s a

very distinctly different conversation with each

group with whom we meet, and I guess that\'s a

function of the priorities of the particular

department and particular agency.

And we know that it is very difficult

to appear in any way disrespectful of the current

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efforts of the security agencies, be they the TSA

or Customs and Immigration. We understand that,

but at the same time, we think that the level of

performance that we request should be a level of

performance that should be expected of every

agency in government.

And this one in particular has a

ripple effect if it isn\'t an effective effort

that has a dampening effect on enthusiasm for

visiting the country. So it\'s simply an attempt

to focus on this.

SECRETARY GUTIERREZ: This is a little bit

like in your business I\'m sure you have this

experience where anytime something becomes a

priority, there is a natural inclination to want

to habit report to the CEO; and as you well know

and as I\'ve found out, that reporting to the CEO

is not necessarily the best way of getting things

done.

MR. TILTON: That\'s probably true in every

business.

SECRETARY GUTIERREZ: The President is the

busiest person in the country. I think that if

we opened it up, I think every advisory committee

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would like to be a presidential advisory

committee.

I\'d like to think that the Commerce

Department can coordinate these very disparate

functions to the best of our ability and as best

as can be done, but, again, I want to be \_\_ I

want to give you the benefit of my thinking

because you\'re giving your time to this, and I

respect that. So the least I can do for you is,

if I have an instant reaction to something, I\'ll

let you know.

I don\'t think that we should spend the

next year and a half or year putting together a

presidential advisory committee. We can spend a

lot of time, and I think we would be solving the

wrong problem. A little bit like in our

businesses where you want to improve quality and

control, habit report to the CEO. After awhile,

you realize the CEO is so busy that it\'s not

necessarily going to be what turns us around.

I think what I would do if I were you

is continue to find ways to put us on the hook

and to make sure that we\'ve got deliverables for

you and to help us navigate this incredible maze

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that is the federal government which will be

there whether it\'s a presidential advisory

committee or a congressional advisory committee.

So I wouldn\'t see that as a priority,

and I don\'t think that is the way to \_\_ I\'m not

even sure I can get close to getting a

presidential advisory committee, but that\'s my \_\_

MR. TILTON: Well, two things,

Mr. Secretary from the perspective of the service

Jay could align is, number one, we\'d be delighted

in following you up and over the Hill without a

presidential advisory committee, and we\'d

certainly would be delighted to keep you on the

hook. So I wouldn\'t \_\_ if you\'d led with those

remarks, I probably wouldn\'t be making mine. So

we can agree to that.

I think that the frustration that

exists around the table is a sense of laissez

fair relative to the industry as if without

impetus it simply happens, the perception perhaps

in Washington that this isn\'t something that

happens because we work hard at it, it happens

simply by dint of natural inclination of

visitors.

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But, actually, it is something that

does \_\_ indeed it does in fact yield to effort,

and we\'ve seen it in our company simply in

promoting travel from the United States to other

countries. So when United participates in a

\"Visit Japan\" initiative from the U.S., we are

enormously successful; and when we participate in

a \"Visit to Thailand\" from the United States, we

are enormously successful.

Our difficulty, ironically,

Mr. Secretary, is creating a \"Visit USA\" program

as United Airlines, and that is, I think, at a

minimum a crime. So I hear you loud and clear,

and however it is that we navigate the

ambiguities, we\'re here to listen to you.

SECRETARY GUTIERREZ: Yeah, I mean the best

I can offer up is that advisory as secretarial

advisory committee, and at some point you have to

let me know if your level of frustration is such

that it\'s not going to work for you.

I can tell you that we\'re here to

serve and we\'re going to do our very best and

we\'re going to put in as much time as we can, as

we have to solve your problem. If it isn\'t

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enough, you got to let us know because we\'re all

very busy.

MS. CARLSON_NELSON: I would just like to \_\_

having been around in this industry awhile, I

hope you appreciate that some of the impatience

may come from an historical collection of

historical initiatives and that personally when

we\'ve spoken just earlier that we\'ve seen more

progress, more intensity and really more vision

and understanding since you\'ve come into this

role than we\'ve seen before, and at least

speaking personally I am extraordinarily

grateful.

And I think that this sense of how to

cross the agency boundaries where, as you know,

those of us in the corporate world have been

working very hard to eliminate piles, and we

appreciate that that\'s what the federal

government is trying to do. So you may need to

help us \_\_ as we said earlier, there\'s no doubt

you need to help us negotiate that because I

think it\'s \_\_ the solution, it may not be the

right solution, but we\'re commonly identifying

the problem.

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But I think you\'ve acknowledged it in

your opening comments in terms of your

willingness to help us by bringing some of these

extraordinary advocates and by putting the right

people together and then helping us collaborate

to make it happen.

So I think I we \_\_ at least I would

like to say how much I appreciate that and I

couldn\'t be happier from my company\'s point of

view on the visa folks. My recent travels have

been literally just about around the world,

seeing \_\_ asking more than once if there was a

demonstration going on and ultimately finding out

it was the line for visas for my country has made

me feel almost panicky on that subject.

So the fact that you are going to

collaborate with us to address this \_\_ and I

think we would have partners across the industry

on that initiative because there\'s no one in

business today that isn\'t having a problem with

that. We can\'t even bring honorees from our

global business in to receive their awards

without finding a senator who will run

interference. I mean it\'s beyond being

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embarrassing. And even within our own company

where we have every lever to create good will, we

run into a barrier that actually undermines

our efforts.

SECRETARY GUTIERREZ: We understand. I just

want you to know we understand.

MS. CARLSON_NELSON: I know you do.

CHAIRMAN RASULO: Great. We\'re going to

move on. I will say, Mr. Secretary, that this

issue of advocacy and a place at the table is

in \_\_ we are in a hundred percent agreement in

this room that we need that.

I would say there\'s been a lot of

ideas on how to get that, and I think as far as

we\'re concerned, any room for advocacy and a seat

at the government table is good enough for me and

good enough for us, and I think our

recommendation will reflect that.

I also want to bring one thing to your

attention. I know you\'re aware of it, but I have

to bring one thing to your attention, which is

the near term issue on the Western Hemisphere

initiative.

As an actor that improves industry, I

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am in a business that attracts a lot of people

from Mexico as every internationally_focused

business in this room does. This is something

that we\'ve really got a deadline of 12/31/06

staring us in the face.

We are not ready for this as a

country. We need to come down to a solution that

is less than a full passport for this very simply

easy type of travel for those people, but we need

to get our act together, and 12/31/06 will not

allow us to do that either the cruise industry or

elsewhere. So I know you\'re aware of it. I just

wanted to put in a bit of an explanation for you

on it.

Andy, if you could talk to us from the

perspective of the Promotion Subcommittee, I\'d

appreciate it.

MR. TAYLOR: Sure, Jay. Thank you, and I

think it\'s a little bit like parts of Glenn\'s

report in this. We have a recommendation here,

but we don\'t have you know the absolute positive

solution on just how to get this fixed. It\'s

going to take a lot of effort by everybody in the

public and the private side.

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A little bit of history. In 2004, the

U.S. rolled out the first promotional campaign

for the first time in our history and started

marketing the U.S. to international tourists as a

brand in the UK and later Japan. This was a fine

first step, but to compete with other countries,

we must do more and better work too than has

really been done in the past.

The United States is one of the only

industrialized countries in the world today that

has an ongoing and sustainable nationally

coordinated, nationally coordinated destination

marketing program. Other countries use

nationally coordinated programs to formulate

consistent compelling messages with proper timing

to insure maximum effectiveness.

I myself am surprised at some of the

smaller countries, particularly out toward Asia,

at some of the large sustainable budgets that

they have. It\'s pretty fascinating to see. So

that\'s our competitive environment.

While individual destinations and some

private sector businesses invest in marketing

internationally, the vast majority of our tourist

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destinations do not have a voice. As a result,

any potential tourists do not see that variety

that the U.S. has to offer, and even with our

variety, we believe the U.S. would benefit from

an overarching umbrella message communicating the

most universal qualities of the U.S. as brand.

For the same reason many of the companies

represented here this afternoon bring their goods

and services to market under one voice, we should

do the same.

Maybe even more importantly,

considering the U.S. brand, and Glenn touched on

this, that many parts of the world investing in

nationally_coordinated destination marketing

program could be an effective vehicle to

strengthen our image.

And here\'s some more facts. Twice

research conducted in six of the top travel

markets in the U.S., Brazil, Canada, France

Germany, Japan and the UK established that, while

38% of those who had never visited the U.S.,

never visited had a positive image, that\'s 38%,

54% of those had who had visited viewed the U.S.

positively, and that\'s too far apart to have a

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statistical problem.

Therefore, our recommendation is

simple. The U.S. must implement a sustainable

long_term destination marketing program. We

believe the program should be a public/private

partnership with each side contributing.

On the private side, an effort is

already underway called the Partnership for

American Travel led by the Travel Industry

Association, and prominent players throughout the

travel and tourism industry expect them to

culminate in early 2007. They are hard at work

developing the funding requirements, identifying

target markets, et cetera.

On the public side, we encourage the

federal government to play a role by marshaling

the resources of the private sector. I\'m sure

the program benefits the entire U.S., coordinates

issues that cut across departments and state,

Homeland Security and Commerce, as you\'ve

suggested, and use the extensive network of

council and the seasoned trade offices to open

doors in foreign markets.

Perhaps the most important issue, of

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30

course, as always, is funding, and, again, we

believe there should be some sort of a

public/private partnership. Given the diplomatic

and economic benefits for the country as a whole

has some dimension, we believe the federal

government should play a significant role in

funding this program. It\'s just a winning

program.

At the same time, we believe the

travel and tourism industry should play an

equally significant role in funding. The

Subcommittee recommends the industry take the

initiative to canvas all sources of funding, both

public and private, an inventory successful

model, in order to develop the appropriate

funding model. Thta was a very high_line view of

the recommendation.

It\'s, unfortunately, not an exact

crystal solution, but we need to at least get all

the parties on the same page to move forward in

finding those solutions.

SECRETARY GUTIERREZ: I hate to be \_\_ the

point that you make about brand U.S., we can\'t

disagree with that. It would be wonderful if we

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31

could develop the U.S. brand and develop it even

more than it is today, and it\'s a great

challenge.

I\'m not sure that the best way to do

that is through an advertising campaign. It\'s

going from an objective that we all agree to to a

solution that \_\_ at this point in time, I believe

that the biggest thing that we could do is get

the precipices straightened out because I don\'t

know why 37% of the people versus 57 something

when they come here, I don\'t know if our brand

could be higher if people felt more welcomed at

the consulate office and that that becomes the

single biggest problem we have to solve and that,

no matter how much advertising we do, if people

go to the shelf and don\'t find the product or

people find the product, but they don\'t like it,

we could be solving the wrong problem.

I don\'t know to what extent Karen has

been involved in it. We met with her a few days

ago, and I want to take up the subject of brand

U.S. because there could be many ways of tackling

the development of the U.S. brand that doesn\'t

necessarily have to be an advertising campaign

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32

funded by the U.S. government. So I\'ll take that

with me.

MR. TAYLOR: Okay, just a point here as an

example to your point. We have this \$4 million

question that we\'ll talk about a little later in

the agenda, I think, Jay, and, you know, we were

talking about using that for advertising. Well,

that\'s really kind of a drop in the bucket.

There may be some other things we can do.

In your company, it\'s taken 50 years

to build the brand that we have today, and so all

this, you know, is a long_term project that will

hopefully accumulate over time, but, you know, we

got to start with the foundation, if you will, of

funding.

SECRETARY GUTIERREZ: Right. The other

thing too, and somebody mentioned this a little

while ago, that Ireland advertises Ireland and

maybe that\'s easier for Ireland because there\'s

one idea in Ireland.

There are many ideas in the U.S.

There\'s a beach idea, there\'s a skiing idea,

there is a Broadway, there\'s a big city, there\'s

Alaska, and that could drive you toward this is

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33

very much a local opportunity as opposed to an

umbrella opportunity.

The umbrella solutions, as you well

know, don\'t always do the trick. So I think

there\'s another \_\_ and another part of this that

could be that it drives you to a local statewide

or citywide type of solution.

MR. TAYLOR: I would agree in the sense that

there are lots of experts in this business that

could tell us how we can best do it, but we first

of all have to make our minds up that we want to

do it, and then the experts can tell us how we do

it.

SECRETARY GUTIERREZ: Right, right.

MR. TAYLOR: Absolutely, thank you.

SECRETARY GUTIERREZ: Thank you.

MR. TILTON: Jay, can I have a comment? Of

course, very briefly, you know, Mr. Secretary,

we\'re a part of the largest airline alliance

around the world, and we have a board structure

that governs the Star Alliance, and we meet on a

biannual basis. So I have an opportunity to hear

from all of the Chief Executive Officers of the

member conferences, Lufthansa, Singapore, ANA,

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34

Thai. The point that they make \_\_ because,

interestingly enough, Mr. Secretary, they carry

more of their citizens to the United States than

I do, and we are largely carrying U.S. citizens.

This is not a proportionly significant issue for

us. We carry Americans abroad.

The point that they make is that today

we have a very effective negative advertising

campaign taking place across the world in the

form of CNN, and that negative advertising

campaign is not intentionally funded by the

Department of Commerce or any of us around the

table, but it is, nevertheless, capable of

conveying worry. And as it conveys worry, what

we are trying to find the answer to is conveying

optimism.

And I will tell you, the City of

Chicago, Mr. Secretary, does a wonderful job of

advertising and promoting the City of Chicago.

So I think the point relative to local

destinations is a very powerful one. They do an

excellent job and so do all of our other hub

cities. We\'re fortunate that the rest of

promotion in Denver, San Francisco,

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35

Los Angeles help us, and we\'re doing quite well

with those hub cities.

But the message that we are a

friendly, welcoming country and that you will

enjoy the community of people here and we do want

you rather than not want you to come meet us is

not effectively conveyed by any alternative

messaging. Thank you, I appreciate it.

CHAIRMAN RASULO: Last Subcommittee, and

then we\'ll move to the two Departments and their

summary report. Larry.

MR. KATZ: Mr. Secretary and Board, guests,

I\'m pleased to present this report on behalf of

the Chairman of Subcommittee on Return on

Investment, Rex Johnson from the Worldwide

Tourism Authority, and Frank Haase, the Vice

President. Both Frank and Rex worked very, very

hard to present this and could not be here today

and asked me to present it on their behalf as

well as the other members of the committee.

Our committee\'s job was to demonstrate

the value of travel and tourism. In a

situational analysis, given the stature of travel

and tourism as one of the world\'s most

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36

significant growth industries, it\'s important

that the U.S. have processes in place to measure

the successive efforts that compete in this

market, those in terms of job creation, economic

impact, tax revenue and representation.

The ability to measure these returns

on investment is particularly important to

continue to calibrate a national strategy by

calculating return on investment and tracking

shifts in the marketplace.

And at this point, I\'d like to reread

a few short sections from one of the earlier

reports as they make the best case for

demonstrating the value of tourism and travel to

our economy and maybe more importantly they

highlight and summarize the need to create a

viable long_term, permanent and fully funded

marketing effort to capture a greater share of

the travel market.

As we all know, the United States is

in the travel business, and like all of us around

this table, we have competition. Rising

disposable income means that vast new markets are

joining the world travel community, and the

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37

market grows by tens of millions of individuals

each year. The number of country_to_country

travelers is projected to double within the next

fifteen years, and dollars spent by this business

and leisure travel is projected to double in just

ten years.

Secondly, countries that adapt to

these new realities will reap a windfall of new

jobs and economic growth, and as Jay said

earlier, lastly, those countries that do not

adapt will risk being left behind.

Currently, the primary dataset for

measuring economic impact of travel and tourism

is published by the Bureau of Economic Analysis,

or the BEA, in travel and tourism satellites

accounts known as the PCSAs, the data that

provides standardized measurements of key

economic contributions of travel and tourism,

which can be tracked over time. They have the

additional benefit of being accepted by

government agencies and the U.S. Congress.

Three major bits of information are

provided by the BEA, the U.S. TTSA includes

estimates of the following variables: Supply or

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38

output, jobs/employment and GEP value added.

In our report, we had four tables, and

I\'m going to very briefly review each table as to

the highlights of each.

In Table 1, according to the BEA, the

U.S. direct tourism output reached about

\$520 billion in 2003, which at that time

accounted for 2.6% of the U.S. total output. The

U.S. tourism related output reached about

906 billion in 2003, at that time 4.6% of U.S.

total output, and it increased 9% in 2004 and 8%

in \'05 to over a trillion dollars.

In \'03, the U.S. direct tourism

employment reached about 5.4 million and at that

time accounted for 3.9% of U.S. total employment.

Total tourism related employment reached more

than 7.9 million in \'03, accounting for 5.8% of

U.S. total employment, and by \'04 had increased

to over 8 million jobs.

Table 2, \"Output and Value Added By

Industry\", the value added by U.S. tourism was

285 billion in 2003 based on the BEA approach,

which accounted for 2.6% of the total U.S. value.

Table 2 shows the industries with the highest

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39

tourism ratio also in 2003, and the five

industries that generated most of the tourism

output were traveler accomodations, air

transportations services, food and beverage,

other industries producing non_durable PCU goods

and travel arrangements and reservations. Of the

26 industries studied, those five industries made

up of over 64% of tourism value added that year.

The TTSA from BEA also includes direct

and tourism employment by industry, and shown in

Table 3 the top five industries with the highest

share of the total direct tourism were food and

beverage, traveler accommodations, air

transportation services, resale trade excluding

gasoline stations, and travel arrangements and

reservations. Over 75% of all direct tourism

employment were in those five industries alone.

Then the last table, Table 4, \"Total Tourism

Related Employment by Industry\".

Apart from the TTSA, what are we

currently doing to measure marketing

effectiveness? We\'ll have a report shortly on

the Longwoods marketing research.

In 2005, as we know, the U.S.

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40

Department of Commerce funded a promotional

program promoting travel from the U.S. to the

United Kingdom, and Longwoods will be measuring

and showing in their report the impact of this

marketing program.

Individual states and cities, also

various market accountability measures that have

been in place, and most of these are focused in

the domestic travel market; however, some have

incorporated programs to estimate the impact of

the marketing activities in the international

markets. Hawaii Tourism Authority, Nevada

Commission on Tourism, Mississippi Development

Authority, Louisiana Office of Tourism, San Diego

Convention and Visitors, Greg Facility Tourism

Marketing and others have fully funded and

research in place which could provide a model for

measurements of federally funded international

marketing programs.

The Commerce\'s Office of Travel and

Tourism Industries gathers volumatic and

demographic information on inbound visitors to

the U.S. through inflight surveys. However, the

sample sizes are quite small. Additionally, OTTI

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obtains a summary of international arrivals to

the U.S. through Homeland Security\'s I94 forms.

The OTTI also publishes the Travel Trade

Barometer providing general forecast of the

trends and demands, however, just three to six

months out, and Statistics Canada provides

results of their international travel survey to

the Office of Travel and Tourism on a monthly

basis. Some foreign governments, particularly

Japan, provide extensive data on their outbound

travelers to the United States.

Gaps and deficiencies. What numbers

are we missing? While the TTSA provides

extensive comprehensive data on the economic

impact of tourism, there are gaps and

deficiencies in using them exclusively as an

accountability measure for tourism promotion

programs. For instance, given the significant

size of the economic contributions of tourism, it

will take a similarly significant investment and

promotion across a wide range of market sources

in order to see the impact of tourism promotion

within the overall TTSA account. There\'s a lag

in the reporting of the TTSA results which limit

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42

the usefulness of the data for marketing

applications, and in addition to travel

promotion, travel to the U.S. is strongly

influenced by other non_marketing variables

including economic conditions, currency rates,

restrictive visa policies, terrorist incidents,

and political disruptions among others, and while

there are some international attitudes toward the

U.S. as a country such as the Pugh Report, there

are no existing international measurements of

consumer intentions to travel to the U.S. or

consumer attitudes toward the U.S. as an

attractive visitor destination. Such

measurements would be a much better indicator of

the effectiveness of marketing programs rather

than reliance on visitor arrival or economic

impact alone.

Our committee recommends the

following: First, \"Return on Investment of

Marketing Campaigns\". There should be a complete

review of existing research models measuring the

impact to travel promotion. These should include

previous Department of Commerce measurements that

Longwood Research conducted to measure the impact

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43

of the UK program in \'05 and existing state and

city marketing efforts\' research.

We urge the DOC to review the methods

by other countries in order to leverage best

practices in this area, and based upon a review

of the existing models, we ask the Department of

Commerce to solicit proposals from qualified

research companies incorporating the best

existing practices and their own creative

recommendations to measure the impact of travel

marketing programs. Ideally, when implemented,

the research should include a measurement of

promotional areas compared to a control area.

Funding for future promotional programs should

include an allocation for effectiveness research.

Second, \"Travel and Tourism Industry

Contribution to Economy and Job Creation\". The

specific metrics within TTSA should be identified

and consistently reported to opinion leaders and

stakeholders.

Prospective tracking measurements from

the TTSA could include direct tourism output,

total tourism related output, direct tourism

related employment, total tourism related

VICTORIA'S TRANSCRIPTION SERVICES, INC. (312) 551_8818

44

employment, tourism value added GEP, and total

share of total GEP.

\"Perceptions Among International

Travelers\" was our third recommendation, and with

the U.S. adoption of the first, Recommendation 1,

\"Measuring Return on Investment For Marketing

Campaigns\", it would be possible to design

research to measure intention to travel and

attitudes towards the U.S. as a travel

destination.

Unlike the Pugh Report, which measures

overall attitudes about the U.S., research can be

tailored to specifically measure factors related

to travel, specifically respondents can be

screened so that the sample is composed of

potential international travelers rather than the

population at large. With tracking research

fielded in multiple markets, shifts in perception

can be measured both against the base and against

the control in order to ascertain the impact of

promotional programs.

As noted earlier, a review of existing

models from states and other countries and the

solicitation of research proposals through a

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45

Request For Proposal can provide creative input

to develop an effective measurement system for

travel attitudes and intentions.

And, lastly, \"Support For Permanent

Funding\", and I think we\'ve already addressed

that, but I\'ll see if I can convince you at this

point.

The implementation of a program to

measure marketing effectiveness and track return

on investment should be used as a critical and

integral support point for dedicated funding for

tourism promotion. All potential sources of

funding should be canvassed, both public and

private, and also we ask to inventory the

successful funding models used by other countries

as well as states in an effort to build a

consensus behind the most viable funding

mechanism for this project.

The economic rewards, Mr. Secretary,

for implementing a coordinated marketing effort

or, in layman\'s terms risk/reward ratio, are very

good. For every 1% of world market share the

U.S. regains will result in an estimated

8.1 million more visitors, \$13.4 billion in

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46

additional revenues, 153,000 additional U.S.

jobs, 3.5 billion in additional payroll, and

2 billion in additional tax revenues. Ladies and

gentlemen, what I just described is a very

successful public/private partnership.

To conclude, we recognize that there

are already in place, both in this country and in

others, a current successful funding model. We

should seek one out and improve it to suit our

needs and implement it. With reference to

competitive balance, time is not our ally.

Thank you again to the Subcommittee

for their hard work and to Rex Johnson and Frank

Haase for all their diligence in making this

report and the opportunity to present it to you.

SECRETARY GUTIERREZ: When are you going to

talk about the 4 million and what the best use of

the 4 million is?

CHAIRMAN RASULO: I think, actually, we

were going to discuss that later on today after

your departure.

SECRETARY GUTIERREZ: I mean I think we\'re

running behind schedule. I wonder if we could

move to Rice_Chertoff, and I think there\'s one

VICTORIA'S TRANSCRIPTION SERVICES, INC. (312) 551_8818

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subcommittee that hasn\'t \_\_ needs to be

presented.

CHAIRMAN RASULO: No, that was the last.

SECRETARY GUTIERREZ: Let\'s do that. And

when do we need to leave?

MS. GOTTINGER: Five minutes to.

SECRETARY GUTIERREZ: I heard five to ten

minutes. Seven and a half. Okay, why don\'t we

get started here. And we\'ve got with us today

Tara Riordan from Homeland Security and Karen

Christensen from the State Department to report

on that initiative. So I\'ll let you ladies

decide how to start.

MS. CHRISTENSEN: I think I\'ll start by

doing an introduction about Rice_Chertoff. I\'m

Karen Christensen from the State Department and

just a little bit about who I am.

I am the Chief of the Post Liaison

Division in our legal office. That means our

office is the office that goes out and tells all

those good folks overseas what they need to do in

terms of visa policy and procedure and how they

need to be working.

But I think the most important thing

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48

that Tara and I were talking before we came out

here about is what should we say about

Rice_Chertoff to sort of put it in context, and

to me what we need to remember is that this is an

attitude, it\'s not a checklist. And it\'s a very

important attitude, and from our perspective

sitting in the State Department it is a big

change, it\'s a very significant thing.

What Rice_Chertoff says is that we,

the Department of Homeland Security and

Department of State, acknowledge that we have a

joint responsibility for insuring facilitation of

legitimate travelers. We recognize how important

this is to the United States, what an important

economic impact travel and tourism has, and we

have committed, our two Secretaries have

committed, and that commits all of us down here

at the working level to really making some

efforts to work together to remove barriers where

we can. We can\'t compromise security, but we can

look very closely at how we can achieve this

balance.

And this whole idea of working

together, of course, is a relatively new thing

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49

because Department of Homeland Security is

relatively new, and DHS has a responsibility.

They have the authority for visa policy, and we

in the State Department carry it out.

So what Rice_Chertoff does is really

give us a high level framework for coordinating,

for making sure that we are working together, and

it really does \_\_ certainly from my standpoint in

the State Department, it all depends on a lot of

the things we talked about. Even things just in

our day_to_day actions and our day_to_day normal

processing plans are seen against this, are

measured against this. We look at Rice_Chertoff

as the mechanism that supports and gives a lot

more oomph to our efforts to coordinate.

I think we\'re going to go through and

sort of talk about some of the things that have

been done. Some of them are concrete things,

some of them are things where we can show that we

achieve something. Other of them, of course, are

longer_term coordination efforts, and some of it

is way too down in the weeds to discuss here, too

down in the weeds for me, some of it.

But basically Rice_Chertoff, I think

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50

you all read the notepad, the sort of the overall

announcement of what Rice_Chertoff was and the

announcement that our two Secretaries worked from

back in January.

There are three parts to it.

\"Renewing America\'s Welcome With Improved

Technology and Efficiency\", that\'s probably this

visa part we keep hearing about, what can we do

to make this process better both overseas when

they\'re applying for visas and then also when

folks arrive here, when they arrive at the ports

of entry.

Part two is \"Travel Documents For the

21st Century\". That\'s some of the very technical

stuff about improving our travel documents, about

using technology to make these more efficient

documents, to make them more usable, to make them

better for the travelers.

And part three, the \"Smarter

Screening\", that\'s where we get into a lot of the

information sharing parts that are very, very

technical, but are really essential if we\'re

going to work together and make sure that we\'re

not duplicating each other\'s efforts, that we are

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51

sharing information, that we\'re not having a

whole lot of redundant time_comsuming checks that

we need to do. So that sort of mentions a few

specifics.

MS. RIORDAN: Yeah, by way of introduction,

I work for Online Communiform, which is the

Secretary for the Private Sector Office at

Homeland Security, and there are many familiar

faces in the group, and I wanted to thank

Secretary Gutierrez for having us to brief this

progress.

The first few datapoints actually are

more specific to the State Department, so I\'m

going to let Karen kick it off, and then we\'ll

dovetail.

MS. CHRISTENSEN: \"Model Points of Entry\",

and this is kind of an indication of how blended

we are in this effort that \"Model Ports of Entry\"

comes under the part that was announced by

Secretary Rice. At the announcement in January,

she talked about model ports of entry. Now, of

all the people that touch ports of entry, the

State Department probably has the least to do

with it, but we\'re very involved in this effort

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52

as well.

There have been a number of meetings

between DHS and DOS including site visits out to

the two identified model ports of entry in

Houston and Dulles where they\'re going to try to

put into place ways of moving people through more

efficiently, better in a more friendly manner.

MS. RIORDAN: Within DHS, CBP has the lead

on this, however, our office serves as an

advocate and a liaison for corporate America. So

one way we like to present our case is by having

some of those business \"figures behind our

argument that we have a human economist who also

engages in this effort.\" The next stage is now

working with airport authorities to determine

funding and some of the technical liabilities.

SECRETARY GUTIERREZ: Which just begs the

question are you \_\_ you\'re doing this on a

world_wide basis?

MS. RIORDAN: Doing what?

SECRETARY GUTIERREZ: Are you doing it

throughout, say, all the embassies and all our

consulates or are you able to pick out a few hot

spots, a few countries?

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53

MS. CHRISTENSEN: Okay. Well, the model

ports of entry specifically, of course, are ports

of entry here in the United States.

SECRETARY GUTIERREZ: Right.

MS. CHRISTENSEN: So that\'s not a worldwide

thing. Everything we do in this process is,

generally speaking, worldwide. I mean if we make

a change, it is a worldwide change. Not every

solution and not every approach works in every

post overseas.

SECRETARY GUTIERREZ: Right.

MS. CHRISTENSEN: You mentioned hot spots,

and I\'ll just assume we\'ll talk about this later,

but I\'ll mention it now. We hear India, we hear

China, we hear Brazil. We are very aware of

those places.

Last year, we commissioned, we and

Consulate Affairs commissioned a study by outside

experts to look at predictions for visa demand,

experts in international travel and in

econometrics, et cetera, et cetera. They told us

what we already knew, which was demand was going

to grow expedientially in China and in Brazil,

but it gave a lot of credibility and a lot of

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54

weight and authority to our sort of matter in

Consulate Affairs saying, This is coming.

We hope that that will help in some

way bolster our request for resources in order to

facilitate the buildings overseas that we need,

the space, the facilities. That\'s just something

that we were doing anyway because we know that

those are hot spots. We talk about India every

single day.

SECRETARY GUTIERREZ: All right, I would

encourage you to talk about priority countries

because I think it\'s going to be a lot simpler to

focus on three or four countries, get them

writing, understand what it takes, what the

problems are.

I know in Brazil, we were down there,

there are four offices in a very large country.

People have to take a trip in order to get a

visa. That\'s a problem, but there\'s probably a

different problem in China.

MS. CHRISTENSEN: Same problem.

SECRETARY GUTIERREZ: Well, okay. And the

other thing too is priority in terms of ports of

entry. Are there some ports of entry that

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interest you more than others?

MR. TILTON: Suffice it to say that Dulles

is moving to be a focal point. Since it is today

one of the more difficult Customs and Immigration

facilities to navigate, that would be a very good

thing, not to mention, Mr. Secretary, in Delles

because it happens to be in the Capitol.

SECRETARY GUTIERREZ: So, hopefully, if not

today, at some point, we should talk about

priorities.

MS. RIORDAN: I believe that\'s one reason

why Dulles was selected. Dulles and Houston are

distinctly different, however, some of their

issues are common amongst other airports. Even

the physical layout of the two properties is

drastically different, the ages of the property.

So we recognize those challenges in the systems,

thanks.

MR. TILTON: Thank you.

CHAIRMAN RASULO: Okay, go ahead.

MS. CHRISTENSEN: I\'ll just continue. We\'ll

run through rather quickly, and then have time

for questions.

One of the things we specifically

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56

mentioned in my other talk was the Business

Facilitation Center that we have in our offices,

the visa office where Americans can call in if

they\'re having problems, if they need

information. We realize that just getting

information out to people is one of the most

important things we can do, and that office

estimates that they\'ve handled about 2,700 calls

since January, which they think represents about

139,000 international travelers.

We also have made a lot of efforts in

the visa office as a whole to put information out

there. I know there\'s a lot of talk now about

the wait times. Three years ago, those wait

times weren\'t even available, but we\'ve been

collecting that information, we\'re putting that

out so that we hope that people can plan their

travel, that they can build that in. While we

work on trying to produce those wait times, they

are a fact of life, and people have to plan that

into their travel.

We mentioned in Rice_Chertoff there

was mention made of looking into the digital

video conferencing technology as a way of

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conducting interviews. As you know, there is a

requirement, legal requirement, it\'s legislative,

that we interview the applicant and then we

collect the biometrics from every applicant.

That limits greatly our flexibility in coming up

with creative solutions for this problem.

(Exit Secretary Gutierrez at 4:37 p.m.)

MS. CHRISTENSEN: So we are looking into

that digital video teleconferencing. We\'re

testing equipment, we\'re developing software, and

we hope by the end of this year to actually test

it overseas and see how it works in some overseas

areas.

Again, we can get into things like

band width and all sorts of technical problems,

but we are looking very carefully at that and

really making and effort, and, again, three years

ago, it\'s something we never perceived of doing.

So it\'s quite a dramatic change for us.

MS. RIORDAN: The next point highlighted in

Rice_Chertoff, actually, Mr. Tilton follows up on

what you were bringing and that\'s an opportunity

linking to departmental boundaries. So there

will be a joint Rice_Chertoff Advisory Board, and

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the members of the Board will report to both

Secretary Rice and to Secretary Chertoff.

The status on that Board currently is

that both Secretaries have approved the selected

members, the selected members have been notified,

and they are going to be submitting paperwork for

security clearance and hopefully announced at the

end of the summer for the first meeting to be

held in September or October.

Another private sector outreach

effort, back to business visas, is that our

office and US_VISIT and other parts of the

Department of Homeland Security as well as State

are working with American Chamber of Commerce

overseas to facilitate that process as well.

MS. CHRISTENSEN: Let me just say something

about that since we\'re on that, and I think that

there probably is a lot of interest in the visa

process, so I\'m going to keep tossing in a few

things like that.

We recently \_\_ the U.S. American

Chamber of Commerce went out and surveyed the

overseas members, and we were told in all other

posts overseas that they need business

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facilitation programs in order to make sure that

legitimate business travelers can get

appointments.

How you define a business traveler

becomes difficult in places where everybody says,

I\'m a business traveler; and if we facilitate it,

we\'re expediting everybody, and then nobody is

getting expedited. So one of the ways that a lot

of the posts have arranged their programs is

through the American Chamber of Commerce in

Beijing or in whatever the post is overseas.

So the U.S. Chamber of Commerce went

out and surveyed their members and came back to

us and said, These are the programs that work

very well, these are the types of programs that

our members like, these are the qualities of the

successful facilitation program, and we\'re

compiling that information and sending it out to

all our posts and saying, When you develop a

business facilitation program, these are the

things you need to do, this is what we mean by

business facilitation program, and this is what

works.

And the last point, the last crucial

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point that was made in Rice_Chertoff is

\"Encouraging Students in Academic Study to the

United States\". The academic community is a

community here in the United States that we hear

from a lot. Besides you all, those are the folks

I think that make the most noise about the

business about the visa program.

One of the things we did was to expand

the window for \_\_ there was a requirement in our

regulations that students could only apply 90

days in advance of the start of their study.

That made it difficult for people to plan their

trip, it made it difficult to get their

applications in early, as we\'re always

encouraging them to do. So we expanded that to

120 days. That is in place and students are

already applying.

MS. RIORDAN: The Department of Homeland

Security is following suit, and the next step

is \_\_ currently students can only enter 30 days

in advance of the beginning of their study.

Through Rice_Chertoff, the change will be to 45

days in advance. So we\'re having a brainstorm

session to figure out the regulatory requirements

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and how exactly to go about that.

MS. CHRISTENSEN: And probably not directly

as a result of this, but our statistics do show

that student visa applications so far in 2006 are

up nearly 20% from what they were last year,

student issuances.

I hesitate to say that in a sense

because I don\'t know if that\'s an increase that\'s

going to hold through the rest of the year, but

we are definitely seeing an increase in students

who are flying and who are being issued visas.

MR. JACOBS: It\'s a fraction of where it

was.

MS. CHRISTENSEN: Excuse me?

MR. JACOBS: It\'s a fraction of where it

was five years ago.

MS. CHRISTENSEN: But it\'s turning the

corner and moving up.

MR. JACOBS: But we lost the student base

here effectively created for universities to

accommodate them. And they\'re not doing well

as \_\_ it\'s a society problem, and they really

need \_\_ the students, the issue is we\'re not

answering it with 30 or 60 days. These kids have

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to apply a year in advance, you have to decide

where they\'re going, and we\'re not giving them

that comfort that they can be here, so they\'re

not. And I know that. I\'m Chairman of a

university, and I see that.

MS. CHRISTENSEN: Okay, well, we can talk

more about students in another \_\_ later.

\"Travel documents for the 21st

Century\" were part that were included in the

Rice_Chertoff provision starting with the

e_passport, the U.S. passport that\'s going to

have biochips in it, and we\'ve already started

producing those on a test basis. We\'re starting

with diplomatic and official passports because

that\'s a group we have control over, and we plan

to expand to regular issues by the end of 2006.

MS. RIORDAN: Just from the Department of

Homeland Security\'s perspective, we collaborated

in testing those documents back in April with the

countries of Australia, New Zealand and

Singapore.

MS. CHRISTENSEN: The Passport Card has been

mentioned already, which would be equivalent to a

passport, but basically is a card like a credit

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card size, and, again, State and Homeland

Security are in regular discussions about exactly

what that format will be, although the Passport

Card, because it was passport issued by the

Department of State, we really wanted to be able

to build on whatever technology is agreed on for

the other cards that DHS is going to be producing

so that they will all be able to do that, I

think.

MS. RIORDAN: And this in large part goes

with that Western Hemisphere Travel Initiative.

So, Chairman Rasulo, I heard your comment, and

one thing I\'d like to add, which is not

completely on Rice_Chertoff Initiative, but it\'s

just tht the Notice of Proposed Ruling should be

out this summer, and that will be another formal

way to get your comments heard. And anyone

that\'s not familiar with WHTI is what we call it,

I\'ve got some documents, quick take_away

information.

So the next datapoint is \"the Global

Enrollment Network\", and this is where DHS has

established the Consolidated Trusted Traveler

Program. It\'s a single trusted traveler program

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strategy that integrates all of the existing and

proposed trusted traveler programs. Currently,

that includes NEXUS, SENTRI, FAST and US_PASS.

The objective is to get an online

enrollment system and to ultimately have one card

that can be used and also a centralized common

fee for all the different programs. Currently,

CBP does some of the bedding for approval into

the IFTA system, and also this part is being

considered for Western Hemisphere Travel

Initiative.

So that wraps up the second part, and

we move on to the third part, which was \"Smarter

Screening\", and the lead bullet there is \"with

US_VISIT\", which is an integrated database that

all international travelers interface with when

they enter the United States.

Between January of 2004 and June of

2006, US_VISIT processed over 60 million foreign

visitors and intercepted nearly 1,200 people who

were suspected of criminal and immigration

violations. Also this was all based off of the

biometrics that were collected.

So one concern with the US_VISIT

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65

system was that it would slow down the processing

at the entry points. And, actually, at the

airports there\'s been no reportable change in

time, and at the land quarters, it\'s actually

sped up the process because it\'s eliminated the

old paperwork processes that were very time

consuming.

MS. CHRISTENSEN: Travel intelligence, both

the Department of State and DHS both support the

Terrorist Screening Center and the Human

Smuggling and Trafficking Center. These are

centers that share information about these issues

and sharing intelligence that coordinate our

response. Again, it\'s a very important way that

we\'re sharing information and trying to move

things along.

And then just sort of general

information on sharing is that we are really

working to insure access, that we both have

access to each other\'s information. What has

been the case in the past is that folks at the

port of entry, the CBP people at the port of

entry don\'t necessarily know \_\_ they don\'t

necessarily have access to the information, our

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66

visa information; and, likewise, our visa people

don\'t necessarily know what has happened at the

time that an individual has touched DHS, either

CBP or applied for some benefit in the United

States. So we are sharing that information.

That information is now available at the ports of

entry. It\'s really quite a leap forward.

MS. RIORDAN: The integration of the

different databases is really a step forward and,

interestingly, the Terrorist Screening Center

with their outreach to foreign governments and

synchronization of many databases is really

viewed as a model for information sharing in the

whole community as well. So that\'s a success

story.

And the next point is \"One Stop

Redress For Travelers\". Currently, there\'s a

committee in DHS that\'s chaired by the

Civil Rights & Civil Liberties and US_VISIT

Offices, Dan Sutherland and Bob Motney, and they

are reaching out to internal components, TSA, the

external, et cetera, to figure out the way ahead

and to focus us with this task.

And the last point is \"Pooling Data

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67

With Like Minded Foreign Governments\".

Discussions simply continue with foreign

governments to increase exchange of information.

The Department of State and Homeland Security

will continue with that effort for the

comprehensive exchanges of the plan that blocks

the stolen passport information with other

governments.

And I don\'t know if Karen has some

conclusive comments, but I know \_\_

MS. CHRISTENSEN: Well, as I said, as I\'m

running through this, and I have been doing

consulate work for a long time, this degree of

cooperation and especially this degree of

information sharing really forms the basis, I

think, for making our processes much more

efficient and much more comprehensive.

So I think that while we might not see

an instant turnaround and an instant change in

visa process, we really are using the framework

of Rice_Chertoff to look at how we can together

do a better job of moving legitimate travel.

MS. RIORDAN: If I may also, beyond visas,

there are many other policies too that both of us

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work with that aren\'t included in Rice_Chertoff.

So we are available as a travel and tourism

liaison, glad to talk with you about western

hemisphere travel issues, AFIS, which was

announced yesterday, all different sorts of

policies. So, please, don\'t hesitate to ask

questions and, to echo what Chairman Rasulo

brought up, the need for all coast

revitalization.

Also I\'d like to thank all the

industry partners here who helped the Department

of Homeland Security and Commerce and everyone

else in the room with hotels and buses and

evacuations and everything else. So your spirit

was major in their recovery.

CHAIRMAN RASULO: Okay, questions, comments

for Tara or Karen?

MS. CARLSON_NELSON: Well, I think you\'ve

got lots of thoughts, but for many of us or all

of us, first of all, you know, the problems are

so great that I think we have to salute the

progress that\'s been made, and, hopefully, you

see us as collaborators, not in any way

adversaries. But whether whoever wants to

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69

consider if there\'s this interdepartmental type

of collaboration and advisory board, should

commerce play a role in that because you talk

about the Chamber of Commerce, you talk about

business facilitations. So maybe some of this

effort that we\'ve been talking about that \_\_ and

hopefully there are \_\_ that these groups could be

collaborate.

And it\'s clear in listening to our

reports that we face some of the same issues, and

I think from my personal point of view there\'s

two pieces of it. One of it is obviously

addressing the barriers and doing the

facilitation in each of those efforts that you

articulated or focused on.

The second piece is the perceptions.

And so often in our businesses we sort of look

for low hanging fruit and we look for something

that\'s visible to the market that we can lay

claim to some kind of progress to begin the

change of America around the perception.

I don\'t know where that is or who

helps you in that piece because sometimes when we

get so focused and we\'re down in the weeds

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70

getting these things done, we don\'t have somebody

who pulls up and says, Wait a minute, if we did

these things first and we could let the world

know that our lines are shorter or \_\_ you know,

who knows? Maybe \_\_ you know, in some of our

businesses we give our people pagers so there\'s

not a line because the line has a bad perception.

So I mean are there also perception possibilities

that we could collaborate on?

And then the second piece, my

observation would be, you know, this is quite an

extraordinary offer to have the hospitality and

travel industry say, We\'d like to help with the

training or hospitality or positioning, and that

would be something that maybe someone should be

taking pretty seriously because it could \_\_ you

know, it could just get dissipated to it, and I

think it has some promise that would be very

interesting.

One of the interesting experiences

that I had would be the head of travel and

tourism in Australia was not a large promotion

budget, which we knew about and were impressed

by, but, in fact, the information that they felt

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71

they were a more secure country even than we were

was that somehow they\'ve been able to do it

without creating the perception of being

unwelcoming. So maybe there\'s some opportunity

for us to collaborate.

MS. CHRISTENSEN: And we are certainly very

interested in hearing your input and hearing your

perceptions and hearing your suggestions.

The task, obviously, of fixing the

mechanics of this falls to our two agencies, but

we very much want to hear what you see as the

problems. Some of them are things we can\'t fix,

but we\'re always interested in hearing ways that

maybe we could loosen that perception issue is a

huge issue.

And you mentioned the lines. We hate

the lines too, but as long as the people have to

come in, there inevitably will be some people

there. We are trying to do as much as we can

with call centers so that people don\'t have to

come in and use their time and resources. We\'re

trying to do as much as we can in hopes that

returning those passports by courier or returning

those passports by mail so that people don\'t have

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to make yet another trip to pick up their

passport. We\'ve developed and deployed now our

and will soon deploy a web_based appointment

system that any NDC can use, that any N computer

conference can use to help them manage their

appointments so that they don\'t have those crowds

that show up at the gate. So we really are

looking at those things, and we do appreciate any

help with that.

MR. TILTON: If I could?

CHAIRMAN RASULO: Of course.

MR. TILTON: Karen, one of the things

that \_\_ your point that we have, of course, been

discussing is the use of the rather modest

funding that remains for the Advisory Board that

you invest in something that we think would be

creative. The communication effort, if it were

to be a website, just as a point of reference,

the communication effort is available on a

website by facility that communicates the efforts

that you have shared with us, to the extent that

you would think it appropriate, really is thought

in how to begin the change of perception of what

your priorities are for those who would like to

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or even contemplate attempting to secure a visa.

And I think one of the difficulties we

have now is not so much the lines as the

impression of the communication the lines effect.

And Marilyn said it very eloquently a moment ago,

we\'ve created an impression of indifference.

We\'ve actually created an impression

that there is a reward that, if you think about

it, it\'s an adversarial reward to saying yes, and

there\'s actually a reward for which finding a

means by which to say no.

And that perception is \_\_ I hear it in

every country I visit. The Counselor Office and

I think representatives in every Chamber office

also says that the efforts are improving, and the

Chambers are invited in to effect a positive

solution. Every Chamber and President that I

visit says they are being asked to participate,

and they appreciate that, they truly do, and we,

of course, as members appreciate it.

But I do think that it is now

messaging because, unfortunately, the message is

out there, however unintended it was, and you\'ve

got to find some means by which to convey a

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74

message that \_\_ it\'s not glib. I mean nobody is

suggesting that we accuse anybody of change in

priorities, and we are going to be diligent, but

we are going to talk about it and we are

welcoming, and I think that\'s the ambition, to

get that message across. It may well be, Jay, on

that website would be a very effective way to

convey the message.

MS. RIORDAN: Please let us know if you do

the website. Actually, Karen and I spent part of

our earlier part of the week generating basically

the six_month progress report of Rice_Chertoff

Initiative for Secretary Gutierrez, and the first

thing I did last night when I got done with it

was ask for Public Affairs to make a

publicly_releaseable version. So however my

attempt to outreach and to get out some success

stories, that will be something that will be

coming down the pipeline.

And we see your industry at practice.

We\'ve heard from some people in the room, even

the ideas of using videos to describe to people

how to fill out their Customs order paperwork

before they get up to the front of the line so

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75

that\'s not another reason for the long queue. So

we are glad to hear all of your ideas and

appreciate it.

MR. TILTON: I think that\'s great, Karen.

I think whether it\'s the website the committee

funds, that\'s another thing for you to be

thinking about is if it would be of benefit for

you to take and release such as the one that you

put together and think about commercial means by

which we could make communications available, to

take our inflight opportunity, and we have a

tremendous opportunity to communicate effectively

both in video and in the magazine. On a monthly

basis, the ad revenues in our magazine is better

than the ad revenue that you see in some of the

supermarket queues. So they\'re actually very,

very well read. The circulation is

extraordinary.

So if you could imagine that there

would be a letter from you in one of our

magazines or the U.S. Carrier type that actually

went out and said that, This is what we\'re

attempting to do with Rice_Chertoff, I think

that\'s something that we as a industry would like

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to do.

MS. RIORDAN: I think that\'s a creative,

great idea, and I\'ll follow_up with you.

MR. TILTON: Please do.

Ms. Riordan: So thanks.

MR. TILTON: You bet.

CHAIRMAN RASULO: Other comments?

(No response)

CHAIRMAN RASULO: Thank you, ladies. I

want to go back a little bit from before the

Secretary left and accomplish a little bit of

business which was really focused at, now that

we\'ve done these recommendations, what do we do

with them.

And I chatted with him briefly before

he left, but if I can get a vote from the Board

that this is a document that we would like to

forward to the Department of Commerce, what I

would like to do is then ask the Secretary to

accept this document as what it is,

recommendations from this Board from which we

would like to hear from the Department of

Commerce in writing as to what their response is

to the recommendations contained within.

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77

We heard a little bit from the

Secretary today, but the recommendations are much

more comprehensive than that, and this way, we

will embark on set common goals that at least we

know where we all stand.

So if we can \_\_ the only \_\_ and by the

way, since he\'s not here for the discussion of

the \$4 million spending which Andy is going to

take us through in a second in terms of

recommendation there, I think we probably ought

to move that as either an addendum or second

separate document recommending where we think and

how we think that money should get spent.

So if I can get a vote that this

document from the Board members here, you know,

represents our recommendation, then we\'ll get

those wheels in place.

MR. TILTON: I\'d say, Mr. Chairman, we might

want to ask for his recommendation and

acknowledge that he doesn\'t want it to be sunk by

the President of United States and is that okay

with us.

CHAIRMAN RASULO: Yeah.

MR. TILTON: I don\'t want to push that

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78

peanut up the hill any further. It doesn\'t look

like it\'s going anywhere.

CHAIRMAN RASULO: I\'m not sure there was a

full agreement on recommendation anyway. So if

we \_\_ I think we probably ought to bolster up the

notion that what we want as an industry is a

consistent high level voice that carries the

water. And if the Secretary agrees to take on

that burden, then so be it; but if not, we need

something, another mechanism.

MR. TAUBMAN: Jay, I would just like to

comment on the other aspect with the message that

you said, which is this concept of the broadbased

advertising program that is part of our

statement, the White paper, and I mean I think he

was sending a strong message having said that,

you know, on many levels this group has supported

a broadbased advertising \_\_

CHAIRMAN RASULO: Yes.

MR. TAUBMAN: (Continuing) \_\_ you know,

initiative for a painful long time. And I think

it would be very unfortunate that if the thought

process \_\_ and I wish he were here to hear this.

I was going to make this comment that in essence

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the thought process and the solutions that are

being suggested by the Department of Commerce are

not solely driven by the need for funding that

this suggests.

And I sense that the appropriation

problem is a critical one in the budget and the

Department of Commerce, and therefore, they are

trying to send us messages that I don\'t think we

should embrace.

I think that Glenn\'s comment with

respect to, you know, the presidential advisory

initiative is well_spoken, but I don\'t \_\_ I think

we need to make a strong statement that we

believe that some broadbased effort makes sense,

notwithstanding, perhaps, his suggestion, you

know, that there was some view that may be given.

CHAIRMAN RASULO: Personally, I agree. I

would be happy to hear from any other Board

members that don\'t agree that that remain the

recommendation.

MS. CARLSON_NELSON: I would hope we

could \_\_ clearly, we need something that \_\_ we

need someone to advocate and we need a voice at

the table, and if this interdepartment or

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interagency group becomes stronger, then the

Commerce should be part of it. There\'s got to be

a place \_\_ and my only hesitancy about this

thing, being heard about it, is that you may lose

an advocate rather than gain one. I think that

would be very dangerous.

And my concern again is that the

rationale behind our commercial, our job

creation, our economic impact is so powerful that

it\'s beyond self interest, and I think that\'s

really important in order to make \_\_ have the

resonance that we need because we are competing

with other industries, some are rather more

narrow to you as an industry. This is something

broader, that has implications beyond.

So the platform \_\_ you know, I\'m

supportive of a broader platform. I just want \_\_

and I\'ve looked certainly at the industries on

how to get that. And I don\'t know technically

what the difference is, whether we can call

hearings or do something different as a

presidential commission that we can\'t do in this

mode of operating. That, I\'d like to understand

technically if there\'s anything we can do to get

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our voice up, if there\'s different things, and

maybe I don\'t understand that.

As far as the report, I haven\'t read

the one that\'s in the book. I read certainly the

one that was sent, and I was so impressed. I

felt in a sense that the order was wrong in terms

of making these efforts. It seemed to me that

\"The New Age of Travel\" is a great way to start

least. There\'s no question anybody who travels

knows that we\'re competing with countries in

every country we go to. There\'s more momentum

around the global traveler than just about

anything that I\'ve encountered.

So I think that\'s really important,

and then I think that this whole question of

making it easier for people to come, almost, you

know, asking people to come to the industry

should come after making it easier.

I think that the Secretary seems to

recognize that, that we need at least work in

parallel so that we can be telling the story at

the same time that we have things to point to

that they could \_\_ that can corroborate our story

not just to the other markets, but to our fellow

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industry people because if we can\'t go to them

and say, We\'ve got momentum around visas, we\'ve

got momentum around the barriers, I think it will

be hard to get the momentum that we need around

the message.

MR. JACOBS: Jay, and I heard I think the

Secretary understands this better than we

might \_\_ than we\'ve seen before, and I also think

that what I heard him say was not necessarily

what would be negative towards advertising or

anything, but what I got the impression of was

that we are not in a position, you know, from an

operational standpoint to really appeal to the

third party.

It doesn\'t make a lot of sense for us

to go and promote a lot of sales if we don\'t have

the back of the house able to meet those needs,

but, you know, I can\'t \_\_ the amount of growing

desire come to travel is so immense, and we have

gone backwards, where worldwide the industry has

grown so expedientially.

And the numbers you have quoted are

less than even 7% that we are expecting, and it\'s

not compounding very well. So this is something

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we do have to harvest on.

I don\'t know the answer to it, but I

think that our mechanisms in place right now

aren\'t able to receive that number of people that

want to come to this country and visit.

MS. CARLSON_NELSON: Do our two guests \_\_

Karen and Tara, do you feel having listened to

the report, are there audiences that you think

you would like us to facilitate our presenting

this report that would help \_\_ we made the

comment, \"We need to get funding\". So, you know,

how can we facilitate or amplify your voice in

getting just the staffing funding that, you know,

if that\'s a barrier, that\'s something that this

story probably needs to get told?

MS. CHRISTENSEN: I\'m not sure I have an

answer for you about where or how we could do

that. I do have a question to follow up on

something that was said earlier, which is there

was mention made of a report, a survey including

Canada, Japan, UK, France and Brazil and your

attitudes toward travel to the United States and

that there was a relatively negative view of

travel to the United States.

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That list of countries, of that list

of countries only one of those countries, Brazil,

requires visas. So the comment the rest of the

countries are on the visa waiting program and

don\'t require visas. So there\'s something else

going on with those countries than visa issues.

CHAIRMAN RASULO: No, I don\'t think anybody

around this table thinks that visas are the sole

problem. The problem starts with visas, it\'s

amplified at the borders, and it continues \_\_

MS. CHRISTENSEN: Right. I\'m saying that \_\_

CHAIRMAN RASULO: Yeah, that\'s probably

right. But so what?

MS. CHRISTENSEN: I mean there\'s a lot of

things added, and so if we\'re going to look at

visas, and I don\'t know whether the survey

contained more than that, other countries besides

those countries.

CHAIRMAN RASULO: I believe the survey was

of travel agents and their customers\' attitudes

towards travel to the United States, and it

starts with the advertising, as Glenn so aptly

put it, put out on CNN, and it goes through

process, probably goes through arrival and

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departures.

So I don\'t know that the research, by

the way, will be able to find encouragement for

the purposes of the important specifics of, Gee,

you know, I didn\'t like this Consulate Officer,

so I didn\'t have a good feeling about coming.

MR. TILTON: I think maybe, Jay, if I could

for a second, if we \_\_ Marilyn, if we stuck with

Bobby\'s point that we want to take the Secretary

up now on an offer of advocacy, there is a

message that has to be delivered.

And it could well be that advertising

doesn\'t describe it appropriately and it could be

that information both in communication, as Tara

and Karen have shared with us, really is a

fundable, responsible and first effort

communication, and if the Secretary were to

acknowledge it is actually a communication

initiative that links back to access and ease of

travel, the ease of entry, then we could fund

messages that actually go against the negative

perception and the negative advertising.

But any of us abroad traveling 50% of

our time abroad will tell you that that the

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message is not positive, and whether they\'re

students, as Jerry said, the dissuasion that\'s

taking place is pretty well \_\_ is pretty

effective. So simply to push back on that and to

have the Secretary take on the responsibility

that that would be the responsibility, to fund to

solve both issues, at least at the point of

initiation \_\_ and we love to graduate genuine

advertising and promotion too, but many of the

destination points the Secretaries do a pretty

good job.

MR. TAUBMAN: Well, I definitely think with

hearing we will help you and try to help you in

the Department of Commerce interact with agencies

across agencies we\'re going to try to help you

and provide that facilitation. That\'s a

non_economic thing that we can do.

When it comes to economics, I don\'t

know how much money we have, and now we\'re

getting into how fast can you spend the dough.

And I don\'t know how much facility we have to

change what the appropriation is for, but,

certainly \_\_

CHAIRMAN RASULO: We\'re going to hear about

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that.

MR. TAUBMAN: (Continuing) \_\_ but if there

is that ability to shift, I\'m all for \_\_ you

know, rather than sort of dropping the money in

the ocean, I\'m all for creating a deduction or

whatever that would allow partners such as

yourself and others to use that production in a

way that does suggest a more open and a more

welcoming environment, you know, about visas,

about, you know, the whole U.S. travel issue

because that\'s at least leveraging what we\'ve got

against one of the two important points. There\'s

really two important points, ease of travel and

it\'s really the awareness of our branding the

United States.

MR. TILTON: Well said.

CHAIRMAN RASULO: I think Al Frink has

something.

HON. FRINK: Yes. Just addressing Glenn\'s

point and others that share the view of, perhaps,

the need for a presidential council over one

Secretary, I know that\'s probably a little

delicate issue, but let me put my private sector

hat on because I was on that end of that life of

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mine for 30 years, and I\'m now coming up on two

years in government.

And I\'ve sat on so many councils and

interagency working groups, that it defies

description, and I would have to say as a balance

or a baseline that the President Export Council,

which meets twice a year, in my mind matching

that against the work that I see in this advisory

group, in this tourism council, I don\'t think

that I\'ve ever heard even from people who have

been here quite awhile much longer than I have

that the tourism industry has had higher level of

attention.

This is a very impassioned Secretary,

and he believes, as a brander that he is, that

helping tourism, this helping put a brand on

America, which has a carry_over effect into many

other areas, and I firmly believe that even

though the brand of the President could have

maybe a long_term benefit, it would raise the

level, I would go with the man as you have it

today.

I think that the Secretary is

impassioned, he\'s committed. He\'s even at the

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point of at the fifth floor where it\'s often

said, Is there another subject that we have on

the table right now besides tourism? I have to

say that I\'ve seen this firsthand.

CHAIRMAN RASULO: I hope the answer\'s no.

HON. FRINK: And, actually, I would say the

answer is no. I think that it\'s presidential,

it\'s administrative view, and he has the ear of

the President probably as well as anybody.

I think you have folks in State and

Homeland Security, myself, Ana, who is the new

Deputy Secretary, our travel czarina, who all

focus on the issues of travel and tourism.

I think the interagency policy group

that\'s going to meet subsequent to this meeting

is going to take a lot of these issues and move

forward on them, and you\'re going to get the best

we\'ve got, and I can assure you of that.

And I think that maybe under another

administration, I can\'t speak for that, but under

this current one, in matching what I\'ve seen from

the President\'s Export Council, I\'d bet on this

council for getting its goals achieved with the

kind of support that you would expect from

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interagency process.

And you should hold us accountable.

That\'s really what your job \_\_ you\'ve done a

terrific job on these reports. Our job is to

take that information and to try to make it into

an action plan that will deliver as much as

possible, and I think to that end, let\'s wait and

see.

CHAIRMAN RASULO: I think Chuck Merin, who

is representing John Tisch today, has something

to say on presidential advisory.

MR. MERIN: Thank you, Jay. I\'m here

representing John, and the idea for a

Presidential advisory council \_\_

CHAIRMAN RASULO: You need a mike, John, as

eloquent as you are.

MR. MERIN: I\'m sorry. Yeah, the idea for

the Presidential Advisory Council was created

about ten years ago emanating from the Travel

Business Round Table of which many of you are

members. I think Secretary Gutierrez is as

passionately sincere about travel and tourism as

any Commerce Secretary I\'ve been around, and I\'ve

represented the industry for many, many years.

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There\'s no question in my mind about his

sincerity and the depth of his commitment to the

industry.

What he asked for, I think, of this

Advisory Board were major policies, structural

policy recommendations that would enhance the

place and power and vision of travel and tourism

now and for the future.

The Secretary\'s commitment is

non_transferable. As delicately as I can say it,

I\'ve seen Commerce Secretaries who were invested

and committed to the travel and tourism industry,

and I\'ve seen few as committed to the travel and

tourism industry as the Secretary. If the

Secretary were to step down in a year or two

years or with the change in administration in two

and a half years, that passion doesn\'t

automatically flow to the next Commerce

Secretary.

So I think that the thinking here was

that if you accept that this is a industry whose

issues are diffuse, and I\'ll give you a specific

example in a moment, that the best way to get the

issues addressed across agency was to not only

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bring Cabinet Secretaries together and selected

members of Congress, but, in fact, to bring

mayors and governors, who, frankly, are doing a

lot more in terms of creative solutions problem

solving for industry issues at the state and

local level and begin to address long_term

trends.

I\'ll give you a specific example. You

don\'t have jurisdiction over the western

hemisphere travel industry. It\'s an issue

incurring debt to this industry on multiple

levels. We work closely with DHS, we work with

lowsly with State. I believe the Commerce

Department is very sympathetic to what this

industry is trying to do on Capitol Hill.

Currently, the United States Senate has spoken

and committed its support about the industry\'s

position on the extension of the deadline on the

dates.

If there were a U.S. Travel & Tourism

Advisory Board with multiple Cabinet Secretaries

heading agencies in multiple jurisdictions

affected by this matter that could in fact

discuss the issues, could hear from mayors and

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governors who are impacted by the issues, can sit

with industry leaders to talk about real world

perspectives about impact with the industry,

that\'s what we\'re looking towards. It\'s not in

any way about some lack of respect or

appreciation for the Secretary\'s commitment. I

think the Secretary is fabulous.

This was about creating a long_term

policy recommendation to benefit the industry,

not for today or tomorrow, but for longer term

and in the same way that I think policy

recommendations have been made in terms of public

diplomacy, ease of travel, many of the

longer_term issues addressed by Rice_Chertoff.

So that\'s the context for creating a

presidential advisory council. The advisory

council will be created under the provisions of

the Federal Advisory Council Act, will be created

by executive order and, yes, Marilyn, it would

not be a party, call peers, call witnesses

subject to the approval of the Office of the

President.

HON. ALBERT FRINK: Thank you, and I agree

with Jay, eloquently presented and fairly

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presented, and I think I qualified my statement

by saying that I can\'t speak for the future, I

can only speak for the present. So I understand

as business people that are looking for the

long_term interest of tourism that you may want

something you feel that would serve you better

long_term, and so that\'s your prerogative.

Perhaps, in the intergovernmental

coordinating committee should be something for

tourism so that we match federal and state issues

in a format where we come to the table together.

It could be a partial solution to some of that

collaboration that you\'re referring to.

All of you that you were taking notes

on everything, we\'re going to follow up with

discussions and try to get a lot of these issues

that we\'re hearing loud and clear focused in the

direction that you want. We work for you.

MS. CARLSON_NELSON: Do you think that

there\'s any chance over time, in hearing what we

just heard, would the Secretary see that as part

of his legacy, to help extend his commitment and

his concerns for the role of the \_\_ I hadn\'t

thought of it before, but if we\'re looking for

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something longitudinal, and however long he

stays, it won\'t be as long as we need someone in

that role.

HON. ALBERT FRINK: Let me give a quick

answer. I can\'t speak for him, but I can say

that as a businessman and leaving what you leave

to come and perform public service and not have

some of what you do into the DNA of process would

be the thing we fear most, and I can\'t believe

the Secretary feels any differently. It\'s what I

am most concerned about it is what I do and how

it will be embedded in the process so that it

will be \_\_ it will have a life of its own

afterward.

And so that\'s the spirit I try to take

with what I do, and certainly what we\'ll try to

do with the discussions here \_\_ and I can\'t speak

for the Secretary, but I\'d be surprised if he

didn\'t feel the same way. Okay?

CHAIRMAN RASULO: All right, thank you, Al,

and I appreciate it.

Any other comment on the document that

we haven\'t \_\_ if we haven\'t come to agreement on

this presidential committee for four years, it

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ain\'t happening here. So I think that, you know,

we will reflect, as I said before, on the need

for a consistent and constant voice, and,

frankly, I don\'t know how to go either way on

this presidential advisory committee.

There is one constant voice on this,

and he\'s not here to represent himself. Chuck is

trying to do it, and I don\'t think the rest of us

have a lot of energy behind it.

MR. TAUBMAN: It is reflective, though, of a

committed position, and, you know, I think from

that \_\_

CHAIRMAN RASULO: Who\'s representing that

committee that can speak for it? I guess maybe,

Glenn, maybe you can tell us how that committee

meeting went.

MR. TILTON: Well, I think I couldn\'t be

anywhere as near as eloquent as the genuine

advocate was a moment ago for the industry, but I

will do my \_\_ and I think it\'s hard, Jay, to be

against a presidential advisory committee in

support of our effort. I think that a practical

business person who now is the Secretary of

Commerce said to us, \"Be careful what you wish

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for.\" And I have been down that road before, and

I acknowledge the point irrespective of the

elements.

It may well be that, over time, the

Secretary himself will be an advocate for the

advisory committee on the strength of the work

that the Secretary effects on our behalf, but I

am not enthusiastic about conveying a message

that we absolutely think tht we need that rather

than his efforts and his advocacy at this

juncture.

So it could well be that we could

phrase this, Jay, that, We recognize, we hear

you, it may well be down the road something of

real value to us if we get to the point where

we\'ve got enough initiative behind our efforts to

establish it and make a committee. But as a

surrogate to what we\'re doing now, I have a hard

time thinking it\'s the appropriate time.

CHAIRMAN RASULO: Okay, so I think that\'s

all a lot for the moment to worry about,

obviously, and we\'re going ultimately going to

have to revise the document and take an

alternative vote by mail, and we\'ll get that

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done. I do want to get this to the Secretary,

and I don\'t want to lose momentum on the budget

that we have currently; and such details,

frankly, are irrelevant to the main thrust of our

argument here and they really aren\'t relative, so

we should move forward.

Okay, Al, I\'m not going to give you a

break to prepare to speak for us, unfortunately,

because we\'re way behind. So, without that

break, take a deep breath and \_\_

HON. ALBERT FRINK: No, not to worry. Thank

you, I will make this rather quick, just kind of

give you an update on travel and tourism. A lot

of this information you\'re quite aware of.

All things considered, that it\'s not

what it used to be in the year 2000, the travel

and tourism industry is relatively strong. The

U.S. clearly has the most innovative and the most

diverse travel and tourism industry in the world.

We\'ve had fourteen consecutive months of positive

growth.

There\'s one area that I just want to

talk about that we\'re working on to help you, and

I sent a letter out to this effect, but I think

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the key point that I just wanted to reemphasize

for the record, and that\'s the facilitation of

Chinese group leisure travel to the U.S.

The genesis of that is that I met with

the Chinese National Tourism Administration in

Los Angeles about three months ago, I think it

was about April 6th, as part of a JCCC Travel &

Tourism Group with an objective of signing a work

plan that lays oout a program of cooperation for

activities in China.

Based on that meeting, which was very

productive, China expressed serious desire to

advance its discussion on Chinese outbound travel

to the U.S. The reason is obvious. I mean the

opportunities to get business with the amount of

folks they have is just almost immeasurable.

In the U.S., clearly, we welcome

Chinese travelers, but that doesn\'t always work

in the other direction. There are laws there too

that are impediment Chinese leisure travel to the

United States. That impediment is license

requirements that are imposed on leisure

travelers by the Chinese government. They have

to come here in group travel format, and that

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makes it very difficult, but that\'s how they will

get their groups. Their leisure travelers must

get visas in group format, and they must be

accompanied by sanctioned government travel

operators.

I had \_\_ we had a lot of official

discussion with them, but I think the discussion

I enjoyed most was the off_line discussion where

Chairman Chow, who is the head of that

organization, clearly communicated to me there

was a strong desire to make this deal a mutual

interest to both.

See, the end result is to get ADS,

which is Approved Destination Status, agreement

with China, and they were almost in some cases I

think so optimistic that they gave it away by

their body language and the way they

communicated.

So there\'s a process we go through,

the working process to get a lot of these issues

cleared, how we provide travel operators that

meet their needs with regard to the language and

in case their folks traveling in the U.S. need

medical attention. There\'s a lot that they look

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at from their perspective. We\'re looking at how

we can assure them on that and make that happen,

and I think you\'re going to be pleased with the

outcome of this eventually.

So this is just a report on \_\_ it\'s

very high in my profile. I\'ve got myself into

something I\'m really enjoying, and I think it\'s

going to be a tremendous deliverable for you. So

I\'ve got my teeth clenched into it, and I\'m

asking Cary and all the folks in Tourism and ask

Ana that we stay on top of this opportunity.

So they\'re reporting back to us. I\'m

going to be meeting with Randy Beardsworth of the

State Department so we can talk about, you know,

what issues they have so we don\'t have any

impediments to getting this moving forward.

And I think everything else I had say

this time could pass. That was the key message

that I wanted you to have to take away.

CHAIRMAN RASULO: Thank you, Al, no

problem.

Next on our agenda is to hear from

Michael Erdmann from Longwoods about the

conversion study. So, Michael.

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MR. ERDMANN: I will cut my time allotment

down to two minutes.

CHAIRMAN RASULO: Thank you.

MR. ERDMANN: High level learning. We were

tasked to evaluate the success of the UK

promotion and campaign. It involved about three

phases. The first phase was to evaluate the

strategy, was it in tune with priorities of UK

travelers.

The second stage was to go in after

the campaign was complete to see whether it moved

the needle. The key learning from that phase was

that approximately 2 million UK travelers were

intending to visit United States that otherwise

wouldn\'t have come without the advertising.

So the third phase, we went back to a

sample of people who said that they intended to

come and had been exposed to the advertising to

see whether they actually came, and what we found

was that, in fact, 362,000 folks actually visited

the United States that otherwise wouldn\'t have

come without the advertising, which is 18%

conversion rate among those intenders.

Using the average amount the UK

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vacationer spends here on a trip, which is about

\$1300,, those visitors generated almost

\$500,000,000 in travel spending in the United

States. Again, I emphasize these are

expenditures that would not have been made

without the campaign.

Now, if I translate that into tax

dollars, which is in a sense the profitability

measure of the return that you get back on the

investment, those \$500,000,000 in travel

expenditures translated into about \$80 million in

taxes. About half of that was federal taxes, and

half was state and local taxes.

So I don\'t have the slide rule in

front of me, but I\'ll try to give you the

calculations. When we divide that spending, that

four hundred, five hundred million dollars by the

total media cost of \$400 million, the yield is

\$117 in additional visitor spending for every

dollar spent on media. If you look at the taxes

generated, that\'s about \$10 in taxes to the

Federal Treasury and \$10 in state and local taxes

approximately for every dollar that you spent on

media.

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How does this compare with other

destinations? Australia\'s \"A Different Light\"

campaign, which seemed to be quite successful in

2005 and yielded the return of \$64 per one dollar

spent in their campain. So \$117 is pretty good.

\"Visit Britain\", they had had some

challenges. They were trying to improve their

campaign 30 to 1, and the 117 to 1 is close to

the top of some of the longer haul destination

marketing campaigns that we\'ve evaluated for the

State of Hawaii or Japan or America and as well

as for private sector clients promoting cruises

to Alaska.

So, in summary, the campaign generated

very positive impacts in both short and longer

terms, yielding substantial intentions to visit

during the campaign period itself and converting

substantial numbers of people to people who

planned a later trip.

Compared to similar marketing

campaigns a return of 117 to 1 is really a

powerful testament to the strength of the

campaign in the UK market. This success is

consistent with the campaign\'s proof in

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communication strengths. It looked very

successful at telling people positive messages

about the United States through our testing

including clear motivational ability that came,

some of them, and residents with traveler

priorities as we measured in post campaign

research.

So, ultimately, this campaign

demonstrates that a relatively small investments

can indeed have disproportionately positive

results. So congratulations on this campaign.

CHAIRMAN RASULO: Great. Any questions for

Michael?

MR. KATZ: Just a quick one.

CHAIRMAN RASULO: Yeah, Larry.

MR. KATZ: Michael, how did you determine

that those 360 were not new travelers as opposed

to people that were going to come here anyways?

MR. ERDMANN: This is a methodology

discussion. If you want to go through \_\_

MR. KATZ: Sure.

MR. ERDMANN: It was a testing situation

based on experimental design.

MR. KATZ: Are you confident that those are

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people, a high percent of those people are coming

here?

MR. ERDMANN: Yes.

MR. TAUBMAN: Is it a similar test for other

campaigns around the world?

MR. ERDMANN: It\'s a similar methodology

that we\'ve used for fifteen years. It\'s been

validated by academics, economists, P & G is

adopting our methodology for its worldwide

measurement of banks.

MR. TAUBMAN: So it sounds like a terrific

thing for the government to spend money to make

more taxes than they actually spent.

MR. ERDMANN: Sounds like a good idea.

MR. TAUBMAN: I think this definitely should

somehow be embedded in our stuff that we want to

give.

CHAIRMAN RASULO: The numbers are not

always up that high, but anytime \_\_ and it has a

lot \_\_ every one of you know that runs a company

the return to marketing dollars spent when you\'re

at a very low marketing level is almost always

demonstrable to drive business. When you get out

there at the end and you\'re already spending a

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billion and a half dollars, that last 50 million

is sometimes harder to prove that it\'s

worthwhile.

But every study that I\'ve ever seen,

state, local, convention bureau, spending on

advertising destinations almost always works and

almost always has a huge rate of return. I\'ve

never heard of 117 to 1, but usually it works.

MR. ERDMANN: In our experience, there have

been a number of campaigns, one that I presented

yesterday to another federal government client

where the campaign actually backfired.

CHAIRMAN RASULO: All right. Well, there\'s

always the exception that proves the rule. Okay,

so much for broad, sweeping statements in the

future.

Let\'s see, so getting down to the nuts

and bolts of the \$4 million. Andy, I know you\'ve

got some options to discuss, so here we go.

MR. TAYLOR: Okay. Well, this is a

recommendation, and I feel a little bit like the

golf ball on the tee here, but \_\_ notwithstanding

Michael\'s presentation there.

As part of the U.S. promotional

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campaign we have used congressionally

appropriated funds on television and print ads in

the UK and Japan, as Michael talked about. There

is there is additional 4 million in appropriation

that remains to be spent. The question is

whether we continue to spend the money on the

existing campaign in Japan and United Kingdom or

we use something else.

I really admire the creativity and the

quality of the existing campaign, but we are

concerned about the effectiveness of

incrementally spending small amounts of money to

advance our message. This is news to me since we

had some of these statements here. On the other

hand, if we\'re going to try to have something

that is scale_able, you know, globally, that\'s

the question. You can throw some money out in

small amounts, but, you know, where do you have

any measureable returns.

Our bottom line concern is the

\$4 million in traditional media is simply not an

amount for any country to have a significant

impact. Obviously, we had some impact. The

question is can we scale it up. I\'m not going to

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go through all those details because we\'re

running late here.

The \$4 million, if some of you will

recall, we talked about World Cup, we also talked

about Americas in the Caribbean, and, finally,

we\'ve considered the suggestion to update U.S.

presence on the web where I want to spend just a

couple of minutes.

The current campaign, which is

entitled \"You\'ve Seen the Film, Now Visit the

Set\", the call to action is to a website

www.SeeAmerica.org. The Department of Commerce

should be praised for their choice of using

existing resources, partnering with TIA and

others in the private sector to incorporate this

website as a call to action.

Many companies have utilized

state_of_the_art websites to attract tourists to

their location. In particular, in Australia,

South Africa, the EEU, and the Bahamas are using

particularly impressive websites. So when you

take a look at the SeeAmerica.org, some of those

I just mentioned clearly were not there.

SeeAmerica.org was put together by the

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Travel and Tourism Industry of America, and they

made a significant investment. We do not have a

nationally funded office that can build and

maintain a highly functioning state_of_the_art

website. TIA has not been in a position to fund

any site with a stroke of what we think is

appropriate. The site simply needs to be more

compelling in order for our message to be

complete.

The cost of updating the website is

really cheap by comparison to a really large

global media campaign. The cost of producing

replacing television cost advertising is quite

expensive. On the other hand, paying a

reasonably high level person to manage content

and marketing for the site is far more effective

use of our money today because we have a small

amount of money.

We invited TIA to our subcommittee to

present in various ways that increase web

presence and attract the international tourist.

For example they presented the following ways to

update: SeeAmerica.org, for instance, a better

user experience, travelers want an airline travel

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experience, online travel experience that

includes scenes with media, community trip

planning tools, personalization, information on

demand, et cetera, customized international

markets, develop language, customize data based

on interest for inbound markets, this is

tailoring to specific cultures, and also to

enhance tracking functionality, monthly tracking,

e_mail updates and state published newletters,

you know, the stuff from your businesses and

campaign tracking, and, of course, scale_able.

We can generally enhance a website for

very little money, and because an affective

website can be used as a call to action in many

future campaigns, we recommend using a portion of

4 million to enhance SeeAmerica.org.

If you\'re not willing to come up to

our website in the short and long_term, that\'s

kind of our base infrastructure for the future no

matter what we do in terms of advertising and

promotion.

We also have enough money to remain to

be able to track the website, at least initially.

It is not necessary to spend the full 4 million

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to enhance the site, but rather a portion of that

for infrastructure. The remaining dollars can be

used to drive traffic to the site.

In our subcommittee, we believe steps

should be taken to enhance SeeAmerica.org in

combination of the conversations with the

Department of Commerce staff. We understand

because of the governmental component, there

needs to be a fair and transparent process.

Therefore, if the 4 million were to be used on

the website, the bidding process should be open

to anybody in accordance with the appropriate

rules that would govern us.

Let me stop there. Sarah Ellis and

Cary Justice will now discuss quickly, I assume,

the parameters for funding and choosing addenda

and Congressional appropriation.

MS. ELLIS: This will be very quick. We

just wanted to give you a little bit of process

based on what Mr. Taylor just described.

And in anticipation of a possible

recommendation for the Board to do a website, we

have looked at various options, and we\'ve

determined that a grant would be a possible

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mechanism for maintaining the website.

Cary Justice is going to give you just

a little bit more detail on that real quick.

MR. JUSTICE: I\'m pretty sure you know what

a grant is, but just in case you\'re not really

aware of it, a grant is a mechanism for the

federal government to actually give money to a

private institute in order to accomplish a public

purpose.

So you put them out there for a \_\_

there are two different types of grants. There

is a traditional grant, which is the put money

up, you apply for this money, they get the money

and then do the function. The second type is

what we call cooperative agreement, which the

only difference is that there\'s a government

employee function in that the government

employees would actually help with the function.

MS. ELLIS: And as Mr. Taylor mentioned,

this would be an open competitive process, and a

Federal Register Notice would go out it, we would

solicit applications of those and they would be

reviewed by the Department of Commerce and

possibly an outside panel \_\_ we could bring in

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outside private sector, others to review, and

then the decision would be made after it\'s

reviewed. So, on average, we\'re told it takes

between 60 to 90 days for this entire process.

MR. JUSTICE: And the last thing we want to

mention is that Helen informs me that Mr. Taubman

mentioned about some progressive communication

programs to use communications on the e_passport

and ease of travel initiatives.

This could potentially be done under

the existing contract which we have on \"You\'ve

Seen the Film, Now Visit the Set\" if it took

place in the five markets that were originally

discussed, so that\'s good.

MS. ELLIS: Thank you.

CHAIRMAN RASULO: Can we have any

discussion on that? I mean we can discuss the

details, but it just sounds like, yes, we can

figure out a way to do it. We are actually

discussing the recommendation about funding,

which sounds fundamentally to me like \_\_ using

the web, obviously, it would have to go out to a

competitive bid.

We made this decision last time to go

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with the SeeAmerica.org. It doesn\'t mean there

won\'t be a better bid, but that\'s one that\'s up

there, ready. And I\'m open to take some

discussion on that if you\'d like.

MR. TILTON: I\'m supporting the

recommendation.

MR. TAUBMAN: I am compelled by the fact

that the committee worked on it and did a lot of

thought on it, and it sounds like a good way to

use it. It\'s a little bit of money, and you\'re

finding ways to leverage it the best they can

through marketing. It sounds like it makes

sense.

MR. TILTON: I think the other thing about

the funding is it\'s in perpetuity. To change the

message that\'s up there, it involves equity over

time. The inequity is diverse.

MR. TAYLOR: And the other thing that

strikes me is we\'re already out there or they\'re

already out there, and if it\'s not robust and

effective, you know, I don\'t know about your

businesses, but you wouldn\'t want to put, you

know, something out there that\'s not real good.

And now is a good time and the amount

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of money is there that we could get it done

relatively soon, and I think we ought to move in

that direction.

And to Michael\'s point, I think that,

you know, study and promotional plans, obviously,

has to be in the mix. So I can join with you on

that.

CHAIRMAN RASULO: Okay, so it sounds like,

Sarah, we ought to chin up then that process and

then in 60 days sounds much more appropriate,

appealing than the 18 to 60 months we heard how

long it would take to do something. That\'s

great.

The last agenda item I\'d like to \_\_

MR. TAYLOR: Do we need a vote on that?

CHAIRMAN RASULO: There\'s only a few of

here, but looks like we have enough.

MR. TAYLOR: Sorry, I just wanted to make

sure we get didn\'t through this without it.

CHAIRMAN RASULO: Absolutely. I would like

to introduce John Nau, III, Chairman of the

Advisory Council on Historic Preservation, who is

going to address us. John.

MR. NAU: Thank you. As I\'ve been sitting

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here wondering how I was going to bring

preservation importantly to this group, I was

struck by what I heard.

I heard about branding, I heard about

product, return on investment, attracting foreign

visitors, and I go back to an issue that became

very clear to me when I came into Washington in

\'01, that there were 26 states that had some sort

of heritage tourism program, which meant that

there were 24 that had none, and we decided to

try to address that.

I believe strongly that there is a

clear link between preservation and heritage

tourism because, without the essence, there is no

heritage tourism, and without the economic

development generated in communities around this

country through heritage tourism, then there\'s no

assets. Believe it, and the Administration

believes it.

On March 3rd of 2003, President Bush

issued Executive Order 13_287. I heard you all

talk about an EO earlier. It\'s entitled

\"Preserve America\". With broadened and directed

federal policy to improve the government\'s

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leadership in improving America\'s vast and

diverse heritage.

An important component of that, since

we\'re here with Commerce, is that it was the

first time that the Department of Commerce was

asked to get involved in a domestic tourism

program. What it had asked the federal

government to do \_\_ the government owns tens of

thousand of heritage assets, not just the

National Park Service, and before we could go \_\_

before the federal government could go to the

private sector to get organized, we thought it

was right to say, Get the federal government

organized. These destinations are either current

or future heritage tourism sites.

On the same day that the EO was

issued, Mrs. Bush, who is honorary chair of

Preserve America, announced the overall goals of

a White House initiative to encourage and support

community efforts in preservation, fundamentally

the marketing arm of the Preserve America

Initiative.

It\'s the Bush Administration\'s

initiative to align heritage preservation with

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heritage tourism. Its goals include a greater

shared knowledge of the nation\'s history,

strength in regional identities and local pride;

most importantly, convincing local governmental

agencies and private sector groups to increase

the preservation of their shared cultural and

natural heritage.

Preserve America is about preservation

with a purpose, and that is totally based on

economic development. Sustainable preservation,

which is the use of these assets that creates

heritage tourism, absolutely is sustainable.

Preserve America provides us with ways

to recognize the tremendous efforts to preserve

and share the past already taking place in the

country as well as to encourage opportunities for

the state, local governments and private sector

to do more.

Why? Earlier there was a discussion

on return on investment. I would suggest to you

that there\'s no greater return on investment than

heritage tourism. We don\'t need to go fight the

battles anymore. We don\'t need to build the

courthouses or the old, old cemeteries. Our

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ancestors did that. We simply need to interpret

them, integrate them into a tourism program, and

make sure that the visitors know where they are.

These sites exist in every big city and small

town around the country.

From a businessman\'s standpoint, the

return on investment is uncalculable because I\'ve

tried it. You just simply preserve, interpret,

and then integrate, integrate in the theme

trails, subject trails or geographic trails, and

they work. I don\'t care what state you\'re in,

they work.

In one state, which happens to be

Texas, we know for a fact that every tax dollar

the state invests is bringing back \$19 in tax

revenue day in and day out, and most importantly,

the impact is at the county and city level. So

we\'re engaging the local political leaders.

What we must do is build this

awareness, and that\'s what we\'re doing because

the Preserve America motto states, \"Explore and

enjoy our heritage.\"

Leverage. Leverage these assets.

Now, as I said earlier, the bottom line is,

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without these assets, there can be no heritage

tourism. It\'s one of the primary economic

development benefits of the Administration\'s

Preserve America\'s initiatives. That\'s economic

development.

But you also gain, and this is where I

think branding \_\_ it struck me when you all were

talking about this, the branding is engaged and

the benefit out of these assets are educational,

they\'re cultural, but it\'s about American values.

These are the sites that over the history of this

country have generated the experiences that

create who we are as a people today, and if we

are ever going to create the right type of

environment for foreign visitors, it is to teach

them or let them experience those places. That

to me is the ultimate branding of the country

because that\'s what we are, we\'re based on

values.

All right, Preserve America has

various components. Educational: We have the

History Teacher of the Year Award that Mrs. Bush

has presented three years in a row. It covers

every state. We have a foundation from New York

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that invests about \$250,000 a year. Every

teacher gets a cash award, and the teacher\'s

school gets a history library. That\'s

significant. I mean I attend the ones in Texas,

and I tell the people, \"The only person who\'s

missing is Norman Rockwell.\" I mean it\'s just

all about America.

We also had dropped in our lap a

marketing man\'s dream. We have national media.

The History Channel has stepped up, integrated

their program into the Preserve America, and we

are generating between 2500 and 4000 spots a year

to support this kind of initiative.

We have Preserve America grants. We

have the support of the President in Congress.

Last year, we received three \$5 million grants to

go to planning and marketing efforts for local

promotion of tourism. Now, you say 5 million

ain\'t going to go far. In Texas, we did it in

1997\. We started with \$100,000 and drafted a

statewide program. It can be done.

The last two major components of the

program are the presidential awards and the

community recognition. We have had three years

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now of the Preserve America Presidential Awards.

There are two categories. Both of them are based

on heritage tourism initiatives. One is

preserving for heritage tourism, the other is

private sector support for heritage tourism.

Community effort. I don\'t mind

acknowledging success in the past. Many of you

will remember the Bicentennial Community Program,

which was in 1976. We created the Preserve

America Community Program, and it recognizes

those communities that protect and use their

assets. To date, Mrs. Bush has designated 381

communities in 48 states. We have over 200 that

have now submitted applications in addition.

Small towns, big towns, urban neighborhoods,

tribes, they\'re all in there. So the Preserve

America initiative, it\'s accomplished much since

its inception in \'03.

Today, I want to tell you about the

biggest component, and that is the Preserve

America Summit that will be held in New Orleans

in October. This summit will be led by

Mrs. Bush. Forty years ago, the federal

government created the National Historic

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Preservation Act. A lot of things have happened,

not the least of which is 9/11 and the two big

storms. So the question is how does the federal

government today craft a preservation program

that isn\'t just based on preserving, but it\'s

based on logical preservation with economic

development.

Well, we are going to explore in

eleven different issue items, eleven different

forums held around the country. We\'ve got

everybody except for one out of Washington, and

then we will address these issues. Every one of

them deals with an aspect of heritage tourism

from tourism on tribal reservations to tourism in

archeological sites that BLM owns all over the

West. How do you craft the culture and heritage

of a city like Houston or Chicago and cut that

out of smalltown America?

All of those will then come together

in New Orleans in October. We picked New Orleans

because it\'s absolute ground zero of the

destruction of heritage and cultural assets.

Other than Washington, there was no other place

that was such a target. Number two, economy down

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there, it was heritage and cultural tourism.

It\'s gone.

I\'ve led one Congressional delegation

down there and I\'ve been down there with members

of the Administration, and it is a huge job. So

we picked it because the federal preservation

response to saving those types of assets, it is

based on information forty years ago, and I will

tell you that those assets down there are being

preserved on their own right now because there\'s

no federal way to respond. And we\'ve worked with

Homeland Security and FEMA and a number of the

agencies, but we\'ve got to update it.

One of the co_chairs, by the way, one

of the issue items is going to be EDA, Economic

Development Agency, of Commerce. Many of these

issue areas, as I\'ve said, are going to impact

heritage tourism from the national parks to

defense, they own assets. BLM, it\'s just \_\_ it\'s

amazing the cultural resources that have never

been tapped in the federal inventory to build the

tourism business.

I\'ll wrap that presentation here up by

saying that the work that you all are doing is

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being supported by this type of program. Early

on, we were asked how can the administration

through this type of program help in bringing

tourists from overseas? And I think the answer

to that is create a better product and a better

visitor experience.

I\'m in the beer business, and I know

if I sell somebody a skunky Bud Light, they\'re

never going to drink another one, and the same

things about visitor experience. So this is the

first time that there\'s been a concerted effort

to marry federal assets with state owned and

local assets into an integrated cultural and

heritage program.

So your work is not being done without

the support of this Administration, and I will

tell you now almost every state now begins to

understand the benefits of preservation, but

preservation for economic development. Thank

you.

CHAIRMAN RASULO: Thank you. Questions for

John?

(No response)

CHAIRMAN RASULO: Thank you. Let me open

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up the floor for public comment if there is any

members of the public still here.

(No response)

CHAIRMAN RASULO: Okay, that\'s

comment_less. I think just for housekeeping, we

ought to at least talk about our next meeting.

Our commitment has been every other meeting in

D.C. So that pretty much says we\'ll be in

Washington next fall. I would suggest October.

We\'ll work on a specific date, but if there are

any other suggestions, I\'m happy to take them.

And, last, I just think we need a

motion to adjourn, and I\'ve been pretty committed

to ending on time. And I\'ve actually got two

minutes to spare, so if anybody has anything to

say, this is the time to do it. Okay, motion to

adjourn?

(Unanimous movement from the Board)

CHAIRMAN RASULO: Okay, thanks everybody.

(Whereupon, at 5:59 p.m. the

above meeting was adjourned)

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STATE OF ILLINOIS )

) ss:

COUNTY OF C O O K )

I, Deborah Habian, a Certified

Shorthand Reporter within and for the State of

Illinois, do hereby certify:

That the foregoing proceeding was reported

stenographically by me, was thereafter reduced to

printed transcript by me, and constitutes a true

record of the testimony given and the proceedings

had;

That the said proceeding was taken before

me at the time and place specified;

That I am not a relative or employee

of attorney or counsel, nor a relative or

employee of such attorney or counsel for any of

the parties hereto, nor interested directly or

indirectly in the outcome of this action.

IN WITNESS WHEREOF, I do hereunto set my

hand this \_\_\_\_ day of \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_, 2006.

DEBORAH HABIAN, CSR, RMR, CRR

Notary Public

CSR No. 084_022432

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