```

[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]

                   THE AMERICAN TRAVEL PROMOTION ACT

=======================================================================

                                HEARING

                               before the

                            SUBCOMMITTEE ON
                COMMERCE, TRADE, AND CONSUMER PROTECTION

                                 of the

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             SECOND SESSION

                                   on

                               H.R. 3321

                               __________

                              MAY 23, 2002

                               __________

                           Serial No. 107-103

                               __________

      Printed for the use of the Committee on Energy and Commerce

 Available via the World Wide Web: http://www.access.gpo.gov/congress/
                                 house

                               __________

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                            WASHINGTON : 2002
____________________________________________________________________________
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                    COMMITTEE ON ENERGY AND COMMERCE

               W.J. ``BILLY'' TAUZIN, Louisiana, Chairman

MICHAEL BILIRAKIS, Florida           JOHN D. DINGELL, Michigan
JOE BARTON, Texas                    HENRY A. WAXMAN, California
FRED UPTON, Michigan                 EDWARD J. MARKEY, Massachusetts
CLIFF STEARNS, Florida               RALPH M. HALL, Texas
PAUL E. GILLMOR, Ohio                RICK BOUCHER, Virginia
JAMES C. GREENWOOD, Pennsylvania     EDOLPHUS TOWNS, New York
CHRISTOPHER COX, California          FRANK PALLONE, Jr., New Jersey
NATHAN DEAL, Georgia                 SHERROD BROWN, Ohio
RICHARD BURR, North Carolina         BART GORDON, Tennessee
ED WHITFIELD, Kentucky               PETER DEUTSCH, Florida
GREG GANSKE, Iowa                    BOBBY L. RUSH, Illinois
CHARLIE NORWOOD, Georgia             ANNA G. ESHOO, California
BARBARA CUBIN, Wyoming               BART STUPAK, Michigan
JOHN SHIMKUS, Illinois               ELIOT L. ENGEL, New York
HEATHER WILSON, New Mexico           TOM SAWYER, Ohio
JOHN B. SHADEGG, Arizona             ALBERT R. WYNN, Maryland
CHARLES ``CHIP'' PICKERING,          GENE GREEN, Texas
Mississippi                          KAREN McCARTHY, Missouri
VITO FOSSELLA, New York              TED STRICKLAND, Ohio
ROY BLUNT, Missouri                  DIANA DeGETTE, Colorado
TOM DAVIS, Virginia                  THOMAS M. BARRETT, Wisconsin
ED BRYANT, Tennessee                 BILL LUTHER, Minnesota
ROBERT L. EHRLICH, Jr., Maryland     LOIS CAPPS, California
STEVE BUYER, Indiana                 MICHAEL F. DOYLE, Pennsylvania
GEORGE RADANOVICH, California        CHRISTOPHER JOHN, Louisiana
CHARLES F. BASS, New Hampshire       JANE HARMAN, California
JOSEPH R. PITTS, Pennsylvania
MARY BONO, California
GREG WALDEN, Oregon
LEE TERRY, Nebraska
ERNIE FLETCHER, Kentucky

                  David V. Marventano, Staff Director

                   James D. Barnette, General Counsel

      Reid P.F. Stuntz, Minority Staff Director and Chief Counsel

                                 ______

        Subcommittee on Commerce, Trade, and Consumer Protection

                    CLIFF STEARNS, Florida, Chairman

FRED UPTON, Michigan                 EDOLPHUS TOWNS, New York
NATHAN DEAL, Georgia                 DIANA DeGETTE, Colorado
  Vice Chairman                      LOIS CAPPS, California
ED WHITFIELD, Kentucky               MICHAEL F. DOYLE, Pennsylvania
BARBARA CUBIN, Wyoming               CHRISTOPHER JOHN, Louisiana
JOHN SHIMKUS, Illinois               JANE HARMAN, California
JOHN B. SHADEGG, Arizona             HENRY A. WAXMAN, California
ED BRYANT, Tennessee                 EDWARD J. MARKEY, Massachusetts
GEORGE RADANOVICH, California        BART GORDON, Tennessee
CHARLES F. BASS, New Hampshire       PETER DEUTSCH, Florida
JOSEPH R. PITTS, Pennsylvania        BOBBY L. RUSH, Illinois
MARY BONO, California                ANNA G. ESHOO, California
GREG WALDEN, Oregon                  JOHN D. DINGELL, Michigan,
LEE TERRY, Nebraska                    (Ex Officio)
ERNIE FLETCHER, Kentucky
W.J. ``BILLY'' TAUZIN, Louisiana
  (Ex Officio)

                                  (ii)

                            C O N T E N T S

                               __________
                                                                   Page

Testimony of:
    Farr, Hon. Sam, a Representative in Congress from the State 
      of California; accompanied by Hon. Mark Foley, a 
      Representative in Congress from the State of Florida.......     3
    Lounsberry, Fred, Senior Vice President, Sales, Universal 
      Studios Recreation Group on behalf of The Travel Industry 
      Association of America.....................................    22
    Nocera, Frank L., Executive Vice President and Chief 
      Operating Officer, VISIT FLORIDA...........................    15
    Sternberg, Michael, President, Sam & Harry's on behalf of The 
      National Restaurant Association............................    20
    Stewart, Jeffrey D., Vice President, Communications and 
      Public Affairs, Loews Hotels...............................    25
Additional material submitted for the record:
    Connors, John P., Executive Vice President for Public Policy, 
      American Hotel and Lodging Association, prepared statement 
      of.........................................................    40
    McDermott, Mark, Chair, Western States Tourism Policy 
      Council, prepared statement of.............................    41

                                 (iii)

  

 
                   THE AMERICAN TRAVEL PROMOTION ACT

                              ----------                              

                         THURSDAY, MAY 23, 2002

              House of Representatives,    
              Committee on Energy and Commerce,    
                       Subcommittee on Commerce, Trade,    
                                   and Consumer Protection,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 9:30 a.m., in 
room 2123, Rayburn House Office Building, Hon. Cliff Stearns 
(chairman) presiding.
    Members present: Representatives Stearns, Deal, Shimkus, 
Bryant, Bass, Walden, Fletcher, Towns, DeGette, Harman, and 
Eshoo.
    Staff present: Kelly Zerzan, majority counsel; Brendan 
Williams, legislative clerk; Jonathan J. Cordone, minority 
counsel; and Bruce M. Gwinn, minority professional staff.
    Mr. Stearns. Welcome to the hearing on H.R. 3321, the 
American Travel Promotion Act. We have with us today a 
distinguished panel of witnesses, and I want to extend a 
special welcome to the sponsors of the legislation, Congressman 
Mark Foley from my home State of Florida, and Congressman Sam 
Farr of California. Thank you both for taking the time to 
testify before the subcommittee, and we look forward to hearing 
from you.
    As we are on the cusp of the Memorial Day weekend, the 
holiday weekend that kicks off the summer vacation season, this 
is a most fitting time to examine H.R. 3321.
    As a member of the Florida Congressional Delegation, there 
is no question that travel and tourism dollars are of critical 
importance to the Florida economy. State officials predict the 
number of people visiting Florida in the first quarter of year 
2002 will be well below last year's level. Visit Florida, the 
State tourism marketing agency who is testifying before the 
subcommittee this morning, estimates that 18 million tourists 
visited the State in the first 3 months of 2002, a decrease of 
4.5 percent from the same period a year earlier. The impact of 
the September 11 terrorist attack was devastating to an economy 
like Florida, that depends so heavily on travel and tourism 
dollars.
    In a story that's becoming increasingly familiar, just last 
month the owners of a newly built 919 room Orlando hotel was 
forced to file bankruptcy to avoid a public auction of the 
property after they defaulted on their loan. And, this hotel is 
not alone in being unable to make their mortgage payments.
    The $957 million in delinquent loans held by the lodging 
industry in the United States during the first quarter of this 
year was the highest since record levels started being kept in 
1995. Led by hotels in the Orlando area, Florida held the 
Nation's highest delinquent loan balance in the industry, 
accounting for $177 million of the delinquent loans. Florida's 
ranking was caused primarily by Orlando area hotels which saw 
occupancy rates plummet by nearly 25 percent in October and 
November of last year, compared to the same time in the year 
2000.
    Although the tourist industry has been hit hard, the 
decline of Florida tourism has ripple effects that have spread 
well beyond just the travel industry. For instance, some 
Florida school boards are now facing teacher furloughs to ease 
a budget crisis following legislative spending cuts after the 
September 11 attacks hurt tourism tax revenues.
    In order to kick start the tourism industry across the 
country, my colleagues Representatives Foley and Farr 
introduced H.R. 3321. This bill creates a State grant program 
of $100 million, operated through the Department of Commerce so 
States can fund advertising campaigns to promote tourism. Every 
State and territory would be eligible for funds under this 
bill, and travel offices would have complete autonomy in 
spending the money as long as it is directed toward travel 
promotion advertising.
    So, I look forward to hearing from our sponsors and our 
witnesses today, who represent all facets of the travel and 
tourism industry, and, of course, I thank you for appearing and 
I call on the distinguished ranking member from New York, Mr. 
Towns, for his opening statement.
    Mr. Towns. Thank you very much, Mr. Chairman.
    I would like to welcome our witnesses today, especially 
Jeffrey Stewart from Loews Hotels Corporation in New York City, 
and my colleague, Congressman Farr from California, and, of 
course, Congressman Foley from the State of Florida.
    In the wake of all that has happened to our country, and in 
my home State New York since last September, I'm pleased that 
both Mr. Farr and Mr. Foley have come together to draft a piece 
of common-sense legislation. It is my hope that we can mark 
this bill up as soon as possible and get it over to the 
Appropriations Committee, so that this $100 million can be used 
by States to promote tourism within their borders.
    I applaud the efforts of the elected officials on the State 
and local level who have worked hard to assist the companies 
that are having problems. I also want to express my sympathy to 
the many workers who have lost their jobs as a result of the 
tragedy. We want everyone to start traveling again, and, of 
course, New York should be your first stop or spot that you 
visit. I do not want to be greedy, so go to Florida, and also 
New Orleans, and California too, it will not only be an 
enjoyable time for you and your family, but will help those who 
are in need.
    Again, I thank you, Mr. Chairman, for holding this hearing, 
and I look forward to hearing our witnesses, because I think 
that this is a very important piece of legislation, that we 
need to get people traveling again, and we need to people out 
of their homes, and the way to do it is to have an incentive 
and, of course, this bill will provide that incentive.
    I yield back.
    Mr. Stearns. I thank my colleague.
    Mr. Shimkus?
    Mr. Shimkus. Thank you, Mr. Chairman.
    As Mr. Towns knows, I lived 4 years in New York, and spent 
many times in the city, but I met the love of my life in 
beautiful Monterey, California, which is the home of our 
colleague and friend, Sam Farr, and so I may take issue with 
some of the comments you have made. Neither of those is as 
beautiful as the 20th District of Illinois, though, so we would 
invite you all to come visit us there in the corn and soybean 
fields.
    Much of the Nation has been hurt because of September 11. 
We know there's been and the economy is still low to recover. 
It's important to look at all avenues that we can be helpful 
for economic growth and development. Tourism is a major part or 
really anybody's district these days, if they want to diversify 
their economy tourism is key.
    So, I think this hearing is important, and I look forward 
to listening to our colleagues and the second panel, and I 
yield back my time, Mr. Chairman.
    Mr. Stearns. I thank my colleague.
    [Additional statement submitted for the record follows:]

 Prepared Statement of Hon. W.J. ``Billy'' Tauzin, Chairman, Committee 
                         on Energy and Commerce

    Thank you, Chairman Stearns, for calling this hearing today on H.R. 
3321, the ``American Travel Promotion Act.'' This hearing is 
particularly timely as we head into the summer travel season and 
families begin to make their vacation plans.
    My home state of Louisiana, like many other states that depend on 
tourism dollars, has been hit by the tragic events of September 11th, 
as well as the resulting economic downturn in this country. The boat 
cruises, swamp tours, riverboat gaming, Mardi Gras, and Jazz Fest 
continue to lure travelers to the Bayou State, but there has been a 
noticeable downturn in the number of people who are willing to make the 
trip since the terrorist attacks.
    Last October, in order to entice visitors back to the state, the 
Louisiana Office of Tourism began its ``New Louisiana Purchase Value 
Package Program'' advertising campaign. The ads cleverly depict 
Louisiana as a great value, ever since its purchase from France--for 
less than 3 cents per acre--in 1803.
    With more people traveling by car instead of air, the ``New 
Louisiana Purchase Value Package Program'' campaign targets Louisiana's 
neighboring states--Texas, Arkansas, Mississippi and Georgia. Louisiana 
dedicated more than a million dollars for this campaign, which included 
TV, newspaper and Internet media to convince potential visitors that 
Louisiana's attractions are open and ready to receive visitors.
    It is precisely travel promotion campaigns like this that H.R. 3321 
is designed to enable. Certainly, for states like mine, which depend on 
the dollars that flow from tourists, H.R. 3321 will allow states to 
undertake the media campaigns necessary to get their tourism industries 
back on track--and to flourish.
    I look forward to hearing from our witnesses today, and in 
particular, I want to thank the sponsors of the legislation, 
Congressman Mark Foley (of Florida) and Congressman Sam Farr (of 
California) for coming before the Subcommittee this morning. Thank you 
gentlemen, and thank you, Mr. Chairman, for bringing H.R. 3321 to the 
attention of the Committee.

    Mr. Stearns. Mr. Farr, we'll start with you. Appreciate 
your opening statement.

 STATEMENTS OF HON. SAM FARR, A REPRESENTATIVE IN CONGRESS FROM 
THE STATE OF CALIFORNIA; AND HON. MARK FOLEY, A REPRESENTATIVE 
             IN CONGRESS FROM THE STATE OF FLORIDA

    Mr. Farr. I thank the committee for having this hearing.
    I've been in Congress just about 10 years now, and this is 
the first time that a committee has really focused on trying to 
help out the tourism industry, which I think is the root of all 
economic development in the United States, because we are 
talking about restaurants, we are talking about movie houses, 
we are talking about the things that are on Main Street of 
almost every town in the United States, as well as hotels, and 
parks, and travel agents, and bus tour operators, and bed and 
breakfasts, and so on.
    I would also like to commend this committee, because many 
of your members are members of the Tourism Caucus, of which 
Mark Foley and myself are co-chairs, and we've been a really 
great bipartisan working group trying to focus in on the 
attention that we need to give to being a partner with State 
and local governments.
    I think this legislation is critical to the travel and 
tourism industry. You all know that it really is America's 
largest industry, it employs 19 million people in each and 
every congressional district in the United States has some of 
these employees and the territories of this country. It's 
really the backbone of our communities, it's the mom and pop 
industries, and that industry was, because travel is so 
dependent on it, whether it's automobile travel, or bus travel, 
train travel, or airline travel, September 11 just devastated 
it. People lost confidence in wanting to really go out and 
about, and particularly that confidence was lost in the safety 
of air travel. And, therefore, the ability of people to 
participate in the tourism industry has really been hurt.
    The first responders to the cause really were State and 
local governments, and many which in this sort of recession era 
have had a tough time coming up with enough resources. 
California is a State of 33 million people, and long ago the 
State realized that if they could just 33 million people to get 
out of their house and move about 40 miles a day, and that's 
what the definition of a tourist is, somebody who is 40 miles 
away from home, then dependent on local restaurants or 
dependent on another gas station or whatever, that you can 
really stimulate the economy.
    So, California began an aggressively marketed intrastate 
tourism promotion. It employs about 1.1 million people in the 
travel and tourism industry, and it launched a $6 million ad 
campaign using State funds, and California got Jack Nicholson, 
Clint Eastwood, and Robin Williams, to help participate in 
these promotions ads.
    New York City, Mr. Towns' hometown, did the public/private 
partnership. They produced ads featuring the New York Miracle, 
and they started with Mayor Giuliani, and Robert Deniro, and 
Billy Crystal.
    The travel industry of America raised more than $15 million 
to produce an ad that I think we all saw, which featured 
President Bush, and I understand that that ad was seen by more 
than two thirds of American consumers, and that ad was 
essentially to bring confidence back to people to use the 
airlines.
    I'd also like to recognize Fred Lounsberry, who is the 
National Chair of the Travel and Tourism Association, and I 
know he's going to be testifying on this bill on the industry's 
behalf. He's done a tremendous job of bringing attention and 
need to it.
    But now, it's been more than 8 months since the attacks. 
State and local governments, as well as private industry, have, 
essentially, come together to kind of aid the devastated 
industry, but it needs more, and that's what I'd like to 
specifically focus on what this bill before you does.
    The American Travel and Promotion Act, otherwise known as 
the ATPA, would provide a much needed infusion of Federal 
assistance to States and territories by creating a dollar-for-
dollar matching grant program. The legislation establishes a 
formula whereby State and travel tourism offices can apply for 
matching funds based on the amount of money they spent on 
tourism promotion in the year 2002. That way, it won't take, 
you know, those States that just put in new money wouldn't be 
sort of at an advantage over other States. So, we go back to 
the 2002 formula, and that's where we actually have data from 
that year anyway.
    In addition to that, the bill establishes a $100,000 floor, 
so that States that do not have large promotion budgets can 
access these funds. After 9 months, if there's any unused funds 
in this account, they would be returned to the Treasury, so 
this is just, you know, a one-time stop gap.
    The American Travel Promotion Act is co-sponsored by 63 of 
your colleagues, but it impacts all 435 congressional 
districts. We believe it's a balanced, fair and equitable 
response to the financial distress that many of our 
constituents who are employed in the travel and tourism 
industry are experiencing as a result of the horrific events of 
September 11.
    We have, essentially, bailed out the airline industry with 
the help of the re-insurance, now it's time, I think, to offer 
a helping hand, not a handout, but a helping hand, to many of 
our segments of the travel and tourism industry, and I would 
encourage you to favorably report out the bill.
    I might add, too, that a lot of our colleagues are from 
rural States, and I'm from a rural part of California and it's 
all well known for its dramatic coastline and places like 
Carmel, and Pebble Beach, and Monterey, and Big Sur Coast, but 
I also represent the Salinas Valley, and it's an area where all 
your produce comes from. And, what's happening in the 
agricultural area is there's a real interest in starting this 
what they call agricultural tourism, of really getting people 
into Rural America, of recapturing our history, or interpreting 
it better, of showing people who have lived in cities actually 
how our crops are harvested, what the process goes through, 
making it really exciting, and offering, you know, the old dude 
ranches are now having people just come down and live with 
families that are in farming. And, that kind of activity needs 
always a little promotion. It's probably the least-it gets the 
least attention, but probably has the greatest impact on those 
communities in the rural areas.
    So, bills like this will help stimulate getting money to 
where the problem is, and I really think it's necessary that 
this Congress get this bill to the President.
    Thank you very, very much.
    [The prepared statement of Hon. Sam Farr follows:]

Prepared Statement of Hon. Sam Farr, a Representative in Congress from 
                        the State of California

    Chairman Stearns and Ranking Member Towns: As co-chairman of the 
Travel and Tourism Caucus I would like to recognize Representatives 
Bono, Deal, Cubin, Deutsch, Doyle, Pitts and Waxman as members of this 
subcommittee who are also members of our caucus.
    Thank you for holding a hearing on the American Travel Promotion 
Act. Passage of this legislation is critical to the travel and tourism 
industry, which employs more than 19 million people in each and every 
congressional district in the United States and the Territories. The 
jobs I am referencing here are those that make up the backbone of our 
communities--the ``mom and pop'' businesses in all our districts like 
the car rental companies, local historic and cultural museums, parks 
and recreation facilities, local travel agents, bus and tour operators, 
and even the yearly senior high school trips.
    The travel and tourism industry was devastated by the September 
11th attacks. The loss of confidence in the safety of airline travel 
had a tsunami effect not only the airline industry to which the 
Congress provided assistance, but also each and every sector of the 
travel and tourism industry. With an industry that generates $100 
billion in tax revenue for local, state and federal governments, the 
impact of the terrorism attacks on New York, Washington, D.C. and 
Pennsylvania was felt across the nation.
    In an effort to stimulate travel, a number of states begin to 
aggressively market intra-state tourism. In my home state of 
California, which employs more than 1.1 million people in the travel 
and tourism industry, Governor Davis launched a $6 million ad campaign 
using state funds to promote travel among Californians within the 
state. As the nation's top vacation destination, the impact of 
declining travel and tourism revenues was a significant loss to the 
state coffers. Restoring the confidence of Californians to travel 
within California is the cornerstone of a modest upswing in increased 
tourism revenue for the state.
    In New York a public-private partnership produced ads featuring the 
``New York Miracle'' and starred Mayor Giuliani, Robert DeNiro and 
Billy Crystal, to name a few. The Travel Industry Association of 
American produced an ad featuring President Bush encouraging Americans 
to travel. The industry raised more than $15 million to produce and air 
that ad that was seen by more than two-thirds of American consumers. 
Fred Lounsberry, the National Chair of the Travel Industry Association 
is to be commended for his exceptional work on behalf of the industry.
    It has been more than eight months since the attacks. State and 
local governments as well as private industry have come together to aid 
an industry that was severely damaged by the terrorist attacks It is 
time for the federal government to help the nation's third largest 
retail sales industry recover.
    The American Travel Promotion Act (ATPA) would provide a much 
needed infusion of federal assistance to states and territories by 
creating a dollar for dollar matching grant program. H.R. 3321 
establishes a formula whereby State travel and tourism offices can 
apply for matching funds based on the amount of money they spent on 
tourism promotion in calendar year 2000. This would allow states like 
Hawaii and California to receive an amount equal to the percentage of 
what they spent on travel promotion compared to what was spent 
nationally. In addition, the bill establishes a $100,000 floor so that 
states that do not have large promotion budgets can access these funds.
    Mr. Chairman, the American Travel Promotion Act is co-sponsored by 
63 of our colleagues but will impact the districts of all 435. H.R. 
3321 is a balanced, fair, and equitable response to the financial 
distress that many of our constituents who are employed by the travel 
and tourism industry are experiencing as a result of the horrific 
events of September 11. We have bailed out the airline industry. Now 
it's time to offer a helping hand, not a handout, to the many other 
segments of the travel and tourism industry. I urge this subcommittee 
to favorably report out this bill.

    Mr. Stearns. I thank you.
    At this point, I think we've called our colleague, Mr. 
Foley, but I think we'll just open for questions.
    Mr. Farr, I just had a few here that you could help 
explain. You know, I support your bill, and I think it's a 
great idea. Have you talked to the Department of Commerce at 
all about this bill?
    Mr. Farr. Yes.
    Mr. Stearns. And, what was their reaction?
    Mr. Farr. They are supportive of us. You know, the 
Department of Commerce oversees the responsibility of travel 
and tourism. This is-what we were trying to with the Economic 
Stimulus Package, this is one of the areas that was always up 
there on the top of the list, to try to get money in the 
Economic Stimulus Package. However, I think it was a decision 
of the Chair of the Ways and Means that it shouldn't be in that 
package at that time. So, we are going through the bill process 
to get there.
    Mr. Stearns. A lot of people will say, well, after 9/11 the 
tourist industry is coming back. A lot of States have 
instituted it, and so it's making a comeback, so financial 
assistant isn't needed. What would you reply to that?
    Mr. Farr. Well, I disagree. I don't think that we do very 
much public promotion of tourism, and yet it's the biggest 
industry in America. There isn't another country, competitive 
country, I'm going to Spain over the break, Spain is the No. 1 
most country visited now in travel, and it just spends a lot of 
money, of Federal money, advertising Spain. You see these ads 
for Mexico and the islands, you don't see those kinds of ads 
for the United States.
    What we try to do with public money is, we think, 
obviously, destination resorts have their own resources to do 
that, and the private sector can do a good job, but it's that 
kind of generic advertising that goes a long way, of just 
showing people that there are opportunities here at home.
    Americans, you know, and I have a stronger feeling about 
it, I really believe that if you talk to people who come from 
other lands, they don't come here to meet their congressmen, 
they come here to see the majestic beauty of our country, 
including our urban cities, and our rural, and our beautiful 
national parks. The land speaks for America, and it's such a 
diverse continent that it's so exciting and dramatic that 
people come here, but while they are here they don't just shop 
with their cameras and their pocketbooks, they shop with their 
eyes about how people do things.
    I live in Carmel, California. An example of that, as the 
Mayor told me, it's kind of shocking, he said that the No. 1 
request that the city of Carmel gets from tourists is requests 
for a copy of the zoning code. Now, that points out, you know, 
they come to this town, it's a cute little town, and they look 
around and they sort of say, well, why can't we do things like 
this in our town, and so I think that really if you are going 
to sell the American culture, and the American spirit, and the 
American people, we've got to promote it. And the only way we 
really can promote it is in trying to get people out and about, 
and this is the way we do it.
    I think it's long overdue. I mean, we ought to have a 
program, you know, we had a tourism promotion program for a 
while that was lousy, because it wasn't focused. This way, in 
this bill, we don't go out and set up a Federal agency to do 
the advertising, we rely on those who are really knowing the 
niche markets, and know how to get advertising in, and they 
can't use those advertising dollars to advertise for private 
gain. So, it will be generic advertising for New York, or 
generic advertising for Florida, or specific parts of Florida, 
or California, or any of the other States here.
    Mr. Stearns. So, you are saying that if they went to New 
York they couldn't use it all for New York City, huh?
    Mr. Farr. Well, it would be for the State of New York and 
probably you have in New York probably a State tourism 
promotion program, and many of your local chambers of 
commerce----
    Mr. Stearns. But, the State would decide where it would go, 
or is it in the bill that it's determined, as you say, generic 
for all the state, or could the State decide based upon 
population and tourism it could be accented toward one 
particular area of the State or not.
    Mr. Farr. Well, as I understand the bill, they can be 
applying for the Federal match monies. They would have to put 
up their local match, and it's competitive. And, you could have 
probably both the State of New York and the city of New York 
apply for it.
    Mr. Stearns. All right, that takes care of my questions.
    Mr. Towns?
    Mr. Towns. Thank you very much, Mr. Chairman.
    Let me just say right up front, you know, I support the 
legislation, but I'd like to know, what do I say to the people 
who will say to me, look, this should be better left up to the 
States rather than for you guys to be involved in it, what do I 
say to them?
    Mr. Farr. Well, it is left up to the States. They have been 
doing this long before the Federal Government has ever offered 
to be of assistance, but what we are trying to do, and why it's 
important that we do this with Federal money, is we are trying 
to really get Americans to travel in America. I think that 
there's a feeling right now that it's probably the safest place 
to travel, but there's got to be some encouragement. This is a 
Federal responsibility, to get people out and about throughout 
the 50 States, and to get them to our territories that we are 
responsible for.
    I don't think any one state, any one community, can do 
that. You can't do that for the whole America. This really 
gets, you know, I think, America focused on America, and that 
is not the responsibility of New York City or the State of New 
York.
    Mr. Towns. How do you arrive at the figure of $100 million?
    Mr. Farr. Pardon me?
    Mr. Towns. How did you arrive at the figure $100 million?
    Mr. Farr. Well, I asked my fiscal conservatives to the left 
how much money do you think it would take to stimulate this.
    Mr. Shimkus. Good answer.
    Mr. Towns. Okay, thank you very much.
    I yield back on that note, Mr. Chairman.
    Mr. Stearns. Mr. Shimkus has just stepped out.
    Mr. Deal?
    Mr. Deal. In calculating the dollars that are spent under 
the charts that we've been provided, is that just money that is 
allocated through a state's budget for generic advertising of 
tourism within their state? I assume it does not count like 
local chambers of commerce that may have travel and tourism 
budgets, and it does not count private entities advertising for 
tourists, it's just what the State spends, is that the way it's 
calculated?
    Mr. Farr. The only figures I think we have are the figures 
that are offered by State offices of tourism, and normally what 
happens, I mean, did you know the city of Vienna spends more 
money than almost anyplace in the country just to advertise 
anyplace in this country.
    What we have are figures of public money, not private 
money, but in most cases they are encouraged to match. What we 
have done in California, much like we have, you may be familiar 
with the agriculture marketing programs----
    Mr. Deal. Right.
    Mr. Farr. [continuing] we have created a tourism marketing 
program in California, where we assess all of the tourism 
industry, that whole list that I read earlier of all the people 
that participate, and they put up money of their own, they 
assess themselves. And then, the State of California 
appropriates about $7 million a year to be matched with the 
private sector amount, and it's all generic advertising. It 
does not go to a specific resort of specific brand name.
    Mr. Deal. But, when you calculate what your State spent, 
you don't calculate the amount that was collected like at the 
local level through a hotel/motel tax and allocate it, it's 
purely what the State itself appropriates.
    Mr. Farr. This had to be an expenditure by the state, not 
through their agents, or subsidiaries, or private concerns.
    Mr. Deal. That's what I want to be sure about.
    Thank you.
    Mr. Stearns. I want to welcome my colleague from Florida, 
and we are just going with questions.
    Ms. Eshoo of California?
    Ms. Eshoo. Good morning, Mr. Chairman, and good morning, 
everyone. I want to welcome my wonderful colleague here this 
morning to talk about their bill, and thank you for the 
hearing.
    Let me say something about my colleague from California, 
Sam Far, and I could go well beyond the time allotted to me 
talking about him, but let me just say to my colleagues that 
the issue of tourism, and the promotion of it as part of our 
national economy and the well-being of our States and our 
communities, is something that he has worked on all of his 
public service life. This is not something that he fell upon or 
came upon since the tragedy that befell our country. He has 
really worked on and knows, I think if there's anyone in the 
Congress that knows anything about this issue, Sam Farr knows 
the most.
    And so, I think that as we review what our colleagues are 
offering to us, that we not think of it, sometimes I think we 
think of tourism as something that's frivolous, it's not.
    It's something that we have to pay special attention to, 
one of the first things the Congress did after our Nation was 
attacked was to do something for the airlines. We recognized 
that that is an integral part of our Nation's economy.
    So, I think that this needs to be seriously considered, and 
that we work with our colleagues from this committee, to do 
something very important for our country. We know that we take 
votes every year in our Nation's budget to help promote our 
Nation's products abroad. This is something that's going to 
help our States and our country rebuild and give our people the 
confidence that they need, and I do think that people are 
paying attention to things that are closer to home.
    As I travel abroad, I always talk to my friends, and my 
colleagues, and my family about all of the places in our own 
country that I haven't traveled to, enjoyed, and seen, so I 
think that this is a very important effort that our colleagues 
have brought forward to us, and I want to thank them for that.
    I have a question about, now as we say $100 million, we all 
wish we had that in our checking accounts, but when you think 
of how many States we have, and you apportion these dollars 
out, that's not a lot of money for each state. California and 
Florida, if you took the population of those two States that is 
overwhelming. In California, it's 34-35 million people, and I 
think you've all either traveled to or want to travel to both 
our colleagues' States.
    Sam Farr represents one of the great treasure areas of our 
Nation. People come from all over the world to Carmel and to 
Monterey. So, we have a lot to brag about to our people, and I 
think these dollars would be very well used in promoting what 
America can show off to its own people.
    In 1995, the Congress, I believe, eliminated the Travel and 
Tourism Office in the Department of Commerce. Is that still the 
case? Do we know?
    Mr. Foley. I'm sorry, we were just sharing one piece of the 
legislation.
    Ms. Eshoo. Oh, that's all right.
    Mr. Foley. Please----
    Ms. Eshoo. I know, you were saying to each other what 
wonderful things I was saying.
    Mr. Foley. Well, no question, and we were thanking you for 
the tourist promotion acknowledgment of our state. We like to 
kid, he represents Pebble Beach, I Palm Beach, so we have great 
destinations.
    Ms. Eshoo. That's quite a set of book ends, that's 
terrific.
    No, I was asking or commenting that it was my understanding 
that the Travel and Tourism Office in the Department of 
Commerce was eliminated by the Congress in 1995. Is that still 
the case?
    Mr. Foley. That is the case. It no longer exists.
    Ms. Eshoo. I'd also like to note that this effort 
represents a 9-month program.
    Mr. Foley. Correct.
    Ms. Eshoo. So, this is not something that we would set into 
motion and that it would continue out ad infinitum, and that we 
could review with the States and the appropriate offices what 
has come about as a result of our national effort.
    I don't have any other questions, but I'd like to thank my 
colleagues for doing the work that they are doing. It's great 
to have you before us, and if you'd like to make some 
additional comments----
    Mr. Foley. I did want to comment, because Sam and I have 
been very careful, we did not want to embark on a program 
without some guidelines. And, we, basically, used the state's 
prior spending to ensure, No. 1, that they had a market 
promotion program in place. We also provided, though, in this 
bill at least a base of $100,000 for States that may not have 
had a program in place. We don't want----
    Ms. Eshoo. So, it encourages them.
    Mr. Foley. [continuing] We don't want to discriminate 
against States that may not have, but we also recognize the 
efficiency of those States that may have had in place, prior to 
September 11, an active marketing program.
    This is less than we spent on market access programs for 
agricultural goods and services around the world. One thing for 
certain, the Federal Government's investment in this $100 
million account will reap substantial benefits to the Treasury. 
One thing we know for certain, tourism not only has dropped 
off, but so have rental cars, restaurants, things that are 
ancillary to the travel and tourism industry. If we are able to 
ratchet up those opportunities, then the payroll dollars will 
flow and we will see more dollars both local, State and Federal 
coffers.
    Ms. Eshoo. Well, I think it's a smart effort, because it 
leverages dollars. It optimizes what's already there. So, we 
are not starting from scratch, it's not an unending program, it 
has a 9-month parentheses around it, and it builds on what is 
already in our States, and I think that it's an important 
economic tool that we are hearing about this morning.
    So, thank you, Mr. Chairman, and I thank my colleagues, and 
I'm proud of you, Sam.
    Mr. Stearns. I thank my colleague.
    Just to answer further her question about the U.S. Travel 
and Tourist Administration, it was closed. The office was 
reopened within the Trade Development. It is focused on policy 
planning and research. The office had its own Deputy Assistant 
Secretary, it does not, all of its overseas employees were put 
into the Foreign Commercial Service, just for information.
    Mr. Shimkus?
    Mr. Shimkus. I'd like to welcome Mr. Foley for attending 
the hearing, and I have no questions.
    I yield back.
    Mr. Stearns. Okay.
    Ms. Harman?
    Ms. Harman. Thank you, Mr. Chairman.
    I want to tell our witnesses that I go to Palm Beach and 
Pebble Beach as much as I can, so I am doing my part.
    Mr. Stearns. Thank you.
    Ms. Harman. But, I also think that they are doing their 
part. I have held off on supporting this legislation, not 
because I don't support its thrust, but because I was worried 
about additional spending.
    Having heard the debate and listened to the significant 
comments of our colleague, Ms. Eshoo, I think this is worth 
supporting, and I want to announce that I support the 
legislation.
    I also support the Market Access Program legislation for 
similar reasons. I represent LAX and the communities around 
LAX, and since 9/11 the place has been absolutely devastated. I 
understand that there are at least 41,000 people out of work, 
hotels and restaurants still see only a fraction of the 
business they did prior to the tragedy. Air traffic is down 12 
percent. Overnights at hotels near LAX have only returned to 
half of their pre 9/11 levels, and in addition to all that the 
decline in the commercial satellite industry has resulted in 
thousands of layoffs by aerospace companies, all of which are 
located in the area.
    So, I think that many communities around the country are in 
the same shape as mine, and we don't have Palm Beach or Pebble 
Beach, and a 9-month program, and the signal that it sends, is 
a very smart idea, and I want to thank your witnesses and thank 
you for holding the hearing.
    Mr. Stearns. I thank the gentlelady.
    Mr. Bass, the gentleman from New Hampshire.
    Mr. Bass. Thank you very much, Mr. Chairman, and I can't go 
through a hearing on tourism without bringing attention, of 
course, to there is a Pebble Beach and Palm Beach, but there's 
also Hampton Beach and Weir's Beach as well which need adequate 
recognition.
    I also want to mention, if I might, there was a story this 
morning on NPR about the Mountainview Grand Hotel in the North 
Country that was renovated after having been essentially 
abandoned for a couple of decades, opened yesterday, a $20 
million investment. From the Mountainview Hotel you can see 57 
mountains, which is fairly extraordinary.
    I want to commend the sponsors for this action. I certainly 
support the bill.
    I have one question. Many States spend money on promoting 
tourism, and they also, some of them at least, spend money 
trying to attract tourism from abroad. If you have a bill that 
is a formula grant for States, does this not just provide money 
for States to compete against one another versus possibly 
having a program whereby States were encouraged to attract 
tourism from other markets outside the U.S.?
    Mr. Foley. We didn't set a parameter for that, because we 
think it's important to get people to travel no matter where 
they are coming from, including internal destinations. So, in a 
State like New Hampshire, where I will be this weekend at Lake 
Winnipesaukee would allow, and, in fact, invite them to compete 
in the global market, to attract people from Europe and other 
destinations.
    Europe has been very, very creative, as have other 
countries, in trying to lure our tourists across the pond to 
visit their countries. That's why we wanted to provide this 
same opportunity in the reverse direction.
    It would be important to note as well that after September 
11 we found a lot of people now more interested in traveling 
domestically, finding locations within the United States they 
hadn't considered before, now finding themselves more 
comfortable traveling within the continental United States.
    Mr. Farr. You'll also find that State and local tourism 
promotion groups target certain areas. For example, northern 
California targets Canada during the winter months. Usually, 
you try to promote tourism at your opportune times, and 
sometimes that's at the off season, so I don't think you are 
really robbing Peter to pay Paul, stealing tourists from other 
States. People are going to travel, the question is, are they 
going to travel abroad or are they going to travel 
domestically, and if they travel domestically, or if they are 
not even going to travel very far, is there opportunities here 
at home?
    As I say, most States find that the best advantage of 
trying to get people out and about is in their own state.
    Mr. Bass. I thought you were going to tell me you were 
going to be in New Hampshire this weekend.
    Thank you very much, Mr. Chairman.
    Mr. Stearns. I thank my colleague.
    Mr. Farr. I'll fly over New Hampshire.
    Mr. Stearns. Ms. DeGette.
    Ms. DeGette. Thank you, Mr. Chairman.
    I'd like to add my words of congratulations to the sponsors 
of this legislation, which I have now cosponsored. It's very 
important to many States, including my State of Colorado, of 
course.
    I'd like to ask unanimous consent to put my opening 
statement in the record, Mr. Chairman.
    Mr. Stearns. By unanimous consent, so ordered.
    Ms. DeGette. And, just to make one point, which is that in 
the 1990's, facing economic downturns, Colorado eliminated its 
tourism office. If you can imagine that. And, they thought, 
well, it's Colorado, everybody will just come here because it's 
Colorado. And, what they found, after they actually stopped 
spending money directly through the government to promote 
tourism, tourism, not mysteriously, dropped down.
    So, in 2000 Colorado reestablished its Office of Tourism, 
and is now spending State funds again. Because, of course, we 
now realize how important it is for us to attract tourism.
    And so, I see efforts like this legislation along the same 
lines, to have the U.S. Congress say let's promote domestic 
tourism all around the country.
    And, just to make a little pitch, I myself will not be in 
New Hampshire this weekend. I'll be in the beautiful State of 
Colorado. We have 58 mountains over 14,000 feet; we have 222 
State wildlife areas, and many, many wonderful opportunities in 
the summer, as well the winter. So, I would invite the sponsors 
and the rest of the committee to come share those summer 
opportunities with us, and I yield back the balance of my time.
    Mr. Stearns. I thank the gentlelady, and we will recess 
just to vote.
    Mr. Foley, I welcome and invite you to offer your opening 
statement as part of the record.
    Mr. Foley. Yes, I will. Thank you very much, Mr. Chairman.
    Mr. Stearns. By unanimous consent, so ordered.
    [The prepared statement of Hon. Mark Foley follows:]

  Prepared Statement of Hon. Mark Foley, a Representative in Congress 
                       from the State of Florida

    Mr. Chairman and members of the committee, I would like to thank 
you for holding a hearing on the American Travel Promotion Act, HR 
3321.
    It is easy to equate tourism with Florida or California, but travel 
and tourism affects every area with an airport, hotel, restaurant or 
highway--in short, virtually every district represented in Congress.
    In the wake of September 11th, Congressman Sam Farr and I, as co-
chairs of the Congressional Travel and Tourism Caucus, began meeting 
with the various segments of the Travel and Tourism Industry to 
evaluate the impact of the terrorist attacks on the second largest 
industry in the United States.
    I will leave the details of the impact of September 11th to the 
panels that follow me today. But I will say the result has had a 
profound impact on states whose economies rely heavily on tourism like 
my own state of Florida.
    From the many proposals that were suggested by each of the groups, 
the one constant message was that more advertising was needed to 
communicate with the traveling public.
    This posed an interesting question: How much money would it 
actaully take to have a true impact nationwide on the state of travel 
and tourism.
    My office contacted an international advertising firm with an 
office here in Washington and we asked them that exact question.
    The product of the information they returned to my office became 
the basis for the American Travel Promotion.
    We worked with the many segments of the travel and tourism industry 
to craft this legislation and as a result we have bill that we feel is 
both effective and efficient--and at very little relative cost to the 
government for the impact it will have.
    The American Travel Promotion Act would provide $100 million for a 
50/50 grant program to state and territory travel and tourism offices 
to promote travel and tourism through advertising.
    The legislation establishes a formula where state and the territory 
travel and tourism offices would be eligible for funding based on the 
amount of money spent on advertising in 2000--a percentage of the total 
national travel and tourism advertising expenditures.
    For example: Florida spent $10 million in 2000 on advertising out 
of $168 million dollars spent nationally, or approximately 6 percent.
    They would then be eligible for 6 percent of the $100 million--or 
$6 million.
    This formula, administered by the Commerce Department, would ensure 
that every state and territory would know exactly how much money they 
would be eligible for without having to compete with other states for 
the funding.
    States and territories that do not spend as much as Florida or 
Hawaii would be eligible for a base amount of $100,000.
    This ``floor'' would ensure that every state and territory would 
have access to funds, regardless of their relative percentage to 
national expenditures on travel promotion advertising.
    As the legislation is drafted, the program would be open for 9 
months, beginning on the day of enactment with all excess funds 
returning to the Treasury after that period.
    This program is meant to be a shot in the arm for travel and 
tourism, not an entitlement program.
    State and territory travel and tourism offices would have complete 
autonomy in spending the money as long as it was directed toward travel 
promotion advertising as defined in the legislation.
    The 63 copsonsors and the many organizations that have endorsed 
this legislation--including the Travel Industries of America, Travel 
Business Roundtable, Restaurant Association, numerous individuals 
states including Florida and Nevada, the National Tour Association and 
the Southern Governors' Association to name a few--all believe this is 
a viable and important way to assist the Industry in getting back on 
its feet.
    Again, thank you for holding a hearing today and I urge your quick 
action on this matter.
              the bipartisan american travel promotion act
Solution:
 ATPA would provide $100 million for a 50/50 grant program to 
        state and territory travel and tourism offices to promote 
        travel and tourism through advertising.
 This legislation establishes a formula where state and the 
        territory travel and tourism offices would be eligible for 
        funding based on the amount of money spent on advertising in 
        2000 (a percentage of the total national travel and tourism 
        advertising expenditures). For example: Hawaii spent $12 
        million in 2000 on advertising out of $168 million dollars 
        spent nationally, or 7 percent. They would then be eligible for 
        7 percent of $100 million or $7 million.
 Every state and territory would be eligible for a base amount 
        of $100,000. This ``floor'' would ensure every state and 
        territory would have access to funds, regardless of their 
        relative percentage to national expenditures on travel 
        promotion advertising.
 The program would be open for 9 months, beginning on the day 
        of enactment with all excess funds returning to the Treasury 
        after that period.
 The program would be administered through the Department of 
        Commerce.
 State and territory travel and tourism offices would have 
        complete autonomy in spending the money as long as it was 
        directed towards travel promotion advertising as defined in the 
        legislation.
Problem:
    The September 11 attacks, combined with an already weak economy, 
hit the travel and tourism industry particularly hard. In the fourth 
quarter of 2001, forecasting predicts a 12 percent decrease in business 
travel and a 9 percent drop in pleasure travel, compared to the same 
period in 2000.
    In 2000, the U.S. travel industry received $584.3 billion, 
including international passenger fares, from domestic and 
international travelers. These travel expenditures, in turn, generated 
7.8 million jobs for Americans, with $173.7 billion in payroll income, 
and $100 billion tax revenues for federal state and local government.
    Projections forsee a $43 billion loss in spending by domestic and 
international travelers during 2001.
    Total domestic travel volume by Americans is expected to decrease 
3.5 percent and total inbound arrivals are projected to decline nearly 
13 percent for fullyear 2001.
    Total domestic and international travelgenerated employment is 
expected to show a dramatic decline in 2001. According to recent 
reports, 453,500 jobs directly related to travel and tourism will be 
lost this year, down 5.6 percent from 2000. An additional 74,000 jobs 
will be cut in 2002 for a twoyear total of 527,400 jobs lost from 2000 
levels.

Source: Travel Industry Association of America

    Mr. Stearns. And, Mr. Farr, I want to thank you very much, 
both of you, for coming, for a great bill.
    The committee will recess until we vote, and we'll come 
back and start with the first panel.
    [Brief recess.]
    Mr. Stearns. We are set to reconvene, and we'll have our 
second panel, and we appreciate all of them waiting, and if we 
can just have someone close the door there that would be 
helpful.
    We have Frank Nocera, Executive Vice President and Chief 
Operating Officer of VISIT FLORIDA, and we have Michael 
Sternberg, President, Sam & Harry's in Vienna, Virginia, on 
behalf of the National Restaurant Association. We have Mr. Fred 
Lounsberry, Senior Vice President, Sales, Universal Studios 
Recreation Group, on behalf of the Travel Industry Association 
of America, and Mr. Jeffrey Stewart, Vice President, 
Communications & Public Affairs, Loews Hotels, in New York 
City. Welcome, all of you, and we would like your opening 
statement, and we'll start, Mr. Nocera, we'll start with you.

  STATEMENTS OF FRANK L. NOCERA, EXECUTIVE VICE PRESIDENT AND 
  CHIEF OPERATING OFFICER, VISIT FLORIDA; MICHAEL STERNBERG, 
 PRESIDENT, SAM & HARRY'S ON BEHALF OF THE NATIONAL RESTAURANT 
  ASSOCIATION; FRED LOUNSBERRY, SENIOR VICE PRESIDENT, SALES, 
  UNIVERSAL STUDIOS RECREATION GROUP ON BEHALF OF THE TRAVEL 
 INDUSTRY ASSOCIATION OF AMERICA; AND JEFFREY D. STEWART, VICE 
   PRESIDENT, COMMUNICATIONS AND PUBLIC AFFAIRS, LOEWS HOTELS

    Mr. Nocera. Thank you, Chairman Stearns, and thank you for 
the opportunity to appear before you this morning, and I would 
offer a special thanks to Congressmen Foley and Farr for 
sponsoring the American Travel Promotion Act.
    I come before you today to speak in favor of the bill. My 
name is Frank Nocera. I am the Chief Operating Officer of VISIT 
FLORIDA, the not-for-profit tourism marketing corporation which 
markets Florida worldwide. VISIT FLORIDA is the service company 
for the Florida Commission on Tourism, a public/private 
partnership with State government.
    As has been said so well earlier today, Florida's tourism 
economy was very badly hurt by the events of September, and has 
yet to fully recover. While we are seeing some slow 
improvement, Florida is a very long way from seeing the 73 
million visitors we hosted in the year 2000, or the $50 billion 
in tourism retail sales of that year, or of full employment for 
the 850,000 Americans who work in Florida's tourism industry.
    Three tools are available to return vitality to the 
Nation's and to Florida's tourism industry, time, patriotism 
and creative marketing. We cannot wait for the passage of time. 
We have hotels who cannot pay their taxes. We have, as we heard 
earlier, hotels that are in bankruptcy. We have hotels that are 
defaulting on their loans. We have tourism industry workers 
still unemployed.
    As we heard earlier, our State government has had to cut 
services to its citizens due to a lack of tax revenues from our 
visitors. We cannot wait for time to resolve the issue.
    Patriotism was an excellent motivator in the early months. 
President Bush, our Governor, Jeb Bush, and many major 
political and popular figures from around the country went on 
radio and television to urge Americans to return to normal, to 
travel, to not be afraid. And, Americans did listen and began 
traveling again, if tentatively.
    But, patriotic messages alone are not enough. Today, 16 
percent of Americans are still reticent to travel. That's 18 
million American households.
    Creative tourism marketing is now the tool of choice. In 
September, Governor Bush and the Florida Commission on Tourism 
led the charge by tapping our $2 million Economic Risk Fund. 
VISIT FLORIDA quickly took this money and turned it into an 
instate and regional cooperative advertising campaign with 
Florida's tourism industry. In December, Governor Bush, with 
the approval of the Florida legislature, redirected $20 million 
of his economic development budget to provide a cash infusion 
for the tourism industry.
    VISIT FLORIDA was given the challenge of quickly organizing 
the Florida tourism industry to match these funds dollar for 
dollar. All segments of the industry had to be included, large 
businesses and small, and we had to distribute the funds fairly 
across the state.
    Cooperative advertising programs began in December and will 
run through June. Seventy-seven tourism industry partners came 
to the table with $24 million of private sector dollars for a 
total program of $44 million. The participants are telling us 
that this incremental advertising program has brought business 
to their front desks and business through their gates.
    Our research shows that this program has recovered $521 
million in retail sales, and over $31 million in tax revenues 
for Florida. That's not a bad return on investment to date.
    Florida is coming back, but we are not there yet. We 
believe that Florida's recent experience in this program can 
serve as an example to show that the American Travel Promotion 
act can and will work. Clearly, our tourism industry needs the 
help this bill can provide.
    We at VISIT FLORIDA, and the Florida tourism industry, 
enthusiastically support the American Travel Promotion Act. It 
is a sound idea, and the timing is excellent. We commend you 
for considering it, and we hope that Congress will pass it 
soon.
    Thank you.
    [The prepared statement of Frank L. Nocera follows:]

  Prepared Statement of Frank L. Nocera, Executive Vice President and 
                 Chief Operating Officer, VISIT FLORIDA

    Let me start by thanking Chairman Cliff Stearns of the Subcommittee 
on Commerce, Trade and Consumer Protection, to other members of the 
subcommittee, and thank you to Representative Mark Foley for 
introducing the American Travel Promotion Act. I come before you to 
speak in favor of the bill.
    It is an honor to appear before this esteemed body. We appreciate 
your invitation.
    I am the Executive Vice President and Chief Operating Officer of 
VISIT FLORIDA, the not-for-profit corporation that serves as the 
official tourism marketing body for the State of Florida. VISIT FLORIDA 
is the service company for the Florida Commission on Tourism, which 
forms the public-private partnership with state government. Created by 
Florida statute, the commission has 28 members, all appointed by the 
governor of the state, who also is empowered with chairing the 
Commission. Although most of the commissioners are volunteers from 
their private sector tourism industry companies (making us very much 
industry-driven), a member of the Florida House of Representatives and 
a member of the Florida Senate also sit on the commission. Florida has 
no completely public agency marketing its tourism. Privatization 
occurred in 1996, and we have rapidly become the model for other states 
considering moving in this direction.
    On September 12, 13, 14, and 15, 2001, we pondered a landscape 
without Americans travelling about this great nation. Hotel hallways 
echoed. Restaurants and attractions were empty. Cars sat idle in rental 
lots. When the nation's air system reopened, those stranded returned 
home. And stayed. For weeks empty seats often outnumbered occupied 
seats by two to one.
    An industry that had relished in reduced government involvement 
changed its thinking and appealed for rescue programs. Congress 
responded appropriately with an airline assistance package. Many 
governors, like Governor Jeb Bush responded with tourism marketing 
assistance programs. A recovery began, and accelerated faster than our 
forecasters had predicted. But it was, and is, not enough.
    We saw that cooperative marketing programs worked at the state 
level. Now we turn to the federal level and applaud your interest in 
working with our industry even further.
    Tourism is the largest industry in Florida, and tourism is larger 
in Florida than essentially any other state. Let's look at our 
impressive statistics for the last complete calendar year before the 
tragedies of September 11th, 2001. Through the 1990's and into the year 
2000, Florida tourism was continuing to grow. In 2000 we hosted 72.7 
million non-residents, tourism contributed $50.7 billion in retail 
expenditures in the state, and directly employed 12.0 percent of the 
non-agricultural work force in the state, or 852,300 residents. There 
were 379,231 hotel/motel rooms in the state, and 37,813 eating 
establishments. For the fourth-largest state, with an impressive 
population of 16 million residents, visitors outnumbered our residents 
by a ratio of 4.5: 1.
    Additionally, tourism in Florida has an econometric multiplier 
associated with it that ranges from 1.8 up to 2.2. It essentially 
doubles the economic impact.
    For at least ten years we had enjoyed impressive growth. Take the 
Tourism and Recreation Taxable Sales data series, for example. It grew 
at an average annual rate of 6.0 percent in the past decade.
    Since tourism data is kept quarterly, the immediate period to look 
at before the tragedies of 09/11 is the first half of calendar year 
2001. We were ahead then also. Our Research Department estimated that 
we were running ahead by 1.1 percent in visitors hosted and 2.8 percent 
in touristic expenditures, even in a recession.
    Then, the shock waves of 09/11 reverberated. On the Scrabble board 
of life, ``terrorism'' and ``tourism'' are very close and it became 
that way in reality as well. As Egyptian tourism had learned with the 
tragedy at Luxor; as Israeli tourism learns all too frequently, Florida 
also learned that terrorist events do great damage to the tourism 
economy.
    Some of the shock waves were global and enveloped industry icons. 
Swissair folded. Canada 3000 Airlines folded. SABENA folded. U.S. 
Airway's Metrojet division folded. Alamo and National Car Rental 
Companies filed for bankruptcy protection. All of these had a direct 
affect on Florida tourism. Those carriers that remained cut their 
service to Florida by as much as 20%.
    At VISIT FLORIDA, a major operating philosophy is ``Research and 
Respond.'' Our Research Department turned on a dime to gather the 
intelligence identifying which strategies would recover our industry. 
One of our research consultants went into the field and reported back 
to us that ``you have a wonderful product that is now shrouded in an 
air of discomfort.''
    We formed a research coalition with two Florida destinations, two 
other states, and one city outside of Florida, and, together, we 
monitored the consumer traveler sentiment from October 2001 through 
January 2002. While concerns about air travel safety slowly improved, 
concerns about the hassles and inconveniences of the new requirements 
to travel worsened. Additionally, consumers feared secondary attacks. 
Security initiatives originating at the federal, state and local levels 
significantly helped reduce the hesitation to be in crowded tourism 
venues. Again, thank you for your efforts in this area on the federal 
level.
    In Florida, research showed the worst case scenario was that the 
state could lose $433 million dollars in sales tax collections from 
September 2001 through June 2002. It could take all the way to December 
2002 to reach the levels we had hoped for by December 2001. That would 
place us a full year behind in growth.
    The combination of the direct hit to the largest part of the 
Florida state economy and the softness in the national economy at large 
caused our state legislature to come into special session and trim back 
the state's spending on essentials for residents. School trips, 
eliminated; school days, shortened; summer school eliminated for this 
summer; highway patrol cars, more at the side of the road and less 
patrolling. Yet Governor Bush and the Florida legislature saw the 
wisdom of investing precious state funds to help the tourism industry 
recover.
    In Florida, 20 percent of the state's economy is based on tourism. 
Nationally, 68 percent of the Gross Domestic Product is derived from 
consumer spending. It was a sad situation. Basically, consumers were 
not living up to their name.
    In Florida, tourism has a global perspective. We are consistently 
the number one destination for Canadian travelers. We are the number 
one long-haul destination for British travelers. The currency exchange 
rate and the softness in the Canadian economy were hurting us. In 
addition, Canadians were concerned about traveling to the states. 
Florida hosts six million overseas visitors a year, largely brokered by 
wholesalers who package their offerings at a discount in catalogs. 
After 9-11 those brokers, especially from the U.K. and Europe, 
significantly cut back in the number of air charters and blocks of 
airline seats for tour groups. The UK market is our second largest 
international market at 1.3 million visitors. This summer our U.K. 
visitation may be off as much as 30% over previous years.
    Three tools could return the vitality of the tourism industry: 
time, patriotism, and creative marketing. Surely, no one was willing to 
wait for the passage of time alone. VISIT FLORIDA's own surveys of our 
state residents reported that 21.0 percent said that the downturn in 
tourism negatively affected my job or business. Our responsibility 
stared us in the face.
    Patriotism helped, but only for a while. President Bush, his 
brother, our Governor, and many other major political figures 
nationwide, showed strong visible support and leadership for our 
tourism industry. They provided a great call for Americans to get back 
to business and life as usual; a call to travel and not be afraid. 
Americans did listen, and travel has improved. But patriotic and family 
messages cannot do the job alone.
    Creative marketing, speaking to value and price is now the tool of 
choice. Our research indicated that the domestic tourism market had 
splintered into three main segments. The first group was what we called 
``the defiant optimists.'' They were determined, as they told us, ``not 
to let the terrorists win.'' They would travel no matter what. 
Secondly, there were the ``reticent travelers,'' reluctant to fly, but 
aware that the tourism industry had gone on sale, and could be 
persuaded with a bargain. And thirdly, there were the dropouts, those 
who first considered postponing vacations for a short while, and then 
began simply forgoing them for the current year.
    Surely, some tourists decided to switch from air travel to auto 
travel. But, our research indicated that they were likely to switch 
their destinations also to stay within a 6-8 hour driving radius with 
no overnight stay en route to their ultimate destination. For most of 
our air visitors, this change in consumer behavior ruled out a switch 
to cars for a trip to Florida. Historically, as in Calendar Year 2000, 
the modes of travel to Florida for domestic visitors (basically the 
only ones eligible to switch to driving) was 52.3 percent by auto and 
47.7 percent by air.
    We saw the negative impact of this in the first six-month reporting 
period after the attacks, from October 2001 through March 2002. Total 
visitation was down by 11.3 percent, for an estimated loss of $4.38 
billion in tourism retail sales. The increase in travel to Florida by 
auto was only 0.7 percentage points, not a reflection of a structural 
shift in the consumer mind-set. Visitors from distant destinations were 
not getting in their cars and driving to Florida.
    So, we came back to creative marketing as the key to the industry 
recovery. A proprietary study, currently in progress by VISIT FLORIDA, 
is indicating that, nationally, 16.4 percent of Americans can be 
classified as reticent travelers, ready to respond to the advertising 
that communicates the good deals. That translates into a potential 
market of 17.8 million households or travel parties. Their reaction to 
the advertising that this bill would support would not only benefit our 
state, but others as well.
    In marketing theory, advertising infusions help in both the short 
term and in the long term. On the other hand, price reductions only 
help in the short term. For example, this was the lodging situation in 
our major markets as recently as March of the current year: hotel 
occupancy in greater Orlando was 13.2 percentage points better than in 
January, but the average daily room rate was down by 5.0 percent from 
the year before. In Tampa, the average daily room rate was down by 5.4 
percent (occupancy improved by 20.1 percentage points). And the story 
in Miami was a decrease of 6.2 percent in average daily room rate 
(while occupancy improved by 9.3 percentage points).
    Back home, the Governor and the Florida Legislature helped us to 
jump-start a recovery. First, the Florida Commission on Tourism allowed 
us to tap into a $2 million Economic Risk Fund as rapidly as October 
2001. Our research told us to apply the funds in ever-widening 
concentric circles of travel radiuses, first enticing residents to see 
more of their own state, then motorists in nearby states to come to 
Florida. We feel that this stopped the hemorrhaging, at least. County-
based bed taxes were down 19.9 percent in December, an improvement from 
the negative 22.3 percent in October.
    Then, the Florida Legislature enabled, on a state level, what you 
are considering on a national level: funding an infusion of tax dollars 
to assist in tourism recovery. In effect, we are in a prototype 
experiment. Its success is a major reason why we support this bill. 
Governor Bush authorized the redirection of funds within his budget, 
with the Florida Legislature's approval, for a one-time infusion of $20 
million for tourism marketing This program has a highly constrained 
protocol, and an end date of June 30, 2002. VISIT FLORIDA was required 
to match these state funds with private sector advertising dollars. We 
had to consider both large and small tourism industry participants and 
a fair distribution across the state.
    VISIT FLORIDA is the umbrella marketing agency and advocate for our 
industry. We must have done something right, because the industry 
responded quickly and enthusiastically. The $20 million available for 
matching was exhausted quickly. The process worked as cooperative 
advertising in reverse. The local business or destination developed 
advertising and featured our logo, toll-free telephone number, and 
Internet Web Site address along with their own. The commitment required 
an accountability methodology from the tourism industry participants.
    Results are becoming apparent. With over 77 industry partners 
participating in the program, assessing an overall return on investment 
is challenging, at this point. Anecdotal information from participants 
is that the extra advertising is helping. Once again, our research 
professionals are responding to another pioneering challenge by 
studying a leading indicator, nationwide air passenger enplanements, 
and how far below they are from the year before. Similarly, we gather 
comparable data for the 14 largest commercial airports in Florida.
    The resulting research hypothesis is simplified as follows: 
extrapolate the gap in the recovery rate at Florida's 14 largest 
airports with the recovery rate nationwide. It is reasonable to assume 
that a significant amount of the difference is attributable to our 
matching grant, cooperative advertising program. The tracking of this 
program is a bit crude at this point, because our $20 million extra 
infusion is coming about over an extended period of time. Nevertheless, 
from September 2001 through January 2002, the most current data 
available, we estimate that the gap translates into $521 million 
dollars recovered by the Florida tourism industry as sales directly 
related to this program. These sales contribute $31.3 million in state 
sales tax collections.
    While this type of creative marketing program works, the challenge 
is that the momentum needs to be sustained. But there is no vision of 
another special grant of $20 million coming from the Florida 
Legislature when its new fiscal year begins on July 1. With the 
matching fund this fiscal year, VISIT FLORIDA's presence in the 
marketplace will total $77 million. However, for July 2002 through June 
2003, we can only envision a marketing presence of $40 million, when 
our own budget is extended by the usual expected recurring presence of 
cooperative type programs from our industry.
    How, then, to fill that gap, and keep the industry recovery rate 
accelerating? That is why Congressman Foley's bill and your timing are 
right on track. We would double our allocation by the same diversified-
type program, casting a net that benefits regions and a wide range of 
businesses.
    When you support tourism, you support the number one, two, or three 
industry in every state. When you support tourism, you support clean 
industry. When you support tourism, you encourage protection of our 
environment and historical resources, because visitors want to enjoy 
them.
    Florida, a leading tourism destination, is also a leading indicator 
for the tourism industry. For we are coming back, but we are still not 
there. We clearly need the additional impetus that your program would 
provide.
    Dr. Spencer Johnson, M.D., in his contemporary book, Who Moved My 
Cheese?, has the character Haw say, ``Sometimes, Hem, things change and 
they are never the same again. This looks like one of those times.'' I 
could not have said it better.
    On behalf of the grateful tourism industry of Florida and the 
grateful tourism industry nationwide, thank you again, for the 
opportunity to address you in support of this bill. We commend you for 
considering it.

    Mr. Stearns. Thank you.
    Mr. Sternberg.

                 STATEMENT OF MICHAEL STERNBERG

    Mr. Sternberg. Thank you, Mr. Chairman.
    Chairman Stearns and members of the committee, my name is 
Michael Sternberg, and I am the CEO and co-owner of three fine-
dining restaurants in the metropolitan Washington area, Sam & 
Harry's, Washington, DC, Sam & Harry's, Tysons Corner and The 
Caucus Room right here in Washington, DC.
    I am testifying here today on behalf of the National 
Restaurant Association, which is the leading business 
association for the restaurant industry. Together with the 
National Restaurant Association Educational Foundation, the 
Association's mission is to represent, educate, and promote a 
rapidly growing industry that is comprised of 858,000 
restaurant and food service outlets employing 11.6 million 
people around the country. Every $1 spent in a restaurant 
creates an additional $2.13 in sales for other industries 
throughout the economy. As a member of the Board of Directors 
of the Association, I'm proud to say that our Nation's 
restaurant industry is the cornerstone of the economy, careers 
and community involvement.
    Let me share some information with you. 47.5 million 
international visitors will travel to the U.S. this year, 
spending billions in travel-related items. Travelers spend 
nearly $120 billion dining out every year. Our economy 
desperately needs these travelers. We applaud Congressman Foley 
and Congressman Farr for introducing legislation that will help 
ensure our States and territories the necessary resources 
needed to promote the U.S. as a wonderful travel destination.
    Travel and tourism has emerged as one of the Nation's 
largest industries. In 2000, the industry's combined direct and 
indirect economic impact was $584 billion, generating over $100 
billion in tax revenue for Federal, state, and local 
governments, with the restaurant industry accounting for a 
majority of this economic activity.
    The travel and tourism industry employs roughly 19 million 
workers, and they are the first, second or third largest 
employer in 28 States and the District of Columbia. In 2001, 
for example, metropolitan Washington food and beverage 
establishments generated $3.6 billion in annual sales, over 
$360 million in sales tax, and employed 79,000 workers.
    Like Mr. Nocera, certainly shortly after the events of 
September 11 Washington, DC joined together and raised $3 
million in additional funds to market the District of Columbia. 
Because of that marketing effort, the hotels in the District 
now are just running 6 percent behind last year. That's a major 
accomplishment, and has brought people back to work and, again, 
has generated tremendous sales tax dollars for the District of 
Columbia.
    My restaurants, my small company, we employ over 400 
employees, and those employees earn over $8 million a year. We 
contribute directly over $2 million in sales and corporate 
taxes to the metropolitan Washington economy.
    Something else of interest is that in an increasingly 
competitive market the United States ranks third in the world 
as a travel destination, behind Spain and France. Almost every 
industrial nation spends money marketing itself as a travel 
destination except the United States. We clearly must do more 
to promote travel.
    Congressman Foley is right on track, and Congressman Farr, 
are right on track with the American Travel Promotion Act.
    [The prepared statement of Michael Sternberg follows:]

Prepared Statement of Michael Sternberg, Chief Executive Officer, Sam & 
   Harry's and The Caucus Room on Behalf of the National Restaurant 
                              Association

    Thank you, Mr. Chairman. Chairman Stearns and members of the 
Committee, my name is Michael Sternberg, and I am the CEO and co-owner 
of three fine-dining restaurants in metropolitan Washington, Sam & 
Harry's, Washington D.C., Sam & Harry's, Tysons Corner and The Caucus 
Room. I am testifying here today on behalf of the National Restaurant 
Association, which is the leading business association for the 
restaurant industry. Together with the National Restaurant Association 
Educational Foundation, the Association's mission is to represent, 
educate, and promote a rapidly growing industry that is comprised of 
844,000 restaurant and foodservice outlets employing 11.3 million 
people around the country. Every one dollar spent in a restaurant 
creates an additional $2.13 in sales for other industries throughout 
the economy. As a member of the Board of Directors of the Association, 
I am proud to say that our nation's restaurant industry is the 
cornerstone of the economy, careers and community involvement.
    Mr. Chairman, I am living the American dream. I have over 25 years 
of experience in the restaurant industry and I am the owner of three 
successful restaurants right here in the nation's capital. After 
beginning my career in the hospitality industry as a waiter in Chicago, 
in 1982, I moved to Washington and began my career as a restaurant 
manager. Three years later I joined a well established real estate 
development group, opening two new restaurants as Director of 
Restaurant Operations. From that experience, I became familiar with all 
aspects of running a fine dining restaurant. Finally, in 1990 I had the 
great fortune to open the first Sam & Harry's in downtown Washington, 
DC.
    The tragic events of September 11, 2001 have had a dramatic impact 
on all aspects of American society. The economic harm to the restaurant 
industry resulting from the terrorist attacks has been substantial, 
particularly on fine dining restaurants, airport concessions and 
restaurants located in urban and rural travel destinations. As I 
understand it, the purpose of today's hearing is to examine the benefit 
that extra funding for travel and tourism offices would have on the 
economy. I am here to endorse legislation introduced by Congressman 
Mark Foley to help fund tourism promotion in the United States. This 
legislation recognizes how vital the travel and tourism industry is to 
our nations' economy.
    The bill, American Travel Promotion Act (ATPA), would provide $100 
million dollars for a 50/50 grant program to state and territory travel 
and tourism offices to promote travel and tourism through advertising. 
The state and territory travel offices would have complete autonomy in 
spending the money as long as it was directed towards travel promotion 
advertising as defined in the legislation. The program would be open 
for nine months and administered through the Department of Commerce. 
This is a win-win situation for everyone involved.
    This is a very timely and important hearing. I care deeply about 
the future of my business, my employees and our industry as a whole. 
Most of our business is from business travelers, convention and meeting 
attendees, tourists and hotel guests, and the industry as a whole, 
derives nearly one third of its sales from travelers. Since the events 
of September 11th, not only have we seen a decline in the number of 
hotel guests and tourists, but we have seen a decrease in the number of 
local diners who are still not comfortable with dining in downtown 
Washington and who are either staying in the suburbs or eating at home. 
The threat of another terrorist attack still weighs heavy on the minds 
of many Americans and those abroad that would otherwise travel in the 
United States. There is a direct correlation between the deficit in the 
budget of the District of Columbia and the decline in travel and 
tourism to the Nation's Capitol.
    Over the last decade, travel and tourism has emerged as one of the 
nation's largest industries. In 2000, the industry's combined direct 
and indirect economic impact was $582 billion, generating nearly $100 
billion in federal, state and local tax revenue. The travel and tourism 
industry is responsible for roughly 18 million jobs nationwide, and is 
the first, second or third largest employer in 28 states and 
Washington, D.C. Travelers spend nearly $120 billion dining out every 
year. However, in an increasingly competitive international market, the 
United States ranks third in the world as a travel destination behind 
Spain and France. Almost every industrialized nation spends money 
marketing itself as a travel destination except for the United States. 
We clearly must do more to promote travel.
    Mr. Chairman, with 11.3 million employees, the restaurant industry 
is our nation's largest employer outside of government. The restaurant 
industry lost 103,000 jobs in September, according to the Bureau of 
Labor Statistics due to slower sales because of economic conditions and 
the September 11 terrorist attacks. Travel and tourism is extremely 
important to my industry and our economy. Approximately 47.5 million 
international visitors will travel to the U.S. this year, spending 
billions on travel related items. We applaud Congressman Foley for 
introducing this bill and for his understanding the importance and 
necessity of getting our nation and our economy back on track. By 
passing the American Travel Promotion Act, Congress will give the 
states and territories the necessary resources to deliver our message--
America is a great place to travel.
    Mr. Chairman and members of the Committee, thank you again for this 
opportunity to appear before you today. I would be happy to answer any 
questions.

    Mr. Stearns. Thank you.
    Mr. Lounsberry?

                  STATEMENT OF FRED LOUNSBERRY

    Mr. Lounsberry. Thank you. I'd like to begin by thanking 
Chairman Stearns, Ranking Member Towns, and members of the 
subcommittee, for the opportunity to testify today.
    I'd also like to thank Representative Mark Foley, Co-Chair 
of the House Travel and Tourism Caucus, for introducing this 
important legislation.
    I'm Fred Lounsberry, Senior Vice President, Sales, for 
Universal Studios Recreation Group, the vendor Universal 
Entertainment. I'm here today in my role as National Chair for 
the Travel Industry Association of America. TIA is the national 
non-profit organization representing all components of the $545 
billion U.S. travel and tourism industry.
    I'd like to provide a brief overview of the economic 
importance of the travel and tourism industry. I'll also 
discuss the outlook for travel this summer.
    Travel and tourism generates 18 million jobs nationwide, 
one out of every seven private sector employees in the U.S. The 
industry also produces nearly $94 billion in tax revenue for 
local, State and Federal Governments. International visitors to 
the U.S. generate $90 billion in expenditures, and these 
visitors accounted for over 1 million jobs nationwide.
    Last year was a very difficult time for the U.S. travel and 
tourism industry. All sectors of the industry saw declines in 
travelers and profits. My home State of Florida was 
particularly hard hit, but Governor Bush and our legislature 
moved decisively to provide financial assistance which was 
matched by the private sector. This public/private partnership 
breathed new life into our state's economy, and our industry 
has made significant rebounds since last fall.
    We expect to see some recovery for the industry this 
summer, but it will be fragile, spotty, and may come at expense 
of profits. TIA forecasts that this summer there will be a 2 
percent increase over last year in leisure travel. Although a 
significant number of Americans plan to travel, their patterns 
have changed. Americans are looking to get back to basics. It 
appears that most summer travel, leisure travel, will take 
place by auto or RV. Leisure travel by air will continue to be 
depressed. We expect to see some shift to overnight 
accommodations, other than hotels and motels, and we expect 
travelers to take shorter trips than last year.
    Spending is also likely to decline. Intended travelers are 
planning to spend 9 percent less than last summer, and nearly 
half plan to travel closer to home.
    The outlook for business travel is much less positive. TIA 
expects that business travel, especially by air, will remain 
weak this summer. With business travel lagging, airline and 
hotel industries will continue to struggle this summer, and 
probably for much of the rest of this year. Traveler concerns 
about safety and security have steadily dropped since last 
September, however, the recent dire and non-specific security 
warnings are certain to dampen some travel plans.
    Our industry is faced with a long-term marketing effort to 
responsibly reassure the traveling public. A joint public/
private partnership must be established to market U.S. travel. 
Visitors need to be reassured that government and the private 
sector are doing all they can do to make their travel as safe 
as possible.
    The tragedies of September 11 have had a disastrous impact 
on this Nation's travel and tourism industry. H.R. 3321 would 
provide much needed funding for travel promotion to help revive 
our industry. This bill would provide assistance to the States 
at just the right time. In addition, this legislation is an 
important first step toward building a comprehensive public/
private partnership. This partnership would promote travel 
through a unified campaign to brand, position, and promote the 
U.S. as the world's top travel destination.
    I thank the committee for their attention to this important 
issue. TIA stands ready to work with Congress to promote the 
U.S. travel and tourism industry.
    [The prepared statement of Fred Lounsberry follows:]

Prepared Statement of Fred Lounsberry, National Chair, Travel Industry 
                         Association of America

    Mr. Chairman, Ranking Member Towns, and Members of the 
Subcommittee, on behalf of the Travel Industry Association of America 
(TIA) and its 2,100 member organizations, I want to thank you for the 
opportunity to testify on the current state of our industry and on H.R. 
3321, the American Travel Promotion Act. I would also like to thank 
Rep. Mark Foley, Co-Chair of the House Travel and Tourism Caucus, for 
introducing this important legislation, which can help an industry that 
is struggling on the road to recovery.
    I am Fred Lounsberry, Senior Vice President of Sales for the 
Universal Studios Recreation Group. I am here in my role as National 
Chair of the Travel Industry Association of America.
    TIA is the national, non-profit organization representing all 
components of the $545 billion U.S. travel and tourism industry. TIA's 
mission is to represent the whole of the travel industry to promote and 
facilitate increased travel to and within the United States. Our 2,100 
member organizations represent every segment of the industry, and I am 
pleased to be joined on this panel today by other TIA members.
    While the events of September 11 had an immediate and terrible 
impact on the U.S. travel industry, we are on the road to recovery. 
This recovery, though, is uneven at best and some regions of the 
country are faring better than others. Some industry segments are more 
positively situated for recovery, whereas others may not see normal 
levels of business until some time in 2003. Domestic travel is 
recovering more quickly than inbound international travel. All of the 
members of this subcommittee will undoubtedly hear different stories 
back in their districts about where the tourism industry is on that 
road to recovery.
    H.R. 3321 would provide much needed funding for travel promotion to 
help revive our industry. State governments are some of the most 
important players in tourism promotion. States run very sophisticated 
advertising campaigns to encourage domestic travel and attract 
international visitors. This legislation would provide badly needed 
assistance to the states at just the right time. In addition, this 
legislation is an important first step toward building a comprehensive 
public-private partnership to promote international travel through a 
unified campaign to brand, position, and promote the U.S. as the 
world's top travel destination.

                ECONOMIC OVERVIEW OF TRAVEL AND TOURISM

    I would like to begin by giving a brief overview of the importance 
of the travel and tourism industry to our nation's economy.
    Travel and tourism generates 18 million jobs nationwide, both 
directly and indirectly. That's one out of every seven people employed 
in the private sector in the U.S. The industry also produces nearly $94 
billion in tax revenue for local, state, and federal governments.
    International travel and tourism to the U.S. is a vital component 
of our national economy. Over 46 million international visitors 
generated $90 billion in expenditures and accounted for over one 
million jobs nationwide. International travel and tourism to the U.S. 
is considered a service export and last year the U.S. had a positive 
balance of trade of $7.7 billion.

                           POST-SEPTEMBER 11

    As a result of the September 11 attacks and the recession, last 
year was a very difficult time for the U.S. travel and tourism 
industry. All sectors of the industry saw declines in travelers and 
profits.
    Not only did Americans stop traveling, but international visitation 
dropped off as well. As an example, Hawaii Lt. Governor Mazie Hirono 
stated that her state's largest overseas travel market--Japan--dropped 
by 50%. The downturn in Japanese travel alone to Hawaii had caused the 
state to lose $4 million each day.
    My home state of Florida was particularly hard hit. But our state 
government recognized the importance of the travel industry and moved 
decisively to provide assistance. Our governor and the state 
legislature authorized an additional $20 million from travel and 
tourism advertising. This sum was matched with $24 million by the 
private sector. By working together, this public-private partnership 
breathed new life into our state's economy and our industry has made 
significant rebounds since last fall. My home city of Orlando was 
particularly hard hit, with the Orlando Convention and Visitors Bureau 
announcing nearly $200 million in cancelled business. Airline lift to 
Orlando is still down 14 percent.

                            SUMMER FORECAST

    We expect to see some recovery for the travel industry this summer, 
but it will be fragile, spotty, and may come at the expense of profits. 
The volume of traffic we see is due, in part, to the extreme price 
reductions many companies have used to keep the travelers moving.
    According to recent surveys, intentions for leisure travel this 
summer are stronger than last year. TIA forecasts that total leisure 
travel volume will increase about 2 percent this summer to a total of 
233.4 million leisure person-trips. Although a significant number of 
Americans plan to travel, their patterns have changed from previous 
years.
    Americans are looking to get back to basics this summer. It appears 
that most summer leisure travel will take place by car or RV--close to 
85 percent. Leisure travel by air will likely continue to be quite 
depressed--perhaps down by as much as 4 percent--despite all the 
discounting that has been going on by airlines trying to stimulate 
demand which has resulted in some very low airfares for consumers.
    Along with more auto travel, we expect to see some shift to 
overnight accommodations other than hotels and motels, which will 
probably experience flat or even a slight decline in demand this 
summer. And we expect travelers to take shorter trips than last year.
    Spending is also likely to decline with intended travelers planning 
to spend $1,066 on their longest leisure trip this summer, down 9 
percent from $1,172 in planned spending last summer. And nearly half of 
traveling Americans said they are planning to travel closer to home 
this summer.
    The outlook for business travel is much less positive. TIA expects 
that business travel, especially by air, will remain weak this summer.
    Business travel is a vital component of our industry. Nearly 40 
percent of business trips in this country are taken by air and two-
thirds involve the use of hotel accommodations. With business travel 
lagging, air and hotel industries will continue to struggle this summer 
and probably for much of the rest of the year.
    There seems to be a consensus among industry analysts that it will 
be a while before we see a recovery of business travel. While the 
numbers will certainly look good in the fourth quarter of this year, as 
compared to the horrible numbers posted in September through December 
of last year, TIA does not expect to see a true business travel 
recovery until 2003 at the earliest.
    Concerns about traveler safety and security have steadily dropped 
since September. Safety and security are concerns for only 7 percent of 
those not planning to travel. However, the recent series of dire and 
non-specific warnings about terrorist attacks is certain to dampen some 
travel plans. Our industry is faced with a long-term marketing effort 
to responsibly reassure the traveling public. A joint public-private 
partnership must be established to market U.S. travel and to reassure 
visitors that government and the public sector are doing all they can 
to make travel as safe as possible.

                                CLOSING

    Prior to last September, many Americans took the importance of the 
travel and tourism industry for granted. It is unfortunate that it took 
the combined effects of an economic downturn and terrorist attacks to 
raise this country's awareness and appreciation for how much our 
industry contributes to this nation, both economically and culturally. 
And while the industry is recovering, it still has a way to go.
    H.R. 3321, the American Travel Promotion Act, is an important 
element in assisting the recovery of the U.S. travel and tourism 
industry. The funds authorized from this legislation will provide an 
important boost to ongoing state efforts to generate domestic travel 
and to draw back the international visitors we have lost to overseas 
destinations. We hope the Committee will support the legislation and 
will continue to work with the travel industry as part of a 
comprehensive effort to create jobs and generate revenues by 
encouraging travelers to see America.

    Mr. Stearns. I thank the gentleman.
    Mr. Stewart.

                 STATEMENT OF JEFFREY D. STEWART

    Mr. Stewart. Good morning.
    I'm Jeffrey Stewart, Vice President of Communications and 
Public Affairs for Loews Hotels and an Executive Committee 
Member of the Travel Business Roundtable. Loews Hotels is 
headquartered in New York City, and owns or operates 17 
distinctive, one-of-a-kind properties in the United States and 
Canada, employing more than 7,000 people.
    The Travel Business Roundtable is a CEO-based organization 
with more than 70 member corporations, associations and labor 
groups. We represent major airlines, hotel companies, rental 
car companies, restaurants, retail outlets, convention visitor 
bureaus and financial service institutions, as well as other 
organizations reflecting the breadth and diversity of the 
travel and tourism industry.
    I'm here today to testify on behalf of both of these 
organizations in strong support of H.R. 3321, the American 
Travel Promotion Act.
    I'd like to thank Chairman Stearns and Ranking Member Towns 
for holding the hearing today. I'd also like to thank 
Congressmen Foley and Farr for their leadership in introducing 
H.R. 3321. As Co-Chairs of the Congressional Travel and Tourism 
Caucus, they have done much to educate their fellow Members of 
Congress on the importance of travel and tourism to the United 
States' economy.
    H.R. 3321 would assist States and the U.S. travel and 
tourism industry in their recovery from the dramatic economic 
impact that resulted from the downturn in travel after 
September 11. In the immediate aftermath, it became apparent 
very quickly that the effect on the industry went beyond just 
the airlines, when people stopped flying or traveling at all, 
they were not staying in hotels, eating in restaurants, renting 
cars, visiting museums, theme parks, or shopping. As a result, 
hundreds of thousands of hospitality employees were laid off or 
worked reduced hours.
    At the same time, hospitality companies experienced revenue 
shortfalls and States and localities saw their tax revenues 
shrink rapidly. Though some segments of the travel and tourism 
industry are slowly beginning to recover, the recovery across 
the industry and the country is, in fact, mixed.
    The Travel Business Roundtable and Loews Hotels offer our 
enthusiastic support for H.R. 3321, because it would provide a 
much needed stimulus to States, local governments, and the U.S. 
travel and tourism industry as a whole.
    Moreover, this legislation is also significant because it 
represents a valuable first step toward raising the country's 
visibility as a desirable destination for business and leisure 
travelers. The United States has much to offer foreign 
travelers, but at this time there is no cohesive marketing plan 
to promote the No. 1 brand in the world, the U.S.A. This is a 
missed opportunity that is beginning to catch up with us.
    In 1996, travel and tourism generated a balance of trade 
surplus of nearly $26 billion for the United States. In the 
year 2000, the trade surplus dropped to $17 billion. We are now 
the third most sought after travel destination in the world, 
behind France and Spain. These countries spend tens of millions 
of dollars a year to promote themselves to foreign visitors, 
but the United States spends nothing.
    In 2000, international visitors spent $106.5 billion in the 
United States. It is simple, good business sense that the 
United States makes at least a minimal investment to retain and 
grow this important and lucrative market share. International 
visitors, on average, spend six times as much as domestic 
travelers.
    Loews Hotels and the Travel Business Roundtable support the 
development of an aggressive brand marketing campaign funded 
from private and public sources to promote the U.S. as a travel 
destination. By and large, our industry does not need capital 
dollars, it needs marketing dollars.
    In addition to creating jobs, generating tax revenues, and 
spurring economic development, travel and tourism increases 
awareness and understanding among diverse cultures and can help 
eradicate prejudices based on ignorance. The need to better 
define America abroad has become all too clear since the events 
of last fall. Let's use the travel and tourism industry, and 
the marketing of the United States as a travel destination, as 
a way to combat misconceptions about the United States around 
the world.
    More than 1\1/2\ years ago, the Travel Business Roundtable 
called for the creation of a Presidential Advisory Council on 
Travel and Tourism, which is currently under consideration 
within the Bush Administration. The Council would be the ideal 
body to explore ways that the travel and tourism industry can 
work for the benefit of our Nation. It would also help 
coordinate the activities of the administration and the many 
departments and agencies that impact travel and tourism.
    By enacting the American Travel Promotion Act, Congress 
would be taking an important first step toward implementing a 
focused national strategy to our travel and tourism. When one 
considers that in the year 2000 travel and tourism employed 18 
million people and generated $100 billion in Federal, State and 
local tax revenues, and that is the first, second or third 
largest employer in 28 States and the District of Columbia, it 
makes good economic sense to invest in this dynamic industry.
    This is something that this country needs to do now more 
than ever. I urge the subcommittee to take action on H.R. 3321 
and to consider expanding on this legislation to include 
funding for a U.S. destination marketing campaign.
    Thank you again for this opportunity to appear before the 
committee today.
    [The prepared statement of Jeffrey D. Stewart follows:]

      Prepared Statement of Jeffery D. Stewart Vice President of 
 Communications and Public Affairs, Loews Hotels, Executive Committee 
                   Member, Travel Business Roundtable

    I am Jeffrey Stewart, Vice President of Communications and Public 
Affairs for Loews Hotels and an Executive Committee member of the 
Travel Business Roundtable (TBR). Loews Hotels is headquartered in New 
York City and runs 17 distinctive properties in the U.S. and Canada, 
including the Regency Hotel in New York and Loews L'Enfant Plaza and 
the Jefferson Hotel here in Washington. The company employs more than 
7,000 people across the United States. TBR is a CEO-based organization 
that represents the broad diversity of the U.S. travel and tourism 
industry, with more than 70 member corporations, associations and labor 
groups. I am here today to testify on behalf of both organizations in 
strong support of H.R. 3321, the American Travel Promotion Act.
    Before I begin, I would like to thank Chairman Stearns and Ranking 
Member Towns for holding this hearing to examine this important 
legislation. I would also like to thank Congressmen Foley and Farr for 
their leadership in introducing H.R. 3321, and for their tireless 
efforts in their capacity as co-chairs of the Congressional Travel and 
Tourism Caucus over the past five years to educate their fellow Members 
of Congress on the importance of travel and tourism to the U.S. 
economy.
    As Congressman Foley and Farr have testified today, H.R. 3321 seeks 
to assist states, and by association, the U.S. travel and tourism 
industry, in their recovery from the dramatic economic impact they 
experienced due to the downturn in business and leisure travel in the 
days and weeks following the tragic events of September 11. It became 
apparent very quickly during that time that this was not simply an 
airline problem. When people stopped flying--or in many cases traveling 
by any mode of transportation--they were subsequently not staying in 
hotels, eating in restaurants, visiting museums or theme parks, renting 
cars or shopping. As a result, hundreds of thousands of hospitality 
industry workers were laid off or had their hours reduced, hospitality 
companies faced steep revenue shortfalls and state and local 
governments saw a rapid decline in tax revenue upon which they were 
particularly reliant in a recessionary economy. Though some segments of 
the travel and tourism industry are slowly beginning to recover, the 
recovery across the industry and the country is uneven.
    We offer our enthusiastic support for H.R. 3321 because we believe 
the $100 million in matching grants to states that this legislation 
would provide to enhance their marketing efforts in the U.S. and 
throughout the world will provide a much-needed stimulus to states, 
local governments and the U.S. travel and tourism industry as a whole. 
However, TBR and Loews Hotels believe this legislation is also 
significant because it represents a valuable first step toward raising 
the country's visibility as a desirable destination for business and 
leisure travelers.
    With its size and regional diversity, the United States has much to 
offer foreign travelers. But instead of capitalizing on that broad 
array of options for travelers to market its ``brand'' overseas, it 
chooses to let others--the media, individual states and U.S. 
companies--define it. This is a missed opportunity that is beginning to 
catch up with us. In 1996, travel and tourism generated a balance of 
trade surplus of nearly $26 billion for the U.S. Today, the trade 
surplus has slipped to $17 billion. Moreover, our country continues to 
rank as the third most sought-after travel destination in the world--
behind Spain and France.
    What do these countries have that we don't? Well, for one thing, 
they spend tens of millions of dollars to promote themselves to foreign 
visitors. In 2000, international visitors spent an estimated $106.5 
billion in the U.S. It seems like simple good business sense--and good 
policy--to spend some money on promoting what the U.S. can offer to 
these visitors in an effort to retain and grow this powerful market 
share. Loews Hotels and TBR support the development of an aggressive 
brand marketing campaign, funded from both private and public sources, 
to promote the U.S. as a desirable travel destination. By and large, 
our industry does not need capital dollars--it needs marketing dollars.
    In addition to creating jobs, generating tax revenues and spurring 
economic development, travel and tourism also increases awareness and 
understanding among diverse cultures and can help eradicate prejudices 
based on ignorance. The need to better define America abroad has become 
all too clear since the events of last fall. Let's use the travel and 
tourism industry and the marketing of the United States as a travel 
destination as a way to combat misconceptions about us around the 
world.
    More than a year-and-a-half ago, TBR called for the creation of a 
Presidential Advisory Council on Travel and Tourism, which is currently 
under consideration within the Bush Administration. Comprised of 35 
presidentially appointed representatives of business, government and 
non-profit organizations with expertise in policy matters impacting 
tourism development, the Council would be the ideal body to explore 
ways that the travel and tourism industry can work for the benefit of 
our nation. The Council would advise the President on national tourism 
policy and would help ensure that travel and tourism receives a more 
sustained and vigorous policy focus at the federal level. It would also 
help coordinate the activities of the Administration and the many 
departments and agencies that impact travel and tourism.
    By enacting the American Travel Promotion Act, Congress would be 
taking an important first step toward implementing a focused national 
strategy toward travel and tourism. This is something that this country 
needs now more than ever. I urge this Subcommittee to take action on 
H.R. 3321 and to consider expanding on this legislation to include 
funding for a U.S. destination marketing campaign.
    I thank you again for this opportunity to appear before the 
Subcommittee today, and I look forward to answering any questions you 
may have.
               Travel and Business Roundtable Membership

  JONATHAN M. TISCH, CHAIRMAN, TRAVEL BUSINESS ROUNDTABLE, CHAIRMAN & 
                           CEO, LOEWS HOTELS

American Airlines; American Express Company; American Hotel & Lodging 
Association; American Resort Development Association; American Society 
of Association Executives; Amtrak; Asian American Hotel Owners 
Association; Association of Corporate Travel Executives; Best Western 
International; Budget Group Inc.; Business Travel News; Carey 
International Limousine; Carlson Hospitality Worldwide; Cendant 
Corporation; City of New Orleans; The Coca-Cola Company; Commonwealth 
of Puerto Rico; Delta Air Lines, Inc.; Diners Club International; 
Distinguished Restaurants of North America; Fairmont Hotels & Resorts; 
FelCor Lodging Trust; Four Seasons Hotels & Resorts; Greater Boston 
Convention and Visitors Bureau; Greater Fort Lauderdale Convention & 
Visitors Bureau; Greater Miami Convention & Visitors Bureau; The Hertz 
Corporation; Hilton Hotels Corporation; Hotel Employees and Restaurant 
Employees International Union; HRW Holdings, LLC; Hyatt Hotels 
Corporation; Inc. Magazine; International Association of Convention and 
Visitors Bureaus; International Council of Shopping Centers; Interval 
Incorporated; JetBlue Airways Corporation; Las Vegas Convention and 
Visitors Bureau; Loews Hotels; Los Angeles Convention & Visitors 
Bureau; Lufthansa Systems North America; Manhattan East Suites Hotels; 
Marriott International Inc.; MeriStar Hotels and Resorts Inc.; The 
Mills Corporation; National Basketball Association Entertainment; 
National Football League; National Hockey League; National Restaurant 
Association; New York University; Northstar Travel Media, LLC; NYC & 
Company; Omega World Travel; Pegasus Solutions, Inc.; 
PricewaterhouseCoopers, LLP; The Rappaport Companies; Six Continents 
Hotels Inc.; Smith Travel Research; Starwood Hotels & Resorts; 
Strategic Hotel Capital Incorporated; Taubman Centers, Inc.; Tishman 
Construction Company; United Airlines; Universal Studios; United States 
Conference of Mayors; USA Today; Vail Resorts, Inc.; Visa USA Inc.; 
Walt Disney Parks and Resorts; Washington D.C. Convention and Tourism 
Corporation; Waterford Group, LLC; WH Smith USA Travel Research; World 
Travel and Tourism Council; and Zagat Survey.

         A Presidential Advisory Council on Travel and Tourism

    Tourism is an unsung hero of the U.S. economy. Over the course of 
the past eight years, it has generated more than 56.7 million jobs, 
$3.7 trillion in expenditures, $622 billion in state, local and federal 
taxes and $157 billion in trade surpluses. Despite such robust economic 
performance, tourism's contributions to the prosperity of American life 
have not been fully recognized, understood nor strategically developed 
by many policymakers for what it is: A powerful driver of jobs, 
community development, small business growth and export generation.
    The United States' tourism policy was previously coordinated to 
some extent through the United States Tourism Administration (USTA), 
which operated under the Department of Commerce with an annual budget 
of approximately $17 million. The Administration was abolished due to 
congressional budget cuts and a perception among many policymakers that 
the organization was not achieving its mission. Its successor, the 
Tourism Industries office within Commerce's International Trade 
Administration operates on a small budget and is largely a statistical 
resource for inbound travel data. It has neither the resources nor the 
directive to promote the U.S. as a desirable travel destination 
overseas.
    This lack of strong, coordinated U.S. government support puts the 
U.S. travel and tourism industry at a sharp disadvantage to its 
international competitors. More than 130 countries have official, 
government-sponsored tourism offices. These nations have recognized 
that a coordinated national tourism policy fulfills numerous domestic 
goals, including job creation, expanding trade surpluses and creating 
economic vitality on a multi-regional basis within their countries. 
This reality is borne out by the fact that the U.S. has fallen behind 
in recent years to become the third most popular travel destination in 
the world--behind France and Spain. Not surprisingly, both of these 
countries provide significant annual funds to their national tourism 
promotion offices.
    The Travel Business Roundtable (TBR) advocates the establishment of 
a President's Council on Travel and Tourism to help the U.S. retain its 
edge against its competitors as the premier travel destination in the 
world. The Council would be created by Executive Order as a federal 
advisory committee under the Federal Advisory Committee Act (FACA). It 
would be comprised of not more than 35 presidentially appointed members 
from the private, public and non-profit sectors. These members would 
represent a diverse range of business, government and non-profit 
organizations with experience relating to policy matters impacting 
tourism development. Operating on a substantially smaller budget than 
the old USTA, the Council would pursue four essential objectives:

 Foster tourism policy development and coordination within the 
        federal government;
 Demonstrate how effective tourism policy can be implemented;
 Raise awareness of the economic importance of travel and 
        tourism; and
 Develop appropriate benchmarks to measure tourism policy 
        success.
    The Council's activities would include:

 Reviewing current policies and programs that support tourism 
        export growth;
 Performing a marketplace needs assessment;
 Identifying replicable examples of effective tourism export 
        policy from other countries;
 Recommending policy improvements and additional opportunities 
        to advance U.S. tourism exports abroad;
 Advising the President on policies that would foster fiscal 
        prosperity and growth for small tourism-related businesses;
 Advising the President on domestic policies and approaches 
        that can promote community-based tourism development, 
        particularly in rural and economically depressed areas; and
 Creating and participating in projects that help forge 
        partnerships among representative of federal and state 
        agencies, urban centers and rural communities, with the goal of 
        creating a strategic vision for community-based tourism 
        development.

    Mr. Stearns. Thank you.
    I'll start with a line of questioning here.
    We are all supportive of what you are saying, and when I 
listen to all of you I'm starting to believe that there might 
be a more comprehensive approach to this, rather than just $100 
million.
    As mentioned earlier, the U.S. Travel and Tourism 
Administration, you know, has been folded into the Trade 
Development, and it doesn't have its own secretary, a deputy 
secretary, and a lot of its employees that were overseas have 
been gone. And so, I mean, let's look at this in, really, a 
serious vain, because all of you touched on the fact that this 
is a long-term problem. And, if this is a long-term problem, 
$100 million might not be sufficient. We need a comprehensive 
plan, and maybe now is the time to talk about it, while there 
is receptivity in the United States because of what happened.
    We hear every day the Vice President, we've talked to the 
President, other people in the administration, talk about 
another possible terrorist attack, and we talk about the 
implication, what that means. Obviously, that's going to have a 
devastating effect on tourism. So, we have to plan, not just, I 
think, for something that is just a shot of $100 million, but 
some kind of comprehensive plan to take care of what happens to 
tourism if we have another terrorist attack, and how can we 
assure that this industry is protected.
    As you pointed out, both Spain and France have spent a lot 
of money and the United States has not. So, you know, I hear 
people say, well, perhaps the recession is over. Some people 
say it's not over. For example, in Florida, let me ask you, Mr. 
Nocera, is there a particular part of the tourist industry 
that's been hurt more than others? I mean, because a lot of 
Florida is local, and a lot of it is United States, a lot of 
it's international, and a lot of it is restaurants and hotels. 
I mean, is it segmented where it's very devastated and other 
portions it's not?
    Mr. Nocera. Yes, sir, that is correct.
    Geographically, you are absolutely correct. The Orlando 
area and the Miami/Ft. Lauderdale areas have been particularly 
hard hit by what has happened.
    Mr. Stearns. In the hotel and restaurant or one or the 
other?
    Mr. Nocera. Hotel, restaurant, and all segments of the 
tourism industry, or the tourism economy.
    Mr. Stearns. You mentioned Orlando is down 14 percent, I 
thought you said? How much is Orlando down in tourism?
    Mr. Nocera. Approximately, 14 percent.
    Mr. Stearns. Fourteen percent, uh-huh.
    Mr. Nocera. Correct.
    Mr. Stearns. What would you say to my comment that sort of 
a comprehensive plan that would protect tourism in the United 
States, not only with the threat, and what people perceive as a 
threat, but the possibility of long term, what should we have 
in place to protect this industry?
    Mr. Nocera. Mr. Chairman, that is an outstanding idea. It's 
an idea that the tourism industry has long put forward and has 
long wanted. The United States of America is the only 
industrialized nation that we are aware of that does not have, 
on a national basis, a comprehensive tourism promotion policy. 
And, it's something that we could use.
    Tourism really is a balance of trade issue on an 
international basis. It's an export business, where importing 
dollars are Deutsche marks, are pounds sterling, into the 
United States when we bring visitors from overseas here.
    Mr. Stearns. Well, we are the most powerful country 
economically, militarily. We have a large expansive territory. 
It would seem to me the United States should be the No. 1 place 
for tourism in the world, and yet, what are we, third now?
    Mr. Nocera. Third.
    Mr. Stearns. Third, behind Spain and France.
    And, Spain and France are higher because they advertise so 
much more?
    Mr. Nocera. That is correct. They have well-established----
    Mr. Stearns. You say that's-and I'm not asking Mr. Nocera 
this question, any of you can contribute here, I mean is there 
a reason why we are not No. 1? Is it just dollars that are 
being expended by these other countries, maybe Mr. Stewart, the 
perspective from New York City?
    Mr. Stewart. I think that's certainly a very important 
factor. As I indicated, the trade surplus that the travel and 
tourism industry provides to this country currently is $17 
billion, but over the last 5 years that's dropped $9 billion, 
and I think that's important to stress because----
    Mr. Stearns. $17 billion to $9 billion?
    Mr. Stewart. [continuing] it dropped $9 billion from 1996 
it was at $26 billion, in the year 2000 it is now $17 billion.
    It's important to note that as our trade deficit of this 
country continues to widen, it is a mystery, quite honestly, to 
members of the travel and tourism industry why the government 
is not focusing on an industry that is actually providing a 
positive balance of trade. And clearly, marketing and promotion 
is a critical step to regaining some of that international 
market share.
    International travelers, on average, spend six times as 
much as domestic travelers. You may even see this yourselves 
when you travel to another country, I see it with my own 
travels, you tend to shop more and spend more money than you do 
when you are in your own country. So, what we know is that 
marketing does work, and that if we did invest money, as these 
other countries have, we would, in fact, capture a greater 
share of this market.
    Other countries, who have increased their travel and 
tourism promotion budgets, have seen an increase in 
international visitors to those destinations.
    Mr. Stearns. Mr. Lounsberry, international, you are here 
also with the Travel Industry Association.
    Mr. Lounsberry. Yes.
    Mr. Stearns. Would you agree that the international travel 
pattern has changed since the terrorist attack? You would say 
yes, but it looks to me, from what Mr. Stewart says, that it 
was $26 billion in the year 1996, Mr. Stewart you said, and now 
it's $17 billion in the year 2002, and is most of that in the 
international travel?
    Mr. Lounsberry. We've been losing market share for the last 
10 years. We've lost, in the last 10 years, 23 percent of the 
world international market share over the past years. And, 
what's happening over the past 10 years, and what it is, is 
these other countries, France, Spain, have increased their 
expenditures and they are taking business away from the United 
States, through aggressive travel industry promotion.
    Mr. Stearns. And, how much is Spain spending a year?
    Mr. Lounsberry. I don't have the exact number on that.
    Mr. Stearns. If you could provide us how much Spain is 
spending a year and how much France is spending, that would be 
very helpful to be part of the record, so that we could-because 
Mr. Foley and Mr. Farr have a very good bill, what we are 
hearing, though, is that this is a larger problem that we've 
got to think about, particularly in light of the fact it's gone 
down almost, you know, 60-70 percent since 1996, and we're 
third behind other countries.
    And, this would be immediate stimulus to this economy, and, 
Mr. Sternberg, I guess I would ask a question for you, which 
is, perhaps, a little bit more toward Washington, DC, where do 
you see the largest decline in your restaurant dining, is it 
from the business customers, local dining customers, or leisure 
travel?
    Mr. Sternberg. Mr. Chairman, I also serve as Chairman of 
the Washington Convention Tourism Foundation, and I will tell 
you that the tour operators in the DC area are just devastated 
by this all. And, I think being spring you would know how 
usually you have school groups through here all the time. When 
is the last time you saw a school group up here on the Hill? 
There are no school groups coming up here this year.
    We are very fortunate we are getting 100,000 Girl Scouts 
coming in June to Washington, DC, which is a huge-it's the 
first group of kids coming to DC since September 11. It's a 
very, very important event.
    I would also add, Mr. Chairman, that I feel that this $100 
million proposal is very important to do now, while a 
comprehensive plan is being put together. I don't think this 
should be an either/or.
    Mr. Stearns. My time is expired.
    The ranking member, Mr. Towns.
    Mr. Towns. Thank you very much, Mr. Chairman.
    Let me begin with you, Mr. Sternberg.
    You indicated something, and I didn't quite understand it, 
you said that for every $1 that generates $2.13. Could you walk 
me through that?
    Mr. Sternberg. The specific math, no, but what that means, 
Mr. Congressman, is that for every dollar being spent in a 
restaurant that restaurant is spending money on employees, it 
is spending money with the local produce company, with the 
local fish company, with the carpet cleaners, et cetera, so 
that all the industries related to the restaurant industry, 
it's created an economic stimulus throughout the economy.
    Mr. Towns. And, I guess for New York also parking cars, 
too, huh?
    Mr. Sternberg. Absolutely, and parking tickets.
    Mr. Towns. Okay, now it's clear.
    Let me sort of ask, switching places here for a moment, you 
know, I understand the $100 million now, but what would you see 
in a comprehensive, you know, legislation, what would you see 
in terms of what needs to be done to sort of fix this thing. 
You know, because we are getting-and the reason I raise the 
question, the fact that we are constantly talking about the 
possibility of another attack, so what do we do to sort of 
balance off and to be able to sort of make this work? Do you 
have any ideas?
    Yes?
    Mr. Lounsberry. I think the idea that the Chairman brought 
up, as far as a comprehensive, really a national tourism 
organization, that is the marketing umbrella on behalf of the 
United States as marketing the United States brand would be the 
addition to this bill, which this bill, I think, becomes a part 
of a larger organization. This becomes the potentially, you 
know, call it the co-op State marketing portion of a larger 
entity, where you have all of this coordinated so that as we 
market outside the United States to return our market share 
loss that's coordinated and you have that umbrella brand that 
gives continuity to the advertising campaigns or programs that 
are executed on behalf of the United States.
    So, I think this is a very important critical piece to a 
larger national tourism entity, which is the sole entity for 
marketing the United States worldwide. That's what I would see, 
I think the idea, this is a terrific idea. I believe it should, 
ideally could happen immediately, but I think it would then 
fold into a larger idea of a national tourism organization that 
puts us on par with the rest of the world, as far as marketing 
the United States brand, and bringing the States in under that 
brand, because some of the States are, an example, California 
would be more interested in international travel from the 
Orient, whereas some of the East Coast markets more interested 
in programs from Europe, so it's a way to have a worldwide 
campaign that is well balanced, well orchestrated, and 
consistent, so that it doesn't become kind of a disjointed 
effort, that we have a consistent voice and that we are 
marketing this terrific travel product.
    Mr. Towns. I'd like to hear from each one of you on this.
    Yes?
    Mr. Stewart. If I may, Congressman.
    Mr. Towns. Sure.
    Mr. Stewart. We are here this morning talking about a 
tourism marketing promotion act, but I think the issue here 
really goes beyond that, and that is to focus on the travel and 
tourism industry itself, the Nation's second largest industry.
    The countries that we compete with, by and large, when you 
are head of the tourism industry for that country, it is a 
cabinet-level position. The United States has no position at 
that same level. What we really need to focus on, beyond a 
specific marketing program which is clearly critical, is how do 
we sustain the focus on this very important industry that the 
Nation is now focusing on, sadly due to the events of last 
fall.
    As I mentioned earlier, the Travel Business Roundtable has 
suggested the creation of a Presidential Advisory Council on 
Travel and Tourism. Certainly, Congress can create some sort of 
entity as well, because the issues really go beyond simply 
marketing and getting international visitors back, which I 
agree is absolutely paramount. But, as has been discussed this 
morning, there are instances beyond our control that could have 
impacts on that.
    There are other regulatory issues, tax issues, that are in 
play day in and day out affecting the travel and tourism 
industry, and what we need to do is really find a way to 
maintain that focus on the industry and ensure that we continue 
to sort of foster this industry, which as I stated in my 
testimony, not only creates jobs, but generates significant tax 
revenues for the Federal Government, for State governments, for 
localities. And, what we've seen across the country as well is, 
this is an engine for economic development in cities, and small 
towns, and rural areas, and that really is sort of the larger 
context. And, I think it's important to take this opportunity, 
as we move forward, to keep the focus on the industry as a 
whole.
    Mr. Towns. Mr. Sternberg?
    Mr. Sternberg. Thank you.
    Mr. Towns. Thank you.
    Mr. Sternberg. I would agree with my colleagues. The idea 
of putting together a comprehensive plan, promoting the United 
States as a destination on to itself, is very, very important.
    Of course, selfishly, I'd like to see a lot of that go to 
promoting travel to the Nation's Capitol, but this is the 
Nation's Capitol, this is the Capitol of democracy, and I think 
there is a message to be sent out to the whole world about the 
importance of the Nation's Capitol, but more so, to promote 
travel to the United States is very, very important.
    Our industry creates jobs. That is a tremendous economic 
stimulus. And, just on a local scale, as I mentioned, we raised 
a few million dollars here after the events of September 11 to 
promote travel and tourism to Washington, DC, it paid off. We 
have people back to work, where initially most of the industry 
was laid off right after September 11, they are all back to 
work now, or mostly back to work now. And, it's making a huge 
difference.
    I believe originally after September 11, the estimate from 
the CFO's office of the District of Columbia was that the 
impact would be something along the lines of $200 million. 
Because of the efforts of the marketing, the marketing dollars 
being put toward the program, that has been re-estimated to be 
a deficit of $20 million. There's certainly an impact there.
    Mr. Towns. A tremendous savings, yes.
    Mr. Nocera?
    Mr. Nocera. My comment would be that I think that there is 
a very wonderful opportunity here for the Federal Government 
and for the private sector to really think outside the box, and 
to come up with some very creative programs.
    I would tell you that the public/private partnership that 
Florida has had for 6 years now has worked wonderfully well. 
Through this public/private partnership, and the Florida 
Commission on Tourism, we have 28 members of the tourism 
industry from around the State of Florida, they are, indeed, 
some of the best and brightest tourism marketers in the state. 
And, by us being able to tap in to their expertise, we have 
been able to come up with programs that have truly been 
excellent.
    I would suggest that a public/private partnership on the 
Federal level might be a very interesting idea to look at.
    Mr. Towns. All right.
    So, let me make certain I understand. You are saying that 
this legislation, we should move forward with it as fast as we 
possibly can, but at the same time, in terms of the Chairman's 
comment, that we should look at a comprehensive approach to 
dealing with the problem. Is that the message I'm getting from 
all of you?
    Mr. Nocera. Yes, sir.
    Mr. Lounsberry. Absolutely.
    Mr. Towns. Okay.
    In particular, interest to the Federal Government was 
promoting heritage, of American's heritage, and patriotism, 
should this legislation give priority to the promotion tourism 
areas of significance to America's heritage, this having the 
dual purpose of promoting tourism and also nationalism at the 
same time? Should we give these kind of things consideration, 
or should we just put that aside and then let whoever is in 
charge of this national make a decision in terms of, you know, 
how this is dealt with?
    Mr. Stewart. Are you talking about the bill currently 
before the committee?
    Mr. Towns. No, more than that, going beyond that, you know, 
I mean in terms of the fact that, you know, there is certain 
sites that we feel that are very important that we'd like for 
people to see, because you are promoting, you know, our 
country, and what it's all about, and, you know, to be 
specific, you know, in terms of giving a couple examples, you 
know, I would say the Statute of Liberty in New York, you know, 
and other things like that that you would want people to sort 
of come and to see, and that we should sort of spend extra kind 
of time and energy in terms of getting people to do that, 
because we also want to promote certain other things, you know, 
at the same time.
    Mr. Stewart. I would leave that personally to the marketers 
and the experts. I think there is not one simple reason that 
everyone will be motivated to travel for, so my guess is, you 
would have to have several different kinds of pitches for 
different kinds of markets. Again, I'd leave that to the 
marketing experts, you would do focus groups, you would do 
research, you would see what motivates people.
    But, to your point, I think one of the beauties of travel 
and tourism is that there are so many different types of things 
to see, to visit, to enjoy, that that is why it's so important 
to have this kind of marketing program, so that we can touch 
upon all different people who are motivated for different 
reasons. Some people love coming to New York City, the urban 
centers, to see the Statute of Liberty and others. There's a 
great amount of heritage tourism throughout the country, 
agricultural tourism we've learned about, patriotic tourism. 
There's many, many different things to see across this country, 
and let's get the dollars and then have the experts figure out 
how to spend it.
    Mr. Towns. All right, thank you.
    Yes?
    Mr. Stewart. I would just add, I think your point is very 
valid from the standpoint of, particularly, from the 
international standpoint. A lot of visitors, they come to 
America to see America, to see and feel our American values, 
our way of life. They come to see, not necessarily all the 
manmade places that we have, but as much the natural beauty and 
really our way of life. So, I think it's, and I agree, it's 
something that you would certainly test from a marketing 
advertising standpoint, but I think it's certainly a very 
strong piece of how this evolves, as to what our product is, 
what our travel product is that we would be bringing together 
under an umbrella organization.
    Mr. Towns. Right, thank you.
    I have just one more quick question.
    You know, and I think this is to Mr. Nocera, I was 
interested in your comments that the State of Florida, at this 
particular time, has increased the amount of money that it is 
spending in terms of advertising. What happens in most cases, 
and, of course, the gentlewoman from Colorado even pointed it 
out, that when you have sort of budget crunch the first thing 
that goes is the advertising budget. I mean, how did you 
convince your state, or who convinced your state, that this was 
a smart thing to do, which it is a smart thing to do, because 
that's the time you spend, you know, to advertise, when you 
find that things are going in the wrong direction.
    Mr. Nocera. I would certainly give credit to our Governor, 
Jeb Bush, whose leadership has been just phenomenal throughout 
this entire problem time that we've been going through. And, it 
was Governor Bush who came forward and offered to redirect $20 
million of his budget to be able to provide this cash infusion 
for tourism marketing, with the approval of the legislature. 
And, that has shown just great leadership, and it's been a 
great program.
    Mr. Towns. Am I correct in assuming that that happens in 
most cases, right, when you have a budget crunch, the first 
thing that goes is advertising.
    Mr. Sternberg. Well, Mr. Congressman, if I may.
    Mr. Towns. Yes.
    Mr. Sternberg. Actually, the basic business tenet is that 
when sales are down you better increase advertising, and that's 
what we are saying here.
    Mr. Towns. Yeah. But, does that happen, though, because I 
was listening to my colleague, Congresswoman DeGette from 
Colorado, who said that, you know, they got rid of advertising. 
And, of course, it seemed to me that's the wrong thing to get 
rid of.
    Mr. Sternberg. Absolutely.
    Mr. Towns. You know, and that's----
    Mr. Sternberg. And, she said it took them 8 years to 
realize they made a mistake.
    Mr. Towns. Yeah.
    Mr. Lounsberry. And, it was a wonderful windfall for Utah.
    Mr. Towns. Thank you.
    I yield back to the Chairman.
    Mr. Stearns. Thank the gentleman.
    The gentleman from Oregon, Mr. Walden.
    Mr. Walden. Thank you, Mr. Chairman.
    You all just keep talking about how you need to advertise 
in a down economy, because in my other life I'm in the radio 
business, so I really like this talk about the need to increase 
your advertising budgets. I happen to also believe in that 
concept as well.
    I also appreciated your comments about seeing the natural 
wonders, and while I want people to come visit our Nation's 
Capitol and admire our seat of government, I want them also to 
think about Thomas Jefferson, the great State of Virginia, but, 
moreover, what he facilitated with the expansion of our country 
through the Lewis and Clark expeditions, which, by the way, 
will be celebrated next year in its 200th anniversary all the 
way out to the end of Oregon Trail in Oregon, and that's a 
natural wonder which doesn't require a lot of capital 
construction. You just come see what nature did, and spend a 
lot of money while you are there.
    I have a question about this legislation specifically, 
because I see that while I thought our State was fairly 
aggressive in its marketing standards, we're fourth from the 
bottom, which makes me wonder if some of what we do is more in 
partnership with the local fund-raising that occurs mainly, 
frankly, through a hotel/motel tax in most communities. I'm 
wondering about how other States do that, because I see these 
numbers here, you know, Florida at $10 million, and we get 
another almost $6 million out of this bill. Oregon is at, I 
think, $750,000 or something, and we get $420,000. Does 
Florida, for you who are from Florida, and these other States, 
is it pretty standard that it's the local sort of fund-raising 
that goes together with a State match, or is it more reliant on 
what the State does?
    Mr. Nocera. Our whole reason for being is to provide, first 
of all, an umbrella to market the State and for the tourism 
industry to come under that umbrella and join with us in 
marketing Florida. We protect and build the brand of Florida, 
and we help and assist the tourism industry for them to be able 
to develop their own individual brands and provide marketing 
programs for their own individual businesses.
    Our funding, on a local level, if I was speaking for the 
Greater Orlando Convention and Visitors Bureau, Orlando Orange 
County Convention and Visitors Bureau, they receive their 
funding from, indeed, what's called a bed tax, a local option 
bed tax. On a State basis by State statute, our public share of 
dollars that comes to VISIT FLORIDA comes from a surcharge on 
rental cars in the state.
    Mr. Walden. Oh, okay.
    Mr. Nocera. So, there's at least two funding mechanisms 
that are in place within the State of Florida, one that's 
basically----
    Mr. Walden. But, does your-excuse me a second, does the 
money raised locally flow to the State and then come back, or 
is it----
    Mr. Nocera. No, it does not, it stays-it's a county issue.
    Mr. Walden. I see, so those numbers would not be reflected 
in the data here we have.
    Mr. Nocera. That is absolutely correct.
    Mr. Walden. That's probably the way it works around the 
country. All right.
    Mr. Stewart, I believe you are the one who said there are a 
lot of other issues affecting the industry and its ability to 
attract tourists and all, including regulatory and tax issues. 
While that's not the subject of our discussion today, I am 
curious about that as well, if you might just take a minute to 
elaborate on a couple of the major impediments that you see 
that we might also need to focus on.
    Mr. Stewart. Well, one area in tax policy that I think 
could help the overall travel and tourism industry, and this 
would really deal with the domestic aspect of it and would also 
be beneficial regardless of any other incidents that may occur, 
unfortunately, due to terrorism or other world events.
    As the members know, the business meal and entertainment 
tax deduction had been reduced over the years, and the spousal 
travel tax deduction has been eliminated.
    Mr. Walden. Right.
    Mr. Stewart. Both of those items, with an upward revision, 
would do much to stimulate travel, focusing on the business 
travel, on the business meal deduction.
    The reason it's so important is that those dollars ripple 
throughout the economy. When somebody is going out on a 
business-businesses have cut back both on advertising, but as 
well on travel and entertainment.
    Mr. Walden. Sure they have.
    Mr. Stewart. And, you want to give people incentives to 
start that activity again. Increasing the business meal and 
entertainment deduction would do that. And, on the spousal 
travel, what we have is when people go to meetings, or 
conferences, or conventions, if you give them an incentive to 
bring their spouse or partner with them, you not only have one 
person traveling, you now have two persons traveling. And 
again, two people flying on an airplane, there are two people 
staying in a hotel, two people eating in a restaurant, two 
people shopping, those dollars ripple throughout the economy in 
ways that we really haven't seen in any other sector of the 
industry.
    So, those are just two examples in tax policy that I think 
we can focus on.
    Mr. Walden. Okay. That can also be very expensive if you 
are the other spouse in the conference attending the meetings 
when the spouse is not, and has a lot of free time to shop. 
There is this other side, the wallet.
    Mr. Stewart. We'd love to have them in New York and 
encourage that activity.
    Mr. Walden. My time is expired.
    I appreciate your testimony today, it's very helpful. This 
is a very important industry, not only to my state, but to our 
country, and to the people who work in the industry, I know how 
hard hit you've been, to the extent I can understand that, and 
we wish you well and we'll do what we can to be helpful.
    Thank you.
    Mr. Stearns. I thank my colleague.
    I just would add before we close, and my ranking member 
might have some closing comments, too, but the Department of 
Commerce promotes goods, and they do that quite aggressively 
and the Export/Import Bank is spending money promoting goods. 
So, the United States has to realize that tourism is a product, 
just like any other product, and should extend that same kind 
of aggressive approach because that's dollars, and that's jobs, 
and that's a clean industry.
    The other idea that Mr. Towns touched on, which is very 
fundamental, is what we are trying to do is promote democracy. 
So, the larger issue when you look at tourism is not just jobs 
for the restaurant and hotel industry, but you are promoting a 
way of life, and you are promoting democracy in a larger sense, 
prosperity, freedom and something that all countries should 
view. So, when Mr. Towns says the Statute of Liberty is one, 
that's one of many, in terms of----
    Mr. Towns. Only because that's in New York.
    Mr. Stearns. [continuing] that's right, New York.
    But, his point is well taken, is that you can talk tourism, 
but we could talk about promoting our way of life and the 
importance of it. And, when people come over here and see it, 
then they go back and say, this is the kind of lifestyle I 
want. These are the kinds of choices I have.
    Joshua Hammond wrote a book, ``The Seven Cultural Forces 
That Define Who We Are As Americans,'' and the No. 1 was 
choice. We want choice in our food market. We want choice in 
our clothes. We want choice in automobiles and everything.
    Most countries don't have that choice, particularly, in 
some of the Third World, so, obviously, when they come over 
here they'll see that and they'll take that back.
    And, many people think that's why the cold war, Russia, 
collapsed, is because the people saw what was happening here, 
and the Presidents, Gorbachev would come over here and see it 
and he'd say, our system is not working, this system is 
working, we should privatize or perestroika and move toward 
that.
    So, I'd like to conclude by saying that I want to thank you 
very much for coming, and your waiting through our vote, but 
you are on a mission. It's a mission to promote tourism, but 
it's a larger mission, to promote our way of life and get 
international travelers to see this. And, in so doing, we'll 
create a more stable society, because more countries will have 
the freedom and the three pegs of cultural identity, plus 
democracy, plus free enterprise. And, with those three we'll 
have a stable type of environment, and democracies don't go to 
war, they usually defend, and it takes a long time to promote 
democracy. And, if we can promote that, we have a big mission 
here.
    So, I'll ask my ranking member.
    Mr. Towns. Thank you very much, Mr. Chairman.
    Let me thank all of you for coming and testifying, and you 
have convinced me that we definitely need to do more.
    So, Mr. Chairman, I'm very interested in putting together 
with you that comprehensive bill to be able to sort of look at 
some areas that we did not talk about, that this bill does not 
actually address. So, I'm hoping that we can do that, and do it 
in a timely fashion, recognizing that we want to get this out 
there as fast as we can, sort of get it moving, but at the same 
time don't look at this as a solution to the problem, but come 
back with a comprehensive bill that, you know, we hope will be 
able to address some of the other issues that we've talked 
about here today.
    So, thank you very, very much, and thank you witnesses, and 
I yield back.
    Mr. Stearns. I would suggest the Travel Industry 
Association of America, if they have sort of a comprehensive 
plan that they would like, the National Restaurant Association, 
they have been in my office, I have seen their long list of 
things, but I think that if we can come down with something 
that you would recommend as a first start that would be 
helpful. And, obviously, New York and Florida would be helpful 
if you want to make part of the record anything that would help 
us to come up with a long-term strategy, because I think we 
sort of dropped the ball here, and with what we hear on the 
Meet the Press and every day, it gives concern to me for the 
long term survival of tourism if we don't have in place this 
plan.
    So again, thank you very much, and the subcommittee is 
adjourned.
    [Whereupon, at 11:17 a.m., the subcommittee was adjourned.]
    [Additional material submitted for the record follows:]

  Prepared Statement of John P. Connors, Executive Vice President for 
          Public Policy, American Hotel & Lodging Association

    Chairman Stearns, Ranking Member Towns, and members of the 
Subcommittee, my name is John Connors and I am the Executive Vice 
President for Public Policy of the American Hotel & Lodging 
Association. I am pleased to be able to give this testimony on H.R. 
3321, the American Travel Promotion Act (ATPA).
    The American Hotel & Lodging Association is a 92-year-old 
federation of state lodging associations throughout the United States 
with some 13,000 members worldwide, representing more than 1.7 million 
guest rooms.
    AH&LA provides its members with assistance in federal governmental 
relations, operations, education, and communications, and we lobby 
Members of Congress to provide a business climate in which our industry 
can continue to prosper.
    The lodging industry is an integral part of the economy in every 
congressional district in the United States. The industry employs 
nearly 2 million people, and the travel and tourism industry is the 
first-, second-, or third-largest employer in 29 states. The tourism 
industry pays $99.5 billion in federal, state, and local taxes each 
year.
    No sector of the U.S. economy was more damaged by the terrorist 
attacks and subsequent recession than the travel and tourism industry. 
While some researchers have predicted a quick recovery, others foresee 
a continued economic struggle. For example, a study released this month 
by InsightExpress, an independent online market research firm, 
estimates that 40 percent of Americans will forgo a vacation this 
summer. The data relating to business travel is even more stark.
    The following findings by the Travel Industry Association paint a 
bleak picture for the industry:

 The September 11 attacks, combined with an already weak 
        economy, hit the travel and tourism industry particularly hard. 
        In the fourth quarter of 2001, forecasting predicts a 12 
        percent decrease in business travel and a 9 percent drop in 
        leisure travel, compared to the same period in 2000.
 In 2000, the U.S. travel industry generated $584 billion in 
        revenues, including international passenger fares, from 
        domestic and international travelers. These travel revenues 
        generated 7.8 million jobs for Americans, with $173 billion in 
        payroll income, and $100 billion tax revenues for federal state 
        and local government.
 Projections foresee a $39 billion loss in spending by domestic 
        and international travelers during 2001.
 Total domestic travel volume by Americans is expected to 
        decrease 3.5 percent and total inbound arrivals are projected 
        to decline nearly 13 percent for full-year 2001.
 Total domestic and international travel-generated employment 
        is expected to show a dramatic decline in 2001. According to 
        recent reports, 453,500 jobs directly related to travel and 
        tourism will be lost this year, down 5.6 percent from 2000. An 
        additional 74,000 jobs will be cut in 2002 for a two-year total 
        of 527,400 jobs lost from 2000 levels.
    Representatives Mark Foley [R-Fla.] and Sam Farr [D-Calif.], co-
chairmen of the House Travel and Tourism Caucus, have shown great 
bipartisan leadership in proposing this new idea for tourism promotion 
which would help ensure the future vitality and growth of the travel 
and tourism industry.
    Each state currently has an office responsible for promoting that 
state as a travel destination. H.R. 3321 would leverage these existing 
state funds by providing $100 million to be distributed among the 
states for travel promotion based on their current budget.
    According to the sponsors, the features of the bill include:

 ATPA would provide $100 million for a 50/50 grant program to 
        state and territory travel and tourism offices to promote 
        travel and tourism through advertising.
 This legislation establishes a formula where state and U.S. 
        territory travel and tourism offices would be eligible for 
        funding based on the amount of money spent on advertising in 
        2000 (a percentage of the total national travel and tourism 
        advertising expenditures). For example: Hawaii spent $12 
        million in 2000 on advertising out of $168 million dollars 
        spent nationally, or 7 percent. It would then be eligible for 7 
        percent of $100 million or $7 million, under ATPA.
 Every state and territory would be eligible for a base amount 
        of $100,000. This ``floor'' would ensure every state and 
        territory would have access to funds, regardless of their 
        relative percentage to national expenditures on travel 
        promotion advertising.
 The program would be open for 9 months, beginning on the day 
        of enactment with all excess funds returning to the Treasury 
        after that period.
 The program would be administered through the Department of 
        Commerce.
 State and territory travel and tourism offices would have 
        complete autonomy in spending the money as long as it was 
        directed towards travel promotion advertising as defined in the 
        legislation.
    We believe the American Travel Promotion Act's approach would be 
particularly effective because:

 It allows states to use the grant funds for marketing and 
        promotional programs that they find most effective in touting 
        their unique attractions and destinations;
 It contains a sum certain of appropriated federal funds to be 
        distributed during a finite period of nine months to each state 
        and territory according to a simple, non-subjective formula; 
        and
 It creates no new bureaucracy and would not require any 
        additional federal employees to be hired. It would simply 
        supplement the states' existing tourism promotion budgets.
    ATPA will be a tremendous boost to the travel industry in every 
state in the Union. Putting money into the hands of the state travel 
promotion offices to leverage their existing efforts will help the 
entire industry get back on its feet.
    We urge Congress to quickly pass this important legislation.
                                 ______
                                 
  Prepared Statement of Mark McDermott, Chair, Western States Tourism 
                             Policy Council

    These comments are respectfully submitted by the Western States 
Tourism Policy Council (WSTPC) with regard to the May 23, 2002, hearing 
by the Subcommittee on Commerce, Trade and Consumer Protection to 
consider H.R. 3321, the American Travel Promotion Act. The WSTPC 
strongly supports H.R. 3321. We believe this legislation is vitally 
needed to stimulate a lagging travel and tourism industry. The full and 
complete revival of travel and tourism will mean jobs and economic 
growth for the entire nation.
    The WSTPC is a consortium of thirteen western state tourism 
offices: Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, 
Nevada, New Mexico, Oregon, Utah, Washington and Wyoming. The mission 
of the WSTPC is to advance understanding and support for public 
policies that enhance the positive impact of travel and tourism on the 
economy and environment of each of its member states and their 
communities.
    In all thirteen of these western states tourism is a dynamic and 
vital part of the economy. It ranks among the top three providers of 
jobs in each western state and generates billions of dollars in payroll 
and taxes in the West. The economic vitality of hundreds of western 
communities is linked to tourism.
    As is well known, few industries were more seriously damaged by the 
tragic events of last September 11th than travel and tourism. Already 
experiencing a downturn as a result of the general economic slowdown, 
American travel and tourism was brought to its knees by 9/11. Although 
it has rebounded from its lowest points, recovery has been slow and 
inconsistent. International travel to the United States remains 
severely depressed.
    The capacity of state tourism offices to support and accelerate the 
recovery of tourism is now being hampered by the most severe state 
government budget cuts in perhaps two decades. The National Governors 
Association and the National Association of State Budget Officers 
report that state budgets are in the worst shape in twenty years.
    In the thirteen western states, domestic tourism (from outside the 
state) has declined 5%-10% since 9/11 and international tourism has 
declined more than 40%. The budgets for nearly every western state 
tourism office has been sharply cut--as much as 25%.
    The protracted fall in international tourism is particularly 
distressing because it has had historically such a positive impact on 
our national balance of trade. In the year 2000, for example, foreign 
visitors to the United States provided a $14 billion trade surplus for 
the United States. Although the entry of international visitors into 
the United States has become more difficult because of necessary and 
understandable national security requirements, it is vitally important 
to continue to encourage legitimate visitors not only for the positive 
economic impact but to show the world the strength and diversity of our 
nation.
    It should be further noted that, because the United States does not 
have a Federal tourism office to market and promote our nation as an 
international travel destination, state tourism offices have the 
primary public sector responsibility of marketing the United States as 
the premier global tourism destination. We believe most states will 
primarily use the grant money authorized by H.R. 3321 to boost their 
international marketing efforts, although the bill wisely leaves 
decisions about marketing strategies in the hands of each state tourism 
office.
    The member state tourism offices of the Western States Tourism 
Policy Council urge prompt passage of H.R. 3321. Congress could make no 
wiser investment in economic recovery--in jobs and economic growth.
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