remarks | U.S. Chamber of Commerce


Wednesday, August 3, 2005 - 8:00pm

San Diego, CA
August 4, 2005

Thank you, Mike Gehrisch, for that introduction and for your strong leadership in Washington. Mike represents the Destination Marketing Association International on the Chamber's Association Committee of 100. He's somebody we listen to and have worked with closely, especially on our Travel and Tourism initiative.

Mike is doing a great job making this organization more relevant and effective. Like the private sector, associations need to constantly evolve to remain competitive and meet their members' needs.

This organization is doing that and doing a better job of communicating to others the link between CVB marketing dollars and economic growth in their communities.

I appreciate the challenges you face every day. You compete against one another to attract business and leisure visitors who are presented with more destination choices than ever before.

You're also competing against a whole other set of circumstances that you couldn't have possibly envisioned four years ago:

The lingering affects of 9/11 and new travel security measures resulting from it; stricter visa and border security policies that discourage travel to the United States; higher taxes and fees on travel and tourism industries; and, a commercial aviation infrastructure and industry badly in need of repair.

All of these things act as incentives for people to stay home, and that's bad for your industry. But these challenges aren't yours alone. They are the challenges of the entire business community.

That's because few, if any, industries have a greater economic impact and generate jobs and commerce like travel and tourism does.

Let's remember that one out of every eight people in the U.S. private-sector workforce is employed directly or indirectly in travel and tourism related jobs...

That international and domestic travelers combined spend $1.5 billion a day in the United States…

And that travel and tourism is a $500 billion industry that contributes nearly $100 billion a year in tax revenue for federal, state, and local governments…funds that are used for health care, education, transportation, and other critical needs in your community.

How can travel and tourism remain a vibrant, competitive industry in the United States when traveling here is dreaded and avoided whenever possible?…

When flights are routinely delayed and lines stretch forever…

When we make foreign visitors jump through all sorts of hoops just for the "privilege" of coming here to spend their money…

And when we tax travel and tourism more than any other product or service, yet we don't spend nearly enough of those tax dollars marketing ourselves as a destination.

Revitalizing travel and tourism and restoring America as the most open, welcoming, and secure nation on earth is one of the most important economic competitiveness challenges of our time.

I'd like to take this opportunity to share with you some specific ways in which to meet that challenge.

First, we need to create the right balance between security and mobility and make our country more welcoming to international visitors.

When people don't feel safe, they stay home. So adequate security is important. But by the same token, the wrong kind of security measures can deny travel to legitimate visitors and cause very long delays for others - and that also keeps people at home.

We have to do a better job with the whole visa process. Visa denials and processing delays are a serious problem. It's not unheard of for a visa applicant to wait three months just to interview.

We need to increase visa resources and staff and streamline the process.

We also have to show greater flexibility in implementing new passport requirements.

For instance, Italy, France, and Austria probably won't meet the end-of-October deadline by which travelers from the 27 Visa Waiver Program countries must have digital photo passports.

These three countries combined send more than 1 million visitors to the United States every year. If we don't want to see this number dwindle, then we have to exercise greater patience and flexibility.

A separate initiative mandates that everyone traveling within the Western Hemisphere-including Americans heading for Canada and Mexico-be required to have a passport by 2008.

There should be some flexibility in the type of documents accepted as substitutes for a passport, or else we'll see millions of travelers turned away at border crossings and airports-at a heavy economic price.

We can't afford to take travel to America for granted. This is a beautiful country, with lots to see and do. But there are plenty of alternatives, and travelers will vote with their feet, plain and simple.

Trade shows are choosing locations outside the United States, and business leaders around the world are telling us, "We're not coming to the United States to do that deal; we'll meet you somewhere else."

Though we have seen a bump in international travel to the United States in part because of the weak dollar and a stronger global economy, it is declining as an overall percentage of global travel.

According to the Travel Industry Association of America, U.S. market share of overall global travel has declined 38% since 1992.

So the Chamber will continue to work with the Departments of Homeland Security and State to sort out these security issues, and we're counting on your marketing skills to help make the United States a favorite destination.

Second, we must resist overtaxing travel and tourism industries. Already, they incur more arbitrary taxes, user fees and add-on charges than any other industry worldwide.

In an era of tight budgets, hotel rooms and rental cars are easy targets for increasing city revenues. Why? Because taxes on these items are paid by residents of someplace else-no angry voters for the local politicians to worry about.

But where do these tax revenues go? Unfortunately, more and more dollars are being diverted away from CVBs and their destination marketing efforts and instead are being used to plug shortfalls in other city government programs.

The airline business has a particularly difficult tax and fee structure. U.S. passenger airlines this year will collect $15 billion-or 20% of total passenger dollars-in taxes.

In 1972, taxes accounted for 7% of the average price of a ticket. This year, the average is 26%.

A big chunk of this increase is due to enhanced security post-9/11. No one is arguing against improved security, and no one is asking to be relieved of paying their fair share of the cost.

But increased airport and airline security is a matter of national security and should be treated as such. The airlines and their passengers should not have to shoulder the entire financial burden of protecting our homeland. That responsibility should be spread out among all taxpayers.

That brings me to my final point. We must deal with the crisis in aviation-an industry that accounts for $900 billion in U.S. economic activity, 10 million American jobs, and 9% of our gross domestic product.

From a passenger volume standpoint, the airline industry has bounced back from 9/11. 688 million passengers boarded planes in the United States last year, and we will reach 1 billion passengers before the year 2015.

This increase in traffic, though welcomed, has exposed an infrastructure that is outdated and at risk of falling apart.

Our skies are congested and our airports are on the verge of gridlock. Parking facilities and roads leading to airports are being overwhelmed by air travelers. We've built only one new major hub airport in the past 20 years.

With years of neglect, we've allowed our aviation system to reach its breaking point, and only a top-to-bottom transformation of the industry will set it right.

We need to design and build an airport and air traffic management system with the capacity to safely and efficiently handle much greater volumes of traffic and cargo-now and in the future. This is absolutely critical to safety, national security, the environment, and economic competitiveness.

The hard part in getting there is deciding how to pay for it. There's little consensus on this issue within the industry.

But I do think everyone agrees on this much-the current aviation financing mechanisms are insufficient to meet user demand.

For starters, we have to ensure that the Aviation Trust Fund, which is financed by airplane ticket fees and taxes, be used only for its original purpose-to pay for infrastructure improvements where they are needed most, and not for FAA operations or other purposes.

But the Trust Fund by itself isn't sufficient to pay for the kind of system overhaul we need, and so we should be thinking about alternative, long-term funding mechanisms, such as bonds, that don't require an annual vote in Congress.

There's another side to the aviation crisis, and that's the poor financial state of the commercial airline business. The marketplace needs to look a whole lot different than it does today if the airline industry is to return to financial health.

Quite simply, the market is overcrowded-in part because natural attrition is not allowed to occur.

There are 18 new market entrants awaiting certification-and there are no airlines leaving the market, though as we know, some are in no condition to remain operating by themselves.

The industry needs consolidation. It happens in the insurance, computer, manufacturing, and just about every other industry, but it rarely happens in the airline industry.

It's nearly impossible for an airline to go out of business, and sometimes it can be equally as difficult to get the government to approve a major merger or acquisition. The government should allow market forces - not itself - to determine market winners and losers.

At a recent Chamber-hosted aviation summit, a CEO of a major airline said that members of Congress and other policymakers are tired of hearing about the airline industry's problems from executives within the industry. This CEO said that for real change to occur in aviation, Congress needs to hear from the broader business community.

The same is for the entire travel and tourism industry. The larger business community must raise awareness of the industry's tremendous economic contributions, call attention to the challenges it faces, and promote travel to and within the United States even as we continue to enhance security.

That's what the Chamber's Travel and Tourism Across America initiative is all about. Our grassroots network of local chamber, CVB, and business community leaders numbers several hundred individuals - and it's growing. If you're not already involved, I hope you will be.

With the Destination Marketing Association International as an important partner, we have held Travel and Tourism Summits three years in a row at Chamber headquarters, waking up policymakers in Washington to the importance of the industry and the challenges it faces.

We've started a Web site to develop our grassroots network and mobilize members, lobbied Congress for Department of Commerce funds to market the United States, and this fall the Chamber and this organization will begin hosting regional travel and tourism forums, beginning in Chicago and Orlando.

Of course, the Chamber will also continue to work with DHS and the State Department to implement policies that reduce unwarranted travel delays and hassle.

Ladies and gentlemen, openness and the ability to move about freely and expeditiously are important to our freedom, to our economy, and to your industry.

These principles must never be compromised or minimized. Working together, the travel and tourism industry and the U.S. business community led by the Chamber can ensure that they aren't.

We can achieve workable security solutions, make the United States a more appealing place to visit, and ensure the competitiveness of the U.S. airline industry.

The Chamber couldn't ask for a better partner in this effort than the Destination Marketing Association International and its members. Thank you very much.