3. COOPERATION WITH STATES

Most frequently, the aspects of domestic travel promotion not undertaken by the private sector have been addressed by state and local governments, regional tourism councils and other quasi public/private interests.

Since 1974 state tourism budgets have grown by 67.6 percent and now total more than 60,000,000 annually.

Any Federal tourism policy must recognize and appreciate the value of this commitment and work in concert with it. Inasmuch as the NTPS acknowledges this goal through its recommended formation of an Intergovernmental Travel and Recreation Planning Board, we endorse such a move.

4. COOPERATION WITH INDUSTRY

With the completion of the NTPS and the prospect of new enabling legislation we are, at long last Mr. Chairman, on the verge of a true "full cooperation with (other) public and private sector entities" as your own letter of transmittal accompanying the NTPS report so ably states.

No goal could be nearer and clearer to our hearts, or more elusive to the grasp. The industry has much to offer. It is ready, willing . . . and able as never before... to enter into a practical, functional and pragmatic partnership with government .. one where our skills in management of resources, planning for effective land-use, coordination of data and policy can be effectively utilized by our colleagues in Federal roles.

We must design a mechanism for involvement that is flexible enough to call forth the best that our industry has to offer. . . in donated time and expertise at all levels, and to justify that involvement on a continuing basis.

I am most conscious of the difficulties in herent within the Travel Advisory Board .. or the short life of the ill-fated Advisory Committee on Tourism and Recreation to the Federal Energy Administration. Neither body has optimally used the industry executive talent available to it.

When you asked me to accept this assignment, Mr. Chairman, I took the occasion to ask a number of my colleagues in the industry to share their views with me. Many responded, some will appear before the committee in coming days. I have to tried to reflect their views. Many are compelling . . . and while very supportive of this committee's efforts in moving the National Tourism Policy Study forward are perhaps best summarized by United Airlines, Inc. Chairman Eddie Carlson's comment that ".. too often the very large contribution to the national welfare that our industry makes is not adequately recognized."

I submit that these criteria, presented on behalf of the lodging group are still appropriate . . . for all tourism . and to them I would like to add two addi tional elements advocacy and access.

If a national tourism policy was in place whose enabling legislation called for adherence on the part of agencies whose actions affected tourism . . . and mandated the chief official responsible for tourism to be an advocate and to enforce and defend that policy's interests... then perhaps tourism could be heard in CAB action, proposed DOE energy contingency plans, USDA nutrition/labelling studies and FTC overbooking probes and consensus achieved before it became necessary for Congressional intervention to resolve difficult and politicized issues. The tourism industry must have access to government at all levels . . . and particularly at the highest levels where broad policy issues are forged which inevitably affect tourism's interests. As the third largest industry in the nation, tourism, by definition, should be heard in the planning stages, not reaction stages, of national policy regarding energy, the economy, employment, others. An effective national tourism policy must establish, by enabling legislation, that accessibility within the executive office of the President.

Therefore, Mr. Chairman, in keeping with the objectives of these hearings, we would urge the committee to consider two major factors in formulating a national tourism policy and in designing a useful implementing mechanism.

1. That the formal private sector advisory function to be set forth in the enabling legislation be clearly structured in such a way as to command the involvement of the highest level of industry officials and correspond to the highest possible level of responsiveness from the Federal Government, For example, any private sector body, such as the "Travel and Recreation Development Board" contemplated in the National Tourism Policy Study must carry the same weight

and stature as the Government's own inter-agency coordinating body . . . and must "plug into" the Administration at the same level.

2. That the formal responsibility for coordination of federal tourism policy rest within the office of the President itself. . . and that the enabling legislation carry with it a mandate for stewardship of that policy and an accountability to the Congress of the United States to ensure that it is being carried out.

We have no basic quarrel with the concept of the National Travel and Recreation Policy Council called for by the National Tourism Policy Study as a body comprised of the agency and department heads whose authorities embrace tourism and travel functions.

To accomplish both these goals, we advocate a rather minor, but we think important, modification to the National Tourism Policy Study recommendations. We propose that both bodies. . . the governmental National Travel and Recreation Policy Council and the private sector's Travel and Recreation Development Board... feed their analyses and input through the same executive committee containing joint representation of both groups. This executive committee shall be chaired by an assistant to the President of suitable rank. A preliminary chart outlining this view is attached.

Make no mistake, we do not advocate the establishment of any massive new bureaucracy for tourism, or even a significant enlargement of the President's staff, which he has pledged to reduce.

But we do feel strongly that the tourism and travel industry is large enough .. and the needs of tourism and travel so pervasive across traditional agency and functional lines . . . as to command the attention of senior-level policy coordination within the highest levels of advisors to the President of the United States.

We feel this approach is not without precedent as seen in the recent creation by the President of the Inter-Agency Coordinating Council (IAAC) for urban policy, to be chaired by presidential assistant Jack Watson. Such a group designed to coordinate federal programs and policies affecting tourism would go a long way toward providing those crucial functions of access and advocacy necessary to ensure that the "non-essential" label is never again laid at the doorstep of this industry.

Mr. Chairman, I have greatly appreciated this opportunity to be with you and to share some of my observations about the work that is past... and the challenges that lie ahead.

You, the Committee, the Senate . . . all of us have a great stake in working hard to artfully shape a national policy for tourism and a viable, acceptable methodology for bringing it about.

The task is arduous . . . and there will be dissonant voices. We must be prepared to listen, to share, to argue, to compromise . . . and to lead . . . in forging our destiny.

We must be ever mindful that the goal, the resulting good it can bring around the globe, is larger than any one of us. We must remember the admonition of Robert Lonati, Secretary General of the World Tourism Organization, in a wire to me just last week, and I quote:

"The States' position on tourism has too often been guided by economic aspects while the most important impact of tourism on the social and cultural life of nations has been neglected."

Above all, we must be prepared to love . . . our colleague, our customer, our adversary and our fellowman . . . remembering that God's great commandment throughout the Old and New Testaments . . . as the resolution to all strife and tension... is simply to love our neighbor as ourselves.

In that spirit, Mr. Chairman, I offer my gratitude, and that of my company and my industry, for your leadership. I pledge my continued dedication and involvement in the months and years ahead.

Together we shall all prevail.

Senator INOUYE. Our next witnesses will be four men who will constitute a panel representing the lodging industry. First, the president of the Homestead, Mr. Thomas Lennon; second, the vice president of Howard Johnson, Mr. Wallace Lee; third, the general manager of Magee Hotel, Mr. Richard Benefield; and fourth, president and chief executive officer of the Sheraton Corp., Mr. Howard James.

Gentlemen, we are most grateful for your participation this afternoon, and your presence here gives great legitimacy to our efforts. We thank you for your participation.

STATEMENT OF THOMAS J. LENNON, PRESIDENT, THE HOMESTEAD, HOT SPRINGS, VA.

Mr. LENNON. Thank you, Mr. Chairman.

My name is Thomas Lennon and I'm president of the Homestead, in Hot Springs, Va. I am also chairman of the American Hotel & Motel Association's Governmental Affairs Committee.

It is an honor for me to participate at the opening day of hearings on the National Tourism Policy Study representing the resort segment of our industry. I am also proud to be associated with this lodging panel as each member here is either associated with A.H. & M.A.'s Governmental Affairs Committee or its Industry Advisory Council. You may recall that during phase II of the study, many of us were called to Washington to provide the views of the lodging industry to the Arthur D. Little people and staffs of this committee.

I am pleased that I now have the opportunity to inform this committee that our association fully supports the recommended "policy statement" that appeared on pages IV and V of the "National Tourism Policy Study Final Report" and further elaborated on in page 34 of the same report.

I know I speak for all members of our association when I say how grateful we are for the efforts of Senator Inouye who has provided the impetus for this study, and Senator Cannon and others on the committee who have lent their support to these hearings.

In addition to A.H. & M.A.'s support of the policy statement, you wish also for the participants to comment on the need for a mechanism to coordinate Federal tourism policy.

I believe that it is imperative that agencies of the Federal GovernIment which have a tourism involvement be bound together within a structure as generally presented in the final report on pages 126–128.

However, I wish to emphatically state that whatever Tourism Policy Council is finally decided on, it must be chaired by someone appointed by the President and directly responsible to the President at the White House level.

The administration has already created an "Interagency Coordinating Council" (IACC) to handle urban affairs and using as a chairman an assistant to the President. For the same administration not to provide White House support to a $115 billion industry employing approximately 5 million workers and ranking in importance as the first, second, or third industry in 46 of 50 States, is unthinkable to me.

Respecting the question of how a Council would benefit tourism and especially resorts, let me say that two important things will develop. One, each agency will have a greater appreciation of tourism and thus, when making decisions of a regulatory nature, will better understand the impact their regulations have on our business.

For instance:

1. Law Enforcement Assistance Administration (LEAA), a part of the Justice Department, in the spring of this year promulgated an internal policy prohibiting its money from being spent for meetings held in resorts. How discriminating was this? Fortunately, we recently learned that they have rescinded this policy-thanks to the efforts of the association. But, how many dollars were lost by resorts as a result of this type of action?

2. IRS has instructed beginning this year that employers retain a record of all employee "charged tips" so that we will act as watchdogs for them. Is it the job of American employers to do the work of the Revenue Service? In resorts, it is very common to "share" or "pool" tips with other employees. Can you imagine the paperwork, cost, and employee dissension we will face if on January 1, 1979, we are forced to comply with this regulation? We have asked for legislative relief on this question and are supporting a bill, S. 1674, introduced by, among others, the distinguished chairman of the Commerce Committee, Senator Cannon. It is still too early to tell how we will fare, but we are hopeful. Perhaps under the "Council" approach, the IRS would have had a better opportunity to study the impact their proposal would have on us; at least I think so.

Those are just two examples of where a Federal agency became involved in our business without any idea of their impact on us.

Second, in the area of coordination of agencies, a good example would be the conflict that currently exists between Labor and Treasury respecting the question of "value of meals."

Simply, the Labor Department permits a credit to be taken by the employer based on the reasonable cost of the meal. However, it would like that value to be as low as possible to insure a greater cash wage to the employee. On the other hand, the IRS wants the valuation to be higher for social security purposes. Consequently, employers in the hotel-motel and restaurant industries are whipsawed on this issue. Trying to comply with both agencies is near an impossibility.

Another area of where agency coordination and cooperation is sorely needed is between the USIA and USTS. Both agencies have tourism responsibility, but as the report in the "National Tourism Policy Study Ascertainment Phase" pointed out on page 71, a need to develop a uniform promotion policy is lacking.

At a time when the devaluation of the dollar makes America a great travel bargain and more importantly American resorts an affordable destination, we need promotion help right away.

Lastly, an example of needed coordination within one agency would be where the Commerce Department and the Bureau of Census are often at odds respecting data. Unfortunately, Census provides information on the tourism industry which is often outdated. Something must be done in this important area to insure accuracy.

In summary, the best reason I can think of for a Federal interagency tourism and recreation coordinating body is found on pages 15-19 in the "National Tourism Policy Study Final Report." How shameful it was for me to see the rating "poor" given to the coordination found to exist between Federal agencies with tourism involvement by the Arthur D. Little team.

It is my hope that this committee will support the concept of a Tourism Policy Council chaired by an individual appointed by the President from the White House staff.

In conclusion, I can't agree more with the statement made by tourism's great friend, Senator Inouye, when he said in a speech in Chicago in April 1978:

A national tourism policy must recognize the role of the private sector of the industry. In our free enterprise system, however, a Government policy can only recommend and encourage you. If it were to do more, it would necessarily further involve the Federal Government in private business. No one, in my judgment, advocates any further, pervasive Federal involvement.

That concludes my statement, Senator.

Senator INOUYE. Thank you very much, sir.

How do you comply with this conflict in the so-called value of meals?

Mr. LENNON. How do we comply? I don't understand.

Senator INOUYE. You said that the Departments of Labor and Treasury place a great burden upon you trying to comply with their conflicting policies regarding the valuation of employee needs.

Mr. LENNON. Well, one wants the meals to be as low as possible and the other one wants them to be as high as possible.

Senator INOUYE. How do you resolve this?

Mr. LENNON. Well, we haven't resolved it yet. We're doing the best we can to try to negotiate it.