I might add that the linchpin of this proposal is that the Council be "chaired" by an individual appointed from within the White House and responsible to the President. As a small businessman in the lodging industry, I have come to be aware of Federal agency decisions which often impact on our business. For instance: One. The Federal Highway Administration (FHA) in enforcing the Highway Beautification Act appears to have an indifference to the regards of small operators who may be off the interstate and primary system and are not part of a reservations network. For instance, we are downtown. We are 21/2 or 3 miles away, and unless we can put signs on the highways, it's very, very difficult to get the tourists to come off the highway. Frankly, without some form of visual advertising, it is near impossible to draw people off the highways to our business. On this point, I believe the Small Business Administration should be doing more coordinating with FHA to make them better understand our problem. Two. Another point that is very important to me, the U.S. Department of Agriculture in their inspection requirements prohibits a restaurant from purchasing meats at retail for resale in a restaurant. I believe that Federal inspection is proper and often needed. However, in our property which has the regional charm of the Pennsylvania Dutch country, we believe it important that we be permitted to purchase the best Pennsylvania Dutch scrapple and sausage for our customers, some of whom are overseas visitors. Unfortunately, USDA rules force us to purchase wholesale and thus, make us settle for mediocrity. It seems if we are in the business of tourism, we should proudly sell the best foods our region specializes in. Therefore, the USDA should review the inflexibility of their rules. Now an analogy might be this, Senator Inouye: Talking about the finest nut in the world, which is a Macadamian nut, you have scattered throughout the island of Hawaii small businesses operated principally by families that make candies, that make baked goods, using the Macadamian nut, and some of those products are now sold by many of the hotels, especially in islands other than Oahu, and if you would pass a ruling or the USDA, would pass a ruling that these hotels and restaurants might only resell products bought from C. Brewer or Castle & Cook, while those are fine companies, this would be both unfair to the hotels and restaurants, and unfair to the tourists that visit Hawaii. We have the same kind of problem with our products in Pennsylvania. Senator INOUYE. May I interrupt at that point? Senator INOUYE. When did this rule come into effect? Mr. BENEFIELD. It came into effect in this way, there are many State departments of agriculture that have abdicated their function, either for economic reasons or other reasons, and when the Pennsylvania Department of Agriculture no longer inspected hotels, restaurants, retail stores, wholesale stores, they abdicated this responsibility to the Federal Government; and when the USDA took over the inspections in Pennsylvania, they made this what we consider arbitrary ruling. They came into our establishment and tagged scrapple and tagged bacon and sausage, and said, "You may not use this." I said, "Why? It has Government inspection stamps on it." They said, "You purchased it from Davis Butcher on Light Street, Pennsylvania, and they are not a wholesale establishment." Well, we have fought them all the way. We came down to Washington and we finally were able to get at least one of our local suppliers to stop selling retail in order to be able to supply us, and this is a very discriminatory policy. Senator INOUYE. What was the rationale? That the wholesale food is much more wholesome than the retail food? Mr. BENEFIELD. There can be no rationale, Senator, because, for instance, if you're going to poison people, you're going to poison them. if you buy it retail or wholesale. There is no logical rationale. It just doesn't make sense. But I think that this is an important area for some action as far as our business is concerned. Senator INOUYE. I will make certain that Secretary Kreps is made aware of this. The CHAIRMAN. Better notify the Secretary of Agriculture. Senator INOUYE. She will get in touch with Secretary Bergland. Mr. BENEFIELD. Three. The Small Business Administration and the Economic Development Administration should look into the possibility of revising their minimum lending criteria downward to permit greater numbers of small businesses to qualify for small-scale loans. In addition, financial assistance programs should be expanded to support continued development of small businesses in the tourism industry. Four. In another area, DOD over the past few years has become a source of "unfair competition" to many small motel operators. Historically, small motel operators have located around bases with theidea of housing military people in transit. The rates charged are Government rates taking into account the salaries of our service people. Now, DOD has been aggressively moving in the direction of upgrading base housing and in many bases allowing people to stay who are not even on temporary duty station. The military should not be in the motel business. They have other more important roles to fill. Now, this does not affect me personally, but my colleagues in the small motel and hotel business have expressed this concern to me. In conclusion, I would like to stress that an important service to the small business sector by the Federal Government would be in the area of career-training programs. It would be most helpful if agencies within the Federal Government having tourism promotion responsibilities be encouraged to support efforts by vocational schools to train people in the hotel, motel, and restaurant industries. So those are just a few areas, but I'm particularly concerned about. the USDA. I also would like to state that over the years we feel that the chairman has been very, very sensitive to the needs of the small hotel people, and we appreciate the great concern that both you gentlemen have had. It's very helpful, and when we come to Washington we know that we are going to get an audience. Senator INOUYE. Thank you very much. I think all of you have very dramatically articulated what we have been contending with up until now, that there's absolutely no coordination between the various agencies here. I guarantee you that Secretary Kreps will hear of this because, according to what you tell me, I should now think about buying all of my meat wholesale. Something must be wrong with the retail meat. [The following information was subsequently received for the record:] U.S. SENATE, COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION, Hon. JUANITA M. KREPS, DEAR SECRETARY KREPS: Recently, during hearings on our National Tourism Policy Study, the Committee heard testimony from a number of witnesses regarding the failure of government agencies to consider adequately the impact of their policies and programs on various segments of the tourism industry; and the lack of interagency coordination of programs affecting tourism. For example, one small hotel owner testified that: "The U.S. Department of Agriculture in their inspection requirements prohibits a restaurant from purchasing meats at retail for resale in a restaurant. I believe that Federal inspection is proper and often needed. However, in our property which has the regional charm of the Pennsylvania Dutch country, we believe it important that we be permitted to purchase the best Pennsylvania Dutch scrapple and sausage for our customers, some of whom are overseas visitors. Unfortunately, USDA rules force us to purchase wholesale and thus, make us settle for mediocrity. It seems if we are in the business of tourism we should proudly sell the best in foods our region specializes in. Therefore, the Agriculture Department should review the inflexibility of their rules." When asked how this USDA regulation came into effect, he replied: "It came into effect in this way. There are many state Departments of Agri-culture that have abdicated their function, either for economic reasons or other reasons, and when the Pennsylvania Department of Agriculture no longer inspected hotels, restaurants, retail stores, wholesale stores, they abdicated this responsibility to the Federal government. When the Federal Department of Agriculture took over the inspections in Pennsylvania they made this what we consider arbitrary ruling. They came into our establishment and tagged scrapple and tagged bacon and sausage and said, "You may not use this." I said, "Why?" It has government inspection stamps on it." They said, "You purchased it from Davis Butcher in Light Street, Pennsylvania, and they are not a wholesale -establishment." In view of the earlier testimony of the Assistant Secretary of Commerce for Administration regarding the concern and emphasis your Department places on the economic importance of tourism, I felt you would want this matter brought to your attention so that in turn you might discuss it with the Secretary of Agriculture from the standpoint of reconciling the conflicting public policy principles involved. I would herefore appreciate a report on the issues which were raised by the witness in his testimony. Aloha, Hon. DANIEL K. INOUYE, DANIEL K. INOUYE, Chairman, THE SECRETARY OF COMMERCE, Chairman, National Tourism Policy Study, Committee on Commerce, Science, and Transportation, U.S. Senate, Washington, D.C. DEAR MR. CHAIRMAN: Thank you for your letter of October 5. My staff has talked with Department of Agriculture personnel about this situation which involves a Pennsylvania hotel owner who was told by Agriculture inspectors that he could not sell scrapple, bacon and sausage prepared by a local retail establishment despite his testimony to the effect that the product bore "Government inspection stamps". The Federal Meat Inspection Act of 1907 authorized the Secretary of Agriculture to permit retail dealers to prepare and sell uninspected meat products such as scrapple, bacon and sausage, provided that such sales were made only to consumers. Despite substantial revisions in the Wholesome Meat Act of 1967, Federal law still provides that retail sales of prepared meat products to con sumers are not subject to Federal inspection requirements. In such cases, however, the concept of consumer does not include restaurants and hotels. They are required to purchase prepared meat products from sources subject to inspection, which sources do not include retail establishments. The regulations issued by the Department of Agriculture pursuant to the 1967 amendments (7 CFR 303.1(d)) reflect these legislative provisions. Theseregulations have applied to Pennsylvania since July, 1972, when the State discontined its meat inspection program and became subject to Federal inspection programs. Department of Agriculture personnel informed my staff that the existence of State inspected meat products in the system during the 1972 transition from State to Federal inspection probably accounts for the hotel owner's statement that the product which Federal inspectors tagged as not complying with law "has Government inspection stamps on it". The Department of Agriculture has informed us that they have interpreted the law as flexibly as they believe they can. We have found no basis for contradicting their view and, accordingly, we believe that this is a matter which can only be resolved by legislative changes. Therefore, I do not feel my intercession with Secretary Bergland would be fruitful. However, as Assistant Secretary Porter noted in her September testimony on tourism policy, the Department of Commerce and the United States Travel Service will seek to work with other agencies in those cases where executive branch coordination and cooperation can be effective. Sincerely, SIDNEY SNEED, Acting Secretary of Commerce. Senator INOUYE. I believe Mr. James would like testify now. STATEMENT OF HOWARD P. JAMES, CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER, THE SHERATON CORP. Mr. JAMES. Yes, sir. Chairman Cannon and Chairman Inouye, I should introduce myself officially for the record so that if you prefer not to invite me back, you will know who you have here. I'm Bud James. I'm the president, chairman, and chief executive officer of the Sheraton Corp. I'm also a member of the American Hotel and Motel Governmental Affairs Committee and chairman of the Association Industry Advisory Council. The Industry Advisory Council is a committee comprised of the chief executive officers of the major U.S. hotel companies which was organized to provide a voice for that sector of the industry in the association. It's a pleasure for me to appear here today and if you will take my printed testimony-as I said once before, it coincides right down the line with what the other people have said-I would like to deviate from that and just make a few remarks because it would be repeating and taking your time if I did anything else. Senator INOUYE. Without objection, your prepared statement will be made a part of the record. Mr. JAMES. Thank you. I want to reiterate that we do not have a national policy nor do we have an international tourist policy. We are, as Madam Secretary said, having an excellent tourist year. It has been good for several years. I do not agree with her that that's a reason that we should not take a look at it and do something about it. It happens to be that if we have anything good going for us and we are healthy today, it's because we have done most of it ourselves. We have gone out and we have done our own advertising, our own promoting. We have represented ourselves around the world and we have, as Vice Chairman Walton so eloquently put it, developed our own friends and have brought them to this country. Several facts should be made known, I think, that should be included in the minutes of this meeting. You know, in Western Europe there are 330 million people who are capable of traveling and who will pay high rates and pay good air fares to travel. Of that group, 23 percent of them would like to come to the United States, but to date, only 1 percent of them have come here. Today, we are the best travel bargain in the world. The United States, with the devaluation of the dollar all over the world, is the best place for people to travel to, and yet only 1 percent of that 300 million people in Western Europe have come here. And what do we do in the face of all this? We close down our offices in those areas. We cut out the assistance that those people could have to come to the United States. Now I submit to you that the vacation dollar that comes into this country is a little better dollar than we generate here among ourselves because it brings no problems with it. It's good, clean, fresh money. It doesn't bring a school problem. It doesn't bring a welfare problem. It doesn't bring any of the other problems that we have to fight our way through to generate moneys here in this country. It creates jobs. We are talking about 5 million jobs today being created by the tourism industry in the United States and I can say that in 3 or 4 years from now, that figure can increased by 15 to 20 percent. We are the major source of providing minority and untrained labor a source of living in this United States and yet I submit to you and say before you today that we have no policy for bringing more people here. We have no policy for taking care of them when they get here. And I sympathize with you in your return to Dulles on your short flight. Just for a brief minute do I sympathize with you, because I do it three times a month. I know most of the Customs people in Boston and I still go through the same thing every time I come in. It isn't a matter of protecting the United States from my carrying something back in. It's a matter of having a little bit of authority and exercising it to the hilt. We don't welcome people into the United States. We prohibit them from coming here. The purpose of our being here today, of course, is to take a look at the report submitted to you by Arthur D. Little, and I concur with my colleagues in that I think they have done a good job in that they are recommending a council be formed out of the different agencies that have something to do with tourism. I concur with that. In cutting through the boilerplate that's in here, I would like to say that I believe that a principal Federal interagency coordinating council could be put together. It's going to be difficult. If you asked me to do the job I would tell you how I would go about doing it. I would have senior members of every one of these departments put on that council by law. I would have a senior head on the President's staff as the chairman of that committee and I would have a senior tourism person as a full-time staff person conducting that council so that that person knows the tourism business. I would also suggest that that legislation be passed that would include an industry advisory committee such as we have done in our own association comprised of the different elements of travel. The |