Airline Industry Association, the Hotel Association, the National Restaurant Association, the Association of Travel Agents all send a member to the advisory committee to advise that committee and work with that committee. That would fulfill the type job that Mr. Walton talked about and these are not dollar-a-year men. These are men who are here working for not a dollar. They will come for nothing and they would work full time at this because it's their livelihood. I believe that if senior people are made to report via a piece of legislation on their activities on a regular basis and that if they have a staff that can coordinate that council and if they have an advisory council on the outside that can bring in the facts that they don't have here at hand, that can be done and it should be done because I think nothing less should be offered for an industry that is as important as the travel industry and will in 2 or 3 years, in Herman Kahn's words and in mine, be the No. 1 industry in the United States. Thank you. [The statement follows:]

STATEMENT OF HOWARD P. "BUD" JAMES, CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER, THE SHERATON CORP., ON BEHALF OF THE AMERICAN HOTEL AND MOTEL ASSOCIATION

SENATE TESTIMONY

Mr. Chairman, Members of the Committee-I am Bud James, President, Chairman and Executive Officer of The Sheraton Corporation. I am 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.

The Sheraton Corporation is an international hotel company with 404 hotels and inns operating in 41 countries throughout the world. Sheraton properties employ more than 60,000 people and in 1977, gross revenues for our company exceeded $1.2 billion.

The Sheraton name is now carried on properties estimated in value at $2.5 billion, and by the early 1980's, properties currently on the drawing boards and under construction will increase that figure to a projected value of $5 billion. During this year alone, we will open 34 new properties in the United States and ten foreign countries.

It is a pleasure for me to appear at these important hearings of the National Tourism Policy. I believe that this is one of the most important steps in developing a true partnership between the tourism industry and the federal government. I have participated in this endeavor from the outset in the Phase II study. We provided input to that study and I am here now to talk with you about the more substantive stages of developing a National Tourism Policy and what is really most important, the enactment of that policy into law.

I am here to present one company's view on the subject of a national tourism policy. I would say that that view represents the opinion of most other major chain executives if not all of them.

Mr. Chairman, we are confronted with one overriding fact here--The United States has no national tourism policy. The travel industry is one of the major industries in the United States generating revenues and income of over One Hundred Billion Dollars per year and supporting more than four million jobs. We are a major employer of minorities and women. We provide thousands of entry level jobs for the youth of this country. And yet, Mr. Chairman, this country has no national tourism policy.

We need only to go back to 1973 for a rather chilling example of what that means when there was a discussion in the Congress which characterized the travel and tourism industry as a "non-essential" one. I believe that it was only through your foresight, Mr. Chairman, when Senate Resolution 281 was introduced in April 29, 1974 which indicated that it was the "sense of the Senate that," if I may paraphrase, "Tourism was indeed an essential industry and that federal departments and agencies would assure a proper allocation of energy supplies to the tourism industry".

Is a National Tourism Policy a good idea? We think so.

Mr. Chairman, on page 199 of your study here, a table indicates that the governments of Canada, Mexico, United Kingdom, France, Spain, Hong Kong, Ireland and Japan have a legislated tourism policy. Apparently they think it is a good idea.

We were shocked to find upon reading this study that the United States ranks dead last among the trading partners I just mentioned in terms of all sorts of categories of government tourism promotion expenditures be they domestic or international.

I can look out my window every morning and see a British Airways 747 taking off from Logan Airport with hundreds of American tourists aboard. Undoubtedly, as a result of a very aggressive promotional effort by the British government. Now I wouldn't suggest for a moment that we restrict travel by our citizens-but why not a more rational approach to encouraging foreign citizens to visit the U.S.

This country is faced with a serious balance of payments deficit overall and indeed a deficit in the tourism account as a portion of that overall deficit. It is my opinion that the beauty of this country, particularly my own southwest (Chairman Cannon can attest to that) and the diversity of its people representsa natural resource that has been substantially untapped as a far more significant contributor to reducing our overall trade deficit. We need a National Tourism Policy, Mr. Chairman.

Beyond the enactment of a National Tourism Policy into law which is of itself an essential objective, we must address two other corollary aspects. Number one is a coordinating mechanism in the government and a method or mechanism for implementing the National Tourism Policy after its enactment. I am told that 50 separate federal agencies administer over 100 porgrams which in some way either directly or indirectly touch upon our industry or our business.

Let's talk about the subject of coordination. If I can impress upon you the problems created for the Tourism Industry by a lack of coordination between and among the federal agencies I will have made a substantial contribution here this afternoon. How about a few recent examples?

While Sheraton and other companies were out spending millions of dollars to advertise U.S. destinations and incidentally the government was also promoting travel from foreign countries to U.S. destinations, the State Department was considering closing various foreign tourism offices. Did they check with private tourism industry to determine whether a federal presence would assist us? I don't believe so. Did they check with convention bureaus in major U.S. cities, New York, Boston, Chicago to see if a federal presence overseas helped them? I don't believe so.

The current foreign convention legislation is a classic example of governmental action which impedes the free ebb and flow of international tourism.

The "three-martini-lunch" fiction still hangs over our heads as a dark cloud. Did the Treasury coordinate with the Department of Labor? Do they know how many jobs are at stake? Do they know how much business is at stake with this unwise proposal. I don't believe so.

The substantial increases in the minimum wage and the reduction of our tip credit is another example. While the Council on Price Stability urges restraint in prices and wages, the Department of Labor proposes to increase the salary base test for administrative people by 40 percent.

The EPA still talks about the indirect source regulations which would impede our ability to build new lodging facilities because they attract automobiles to a particular area. I cite these as examples of government action affecting tourism which is uncoordinated, contradictory, compartmentalized and lacking in prospective with respect to its impact on our industry.

What is the solution? Stripping away the boilerplate. I find myself in substantial agreement with the Arthur D. Little recommendation for a Coordinating Council. I disagree, however, with their recommendation for four separate agencies and/or coordinating councils to accomplish this end. I believe that a principal federal interagency coordinating council comprised of the 18 department or agency heads having direct or substantial tourism related programs or regulatory responsibility should be established. This coordinating council should' be chaired by one of the existing presidential assistants. The subject of presidential assistants leads me to comment that part of the problem that we are faced with is a result of not having visibility at the highest levels of the government and indeed the White House.

It is my understanding that Mr. Eisenstadt now has an assistant with some direct tourism related responsibility. To be effective the Congress must require regular meetings of the Council with a detailed annual report which gives an accounting of their efforts to assure that the actions of their agencies with respect to tourism are consistent with the National Tourism Policy Law as enacted.

That then leads us to the other critical facet of a response to a national tourism policy, namely; the implementing mechanism. I submit to you that the United States is not ready for a Minister of Tourism! Nor do we need one! With all of the various governmental agencies and the numerous programs in each agency, I think it would be impractical to uproot them and attempt to consolidate all of these agencies' tourism related programs into one giant superagency.

If the existing federal agencies can through the coordinating council and White House overview, execute their programs in consonance with National Tourism Policy to be enacted by this Congress, I would recommend leaving them essentially untouched.

In summary then, we would advocate the enactment into law of a National Tourism Policy not unlike that proposed on page 33 of this report. Secondly, the establishment of a coordinating mechanism or council is absolutely critical to assist the federal agencies in conforming their programs to the National Tourism Policy Law. Third, the existing federal agencies should probably be the implementing mechanism for the National Tourism Policy. In closing, permit me to tell you briefly what we don't want:

We don't want to need a super tourism agency or a cabinet-level Secretariat. We are not recommending or asking for an uprooting or consolidation of existing federal agency programs.

We are not asking for substantial increases of taxpayers' money.

We don't want or need additional intrusion of government into what after all is a rather fragile people-to-people business.

We believe that fostering and promoting tourism is in the national interest when it fosters and supports one of the largest industries we have.

We are not asking for a hand-out.

We are not asking for additional federal funds.

We are not asking for subsidies.

What we are advocating in the strongest possible terms is to allow our free enterprise system to operate in the tourist industry unfettered by ill-conceived or conflicting government policies, programs or regulations.

Thank you Mr. Chairman. If you have any questions, I would be happy to try to respond to them.

Senator INOUYE. Thank you very much.

I'm not aware of the experiences you or your industry has had with the USTS but may I ask how you would rate this agency? Are you satisfied with the services provided you or have they provided you with any services?

Mr. JAMES. I should say, for myself, I was appointed a director to USTS. I did not attend the meetings. The meetings were not scheduled on a regular basis, so I could not attend those. I didn't know where they were to be held and when they did call them I could not attend them, so I resigned my position.

I think, in looking at some of the things that USTS has attempted to do in the past, had they had the funding to do it, they may have accomplished something. These are my own thoughts and I don't think they embodied everybody that should be embodied on their board, and I should also say-and this I want to express and go back to my industry advisory council-when we talk about industry advisory council, I think you must include on an industry advisory council representatives from organized labor. They are the people that are going to lose the jobs and they are the people we need to work with on that.

On the USTS I can't be too specific. I know they have been working in the foreign areas. They have never assisted my company personally. Senator INOUYE. Have any of you had experience?

Mr. LENNON. Nothing.

Mr. LEE. No.

Senator INOUYE. Senator Cannon.

The CHAIRMAN. Thank you, Mr. Chairman.

I want to compliment all of you for what I consider to be an excellent presentation and I'm particularly interested in hearing a number of these day-to-day problems that you have that disrupt your plans of doing business or your business operations more than they assist them. It's rather interesting that I came to the Senate my first year here was 1959 and in that year there was a branch in the Department of Commerce-I think they had five people and their total budget was $60,000. The following year, 1960, President Eisenhower proclaimed that year as "Visit U.S.A. Year" and the budget on that particular department was cut by 23 percent from the $60,000.

Now at that time we had a travel deficit in 1960 of $1.2 billion. We continued to have it for a number of years and when we established USTS to encourage foreign tourism in the United States and to help the foreign tourists it was not established with the idea of going out and spending a lot of money in a promotional role. With the exception of Mr. Benefield, I'm sure that each one of your companies spend more than the United States does in tourist promotion; but the idea was that we would try to establish a travel office in these foreign countries so important to us to generate interest locally. Subsequently, of course, the USTS adopted a marketing program to assist the private sector promote the United States of America as a visitor destination. During all of this period of time our deficit increased and, as Bud James says, now the United States of America is the best travel bargain there is in the world. People from these foreign countries have the money to travel. A lot of them are traveling at a tremendous rate now, but we are still trying to make it more difficult for them to come over here and see us instead of trying to assist them in every way possible, and that was one of the reasons that I was really shocked when the move was made to close down the London office and to close down the Tokyo office.

The Japanese trade, as you gentlemen here know, is our biggest single country tourism trade today and very, very important to us. When these people could come over at a deflated value of the dollar such as it is now and all we need to do is try to encourage them and not put roadblocks in their way, but assist them in working out their problems so they can come and visit us-I think we are making a very serious mistake.

I think the highest authorization that we ever did get through was $30 million for the USTS, if I recall correctly. We did finally get the appropriation up to $14 million and of that amount $1.5 million was for development of a domestic program by the Department of Commerce. But at the same time, again, in 1977, the travel deficit was $2.7 billion. So to me, we talk about increasing our trade advantages and our balance of payments with these foreign countries and here's something that we don't even have to put up a nickel of capital investment

for that sort of thing. All we'd have to do is encourage people and get them to come over here. With the airline fares the way they are today, people in most of these foreign countries can afford to travel. At least an awful lot of them can afford to travel and visit this country.

So I'm particularly happy to have had you gentlemen here and have you give us your views on the problems that you have and see if we can't find some way of helping you out. The only thing that I'm sorry about is that none of you happen to be constituents of either mine or Senator Inouye. Bud James is the closest. I guess he's the only voting constituent in this group that I have had, but we certainly want to help you if we can and we appreciate you presenting a very clear picture of your views on this problem.

Senator INOUYE. I must say that I'd like to echo the chairman's sentiment. I thought I knew a lot about this business, but this is the first time I learned that you've got to buy wholesale. Let me assure you that I will personally get in touch with USDA and try to get an explanation from them, because from what you tell me it's total nonsense.

Mr. BENEFIELD. It is, and I thank you.

Senator INOUYE. It's been a most educational afternoon.

I'd like to call a short recess at this time because there's a vote pending on the floor, but we will be right back. Our next witness after the recess will be Mr. Robert Juliano.

[Recess.]

Senator INOUYE. The hearing will come to order.

Oftentimes in referring to the tourism industry, we inadvertently leave out an important segment of that industry, the men and women who work in hotels and restaurants, driving the buses, piloting the planes, serving food. This afternoon we have the legislative representative of the Hotel and Restaurant Employees and Bartenders International Union. It is with great pleasure that I call upon Mr. Robert Juliano to testify. Welcome, sir.

STATEMENT OF ROBERT E. JULIANO, LEGISLATIVE REPRESENTATIVE, HOTEL AND RESTAURANT EMPLOYEES AND BARTENDERS INTERNATIONAL UNION

Mr. JULIANO. Thank you, Senator.

Mr. Chairman, in behalf of our general president, Edward T. Hanley, and the 500,000 members of the Hotel and Restaurant Employees and Bartenders International Union, it is a pleasure once again to appear before your subcommittee to testify relative to the national tourism policy study.

It is our understanding that you wish all interested parties to comment, during this phase of the hearings, on how our particular segment has been affected by the lack of a national tourism policy and a Federal mechanism to assure that that policy is coordinated among and reflected in the numerous Federal tourism and tourism related programs. Also, that we proffer our recommendations for a national tourism policy and a Federal coordinating mechanism.

It is a pleasure to respond to your statement. As usual, I will leave the lengthy statements and consummate eloquence to others. Believe it or not, my statement will be short and to the point.