NATIONAL TOURISM POLICY STUDY

TUESDAY, SEPTEMBER 26, 1978

U.S. SENATE,

COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION,

Washington, D.C.

The committee met at 2:10 p.m., in room 235, Russell Senate Office Building, Hon. Daniel Inouye presiding.

Senator INOUYE. The chairman of the committee, Mr. Cannon, is unable to be with us at this time, but he has asked me to advise the hearing that he will be here shortly. In the meantime, I have been asked to read a statement which he has prepared.

OPENING STATEMENT BY THE CHAIRMAN

Today the Committee continues the hearings which it began September 20, on the NTPS.

That hearing, as well as today's and the one scheduled for this Thursday, September 28, are concerned with testimony on the objectives a national tourism policy should seek to achieve, and the most effective federal mechanism to coordinate such a policy among the many government agencies having programs and responsibilities which impact travel and tourism.

Subsequent hearings this year will consider the most effective principal federal implementing mechanism for that policy, and how best to provide for cooperation with the states, cities and the private sectors of the industry.

The federal government significantly affects the travel industry and the traveling public because over 100 programs administered by some fifty separate agencies now adopt policies and administer programs which directly or indirectly impact travel and tourism. To date, however, no legislation has been enacted which provides these agencies with the necessary policy guidance to assure that their programs are furthering the national interests in tourism. Nor is there a federal mechanism for coordinating and implementing a tourism policy if one existed.

The government failure in this regard was, I believe, illustrated by the Bermuda II agreement which we concluded with the United Kingdom.

Until Bermuda II, most U.S. Air Service Agreements had followed the precept that carriers from each country should have a fair and equal opportunity to compete for traffic, without a guarantee of either specific market share or level of revenue.

I believe it is accurate to say that the consensus is that Bermuda II represents a substantial departure from the kind of system envisioned by Congress and generally incorporated in other bilateral agreements.

It is also fair to say that this departure has been made at the expense of U.S. air carriers, both scheduled and supplemental.

That Bermuda II was not in the best interests of the United States and our carriers was, in large measure, due to the traditional lack of coordination among the agencies of government which made up our negotiation team.

In testimony before my Aviation Subcommittee last year the Chairman of the CAB noted that the increasingly complex nature of air services agreements, and the larger number of federal agencies who sometimes have an interest in particular negotiations strongly suggest that our negotiation process could be improved. He recommended that various government agencies with expertise and perspective to contribute should share integrally in the responsibility for the planning of a broad negotiating strategy in each instance.

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At present, Chairman Kahn said, (November 1976), "each agency makes recommendations reflecting the particular perspective of its own individual institutional interests and legal responsibilities, without sharing in the responsibilities for integrating the relevant economic regulatory and foreign policy considerations."

I am pleased to note that since Chairman Kahn's remarks of November 1976 the situation has improved and that the federal agencies involved are more effectively coordinating and negotiating international aviation bilateral agreements.

Chairman Kahn's words came as no surprise to my Committee, because we know that there are over 100 tourism and tourism-related programs administered by 50 federal agencies. There is little or no coordination. Often there is contradiction. And in some cases, duplication.

As a consequence, the federal tourism effort is wasteful, inefficient, and unresponsive to the needs and interests of the private sector of the industry. Essentially, this is what the NTPS is about. It is an attempt to make sense out of the vast federal involvement in travel and tourism.

Last week the Committee heard testimony from the Administration, the lodging industry, organized labor, and consumer representatives. Today we look forward to hearing from representatives of the Lieutenant Governors' Association, the scheduled U.S. airlines, the International Association of Convention & Visitor Bureaus, and the American Express Company.

OPENING STATEMENT BY SENATOR INOUYE

Senator INOUYE. I would like to say a few additional words. Today the committee expects to learn from representatives of the States, the cities, the scheduled airlines, and the travel promotion and sales segment of the industry how each has been affected by the lack of a legislatively enacted national tourism policy and a Federal mechanism to assure that such a policy is coordinated among and reflected in the numerous tourism and tourism-related programs.

We would also hope that the witnesses will make whatever recommendations they feel necessary for a national policy and coordinating mechanism.

Today's witnesses represent additional segments of the $115 billion a year travel industry which has been seriously handicapped by the Federal Government's myopia and inertia.

All of us are, I believe, aware of the proposals to limit tax deductions for business meals and to restrict attendance at foreign conventions. It would probably surprise many, however, to know that the Bureau of Security and Consular Affairs which administers the visa program is operating under visa issuance regulations developed to implement legislation enacted in 1952. In other words, we have gone into the jet age and from there into the jumbo jet age with regulations designed to accommodate the volume of traffic which existed in the prop age.

Current policies and regulations regarding visas, customs and immigration procedures, and the quality of receptive facilities and services at U.S. ports of entry have caused many people to question whether these requirements and conditions do not, in fact, needlessly detract from the quality of a visitor's experience, and discourage travel to the United States.

According to testimony received during earlier hearings, if our visa requirement were abolished the United States could expect an additional 63,000 visitors from 9 European countries, another 33,500 visitors from South America: 20,500 more from Central America; an additional 41,700 from 10 Asian countries; and, 17,000 more from Australia and New Zealand. This is a total of 160,000 more visitors per year.

The USTS estimates that every incoming visitor is a "living $343 export" for the United States. Using that yardstick, our international travel deficit would be reduced by over $55 million annually if there were no visa requirements.

In response to a question during that hearing, the Immigration Service replied that the standards for visa issuance to tourists by the State Department and the standards for admissibility of tourists by Immigration are the same. If ever there were duplication, this, it seems to me, is it.

Another example of the failure of the present Federal effort which emerged from that hearing relates to the role of the DOT in international visitor facilitation.

That agency described its role to the committee as "one that emphasizes coordination and cooperation with other interested agencies of government."

In answer to our inquiry, however, the Department of Transportation said it "has not undertaken a comprehensive examination of the restrictive or deterrent effect that the policies of our inspection agencies may have on international visitors" because the agency did not feel inspection policies could be a substantial deterrent to travel.

I doubt if too many here would agree with this assessment. There are many other areas when Federal programs have been uncoordinated or failed to take into account the legitimate needs and interests of the States, cities, and those segments of the travel industry testifying today.

I would therefore hope that everyone will work together and assist the committee in making its recommendations to the Senate as required by Senate Resolution 347.

Our first witness this afternoon is the Honorable Thomas P. O'Neill, III, Lieutenant Governor of the State of Massachusetts, and chairman of the National Association of Lieutenant Governors Conference. Governor, it's my pleasure, sir. Welcome.

STATEMENT OF HON. THOMAS P. O'NEILL III, LIEUTENANT GOVERNOR OF THE COMMONWEALTH OF MASSACHUSETTS, AND CHAIRMAN, NATIONAL ASSOCIATION OF LIEUTENANT GOVERNORS

Mr. O'NEILL. Thank you Mr. Chairman. It's good to be here. It's an honor and pleasure to be invited to testify before the Senate Committee on Commerce, Science, and Transportation. As the newly elected chairman of the National Association of Lieutenant Governors of the United States, may I convey to you our appreciation and respect for the work you are doing. Mr. Chairman, I think it ought to be pointed out to you that I also chair the Travel Advisory Committee of the Council of State Governments, funded by the USTS, and I would like to keep you attuned and abreast as to what our organization has been doing over the last 10 or 11 months.

We have a draft report which we are about to submit to you and to your committee. I hope you will inform us if you think our report can be improved, or perhaps how you think you can supplement or complement it in any way. We would deeply appreciate that. We have Mr. Chavez from the USTS himself.

Mr. Chairman, the work that has been accomplished by the NTPS is very important. For the first time, we are now coming to grips with a national policy issue-tourism-that has been neglected for too long in the councils of Government at the Federal level. Your hard work, dedication, and determination, Senator, in chairing the National Tourism Policy Study has already produced a clear message to Federal policymakers at the executive and congressional levels: First, that tourism is a vital and important part of our Nation's economy; and, second, that tourism must be accorded equal treatment and status as an economic development tool if we are to have maximum economic growth and expansion in the United States in the future.

I am here today as a representative of State government to talk about one part of that study, namely, the area of cooperation and coordination between Federal and State governments. The tourism policy study makes an excellent beginning by proposing an organizational framework that, to quote from the NTPS report, would attempt "to create a workable forum for effective coordination between State and local public sector interests in travel and recreation and Federal Government interests." The proposed Intergovernmental Travel and Recreation Planning Board (ITRPB) is an excellent idea. We endorse it and pledge our wholehearted support, cooperation and participation. Coordination and cooperation between Federal, State, and local tourism programs is essential if we as a nation are to improve our competitive position in the free world economy and strengthen our domestic tourism industry.

Mr. Chairman, State governments have long recognized the important role of tourism in enhancing economic development at the State and regional level. All of the States, commonwealths, and territories have tourism programs. Altogether, we spend on an annual basis approximately $61 million in taxpayer dollars to promote and develop tourism and travel. The level of professionalism in the ranks of State tourism administrators has risen dramatically in the last few years as States have accorded tourism programs a status equal to that of other State economic development programs. I believe that the same can be said for local government. Tourism programs provide a resource and reservoir of talent that can be drawn upon to develop an effective and meaningful national tourism policy.

The next few weeks will be critical as you develop legislation that will be introduced in early 1979. At this point, therefore, let me offer a few ideas, Mr. Chairman, that you and your staff may wish to consider as part of this proposed legislation, First, the partnership between the Federal, State, and local governments needs to be strengthened, particularly in terms of allocating financial resources to tourism programs. The number of Federal dollars made available to State and local governments for tourism programs is so meager as to be pitiful. The Federal Government spends billions of dollars in assistance to State and local governments for many important programs that relate to economic development, yet in the area of travel promotion—where the economic benefits in terms of job creation and increased per capita income are measurable and direct-the Federal Government is spending in fiscal 1977-78 the total sum of $580.000 in direct matching grant programs. We have matching programs for building highways, subways, parks, playgrounds, sewers, and waterworks, and even for hotels

and convention centers-as part of the UDAG program-but there is no effective matching program that would strengthen tourism at the State and local level and thus bolster tourism at the national level. State and local governments are not asking for a handout but for a partnership.

As a start, I would suggest that you consider a matching program of Federal participation that would allow the Federal Government to match on a one-for-four basis every dollar expended by State and local governments for tourism programs that meet acceptable standards. For example, the Commonwealth of Massachusetts spends about $1.2 million per year on State and local tourism programs. Under our proposal, the Federal Government would provide approximately $300,000 in matching funds. Florida spent approximately $5 million at the State level this year. Under our proposal, Florida would receive $1,250,000 in matching Federal funds. Under this proposal, the total cost to the Federal Government would be approximately $15 million.

Second, the relationship between Federal, State and local governments and the private sector needs to be strengthened. State and local tourism programs are most effective when there is close cooperation and communication between State, local and private sector interests. As you draft legislation to implement recent studies and evaluations, I would strongly urge you to include the expertise of the private sector at every opportunity. Based upon my work with the State tourism programs throughout the country, I can assure you that tourism programs thrive and produce results when there is a strong and continuing dialog between the private and public sectors.

Finally, Mr. Chairman, I believe that there is a greater need for input into Federal decisionmaking before policy decisions are made. As I indicated earlier in my testimony, we support the creation of an intergovernmental travel and recreation advisory board, and we hope that this advisory committee will advise decisionmakers in Congress as well as in the executive branch. Given the increased responsibilities of Congress in the area of policy formulation and budgetmaking, we at the State and local government level are focusing our attention upon the congressional process to insure that State and local tourism interests are recognized.

These are but some of the ideas that the lieutenant governors have developed in their work with the Governors, State legislators, local and regional governmental bodies and the private sector. We are deeply appreciative of the invitation to join with you in developing an effective national tourism policy and stand ready to work with you and your colleagues in the House of Representatives to insure that 1979 brings to tourism the recognition and status that it so rightly deserves.

Mr. Chairman, Senator Inouye, may I again thank you for the opportunity to present our views. We commend the work that you are doing and hope that we can provide the kind of support and assistance that will bear fruit in the next year.

Senator INOUYE. Governor, it's a pleasure hearing from you. We thank you for your assistance. We note that 46 out of 50 States look upon tourism as one of the top three moneymakers and in many States you have very important positions filled by highly talented men and

women.