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111th Congress                                                   Report
                                 SENATE
 1st Session                                                     111-25

======================================================================



 
                      TRAVEL PROMOTION ACT OF 2009

                                _______
                                

                  June 5, 2009.--Ordered to be printed

   Filed, under authority of the order of the Senate of June 4, 2009

                                _______
                                

     Mr. Rockefeller, from the Committee on Commerce, Science, and 
                Transportation, submitted the following

                                 REPORT

                         [To accompany S. 1023]

    The Committee on Commerce, Science, and Transportation, to 
which was referred the bill (S. 1023) to establish a non-profit 
corporation to communicate United States entry policies and 
otherwise promote leisure, business, and scholarly travel to 
the United States, having considered the same, reports 
favorably thereon with amendments and recommends that the bill 
(as amended) do pass.

                          PURPOSE OF THE BILL

    The purpose of the Travel Promotion Act of 2009, as 
reported, is to increase international travel to all areas of 
the United States, communicate United States travel policies 
overseas, and make entry procedures into the United States more 
efficient and welcoming.

                          BACKGROUND AND NEEDS

    Travel and tourism generates approximately $1.3 trillion in 
economic activity in the United States every year. The United 
States travel and tourism industry is one of the nation's 
largest employers with approximately 8.3 million direct travel-
generated jobs. According to the Department of Commerce (DOC), 
international travel receipts (travel-related tourism spending, 
including passenger fares) in the United States were $142.1 
billion in 2008, which surpassed the previous record of 2007 by 
16 percent. The bulk of these dollars came from purchases made 
by international visitors, which totaled $110.5 billion in 
2008. Travel and tourism exports (food, lodging, recreation, 
gifts, entertainment, transportation, etc.) accounted for eight 
percent of all U.S. exports and 27 percent of services exports. 
In percentage terms, U.S. travel and tourism related exports 
showed the strongest growth for Italy (up 38 percent), France 
(up 38 percent), Argentina (up 32 percent), Netherlands (up 32 
percent), and China (up 31 percent). The top five international 
markets for U.S. travel and tourism exports include Canada 
($18.7 billion), United Kingdom (17.5 billion), Japan ($15.1 
billion), Mexico ($9.8 billion), and Germany ($6.5 billion). 
According to the U.S. Travel Association, an increase of one 
percent in international travel market share would produce a 
$3.9 billion increase in payroll receipts. While the tourism 
industry continues to be vital to the U.S. economy, the United 
States' share of the world market of international tourism is 
in decline. The U.S. Travel Association noted that since 9/11, 
the 17 percent decline in America's share of international 
travelers has resulted in the loss of more than 200,000 jobs 
and nearly $100 billion in lost visitor spending. According to 
the DOC, in 1992, the United States attracted 9.4 percent of 
all international tourist arrivals from around the world. In 
2007, the United States attracted only 6.2 percent of total 
international arrivals. Federal officials and travel and 
tourism industry executives have been grappling with how to 
reinvigorate the tourism industry to recapture lost world 
market share. Officials and experts note two issues that 
contribute to the decline and need to be addressed: (1) lack of 
a coordinated international tourism advertising campaign; and 
(2) increased difficulty for international visitors to gain 
entry to the United States.
    The Federal government recognizes the importance of travel 
to the U.S. economy. The DOC has taken an active role to 
promote international travel to the United States, but 
Departmental emphasis on specific promotions has waxed and 
waned over time. In addition, following September 11, 2001, the 
U.S. government increased border security dramatically, which 
resulted in a significant decrease in the number of visitors to 
the United States. Recently, the State Department and the 
Department of Homeland Security (DHS) have recognized the need 
to make the visa and entry process more efficient and welcoming 
for foreign visitors, while maintaining border security. In 
2006, former Secretary of State Condoleeza Rice and former 
Secretary of Homeland Security Michael Chertoff initiated a 
joint agreement, the Rice-Chertoff Joint Vision to Ensure 
Secure Borders and Open Doors (Rice-Chertoff Joint Vision), to 
utilize technology and eliminate inefficiencies to improve 
border security and the ability for international travelers' to 
participate in United States tourism and border security. 
Despite these efforts, the travel industry continues to push 
for greater reforms.
    The Economic Crisis and the Impact on Business Travel. 
Industry experts believe that the travel and tourism industry 
could lose nearly 250,000 travel-related jobs in 2009 due to 
the economic downturn and the growing public perception that 
business travel is wasteful and unethical. A report 
commissioned by The Economist and released on February 10, 
2009, found that executives will make fewer, shorter, and 
cheaper business trips in 2009 and prefer basic efficiency over 
luxury services. Similarly, a recent survey by the Association 
for Corporate Travel Executives, found that 60 percent of 
American businesses would avoid taking business trips to an 
exotic locale to avoid public backlash, even if the proposed 
location were cheaper.
    History of Federally Funded International Travel Promotion. 
Federal promotion of tourism in the United States dates back to 
the establishment of the U.S. Travel Bureau in 1937. However, 
only in the past 40 years has the DOC had an office or 
administration that promotes U.S. tourism to foreign nationals 
through coordinated advertising. Enacted in 1961, the 
International Travel Act required the Secretary of Commerce, 
through the establishment of the U.S. Travel Service (USTS), to 
carry out a program that encouraged travel to the United States 
by foreign nationals. Appropriations directed to the USTS 
increased until 1977, when Congress and the White House began 
scaling back the government's role in advertising. Federal 
funding for advertising was eliminated in 1996, when Congress 
abolished the U.S. Travel and Tourism Administration (USTTA), 
the successor of USTS. Between 2001 and 2003, total tourism 
receipts dropped almost 12 percent, and tourism-related 
industries lost approximately 390,000 jobs. Congress decided to 
reinitiate Federal tourism advertising in 2003 in response to 
the downturn. The FY 2003 Consolidated Appropriations 
Resolution (P.L. 108-7, Sec. 210), authorized the Secretary of 
Commerce to ``award grants and make direct lump sum payments in 
support of an international advertising and promotional 
campaign developed in consultation with the private sector to 
encourage individuals to travel to the United States consisting 
of radio, television, and print advertising and marketing 
programs.'' This law also established the United States Travel 
and Tourism Advisory Board (USTTAB) and provided a one-time $50 
million appropriation, though $44 million was later rescinded. 
The USTTAB, re-chartered in August 2005 and again in September 
2007, is comprised of up to 15 senior travel and tourism 
executives from across the United States. These members advise 
the Secretary of Commerce on how best to increase the number of 
international visitors to the United States and make sure that 
the share of the country's international receipts continues to 
grow. In addition, the board advises the Secretary on the 
creation of a national tourism policy. On September 5, 2006, 
the USTTAB issued a report to the DOC entitled, Restoring 
America's Travel Brand: A National Strategy to Compete for 
International Visitors, in which it recommended actions in the 
following four areas to help improve America's standing in the 
international travel market. Its recommendations are summarized 
below.
    Barriers to Travel. The USTTAB report recommended removing 
unnecessary barriers to travel. The report highlighted concerns 
about the current waiting periods for legitimate travelers. The 
USTTAB noted that the Nonimmigrant Visa Program is 
understaffed. It cited a General Accountability Office report 
that found almost half of the State Department's 211 visa-
issuing posts reported maximum wait times for visa interviews 
of 30 days or more. The USTTAB was particularly concerned about 
the long waits in Brazil, China, India, Mexico and Venezuela. 
Since the report was released, the State Department has greatly 
improved its interview wait times.
    Creating a Welcoming First Impression. The report contained 
numerous suggestions about how to make the first arrival 
experiences of international travelers more welcoming. The 
USTTAB report recommended fully staffing the Customs and Border 
Patrol (CBP) and the Transportation Security Administration 
(TSA) to reduce wait times at inspection points. Another 
problem discussed in the report was the delay caused by re- 
screening passengers by TSA. The report noted the examples of 
Canada and the Netherlands as countries that prioritized 
efficient inspections and succeeded in attracting more 
travelers because of the changes. Members of the USTTAB and 
other industry participants have offered their expertise in 
managing waiting lines and staffing patterns to Federal 
agencies interfacing with travelers. The U.S. Travel 
Association began discussions with the Under Secretary of State 
for Public Diplomacy and Public Affairs in that effort. The 
travel and tourism industry also has offered to advise Federal 
agencies on signage and the use of international symbols to 
direct and prepare travelers for the inspection process. 
Several leading travel companies stated their willingness to 
loan customer service/hospitality experts to provide training 
for CBP officers at the Federal Law Enforcement Training Center 
in Georgia.
    Provide a Stronger Voice for Travel and Tourism in 
Government. The USTTAB report found that the countries that 
claim the largest share of the growth in the international 
travel market are those that have either ministries of tourism 
or other governmental entities that help coordinate tourism 
policy decisions. The United States, by contrast, has neither a 
dedicated office of tourism nor an official to advocate at the 
highest policy levels. The USTTAB report recommended the 
creation of an office with the power to coordinate government 
policy to enhance the nation's competitive standing in the 
global travel market. That Federal office would:
    Serve as an institutional home and voice for the industry;
    Energize the interagency process for travel and tourism 
through an elevated Tourism Policy Council, with ex officio 
status for private sector representatives, and ensure all 
government decisions potentially affecting this industry 
receive early attention in the interagency process;
    Identify existing private sector advisory committees that 
included representatives from the tourism industry, while 
widely sharing their recommendations across agencies and with 
other private sector groups and the public; and Coordinate the 
roles of other government agencies to more effectively expand 
travel and tourism promotion while addressing infrastructure 
needs and development.
    Avoid Inappropriate Taxes, Fees, and Regulations. The 
USTTAB report argued that Federal, state, local, special entity 
and foreign-government imposed taxes and fees on rental cars, 
commercial aviation, hotels and restaurant meals, among other 
services, increase the cost of travel and can dampen demand for 
inbound travel. In the report, the USTTAB asked the DOC to 
advocate against discriminatory taxing structures and to work 
within the interagency process to discourage travel taxes 
imposed by international authorities when the revenue raised 
has no clear benefit or connection to the travel and tourism 
industry.
    In addition, the report reiterated and supported the 
airline industry's request for a review of the CBP rates and 
charges based on costs, due to concerns about further 
increasing costs on international travelers.
    Travel Promotion Activity by States. Many States invest 
significant time and resources to promote tourism. According to 
the U.S. Travel Association, the projected State tourism office 
budget for 2007-2008, for all 50 States, is $869 million. The 
average State budget is $17 million. For most States, however, 
only a small portion of their budgets is designated for 
international advertising and sales promotions. State 
international promotions generally focus on a limited number of 
attractions in the state and target countries with likely 
visitors. States rarely work in conjunction with their 
neighbors to cross-promote destinations and encourage longer, 
more expansive visits to the United States. Moreover, many 
States cannot afford large international initiatives and 
therefore foreign visitors are less likely to know about and 
travel to such States.
    A national travel promotion program would be well 
positioned to spotlight a range of travel destinations and 
tourist options throughout America. States that do not have the 
resources to target international travelers would benefit from 
increased exposure through a national campaign.
    In addition, State-operated promotion programs have neither 
the resources nor the incentive to address international 
travelers' concerns and questions regarding the U.S. visa 
application process and entry procedures. As the USTTAB pointed 
out, the United States' visa and entry procedures have created 
the perception that international travelers are not welcome to 
the United States. Some analysts contend that a national 
promotion program operated with input from the DOC, the State 
Department, and the DHS would be in a position to ameliorate 
the concerns of international travelers over Federal government 
processes.

                         SUMMARY OF PROVISIONS

    S. 1023 would establish a nonprofit corporation 
(Corporation) to create and execute a nationally coordinated 
travel promotion program. The program's purpose would be to 
accurately communicate the Nation's travel policies, to 
encourage travel to the United States, and to provide 
international exposure for areas of the United States that do 
not have the resources to promote themselves overseas. The 
Corporation would be governed by an 11-member board of 
directors appointed by the Secretary of Commerce, which 
consists of representatives from States, the Federal 
government, and the sectors of the travel industry. In the 
first year, the Corporation would be provided $10 million from 
moneys collected from travelers under the Electronic System for 
Travel Authorization (ESTA) system currently being established 
by the DHS. After FY 2010, in order to be entitled to receive 
Federal funding, the Corporation would be required to raise 
non-Federal money and in-kind matching contributions at the 
rate of 50 percent in fiscal year 2011 and 100 percent in the 
subsequent years.
    In addition, the Travel Promotion Act would establish an 
office in the DOC known as the Office of Travel Promotion. The 
Office would serve as a liaison to the Corporation, work with 
the Secretaries of State and Homeland Security to ensure that 
international visitors are processed efficiently, and to 
promote travel to the United States.

                          LEGISLATIVE HISTORY

    The Subcommittee on Competitiveness, Innovation and Export 
Promotion on May 13, 2009, held a hearing on the Travel 
Promotion Act of 2009, as well as the economic and security 
issues relevant to promoting travel to America. The 
Subcommittee heard testimony from representatives of the travel 
industry and State tourism agencies regarding their 
perspectives as to the state of the travel industry, 
difficulties that travelers face coming to the United States, 
and recommendations for encouraging international travel to 
America.
    On May 12, 2009, Senator Byron Dorgan introduced S. 1023, 
the Travel Promotion Act of 2009, which was referred to the 
Committee on Commerce, Science, and Transportation. Chairman 
Rockefeller was an original cosponsor of the measure. When S. 
1023 was considered in executive session, Senators Ensign, 
Inouye, Martinez, Klobuchar, Begich, Udall of New Mexico and 
Vitter also were cosponsors of the legislation.
    On May 20, 2009, the Committee met in an open executive 
session to consider S. 1023. Senator Dorgan offered an 
amendment that made technical corrections to the legislation.
    The Travel Promotion Act of 2009, as amended, was accepted 
by voice vote and the Committee ordered the bill be reported.

                            ESTIMATED COSTS

    In compliance with subsection (a)(3) of paragraph 11 of 
rule XXVI of the Standing Rules of the Senate, the Committee 
states that, in its opinion, it is necessary to dispense with 
the requirements of paragraphs (1) and (2) of that subsection 
in order to expedite the business of the Senate.

                      REGULATORY IMPACT STATEMENT

    In accordance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee provides the 
following evaluation of the regulatory impact of the 
legislation, as reported:

Number of persons covered

    The formation of the Corporation would require 
representatives of various sectors of the travel industry to 
participate on its board of directors. The general travel and 
tourism industry will not be impacted by S. 1023 directly, 
unless the Corporation chose to initiate a referendum under 
Section 6. At that point, impacted members of the travel and 
tourism industry would participate in a referendum and, if an 
assessment is approved, pay the assessment.

Economic impact

    S. 1023 is not expected to have an adverse impact on the 
Nation's economy. Rather, promoting international travel to the 
United States through the creation of the Corporation and 
establishing an Office of Travel Promotion within the DOC 
should substantially increase the number of international 
travelers to America, which will result in economic growth in 
the travel industry.

Privacy

    S. 1023 would have no anticipated impact on the privacy 
rights of individuals.

Paperwork

    In general, there will not be an increase in paper work for 
members of the travel and tourism industry. If the Corporation 
initiates a referendum and assessment under Section 6, then 
affected companies would need to submit associated paperwork.

                      SECTION-BY-SECTION ANALYSIS

Section 1. Short title

    The section cites the short title of the bill as the 
``Travel Promotion Act of 2009.''

Section 2. The Corporation for Travel Promotion

    The section establishes the Corporation for Travel 
Promotion as a nonprofit corporation governed by an 11-member 
board of directors appointed by the Secretary of Commerce. The 
members shall represent State and local interests, the Federal 
government, the small business community, hotels, restaurants 
and retail businesses, air transportation, attraction 
businesses, the intercity passenger railroad business, and 
travel distribution services. The members of the board are 
required to have professional expertise in travel and 
international travel promotion and marketing, and to broadly 
represent all regions of the United States. No member of the 
board may be considered a Federal employee by virtue of his or 
her service on the board.
    The board shall appoint an executive director and other 
officers who shall be responsible for hiring staff necessary to 
carry out the mission of the Corporation. No political test or 
qualification shall be used in personnel actions with respect 
to officers or employees of the Corporation. The Corporation 
may not contribute to or otherwise support any political party 
or candidate for elective public office. The Committee further 
intends that the Corporation not engage in activities to 
directly or indirectly influence legislation.
    The Corporation must develop and implement a plan to: (1) 
provide information to travelers, tour operators, and other 
international travel stakeholders, including materials provided 
by the Federal government concerning entry requirements and 
other information that would allow travelers to better navigate 
the process of entering the United States; (2) counter and 
correct international misperceptions regarding United States 
travel policy; (3) maximize the economic and diplomatic 
benefits of travel to America through promotional activities; 
(4) ensure that the Corporation's promotional efforts benefit 
all 50 states and the District of Columbia, including areas not 
traditionally visited by international travelers; and (5) 
prioritize the use of Corporation resources towards countries 
and potential travelers that are most likely to travel to 
America. In order to carry out its mission, the Corporation is 
empowered to contract with public and private entities hire or 
accept voluntary services of consultants and experts, and such 
other actions as may be necessary. Promotional expenditures of 
over $25,000,000 must be authorized by a vote of at least 2/3 
of the board at a meeting at which six of more members are 
present.
    Meetings of the board must be open to the public with the 
limited exception that portions of a meeting may be closed for 
the period of time necessary to preserve the confidentiality of 
commercial or financial information or to discuss legal 
matters. An independent accounting firm must conduct an annual 
audit of its operations, and the Corporation must provide the 
Comptroller General and the Congress full and complete access 
to its books and records.

Section 3. Accountability measures

    The section requires the Corporation's board to establish 
annual objectives for the Corporation subject to approval by 
the Secretary of Commerce and establish a marketing plan for 
each fiscal year. It also must submit an annual budget to the 
Secretary with an explanation of any expenditure in excess of 
$5 million, which shall be made available to the public. The 
Corporation must submit an annual report to the Secretary of 
Commerce for transmittal to Congress detailing its operations, 
activities, financial conditions, and accomplishments, as well 
as an objective and quantifiable measurement of the 
Corporation's progress on an objective-by-objective basis, and 
an explanation of the reason for any failure to achieve an 
objective established by the board.

Section 4. Matching public and private funding

    The section establishes a fund in the Treasury known as the 
Travel Promotion Fund (Fund). For fiscal year 2010, the 
Corporation shall be provided up to $10 million from the ESTA 
to cover its initial expenses and activities under the Act. 
Subsequently, the Secretary of Treasury shall transfer not more 
than $100,000,000 in fees collected pursuant to section 5 of 
the Act to the Fund. Based on the amount of private industry 
contributions raised by the Corporation, the Secretary of the 
Treasury may distribute to the Corporation matching moneys from 
the Fund. At least 20 percent of the private-sector 
contributions must be in cash and remaining contributions may 
be in-kind contributions such as television advertising time, 
advertisement space or services calculated at the fair market 
value of such goods or services. The Corporation shall have the 
right to refuse any contribution that is not useful or 
inappropriate. For fiscal year 2011, the Corporation must 
provide matching funds from non-Federal sources equal to 50 
percent of the amount received from the government. After 
fiscal year 2011, the Corporation must provide matching funds 
from non-Federal sources equal to 100 percent of the amount 
received from the government. Matching Federal funds will not 
exceed $100 million per year. To the extent that industry 
contributions entitle the Corporation to more matching money 
than is available in the Fund in a given year, the value of 
contributions may be carried forward for matching purposes in 
subsequent years.

Section 5. Travel Promotion Fund fees

    The Secretary of the Department of Homeland Security shall 
establish and collect a fee from the ESTA, which will include a 
$10 fee for the matching funds for the Corporation. The 
authorization to collect the fee for the Travel Promotion Fund 
will expire on September 30, 2014.

Section 6. Assessment authority

    The Corporation may impose an annual assessment on the 
United States travel industry, other than airlines and small 
businesses, of up to $20 million. Prior to initiating such an 
assessment, the members of the industry that would be assessed 
must agree to such an assessment by referendum. The Corporation 
shall establish a means of collecting the assessment and may 
bring suit in Federal court to compel compliance with an 
assessment. Pending disbursement of the funds assessed, the 
Corporation may invest the funds in any interest-bearing 
account.

Section 7. Office of Travel Promotion

    The section establishes the Office of Travel Promotion in 
the DOC. The office would serve as liaison to Corporation, 
support and develop programs to increase the number of 
international visitors to the United States, support state, 
regional, and private sector initiatives to promote travel to 
and within the United States, and work with the Departments of 
State and Homeland Security to ensure that international 
visitors are processed efficiently. Within a year after the 
date of enactment, the Secretary shall transmit a report to 
Congress describing the office's work with the State Department 
and DHS to ensure that international visitors are processed 
efficiently.

Section 8. Research program

    The section amends the International Travel Act of 1961 and 
requires that the Office of Travel and Tourism Industries to 
expand its research and development activities in support of 
promoting international travel to the United States, including 
expanding access to official Mexican travel surveys data, 
improving the DOC's Survey of International Travelers, 
developing estimates of international travel exports on a 
State-by-State basis, and evaluating the success of the 
Corporation in achieving the objective set forth in the Act.