U.S. Travel and Tourism Advisory Board

1 2 1 U.S. TRAVEL AND TOURISM ADVISORY BOARD 2 3 4 5 6 Room 4830 7 DOC Building 8 14th & Constitution Avenue. N.W. 9 Washington, DC 10 11 Wednesday, 12 September 14, 2011 13 14 15 The meeting was convened, pursuant to notice, 16 17 at 9:15 a.m., MR. ROSSI RALENKOTTER, Chair, presiding. 18 19 APPEARANCES: 20 21 MEMBERS OF THE BOARD 22 23 MR. ROSSI RALENKOTTER 24 President and Chief Executive Officer 25 Las Vegas Convention and Visitors Authority 26 27 MS. DAWN DREW 28 Founder and Chief Executive Officer 29 The M.O.S.T.E., Inc. 30 31 MS. HOLLY AGRA 32 President 33 Chicago's First Lady Cruises 34 35 MS. SHEILA ARMSTRONG 36 Executive Director 37 U.S. Cultural and Heritage Tourism 38 Marketing Council 39 40 MS. HELANE BECKER 41 Managing Director 42 Dahlman Rose & Company 43

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 2 2 1 MR. JOHN SPROULS 2 Chief Executive Officer 3 Universal Orlando Resort 4 and Executive Vice President 5 Universal Parks and Resorts 6 7 MR. SAM GILLILAND 8 Chairman and Chief Executive Officer 9 Sabre Holdings 10 11 MR. DOUGLAS SHIFFLET 12 Chairman and Chief Executive Officer 13 D.K. Shifflet & Associates 14 15 MR. GREG STUBBLEFIELD 16 Executive Vice President and 17 Chief Strategy Officer 18 Enterprise Holdings 19 20 MR. JOSE ANDRES 21 President and Co-Founder 22 ThinkFoodGroup 23 24 MR. CHANDRAKANT "C.K." PATEL 25 President 26 BVM Holdings, Inc. 27 28 MR. HUBERT JOLY 29 President and Chief Executive Officer 30 Carlson Companies 31 32 MR. ADAM GOLDSTEIN 33 President and Chief Executive Officer 34 Royal Caribbean International 35 36 MS. MARYANN FERENC 37 Founder, President and 38 Chief Executive Officer 39 Mise en Place, Inc. 40 41 MR. PHILIP LEVINE 42 President & CEO 43 Baron Corporation

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 3 2 1 2 MR. GEORGE ZIMMERMAN 3 Vice President, Travel 4 Michigan at the Michigan Economic 5 Development Corporation 6 7 U.S. DEPARTMENT OF COMMERCE 8 9 MR. FRANCISCO SANCHEZ 10 Under Secretary for Manufacturing & Services 11 U.S. Department of Commerce 12 13 MS. NICOLE Y. LAMB-HALE 14 Assistant Secretary for Manufacturing 15 and Services 16 U.S. Department of Commerce 17 18 MS. HELEN MARANO 19 Director 20 Office of Travel and Tourism Industries 21 U.S. Department of Commerce 22 23 MR. MICHAEL MASSERMAN 24 Director 25 Office of Advisory Committees 26 U.S. Department of Commerce 27 28 MS. JENNA PILAT 29 Deputy Director 30 Office of Advisory Committees 31 32 MR. MARC CHITTUM 33 Executive Secretary 34 U.S. Travel and Tourism Advisory Board 35 36 ALSO PRESENT: 37 38 MS. PATRICIA COGSWELL 39 National Security Staff 40 White House 41 42 MR. RICHARD L. FRIEDMAN 43 President's Export Council

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 4 2 1 2 MR. CARL BURLESON 3 Federal Aviation Administration 4 5 MR. STEPHEN J. CLOOBECK (via teleconference) 6 Chairman 7 Corporation for Travel Promotion (CTP) 8 9 MR. KENNETH HYATT 10 Acting Deputy Assistant Secretary for 11 Services 12 Liaison for CTP 13 14 MR. PAUL BRUMAN 15 TSA

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 5 2 1 I N D E X 2 3 PAGE 4 5 6 OPENING REMARKS & INTRODUCTIONS 7 Rossi Ralenkotter, Chair 5 8 9 WELCOME AND NEI UPDATE 10 Francisco Sanchez, Under Secretary for 11 International Trade 9 12 13 ADVOCACY PRESENTATION & DISCUSSION 14 Adam Goldstein, Subcommittee Member 16, 80 15 16 RESEARCH PRESENTATION & DISCUSSION 17 Doug Shifflet, Subcommittee Chair 45 18 19 REMARKS 20 Dr. Becky Blank, Acting Secretary of Commerce 63 21 22 REMARKS 23 Rhea Suh, Assistant Secretary for Policy, 24 Budget and Management, 25 Department of the Interior 77 26 27 FINAL PRESENTATION 28 Rossi Ralenkotter, Chair 83 29 30 TOURISM POLICY COUNCIL UPDATE ON PAST 31 RECOMMENDATIONS 32  Michael Frias, Deputy Assistant Secretary 33 for thePrivate Sector, 34 Department of Homeland Security 96 35  Ed Ramotowski, Acting Deputy Assistant 36 Secretaryfor Visa Services, 37 Department of State 86 38  Carl Burleson, Deputy Assistant Administrator 39 for Policy, International Affairs and 40 Environment, Federal Aviation Administration 104 41  Stephen J. Cloobeck, Chairman, Corporation for 42 Travel Promotion 111 43

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 6 2 1 CLOSING REMARKS & NEXT STEPS 2 Nicole Lamb-Hale, Assistant Secretary for 3 Manufacturing and Services 116 4 5 ADJOURNMENT 111

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 7 2 1 P R O C E E D I N G S

2 OPENING REMARKS & INTRODUCTIONS

4 CHAIRMAN RALENKOTTER: Good morning,

5 everyone. I'm sorry I didn't have a gavel with me, so

6 I did what a pit boss in Las Vegas does, I just

7 clapped my hands.

8 (Laughter)

9 CHAIRMAN RALENKOTTER: But again, thank you

10 for all being here. This is our final meeting, our

11 wrap up of a lot of hard work by everyone on the

12 committee, and I'll do a few remarks at the end. But

13 I really do appreciate all the hard work that has gone

14 into this and I think we are seeing some progress,

15 some movement, and some great dialogue going back and

16 forth.

17 So to get started, I think we all need to

18 just, at the table, introduce ourselves.

19 Dawn, we'll start with you.

20 MS. DREW: Hi. Dawn Drew, CEO and Founder of

21 The Most, Incorporated out of New York City.

22 MR. SHIFFLET: I'm Doug Shifflet. I'm

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 8 2 1 Chairman and CEO of D.K. Shifflet & Associates.

2 MR. JOLY: Hubert Joly. I'm the CEO of

3 Carlson.

4 MR. STUBBLEFIELD: Greg Stubblefield,

5 Executive Vice President and Chief Strategy Officer

6 for Enterprise Holdings, which is Enterprise Rent-A-

7 Car, National Car Rental, and Alamo.

8 MR. ANDRES: Jose Andres, chef,

9 ThinkFoodGroup, here in Washington, DC.

10 MS. BECKER: I'm Helane Becker, director with

11 Dahlman Rose & Company, a brokerage firm in New York.

12 MS. ARMSTRONG: Sheila Armstrong. I'm the

13 co-founder and Executive Director of U.S. Cultural and

14 Heritage Tourism Marketing Council.

15 MR. MASSERMAN: Mike Masserman, Director of

16 the Office of Advisory Committees here at Department

17 of Commerce.

18 MR. FRIAS: Michael Frias, Deputy Assistant

19 Secretary for the Private Sector at DHS.

20 SECRETARY LAMB-HALE: Nicole Lamb-Hale,

21 Assistant Secretary for Manufacturing & Services,

22 Commerce.

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 9 2 1 SECRETARY SANCHEZ: Francisco Sanchez, Under

2 Secretary of Commerce for Trade.

3 MR. HYATT: Ken Hyatt, Acting Deputy

4 Under Secretary for Services and Liaison to the

5 corporation --

6 MS. COGSWELL: I'm Patty Cogswell and I know

7 it says Department of Homeland Security, but in fact

8 I'm with the National Security staff at the White

9 House.

10 (Laughter)

11 CHAIRMAN RALENKOTTER: She's incognito.

12 (Laughter)

13 MR. RAMOTOWSKI: Ed Ramotowski, the Managing

14 Director of Visa Services at State.

15 MS. MARANO: Helen Marano, Director of the

16 Office of Travel and Tourism Industries, a tireless

17 leader for you all.

18 (Laughter)

19 MR. MCREYNOLDS: John McReynolds with

20 Universal Park Resorts.

21 MR. ZIMMERMAN: George Zimmerman, Travel

22 Michigan.

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 10 2 1 MS. AGRA: Holly Agra, Chicago's First Lady

2 Cruises in downtown Chicago.

3 MR. DAVIDSON: Good morning, everyone. Todd

4 Davidson with Travel Oregon.

5 MS. FERENC: Maryann Ferenc, CEO of Mise en

6 Place Restaurant and Bank Company from Tampa, Florida.

7 MR. GILLELAND: Sam Gilleland, Saber Holdings.

8 MR. GOLDSTEIN: Adam Goldstein, Royal

9 Caribbean.

10 MR. RALENKOTTER: And I'm Rossi Ralenkotter,

11 President and CEO of Las Vegas Convention and Visitors

12 Authority. Again, welcome everyone. We have a tight

13 agenda, so I'm going to turn it over to Francisco,

14 who's going to give us an update on the Export

15 Initiative.

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 11 2 1

15 WELCOME AND NEI UPDATE

16 By Francisco Sanchez,

17 Under Secretary for International Trade

19 SECRETARY SANCHEZ: Right. Thank you, Rossi.

20 Good morning, everyone. It's good to see all of you.

21 Let me start by thanking Rossi, Dawn, and the

22 entire board for your excellent service. I have been

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 12 2 1 on a lot of boards, some outside of government,

2 nonprofits and for-profit, and in government, and not

3 all boards are created equal.

4 But this board has delivered and you've

5 delivered very, very good, very sound, very strong

6 policy recommendations. I know I am very grateful to

7 the effort you've put into this. Secretary Locke--I

8 should say former Secretary Locke--before he left for

9 China, commented on the effectiveness of this board.

10 So, a big, big thank you with a lot of gratitude to

11 all of you.

12 Let me talk about trade very quickly.

13 Overall, we're doing well. Trade in the first seven

14 months of this year, exports are up 16 percent over

15 2010, which is phenomenal considering that in 2010

16 they were up 17 percent over 2009. To meet the

17 President's NEI goals we have to be growing at about

18 14.8 percent each of the five years that the NEI has

19 set as its goal of doubling exports. So overall we're

20 doing great. I am very happy to report that travel

21 and tourism is playing a very, very important role in

22 our trade numbers looking good.

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 13 2 1 Direct employment from travel and tourism

2 industries increased 2 percent in the first quarter of

3 2011, making it the fourth consecutive quarter of job

4 growth in the sector, outpacing the average growth of

5 travel and tourism employment. The air passenger

6 sector increased its labor force by 4.3 percent in the

7 first quarter.

8 In the first six months of 2011,

9 international visitation grew by 5 percent over the

10 same period last year. Even better, international

11 visitors have spent $86.9 billion during their visits

12 to the United States through July of 2011, which is an

13 increase of 13 percent over last year. The growth of

14 U.S. travel and tourism exports have appreciably

15 outpaced the growth of imports, thereby resulting in

16 about a $23.3 billion trade surplus for travel and

17 tourism, which by the way is an increase of 30 percent

18 over last year.

19 VOICE: Wow.

20 (Applause)

21 SECRETARY SANCHEZ: Now, if you didn't see

22 the President's speech on Thursday, I suspect that you

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 14 2 1 at least have heard about his speech and you know that

2 on Monday he delivered to the Congress the American

3 Jobs Act. This is a very, very important Act at this

4 particular time. Independent economists--not the

5 government economists, not the White House economist--

6 estimate that this Act will generate somewhere between

7 1.5 and 2 million jobs.

8 I have to say that I've got to believe a

9 chunk of those jobs will come from the travel and

10 tourism industry. I also want to say that a lot of

11 the things in that Act, in that proposed Act, will

12 benefit the travel and tourism industry.

13 Very quickly, just a couple of things. The

14 payroll tax gets cut 50 percent for 98 percent of all

15 businesses in the United States. If you increase the

16 wages for your current employees or you hire new ones,

17 you get an additional cut. If you're making capital

18 expenditures, you can fully depreciate it in 2012--

19 huge, very important in this industry.

20 There are a lot of other things in there. I

21 won't bore you. But I felt it was important to point

22 this out, it's huge if, and only if, the Congress

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 15 2 1 acts. I can't tell you to lobby so I'm not going to

2 tell you to lobby, but I will tell you that it's

3 important for you to become well-informed of the

4 President's plan and to generate debate and talk about

5 it because we need action now.

6 So with that, let me stop and let me also

7 just talk a minute about some of the work you've done.

8 We've shared your recommendations with the inter-

9 agency Tourism Policy Council, which includes the

10 Department of State and Homeland Security, as well as

11 the White House. The council met last week to discuss

12 how to move forward on many of the issues that you

13 have raised, including one that I know we've been

14 talking about for a while: enhancing the visa process.

15 The council reviewed the metrics to further

16 track progress on travel facilitation issues raised by

17 the President's Export Council and the board at this

18 inter-agency policy committee meeting. It also

19 established a Crisis Communications Working Group to

20 develop and coordinate responses to industry issues,

21 including during times of catastrophes such as the

22 deep-water horizon or Hurricane Irene.

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 16 2 1 Today you'll be hearing a report from the

2 State Department on the extensive progress that

3 they're making in increasing responsiveness to meet

4 the increased demand for visas, in particular among

5 emerging nations. I know that the Travel Facilitation

6 Subcommittee met with Ambassador Jacobs yesterday to

7 hear an update and to engage in further discussion on

8 the board's recommendations.

9 The board's work has been recognized and

10 discussed at the White House, where the Obama

11 administration is actively looking for ways to

12 facilitate legitimate travel and support the travel

13 and tourism industry which, I don't need to tell

14 anyone in this room, promotes millions of jobs for

15 American workers and, as I pointed out in my earlier

16 comments, is contributing significantly to the balance

17 of trade. The administration is fully engaged with you

18 as representatives of the travel and tourism industry

19 to jointly pave the way for increased travel activity

20 to support job growth for the American economy.

21 Following the Chair's comments, we look

22 forward to giving you a more in-depth update on your

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 17 2 1 recommendations and the actions that are being taken

2 as a result of them, but let me also just say one more

3 thing. As you're aware, we recently rechartered the

4 board and we are currently accepting applications for

5 the next round of appointments. We hope, if you're

6 interested in continuing to serve, that you will let

7 us know. You've been terrific and we hope that many

8 of you will come back to us.

9 So, Mr. Chairman, thank you very much.

10 CHAIRMAN RALENKOTTER: Thank you. And on

11 behalf of the committee itself I want to thank

12 everyone in Commerce for the cooperation. The feeling

13 of a partnership has really been developed. We

14 believe that as we move forward with some of the

15 initiatives we're talking about we're going to see

16 increased jobs, we're going to see more international

17 visitation, as well as domestic travel to our country.

18 So I want to thank you and everyone at Commerce for

19 that, because without that spirit of cooperativeness

20 we can't make this all work. So, thank you again.

21 SECRETARY SANCHEZ: Thank you, Rossi.

22 CHAIRMAN RALENKOTTER: We appreciate it.

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 18 2 1 SECRETARY SANCHEZ: Thank you.

2 CHAIRMAN RALENKOTTER: Okay. Thank you.

3 Before I start with the presentations though,

4 I would like to recognize Dick Friedman, who is here

5 with the President's Export Council. Dick, if you'd

6 just give us a little wave there. Thank you for being

7 here. We appreciate it.

8 MR. FRIEDMAN: Glad to be here.

9 CHAIRMAN RALENKOTTER: Thank you. Okay.

10 Well, we're down to two presentations. We

11 have the Advocacy Committee and the Research

12 Subcommittee presenting today. So I'd like to turn

13 this over to Sam Gilliland. Sam, if you would start.

15 ADVOCACY PRESENTATION & DISCUSSION

16 Adam Goldstein, Subcommittee Member

18 MR. GILLILAND: Thank you. Thank you, Rossi,

19 and thanks to all of you for the opportunity to

20 present the recommendations of our Advocacy

21 Subcommittee regarding energy policy.

22 And before I jump in, I would also express my

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 20 2 1 appreciation to the subcommittee itself, our members,

2 and their contributions to the work product that we'll

3 present to you all here today.

4 Those at the May meeting will recall that we

5 presented recommendations regarding aviation security

6 and I am pleased that we're seeing traction. There

7 are wheels, in some cases, already in motion and some

8 that have been put in motion since those

9 recommendations have been put forward and we really

10 appreciate it and are pleased to see that there is

11 some momentum behind those recommendations.

12 Before I hand it over to Adam--who really is

13 an expert on energy policy and security--to take you

14 through our presentation here and our recommendations,

15 I wanted to just emphasize for a moment the importance

16 of this particular topic, travel and tourism. I think

17 there aren't always direct linkages made between

18 energy policy and travel and tourism, except in times

19 of crisis.

20 So as you look back to when oil was nearing

21 $150 a barrel, and even as it sits bumping up and down

22 and close to $100 a barrel, you see many businesses in

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 21 2 1 the travel and tourism industry, but particularly the

2 airlines -- and back in the days when it was near $150

3 a barrel, airlines were in dire straits.

4 I think it is very important to the travel

5 industry that we have a healthy airline industry

6 because, after all, it is in many respects the power

7 grid of travel and tourism, bringing people to

8 destinations, allowing those people to spend money

9 through many of the firms that are represented here

10 today.

11 So it is really important and I hope it

12 becomes an important agenda item, both for Commerce

13 and also for the travel industry as a whole. So with

14 that I will turn it over to Adam to walk us through

15 this.

16 MR. GOLDSTEIN: Thank you very much, Sam.

17 Thank you to the Department for this opportunity to

18 talk about energy policy, and in fact for all the

19 opportunities that you've given us for these two years

20 to comment on a number of items of great interest to

21 our industry, and also for being very proactive and

22 taking it forward throughout the government, which we

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 22 2 1 are counting on you for and very pleased to see that

2 that's happening.

3 I also want to thank Sam because I did not

4 expect, when I joined the Advocacy Subcommittee, such

5 keen support for the idea of coming forward with some

6 recommendations on energy policy. I do not expect--to

7 the point that Sam just made--such a ready connection

8 having been made between the interests of this

9 industry and the country and what is happening in the

10 energy space. So that really has been great from my

11 standpoint.

12 As, as it says in the letter, we've worked

13 quite a bit with an entity known as SAFE. It stands

14 for Security America's Future Energy, which is a

15 nonpartisan organization that is dedicated to helping

16 the United States confront and reduce its

17 vulnerability in this area, and I should disclose that

18 I'm a member of something called the Energy Security

19 Leadership Council, which is an affiliate to SAFE.

20 We understand in making these recommendations

21 that there isn't actually a single one of them that

22 the Department of Commerce could action all by itself.

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 23 2 1 The examples that you just gave of interagency

2 cooperation and things that are happening on the

3 interagency scene are symbolic of exactly what we're

4 looking for in terms of the opportunity that the

5 Department has to spearhead action and critical debate

6 to move the country forward. These recommendations,

7 although they certainly would benefit the travel and

8 tourism industry greatly, are not parochial.

9 The vulnerability that we're talking about

10 here is the vulnerability of the United States of

11 America and all of its people and the recommendations

12 we believe would help everyone, not only in terms of

13 job creation, but in terms of the basic safety and

14 security of our country going forward into an

15 uncertain future.

16 (Showing of slides)

17 MR. GOLDSTEIN: If we can go to the first

18 slide, we changed the slides a little bit last night.

19 We took enormous risk in doing so.

20 (Laughter)

21 MR. GOLDSTEIN: So we'll see what comes up on

22 the screen. The definition of energy security as we

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 24 2 1 put forward as the first bullet, it's a very simple

2 concept. But as Sam said, the connection is not often

3 made of what that means to the daily and long-term

4 needs of our sector and other sectors.

5 The second and third bullet points. When you

6 look at them, they appear to be blindingly obvious.

7 Yet, the country has not been able to take,

8 consistently over time, the steps that are needed to

9 reduce particularly the volatility of energy prices.

10 That clearly undermined the economy, our sector, and

11 in general the ability to plan forward. All business

12 and government prize the ability to plan for the

13 future, but the volatility that we're confronting here

14 very much undermines that ability.

15 We have experience now in the last few years,

16 tremendous dislocations in the travel and tourism

17 sector, loss of employment, shutting down of whole

18 capabilities, air service to cities being one

19 prominent example, significant reductions in capacity

20 to major tourism centers, as businesses have tried to

21 get through the period that we have been enduring. So

22 that is, in essence, the background to why we believe

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 25 2 1 recommendations should be brought forward and action

2 should be taken.

3 If we go to the next slide --

4 (Changing of slides)

5 MR. GOLDSTEIN: I know it's hard to read from

6 a distance. Essentially that slide shows 40 years of

7 the relationship between oil expenditure as a

8 percentage of GDP and the economy. What it shows in

9 the dark bars, which appear now and then as you look

10 across the slide, are essentially the recessionary

11 periods.

12 But if you look at the line that hovers above

13 the bars, essentially what you see is that every

14 recession that we have endured in the last 40-plus

15 years has a direct relationship with a spike in oil

16 prices. It doesn't mean it will happen every time,

17 but every recession that we've had is connected to

18 such a spike. It simply is not in our interest to

19 tolerate this condition endlessly on into the future.

20 You can see some of the points here. For the

21 air industry, which of the various sectors of travel

22 and tourism has fuel representing the highest

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 26 2 1 percentage of its cost base, a $1 increase in jet fuel

2 costs the industry approximately $17.5 billion. So a

3 $10, $20, $30, $40 increase is clearly the difference

4 between industry viability and great suffering in the

5 industry, just as one example.

6 What we see here is that, generally speaking,

7 over these years, when 4 to 5 percent of our GDP is

8 spent in oil expenditures, we're coming into a

9 recessionary environment. Unfortunately, that is the

10 case at the moment. So when people get worried about

11 what this situation is that we're in, that is one of

12 the key indicators that will cause us to worry and the

13 government to worry about what's going on. So that's a

14 pretty stark reminder of what we have faced and what

15 we potentially will face if we don't take actions to

16 address these issues.

18 MR. GOLDSTEIN: If we go to the next slide, I

19 should say, by the way, that airlines -- it's

20 important to note that while I commented on the

21 airline sector. airlines are not alone. They may face

22 the highest percentage of their cost base, but you can

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 27 2 1 go through all the sectors of travel and tourism, and

2 they're either highly directly affected or very

3 indirectly affected in a trickle-down type of effect

4 as they try to contend with higher auto prices.

5 Certainly in the cruise sector we appreciate

6 that greatly, but you can talk about hotels, and

7 convention centers, and retain travel agencies, and

8 tour operators, and on and on it goes. We are all

9 affected by this.

10 The costs that we have borne, if you take it

11 to the level of the individual in a household, it's

12 really interesting what has transpired in the last

13 decade. In general, the tax burden on individuals has

14 been reduced, by round numbers, $2,000 per person. In

15 general, the extra costs that these individuals have

16 paid out in higher energy prices, rough numbers, is

17 about $2,000.

18 So all the benefits that have occurred

19 through the lessening of the tax burden in the last

20 decade have been completely and totally offset by the

21 increase in energy costs. You can also make

22 connections between the additional energy costs that

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 28 2 1 the country has faced and the shortfall in mortgage

2 payments that occurred in the run-up to the real

3 estate crisis in 2007, 2008, 2009, a similar type of

4 correlation.

5 So energy costs directly undermine the

6 economy and reduced discretionary spending, which of

7 course a tremendous part of the success of our sector

8 depends on consumers choosing to spend discretionary

9 dollars. They don't have them because they're going

10 to energy prices. We are completely vulnerable to

11 that. You can even say, if you want to state it as a

12 very simple equation, volatility of energy prices

13 equals vulnerability of our sector and of the United

14 States. We should take actions to address that.

15 We cannot control, obviously, the entire

16 energy environment. The price of oil is determined on

17 a global basis. We all see that the emerging

18 economies, whose travelers would love to come and

19 visit the United States, are rapidly increasing their

20 usage of energy. So factors that cause volatility go

21 far beyond the bounds of the United States. We should

22 address those areas that we are capable of addressing.

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 29 2 1 If we could go to the next slide.

3 MR. GOLDSTEIN: These are the basics, what I

4 would call the 40, the 70, and the 90 just to try to

5 frame how oil fits into the general picture of the

6 economy and of our industry.

7 On the left pie, that's the primary energy

8 demand for our country, and oil, the orange slice,

9 represents 39 percent. So approximately 40 percent of

10 energy demand in the United States is met by -- if you

11 then move over into the sectors of transportation,

12 about 70 percent of the country's use of oil goes to

13 transportation. So, oil and transportation are

14 intensely linked.

15 In fact, within transportation, 95 percent of

16 the energy requirement within transportation is oil.

17 So when we talk energy generally in the economy, you

18 talk about a lot of things. But when you talk about

19 the transportation sector and how things move, they

20 move because of oil. The dependency of our sector is

21 acute with respect to oil.

22 No matter what we do here, it's going to take

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 30 2 1 a very long time to change those fundamentals. But if

2 we never get started, we will never change those

3 fundamentals. So our reliance, our sector's reliance

4 on a single, highly volatile fuel to power mobility is

5 what jeopardizes us and reduces the security of the

6 country, depresses the dollar, and vastly increases

7 our balance of trade deficit.

9 MR. GOLDSTEIN: If we go to the next slide we

10 see something that I think most Americans simply do

11 not appreciate. There's often debate in the country

12 about the role that the large oil companies play in

13 the drama of energy prices, and energy profits for

14 that matter. You have to go down on this list to the

15 bottom, to number 14 to find an oil major on the list

16 of entities that control the world's oil reserves.

17 The first 13 belong to another country. You can see

18 from the size of the bars, compared to ExxonMobil

19 which we may understand as the most valuable company

20 in the world, I think, in stock market value, at least

21 some days --

22 (Laughter)

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 31 2 1 MR. GOLDSTEIN: Compare that little bar to

2 the bars above it. The first one I think is the

3 National Iranian Oil Company, the second one is Saudi

4 Aramco, so the Saudi Arabian oil company, and so on.

5 The next one is Russia, and so it goes. I think the

6 next one is Iraq.

7 The oil majors have nothing in comparison to

8 what is controlled by countries whose interests are

9 often antithetical to ours, or at least there is some

10 degree of tension or hostility and they are the ones

11 who have the oil. That isn't going to change in our

12 lifetimes. You can see that from the graph.

13 So more than 90 percent of the global crude

14 oil reserves are held by those types of companies in

15 those countries, and that is what is a critical source

16 of our vulnerability. So given all that, our sense is

17 that it's clearly in our national interest for

18 Congress and the administration to move forward to

19 develop a comprehensive strategy to increase American

20 energy security and to take actions quickly, even if

21 the pay-off will not occur for a longer period of time.

22 There are things happening in travel and

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 32 2 1 tourism today to facilitate that. There's a lot of

2 effort going on around alternative fuels, creating

3 them and using them, in the air sector and elsewhere.

4 There is momentum in some quarters for electric

5 vehicle transportation, which I'll come back to in a

6 minute.

7 But we need to do more as an industry and we

8 need a much more aggressive public/private partnership

9 with the government in order to move forward in a very

10 meaningful way. The actions that are being taken will

11 not get us there yet.

13 MR. GOLDSTEIN: So if we then go to the next

14 slide, this is a summary of the policy recommendations

15 that are contained in the letter. There's essentially

16 one slide still left for each one of those four major

17 areas to go through, which I will do in a minute. It

18 is very possible to make progress on all of these

19 recommendations but it is a pan-governmental type of

20 undertaking.

21 I think there's a real opportunity for the

22 Department of Commerce to step forward and be visible

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 33 2 1 in a very positive and constructive way within the

2 government to take leadership in these areas, even

3 though you will need help from your colleagues to

4 achieve them. We will need regular touring policy

5 changes to get where we need to go.

7 MR. GOLDSTEIN: If we go to the next slide,

8 we'll start with the first area, which is increasing

9 efficiency in the transport sector. In all my years

10 in travel and tourism I've been hearing about the

11 funding of the transportation infrastructure, the

12 different acts that have occurred over time. There's

13 a lot of legislation that is in place. We do struggle

14 to get that done; so often it goes on by many, many

15 extensions, unfortunately.

16 But what I've come to realize in the last

17 year as we've done this work is that the decision-

18 making calculus that determines what transportation

19 infrastructure development occurs in the country so

20 far to this point is in no way affected by the desire

21 to use oil more efficiently. There is no connection

22 in how we choose to do transportation infrastructure

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 34 2 1 projects and what will help the country save oil.

2 We believe that those types of metrics should

3 be introduced into the travel and tourism

4 infrastructure policy calculus so that the significant

5 spending that occurs over time can help drive us

6 towards the right result. There are lots of

7 opportunities and options, more than can be discussed

8 here.

9 In the first bullet point up there in the

10 white space it says, "Congress should pass

11 transportation legislation that funds road pricing

12 pilot programs, including congestion fees and vehicle

13 miles traveled fees". These are interesting and

14 sometimes controversial subjects. We don't have time

15 obviously to delve into them today, but I certainly

16 recommend -- we recommend for the Department of

17 Commerce to come fully up to speed on these options

18 and to promote those that you believe the most in.

19 Also in this area of the efficiency in the

20 transportation sector--and I will be very happy for

21 Sam to help me out here because he's closer to this

22 than I am--is we want to take advantage of the

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 35 2 1 opportunity to ensure that the Federal Aviation

2 Administration can do what needs to be done and is

3 funded to do what needs to be done to get the Next

4 Generation of air traffic control in place,

5 implemented, so that the country can save very

6 significant amounts of oil by a more rational

7 orchestration of air --

8 MR. GILLILAND: Well, just one factoid. I

9 think the view is that when in place, when full

10 implemented, the NextGen system will drive 16 percent

11 efficiency, and therefore much lower utilization of

12 fuel for airlines. So 16 percent is a huge

13 opportunity if we can push forward with NextGen air

14 traffic control and air traffic control technology.

15 MR. BURLESON: So when would you like

16 reaction? I'm Carl Burleson with the FAA.

17 (Laughter)

18 MR. GILLILAND: Our intention as an industry

19 is to be fully supportive of your efforts to do what

20 needs to be done.

21 MR. BURLESON: We really appreciate it. It

22 is absolutely critical. When you look at airlines,

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 36 2 1 airlines' fuel bill today and operating costs are

2 between 35 to 40 percent of their operating costs. So

3 clearly this is a huge issue for the airlines. You

4 can see in the system today, in terms of both managing

5 utilization, loss of service to a number of cities,

6 it's a huge driver and certainly we think NextGen is a

7 critical piece on how we deliver future efficiencies,

8 both in the air traffic side, but also, as you're

9 touching on, on fuels. Certainly our vision for

10 alternative fuels is a critical piece of NextGen.

11 MR. GOLDSTEIN: Often when you get into the

12 specifics of our recommendations we are of course

13 advocating government actions. There are also private

14 sector initiatives that need to take place. Some of

15 them, we believe, require tax incentives, so that is a

16 component of what we're talking about. But probably

17 the main, central component here would be to make sure

18 that the FAA is funded, staffed, and ready to

19 implement what it needs to do.

21 MR. GOLDSTEIN: If we then move to the next

22 slide, to the next area, which is accelerating the

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 37 2 1 commercialization of alternatives to oil, as I've

2 mentioned several times it's going to take a long

3 time. The scale of our use of oil dwarfs our use of

4 alternatives today.

5 But as science and government and private

6 sector devote increasing attention to the

7 possibilities that exist for alternatives, we continue

8 to find exciting potential developments, even, for

9 example, in the air sector where, because the range of

10 possibilities for energy use for the air sector is

11 narrow compared to land-based sectors, or even

12 shipping, we find even within that sector that there

13 are potential alternatives for high-density energies

14 that are liquid fueled that could work in the aviation

15 environment. There is some progress being made on

16 that, including a lot of cooperation with the U.S.

17 military, but there's much more that can be done.

18 But the area in which SAFE, in particular,

19 has pushed the hardest and where there is legislation

20 that is in front of Congress in this session called

21 the Promoting Electric Vehicles Act of 2011, which is

22 up there on the slide, is the electrification of road

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 38 2 1 transport. It is the shift of the powering of

2 transportation mobility from an oil-based equation to

3 an electricity-based equation over time.

4 The act is intended to cause competition

5 amongst local communities around the United States,

6 literally through public/private partnerships, to bid

7 for selection as an area for critical mass, to become

8 a leadership community where all the different

9 components of electrification will be accelerated and

10 brought together so that in that community

11 electrification will be prevalent on the roads as the

12 source of power for the cars and trucks.

13 Before I showed what I called the 40 to 70

14 and the 90 to show how critical, how central to energy

15 demand oil is in the transportation sector, these two

16 pie graphs show you the exact opposite case as it

17 relates to electricity. Oil has almost nothing to do

18 with electricity generation in this country and the

19 transportation sector essentially does not depend on

20 electricity for anything at all. So the opportunity

21 to move towards electricity as the source of powering

22 transportation moves us essentially completely away

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 39 2 1 from oil, and transportation is a huge untapped

2 opportunity in this regard.

3 So there are two ubiquitous infrastructures

4 for supporting our energy needs in the country, the

5 gasoline infrastructure and the electricity

6 infrastructure. So one of the reasons why we are so

7 enamored of electricity for this purpose is that the

8 ubiquity of the infrastructure is there.

9 Now, there's a lot that needs to be done with

10 batteries and charging stations and so on and so

11 forth, but it wouldn't take, relatively speaking, that

12 much more effort to put the drivers of cars in a

13 position where they can just plug in instead of just

14 going to the pump and fueling up with gas.

15 And I don't know if any of you have had the

16 opportunity. I did have the opportunity to drive a

17 Chevy Volt for a week a few weeks ago, and it's really

18 a very interesting experience to have. Okay, today

19 the tank -- actually the gas tank is wonderful if you

20 have to get there, but the battery right now provides

21 you 34 miles of travel.

22 Obviously to achieve what we're talking about

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 40 2 1 it will have to go much, much, much higher than that,

2 and part of the government involvement is to spearhead

3 basic research that will get us to batteries that have

4 much, much, much longer use lives before they need a

5 charge. But we are on the way. This country does

6 electricity well. Do we have issues in electricity?

7 Sure. Transmission, distribution, generation, all of

8 it. But as a basic proposition, we do electricity

9 well.

10 Electricity is what would give public

11 policymakers the flexibility over time to direct the

12 energy source for the electricity to evolve and the

13 drivers wouldn't have to worry about it. All they

14 know is, you plug into the outlet and your car can

15 move more. I think that's pretty much all we want the

16 drivers to know. But lots for the public policymakers

17 to think about behind the scenes. So, we're really

18 looking for the Department of Commerce, Department of

19 Energy, and other departments to accelerate the

20 progress of plug-in electric vehicles.

21 I should mention one more thing on

22 alternative fuels. The reason why I am on the Energy

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 41 2 1 Security Leadership Council is that Royal Caribbean

2 has a strange history wherein we became the world's

3 largest user of biodiesel for a period of about two

4 years, powering eight of our big cruise ships, and

5 today we don't use it.

6 I don't have time to explain all that here,

7 but suffice it to say that the possibilities, we

8 clearly saw. Motor vehicles, ships, and aircraft can

9 be powered by alternative fuels and there's a lot of

10 effort that needs to take place in there, and a lot of

11 government support that is needed to support action.

13 MR. GOLDSTEIN: If we go to the next slide,

14 this graph really says it all. This is the graph that

15 shows the budget in the country for energy, research,

16 development and deployment over the past 30 to 40

17 years. After the tremendous ramp-up that occurred in

18 the 1970s oil crisis, you can pretty much see we went

19 off the proverbial cliff.

20 For the importance of this issue to this

21 country, even understanding how difficult dollars are

22 to come by in this era, we can't have this. This

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 42 2 1 won't get us where we need to get to in terms of the

2 recommendations that we're making or all the different

3 things that have to happen in energy to reduce the

4 country's vulnerability.

5 There are actions that Congress should take

6 in terms of creating trust funds and technology

7 authorities that would propel us to a better place,

8 but it will take investment in the short term. Of

9 course, that investment will create jobs as well, but

10 we cannot go on like that. We need to reform the

11 process of research, development and deployment.

12 It is spread piecemeal across almost the

13 entire executive branch of the government, probably in

14 Congress too, and here is a real opportunity, I think,

15 for the Department of Commerce to spearhead the

16 harmonization of the research regime so that we do it

17 in an efficient and sensible manner. We are not

18 advocating that the government choose particular

19 technologies, just that we have a more rational and

20 harmonized research regime.

22 MR. GOLDSTEIN: If we then go to the next and

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 43 2 1 last slide, this is understandably a controversial

2 issue in many quarters. The United States of America

3 has within its territorial boundaries enormous amounts

4 of proven, and unproven but expected, oil reserves on

5 the Outer Continental Shelf, in the Gulf of Mexico, in

6 Alaska, and so forth.

7 Other countries, if they have such assets,

8 they take advantage of them. This needs to occur in a

9 profoundly environmentally responsible manner. We

10 can't obviously have, again, what we just experienced,

11 but searching for oil does not mean that what we

12 experienced must happen again.

13 There are countries, notably Norway, who have

14 proven under much more difficult conditions that they

15 can extract oil and gas from under the water and under

16 the ground with the smallest possible environmental

17 footprint, although there is an environmental

18 footprint, and serve the needs of their country, and

19 actually in the case of Norway, set their country up

20 for decades, or even centuries, of prosperity by doing

21 all of these activities in a really responsible and

22 sensible way. Why shouldn't the United States of

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 44 2 1 America be able to manage that?

2 The graph shows the potential in the years

3 coming for significantly more oil and gas to be

4 developed here in the United States, significantly

5 more. But would it change the world price of oil?

6 Not necessarily, because the world price of oil is set

7 on a world basis. Would it affect the balance of

8 payments and our deficit as a country in trade?

9 Tremendously. It would have a direct and immediate

10 impact on that as we grow up the capabilities. Our

11 industry has a vested interest in that and we

12 certainly would like to see the actions taken to

13 promote that.

14 So in closing, I think we go maybe one more

15 time back to the summary slide, if you have that.

17 MR. GOLDSTEIN: Reform of the regulatory

18 approach in general, including for offshore

19 production, is critical. There are clearly a number

20 of critical steps that need to be taken. I think the

21 most critical thing is to maintain the necessary level

22 of intention. The ebbing and flowing of attention, as

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 45 2 1 crises ramp up and ramp down, is what has placed us in

2 this predicament.

3 We have not been able to sustain as a country

4 year-in and year-out the necessary set of actions.

5 For all we know, with the softening economy and

6 potentially an improvement in, let's say, peaceful

7 conditions in some of the more contentious parts of

8 the world, we could see a ramp-down in oil prices in

9 the near future. It's possible.

10 If, once again, the implication of that is

11 everybody takes their eye off the ball and goes back

12 to daily business as usual, then other people will be

13 sitting in a room just like this in 5, 10, or 15 years

14 having the exact same discussion. We hope that that

15 doesn't happen and we very much hope that the

16 Department of Commerce will take a leadership role in

17 ensuring that that does not happen in actioning these

18 recommendations, and we thank you again very, very

19 much.

20 (Applause)

21 SECRETARY SANCHEZ: Adam and Sam, that was an

22 excellent presentation. In fact, if you would be so

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 46 2 1 kind as to let us have a copy of that.

2 MR. GOLDSTEIN: By all means.

3 SECRETARY SANCHEZ: I will shamelessly

4 appropriate large portions of it when I talk about

5 this topic.

6 (Laughter)

7 SECRETARY SANCHEZ: I'll give credit, though.

8 (Laughter)

9 MR. GOLDSTEIN: Thank you.

10 SECRETARY SANCHEZ: Let me just say a few

11 things. I think you're right. I think the Department

12 has a role to play. We are working closely with the

13 Department of Energy on a number of these issues.

14 Nicole led, what would you call it, a workshop? At

15 the Paris Air Show and the jet biofuels sector. Very

16 exciting to see this budding industry coming up. She

17 held a workshop there with all of the various players

18 in that small but growing industry.

19 By the end of the year, we're going to have

20 an interagency meeting with the private sector in that

21 jet biofuel space to talk about how we should be

22 coordinating as a government on that area. I know

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 47 2 1 that that's just one segment that you talked about,

2 and we'll probably need to look at doing that in other

3 places. So we hear you and we're acting on it, and I

4 suspect we should be acting even quicker. Thank you

5 very much.

6 I apologize that I have to excuse myself.

7 I'm going to be leaving on an eight-day trip to

8 Turkey, Poland, and the Czech Republic. If I don't

9 leave now, I'm in big trouble, according to my staff.

10 (Laughter)

11 SECRETARY SANCHEZ: Thank you, again, all,

12 for your service. I hope to see you again very soon.

13 Thanks.

14 (Applause)

15 CHAIRMAN RALENKOTTER: Sam, Adam, thank you

16 for a great report. Very thoughtful and well

17 researched.

18 Do we have any questions or any comments from

19 the committee? Would anybody like to make any

20 comments?

21 SECRETARY LAMB-HALE: I'd just like to say

22 thank you so much again for the work that you're

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 48 2 1 doing. We're very supportive of your recommendations

2 on NextGen. You know, as the President mentioned in

3 his speech last week, infrastructure upgrades are

4 critical. I really appreciate the tie to

5 infrastructure and energy policy that you articulated.

6 I think that's just incredible.

7 I haven't heard it put that way and I think

8 it's certainly a critical component. Our roles are

9 configured and all of the various transportation roles

10 are configured in a way to, you know, preserve energy

11 sources, and that's the point. This is just

12 excellent. So, thank you so much.

13 Of course, that's a critical component to

14 getting people back to work as well. So, thank you.

15 We look forward to the rest of the recommendations

16 that we'll hear today.

17 CHAIRMAN RALENKOTTER: Okay. Great.

18 Carl, would you like to have any other

19 comments?

20 MR. BURLESON: Well, as my 18-year-old would

21 put it, the FAA thinks your report is "hip, cool, and

22 doing it right".

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 49 2 1 (Laughter)

2 MR. BURLESON: So again, we're very grateful

3 of the attention you paid to NextGen. We certainly

4 think that's critical. We are very pleased with the

5 attention you paid to reauthorization. This is a big

6 deal. I know this was probably lost in the debt

7 debate, but for those of you who might have seen it,

8 because of the lack of authorization extension the FAA

9 actually had to furlough 4,000 people.

10 Actually, the 4,000 people we were

11 furloughing were almost three-quarters of our NextGen

12 staff. I have to say we've already seen the

13 ramifications of that. In my own organization I've

14 had two of my best and brightest young engineers say,

15 well, thank you very much, I think I've had enough of

16 government work, I think I'm going to go find brighter

17 prospects somewhere else. So I think this is a real

18 concern to us because we really need to get NextGen

19 done.

20 But that really requires a lot of not just

21 the hardware, but the software of human capital.

22 Certainly these are the folks that probably have the

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 50 2 1 greatest ability to go somewhere else. So I think

2 it's really important that we have the authorization

3 and have a stable level of funding that is so

4 important to this.

5 I will say I think the good news in the

6 alternative fuels area is this administration has

7 really pushed hard to take the lead in this area. We

8 started what's called the Commercial Aviation

9 Alternative Fuel Initiative a number of years ago. We

10 had our first approved biofuel standard this summer in

11 July, a 50 percent blend. Again, I think we're moving

12 very much forward.

13 For those who haven't had a chance, because I

14 know this is not in everyone's reading, the FAA just

15 put out a new strategic plan. We call it Destination

16 2025. One of our goals there is that by 2018, the

17 aviation sector will be using 1 billion gallons of

18 alternative fuel.

19 So again, I think the way your letter is

20 framed, we need to pay attention. I think what I

21 would share with you is we already have the attention,

22 we already are taking initiatives. We would welcome

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 51 2 1 your support to continue to move that forward.

2 I think the other really important thing is

3 we've been able to do this really through a

4 public/private partnership. When you look at what

5 we're doing through CAAFI, that has really been us

6 coming together with a number of agencies, but really

7 relying extensively on private partnership with us. I

8 think it really is a terrific model for the kinds of

9 initiatives you're talking about. So again, thank you

10 very much for this letter. I can't wait to show it to

11 my senior management.

12 CHAIRMAN RALENKOTTER: Thank you, Carl.

13 Any other comments from the committee?

14 (No response)

15 CHAIRMAN RALENKOTTER: So we do need to have

16 a motion to accept the letter and the report so we can

17 forward that on to the Commerce Secretary.

18 VOICE: So moved.

19 CHAIRMAN RALENKOTTER: I have a motion.

20 VOICE: Second.

21 CHAIRMAN RALENKOTTER: I have a second. Any

22 further discussion?

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 52 2 1 (No response)

2 CHAIRMAN RALENKOTTER: All in favor say aye.

3 (Chorus of Ayes)

4 CHAIRMAN RALENKOTTER: All opposed?

5 (No response)

6 CHAIRMAN RALENKOTTER: The motion passes.

7 Thank you very much.

8 Now I think we need to go on with the last

9 report, which is Research. Doug Shifflet is going to

10 be making that presentation, so Doug, I'm going to

11 turn it over to you.

22 RESEARCH PRESENTATION & DISCUSSION

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 53 2 1 Doug Shifflet, Subcommittee Chair

3 MR. SHIFFLET: Thank you, Rossi. I hope you

4 all don't mind if I stand for this. We've narrowed

5 this down to 4,372 numbers, 6.5, which I'm going to

6 have to read to you because you won't be able to see

8 (Laughter)

9 MR. SHIFFLET: The quietness penalty. That

10 is what you expect, right?

11 (Laughter)

12 MR. SHIFFLET: We're going to deal

13 conceptually with the issue. I'm sorry that Francisco

14 had to leave. It's amazing to me what lengths people

15 will go to out of a Research presentation.

16 (Laughter)

17 MR. SHIFFLET: Let me thank the people that

18 have been on our committee. Adam Sacks is not here,

19 unfortunately, and Bill Saunders from Visa couldn't

20 join us, but George Zimmerman, and -- and -- Eckert

21 have been strong contributors and we really appreciate

22 their effort.

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 54 2 1 There's going to be a lot of button-pushing

2 on this, so I'll just go kind of like this. Okay.

3 (Showing of slides)

4 MR. SHIFFLET: So what I'm going to do is

5 kind of theoretically go through some of the issues

6 that we see. So what we're trying to do, our mission

7 here has been to focus on practical recommendations,

8 the ideas that through the application of improved

9 measurement-based insights, insights that you can get

10 from usually good measurement, we can enhance job

11 creation on exports and leverage the growth of the

12 whole travel industry by being smarter about

13 advocation of information. So that's kind of where we

14 are coming from.

15 Our approach to that is problem/solution,

16 where sometimes people come up with solutions for

17 which there is really not a problem and there's a lot

18 of product out there that's like that and never goes

19 very far. So the idea is to clearly identify what the

20 issue is and then once you have it, work through what

21 the solution might be in terms of measurement.

22 So we've identified three areas of concern.

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 55 2 1 The first, is measurement of international visitation

2 to the U.S, OTPI's specialty. We want to thank them

3 very sincerely for the entire Department's efforts and

4 support of this, and also some of the work that we've

5 done with Customs and Border Protection through

6 Homeland Security.

7 The second area that we're working on is

8 international competitive knowledge for U.S.

9 promotion. This has more to do with preparation for

10 travel promotion that we've been speaking with, but

11 there are so many issues associated with that that we

12 thought we should address.

13 The third area is comprehensive metrics and

14 their communication. This is a little more

15 theoretical but it has to do with the information that

16 Commerce provides to the industry and how they do it,

17 and some thoughts that can help people use the

18 information more effectively.

19 So I'm going to walk through them one at a

20 time. The first one is insufficient measurement of

21 the international visitation to the USA. We call it

22 that partially because the Travel Promotion Act has

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 56 2 1 mandated that the sample size be much larger. The

2 first one is that you need a 1 percent sample,

3 according to TPA. TPA started really giving two-

4 tenths of 1 percent of the victors that come to the

5 United States.

6 There's a five-fold increase and it's an

7 unpleasant one -- to do that. So the question for us

8 is really what are the issues for the industry? Do we

9 really care? What's really involved? So the export

10 data is certainly equivocal for states. Only about 20

11 states can currently use the data from OTPI because

12 the samples are insufficient.

13 Last year we ran a small survey through the

14 industry and some 70 percent of the people said this

15 information is critical for our budgeting and our

16 marketing analysis in order to go after that business.

17 In fact, some 69 percent of those people said they

18 currently can't go.

19 So they are making decisions which are under-

20 leveraged, sometimes wrong, wasting money that they

21 dearly need, especially in their -- and the

22 Corporation for Travel Promotion absolutely needs this

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 57 2 1 information because they've been mandated, in fact, to

2 measure and evaluate the effectiveness of their

3 programs. So what do you do about that?

4 Well, our approach to the solation is really

5 pretty straightforward conceptually. That is find a

6 broader base and lower cost. CIAT, which is the --

7 International Air Travelers. Most of the people that

8 are coming in are not coming by land. In fact, the

9 internet survey is really about the only way to do

10 that.

11 We've worked through several approaches to

12 try and get the internet survey. What we found is

13 that we can get at least a 10 times cost reduction.

14 You can survey at least 10 people for every one you

15 can do in a paper survey that you hand out in an

16 airport or on an airplane. It's more like 20, but we

17 don't want to overstate the situation until we can

18 actually get it in place.

19 So the issue is, how do you do that? Here

20 are a series of recommendations that we have. The

21 first one is--keep in mind that this is near-term, and

22 I'll tell you why in a moment--operationalize the ESTA

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 58 2 1 approval page. The Electralite system for travel

2 authorization that is replacing the I-94, or the I-94W

3 for the visa waiver countries, currently. They are

4 currently getting a million applications a month.

5 That's a lot of folks.

6 If we could tap into that, then we could

7 survey people and get the 1 percent sample pretty

8 quickly. The problem, of course, is that their email

9 address is that kernel when they go online to register

10 cannot be used. So we've had some very good

11 conversations with Suzie Shepherd and Customs and

12 Border Protection folks and they have told us that the

13 final page of their approval document can have an opt-

14 in if you will, but that moves them someplace else.

15 They're willing to program that at their cost. So the

16 idea, first of all, is to create a new site.

17 There was already a button at that approval

18 page for Discover America. It says if you want some

19 more information, push this button. Well, you can't

20 have two buttons because you get one and you don't get

21 the other, so there needs to be a coming together of

22 this. When you then do that, we have been given the

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 59 2 1 opportunity through that organization to have a pop-up

2 page. Not a button, but a pop-up, almost full-screen

3 to come up to tell them why they should click and go

4 there, and that there will be potentially several

5 other things that can happen on that side. But we

6 want to sign up for a survey, not opt in.

7 So the next part of that is to operationalize

8 what we're calling -- by the way, we were thinking

9 about, as part of this presentation, having four pages

10 of acronyms so we could all keep them straight, but we

11 decided to just add one, which is Discover America

12 Promotion, CIAT, or DAPs. The new site had all that

13 stuff off the Customs and Border Protection site into

14 one place where we can provide them with more

15 information, we can graphically make it far more

16 effective, the look and feel, and all of this.

17 I will tell you that there is a cost to this,

18 but the cost is really relatively inexpensive. You've

19 got to operationalize the back end if people are going

20 to opt into a survey. You've got to keep track of all

21 those email addresses and you have to keep them secure

22 and they're not coming right now, they're going to

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 60 2 1 come later, so you've got to get back to them when you

2 find the time, you've got to manage all that. So

3 there is substantial effort.

4 We estimate, talking with people that we

5 know, it's about $100,000 to set up that site, about

6 $350,000 a year to run it, which is dramatically less

7 than what the system currently costs. I talked to Jim

8 Rabins of CTP. He was very much in favor of this.

9 He's asking for a sponsor this Friday at their meeting

10 in Montana, to have someone step up so that we could

11 get through the first phase.

12 If we can set up the promotional program that

13 can be there so that people can pay to promote their

14 products to the places these people are going, because

15 we'll ask them where they're going, then you can have

16 two promotions at a cost.

17 If you look at the cost of promoting in other

18 venues, what you find is that we could very quickly

19 get to a million or more dollars and that if you only

20 need $350,000 the program becomes self-funded. So

21 that's our concept. If we go beyond that, this is the

22 CTP support. In fact, they're already stepping up to

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 61 2 1 the plate and we're pleased to let you all know that.

2 So the self-funding program really will get

3 us to the mandated 1 percent, we believe. The issue

4 is near-term because CTP is positioning the brand now,

5 and if you're going to have a measurement system in

6 place you really should have a pre-measurement so you

7 know what the shift is afterward. They'll be in the

8 field, they'll be talking about it in November with

9 the general positioning, but they'll be promoting by

10 next spring, we believe, so we've got a relatively

11 short window to get this in place.

12 So that's where we are on that issue.

13 Insufficient competitive knowledge for brand

14 development and promotion. This also leads back to

15 the CTP. They do easily understand product

16 development, brand positioning, but part of the issues

17 we're talking about here is, it's a really complex

18 product. It's terribly complex and you've got to

19 communicate it to diverse audiences in different

20 cultures with different value systems.

21 As part of that, what often happens is some

22 things which are quite difficult to deal with. For

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 62 2 1 example, those people are already going someplace, you

2 know. They've got beaches, they've got an awful lot

3 of things that everybody else has, and those places

4 are all being promoted at a high level. It's going to

5 be a very competitive effort. This is not saying,

6 come to the U.S., you're going to love it here. It's

7 going to be very difficult to really move people.

8 So for the third area here we have people at

9 home. All the destinations really are stakeholders.

10 They're all going to want to see their destination in

11 the positioning and advertising. Those kinds of

12 pressures are very difficult because they're putting

13 up money and all of this.

14 So the kind of recommendations that we're

15 suggesting really are near- to mid-term, but the

16 contextual understanding involves avoiding the inside-

17 out perspective. It's very common to say here's

18 what's great about the United States, come on over.

19 Well, the issue isn't what we think is great,

20 it's what they are looking for. They are finding it

21 someplace else. So the issue is an outside-in

22 perspective, which is understanding those markets and

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 63 2 1 those people and finding out, what are the hot buttons

2 that we can use to get them to come here? So that's

3 another cost and it's a time issue, so how do you do

4 that?

5 Well, operation can be helpful. I had a

6 conversation just yesterday with Michelle McKenzie,

7 who's the director of CTC in Canada. They have been

8 running these kinds of surveys for many -- they're one

9 of the best in the world at doing that and they want

10 very much to cooperate with us. I'm not sure the CTP

11 is going to want to do it that way. They may not have

12 complete control.

13 But we could tune -- use their history from

14 all of North America and then focus people in on the

15 United States using the information very quickly to

16 find -- so that's a recommendation that makes some

17 sense. All of this is testing and information

18 development which is why we believe that it's

19 appropriate for us to be suggesting this not only to

20 Commerce, but in fact to the CTP, and both are very

21 receptive to this discussion.

22 So in testing the promotions, the uniqueness,

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 64 2 1 the communications, all these efforts are terribly

2 important. You are all familiar with, obviously, Las

3 Vegas. If you say what happens here stays -- now

4 matter how you say that, everybody knows it's Las

5 Vegas. If you have the Nike swoosh, everybody sees it

6 all the time, you know what it is. They put it on

7 everything.

8 So part of the issue is coming up with

9 something which is in fact something everybody will

10 get, understand, recognize every time. If done in a

11 relative positioning way so that all he products in

12 the U.S. can get under that umbrella and use it all

13 the time so that it becomes as ubiquitous as the Nike

14 swoosh or anything else that'll say that's the U.S.,

15 constant reminders from the U.S.

16 It needs to be, obviously, unique. Everybody

17 has beaches. Most every country can talk about their

18 crafts, the wicker they make, or anything that you

19 want to think of. Almost everybody has some of it.

20 How do you become unique? So that's a major issue but

21 it's also a researchable and testable issue.

22 To get there, you really need objective

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 65 2 1 clarity. What we're talking about here is simply

2 being very clear about the objectives, to set them up

3 and make sure they're measurable. It is not just, we

4 are going to increase things by 20 percent, it's, what

5 are the things that you're going to communicate to do

6 that? What's the communication objective? How do you

7 make that all happen? So that's the approach we're

8 taking here.

9 So the third area is comprehensive metrics.

10 What we're trying to accomplish here is overcoming the

11 problem of the need to gain marketing impact when

12 budgets are lower, when people are holding that,

13 except maybe in Michigan where they're wise enough to

14 know that --

15 So to, in fact, create leverage requires

16 smarter decisions and smarter decisions are based on

17 their analysis of issues, markets and travelers, and

18 that requires, of course, effective measurement. So

19 what's the solution here? Well, more comprehensive

20 frequent or monthly metrics in an authoritative

21 dashboard, which we suggest might well come from

22 Department of Commerce--in fact, it's my understanding

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 66 2 1 they're working on one now--and use what we are

2 suggesting is something called metrics by objective,

3 which I'll show as a framework for thinking about

4 developing the metrics, not just saying we'll use --

6 MR. SHIFFLET: So let's go to the next slide.

7 What we're talking about here really is the

8 authoritative dashboard. So one of the major thoughts

9 is don't just put up the data that Commerce has. If

10 you look at what facilitate has talked about with wait

11 times and that kind of thing, that's not Commerce

12 data, that State Department data. Well, it seems to

13 me Commerce is in the position to pull the appropriate

14 data from all departments, put it in one place so we

15 can work with it. The dollar exchange rate happened

16 to be a huge driver of people's international

17 behavior, so in fact that should be one of the kind of

18 metrics that we want.

19 Monthly toll measures. The Department of

20 Commerce provides international visitation numbers,

21 right, but not total. The amount in the U.S. of

22 travelers internationally is somewhere around 5, 10

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 67 2 1 percent and they generate about 18 percent of the

2 revenue.

3 But what about the rest of the country? How

4 is that doing? What's the relationship? So we're

5 suggesting that domestic travel be incorporated to

6 provide tools so we can understand our industry from

7 the perspective of the total country, including the

8 Department of Commerce insights and the integration of

9 that information.

10 The core metrics. Currently visitor -- I'm

11 sorry. The visitor counts is the core measurement.

12 How many people came? Well, historically it's a

13 turnstile number. You know, how many people walked

14 through the door? But it's essentially the same no

15 matter how you say it. Hotels don't count folios, you

16 know, they look at occupancy. Airlines look at load

17 factor. You get misled if you just count people, or

18 you can be misled.

19 What I'm showing you here is this is some of

20 our data from North Carolina, but we could do it for

21 anyplace. But our monthly data shows that as you move

22 from 2005 to 2008, the red line is the visitor count,

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 68 2 1 how many people came. Okay. The blue line is visitor

2 days. It takes into account how long they stayed.

3 The green dot is how much they spent. Well, which one

4 is related to the money, you know? The problem is the

5 conclusion that you reach.

6 When you watch the red line and visitor

7 counts you think you're doing great, you're telling

8 the world you're doing great, and the money has

9 stopped and people are saying, are you crazy? People

10 aren't coming to my hotel. Our occupancy -- and

11 you're telling me more people are coming?

12 Well, what happens when times get bad is

13 people slow down and they may come two or three times,

14 but they only stay a day or two. One of the problems

15 is the reverse when you go into an improved situation,

16 where the market is improving, when in fact you may

17 have people coming but they have fewer people coming

18 because instead of coming a couple of times they come

19 once and stay for a week. So you make the wrong

20 decisions, you promote inappropriately, that kind of

21 thing.

22 So what we're suggesting is that something

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 69 2 1 like person days be used and you share information so

2 that if the market's going up it's really the share

3 that counts, especially when we're looking

4 international and at share of what. What is the U.S.

5 share of France? What's the share out of the U.K.?

6 You know, where else are they going? So it's not just

7 the absolute numbers, obviously it's how well we're

8 doing relative to the rest of the market. So that's

9 the kind of considerations that we would like to see

10 and are recommending that Commerce provide on an

11 ongoing basis.

12 So metrics by objective is one of the ways --

13 one of the problems that happens is that people very

14 often are talking about, how well did we do when you

15 have a single measure, or whatever. Different people

16 are interpreting that in different ways, so how do we

17 all get on the same page and get everyone on board

18 with what we're talking about?

19 So we're talking about, and it sounds pretty

20 basic but we don't see it very often, is the business

21 objective. What is it that you say you're going to

22 do, how are you going to do it? One of the drivers,

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 70 2 1 irrespective of your behavior, that will affect it,

2 and how are you going to use that information, what

3 are you going to do with it, what decisions are you

4 going to make with it, and what are the components --

5 actually, what's the formula for the metric? I'm

6 sorry if I'm going -- this is maybe so basic that you

7 all are saying, yeah, yeah. But again, we don't see

8 it that often. Then you generate the metric with the

9 filters that you say need to be with it to justify

10 what it really means.

11 So here's a very simple idea. Entries of

12 international leisure visitor days by 15 percent,

13 whatever the number is. Well, what are the things

14 that affect that? The leisure monitoring level, how

15 much money are we spending, but also, what's the

16 economic environment? Is it going up, is it going

17 down? And what's the exchange rate? Those kinds of

18 factors that are driving it.

19 So if you find out that you went down when

20 the rest of the world went up you've got a real issue.

21 Or if you went up, you went up more slowly than the

22 other ones, you've got an issue. So those are the

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 71 2 1 kinds of things, and then you can -- you can measure

2 it. It becomes very specific.

3 You have a definition and everybody says, I

4 know what it means and you're not trying to pull the

5 wool over our eyes. So we found very useful the share

6 of market certainly is an issue. The entire market

7 goes down and you go down less, you're actually

8 looking good and you can justify what you're doing.

9 It's terribly important to understand.

10 ROI becomes another one. If the CTP says

11 we're going to generate 10:1 ROI on our efforts in

12 marketing, well, who is it that you're going to get?

13 International leisure travelers from certain markets.

14 Well, the problem then becomes, what are the factors

15 influencing that? What are you going to do about it?

16 How do you measure it? What's the definition? So

17 then you get to a CTP ROI that you know what it means,

18 everybody's on board and you don't have people sniping

19 at you from Congress or anywhere else. So that's the

20 idea.

21 Our summary is really these are key areas.

22 The international measurement and Customs and Border

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 72 2 1 Protection is working with us at CPP, is moving

2 forward to help fund that and move that along. We

3 hope that that will happen before too long. The

4 competitive knowledge, working with Canada on a lot of

5 the information that's going to be needed for the

6 positioning of the U.S., and in the third area we're

7 talking about some kind of a dashboard which is --

8 moving it all forward through all the metrics and

9 kinds of ideas that we're talking about.

10 So that's the conceptual approach to --

11 numbers, which we're happy to provide. Thank you very

12 much.

13 (Applause)

14 CHAIRMAN RALENKOTTER: Doug, thank you. If

15 we could hold any comments or questions because we

16 have the Acting Secretary of Commerce, Dr. Becky

17 Blank, with us. We would like to hear a few words

18 from you. Welcome.

11 REMARKS

12 Dr. Becky Blank, Acting Secretary of Commerce

14 ACTING SECRETARY BLANK: Thank you very much.

15 I really appreciate the chance to stop by. I'm going

16 to have to apologize because my schedule is a little

17 tight this morning. I have to leave for the airport

18 at 10:45. I have to leave for the airport at a

19 quarter to, whenever the next quarter to comes. I had

20 my eyes dilated this morning and everything is still

21 fuzzy around the edges. I can't read my -- it's a

22 sign of aging, right?

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 74 2 1 In any case, I have spent some time this

2 weekend reading through all of the materials that you

3 have put together over the last, whatever, nine

4 months, the various letters that were sent this spring

5 and the ones that you are sending today. I just want

6 to say that I was really impressed with the quality

7 and the care with which you sort of have put data,

8 arguments, and recommendations together.

9 I think that the level of expertise that's

10 really clear in those recommendations is clearly

11 driving a response here inside the administration

12 because it's obvious that we've got a partner here who

13 really -- you know, you know what you're talking about

14 and you're putting real time and effort into it. So I

15 want to thank you for that.

16 I want to talk just a little bit by starting

17 at the big picture of the overall economy and then

18 drop down to say a few things about travel and tourism

19 and where we are with regard to some of the

20 recommendations that we've received over the last

21 number of months.

22 So let me just go through that real briefly,

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 75 2 1 and then if we have time for a few questions we can do

2 so. So as you all know, domestic travel and tourism

3 depends very heavily on income levels and on the

4 overall economy. The recession of 2007, 2008, 2009

5 was extremely deep, left too many Americans out of

6 work and too many businesses facing reduced demand.

7 When President Obama first came into office

8 we were at the very depths of this recession and he

9 took a number of tough steps, steps that were not

10 always popular, to stabilize the financial system, to

11 keep the automobile industry from going bankrupt, to

12 pass along a tax cut to middle class families, and to

13 shore up the bottom line for America's cities and

14 states so teachers and policemen could keep their jobs.

15 The economy since then has been recovering.

16 We've had four quarters of positive economic growth.

17 We've created more than 2.4 million jobs since the

18 depth of the recession. But the bad news is, as you

19 all know, the growth simply hasn't been as fast as any

20 one of us would like. I am economist by background

21 and I know exactly what levels of growth we need to

22 start pulling unemployment rates down, and we

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 76 2 1 obviously just haven't seen that.

2 We'd love to be up in growth rates of 3.5, 4

3 percent, and instead our growth rates have been down

4 closer somewhere between 1 percent and 2 to 2.5 at

5 best. That's what needs to change. You know, we have

6 to create stable and higher levels of both for the

7 economy, not just for the overall macroeconomy to pull

8 down unemployment and to help work through our set of

9 foreclosed houses out there, but to help all of the

10 different industries such as your own that are really

11 looking for an expansion in consumer demand and, you

12 know, seeing the economy move forward more.

13 So one of the -- you know, this is the reason

14 for the Americans Jobs Act that President Obama

15 presented last Thursday night, a sense that we are

16 still in a very fragile economy. It's not moving as

17 fast as we want it to and we need to do some things

18 that will get some wind under the sails of businesses

19 and of consumers.

20 If we can do that, you will move into the

21 virtuous cycle whereby increased consumer demand

22 stimulates more business, spending demand, and in turn

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 77 2 1 creates more jobs, which in turn creates more --

2 that's where we want to be and where we haven't quite

3 gotten to as fully as we would all like.

4 So four main components to President Obama's

5 plan. Component number one is to help businesses, and

6 particularly smaller businesses which I know are a lot

7 of your constituencies, by cutting taxes, with

8 substantial cuts in payroll taxes and a complete

9 payroll tax holiday for any new hires or for any wage

10 expansions for current employees, as well as

11 expansions of the depreciation allowances with 100

12 percent expensing all the way through 2012.

13 Secondly, putting Americans back to work

14 through modernizing infrastructure. There's a

15 proposal here to support the infrastructure bank that

16 has bipartisan support. It's actually on the Hill

17 right now, with support from Kay Bailey-Huchison and

18 from John Kerry, so we're very hopeful that that may

19 have some legs under it as an initiative that's going

20 to move forward, and then some money to states that is

21 directed to retain or rehire teachers and first

22 responders who may have been laid off, particularly

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 78 2 1 cops and firefighters.

2 So, you know, number one is assistance to

3 businesses, number two is ways to put some people back

4 to work through modernizing American infrastructure

5 and assisting teachers and first responders. The

6 third is assistance to long-term unemployed. Yes, the

7 President is asking for further extensions of

8 Unemployment Insurance given the level of unemployment

9 we're at and the number of people who have been

10 unemployed long term. That is crucial.

11 But there's some real creativity in this plan

12 about how to not just extend unemployment benefits but

13 to do some things that are going to help long-term

14 unemployed get back to work. So there's a $4,000 tax

15 credit if you hire someone who's been unemployed for

16 six months or longer.

17 There's a number of options. The states run

18 the Unemployment Insurance systems. There's a number

19 of options for States to select that allow people who

20 are unemployed to go into training and still receive

21 some of their unemployment benefits, or to go back to

22 work part-time and still receive some of their

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 79 2 1 unemployment benefits. So I'm hopeful a number of

2 states are going to take some of those options off.

3 So, you know, the third issue here is help for getting

4 the long-term unemployed back to work.

5 The fourth issue is money in the pockets of

6 American families and workers. That is not just an

7 ongoing extension of the payroll tax cut we had this

8 year, but an expansion of that tax cut so that half of

9 what you would normally pay out of your paycheck in

10 payroll taxes will not be paid out. For the average

11 household, that's going to be a gain of $1,500. You

12 know, $1,500 is real money. If you make more than the

13 average household, it's going to be bigger.

14 If you make less, it's going to be a little

15 bit smaller because your payroll taxes are predicated

16 on wages. But, you know, there are a number of issues

17 here, from help for businesses, help for workers, both

18 of them tax cuts, which means the money is going to

19 get spent immediately. Those are paid out every month

20 on a regular basis. Help for the long-term

21 unemployed, and then trying to do some things to get

22 particular segments back to work. All right. So

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 80 2 1 that's the outline of the plan.

2 Everyone knows this is not going to solve all

3 of our problems, but it is the sort of start that we

4 need to make that will, as they say, give some

5 additional boost particularly to businesses and to

6 consumers that, you know, hopefully over time will

7 then create the long-term recession that is powered by

8 the private sector, which is what we have to have to

9 get back to where we want to be economically.

10 Now, you in the travel and tourism industry

11 are already doing better than at least some other

12 industries. According to the most recent travel and

13 tourism data, direct employment increased 2 percent,

14 to more than 7.6 million, with more than almost 40,000

15 additional jobs in the first quarter of 2011, the

16 fourth consecutive quarter of growth for that industry.

17 If you look more closely at those job gains

18 by sector, they're pretty broadly spread. You see

19 gains in air passengers, gains in motels and hotels,

20 gains in the food and beverage sector. In fact, with

21 the exception of the recreation and entertainment

22 sector, every single travel and tourism related sector

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 81 2 1 showed positive gains for employment in the first

2 quarter of 2011, so it's a good start.

3 Through the first six months of 2011,

4 international visitation was growing by 5 percent over

5 the same period last year, and even better,

6 international visitors spent nearly $87 billion while

7 visiting the United States through July, an increase

8 of 13 percent compared to last year. It goes to your

9 comment, don't just look at people, look at dollars.

10 So the gains in dollars are even bigger than the gains

11 in people.

12 The growth of travel and tourism exports have

13 outpaced the growth of other areas, resulting in a $23

14 billion trade surplus for travel and tourism. As many

15 of you know, exports in trade have actually been

16 leading growth over the last couple of quarters, so

17 this industry is playing a very important role for

18 that.

19 So, you know, the question is, how do we keep

20 this going? You've obviously got a series of

21 recommendations in front of us and let me just say a

22 couple of things about what we've done with those

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 82 2 1 recommendations, okay?

2 Increasing travel and tourism is a very clear

3 priority in this administration, and I can tell you in

4 the month and a half that I've been here acting--we're

5 waiting for our nominee to get approved by the Senate,

6 but we'll see when that happens--I have gotten

7 multiple inquiries from the White House to myself and

8 to some of our senior staff, sort of just checking in

9 on, you know, where are we with regard to various

10 issues related to travel and tourism. This is an

11 issue that the White House is extremely aware of, and

12 partly they're aware that you have been leading some

13 of the economic growth and they want to do everything

14 they can to keep that up.

15 The President's Council on Jobs and

16 Competitiveness, the Commerce Department, the State

17 Department, the Department of Homeland Security,

18 senior White House officials, you know, all appreciate

19 the importance of this industry as an engine to

20 economic growth. We shared your recommendations with

21 the interagency Tourism Policy Council, which includes

22 State and Homeland Security, as well as the White

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 83 2 1 House. I want to acknowledge the interagency

2 colleagues who are here, and particularly Patty

3 Cogswell, who chairs the Interagency Policy Commission

4 at the White House.

5 So a number of things they've been doing.

6 The Tourism Policy Council met last week to discuss

7 how to move forward on many of the issues that you

8 have raised, including enhancing the visa process. At

9 this meeting the Council also reviewed the metrics to

10 further track progress on travel facilitation issues

11 raised by the President's Export Council and the

12 Interagency Policy Commission.

13 It also established a Crisis Communications

14 Working Group to develop and coordinate responses to

15 industry issues, including support during times of

16 disaster, such as deep-water horizon or Hurricane

17 Irene. Shortly you're going to be hearing a report

18 from the State Department on the extensive progress

19 that they are making in increasing responsiveness to

20 meeting the demand for visas, particularly among

21 emerging nations.

22 I know that the Travel Facilitation

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 84 2 1 Subcommittee met with Ambassador Jacobs yesterday to

2 hear an update and to engage in further discussion on

3 the board's recommendations, and I hope that was a

4 good conversation. I haven't gotten a briefing back

5 on that yet.

6 I am also pleased that in the development of

7 research recommendations that have just been adopted,

8 the subcommittee worked very closely with the Tourism

9 Policy Council's Research Working Group, which

10 includes both DHS and State, and it's that type of

11 collaboration which I think is going to help move

12 these things forward much more quickly.

13 The board's work, as I noticed, has been

14 discussed at the White House where the administration

15 is actively looking for ways to support the travel and

16 tourism industry. So, you know, the bottom line here

17 is that the administration really does want to partner

18 with you as representatives of travel and tourism to

19 pave the way for increased travel activity, to support

20 jobs and economic opportunities for the American

21 people, and for international visitors to come and see

22 America.

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 85 2 1 So one final note. I know that this is the

2 board's last meeting under its current charter and I

3 really want to thank all of you. You have done an

4 enormous amount of work. I was impressed by

5 everything I had to read through this week when I sort

6 of said, show me what the Travel & Tourism board has

7 done. You've been working hard.

8 I know from my conversations with Secretary

9 Locke and our travel and tourism team here at Commerce

10 that they just really appreciated working with you

11 over this last year or more. So know that your time

12 and your expertise has been appreciated. No one

13 serves on these committees for compensation, and I

14 know you don't serve on them for the lunches that you

15 get.

16 (Laughter)

17 ACTING SECRETARY BLANK: So thank you for

18 coming and for really engaging in this.

19 We have recently rechartered this board and

20 we are currently accepting applications for the next

21 round of appointments, and as I know others have said

22 to you, I hope that if you want to remain on the board

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 86 2 1 you will let us know if you are interested in being

2 one of those who might be renominated.

3 So on behalf of myself, the Commerce

4 Department, the administration, thank you for your

5 service. I really look forward to continuing to hear

6 how these issues and all of your set of

7 recommendations are moving forward as they go through

8 the interagency processes here. So. that's a quick

9 movement through some of the things that I wanted to

10 make sure got said this morning.

11 (Applause)

12 CHAIRMAN RALENKOTTER: Thank you very much.

13 ACTING SECRETARY BLANK: I have to go in

14 about five minutes, but if there are questions or

15 issues that anyone wants to raise.

16 CHAIRMAN RALENKOTTER: Just one comment. You

17 know, it's all about jobs and job creation. Just

18 taking it to Las Vegas, for every 1,000 visitors we

19 get in addition to what we already have, it either

20 stimulates or supports 9 jobs. The jobs in our

21 industry you can't outsource to another country.

22 ACTING SECRETARY BLANK: Yes. Yes.

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 87 2 1 CHAIRMAN RALENKOTTER: So the President's

2 comments to Congress, let's pass this legislation now,

3 I think there's a lot of issues that we have brought

4 forth to Commerce that, if implemented them

5 immediately or pretty soon, you would see an increase

6 in not only international visitation, but domestic.

7 ACTING SECRETARY BLANK: Yes.

8 CHAIRMAN RALENKOTTER: So we're out there

9 selling every day and that's going to be creating more

10 jobs.

11 ACTING SECRETARY BLANK: And I think it's one

12 of the things that people appreciate about your

13 recommendations. I mean, there are always a number of

14 things to be worked on that, you know, over the next

15 10 years you'll sort of figure them out and make some

16 improvements.

17 But there are a number of recommendations

18 that have come out of this group that I know that if

19 we can do this sooner rather than later, it will show

20 very immediate effects. That is obviously, in this

21 economy, particularly attractive, so I thank you for

22 that.

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 88 2 1 CHAIRMAN RALENKOTTER: Thank you.

2 ACTING SECRETARY BLANK: Good. Thank you

3 very much. Best wishes for the rest of today. I hope

4 you have a great meeting, and I'll hear all about it

5 when I get back.

6 CHAIRMAN RALENKOTTER: Yes. Okay.

7 (Applause)

8 CHAIRMAN RALENKOTTER: I'm going to divert

9 just a little bit from the schedule because Rhea Suh

10 is here from the Department of Interior. She's the

11 Assistant Secretary for Policy Management and Budget.

12 REMARKS

13 Rhea Suh, Assistant Secretary

14 for Policy Management and Budget

15 Department of the Interior

17 ASSISTANT SECRETARY SUH: Thanks very much.

18 I also have to leave. I don't have a plane to catch

19 to a fabulous place, I have a Secretary waiting for

20 me, which is a little bit more tenuous for me. So I

21 apologize, but I'm very, very grateful to the board

22 for your willingness to invite the Department of

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 90 2 1 Interior to look at the presentations this morning.

2 There are very concrete take-aways that I will bring

3 back to our Department, and of course very

4 specifically around energy policy and the metrics

5 conversation. So thank you very, very much for the

6 work and the presentations.

7 Just a couple of things about the Department

8 of Interior that specifically I want to convey to the

9 folks on the board and to, obviously, our colleagues

10 as well across the Federal Government. Interior, I

11 think, is uniquely positioned to think about

12 increasing the opportunities for attracting foreign

13 tourists to America. If you think about the iconic

14 imagery of what people kind of connotate with America,

15 it's oftentimes the assets that we manage and run on

16 behalf of the American people. So anything that we

17 can do to help you all --

18 (Phone ringing)

19 ASSISTANT SECRETARY SUH: That's the

20 Secretary right now.

21 (Laughter)

22 ASSISTANT SECRETARY SUH: Probably not a good

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 91 2 1 idea to hang up on him.

2 (Laughter)

3 ASSISTANT SECRETARY SUH: To further help the

4 efforts on behalf of the private sector as well as to

5 further help the efforts that we're engaged in,

6 obviously, in this administration, really to hone and

7 focus down on the travel and hospital sector in

8 particular, we are at your disposal. Really, either

9 formally or informally, please don't hesitate to give

10 us a call.

11 I was thinking that the Secretary would

12 actually be quite interested in having the opportunity

13 to sit down with many of you and to get some insight

14 into specifically what the Department of Interior

15 could do to really help increase the opportunity that

16 you see in your industry for, again, increasing the

17 amount of tourists that we bring to this country. So

18 with that, I've got to run. But again, thank you

19 very, very much for the opportunity to be here.

20 CHAIRMAN RALENKOTTER: Thank you.

21 (Applause)

22 RESEARCH DISCUSSION

2 CHAIRMAN RALENKOTTER: That brings us back to

3 the agenda that we have been going through. So it's

4 the Research comments or questions. Just one comment,

5 and I can say this from experience, is that all of the

6 marketing, advertising, branding campaigns that Las

7 Vegas has instituted over the last 40 years have all

8 been research-driven.

9 We don't do anything without adequate

10 research, both of our customers, or non-customers,

11 trends, and so forth. So it's critical for CTP, it's

12 critical for all of us to make sure that we have a

13 strong research base for anything that we do, because

14 if you have good research you're going to have good

15 results.

16 So with that, do we have any questions for

17 Doug?

18 SECRETARY LAMB-HALE: Well, thank you,

19 Professor Shifflet.

20 MR. SHIFFLET: I was hoping that you'd

21 forgotten about this by now.

22 SECRETARY LAMB-HALE: No, no, no. Thank you

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 94 2 1 so much for the presentation. I really enjoyed it and

2 I really appreciate--and we all do--your collaboration

3 with LTTI and the recognition that we have an unfunded

4 mandate. Maybe we should pass the hat to get up to

5 that 1 percent sample size that we need because it's

6 really tough, but I really appreciate the insights

7 that you brought.

8 My favorite slide is the graph that shows how

9 the money -- even though the visitors have gone up,

10 the money has gone down. I think we really need to be

11 careful as we look at numbers. We shouldn't celebrate

12 right away, we need to look at the money that's

13 underneath and work on that. So, thank you so much

14 for your collaboration with our team.

15 CHAIRMAN RALENKOTTER: Okay. Thank you.

16 Anything else on Research?

17 (No response)

18 CHAIRMAN RALENKOTTER: I need a motion to

19 accept the report and to adopt the letter.

20 VOICE: So moved.

21 CHAIRMAN RALENKOTTER: I have a motion. Do I

22 have a second?

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 95 2 1 VOICE: Second.

2 CHAIRMAN RALENKOTTER: Any discussion?

3 (No response)

4 CHAIRMAN RALENKOTTER: All those in favor say

5 aye?

6 (Chorus of Ayes)

7 CHAIRMAN RALENKOTTER: Opposed?

8 (No response)

9 CHAIRMAN RALENKOTTER: Thank you very much.

9 FINAL PRESENTATION

10 Rossi Ralenkotter, Chair

12 CHAIRMAN RALENKOTTER: I do want to just have

13 a couple of concluding remarks on the reports because

14 we have the reports being passed out. I think someone

15 is going to be doing that for us, I hope. I hope you

16 have big enough briefcases to take them home with you.

17 Just a couple of comments to close, and then

18 we have a couple of other reports for you. First of

19 all, just the issues that we've talked about in the

20 subcommittees. The visa issues, the visa waiver

21 programs, the facilitation of these applications all

22 are very important to us.

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 97 2 1 When we talk about--and this is part of the

2 President's program for jobs--the infrastructure of

3 transportation, whether it's rail, car, bus, plane,

4 all of that is so important to our industry because we

5 need to be able to get people from Point A to Point B

6 effectively and efficiently.

7 So those are all issues. You know, one of

8 the things that -- when we talk about the

9 reauthorization of the FAA as well as NextGen, you

10 know, in the '90s in the airline industry you had

11 market share and how big can my airline become, to

12 control capacity of today. So anything that we can do

13 to improve the efficiency of the air transportation

14 system is going to benefit all of us, especially on

15 the international side.

16 So I want to again compliment all of the

17 members of this board and the subcommittees for all of

18 the hard work. This has been an effort that I have

19 just been amazed at as we've gone through all the

20 reports, and the meetings, and the telephone calls and

21 everything to get this final work product. So I want

22 to thank all of you. Give yourselves a round of

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 98 2 1 applause.

2 (Applause)

3 CHAIRMAN RALENKOTTER: The sense of

4 cooperation from Commerce and from everyone involved

5 in our industry has been great, and I think we have

6 started a dialogue that's going to be able to push our

7 agenda forward, allowing more visitation both from out

8 of the country as well as within the country. So

9 thank you again.

10 We will also have flash drives for anybody

11 who needs to have flash drives for this, but all of

12 you can take this on the plane and read it as you go

13 home today. Not while you're driving, if you're

14 driving back, but you can do that.

15 Just a couple of updates from some

16 representatives here. We have Ed Ramotowski, who's

17 the Acting Deputy Assistant Secretary of Visa Services

18 at Department of State.

19 TOURISM POLICY COUNCIL UPDATE ON PAST RECOMMENDATIONS

20 Ed Ramotowski, Acting Deputy Assistant Secretary

21 for Visa Services, Department of State

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 100 2 1 MR. RAMOTOWSKI: First of all, I don't have

2 to leave.

3 (Laughter)

4 MR. RAMOTOWSKI: But in the interest of time

5 I'm going to hit the highlights of the report that

6 Ambassador Janice Jacobs gave to the Travel

7 Facilitation Committee yesterday afternoon. We've

8 made her presentation available to the Commerce

9 Department and they can certainly make it available to

10 you all.

11 First of all, let me express, on behalf of

12 Secretary Clinton, the State Department's thanks for

13 all of your valuable suggestions and your service on

14 the board. This is our most important outreach effort

15 with the private sector and it's been an extremely

16 productive dialogue for our Department, and we look

17 forward to continuing that in the future.

18 Second, the key take-away is that we've made

19 significant progress on all of the recommendations

20 that the Facilitation Committee has made. That also

21 has been an extremely useful and productive dialogue

22 for us and we thank Hubert and the committee members

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 101 2 1 for their assistance.

2 Let me just hit the highlights of that. A

3 key committee recommendation was to reduce wait times

4 in key emerging markets. Let me point out that most

5 of our embassies and consulates around the world have

6 wait times of less than one week. Wait times for

7 student visa interview appointments worldwide are less

8 than 15 days. The student sector is an extremely

9 important one for the academic community. Most

10 students coming to the United States are paying full

11 tuition, room and board, and that is a significant

12 injection into the U.S. economy.

13 All U.S. embassies and consulates have

14 established procedures to expedite appointments for

15 urgent business travel around the world. We've handed

16 out a form describing the Department's Business Visa

17 Center that operates here in Washington, and its

18 purpose is to assist U.S. business with inviting

19 foreign counterparts to conventions, business

20 meetings, seminars, and the like. So, the contact

21 information is there.

22 We recognize that emerging markets are a

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 102 2 1 particular priority for the industry and for us as

2 well, and we've made substantial progress in reducing

3 the wait times in China. In all of our posts in

4 China, where at the beginning of our conversation wait

5 times were sometimes higher than 90 days, they are all

6 under 25 days at the moment, and several of the posts

7 have single-digit wait times.

8 (Applause)

9 MR. RAMOTOWSKI: I will get to how we did

10 that in just a moment. Let me point out, though, that

11 Brazil is still an issue. We recognize that the wait

12 times there are not where we want them to be and we're

13 addressing that as our most important goal.

14 How did we get the wait times down? Well,

15 the second recommendation of the committee was to add

16 more visa processing officers, particularly in the

17 emerging markets. We've created 114 new consular

18 officer positions. We've reallocated 74 existing

19 positions from countries of lower demand to countries

20 of increasing demand. We sent a large number of

21 temporary duty officers, particularly to Brazil and

22 China, and extended the work hours of our mission in

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 103 2 1 both places.

2 In China and Brazil we're now operating our

3 facilities for 12 hours a day. We're sending in more

4 staff to ensure that the visa windows in both places

5 are covered for that entire period of time, and that

6 increases the through-put of applicants that we can

7 handle.

8 Also in Brazil, the mission there, in the

9 spirit of reducing wait times, interviewed 8,000

10 applicants on two successive Saturdays and that was

11 well-received down in Brazil, and also it was popular

12 with our staff to show that they were doing their part

13 to help the travel and tourism industry.

14 Yes, sir?

15 MR. SHIFFLET: Are any of those new or moved

16 people standing around with nothing to do?

17 MR. RAMOTOWSKI: Absolutely not. If you

18 visited one of our consular sections you'd see that

19 the work is obvious and comes right at you.

20 MR. SHIFFLET: That's great.

21 MR. RAMOTOWSKI: So, you know, in some other

22 countries visa demand has dropped slightly and we want

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 104 2 1 to reallocate our resources where it will do the most

2 good. That doesn't mean that we don't value the

3 travel from these other countries, it just means, with

4 limited resources, we need to put them where they'll

5 get us the most bang for the buck.

6 We're going to continue ramping up our

7 staffing in China and Brazil. This year we've already

8 adjudicated more than 900,000 visa applications in

9 China, and that's up from 744,000 last year, and only

10 550,000 the year before. So in two years it's almost

11 doubled. We may actually almost break a million cases

12 this year in China. By 2014, we expect to be handling

13 about 1.4 million cases there. So that is a

14 significant increase.

15 In Brazil, the numbers -- we've already done

16 over 730,000 visa cases this year, up from 576,000

17 last year and 507,000 the year before, so another big

18 increase there. We're looking to increase our

19 adjudications by 40 percent in 2012 in both China and

20 Brazil, and to do that over this year and next we will

21 have 98 new adjudicator positions in those countries.

22 We've also established in record time a new

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 105 2 1 hiring program to bring on visa adjudication

2 specialists, the so-called LNA program, Limited Non-

3 Career Appointments. These are individuals who will

4 be hired for the exclusive task of processing visas in

5 high-demand countries, currently China and Brazil. We

6 have advertised these jobs.

7 We're now currently evaluating the first set

8 of candidates and we expect to send the first group of

9 10 to China and the first group of 10 to Brazil in the

10 spring of 2012. So those of you familiar with

11 government hiring and personnel systems know that

12 bringing a new program like that into fruition in the

13 space of one year is a major achievement and we've

14 done that and we're committed to continuing that.

15 Another key recommendation of the Travel

16 Facilitation Committee was to add four to six visa

17 processing locations each in China and Brazil. That's

18 not the easiest thing to do, so we're approaching it

19 in two ways. First of all, we're looking at our

20 existing facilities, both the current ones and some

21 new ones that are under construction, to ensure that

22 we get absolutely the most productivity that we

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 106 2 1 possibly can under those facilities.

2 There will be 17 new visa windows established

3 in Mumbai, India; 22 new visa windows in Guangcho,

4 China; 20 new visa windows will open later in

5 Shanghai, China; and 8 new windows in Beijing. We

6 also need to optimize the back-office space where the

7 visa processing occurs. It's not just the applicant

8 interface, it's all of the computer and IT support,

9 and everything else that we need to ensure that the

10 visa system is not only efficient, but also secure

11 because visa security is our number-one task.

12 We are also sending a team to Brazil in the

13 next two weeks to do a site survey, both of our

14 existing facilities and to look for some possible

15 additional locations where visa processing operations

16 could be established. We expect to have a report to

17 them later this fall and to then act on it as quickly

18 as we can.

19 The Travel Committee also recommended that we

20 increase the validity of non-immigrant visas for

21 Chinese visitors to 10 years. As Ambassador Jacobs

22 said yesterday, we would love to do that. The law

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 107 2 1 doesn't allow us to unless the Chinese offer

2 reciprocal treatment to Americans. We are pressing

3 that issue hard at high levels, both here and in

4 China.

5 I can assure the committee that you could

6 have no more effective advocate than the former

7 Secretary of Commerce and now Ambassador to China Gary

8 Locke. He is totally familiar with the issue and

9 determined to move forward on it, so we will support

10 him in every possible way to try to make progress with

11 the Chinese on this.

12 The fifth recommendation of the Committee was

13 that the Department of State retain all visa

14 processing and consular fees to cover our costs of

15 staffing visa processing activities. We certainly do

16 appreciate the Committee's support on that score.

17 That will be a difficult thing to get through

18 Congress.

19 I would like to reiterate Ambassador Jacobs'

20 commitment. We are taking the measures that I

21 announced earlier using our existing resources. They

22 are already being taken, they are already funded. We

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 108 2 1 are committed to do that, regardless of what happens

2 with the retention of our aides, but we do appreciate

3 your support for that.

4 The final recommendation relating directly to

5 State was that the Department of State receive more

6 discretion to waive in-person interviews when we

7 determine that that's a feasible task. That is an

8 issue that we are exploring actively. We have some

9 proposals in mind in our top leadership and the

10 leadership of other government agencies in the

11 security and intelligence fields. We'll be looking at

12 that.

13 This is something the Department cannot do

14 unilaterally without the support of the security

15 agencies behind us, but given your efforts and the

16 activity in presenting the importance of the travel

17 sector to the U.S. economy, I think those agencies

18 also understand the importance of making logical

19 changes in our visa process where it does not

20 compromise security. So, that's under way as well.

21 I would also point out that while there is

22 some strong support in Congress for this type of

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 109 2 1 change, there are others in Congress who are not yet

2 convinced. Yesterday morning I testified before the

3 House Homeland Security Committee and they are

4 certainly very concerned about visa overstays, illegal

5 immigration, and security threats to this country. I

6 point that out just to say that we must ensure that

7 visa security is always present in any of the measures

8 that we undertake.

9 So with that, Hubert, I don't know whether

10 you want to add anything.

11 MR. JOLY: Well, on behalf of the

12 subcommittee, and I think the board, I have to say

13 that the progress that has been made, the commitment

14 -- first, the understanding and the commitment, and

15 then the progress of our several months of

16 collaboration has just been outstanding. I think

17 yourself, Ambassador Jacobs -- others, this is an

18 inaugural public/private partnership and I wanted to

19 thank you for the results. I think you said it:

20 everything is not solved. But there is momentum and I

21 think we just have to keep going.

22 MR. RAMOTOWSKI: Exactly.

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 110 2 1 MR. JOLY: You know, sometimes, as was

2 mentioned this morning, there's a badminton game

3 between the industry and the administration, where we

4 criticize each other, we send letters and so forth.

5 This is not the case. I think that we can applaud

6 this collaboration and the results and go towards the

7 finish line. So, thank you. Keep going at it. Thank

8 you.

9 MR. RAMOTOWSKI: We certainly will. Thank

10 you.

11 (Applause)

12 CHAIRMAN RALENKOTTER: Thank you for that

13 very positive report.

14 So I'm going to now turn it over to Michael

15 Frias, who is the Deputy Assistant Secretary for the

16 Private Sector for Department of Homeland Security.

13 Michael Frias, Deputy Assistant Secretary

14 for the Private Sector

15 Department of Homeland Security

17 DEPUTY ASSISTANT SECRETARY FRIAS: Thank you.

18 On behalf of Douglas, who many of you know I'm going

19 to stand in his stead and give a report, and also on

20 behalf of the Secretary, we continue to echo her

21 strong commitment to the travel and tourism industry,

22 and also to our government partners. It's not often

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 112 2 1 that you can find government partners that are as

2 interested, and willing, and engaged to kind of think

3 outside the box and engage the private sector.

4 Sitting in our office at DHS, we often

5 preach, you know, there is a need to engage the

6 private sector for all kinds of issues, not the least

7 of which is security. To have partners like CBP and

8 TSA, and I'd like to recognize Paul Bruman here from

9 TSA, their partnership has been invaluable in

10 accomplishing some things that we wanted to accomplish

11 with respect to the recommendations. So now I will go

12 through those recommendations and tell you our

13 progress.

14 Global entry. One of the recommendations was

15 to increase global entry membership. In October of

16 2010 it was around 81,000 members and 1,300 users

17 daily. The result? In September of 2011 there are

18 740,000 travelers with benefits, and around 2,700

19 users every day.

20 As you heard from Commissioner Burson, it

21 saves officer hours, but it is also a benchmark. We

22 need to do better than that. That 21,000 saved hours

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 113 2 1 needs to be 50,000, it needs to be 100,000, in order

2 to show real impact and scale. As he said, he's never

3 found a pilot project that doesn't work, it's about

4 scaling it. So we will continue to partner with our

5 intergovernmental partners and you to continue to

6 increase that.

7 Secondly, I would like to mention, with

8 respect to global entry, and I think Commissioner

9 Burson touched on this, is there's a bit of a paradigm

10 shift within security, which is global entry and known

11 traveler programs, both CBP's and TSA's, are security

12 efforts.

13 I think Commissioner Burson spoke eloquently

14 to this, which is as long as we can continue to talk

15 about these programs as a security effort, which is,

16 as they use the metaphor, "thinning the hay to find

17 the needle", I think that is something that we will

18 all aspire to and continue to push these programs both

19 from a trade and efficiency and travel perspective,

20 but also fundamentally from a limited resource and

21 security aspect as well.

22 Again, with global entry and with the rest of

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 114 2 1 the recommendations I will report back on, they were

2 our successes because we partnered successfully with

3 the private sector. Carlson sent out emails, National

4 Car Rental sent out emails. We had the partnership

5 with American Express. All of this is not possible,

6 these successes are not possible without that

7 engagement.

8 So we will continue to look to increased

9 partnerships and as, again, Commissioner Burson

10 mentioned, a synching up of the collaborative effort

11 so that it's not these one-off efforts, but it is a

12 collective effort. They shared with me on their way

13 over here that there is a paradigm shift that we're

14 trying to engage in with the government.

15 As you see limited resources in tough budgets

16 be a common reality, more and more you hear from the

17 Federal Government. We need to partner with our

18 private sector partners to help accomplish more and do

19 more with less. That's true, however, you also have

20 very restrictive rules.

21 I know with FEMA, there are issues with co-

22 branding. There are issues even with talking about

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 115 2 1 partnerships with global entry with American Express.

2 It's difficult to get approval to say, thank you,

3 American Express, thank you National Rental Car, for

4 your partnership and with your partnership we helped

5 accomplish the goal of a million known travelers in

6 the program.

7 So I would encourage you to engage with us in

8 that effort to shift that paradigm and continue to

9 inform folks and in government of the need for these

10 public/private partnerships, but also to go the next

11 step and actually be able to recognize them publicly

12 and laud those companies that are willing to step

13 forward.

14 Model ports of entry. Again, one of the

15 recommendations was to strengthen the program through

16 local partnerships. John Carlson is here. This,

17 again, is a great example of where the local CBP

18 officer was engaged to be creative and work with the

19 folks on the ground to come up with the best solution

20 possible. I heard it time and time again. It was as

21 simple as re-designing how the flow of traffic is

22 versus vertical or horizontal. So simple a solution,

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 116 2 1 but yet an effective outcome.

2 So, you know, we will continue to look with

3 you for other places, as Commissioner Burson said. We

4 will look for two land ports, one in the north, one in

5 the south, and then also two airports. We had thought

6 tentatively Las Vegas International Airport. So, you

7 know, if we could add one more or two more to that

8 list, we look forward to engaging with you.

9 Secretary of Homeland Security Napolitano

10 attended your Travel and Tourism Summit. She was

11 sorry that she wasn't able to make the breakfast, but

12 I trust that Commissioner Burson was an adequate

13 stand-in. What I'd like to say, is the Secretary and

14 Douglas have always said that our office, the private

15 sector office, sits at the unique nexus point where

16 national security meets economic security. It's in

17 that little circle where we play.

18 So where we are not operational like State

19 for our component partners with CBP, TSA, and others,

20 we are always a cheerleader for the private sector and

21 an advocate for more programs, more engagement, and

22 better ways to solve problems that you all and

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 117 2 1 industry are confronting.

2 I will touch on this. A recommendation was

3 to expand the visa waiver program to more countries.

4 You were informed yesterday in the subcommittee that

5 there are two bills currently under review, Senate

6 bill 497 and House bill 959. Again, those are efforts

7 that we would be supportive of, but obviously we'll

8 follow State's lead.

9 Risk-based screening. TSA began its -- it

10 was said to be trusted traveler. We are changing that

11 language. It's known traveler.

12 (Laughter)

13 DEPUTY ASSISTANT SECRETARY FRIAS: I think

14 the key there is, again, going back to this needle in

15 a haystack idea, which is the more information we know

16 about people, the earlier, the easier we can slot them

17 into the appropriate lines and do the adequate

18 searches for their risk profile.

19 I think, you know, it's been raised with

20 respect to maybe getting global entry information for

21 people that are renewing passports or holders of

22 particular visas. Those are potential areas to grow

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 118 2 1 because these are obviously applicants and individuals

2 whom we know a lot about.

3 So I think that is a trend that is positive

4 and one that we would continue to encourage our

5 components, our agency, and others to kind of look at

6 as potential room for growth. TSA, as you guys may

7 know, did the risk-based security initiative. TSA is

8 developing procedures and systems that will provide

9 expedited screening to known travelers, and will be

10 launching this in 2011.

11 If you guys read the newspaper today you saw

12 that there were some rules that came out or guidelines

13 that came out with respect to travelers under the age

14 of 12, so families traveling to popular destinations

15 -- Las Vegas has become family-friendly, and Orlando,

16 and Anaheim, and those places will see a direct

17 benefit from that.

18 Aviation security. TSA improved stakeholder

19 engagement. The Federal security directors and

20 stakeholder managers that keep stakeholders apprised

21 of changes. I know Administrator Pistle and Douglas

22 and Assistant Secretary Smith were also able to have

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 119 2 1 conference calls about the roll-outs of reforms. Then

2 also, TSA has strategic engagement teams that are

3 working with Fortune 500 companies and continuing to

4 do outreach, as well as they have reactivated the

5 Aviation Security Advisory Committee, which is

6 directly advising Administrator Pistle.

7 Marketing outreach and communications. One

8 of the recommendations was to improve marketing and

9 communications to the traveling public, both online

10 and offline. Mr. Shifflet made reference to that with

11 respect to ESTA, and also potentially increasing that

12 number and getting folks to fill out an online--call

13 it a quiz--but a test or a poll to kind of lead to

14 empirical data that we can then make sound decisions

15 off of.

16 Crisis communications. This is one that I

17 personally picked up and have started to socialize

18 within DHS, and obviously it's a big one and a sticky

19 one. So the Department of Commerce -- the Tourism

20 Policy Council is going to pull together a workgroup

21 on crisis communications, so maybe for the next board

22 that is something where we can report on our progress.

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 120 2 1 That is my report. I thank you guys very

2 much. This is my first public/private partnership

3 meeting like this and I have to say the bar has been

4 set really high and I have been spoiled, so I will

5 hold others to this high, high standard.

6 Thank you.

8 (Applause)

9 CHAIRMAN RALENKOTTER: Do we have Steven on

10 the phone? Oh, okay. All right.

16 Carl Burleson, Deputy Assistant Administrator

17 for Policy, International Affairs and Environment

18 Federal Aviation Administration

20 MR. BURLESON: Thank you. Again, I think

21 just to echo Michael's remarks, I'm actually in a

22 better position in terms of public/private

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 121 2 1 partnerships because many of the things I was going to

2 share this morning you've already shared. So I think

3 this is a great sign, to see the harmonization of

4 thinking, but I'll make a few observations that I

5 think might be helpful for this group.

6 First, I would encourage folks to go to the

7 FAA government website to download Destination 2025.

8 That's our new strategic plan. We are trying to

9 minimize paper for our carbon footprint, but we would

10 encourage you to look at it because I think from the

11 tourist industry point of view the plan the FAA has

12 laid out, I think, is very vital, because part of what

13 we've done is try to be much more aspirational in the

14 kinds of goals that we are seeking in terms of

15 improvements of safety, improvements of efficiency and

16 capacity, and I think, importantly for this industry,

17 improvements in the international realm in those areas.

18 We have laid out pretty aspirational goals of

19 where we want to be by 2018 in terms of diffusion of

20 the NextGen kinds of capability around the world so as

21 to allow the aviation industry to grow in capacity.

22 We've been pretty aspirational in terms of what we

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 122 2 1 want the safety record to be, not just for our own

2 industry but for the international community.

3 Then, finally, I think, which is important,

4 we've also been pretty aspirational on how we want the

5 international community to be able to grow aviation in

6 a sustainable fashion, so we've made pretty strong

7 commitments--I said earlier about the one billion

8 gallons of alternative fuel--of how we want to

9 absolutely reduce noise impacts, how we want to reduce

10 air quality impacts, and how we want to shrink

11 aviation's carbon footprint, even as we increase

12 operations. So this is, I think, quite an ambitious

13 vision and I think it's really important that we

14 achieve this. The only way we're going to do it is

15 certainly in partnership with our industry.

16 So speaking of that, there was actually a

17 meeting last week by a number of CEOs of airlines, as

18 well as my Deputy Secretary and my Deputy

19 Administrator with Aniche Chopra of the White House,

20 who is the Chief Technology Officer.

21 The whole discussion of that meeting centered

22 around NextGen and the importance of technology

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 123 2 1 innovation for us to be able to deliver, in working

2 with airlines, all these capabilities.

3 So again, just to be clear, there's a really

4 high-level focus in this administration on how we get

5 NextGen. Certainly the good news is, we have real

6 support by our airline community because they see how

7 vital it is for their interests to be able to grow in

8 an efficient fashion.

9 As I mentioned earlier, when you're talking

10 about 35 or 40 percent of your expenses being fuel,

11 you're trying to figure out every way possible to

12 reduce that fuel burn. So certainly as a regulator I

13 love that because not only do you get the fuel burn

14 reduction, I get the emissions reduction. So again, I

15 think there's a real alignment of interest here.

16 I would say I think there's a couple of

17 issues on the horizon of which I think you all should

18 be aware. I think most immediately there is -- I

19 mentioned at the San Francisco meeting there is this

20 issue on emissions trading. So the European Union has

21 decided to apply its emissions trading system to

22 international aviation around the world.

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 124 2 1 Not surprising, the rest of the world doesn't

2 particularly like that idea because Europe decided to

3 do it without talking to anybody. They decided they

4 would unilaterally apply it on its rules, its terms,

5 its targets without actually engaging in any manner of

6 negotiation with the rest of the world.

7 So that has elicited a not-surprising

8 response from most of the world. Certainly in the

9 U.S. we've tried to explain to our European colleagues

10 that the reason the United States exists today is

11 because a couple of hundred years ago Europeans tried

12 to put a tax on us on which we didn't feel like we

13 were well represented.

14 (Laughter)

15 MR. BURLESON: So sort of an American DNA.

16 But again, I think we've had one congressional hearing

17 on this. There's a round table with the House

18 Aviation Subcommittee next week on this. There is a

19 meeting in India late this month which is going to be

20 attended by a large group of countries' major aviation

21 states concerned about what Europe is doing.

22 So I suspect this is going to be a long,

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 125 2 1 tough process. Clearly, the outcome of this will have

2 some impact, I think, on tourism, because certainly

3 depending on what the pricing is, how that's handled,

4 even retaliation, I mean, all these issues I think are

5 going to be working through in the next, probably, 12

6 to 15 months. Even though the European system comes

7 into effect in January, money isn't required to change

8 hands until probably April of 2013, so there is some

9 time to try to find a way forward. But again, you can

10 anticipate a number of news articles on this.

11 The finally, I think one of the things that

12 -- you know, I'm just an aviation guy. In some ways

13 this actually would help me if this goes forward. But

14 there's a very different paradigm in parts of the

15 world than what I think you're hearing today in terms

16 of a basic posit that we want to grow tourism.

17 I would recommend to you read -- there's a

18 newspaper, The Guardian, in the United Kingdom. I

19 would recommend to you to read the article published

20 on August 30, which basically chronicled the U.K.

21 government policy of, how do we find ways of modifying

22 the behavior of Britons to no longer fly out of the

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 126 2 1 U.K. and take family vacations? That's their strategy

2 for how to reduce their carbon footprint. So again,

3 this is a really different paradigm in terms of, how

4 do we address this vital issue of climate change,

5 which is, let's restrict demand, let's change

6 behavior, let's not encourage tourism.

7 So again it's clear that the U.S. and this

8 administration is very concerned in addressing climate

9 change, certainly as we look at what we're doing in

10 FAA, as well as with other agencies to try to bring

11 about NextGen, environmental issues are front and

12 center.

13 How we deal with energy is front and center.

14 But we have a very different paradigm, which is, we

15 believe we can actually bring about the technology and

16 operational improvements to support the growth of

17 aviation that is a key part of supporting tourism.

18 But I would give you a head's up that this is not

19 necessarily the view of some parts of the world.

20 I think increasingly in some -- agencies this

21 is an ongoing debate in terms of, what is the role of

22 tourism, is it something that really should be

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 127 2 1 fostered or is it something that should be shrunk? So

2 again, if it shrunk it actually helps me out a lot. I

3 don't have to worry about as much congestion,

4 schedules, and all that kind of stuff.

5 But I think, at least from your standpoint as

6 being concerned with tourism, I think you should

7 probably give some attention to different views that

8 actually would have a very different sort of

9 perspective of what is the future of tourism.

10 I'd be glad to take any questions.

11 CHAIRMAN RALENKOTTER: Questions?

12 (No response)

14 MR. BURLESON: Thank you.

15 (Applause)

16 CHAIRMAN RALENKOTTER: So do we have Stephen

17 on the phone?

18 MR. CLOOBECK: Hi, Rossi. How are you?

19 CHAIRMAN RALENKOTTER: Stephen, I'm doing

20 good. How about you?

21 MR. CLOOBECK: Thank you. It's pouring rain

22 in Vegas today.

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 128 2 1 (Laughter)

2 CHAIRMAN RALENKOTTER: Just one day out of

3 the year. That's not too bad.

4 MR. CLOOBECK: That's what you tell everybody.

5 CHAIRMAN RALENKOTTER: That's what I tell

6 everybody.

7 The floor is yours. Stephen Cloobeck is the

8 Chair of the CTP, and Stephen is going to give us an

9 update on what's going on with the Corporation for

10 Travel.

14 UPDATE FROM THE CORPORATION FOR TRAVEL PROMOTION

15 Stephen J. Cloobeck, Chairman,

16 Corporation for Travel Promotion

18 MR. CLOOBECK: Thank you very much, Rossi.

19 We've had some major advancements in the Corporation

20 for Travel Promotion over the last -- I guess we met,

21 oh, four or five months ago, Rossi?

22 CHAIRMAN RALENKOTTER: Yes.

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 129 2 1 MR. CLOOBECK: And in such time we have now a

2 full management team together, led by Jim Evans, our

3 CEO. We've also hired a CFO, Business Development, a

4 full business strategy team. We also were fortunate

5 enough to have chosen our national advertising agency,

6 which is J. Walter Thompson. All of these things have

7 been transparently put into the press and also are

8 available on our website.

9 The reason I'm not able to make it is because

10 I'm on the road today going to our board meeting

11 tomorrow and Friday in Wyoming. We are moving our

12 board meetings throughout the United States every

13 other month right now, and we will have our

14 international launch at World Travel Mart in London in

15 November for Brand USA. The brand is very close to

16 being announced as to what that DBA will be, and the

17 entire storyboards of that brand, I can tell you have

18 been completed and presented to our board this week.

19 We continue to work very closely with your

20 group. I've worked with Hubert Joly, visiting with

21 the President's Export Council, and on the specific

22 aspects of increasing consular affairs offices

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 130 2 1 throughout the world. Tom Noyes has been wonderful.

2 I don't know. Hubert, did you make your presentation

3 yet?

4 MR. JOLY: Yes, Stephen. Hi. We've had a

5 comprehensive report yesterday from Ambassador Jacobs,

6 and then this morning Ed Ramotowski presented a

7 summary of this report to a standing ovation.

8 MR. CLOOBECK: So Hubert and I have been

9 thrilled because we went in extremely apprehensive and

10 we could not believe the amount of progress that has

11 been completed and the full thinking of the State

12 Department. So we're very excited about that.

13 I believe that we still have to work--we

14 collectively--need to work to make sure that Customs

15 and Borders is really facilitating that hospitable

16 atmosphere on entry and exit from the United States

17 and making sure that the scripting is proper and that

18 they're trained properly and that it's QA'd, that we'd

19 get quality assurance that it's actually occurring.

20 I get very positive responses from Customs

21 and Borders, but I think it's incumbent upon us

22 collectively to figure out how we QA that, to make

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 131 2 1 sure to dispel the rumors and the myths that we're

2 being rude as a nation. We really haven't heard at

3 CTP that this is truth anymore, so if it's not we want

4 to dispel that rumor and come out with some really

5 creative press to let everyone know the United States

6 is a hospitable place to arrive to and to depart from.

7 So with that, we have all of our funding put

8 in place through the year. It was challenging, but

9 Commerce and Treasury worked very closely together

10 with us and facilitated our funding. Our active

11 fundraising for matched funds for the two -- starting

12 October of 2012 fiscal, which is October of this year,

13 we will be asked to raise $10 million cash, $40

14 million of in-kind funds.

15 We've already started the matching process of

16 that. We've reviewed this proposal briefly with

17 Commerce. Our global proposal will be submitted in

18 the next week. So we're going to be off and running,

19 raising this money. We've circled in excess of the

20 $10 million right now, but we're going to be calling

21 on all companies in tourism and travel to participate

22 in this process. The quid pro quo at the beginning:

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 132 2 1 it's nothing more than a patriotic duty to fulfill the

2 mission of the statute of the Travel Promotion Act.

3 So with that, Rossi, I'm happy to answer any

4 questions that the TTAB has.

5 CHAIRMAN RALENKOTTER: Okay.

6 Does anybody have any questions of Stephen?

7 (No response)

8 CHAIRMAN RALENKOTTER: No questions, Stephen.

9 But thank you very much for communicating with us

10 today by phone, and hopefully it will stop raining

11 soon. I'll see you back at home.

12 MR. CLOOBECK: All right. Be well. Thank

13 you again.

14 CHAIRMAN RALENKOTTER: Okay. Thanks, Stephen.

15 A couple of things, just real quick before I

16 turn it over to you. I want to also recognize the

17 Vice Chairman of TTAB, Dawn Drew, for all the hard

18 work that she's done over the course of this process.

19 Thank you again.

20 (Applause)

21 CHAIRMAN RALENKOTTER: We will have a team

22 photo after this meeting is over, so don't run away.

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 133 2 1 We have to have that team photo for the baseball card

2 that we'll produce.

3 (Laughter)

4 CHAIRMAN RALENKOTTER: And with that, I'm

5 going to turn this over to Nicole Lamb-Hale and she's

6 going to close.

8 CLOSING REMARKS & NEXT STEPS

9 Nicole Lamb-Hale, Assistant Secretary

10 for Manufacturing & Services

12 SECRETARY LAMB-HALE: Okay. Well, thank you

13 again for all of the work that's been done, and the

14 impressive binder. I mean, talk about raising the

15 bar! I've never seen a binder like this produced by an

16 advisory committee. So, thank you so much.

17 I just want to thank my interagency

18 colleagues for all the work that they've done to

19 really bring the results that you've heard today. I

20 hope that it's clear that we've been listening to you

21 from these reports. I am very pleased with the White

22 House's engagement as well.

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 135 2 1 I think that that has been fabulous and has

2 really been the wind beneath our wings, so the

3 President is very focused and I am just so happy to be

4 a part of this public/private partnership, as well as

5 with the CTP. We have really worked hard with them.

6 We were able to release the remaining dollars in terms

7 of their initial start-up expenses, and I know Stephen

8 was very happy about that, as was Jim Evans.

9 So we're moving along. We're trying to move

10 government as fast as the private sector. You know,

11 we're getting there but we will keep striving and

12 really trying to support you and this industry because

13 it's so critical to job creation and job growth.

14 I also want to say that it's clear that the

15 State Department has been doing a good job because I

16 was in Brazil last week, and on my way back I was on a

17 plane full of exports.

18 (Laughter)

19 SECRETARY LAMB-HALE: I think the flight

20 staff and I were the only ones speaking English on

21 that plane, so something is going well in what State

22 is doing. So, thank you, Ed, for your report, and

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 136 2 1 really to all of the interagency colleagues that have

2 made a difference here.

3 So we really are excited about the

4 opportunity to continue to work with you. I hope that

5 many of you will consider applying for the next

6 charter term. We have been working hard at Commerce,

7 through our Office of Travel and Tourism Industries,

8 to support all the work that's being done and we've

9 really been taking on double duty because, under the

10 TPA, we have the obligation to create an Office of

11 Travel Promotion.

12 What we've really done, because of our

13 limited resources, is to combine that function into

14 OTTI. So Helen and her team, represented here, have

15 been extremely busy to make sure that we coordinate

16 all of these efforts and really implement the advice

17 that you've given us. So, thank you again for all of

18 the work that you've done.

19 I want to introduce Ken Hyatt, who I know

20 many of you have met. Ken was senior advisor with

21 NITA, and now he's Acting Deputy Assistant Secretary

22 for Services and he's the liaison to the Corporation

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 137 2 1 for Travel Promotion. So, please welcome Ken. He's

2 been calling himself the Minister of Tourism, since

3 most of what he's been doing since he took on the post

4 has been in that area.

5 So, you know, as Francisco said earlier and

6 many have said, you've really raised the bar for the

7 work that advisory committees do, so we really

8 appreciate that opportunity.

9 I do want to yield some of my time, Rossi, if

10 I may, to Dick Friedman, who is here from the

11 President's Export Council. I know everyone knows

12 Dick. It just is another example of the engagement

13 that we're receiving in the private sector and at the

14 White House, so I'd like him to say a few words.

15 MR. FRIEDMAN: I'll be very brief. I'm a

16 hotel owner in development from Boston. A year ago, I

17 was -- executives that advice the President on policy.

18 Together with Alan -- who is the president of Ford

19 Motor Company, I co-chaired the Committee on

20 Manufacturing. I don't know how this got together,

21 but we're working together.

22 Let me just tell you, since I'm not

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 138 2 1 restrained, most of the people have talked about the

2 issues which I would talk about -- and Stephen -- but

3 I'm not constrained by telling you not to lobby, so I

4 will tell you to lobby. When I started on this

5 commission I was very enthusiastic about how we could

6 change this and I got very despondent. In the last

7 month or two I've gotten very optimistic again.

8 In fact -- Stephen and I have had numerous

9 conversations with Secretary Noyes, who's a superstar,

10 actually, from Wall Street at the State Department and

11 is really making a fast change there, frankly, from a

12 very low base I think to a very high base.

13 In the last couple of weeks -- I want to tell

14 you it's because of the mission. In the last couple

15 of weeks, the message has reached the top. I can

16 report to you that, within the last two to three

17 weeks, I have personally met one-on-one, or maybe one-

18 on-two, with the President, with Valerie Jarrett, with

19 Secretary Kenton, and on the phone with Tom Noyes --

20 and yesterday I had lunch with Jim Messina, who used

21 to be the Deputy -- all of those people are getting to

22 really understand this issue and they're enthusiastic,

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 139 2 1 and it comes from the pressure that you've got. But

2 there's still problems in Congress and there's still

3 problems in other places, and you've got to keep the

4 heat on. I gave some articles to people, they read

5 them. It comes from Travel Promotion, from the -- so

6 we've just got to keep the heat on.

7 Just one thing in addition to what Ed said.

8 Each of these people at the higher end, first of all,

9 they make money on visas. This is ridiculous. They

10 make money on getting visas. Each person they had,

11 they had at least 15,000 visa applicants. I think

12 that's 95 percent of the -- talking about that.

13 VOICE: It depends on the country.

14 (Laughter)

15 MR. FRIEDMAN: But it's a gigantic number.

16 So all -- they are making gigantic progress in these

17 countries. It is reaching the top. Keep the pressure

18 on, and thank you for your work.

19 (Applause)

20 SECRETARY LAMB-HALE: I just wanted to note

21 that all of you received a document -- this is the

22 public fact sheet on what the Tourism Policy Council

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401 1 140 2 1 has been doing. So please take a look at that.

2 We are also emailing it to you so that, as

3 you make remarks around the country about what the

4 U.S. Government is doing to support the industry, you

5 can draw on some of that.

6 So with that, Rossi, thank you again.

7 CHAIRMAN RALENKOTTER: Thank you. Thank you

8 again for everything that you have done for us, too.

9 So with that, we will adjourn our last meeting of this

10 group. Again, thank you very much. Don't forget the

11 team photo.

12 We're adjourned.

13 (Applause)

14 (Whereupon, at 11:34 a.m. the meeting was

15 adjourned.)

5 C E R T I F I C A T E

6 This is to certify that the foregoing

7 proceedings of a meeting of The Travel and Tourism

8 Advisory Board, at the U.S. Department of Commerce,

9 held on Wednesday, September 14, 2011, were

10 transcribed as herein appears, and this is the

11 original transcript thereof.

14 LISA L. DENNIS, CVR

15 Court Reporter

3 4 5 LISA DENNIS COURT REPORTING 6 410-729-0401