TBR Conferees Address Recovery

Washington - The travel industry is showing signs of life that suggest an end to three years of losses and cutbacks, said a host of travel executives, cabinet secretaries and members of Congress here last month at the Travel Business Roundtable/U.S. Chamber of Commerce summit, called Securing the Future of Travel and Tourism. Yet, that progress, some cautioned, will be short lived if the industry can't prove to lawmakers that its needs must top their priorities in coming years.

"Your industry is one of America's largest employers, directly generating some 7 million travel-related jobs," U.S. Secretary of State Colin Powell said in his afternoon address. "You are a big part of our economy, for sure, and President Bush and our whole administration share your goal to succeed in what you're doing."

Other speakers at the two-day event included U.S. Department of Transportation Secretary Norman Mineta, director of Homeland Security Tom Ridge and former American Airlines CEO Robert Crandall.

"After three years of negative forecasts and shrinking profits, the proverbial light at the end of the tunnel is rapidly expanding," said Lalia Rach, dean of the Preston Robert Tisch Center for Hospitality, Tourism and Sports Management at New York University. "The industry is stronger and more united than ever."

Stevan Porter, U.S. president of Intercontinental Hotels Group, said the hotel industry sold 151 million room nights in the first quarter of 2004—an increase of 2 million from the first quarter of 2001, previously the strongest year to date. He said occupancy still was somewhat depressed, but attributed that to an increase in room capacity, adding, "We are seeing general recovery in virtually every segment in virtually every part of the globe."

A more cautious note was sounded by Robert Crandall, retired chairman, president and CEO of American Airlines. Discussing the airline industry, Crandall said, "Volume will be up in the summer of 2004, but revenues will be down."

While smaller, unconventional carriers, such as Song and Southwest Airlines, are performing well by subverting industry norms, Crandall said that "all of the legacy airlines continue to lose money, and there are very serious questions as to whether they can recover their financial well-being. Whether or not they survive is up to them."

Behind the sunny forecasts were ominous warnings that too few government officials are aware of the negative impact their policies could have on U.S. travel and tourism. "One of the things we are doing wrong is constantly imposing higher taxes on travelers," Crandall said. "People want to travel, but every time we add a dollar we keep a very substantial number of people at home."

Vince Wolfington, chairman of the World Travel and Tourism Council, stressed that the success or failure of travel industries around the world was proportional to the importance placed upon them by their host governments. WTTC research, he said, showed that countries with the 10 fastest-growing travel and tourism industries "are all countries where the government is very aware of the impact of travel on their economies and where governments have embraced travel and tourism as national priorities."

Greater security burdens on airlines, new taxes on travel, crumbling infrastructure, the rising costs of fuel, reduced restrictions on foreign airlines and difficulty obtaining a U.S. visa all were cited as government obstacles against which industry representatives should be advocating. "We must heighten the profile of our challenges," Wolfington said, not just boast about brighter prospects. Those concerns were addressed by a number of the administration figures in attendance.

"We at the U.S. Department of Transportation are committed to strengthening our transportation system, thus making tourism even stronger," Mineta said. He outlined a half-dozen DOT initiatives designed to improve U.S. travel, including a joint initiative with the Pentagon, NASA and others to develop the next generation of air transport and "a system that will offer seamless security and added capacity to relieve congestion" at airports.

Powell summed up his remarks by encouraging the industry to better communicate its needs. "Share your insights with us," he said. "Tell us what your problems are. Until you tell me how you see it in the field, I really won't know what's going on."

Curtis Nelson, president and CEO of Carlson Cos., said that if a second 9/11-style attack were to happen today, it would not take nearly as large a toll on the travel industry, which is more prepared than ever for terrorist incidents. Unfortunately, he said, that news has yet to reach travelers and investors—a fact that is hobbling the industry's shot at a full economic recovery.

"Even though we're recovering economically, everyone now feels that we are exposed to the risk of a major attack and that we could have an incredible turnaround in fortunes," Nelson said. "We need to continue to work on the American psyche relative to our ability to bounce back from such an event."

Doug Wills, spokesperson for the Air Transport Association, said Nelson likely would be proven right in the event of another attack, but cautioned that predictions regarding any such event are risky. "The key issue is whether flights would be grounded again if there were anther 9/11-style attack," he said. "The unusual nature of that particular tragedy forced FAA to ground all planes until they could sort things out. Now there clearly is a higher level of security in place. There are new rules and procedures about what happens when an event like that occurs. But who knows what FAA would do. They're in charge of protecting the nation's air space. If they made a judgment that it was somehow threatened, they do have the power to ground all planes again."

At least one industry executive, however, strongly disagreed with Nelson's assessment. "The impact the second time would be worse," said Michael Boyd, president of aviation consulting firm The Boyd Group. "What it would say is that, even after all this improved security 'rah rah rah,' that we're still not safe at all. People would stay way from airlines in droves. You could also be sure we'd have another knee-jerk reaction from the federal government, like more National Guardsmen in airports with empty guns. It would be devastating."