Last year, I had the pleasure of hearing Jonathan Tisch, Chairman of Loews Hotels, speak at the NYU International Hospitality Industry Investment Conference where he shared a powerful perspective on the vital role the travel and hospitality industry plays as a driver of U.S. economic growth.
The speech got me thinking, as did his more recent comments on this view at the AH&LA Legislative Action Summit this past April. At the heart of Tisch’s argument lies a simple idea. Unlike most other industries, which rise and fall like the tides, travel remains a dominant force behind the expansion of the American economy, providing millions of jobs, billions in tax revenues and unique opportunities for the middle class and millennials.
In fact, according to the U.S. Travel Association, our industry generated $2.1 trillion in economic output in 2014, supporting over eight million jobs and ranking us as a top 10 employer across 49 states. And 2015 looks even better ─ travel employment increased by 49,000 in the last 6 months alone, pushing us to 8.1 million jobs. Indeed, as our nation climbed out of the Great Recession, the travel industry was a vital tonic, outpacing job expansion in other industries by a whopping 28% since 2010.
In addition, America’s trade surplus (net exports) in travel increased more than five-fold from 2003 to 2013, climbing from $16 billion to $78 billion. Without these funds, the total U.S. trade deficit would have been $579 billion in 2014 alone, almost 15% higher than its actual rate.
America’s travel economy also offers a unique career opportunity for our young. Nearly 25% of all travel industry employees are under 25 years old, compared with just 13% in other industries.
So whether working in our hotels, online travel agencies, airlines, theme parks or countless other travel-related businesses and organizations, tomorrow’s business leaders are honing their skills today in a flourishing U.S. travel industry. And while our nation’s middle class has struggled to recover job losses in the wake of the recession, the travel industry remains one of the top 10 largest employers of middle class wage-earners.
Creating a Secretary of Travel
According to Tisch, all of this growth and potential speaks to a tectonic shift in the American economy — specifically, that today’s service-economy, led by the travel industry, is occupying the same center of gravity that agriculture and manufacturing did in the 20th Century, and therefore, is worthy of increased support and attention from our government. In this regard, I would like to make some specific recommendations.
First and foremost, I agree with Tisch that our industry deserves a Cabinet-level position in the U.S. government. We currently have 15 separate Secretaries reporting to our President, covering everything from Agriculture to Defense to Energy and Education.
But where’s travel?
As it stands now, our interests are marginally served by the Department of Commerce, and we rub up against the Departments of Transportation and State, and others too. However, we have no true champion in the White House and it’s time ─ we’re a two trillion dollar economic engine.
By contrast, the Department of Agriculture operates 266 subsidy programs and employs more than 91,000 people across 7,000 offices, and in total the agriculture and agriculture-related industries contributed $789 billion to the U.S. Gross Domestic Product in 2013.
A Secretary of Travel could be an advocate to market and promote more inbound travel to our nation. Currently, U.S. travel promotion investment lags behind many other countries. The 50 state tourism offices spent $574 million to promote regional tourism in 2013, compared to $1.7 billion spent by countries in Europe and $1.2 billion by those across Asia-Pacific. The passage of the Travel Promotions Act and the creation of Brand USA have helped close this gap, but we’ve got a long way to go.
Not only do we have a lot to gain ─ the average overseas visitor spends $4,380 per trip to the United States ─ but the U.S. Travel Association’s 2013 survey estimated that 100 million overseas people could be told ‘not to come to U.S.’ because of frustrations with the entry process. If 10% of this population did not come to the U.S. over the next 5 years, the economic cost could be $95 billion in total output.
Secondly, we’ve got to make it easier for visitors to enter the United States. Some international tourists still have to wait a long time to get into our country, so it’s hardly surprising that a 2013 survey by U.S. Travel showed that two in five overseas business travelers indicated they won’t visit the U.S. in the years ahead based solely on frustrations with the entry process.
Here again, our State Department has made progress in recent years by opening more offices to process visa applications, e.g., visa applications in China are up by 58% over the past year alone. The Visa Waiver Program has also been expanded to include 38 countries. However, there is a lot more to be done to reduce visa wait times as well as to make visitor entry into our country more pleasant and welcoming.
Finally, a Secretary of Travel could create unique synergies with the Department of Transportation and enhance our nation’s infrastructure, making it easier for travelers to discover the best that America has to offer, quickly and easily.
A 2014 report from 60 Minutes showed that over 70,000 U.S. bridges, or one out of every nine, is now considered structurally deficient, and recent U.S. Senate data shows that 42% of our urban highways are congested. And the skies above are even worse ─ a shortage of airport runways and gates, outdated air traffic control systems and dearth of NextGen technologies gives us some of most congested air traffic anywhere on the planet. And while there are more than 14,000 miles of high-speed rail operating around the world, we still have none here in the United States.
In the end, I think Jon Tisch has started an important conversation, one that I’m happy to join and lend my support to. Travel, after all, is part of the fabric that connects us to the world and everyone in it.