NEW YORK — An overarching theme to this year’s NYU International Hospitality Industry Investment Conference was the potential impact the new administration in Washington, D.C., could have on the country’s tourism industry—and, by proxy, hotel revenue.
“In the past few months, we’ve seen a flurry of announcements from the White House that could have a significant impact on our industry,” Jonathan Tisch, chairman and CEO of Loews Hotels, said in his opening statement to the audience, citing travel bans and a new ban on technology on inbound flights. “Of course, the travel industry supports efforts to remain vigilant in the face of security threats to the U.S.,” he said, “but as Colin Powell always said, 'We need to have both secure borders and open doors.' Because when it comes to a business as competitive as travel, we need to remember that words matter. Perceptions matter. The way the administration’s policies are portrayed to the world matters.”
A recent international survey ranked public perceptions of a country’s openness to travel, Tisch said, and the U.S. didn’t even crack the top 20. “Those views didn’t develop in just the last four or five months,” he noted. “But we haven’t done anything to reverse them, either.”
Citing a “lost decade” of inbound travel to the U.S. following an “anti-travel political climate” in the wake of 9/11, Tisch called on the attendees to speak up and avoid another sharp downturn. “That ‘Lost Decade’ cost our country over 68 million visitors, $606 billion in traveler spending and 467,000 jobs,” he warned the crowd. “By one measure, international travel to the U.S. did not return to pre-9/11 levels until December 2016. According to the U.S. Travel Association, international travel’s share of total U.S. exports just recently reached the highs set back in 2000.”
The second leadership opportunity for travel is to shape the promised $1-trillion infrastructure investment program. “According to news reports, the administration wants to lead a vast public-private partnership, leveraging corporate resources with federal, state and city tax revenues to speed investment and jump start construction,” Tisch said. “This is an innovative approach that will enlist the energies of many of us in the room. We should welcome the opportunity to take a leadership role in this effort.”
The hospitality industry also needs to remind Washington not to forget the need for federal resources to back up this new partnership, he added.
And then there’s support for destination marketing organizations and Brand USA, the only organization dedicated to both promoting the U.S. as a travel destination and educating travelers about security and visa requirements. Brand USA has been zeroed out in the Trump Administration’s budget proposal—a development that surprised Tisch. “If anyone should understand the value of a ‘brand’ and the need to market it effectively, it should be Donald Trump,” he said. “It also makes no sense on a policy level. It’s completely at odds with the administration’s own economic goals.”
According to its own proposed budget, eliminating Brand USA will increase the federal deficit by $510 million over three years, he said, and by reducing international travel to the U.S., it will also widen America’s trade deficit.
In short, the travel and hospitality industries have an obligation to engage the new leadership in Washington—“to make sure they understand the role we can play in achieving our shared economic goals of more growth, more jobs, and more U.S. exports.”
Keeping the Lights On
In November, Hilton named Katie Beirne Fallon—a former senior advisor at the White House and a top aide in the U.S. Senate—as SVP and global head of corporate affairs. With a solid background in politics, Fallon predicted that Congress would be focused on “keeping the lights on” for 2017.
Infrastructure investments are very important to recover US economy - Katie Fallon, Hilton #nyuhospitality— NYU Hospitality Conf (@nyuhospitality) June 5, 2017
“Congress will succeed in keeping the lights on, which is saying a lot in this political environment,” she said, noting that bipartisan leadership has already come together in Congress to pass a budget agreement to fund the government. “And they did so in a way that compromised away some of the administration’s priorities from the campaign, like building a border wall,” she said. “Their conclusion was that it was more important not to cause economic uncertainty or any difficulties for the economy, and just to keep the government open.” Congress will take that logic into debt limit fight, she continued, and the country can expect a clean debt limit increase later this year. “That spending bill will not just keep government open, but will fund Brand USA,” she said.
“We often debate internally, are we at a point of institutional breakdown, or is this just business as usual, and things have to adjust?” Katherine Lugar, president and CEO at the American Hotel & Lodging Association, said. “What we’re finding is as institutional leadership doesn’t happen the way it once did.” Behind the scenes, she said, small groups are fighting with “real passion” for issues like tax reform and infrastructure spending. “As those conversations happen behind the scenes, folks are working in earnest to find that landing spot. It is getting harder, but there’s a good reason to remain cautiously optimistic.”
Chip Rogers, president and CEO of AAHOA, cited some reasons for optimism: The stock market is strong, house prices are “absolutely booming,” we’re seeing a 16-year low on unemployment and gas prices have been under $3 per gallon for 36 consecutive months. “If we can add infrastructure improvements, I think we’re in a pretty good position,” he said.
As for supporting infrastructure improvements and DMOs, Rogers believes that they are too valuable to leave unfunded. Ten years ago, he said, he worked on a project for a local airport and was “stunned” by the return on investment in airport infrastructure—$43 for every dollar invested. “The numbers bear out that it makes sense” to fund these programs, he said. “Most lawmakers will agree it needs to be protected.”
“Bipartisan support for programs like Brand USA is alive and well on the Hill,” Lugar said. “It’s incumbent for [U.S. Travel Association President and CEO] Roger Dow, for me, for AAHOA, to move quickly and aggressively to make sure we’re stoking that passion.” But those organizations would not be enough to maintain hospitality and travel as valuable industries, she warned the conference attendees. “It will take all of us, all of you, to make sure we take nothing for granted in this political environment.”