NEW YORK, June 2, 2014
Introduction and Greetings
Thank you, Bjorn – and thanks to all of you for joining us for the 36th annual New York University International Hospitality Industry Investment Conference.
Bjorn and his team have put together another outstanding event, with an exciting program.
We’ll be hearing from top industry leaders such as J. Allen Smith of Four Seasons Hotels & Resorts … Richard Solomons of InterContinental Hotels Group … Arne Sorenson of Marriott International … Frits van Paasschen of Starwood Hotels & Resorts Worldwide.
At lunch today, we’ll hear from New York City’s new mayor, Bill de Blasio, in one of his first addresses to a large business audience. And tomorrow afternoon, I’ll be sitting down with Ivanka Trump to discuss her perspective on the industry.
We’ve got a packed agenda ahead with lots of outstanding content.
This is the 20th year I’ve had the privilege to chair this event – and I look forward to it more and more every year.
For a few days each June, we have the chance to look beyond the day-to-day challenges of running our hotels and look at the big picture.
It’s the difference between focusing on the “hotel business” – the attention to details that occupy the daily agenda – and the “business of hotels” – the trends and forces shaping things for the next decade or more.
Travel and Hospitality: A Major Economic Force
Let me start with a snapshot of where the hospitality industry and the broader travel sector stand today – and where we fit into the overall U.S. economy.
From my standpoint as the chairman of a hotel chain, the data looks very promising.
Demand is growing and both occupancy and average daily rates have been rising – both healthy signs. Business travel and group bookings continue slow and steady gains.
These rising trends have driven strong employment gains across the travel sector. In fact, the travel industry as a whole has gained back all the jobs lost in the recession and then some – making us one of the few industries that can make that claim.
In April, travel employment set another record, hitting nearly 8 million.
The lucrative international travel market also continues to surge. Last year, an additional 52 million international tourists traveled the world – reaching a total of over 1 billion travelers. Nearly 70 million of those travelers visited the United States.
As you know, international travelers stay longer and spend more – benefiting our destinations, hotels and attractions … and boosting America’s balance of trade.
As of April, travel exports were up 6.2 percent so far this year – nearly three times faster than the rise in other U.S. goods and services.
So far in 2014, the travel industry has generated a $10 billion trade surplus. That’s a word you don’t hear very often in Washington these days.
Transformation of American Economy
All this data creates a compelling picture of travel’s increasing importance in driving U.S. economic growth and job creation. In fact, I think it’s fair to say that America’s service sector as a whole – led by travel – has almost single-handedly pushed the U.S. economy forward since the recession.
This is part of a broader transformation – a tectonic shift in our economy’s center of gravity.
Today, America’s economy is no longer driven by agriculture or manufacturing. We are a service economy – and travel is one of its most critical components.
Just think about our expanding economic footprint: Right now, the travel industry is a top 10 employer in 48 states, while 1 in 8 American private sector jobs is linked to the travel industry.
Need Government To Be Our Partner In Growth
Despite our prominence … when it comes to shaping economic policy in Washington … it often seems like there’s a lot more attention focused on recovering the jobs of the past than promoting the jobs of the future.
Now, it’s true that travel’s status inside the beltway has been on the rise – thanks in part to strong leadership from many CEOs and the U.S. Travel Association. In the past several years, we’ve seen the passage of the Travel Promotion Act … the creation of Brand USA … the improvement of the visa process … and the establishment of national goal to attract 100 million international visitors every year.
Just a couple of weeks ago, President Obama invited a group of travel industry leaders to the White House to discuss policies designed to boost the travel industry and the overall economy. Topics included improving the US Customs entry process at airports; revitalizing America’s surface and aviation infrastructure; and expanding Brand USA.
President Obama highlighted progress towards the National Travel and Tourism Strategy and stressed travel as an economically vital industry that supports nearly eight million American jobs nationwide—jobs that are "Made in America" and cannot be outsourced. He also released a Presidential Memorandum outlining steps to enhance the visitor entry process.
This is very good progress – evidence that we now have a seat in the room during important policy debates.
But still compare our standing to another important sector of our economy that gets a lot more attention in Washington – agriculture.
America’s agricultural sector supports about 1.8 million jobs. By comparison, the travel sector directly employs nearly 8 million Americans – more than 4 times as many as agriculture – plus another 7 million indirectly.
Agricultural exports reached nearly $141 billion in 2013. Travel exports exceeded $180 billion.
By any rational measure, travel occupies a place in America’s economy at least on par with agriculture.
Yet think about the infrastructure of influence that’s been built up around the agricultural sector.
We have an entire U.S. Department of Agriculture – which was founded over 150 years ago at a time when about half of all Americans lived on farms. Today, only about 2 percent of Americans are farmers, yet the department operates about 240 subsidy programs … employs over 90,000 people in 7,000 offices across the U.S. … and spent over $150 billion last year.
Many of our competitors in the international travel market treat travel as a cabinet-level post. I’m not holding my breath for that. But I do believe that given travel’s powerful role in driving America’s economy, it’s fair for us to ask government to be our partner in growth ...
… To understand how critical policy debates over immigration, infrastructure, tax policy and other issues impact our industry’s ability to continue growing and creating jobs …
… And to recognize that policies aimed at expanding the service sector boost America’s economy, reduce unemployment and improve our balance of trade.
Think about Brand USA for a minute. The program has brought over 1 million new international travelers to the United States. These visitors have spent $3.4 billion, supporting over 53,000 Americans jobs and generating nearly $1 billion in tax revenue.
And it doesn’t spend a dime of taxpayer money. Let me repeat, not a dime of taxpayer money.
Reauthorizing this program should be a no brainer. But its renewal is far from certain.
I believe one of the things holding us back is a stubbornly persistent misperception about the travel industry – and many service sectors – particularly when it comes to the value of the jobs we create.
It’s a misperception held by many policymakers and reinforced by major media.
Consider this quote taken from a recent New York Times article.
In describing the strong growth of service sector jobs over the past several years, the reporter wrote:
“… in essence, the poor economy has replaced good jobs with bad ones.”
Travel Jobs as a Gateway to the American Middle Class
As industry leaders, it’s our responsibility to fight back against this kind of misperception with the facts. Let me share a couple with you.
First, about one in five Americans start their careers with a job in the travel industry.
As we all know, a first job provides critical skills that lead to a successful and rewarding career. Skills like time management … effective communications … teamwork … customer service … decision-making.
It’s exactly these skills that America’s top companies are searching for today. When asked to name the skills Google wants in its new hires, Google’s chief talent officer said,
“The number one thing we look for is ... the ability to process information on the fly.”
He also said that Google wants problem-solvers. They want people with a sense of humility. They value adaptability and collaboration.
People in the travel industry start acquiring and developing these skills from their first day on the job.
Ask anyone who has dealt with an unhappy customer what they know about humility and creative problem-solving.
Or ask a waiter serving tables during lunch rush what he knows about adaptability and processing information on the fly.
At Loews, our ranks are filled with people who started pretty low on the ladder of opportunity. For instance:
Our VP of Human Resources started out in the hotel industry as an accounting clerk. Our Chief Financial Officer first joined us as an assistant internal auditor. And one employee with a high school degree, who took an early job as a banquet manager, is now our Vice President of Operations for the East Coast.
Second, the travel industry offers opportunities for young adults who often struggle hardest to find work.
Nearly 25 percent of all travel industry employees are under the age of 25, compared to just 13 percent in the rest of the economy.
Third, a job in the travel industry serves as a gateway to the great American middle class.
The travel industry is one of the 10 largest employers of middle class wage-earners in the U.S. – ranking higher than finance and real estate.
Nearly half of all travel industry employees – a total of more than 3.7 million Americans – earn middle-class wages – more than double the number in the information sector.
And two out of five workers who start in the travel industry go on to earn more than $100,000 per year.
Changing Perceptions Can Drive Positive Policy Change
So, why does any of this matter? Why is it important for lawmakers and policymakers – not just in Washington, but in state capitals as well – to understand the value of travel industry jobs?
Well, I firmly believe that changing perceptions can change results.
Right now, every industry in America’s service sector is battling the same headwinds – the misperception that our jobs are not as critical to our country’s future as jobs in other sectors. We need to unite together to transform this mindset.
If we work together, we will turn this headwind into a tailwind … one that can drive better policy decisions that will help fuel our industry’s growth.
Let me put it in perspective.
I read a report the other day that said a single Boeing 747 carrying 467 international visitors to the U.S. brings the spending power to support 14 American jobs.
Understanding the importance of those jobs … recognizing the benefit of those jobs to the American people … changes minds – and changes votes.
It turns government into a partner for growth, instead of a barrier to growth.
It leads to the creation of Brand USA – so for the first time we’re competing with other countries for international travelers.
It leads to visa reform – which is already helping more people from the hottest travel markets in the world visit the United States.
And it can lead to more policy wins – on issues like Customs reform – where putting more agents in place could reduce three hour waits to less than thirty minutes.
On infrastructure – where if we don’t take action, the federal highway trust fund will go broke this summer.
On immigration reform – which affects millions of employees in the travel sector.
Redefining the value of service sector jobs can also play a significant role in putting millions of Americans back to work in the face of persistently high unemployment.
Travel jobs are good jobs: They help Americans grasp the first rung on the ladder of opportunity. They support Americans families. They provide a gateway to the middle class. They are proving grounds for successful careers. They are jobs that can never be outsourced or off-shored.
The sooner Washington embraces a new vision of the value of service sector jobs, the faster we’ll see policies aimed at growing our industry and the quicker we’ll get America back to work.
So, arm yourself with the facts. Become an unapologetic advocate for our industry and for the opportunities we create for millions of American workers.
Reach out to your elected representatives. Tell them to support policies that promote travel.
It’s an investment of time and energy that can yield big dividends for the hotel industry and the nation.
Thank you very much and enjoy the rest of the conference.