Q&Amp;A: On The Road Again

The boom days certainly aren't back. But Americans are less leery of leaving home this summer than they were a year ago, when fears of another terror attack were sharper and war with Iraq was looming. According to a forecast by the Travel Industry Association (TIA), tourists across the nation will take 275.4 million leisure trips in June, July and August--an increase of 2.5 percent over last summer.

Overall, a TIA survey found that 80 percent of Americans say they plan to make at least one vacation trip this summer. That will prompt a 1 percent increase in air travel and a more than 2 percent rise in auto travel. Yet while this may mean better business for the tourism industry--especially because so many vacationers plan to stay inside the United States--travel analysts remain cautious about predicting a better times for the $525 billion a year industry.

One concern: the drop in revenue from international tourism. Foreign tourists to the United States have fallen by almost 20 percent since the September 11, 2001, terror attacks, costing the economy about $15 billion. Now, industry representatives are worried that upcoming tighter visa requirements for foreign visitors could cut still further into the $88 billion the foreign visitors generate annually.

John A. Marks, national chairman of the TIA and president of the San Francisco Convention and Visitors Bureau, was one of the experts who testified this month to the House Committee on Government Reform about the industry's problems with the new measures. He spoke to NEWSWEEK's Arlene Getz about current travel trends and why the visa changes should not be implemented just yet. Excerpts:

NEWSWEEK: What are Americans doing this summer?

John A. Marks: We're encouraged that they do seem to be making their travel plans. Clearly they are staying closer to home. It's probably the result of so many things going on around the globe leading up to this summer: the build-up in Iraq, the war itself, SARS.

What are the most popular destinations?

It depends on who and where you are. There clearly are more driving vacations taking place, [so there's] a lot more regional tourism. There is less outbound international travel. Some of that is due to the declining value of the dollar against numerous world currencies. The beneficiaries [of that] will be areas near large metropolitan areas. We're certainly planning for a good summer here in San Francisco.

Is it getting closer to the good times in the pre-attack summer of 2001?

We're certainly nowhere near back to that level. But that's [due to] a combination of a lot of things, [like] the softening economy, the dot-com implosion. Then 9-11 came along and basically changed the mindset of travelers worldwide.

TIA figures from May show that revenue from rail and auto travel picked up during the year, indicating that more travelers are opting for land travel. What about other types of trips, like cruises?

The cruise market seems to be doing pretty well right now. That's viewed as a nearby travel experience--contained, comforting and easy to access. And the cruise industry really offers great value. [On the West Coast] it's doing very well on the Alaska cruise market and down to the Mexican Riviera.

How much of that is due to the cut-rate cruise prices?

There's certainly a percentage of consumers that respond to price or value. But the true driver in travel is that Americans have always had a freedom to travel. After 9-11, we were in a mindset that someone [had] tried to take that away from us. It took some time to regain our bearing. And in that transition of regaining our bearing, price became the tactic by which travel began to sell itself again. Right now, there's hardly a place in America that isn't offering great value--certainly compared to what the pricing strategies were in the late '90s up to 2000.

But can the travel industry afford to keep prices down like this?

As a long-term strategy, no. As a short-term strategy, yes. Pricing can't precede market share; you have to win your customers back first. The demand will then allow the industry to return to a more stabilized pricing, which is pretty much out of balance right now, particularly in the airline and hotel segment.

How are airlines and hotels doing at the moment?

We are seeing load factors on airlines and hotel occupancy rates beginning to rise. The problem is, in that in order to do that, in many cases it's been at the expense of rate or fare. Every day, you can see the incredibly attractive offers that are being put forward by airlines and hotel companies.

Yet people who try to respond to those deals often complain they're only available if they're prepared to catch a plane at 3 a.m. or fly via some ridiculously obscure route.

The vast majority of the offers are pretty straightforward. Sure, there are some that are a bit circuitous. But when you have an airline offering that if you fly two or three segments, you'll get a fourth free, or if you buy one business-class ticket, you'll get a coach ticket free--that's pretty straightforward.

Any advice for people still looking for a good deal this summer?

Consumers today have more information at their fingertips than at any other time. If someone is interested [in a trip,] don't always jump at the first offer. Take a look, see what's available. A day doesn't go by that there aren't really exciting offers in the travel sections of newspapers and through the reservation systems of airlines and hotels. I would always ask the question, is this the best rate? Not necessarily the lowest, because lowest-priced isn't always the best place to go, but one which best meets my needs. Obviously the [Web sites like the] Expedias, the Travelocities, the Pricelines are powerful options to pursue. But sometimes you're better off to call the [hotel] property directly. Get a warm body that's physically sitting in the city you want to go to. There's nothing wrong with asking a human being on the other end of the reservation system, "is this the best rate you can give me?"

What kind of summer are you expecting in San Francisco?

A pretty decent summer--certainly improved from last year. We're fully expecting to have our occupancy in the summer months back in the 70s [percentagewise]. That's far from where we were in the robust days--where it used to be in the 80s in the pre-2000 summer months--but I fully expect San Francisco to produce reasonably well.

Have hotel prices dropped?

Hotel prices are very advantageous. We have 34,000 rooms in the city, and those prices will probably range from $89 to whatever you want to pay. Talking about price is really hard to do today--it's all a function of what the availability is at any given times. Oftentimes you can get a very attractive rate at hotels you wouldn't associate with a lower rate. You've got to hit them at the right time.

Earlier this month you testified to the House Committee on Government Reform about how new visa restrictions will affect the industry. What are your main concerns?

One is the requirement for personal interviews [of applicants] in those countries that we require visas from. Our government has for years had the ability to interview anyone who wants to come here, but it has routinely been waived in most cases. [Then] in May Secretary [of State Colin] Powell put out a directive to all of our more than 200 consulates and embassies to say that posts must implement the new interview guidelines using existing resources. The guidelines basically call for our consulates and embassies to interview 90 percent of all visa applicants [excluding children under 16, adults over 60 and current visa holders]. We're going to go from a nod of the head to a [new] system with no additional personnel, overtime or physical facilities in which to do this. The Travel Industry Association is sensitive to homeland security. Homeland security and economic security are not coequals; homeland security must take precedence. But it is clear that not only are we going to create a great deal of ill will, we are also going to create extensive lines and waits in order for people to get visas.

What impact do you expect this to have on international tourism?

I used two examples in my testimony. One is South Korea, which is currently interviewing 27 percent of all business- and tourist-visa applicants. If they were to interview 100 percent [of applicants] in Seoul, with no additional resources, our staff at TIA has estimated that it would result in a loss of approximately 114,000 travelers--or one in every six Korean visitors to the United States. The financial price tag on that is $205 million in expenditures from the South Korean market alone. I suspect the State Department would say that's a nonsensical figure. Well, it isn't nonsensical if someone can't get a visa. Another example was Brazil, where we have three consulates and one embassy. Brazil is a huge country. If you don't happen to live in one of those four cities, and if you want to come to America, you are going to have to take a trip to one of those cities to have a personal interview to receive your visa. Let's say you were bringing your family with you. That would mean that four of you would have to travel many hundred miles [and] potentially spend a night in one of those four cities in the hope that your interview will happen in a timely fashion.

What would you like the government to do?

I asked Secretary Powell to hold off on the full implementation [of the measures] until Congress demands and provides the full resources to implement and facilitate them. We're not living in an island. We are competing with the rest of the world in the travel and tourism industry. The more difficult we make it for anyone to come here for business, leisure or medical travel, the more likely they are to go somewhere else. We do not oppose the interview process. I just think we need to be a little more sensitive.

What about citizens from countries that don't need visas?

We have 27 countries that participate in our visa-waiver program. Those countries are traditionally our trading partners like the United Kingdom, Japan, Italy, Switzerland, Spain, France, Australia--our "friends." There's an issue with them, as well. For some time now, those countries have known that by 2007 they will need to have machine-readable passport [with bar codes] for entry into the U.S. After 9-11, the Patriot Act moved that 2007 date to Oct. 1, 2003. The dilemma with this one is that just about every country of the 27 is moving forward with the machine-readable passports, but they're not all in place yet. As of Oct. 1, we're going to tell these countries that if one of your citizens arrives at an airport to the travel to the U.S., they won't have proper documentation and they may well not be boarded. There's a real lack of clarity on what's happening here.