Loews Hotels Chairman Jonathan M. Tisch Calls for Improving Air Travel Experience to Secure Travel's Future
 
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Loews Hotels Chairman Jonathan M. Tisch Calls for Improving Air Travel Experience to Secure Travel's Future

Touts the Benefits of Travel for Individuals and Businesses

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New York, June 1, 2015 —Jonathan M. Tisch, Chairman of Loews Hotels & Resorts, urged travel industry leaders to embrace public policy reforms that will improve the air travel experience to and within the United States and help the industry tap into the growing pool of international travelers.

The changes Tisch called for include an increase in airport infrastructure investment, federal reauthorization of the Federal Aviation Administration, and the implementation of NextGen aviation technology. Tisch made these remarks this morning in a packed hall at the 37th Annual NYU International Hospitality Industry Investment Conference.

According to Tisch, America's airports are more crowded than ever before and our nation's aviation infrastructure is not keeping pace with growing travel demands. "In 2011, our airports handled 33 million more passengers than they did in 2001. But airports haven't expanded to meet that surging demand. And the numbers are only increasing," Tisch said.

To help alleviate congestion and improve the travel experience, Tisch stressed the importance of NextGen technology implementation and said that Congress "should require the FAA to prioritize NextGen deployment in America's most congested airports where its impact would be felt the greatest."

He also called on Washington to act quickly to reauthorize the Federal Aviation Administration, which is set to expire in September. "I understand that politics is a messy business," Tisch said "but our industry needs to send a message that it's time to stop playing political games with the FAA." 

In recent years, the travel industry has earned some notable policy wins in Washington including passage of the Travel and Promotion Act, the creation of Brand USA, improvements to the visa process and expansion of the Visa Waiver Program.

But to spark future industry growth, Tisch encouraged travel leaders to also look beyond the halls of Congress and work to change "America's workaholic culture" by communicating the benefits of taking time off to travel. Each year, Americans leave roughly 429 million days of unused vacation time on the table, a trend he acknowledged would be difficult to reverse.[1]

"But if we can accomplish a change in behavior the rewards will be significant – for American families, for American businesses, and – yes – for America's travel industry."

Contacts:
Sarah Murov
(212) 521-2495
smurov@loewshotels.com

 

JONATHAN TISCH
NYU INTERNATIONAL HOSPITALITY INDUSTRY INVESTMENT CONFERENCE
MARRIOTT MARQUIS, NYC
JUNE 1, 2015

Introductory Remarks

Thank you Dennis for your kind introduction – and thank you all for joining us today. 

I'm excited to welcome you to the 37th annual International Hospitality Industry Investment Conference.  

The Executive Planning Committee once again has organized outstanding general sessions, workshops, and networking opportunities to provide insight and value for you.

Over the next couple of days we'll hear from industry leaders and experts in their field. Highlights of the conference include the annual CEOs Check-In, featuring Geoff Ballotti from Wyndham Hotel Group; Sebastien Bazin from Accor; Mark Hoplamazia from Hyatt Hotels Corporation; and Chris Nassetta from Hilton Worldwide. These four companies alone have nearly 16,000 properties in more than 90 countries.

The year's popular Titans of Real Estate panel will feature Jonathan D. Gray, Global Head of Real Estate at Blackstone and Barry Sternlicht, Chairman and CEO, Starwood Capital Group.

And we will also hear from two industry visionaries: our keynote speaker at lunch today is Stephen Wynn, Chairman and CEO, Wynn Resorts; and for tomorrow's Beyond the Boardroom interview, I will be joined by J.W. Marriott, Jr., Executive Chairman of Marriott International, Inc.

We hope you find the next two days to be informative, productive and enjoyable. As in the past, money raised from this conference will provide education scholarships and other assistance to the next generation of industry leaders from New York University.

I hope you'll take a minute or two to engage with a student during the conference.  Share your experiences… talk about the lessons you've learned during your career… give a little insight from the real business world of hospitality. You'd be surprised how much your conversation could mean to these students futures.

Each year, I look forward to this conference. It's an opportunity to step back from the day-to-day challenges of running our businesses and focus on the long-term trends that will define our industry's future. 

It gives us a chance to identify new opportunities … discuss strategies for seizing those opportunities … and hopefully unite behind a set of actions that can lift the entire hospitality industry to new heights.

Strong Growth for Travel Industry

We have a lot of reasons for optimism. By many important metrics, the travel industry is booming.

Room demand, average daily rate and revenue per available room each hit all-time highs last year. And we see more growth ahead. 

Hotel owners and investors are responding to these positive trends by boosting construction of new properties.

Earlier this year, we opened the new Loews Chicago Hotel – a 400-room luxury hotel looking to capitalize on that city's growing number of visitors and strong convention business.[1]

Next summer, we look forward to opening the new Sapphire Falls Resort at Universal Studios in Orlando, our fifth hotel on site with our partners Comcast/NBC Universal.[2]

These investments represent a concrete, tangible expression of Loews' confidence in the future. 

But of course no industry is immune from competitive pressures. We face risks from a stronger dollar, which makes it more expensive to visit the U.S. and more affordable for Americans to travel abroad. And new competition from AirBnB and others that challenge our business models. 

Nevertheless, from my seat as Chairman of a growing hotel company, the future looks quite promising. 

One major factor stands out in the competitive landscape that I continue to believe can drive growth for decades to come: the growing amount of international travel that shows few signs of weakening. 

Consider the latest data: last year a record 75 million international visitors arrived in the United States. They spent a staggering $222 billion on travel expenses – including billions at our hotels.[3]

While the global economy will ebb and flow, the underlying current is strong and positive for the travel industry.

Hundreds of millions of people from China, India, Brazil and other rising nations will join the rapidly expanding global middle class in the coming decades. They will have the resources and the desire to travel. It's up to us in the travel industry to make sure they have that opportunity.

Using Travel's Influence to Lay Foundation for Future Growth

As a nation, we've taken a step in the right direction. 

The establishment of a National Travel and Tourism Strategy aimed at drawing 100 million international visitors a year by 2021 is a clear signal that political leaders recognize travel as a key driver of economic growth in the U.S. 

Travel's economic performance – $2.1 trillion in economic impact last year, supporting over 8 million jobs – has enabled us to become a far bigger player in Washington policy debates. 

We used to fight for a seat at the table. Now we're regularly invited to the White House, Cabinet agencies and congressional offices at the highest levels. 

We've used this power to win a string of policy victories over the past decade: Passage of the Travel Promotion Act … the creation of Brand USA … expansion of the Visa Waiver Program … improvements to the visa process … reforms to the customs process. 

This has created a virtuous cycle:  growth drives policy wins… which drive more growth. 

Brand USA alone has been responsible for bringing over 1 million new international travelers to the U.S., which in turn generated $3.4 billion in visitor spending and supported roughly 28,000 jobs.[4]

Our victories have a common theme. In every case, the U.S. travel industry identified a need or opportunity … united behind a workable policy or solution … and worked closely with political leaders to build support and win passage. 

Given our recent success, some might be tempted to sit back. Maybe consolidate our gains. Or play small ball in Washington – where it's often hard to get things done.

But that reactive strategy would be unworthy of our industry and inconsistent with our role in driving America's economy and being a creator of good middle-class jobs.

Ideas to Secure Travel's Future

Instead, we must think creatively about new ideas that will help feed the growth cycle and allow us to realize our full economic potential.

I don't claim to have all the answers. But I'm convinced one critical area that demands the industry's attention is improving the air travel experience for travelers to and within the United States.

I think it's obvious to everyone how important air travel is to the hotel business. Our hotels and the related hospitality infrastructure are filled with guests who arrive by air. 

But let's face it: Traveling by plane in the United States these days typically means delay, hassle, frustration and rising costs.

Travelers today face over-crowded terminals … congested runways … endless lines … limited airline choices. Instead of being treated like valued guests, travelers making their way through our nation's gateway airports feel more like cattle being herded to the next destination. 

It's already having an impact on our industry…and the problem is getting worse.

According to a survey by U.S. Travel nearly 9 out of 10 passengers say air travel has become more of a hassle or just as exasperating as last year. Seven out of 10 travelers say air travel options are inadequate.

One of the biggest factors is America's outdated, over-worked airports – most of which were designed to handle the air traffic of the 1970s, not the 21st century. 

In 2011, our airports handled 33 million more passengers than they did in 2001.[5] But airports haven't expanded to meet that surging demand. And the numbers are only increasing. In the next ten years, 25 of the nation's top 30 airports will experience Thanksgiving level congestion twice a week.

For the past several years, I've been calling for greater investment to modernize America's airports. Here are a few practical ideas that can help achieve that goal. 

First, we need to boost the resources dedicated to modernizing our airports.  

One of the primary funding mechanisms for financing airport improvements is the Passenger Facility Charge – known as the PFC. 

The PFC is a nominal charge already added to the price of an airline ticket. It costs passengers about one-fifth the typical airline baggage fee or one-tenth the price of a seat assignment. 

The problem is since 2000 the PFC has been stuck at $4.50. Many airports can't issue bonds anymore because their PFC revenue is already committed for decades just to pay for existing projects. 

For example, at Las Vegas's McCarran Airport PFC funds are committed for the next 40 years!  Dulles International in Washington, DC has committed its PFC revenue for the next 30 years. 

Imagine if we couldn't finance improvements to our hotels for three or four decades. If we couldn't update our rooms … modernize our lobbies … upgrade our elevators. That's the position many of our leading airports find themselves in today. 

But at the same time, we must recognize that travelers already pay a lot of extra fees, including $3.4 billion in baggage fees alone to the airlines last year.[6]

So rather than calling for an across-the-board increase in the PFC, we should give local communities and airports the option of raising it just to its inflation-adjusted level. That's less than the cost of most mid-flight snacks. 

In my experience, people are willing to pay a little more if they know the money will reinvested to improve conditions and to make their lives better.

So with that in mind, here's the important point: they can raise it only to fund a project that will increase capacity, reduce congestion or enhance airline competition. The money needs to be invested in a way to benefit the consumers – the airport guests.

A good thing about the PFC is it's remitted to the airports themselves so all funds stay local. They never detour through Washington. All the money goes to improving airports, allowing destinations to attract more visitors, fueling growth, jobs and prosperity.

This solution would free airports from relying on and begging Washington for funds to modernize. It would enable airports to add new gates, helping attract new carriers. This promotes competition – benefitting travelers and the travel industry. 

Second, we need to speed the deployment of NextGen aviation technology. 
Air traffic in the U.S. is still being directed with World War II-era radar. The GPS system in your car and the map apps on your phone offer more sophisticated ways to travel from A to B. 

Updating our aviation technology is a massive project known as NextGen. It promises to let planes fly more direct routes, saving time and fuel. 

This bowl of spaghetti is an actual image of one day's air traffic over the New York area. While it might look perfect hanging in MOMA or the new Whitney Museum, it's a major headache for our Air Traffic Controllers and for the millions of people flying these routes.

NextGen would turn this image into a series of straight and clear flight paths. And it would increase safety. 

While the idea looks great on paper, implementation has been frustratingly slow. There's been a lot more finger-pointing than progress. 

I'm sure there's a lot of blame to go around. That's the nature of any big scale project. But it's time for the travel industry to unite and tell our political leaders we want a bipartisan commitment to pushing this critical effort forward. 

At a minimum, Congress should provide a stable funding source for air traffic modernization. It should protect NextGen from automatic budget cuts. And it should require the FAA to prioritize NextGen deployment in America's most congested airports where it's needed the most and where its impact would be felt the greatest.

Third, we must urge Congress to reauthorize the FAA.

The FAA's current funding bill runs out in September. The last reauthorization was passed in 2012. After 23 short-term extensions. 

Can you imagine trying to build a hotel that way? You don't know what your long-term budget will be. You're not sure when – or if – any funds will be there. Your employees may be furloughed at any time. You simply wouldn't operate this way.

I understand that politics is a messy business, but our industry needs to send a message that it's time to stop playing political games with the FAA. 

Communicating the Benefits of Travel

These policies – adjusting the PFC, accelerating the deployment of NextGen and putting the FAA on a firmer footing – would immeasurably improve the air travel experience, a critical component to our nation's economy.

It also would help lay the foundation for our next chapter of growth. Imagine what the future might look like…

… Modern terminals… enough gates to meet today's demand… fewer flight delays… more choices among airlines.  And more travelers to more destinations – boosting every sector of the travel industry. 

To win these policy battles, political leaders need to hear our voice. 

But it's not just Washington that needs to understand the benefits of travel. There are other opportunities to expand our market including an unexpected one.

Here's a statistic that illustrates my point. 

According to a report by U.S. Travel, the average American employee leaves 3.2 days of paid time off on the table each year. That's a staggering 429 million days of potential vacation time.[7] And it's happening every year.

This means that right now, millions of Americans are working instead of taking earned time off and traveling.

This has become such a big issue for American society that just last week TIME magazine dedicated the cover of its magazine to this problem.

If American workers used all their paid leave, they would spend about $67 billion on travel. This is a huge potential growth market. 

Fixing this time off deficit won't just help the travel industry.

Businesses of all kinds benefit when employees take a well-earned break. Nearly 7 out of 10 HR managers said using paid time off improves employee job performance; nearly 8 out of 10 say it improves job satisfaction.[8]

Encouraging workers to use their time off actually can deliver a direct benefit to the bottom line. One economic consulting firm did a study and found that U.S. companies are carrying a massive $224 billion in liabilities because employees don't use all of their vacation time.[9]

Research also shows travel strengthens families. Three out of four parents surveyed said vacations were an important way to build memories with their children.[10]

Changing this mindset won't be easy. It will require a shift in America's workaholic culture. It will require corporate managers to look at time off as a way to increase productivity and build morale. But if we can accomplish a change in behavior the rewards will be significant – for American families, for American businesses, and – yes – for America's travel industry.

I do believe the future of travel is nearly boundless. We have opportunities and the ability to increase the size of the travel market and to capture a larger share of it.

But to seize these opportunities and realize travel's full potential, we need to be more active and engaged as advocates for our industry. By putting aside our individual differences we can work together and accomplish a greater good for all.

Thank you again for joining us. Enjoy the rest of the conference.

 

[1] http://www.nbcchicago.com/news/local/New-Loews-Chicago-Hotel-Opens-Monday-294441051.html

[2] http://www.insidethemagic.net/2014/09/universal-orlando-announces-new-loews-sapphire-falls-resort-hotel-to-open-summer-2016-with-caribbean-flair/

[3] http://www.dhs.gov/blog/2015/02/13/report-president-america’s-national-travel-and-tourism-goal

[4] https://www.ustravel.org/sites/default/files/page/2009/09/BUSA_Report_FINAL.pdf

[5] http://thehill.com/blogs/congress-blog/economy-budget/241340-how-government-policies-cause-high-airline-bag-fees

[6] http://thehill.com/blogs/congress-blog/economy-budget/241340-how-government-policies-cause-high-airline-bag-fees

[7] http://www.projecttimeoff.com/research/assessment-paid-time-us

[8] http://www.projecttimeoff.com/research/vacations-impact-workplace

[9] http://www.projecttimeoff.com/research/hidden-costs-unused-leave

[10] http://www.projecttimeoff.com/sites/projecttimeoff.com/files/fact-sheets/ExecSummary_Memories_March2013.pdf

About the NYU School of Professional Studies Tisch Center for Hospitality and Tourism
The NYU School of Professional Studies Tisch Center for Hospitality and Tourism, now celebrating 20 years of academic excellence, is a leading center for the study of these fields. Founded in 1995, the NYU School of Professional Studies Tisch Center for Hospitality and Tourism was established in response to the growing need for hospitality and tourism undergraduate and graduate education.

The Tisch Center's cutting-edge curriculum attracts bright, motivated students who seek to become leaders in their fields. Through its undergraduate degree in hotel and tourism management, its graduate degrees and certificates in hospitality industry studies and tourism management, a plethora of noncredit programs, and its world-renowned conferences, students gain the knowledge and the skill sets that enable them to manage change, to communicate, to thrive in complex work environments, and to advance the businesses of hospitality and tourism.  For additional information on the Tisch Center, visit sps.nyu.edu/tischcenter.

About the NYU School of Professional Studies
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