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Prepared by: Kendall Schaefer Index: Type bundle index here

Date: 06/17/02 DOC Library: Type library name here
Job Code: 320101 DOC Number: 150723

Office of Travel and

Tourism Industries,
Commerce Department
Record of Interview

To discuss the importance of travel from Visa Waiver Program Countries

and the impact on travel demand if the VWP program were eliminated.

Contact Method In Person

Contact Place GAOHQ

Contact Date 06/05/02

Participants Mr. Doug Baker, Deputy Assistant Secretary of Service Industries,

202-482-5261, doug baker@ita.doc.gov
Ms. Helen Marano, Director of OTTI
202-482-4752/0140, helen marano@ita.doc.gov
Mr. Ron Erdmann, Tourism Statistics
202-482-4554, ron erdmann@ida.doc.gov

U.S. GAP
Kendall Schaefer, Economist, IAT/HQ
Bruce Kutnick, Economist, IAT/HQ

Comments/Remarks
The Office of Travel and Tourism Industries (OTTT) is the government's
national tourism office with a current staff of 12. OTTI is responsible for
representing the tourism industry in the national policy arena as well as in
organizations like GATT, OECD, and WTO. They play an active role in
tourism expansion and are secretary of the Tourism Policy Council, an
interagency coordination mechanism for promoting tourism. They also
provide technical assistance to the private sector as well as other
countries and have a statistics program. They are partners with the state
tourism offices, the convention and visitors bureaus and national tourism
associations.

Their statistics program

Through their in-flight survey, OTTI collects both export and import data
for tourism services. Data is collected on the number of arrivals from
each country and estimated expenditures of travelers (note: expenditure
data is not available for all countries since some countries do not have
enough survey respondents to be statistically significant). OTTI sends this
data to the Bureau of Economic Affairs (BEA) who then input the data

Pagel Record of Interview

Prepared by: Kendall Schaefer Index: Type
Date: 06/17/02 DOC Library: Type
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into their national accounts, balance of payments, and Travel and Tourism
Satellite Account (TTSA).

The TTSA is an account that measures the economic contribution of the

tourism sector in the national economy. The TTSA was one of the first
service industry satellite accounts to be constructed by BEA and served as
a pilot program. The satellite accounts are valuable in that they allow for
a comparison of different service industries (i.e. comparing apples with
apples) and can accommodate impact analysis (i.e. they have done
analysis of the impact of 9/11 on tourism).

The first TTSA was constructed in 1998 using data from 1993. BEA has
just finished updating the TTSA with data from 1997 and has published
2001 quarterly estimates. The construction of these accounts, however,
has been limited due to lack of funding. For instance, BEA has not been
able to do the TTSA on a state level yet. However, some states have tried
to do a simulation of the TTSA for their own state using information from
the World Travel and Tourism Council (i.e. South Carolina and Hawaii).

Other models that estimate the economic contribution of the travel

industry include the model from the Travel Industry Association (TIA),
which was developed in 1983 with assistance from OTTI and BEA (as part
of their "REIMS" model). The methodology employed by BEA's TTSA is
different than by TIA, so BEA's estimate of the economic importance of
tourism is lower than TIA's. OTTTs approach has been to consider a
range of estimates by including both sources.

Studies on the impact of visa requirements on tourism demand

/T) OTTI has not yet done a study to estimate empirically the impact of visa
requirements on tourism demand. However, Ms. Marano said this could
be done. In order to do this, Ms. Marano thought they should look at their
in-market commercial services and speak with travel representatives in
the private sector. She also emphasized the importance of factors such
as: 1) the cultural disposition of travelers (i.e. travelers from countries
with violence may fear coming to the U.S. less than travelers from
peaceful countries), 2) nature of their booking behavior (i.e. do they book
through agents, take package tours or travel independently), and 3) the
communication level (i.e. how are travelers getting information about the
visa process?)

OTTI has looked at the importance of travel from VWP countries. For
example, they have looked at utilization rates for the VWP (not all arrivals
from VWP countries enter under the VWP). They have been working with
State somewhat on this issue as well and are serving as the Department of
Commerce's representative on the DMIA Taskforce. (Auditors note: The
Immigration and Naturalization Service Data Management Improvement Act
(DMIA) of 2000 created a Task Force to evaluate how the flow of traffic at
United States airports, seaports and land border ports of entry can be improved

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Prepared by: Kendall Schaefer Index: Type
Date: 06/17/02 DOC Library: Type
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while enhancing security and implementing systems for data collection and data
sharing.)

In OTTI's opinion, visas are a deterrent to travel. Helen said that their
commercial service officers have stated that visas are a significant
impediment to travel in the U.S. Mr. Baker emphasized that at the
International Travel and Tourism Trade Show held in early June, their
office received many questions about the recent INS proposals to change
entry regulations and expressedLconcerrLabout.the; pos^ibje jmjpactof
Their office has also received many inquiries
. Embassies about how countries can be admitted to the VWP.

For Follow-Up with Ron and Helen

We discussed the possibility of Commerce doing a study on visas. We

discussed the timeframes for this project (as well as the possibility of
needed information earlier for a July testimony) and the fact that
Commerce could initially provide some general estimates based on a more
simple methodology and later update the information with more
sophisticated estimates. Particulars to follow up on include:

• Ron is going to send us a table on expenditures from VWP

countries and 2001 preliminary estimates.
• Helen is going to check with DEI to see if they will do a study on
visa's for OTTI as well as other sources that could provide
information on visas such as:
o The foreign commercial service (when the VWP was
threatened in 1994, there was a White House Conference
where they may have done some analysis)
o John Cook - a consular officer they mentioned
o Their Showcase Europe Group (a program through the
foreign commercial service focused on tourism in the EU)
o The U.K. Travel and Trade Barometer (a group of U.S.
travel representatives in private sector in U.K.)
• Helen and Ron are attending the Travel and Tourism Research
Association Annual Meetings from June 23-26 in Arlington.

Documents Received
• Impact of International Visitor Spending on State Economies, 1997
• Key Facts About 2001 Inbound Tourism. 5/02
• In-Flight Survey Country Sample Sizes, 2000
• Description of the TTSA
• Export America Magazine

Other contacts

BEA: Sumiya Okubo and Steve Landerfield

South Carolina Travel Office: Julie Flowers
Hawaii Travel Office: Pearl Ibushu

Page 3 Record of Interview