share
by Loren G. Edelstein | June 06, 2011

The need to modernize America's aging transport infrastructure is the travel industry's greatest challenge, said Jonathan M. Tisch, chairman and CEO of Loews Hotels, in opening remarks this morning at the NYU International Hospitality Industry Investment Conference in New York City. "The process of traveling is becoming more stressful, less convenient and more nerve-racking," Tisch told the audience of 1,800. "When you take a step back and look at the big picture, you quickly realize the entire U.S. hospitality and travel industry faces a serious problem: Our aging infrastructure simply cannot handle today's demand for travel." A critical place to start, he said, is for all industry stakeholders to embrace the FAA's NextGen airspace system. The following is excerpted from Tisch's remarks:

For the first time in several years, our industry is finally seeing evidence that the recovery is taking hold. Hotel demand is picking up. Business travel spending and volume are growing -- another positive sign. The U.S. Travel Association reports "guarded optimism" about the near-term outlook for our industry.

While the end of the recession has certainly left some clouds on the horizon, long-term I'm tremendously optimistic about our future. But we need to act aggressively to build that future. It won't happen on its own. The travel industry can't just sit back and hope the recovery will be strong enough to pull us along with the rest of the economy. We need to work together -- to build a strong partnership within our industry -- to ensure that the positive signs we see today strengthen into full-fledged, sustainable, long-term growth.

We took a significant step last year when Congress passed and President Obama signed the Travel Promotion Act. This was a major milestone for our industry. It signaled that the federal government is finally recognizing the critical role that travel and tourism plays in driving economic growth and job creation, and an understanding that we are in a fierce competition for global tourism and the billions of dollars in economic benefits that market represents.

The TPA led to the creation of the Corporation for Travel Promotion, a public-private partnership that will spend up to $200 million per year to help the U.S. compete in the global travel market. Last month, industry veteran Jim Evans was appointed to head the new CTP, an inspired choice to lead this new partnership between the travel and hospitality industry and government. Under Jim's leadership, at long last, we will have the resources to compete with governments that invest lavishly in advertising, trade shows and other tools aimed at attracting visitors. And the United States will do it without spending a dime of taxpayer money, I might add.

Now it's time to address what I believe will be the next great challenge facing our industry: infrastructure. Everyone here understands that the ability to travel has never been easier. As economies around the world mature and prosper, millions of additional people now have the means to travel, either for business or leisure. But that's just the leading edge of the dawning travel boom. Over the next decade, an estimated two billion people will be able to afford international travel, most of them from the rising economies of China, India, Brazil and Russia.

Quite simply, we're witnessing the greatest expansion of our customer base in history. But let's be honest: At this moment of incredible opportunity, the process of traveling is becoming more stressful, less convenient, and more nerve-racking. I'm not just talking about airport security lines. From our customers' perspective, a trip starts the minute a traveler leaves their front door, not when they check into one of our hotels. Travelers' satisfaction isn't just determined by how much they liked our new bedding or even the overall room experience. It starts with how much traffic our customers encounter on the way to the airport; how easily they can park their cars; how readily they can use public transportation; how long they have to stand in line; how quickly they can gather their luggage; how conveniently they move from airport to final destination; how effortlessly they make their return trip home.

When you take a step back and look at the big picture, you quickly realize the entire U.S. hospitality and travel industry faces a serious problem: Our aging infrastructure simply cannot handle today's demand for travel. Here in New York, more than 100 million passengers arrive and depart from John F. Kennedy International, LaGuardia and Newark airports every year. These three transportation hubs handle a staggering one-third of our nation's flights. Yet, as nearly every traveler will tell you, New York's travel infrastructure cannot efficiently process this level of traffic, much less any increase in travel that we all seek and expect.

To be fair, it was never intended to meet this demand. LaGuardia was built as part of the New Deal's Works Progress Administration in 1939. JFK's lineage dates back to 1943. Newark was dedicated by Amelia Earhart more than 75 years ago, and the last major expansion was in the 1970s. Due in large part to our aging travel infrastructure, the New York area now ranks worst in the nation in terms of delays.

Delays are not just a traveler inconvenience, they impose a huge economic cost. According to a study by the Partnership for New York City, delays cost our regional economy more than $2.6 billion in 2008 and will total a staggering $79 billion by 2025.

The problem isn't confined to New York. Five of the world's 10 busiest airports are located in the U.S., serving a combined 324 million travelers. Yet not a single U.S. airport made the list of the 10 best in the world.

So what can we do the fix the problem? It's complex and it's expensive. But it should be an industry imperative that we begin to address it. A critical place to start is for all industry stakeholders to embrace the FAA's NextGen airspace system, a transformation from today's ground-based air-traffic management to a satellite-based system utilizing leading-edge GPS and digital communications technology. Between now and 2018, the FAA estimates NextGen can reduce delays by 35 percent, save 1.4 billion gallons of fuel and lower carbon emissions by 14 million tons, generating a total of $23 billion in economic benefits, and potentially millions of more satisfied travelers.

We also need to move forward aggressively to modernize and expand our nation's airports to fit both the needs of today's travelers and accommodate heightened security requirements. Upgrading our airports can produce not only a more pleasant travel experience, but significant economic benefits as well. A report just released by the Los Angeles Economic Development Corporation estimates that investing in LAX would create nearly 40,000 jobs and generate $7 billion for the local economy.

But the issue is not confined to airports. The entire infrastructure that transports travelers from home to airport and from airport to final destination is seriously lacking. America's roadways, bridges, tunnels and public transportation system were not built to handle the pace of travel in the 21st century. And whether it's high-speed intercity rail or leading-edge navigation systems, we're not making smart use of the best technology to ease the burden on travelers and make their journey a more pleasant experience.

I'm sure a lot of you are sitting there thinking: "I own a hotel" or "I'm just financing a project. What does any of this have to do with me?" I strongly believe it's time we understood that the challenge of building "world class" infrastructure to match the "world class" destinations that travelers want to reach here in the U.S. extends way beyond any single stakeholder.

The idea that hotels, airlines, rental car companies and local travel bureaus can just sit back and hope someone else steps up to deal with this challenge is not just short-sighted, it threatens the future prosperity of our entire industry. The issue is too big, too complex, and too expensive to be solved by any individual sector or any single level of government. In the New York area alone, upgrading our infrastructure to world-class status will require a long-term investment of $5 billion to $10 billion. That's a price tag way beyond any one company's or even one sector's ability to finance.

But the price of failure is even higher. If a long-awaited trip becomes a long-endured hardship, travelers can easily decide they're better off staying closer to home. According to an industry study in 2008, the frustration with the travel process caused people to avoid 41 million trips that year -- at a cost of $26.5 billion to the economy.

Other countries competing for travelers recognize the imperative of infrastructure investments, and they are not standing still. As President Obama noted in his latest State of the Union address, countries in Europe and Russia invest more in their roads and railways than we do. In Dubai, the United Arab Emirates have built the largest airline hub in the Middle East. In China, the Civil Aviation Administration recently announced plans to invest $230 billion to build 56 new airports over the next five years.

Fortunately, many industry leaders and public officials are becoming increasingly focused on the infrastructure issue, and are developing innovative proposals to address it. One of the most promising is America Fast Forward. Under this plan, communities that dedicate local tax revenue to transportation projects will be able to use that long-term revenue for upfront, low-interest bonds and loans from the federal government. Major projects that would otherwise take decades to fund could be built in a fraction of that time with much smaller financial burden on the federal government. AFF is on track to be part of the next federal transportation bill with strong support from both Republican and Democratic lawmakers, the U.S. Chamber of Commerce and the AFL-CIO.

Both the Chamber and the AFL-CIO have also thrown their support behind bipartisan federal legislation to create a national infrastructure bank. Broadly speaking, the bank would leverage traditional public funding with private investment from global pension funds, private equity and sovereign wealth funds to pump billions into infrastructure investments.

Tackling the infrastructure challenge will require dozens of innovative ideas like this. It will require new partnerships between government at all levels and private stakeholders. It will require a new mindset where we start treating infrastructure as the long-term public/private investment it is, rather than just an expense. But it needs to start in conference halls and meeting rooms like the one we're sitting in today, with an understanding that our entire industry must take ownership of this problem.

I know our industry can come together to achieve big things. We did it with the Travel Promotion Act. It took time, dedication, commitment, money. Most of all, it took a new way of thinking, with a recognition that all stakeholders have a shared destiny. And look at the results. We succeeded because we understood the power of speaking with one voice. We recognized that we could advance our entire industry by working together. We were willing to set aside our individual concerns and work for the common good. If we take that same approach to today's challenges, I am confident our future will never look brighter.