Current Issues

Terrorism Insurance: Extending TRIA's Protections
Privacy
Travel & Tourism/Homeland Security
Seasonal Workers/Comprehensive Immigration Reform
Accessibility Guidelines Revision
Labor Issues
Climate Change

Terrorism Insurance: Extending TRIA’s Protections

Background
The Terrorism Risk Insurance Act (TRIA) was enacted in 2002 because the private insurance marketplace was failing to provide adequate terrorism insurance coverage following 9/11. TRIA was designed to provide a bridge to a time when the private insurance markets would function again regarding this new threat. Following TRIA's enactment, terrorism insurance coverage became readily available, thus enabling billions of dollars of construction and operational transactions previously stalled to go forward. The program requires that the federal government share the risk of loss from terrorist attacks with the insurance industry; and requires that insurers offer terrorism insurance coverage to policyholders on the same terms and conditions as other property and casualty insurance ("make-available provision"). The Terrorism Risk Insurance Extension Act (TRIEA), enacted in December 2005, extended TRIA’s provisions through December 31, 2007.

Current Status
Congress passed the Terrorism Risk Insurance Program Reauthorization Act of 2007 (H.R. 2761) before adjourning last year. The President signed the bill into law on December 27th. The new law extends the terrorism-risk insurance program for seven years and eliminates the current distinction between foreign and domestic acts of terrorism in the trigger provision. As expected, the final package does not extend coverage to NBCR events, but does require the Comptroller General to report to Congress on the unique terrorism insurance capacity constraints in specific markets and the availability and affordability of nuclear, biological, chemical and radiological (NBCR) coverage. It also requires the President's Working Group on Financial Markets to continue to report to Congress on the long-term availability and affordability of terrorism risk insurance.

Outlook
With a seven-year terrorism risk insurance program in place, Congress, the Administration, consumers and the insurance industry have time to look at its long-term availability and affordability and determine whether an ongoing federal role in the terrorism-risk market is warranted; if so, what that role should be; and if not, what legislative changes will be necessary to assure that this insurance continues to be available.

Privacy

Background
The issue of privacy – how personal data and financial information collected on individual consumers should be stored, secured, and if necessary, shared across networks – continues to draw attention from Congress as well as regulators at the FTC and the Department of Commerce.

Increases in both identity theft and cyber-crime have also fueled a growing consensus that uniform federal standards are needed to protect consumers.

Current Status
The prevailing view is that the Democratic majority in the 110th Congress may be more aggressive in producing a measure on which they can seek final action, though the risk may be that they side more with consumer privacy groups that favor more restrictions and/or penalties on business for privacy breaches as well as enforcement by state attorney generals.

There are several privacy bills introduced in this Congress. One bipartisan bill in the Senate would require companies to publicly disclose data breaches and make it a federal crime to intentionally conceal them. It would also mandate security programs and let federal agencies examine the quality of data security. Consumers would be allowed to view and correct information about them.

In addition to protecting the privacy of personal and financial data collected and maintained by business, we have also been drawn into a larger privacy debate. Consumers, including IHG system customers wishing to use the Internet to find data on specific hotels, locations or brands, may be subject to identity theft, phishing or even diversion to other websites including porn sites. Senator Olympia Snowe (R-ME) has recently introduced bipartisan legislation aimed at preventing phishing – the practice whereby bad actors set up websites and domain names virtually identical to legitimate sites in order to lure unsuspecting customers.

Under current rules of the Internet, IHG and its franchisees can police this system in part by tracking those who may be fraudulently using a distortion of a Holiday Inn location/name or other brand by tracking the owner of the offending domain name through a registry maintained by the International Corporation of Assigned Names and Numbers (ICANN), which operates the Internet under an agreement with the U.S. Government’s Department of Commerce.

Some privacy activists are attempting to further reduce the data contained on this registry . . . named Whois. . . by shielding it from inquiry and requiring less actual data to be recorded. Some of these activists serve on the Board of ICANN or represent other consumer groups in the EU and elsewhere.

IHG and related hospitality interests . . a frequent target of these abuses . . have been drawn into the fray to organize a broader business response and to insist that the U.S. Government resist any reduction in accuracy or access to the Whois registry.

We have been successful several times in the last year in thwarting attempts to restrict access to the vital Whois database, but problems remain with the accuracy of Whois data.

Outlook
Privacy legislation will continue to receive attention in the 110th Congress, with the current bills as a starting point. The bulk of attention is likely to now be focused on Senator Snowe’s anti-phishing legislation.

With regard to the ICANN/Whois debate, we will continue to support the technical community (Coalition for On-Line Accountability, others) and to organize appropriate support from the hospitality and lodging industry . . . particularly in having Congressional committees of jurisdiction advise the National Telecommunications Information Administration (NTIA) of the Department of Commerce of the significant importance of their management of the ICANN contract and holding ICANN accountable in this area.

IHG System Role
IHG’s policies and practices in the area of maintenance of personal data and data security have been welcomed on Capitol Hill. We will continue to make this “wise counselor” capability available to the new majority as well as continue our work with the FTC and other regulatory bodies. IHG is now seen as a leader among the business community on this important issue.

The ICANN/Whois will continue to be a flashpoint, especially as the Joint Project Agreement between the U.S. Department of Commerce and ICANN expires in September 2008.

Travel & Tourism / Homeland Security

Through liaison with AH&LA, the TIA, TBR and the Discover America Partnership (DAP), chaired throughout 2007 by IHG’s Steve Porter, IAHI & IHG participated in significant initiatives that advanced the interests/needs of the hospitality industry, several which are highlighted below.

Western Hemisphere Travel Initiative (WHTI)
After implementing requirements for air and sea travelers to have passports when arriving from Canada, Mexico, Bermuda, the Caribbean and South America in early 2007, Congress urged DHS to slow down implementation of requirements for land travelers until June 2009 to allow for various projects to develop secure identification methods other than passports to mature. However, when DHS announced it would no longer accept oral declarations of citizenship at land border crossings as of January 31, 2008, Congress again acted, putting forth the June 2009 date and other conditions regarding the Passport Card in the Omnibus Appropriations Act of 2007, signed by President Bush on December 26, 2007.

However, DHS began its implementation of requiring a passport or valid drivers license together with a birth certificate at the Canadian border on January 31st of this year. Amidst much hue and cry by the Border States and public service announcements by the Canadian government, DHS endeavored to make its policy work. TIA and DAP are still hearing “horror stories” and DHS officials quietly maintain they made this decision to get people “used to” the requirements before June 2009 and to speed up the creation of acceptable, verifiable documents, be it Passport cards or drivers licenses with secure photo and verifiable electronic data.

This is obviously a policy “in play” and will be watched closely by travel and tourism industry leaders.

Visa Waiver Program
We successfully expanded eligibility for countries in southern and eastern Europe based on an agreement for additional security procedures and so far six nations, Hungary, Lithuania, Slovenia, Latria, Estonia and the Czech Republic have been approved bringing Visa Waiver countries to 33. There is hope that the $26 million provided to fund the development of a fully automated electronic authorization system, ETA, will allow other allies such as South Korea to meet the new requirements. With TIA, we are requesting an additional $1 million in FY ’09 funding to allow the Department of State to allocate sufficient staff resources to complete this effort.

Model Ports
Congress provided $40 million to fund a “Model Ports” program at America’s top 20 inbound air terminals and to hire 200 additional Customs and Border Protection (CBP) officers, based on an initiative in which TIA and DAP assisted the DHS at Houston and Washington Dulles airports. The travel community’s “ask” for FY 2009 is to require the Administration to report back to Congress on how they have spent these funds and the impact.

Travel Promotion Act
The number of co-sponsors for both S1661 (Dorgan D-ND, Inouye D-HI, Stevens R-AR) and H.R.3232 (Delahunt D-MA, Blunt R-MO) have risen sharply, to nearly 40 for the Senate bill and over 160 for the House measure. Efforts by travel and tourism leaders at the local and state level complemented by their Washington Counsel and key trade groups continue to press for additional sponsors so that House and Senate leadership will be comfortable allowing consideration before the 110th Congress comes to a close. TIA and DAP are targeting members of the House Travel and Tourism Caucus.

Outlook
With the success of requests included in the FY 2008 appropriations measures, the current-year focus with our travel and tourism allies will be to assure appropriate implementation and reports which Congress and the industry can review to assess next steps. We will continue to pursue sponsorship of the TPA so that Congressional leadership will bring the bills to passage.

IGH System Role
As noted earlier, IHG and IAHI have taken a leadership role in the DAP, in chairing the Government Relations Committee of the AH&LA as well as manning senior leadership positions in TIA, TBR and the International Franchise Association. Those roles continue.

In many of the issues noted above as well as others in this report (immigration, union organizing efforts, etc.), these key elements of the hospitality, travel and tourism community have worked very well together to forge common strategy and committed use of resources to achieve our government relations and public policy goals.

Seasonal Workers/Comprehensive Immigration Reform

Background
Despite high hopes last year that a Democratic-led Congress and a President supportive of comprehensive immigration reform would be able to enact a bill into law, in the politically charged climate surrounding the discussion advocates of comprehensive reform were unable to find sufficient votes in the Senate to move a bill forward. After observing the breakdown of the Senate’s efforts, the House declined to follow suit. While all sides agree that immigration remains a major problem for the American public and economy, the probability of significant action before 2009 remains remote.

Meanwhile, relatively non-controversial legislation to renew a provision allowing seasonal workers on H-2B visas to return to their employers for a second and third year without counting against annual visa limits is being held hostage by warring factors in the larger immigration debate. The most-recent returning-worker exemption expired on September 30, 2007. Congress’ failure to extend the exemption is having a significant economic impact on hoteliers and other businesses dependent on temporary workers to meet summer-season demand.

Current Status
Proposals to extend the returning-worker exemption are pending in both Houses. Rep. Bart Stupak (D-MI) has introduced legislation in the House (H.R. 1843) to make the exemption permanent; Senator Barbara Mikulski’s (D-MD) Senate counterpart (S. 988) would extend the provision for five years. Rep. Boustany (R-LA) introduced H.Res. 1025 on March 6, 2008. If approved, the resolution would provide for immediate consideration of H.R. 1843. It has been referred to the House Rules Committee.

Additionally, negotiations are currently underway in the House to craft a provision that would provide access to visas (although no path to permanent status) for certain illegal immigrants currently in the United States while also extending the returning-worker exemption under H-2B.

Outlook
While pressure is building for action on the H-2B visa issue, a clear path to enactment of the necessary relief remains elusive. As the economic impact on communities that are dependent on seasonal tourism becomes more apparent, it becomes more difficult for Members to continue to hold hostage a legislative fix in the hope of advancing controversial immigration-reform proposals.

IHG System Role
IHG and its franchisees have been active in the grassroots lobbying effort to enact a renewal of the H-2B returning worker exemption. Information provided concerning the economic impact to specific hotels and to their surrounding communities has helped to keep this issue alive. IHG will continue to work with affected franchisees to pressure Congress to move legislation to address the problem this year.

Accessibility Guidelines Revision

Background
Significant and potentially costly changes in the Americans with Disabilities Act Accessibility Guidelines (ADAAG) are making their way through the regulatory process. The proposals address the accessibility of hotel properties – and other public facilities -- to people who are disabled. On September 30, 2004, the Justice Department published an Advance Notice of Proposed Rulemaking (ANPRM), indicating its intent to publish a proposed rule to implement changes to the ADAAG developed in an earlier rulemaking by the Architectural and Transportation Barriers Compliance Board (Access Board). The Access Board published its final rule on July 23, 2004; that rule will not have the effect of law until the Justice Department has completed its own rulemaking process.

Current Status
The Justice Department submitted its proposed rule to OMB for review at the end of December, 2007. OMB has 90 days to review the proposed rule, which we expect to be published in the Federal Register this month. The proposed rule will take into account comments received in response to the ANPRM on a number of issues, the most relevant to the hotel industry being the question of what constitutes “reasonable accommodation” of an existing facility. In proposing its rule, the Justice Department will have to determine how the new rule will impact existing construction – an issue that the Access Board has determined to be outside of its jurisdiction. Much of the cost of compliance with the ADAAG comes not from new construction, but from requirements to make changes in existing buildings.

Outlook
Once proposed, the rule will be subject to public comment, after which the Department will develop a final rule. Once the final rule is cleared by the Office of Management and Budget, it will be published in the Federal Register, with an effective date of anywhere from six-to-18 months from publication likely. Justice has indicated that it intends to conduct a regulatory flexibility analysis, and that it will consider the cost of existing construction in performing its cost analysis.

IHG System Role
IHG has been a leader in the AH&LA ADA Committee, which is engaged in ongoing dialogue with the Administration about the impact of proposed changes on the lodging industry. Priority topics of dialogue with the Administration include accessible guest room dispersion, the cost of making existing rooms fully accessible, what alterations to a guestroom trigger a requirement to make the rooms fully accessible, construction and manufacturing tolerances, equivalent facilitation for pool entries and other elements, and exercise rooms. IHG will continue to work with the AH&LA and other interested parties in assuring that the Justice Department accurately evaluate the cost of implementing the new rule.

Labor Issues

Background
The National Labor Relations Act, enacted more than 70 years ago, established a system to allow employees to determine whether they wish to be represented by a union through an employee secret-ballot election overseen by the National Labor Relations Board. Union leaders made legislation to do away with this well-established secret-ballot process – a hallmark of the labor movement and of American democracy – a top priority for the 110th Congress. They want to forego the secret-ballot election and instead require the National Labor Relations Board to certify a union upon receiving a petition signed by a majority of a company’s workers. This approach would deny workers the opportunity to express their decision for or against union representation in private – free from coercion and intimidation.

Current Status
“Card check” legislation that would dramatically alter the current process of union recognition, was a top priority of the newly elected Democratic leadership in Congress, who recognized the significant role union leadership played in electing Democratic majorities in both Houses. The so-called “Employee Free Choice Act” (H.R. 800) passed the U.S. House of Representatives last year by a 241-185 margin. The measure stalled in the Senate when proponents failed to secure the 60 votes needed to cut off debate and bring the bill to a vote.

In the face of declining Union membership, this bill, or other approaches to making it easier for union organizers to secure the right to represent employees in the workplace, is likely to gain traction in the 111th Congress.

IAHI is working with IHG and the AH&LA to monitor this issue closely, and ensure that franchisees’ views continue to be heard as both sides begin to position themselves for next year’s debate.

Climate Change

Background
Global climate change is likely to be one of the most dynamic issues of our day, perhaps only second behind the economy and the war in Iraq and Afghanistan. While controlling greenhouse gas emissions presents the world with technical challenges, how to reduce carbon emissions presents American government with economic and political conflicts of epic proportions. All over the country, from California to Florida to Minnesota, governors are leading the charge to require carbon emissions to be reduced in their states, as well as to be reduced in the creation of energy sources coming into their states. The federal government is well behind the states, collectively, in addressing greenhouse gas emissions and programs and procedures to address global climate change impacts.

Current Status
In the political world, individual states, and along with local governments, have established a number of requirements intended to minimize carbon emissions and climate change impacts. The Congress, now in its second session of Democratic control, is examining the issue in both a broad (elements come up in almost every committee) and a focused way (many bills introduced addressing the full spectrum of this complex issue). This issue has been widely discussed in the presidential election forum, one of the few for which the candidates’ stands are always contrasted. International pressure is playing a role in elevating this issue as well, as evidenced by the Bali conference.

Last fall, Senators Lieberman (I-CT) and Warner (R-VA) introduced S. 2191, America’s Climate Security Act of 2007. This bill was favorably reported by the Environment and Public Works Committee on December 5, 2007. Because this bill represents compromise positions on most controversial issues, Senators on the ideological extremes are opposed to it unless their “must-have” provisions are included. For example, more liberal members want the carbon cap lowered faster and more conservative members want nuclear energy favored as an alternative energy source, as are renewables. But those Senators floating in the ideological middle, including Finance Committee Chairman Max Baucus from Montana, who strongly believe that the government has a moral imperative to address climate change, are willing to be supportive of the compromise version in order to move the issue along. Among the over half dozen Senate bills introduced so far this Session, S. 2191 is the most likely vehicle to make it to the Senate floor, and ultimately to the President’s desk.

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Terrorism Insurance: Extending TRIA's Protections
Privacy
Travel & Tourism/Homeland Security
Seasonal Workers/Comprehensive Immigration Reform
Accessibility Guidelines Revision
Labor Issues
Climate Change