- The Washington Times - Monday, October 29, 2001

The phones aren't ringing like they usually do at area travel agencies. Since the Sept. 11 terrorist attacks that destroyed New York City's World Trade Center and left a gaping hole in the Pentagon, companies are drastically cutting back on business travel and more people are replacing leisure travel with at-home family activities.

That's bad news for travel agents who rely on worldly travelers for revenue.

"It's been very difficult," says Helena Koenig, owner of the Ticket Counter in Chevy Chase. "We're just not getting new significant bookings."

The travel and tourism industry from hotels and restaurants to airlines and travel agents has taken a huge hit, perhaps more so than any other industry since the attacks. Americans are still reluctant to travel, some fearing their security and others concerned about getting stranded away from home in the event of another attack.

The American Society of Travel Agents estimates that, in the four weeks after the attacks, the industry lost $1.36 billion in business from a dramatic drop in bookings for flights, hotel rooms, car rentals and cruises.

ASTA projects that the travel agency industry will lose $4.4 billion through December 2002.

Those losses, and potential losses, are heaped on to an industry that was already suffering prior to Sept. 11. The travel industry has been hit hard in recent years from declining business travel, the growth of online booking and a general slowdown in the economy.

In the wake of the Sept 11 terrorist attacks, the industry is turning to the government for help.

Travel agency officials are asking for financial assistance in the form of low-interest or no-interest loans totaling as much as $4 billion in an effort to stabilize the industry and give cash back to the financially strapped agencies. The loans, which would be determined based on an agency's sales prior to Sept. 11, would be used to cover revenue lost and unpaid bills since the attacks.

Travel agents, however, will have to get in line.

A flurry of industries including airlines, insurance and the U.S. Postal Service have asked for billions of dollars in financial aid from the government. The nation's airlines won a $15 billion package, including cash and loan guarantees, to help them get back on their feet.

Not everyone thinks the government should bail out the travel agencies.

"Why bail out a sinking ship?" asks Mike Boyd, president of the Boyd Group, a Colorado-based airline consulting and research firm. "What's next, the bagel guy down the street?"

Mr. Boyd says it would be a "waste" to give the travel agency industry federal assistance since it was already struggling prior to the attacks.

"Travel agents are an anachronism," he says. "They were being cut out of the program [before Sept. 11] because they weren't needed."

Travel agents disagree.

They book about 75 percent of all airline reservations a number that has stayed fairly consistent over the past two years, ASTA says.

"If the agency community is not there, there is no infrastructure that exists," said Hal Rosenbluth, chairman and chief executive of Philadelphia-based Rosenbluth International, one of the largest travel agencies in the country. "Planes will be grounded again if there's no way to make reservations."

Travel agency officials warn that if help doesn't come soon the more than 300,000 agents throughout the country will begin losing their jobs. At some agencies, layoffs have already started.

Agencies need the money within 30 days to survive, says Richard Copeland, ASTA's president and chief executive.

"There could be a lot of casualties if the government doesn't step in," he says. "Agents need it now."

However, there is some financial hope for travel agencies.

Earlier this month the U.S. Small Business Administration widened access to its Economic Injury Disaster Loans to small businesses across the country.

Small businesses, which is what many travel agencies are, may apply for a loan of up to $1.5 million if their business has suffered because of the terrorist attacks. The loans, with a 4 percent interest and a maximum term of 30 years, may be used to pay fixed debts, payroll, accounts payable and other bills.

Travel slowdown

The Ticket Counter, like so many other travel agencies immediately following the attacks, took an endless number of phone calls for cancellations and refunds of previously scheduled trips.

The cancellations have since died down and Mrs. Koenig says her nearly 50-year-old agency has lost a "huge" amount of business.

The Ticket Counter, which does about 80 percent leisure travel business, usually starts to see bookings for winter cruises and even advance bookings for summer vacations in October. But that's not what's happening this year.

"We're scared," Mrs. Koenig says. "We've been through a lot of wars and crises before but we've never seen anything like this."

The story is similar at Friendly Travel in Alexandria.

"Things are still gloomy," says Mary Peters, owner of the 37-year-old travel agency. "It's just not bouncing back."

Ms. Peters says that this is the first time that people are afraid they won't get back home if they travel. After the attacks, the Federal Aviation Administration closed airports and grounded all airlines for several days, leaving all passengers who were flying Sept. 11 stranded.

"People don't want to be away from home," Ms. Peters says.

Friendly Travel, which is mostly geared toward the leisure traveler, hasn't had a significant number of bookings either. However, there are people who are inquiring about future plans, possibly for the summer.

"There's always hope," Ms. Peters says. "We'll be back when everyone else gets back."

Some travel agencies report a slight pick up in activity.

"There is a pick up but it's certainly not what any airline or agency would like to see," Mr. Rosenbluth says.

Rosenbluth International, which handles mostly corporate travel accounts, now has 50 to 60 percent of the business it had a year ago, he says.

Golden Travel Service in Northwest has seen an upswing in leisure travel, while corporate and government travel is lagging way behind.

Phones slowly began to ring the first week in October and more and more business has been drummed up as the weeks go on, according to Jim Tittsworth, vice president of operations at Golden Travel.

"We're still seeing apprehension on the part of some travelers," Mr. Tittsworth says. "They're cautious."

He says the leisure business is about 80 to 90 percent back to normal, while government and corporate travel is about 50 to 60 percent back to usual.

"I feel very comfortable that we're OK," Mr. Tittsworth says. "I still have concerns that other agencies are not going to survive. We will though."

Trying times

Some travel agencies weren't exactly living the good life before Sept. 11.

Over the years, travel agents have been hit with the slowing economy, an increase in travel costs, drastic airline commission cutbacks and a big push by airlines to get people to book using the airlines' online reservation systems.

As of September, there were 28,787 travel agency locations, a 17 percent decrease since 1996 when there were 33,715 locations, according to the Airlines Reporting Corp.

The cutback in airline commissions has hit the industry harder than anything else. After years of offering travel agents a standard commission rate of 10 percent, the major airlines began to limit their commissions as a way for them to save money.

In 1995, domestic commissions were capped at $50 and that was only the beginning. Commissions were cut several more times, including the most recent reduction capping commissions at $20 for domestic flights.

As of September travel agents' total commission had reached $3 billion for the year compared to 1996 when they were raking in $6.4 billion. Airline commissions account for 36 percent of an agency's revenue, according to ASTA.

For several years, the airlines have made a push for travelers to book their tickets using the airlines' own online reservation system eliminating paying any commission to travel agents. In June 2001, Orbitz, an online reservation system owned by American, United, Delta, Continental and Northwest was started giving travelers access to hundreds of airlines, hotel chains, car-rental companies and tour operators.

"Airlines do not need [travel agents] anymore to retail their products," Mr. Boyd says.

As a result, travel agents have had to get creative even before Sept. 11.

Many agencies began charging service fees to compensate for the lost airline commissions, while others began focusing on niche travel segments like cruises, tours or European travel. Agencies have also consolidated and formed alliances to serve the travelers.

And now travel agents are finding themselves seeking out other cost-cutting measures.

Top officials at Rosenbluth International have taken a 20 percent pay cut. All associates have had a 10 percent decrease in pay until the end of the year. In addition, the Philadelphia agency had to furlough about 20 percent of its U.S. associates, in the hopes of bringing back those 1,100 employees when financially possible. The company also cut its overhead expenses in half.

"We were running a $6 billion corporation for 12 days with virtually no revenue coming in," Mr. Rosenbluth says about the two weeks following the attacks. "We had to make those decisions."

"I think we're coping with it as well as to be expected," says Ms. Peters, who is also the president of the Central Atlantic chapter of ASTA. "This industry is just full of survivors."

Until the government aid comes through, Mr. Copeland suggests travel agents stay in contact with their clients and continue to give them updated information on travel planning, security and travel deals and packages.

"Government has to pass legislation to make the traveling public aware that it is safe and secure to fly again," he says. "It's then the responsibility of travel agent to disseminate that information."

"People have to get adjusted to the fact that this is going to be a long situation so you need to move on with your life," Mrs. Koenig says.

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