Tourism: Layoffs, Closings, Pay Cuts Implemented as Firms Deal With Woes
Like other industries affected by a sluggish economy, local travel agencies had been grappling with a lower volume of business and an income to match it.
As it turned out, that was nothing compared to what would happen after the week of Sept. 11.
Agencies across the county went into overdrive to make sure customers found ways to get home and that clients planning to leave that week were able to change their plans. Ironically, most of the work they did never translated to revenue. The refunds and changes resulted in a cost-filled week with very little profit, agents said, noting they were glad to be of help.
Although several of the smaller agencies in town have reportedly closed for good, some of the larger agencies have instituted layoffs and other cost-cutting measures to keep their companies profitable.
Although some of the actions began before Sept. 11, most have taken place since then.
San Diego Travel Group, Balboa Travel, Inc. and Anderson Travel & Cruises have all had layoffs of about 10 percent of their staff.
Other agencies, such as Aer Travel, have not laid off anyone but do not rule out the possibility.
At Balboa, which has offices in Northern California as well, the cuts were about 7 percent in September and 3 percent between April and August, said president Jan Schultz. It totaled about 15 people, Schultz said.
Most of the layoffs were in the company’s leisure department, he said.
Brad Anderson, president of Anderson Travel, said he had to lay off 11 or 12 people the week after the terrorist attacks. It was the first time the company has had “significant” layoffs, Anderson said.
Attempting To Cope
At Balboa, part of the reduction before Sept. 11 had taken place informally, Schultz said. The company simply didn’t replace employees who left of their own accord.
The same had been true at TravelTrust Corp., which also laid off three employees , one agent and two receptionists , in the last month, according to company president Richard Meyerson.
San Diego Travel Group, which the San Diego Business Journal currently ranks as the largest local agency by its air ticket sales in 2000, had layoffs that involved 10-12 percent of the staff, he said. The company now has 150 employees, Smith said.
Reflecting a decision that a couple of national agencies made, Smith also instituted a 10 percent pay cut “across the board,” he said.
Smith also restructured the company’s long term and short term debt, made plans to consolidate four offices into two, looked for other ways to keep expenses low and increased the agency’s service charge from $20 to $25.
Although the tragic events of Sept. 11 were a shock, Smith had seen the travel industry’s troubles coming.
“Certainly we saw a decline in the early part of the year, not radical by any means but you can see a softness in the economy that hadn’t existed before,” he said. “We’ve been so spoiled by eight years of a robust economy. Suddenly, when it starts to slow down, you feel it.”
Dramatic Drop
In late August, airlines slashed agencies’ 5 percent commission from tickets from a $50 to a $20 limit, which also cut into companies’ income.
Then came the terrorist attacks and the ensuing travel crisis. Agencies said their revenues dropped 50 percent that week.
The agency executives all say they see an end to the tunnel, and the light’s already showing.
Revenues have begun to pick up, sometimes faster than the companies’ projections.
Already, business is “85 percent of normal” at TravelTrust, Meyerson said.
Executives also say that the recent travel crisis brought on by the terrorist attacks illustrated why the personal service of travel agents is better than booking travel through the Internet or directly with the airlines.
At the end of this month, Anderson Travel plans to have employees begin using a new technology they’ve developed, Anderson said.
According to Meyerson, TravelTrust is moving ahead with opening a new office in Downtown San Diego in January.
