If declines in travel resulting from fear and national government responses to the coronavirus continue, one out of two respondents to an American Society of Travel Advisors (ASTA) survey said they are at risk of going out of business within the next six months.
Speaking before the U.S. House Committee on Small Business, former ASTA Chairman Jay Ellenby, president of Safe Harbors Travel, in Bel Air, Maryland, reported that 21% of respondents report a risk of going out of business within three months and 30% within six months.
Some 29% of respondents are expecting a reduction of 50% or more in revenues, with 40% expecting a 25%-50% decrease, and 29% expecting a decrease of 25% or lower.
“We are facing significant challenges right now, as are many companies in the broader travel industry and beyond,” Ellenby testified, noting that his business is off 20% so far this year, including a 37% decline in international travel “that is worsening by the day.”
Ellenby called the past few weeks “among the most difficult our agency has faced since the terrorist attacks of September 11, 2001 (9/11) and the near-total shutdown of travel that followed.”
ASTA agents also told the organization that 92% of clients are either very (56%) or somewhat (36%) concerned about international travel right now, while 72% are very (16%) or somewhat (56%) concerned about domestic travel.
Ellenby stated in his prepared remarks that it was his belief that the “main driver of the decline, as far as I can tell, is not that people are scared of getting sick, but rather they are afraid of being unable to return home or even being quarantined if circumstances in their destination change rapidly.”
Ellenby’s testimony was submitted to the committee on Friday, Mar. 6, prior to the weekend when the State Department cautioned “U.S. citizens, particularly travelers with underlying health conditions, should not travel by cruise ship.”
Prior to press time, Travel Market Report was not able to obtain any updates on the committee’s proceedings, including changes to Ellenby’s testimony, and any questions and answers presented after his prepared remarks.
As a result of the declines in travel bookings, Safe Harbors is “having to start painful internal conversations about staff structure and size,” said Ellenby. “And it’s worth noting that while Safe Harbors falls under the SBA small business definition, we are considered ‘big’ for the industry – smaller firms are likely seeing similar numbers but many may lack the cash reserves to weather this storm,” Ellenby testified.
In the survey, 4% of agencies reported already having to lay off employees or disengaging with independent contractors (ICs), while another 25% are in detailed planning or preliminary planning regarding staff reductions. Some 71% of respondents report no planning for layoffs or disengaging ICs.
While they struggle with the survival of their own businesses, 33% of agent respondents reported that all changes for clients impacted by coronavirus have been resolved to the client’s satisfaction, with another 29% said more than 75% of cases have been satisfactorily resolved and 15% said more than 50% have been successfully handled.
Looking to the future, 23% of ASTA’s survey respondents believe “the impact of this crisis will not be long-lasting,” while 45% expect that it will be three to six months before clients resume a normal travel schedule, and 32% expect that it will be six to twelve months until normal travel resumes.
In his testimony, Ellenby supported those sentiments: “As the old saying goes, ‘This too shall pass.’ 9/11, SARS, the Great Recession – our industry has been through similar situations and has come out stronger on the other end. I’m certain that, working together as an industry and with the support of the members of this committee and throughout Congress and the administration, we will this time, too.”