Travel Troubles

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The Walko family of Glastonbury, Conn., scrapped a ski trip to Lake Tahoe over safety concerns.

Black and Decker Corp. used videoconferencing to help trim its travel budget by 40 percent.

Consultants at Computer Sciences Corp. flew less frequently, although not by choice: There just wasn't much new business.

In countless ways, the recession and the Sept. 11 terrorist attacks caused families and businesses to cut back on travel in 2001. It was a staggering blow to the industries that depend on people leaving home for work and play.

Major airlines were expected to lose a combined $10 billion in 2001, despite more than 100,000 layoffs, $5 billion in federal aid and massive cutbacks in service. Rental car agencies and hotel owners also suffered.

A turnaround in the U.S. economy would help, but nobody knows if that will be enough to restore the trust of nervous leisure travelers or spur demand among business travelers who became frugal amid the downturn.

"A good portion of the reduction in travel was economic. But there was a portion that was emotional and psychology related," said Hal Rosenbluth, chief executive of Rosenbluth International, a Philadelphia-based travel company. "You don't need airline analysts to do the forecasting now. You need a group of psychologists to do it."

Shortly after Sept. 11, Barry Walko withdrew his family's reservation for a $3,500 week-long ski package to Lake Tahoe, which included airfare, meals and lodging for four. He also postponed planning the family's annual springtime getaway to the Caribbean - and may just cancel it.

"All bets are off if there's another wave of terror," Walko said.

The Walkos instead will drive six hours to a ski resort near the Canadian border and visit a hotel made of ice in Quebec. But while the family may feel safer, and avoid potentially long lines at airports, they will not necessarily save any money.

Renting a 4-wheel-drive vehicle with ski racks for the week cost $360 and seven nights at a condo is $1,792. Add in meals, lift tickets, entertainment and Walko said the revised trip will probably be more expensive.

"Your disposable income is still going to be disposable," Walko said.

At many large corporations, cost was the issue: Travel budgets were sliced significantly and perhaps permanently, executives said.

Engineers at Towson, Md.-based Black and Decker make better use of telecommunications these days, and salesman have gotten into the habit of hunting down the cheapest airfares available, rather than booking trips based on convenient departure times or choosing airlines that will bump them up to first class.

The average price Black and Decker employees paid for a domestic round-trip ticket in 2001 was $377, compared with $425 in 2000, said Peter Bucheit, director of travel at the world's largest power tool manufacturer.

"The economy was in the toilet and we were being very careful," said Bucheit. "I don't think (travel spending) will ever ome back to the levels we experienced in 2000.''

Computer Services of El Segundo, Calif., figured it would save $70 million, or 28 percent, by the end of the fiscal year - more than half of that in the cost of airline tickets, said Mike Kabo, director of global travel at CSC. Employees spent 20 percent fewer nights in hotel rooms.

Even when business picks up, "I'm anticipating the screws remaining tight"' Kabo said.

The chief executive of Hilton Hotels Corp., Stephen Bollenbach, believes the penny-pinching will stop when the economy recovers.

"Unless somebody takes a view that there's a fundamental change in the value of travel, then that's a specious argument," said Bollenbach, who added: "As for those few people that say I'm afraid to travel... it's a teaspoon in the ocean."

Nevertheless, travel-related industries are cutting costs wherever they can. Hotels are laying off tens of thousands of employees. Rental car agencies are selling older vehicles from their lots. And airlines are cutting back on everything from in-flight meals to pillows and blankets. All companies are offering steep discounts.

"To get customers back, we've been selling the product pretty cheap," said Tom Horton, chief financial officer at AMR Corp.'s American Airlines, the nation's largest carrier.

By Brad Foss
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