Chilling. Absolutely chilling.
Released at the beginning of this month (August), the American Society of Travel Advisors’ (ASTA) survey of close to 1,200 of its members reveals the kind of financial devastation that COVID-19 has caused in the retail travel sector and the precarious situation that many of these agencies are in without additional help and support from government.
ASTA president and CEO, Zane Kerby said of the findings: “All businesses in the country have been impacted by COVID-19 in one way or another, but few sectors have been as hard hit, or face a longer road to recovery, than the travel agency industry.”
Kerby continued: “With more than 90% of our members reporting revenue down 75% or more versus 2019, layoffs and furloughs spread wide throughout the industry and a projected three-to-12 month lag time in business income returning after bookings resume, It cannot be overstated – these are incredibly difficult times for travel agencies across the country.”
In releasing the findings of the membership survey, ASTA noted that it’s hard to imagine, but the situation would have been even worse without the relief programs provided by the CARES Act.
Without Relief, Closures Will Be The Norm
The Society says that without additional relief from Congress and the federal government, these negative trends will continue and widespread agency closures will become the norm.
In fact, it said that an astonishing 71.3 % of travel advisors will be out of business in six months or less without additional relief. This would leave travel suppliers’ main distribution channel crippled, and the traveling public left without access to the critical services that travel planners provide.
Said Kerby: “We view this outcome as unacceptable, and call on Congress to include in the next COVID-19 relief bill provisions to prevent it, including the inclusion of travel agencies as eligible recipients in any airline payroll support funding, the RESTART Act to provide long-term forgivable loans to the hardest-hit businesses and an extension at least through the end of the year of expanded unemployment benefits for laid-off agency employees and independent contractors.”
And he added: “As the only trade association advocating for travel advisors, we are spending every waking hour making this case to Congress, and encourage anyone who hasn’t yet participated in our grassroots campaign to do so today.”
A Crisis By The Numbers
ASTA conducted its survey during the first week of August – canvassing close to 1,200 of its members — to determine the impact that COVID-19 is having on their businesses and the steps that governments need to take to help restore those businesses to health.
The findings included:
Of respondents with W-2 employees at the start of the crisis, 75% have laid off or furloughed at least one employee.
These layoffs come despite the fact that respondents reported availing themselves of the various relief programs in the CARES Act, including:
- Paycheck Protection Program (46.3%)
- SBA Economic Injury Disaster Loans (34.9%)
- Enhanced unemployment benefits (38.2%)
Ongoing uncertainty with respect to business conditions and the prospect of additional federal relief risks widespread business failures. Given this uncertainty and factoring in current cash reserves, respondents report being forced to close their doors within:
- Six weeks or less (15.8%)
- Three months (24.3%)
- Six months (31.2%)
- 12 months (15.1%)
- More than 12 months (13.6%)
Due to industry economics (i.e. commission payment schedules), there will be a substantial time lag between a return of travel bookings and a corresponding return of business income. In this regard, respondents report the following:
- No lag time (1.2%)
- A lag time of between one and three months (8.8%)
- A lag time of between three and six months (27.5%)
- A lag time of between six and 12 months (43.8%)
- A lag time of 12 months or more (18.8%)
Beyond financial relief for struggling businesses, governments here and abroad can take steps to help the travel agency industry recover. Respondents ranked the following steps in order of importance:
- 1. Develop and widely distribute a viable COVID vaccine
- 2. Lift State Department/CDC guidance against all international travel
- 3. Lift European Union travel ban on American citizens
- 4. Lift CDC “No Sail” order on cruising
- 5. Mandate masks on all flights
- 6. Lift Caribbean region country restrictions on U.S. travelers
- 7. Lift U.S. state-by-state quarantines
For more, go to www.ASTA.org .