Tuesday, October 1, 2013

Government Shutdown Rattles Travel Industry

The travel industry braced for fallout from the partial shutdown of the U.S. federal government that took effect in the early hours of the morning.

The shutdown, the result of a congressional impasse, is expected to put hundreds of thousands of federal employees on unpaid leave. 

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Among its effects on travel was the immediate closure of all U.S. national parks, but other key travel-related services, including TSA staffing, passport control agents and passport and visa operations were not expected to be affected. (See below)

Essential Travel Services
Air traffic controllers, TSA screeners and passport control agents at U.S. borders and points of entry into the U.S. will not be subject to shutdown-related furloughs, according to the FAA, TSA and Customs and Border Protection.

The Department of State also said it will continue passport and visa operations as well as provide critical services to U.S. citizens abroad. Processing time for passport applications remains at four weeks or less for routine service and two weeks door-to-door for expedited service, it said.

Biggest impact in travel
Travel agents and suppliers who handle government travel will likely see the most immediate and dramatic impact.

Government travel accounts for about 65% of volume at Atlanta-based Duluth Travel Inc. “As of today we are seeing normal volume, but this is the first day,” noted owner Arthur Salus.

We are awaiting word from these [government] agencies on whether they will shut down and keep employees home. These agencies are funded for travel but if they send employees home, they will not be traveling.”

Returning home
The agency also has government clients who are currently on the road. “We will see a surge of those people coming back as soon as they can complete their meetings,” Salus said. “Meetings and conferences could also be curtailed.”

At Omega World Travel, executive vice president Goran Gligorovic said that although some of his many government clients were not affected by the furlough, his agents were busy taking care of government travelers who were required to return home immediately.

There are a lot of phone calls. If they have no funding they have to come back. We will be busy for a day or two getting people home, etc.”

If the shutdown continues, Gligorovic anticipates a “large drop-off” in both government travel and travel by government contractors such as Grumman, Lockheed Martin and IBM. “We handle some of that,” he said.

In the event that the shutdown drags on, “we will need to furlough people – not lay them off,” Gliborovic said. “We have plans for employees that includes furloughs, part-time work, etc., but we will aim to preserve jobs.”

A lost week
At the American Hotel & Lodging Association (AHLA), Vanessa Sinders said members had begun to feel fallout from the shutdown.

We have already heard from some of our owners this morning that reservations for the coming week are down, and they may potentially have to write this week off.

“That has largely been in the Washington, D.C., area, but there will be a national impact because of all the uncertainty,” said Sinders, senior vice president of government affairs.

Uncertainty about travel services was prompting some travelers to check with their travel agents.

Traveler worries
There’s some concern,” said Jeanne Johnston, senior vice president of Colpitts World Travel, a largely corporate agency based in Dedham, Mass. “People are asking if the airports are opening, are flights leaving on time, traffic control.”

Johnston said she was checking government websites for information about travel-related services. “There’s so much news out there; I’m sticking to the government sites.”

A few leisure customers planning international trips who had not yet applied for their passports also contacted the agency. Getting passports in time for travel “could be a concern for people booking at the last minute,” Johnston said.

Johnston noted that vacation travelers heading to Washington, D.C., will be affected by the shutdown, since all of the Smithsonian museums and the National Zoo are closed. Fortunately, she said, “we don’t have anybody on the books for that.”

Lobbying for change
Members of the travel industry raised their voices in recent weeks in an attempt to stave off a shutdown.

On the eve of the shutdown, the U.S. Travel Association warned of the potential travel-related economic damage.

Previous experience tells us that a shutdown unnecessarily disrupts economic activity in communities large and small that depend upon travel spending for employment and tax revenue,” president and CEO Roger Dow said in a statement.

Serious harm
The closure of national parks and federal historic sites to millions of travelers – coupled with the general perception of an uncertain travel process – would do serious and immediate harm to the economy.”

Dow warned that travel “is particularly vulnerable to the perception that a disruption of services will make our customer experience go less than smoothly.”

The association was also concerned that a shutdown would “derail long-term, bipartisan investments in our travel infrastructure.”

A plea to think ahead
For its part, the AHLA co-signed a letter with the Chamber of Commerce last week urging Congress and the administration to the resolve the issue and think ahead to the debt ceiling, Sinders said.

We have been on the Hill reminding representatives and their staff about how important our industry is to the economy, that it has been a bright spot in the recovery and that this will have a negative impact.”

Meanwhile, the Trans-Atlantic Report, which tracks U.S. travel to Europe, reported that a shutdown of the U.S. government and/or a failure to raise the U.S. debt ceiling “could torpedo” expected growth in travel to Europe.

Source: Travel Market Report

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