The Hospitality Sales & Marketing Association International (HSMAI) and the New York University Tisch Center for Hospitality, Tourism and Travel Administration hosted an "Executive Think" interactive conference on October 17 in New York City. It gave not only a state of the industry but attempted to strategize ways in which the beleaguered travel and tourism industry could survive the aftermath of the September 11 terrorist attacks.
Attended by 241 industry executives and held at the Marriott Marquis, the seminar was co-chaired by Robert A. Gilbert, president and CEO of HSMAI, and Dr. Lalia Rach, dean of the Tisch Center at NYU.
Entitled Industry in Crisis: Alternative Strategy Conference, it began with a view of the state of the travel and tourism industry, followed with an assessment of the current situation, and ended with brainstorming future probabilities and solutions.
Jonathan Tisch, chairman and CEO of Loews Hotels and chairman of the Travel Business Roundtable (TBR) opened the conference with some compelling figures on the present state of travel and tourism. He added that the key states being hurt include New York, California, Florida, Illinois, Nevada, and Hawaii, where travel dominates those state’s economies.
Travel & Tourism Statistics
- Tourism generates more than $3.5 trillion worldwide
- 18 million Americans are employed in travel and tourism-related jobs
- One out of every 10 people is employed in Travel & Tourism
- T&T generated $99.5 billion in revenue for federal, state and local governments in 2000
State of the Industry after September 11:
- Airlines: experienced $2.1B in losses and more than 130,000 layoffs
- Employment: domestically, 10percent drop in demand; Globally, 30percent drop in demand
- Hotels: $2B lost in room revenue
- Meeting & Convention Industry: Up to $1B lost
Members of the TBR met with senators and congressional leaders in early October (see related Web article, TBR asks Congress to take action, 10/15/01) and made the following recommendations to help the travel industry and to encourage people to travel again.
- Tax relief and other initiatives to stimulate economic growth
- Restoration of business meal and entertainment deduction to 100 percent
- Tax credit for personal or business travel
- Temporary suspension of payroll taxes for employers and employees
- Re-introduction of spousal travel deductions for meetings and conventions
Promoting the World’s Number One Brand
TBR also asked for the creation of a Presidential Advisory Council on travel and tourism and to develop a national tourism policy to promote travel to the United States. Tisch noted, "We spend no dollars promoting the number one brand in the world." Tisch applauded the efforts of TIA (Travel Industry Association of America) to promote the United States as a destination. In the keynote luncheon address, Betsy O'Rourke, senior vice president, marketing for TIA, unveiled the organization's new marketing initiative, "See America," which promotes travel within the U.S. and to the U.S. from international markets.
The Travel Business Roundtable Survey
The travel business rebound will be slow, according to a TBR survey conducted by Penn, Schoen, Berland and Associates and Burson-Marsteller on October 2 and 3. The survey has a sample size of 800 respondents (margin-of-error +/- 3.5percent). The sample was broken in two: 400 respondents fit the profile of business travelers, 400 fit the profile of leisure travelers. The survey will be updated regularly to track the changing traveler attitudes in the aftermath of the terrorist attacks.
- 30 percent who have changed travel habits say it will take from six months to one year to get back to levels prior to 9/11.
- Recent actions taken by the government and airlines to increase safety have failed to convince all travelers.
- 37 percent of those surveyed say it is the same or less safe to fly now.
- Increased consumer measures will still not get some consumers traveling again. 64 percent of the survey’s business travelers who say they are traveling less than before 9/11 said it would not cause them to restore travel plans.
- Most travelers do not plan to avoid New York City or Washington, D.C.
- 71 percent of those now traveling said they would not avoid these cities. Travelers expect another attack.
- 79 percent of travelers think another terrorist attack is "likely" in the foreseeable future. The government and travel and tourism industry share responsibility to restore consumer confidence.
- 46 percent indicated the government, while 42 percent cited the transportation and travel industries. The travel industry’s response to the September 11 attacks receives high marks from consumers.
- 76 percent indicated that the travel industry’s response to restore the confidence of the traveling public as "better than expected."
Hotels: The Current Situation and Future Probabilities
Mark Lomanno, president of Smith Travel Research, noted that there were certain dynamics in the marketplace before Sept. 11 with demand having begun to decline five months prior. Lomanno also noted that as a result of September 11th, major metro areas are experiencing a greater negative impact, doing four times worse than all other markets.
Bjorn Hanson, global partner, hospitality and leisure, PricewaterhouseCoopers, added: "The year 2000 ended with 84 percent occupancy, a 50-year high. In comparison, the year 2001 will finish at 70 percent occupancy." Hanson is predicting at least 10 outright hotel failures and noted that New York City lost 1,380 rooms or two percent of its total supply. However, he added, the outlook is not as bleak as it sounds because in 1990 the hotel industry lost $5.7 billion, but in 2001, the industry, as a whole, will make $20 billion, primarily because operating expenses have been cut and interest expense is down. There are also fewer employees in a larger industry because of the addition of technology," he added.
Peter Yesawich, president and CEO of Yesawich, Pepperdine & Brown, reported the findings of a just-completed study of consumer travel plans by his company. Yesawich said, "It is difficult to look into the future with any certainty....The climate is now right to turn to the market with promotions and advertising to generate travel...It is important to take into consideration the sensitivities that people feel."
Mary Power, president of the Convention Industry Council, has helped associations and companies move canceled inventory. "We are now working onand we are heavily promoting that it's safe to travel. "Meetings and conventions are a way to bring people together and to make up for lots of individual sales trips," she said, adding: "One of the challenges we face is that news media are telling everyone that people are not traveling. We have to get the message out that meetings are going on and meetings and conventions are a great way to reinforce the right to travel and meet."
Susan Sarfarti, CAE, president and CEO of GWSAE said that the concept of associations, which is to bring people together, is more important than ever. She said that people want to get together and associations help them realize this with the value of "high touch." Safarti added, "meetings will always be here."
Associations Not Canceling
Peter Shure, editor-in-chief of Convene Magazine, the trade journal of the Professional Convention Management Association, said that associations are leading the way for meetings. Since most associations receive 40 percent to 50 percent of their revenue from meetings and exhibitions, it is in their best interest to go forward with scheduled meetings. Shure shared the following results taken from a PCMA Association Marketplace Survey on the status of scheduled meetings post September 11.
50 percent meetings were held
25 percent meetings cancelled
25 percent meetings postponed
One meeting postponed
Group Business Travel Solutions
The participants came up with the following solutions:
1. Communicate measures that have been taken to increase safety; communicate that there is a crisis plan in place.
2. Let meeting planners know of deals through CVBs, newsletters, web sites, and direct marketing.
3. Have a deeper understanding of customer issues such as the return on time investment.
4. Look at partnerships including local partners not normally involved in national promotions such as local florists, restaurants, and other regional marketers.
Said John Russell, chairman of the American Hotel & Lodging Association: "Let’s fight terrorism with tourism."
Cities, States Hardest Hit by 9/11 Aftermath:
New York City
Hotels were losing $6-10M per day
Restaurants were losing $20M per day
Will lose 41,000 jobs and $2B in travel spending
40 percent of union hotel workers (3,500 people) have been laid off or had hours reduced
Hotels lost $1M daily
25 percent of union hotel and restaurant employees have been or will be laid off by the end of the year
$30M per day in lost visitor revenue
Unemployment claims up more than 50percent
15,000 hotel and casino workers laid off or had their hours reduced significantly
Hawaii Tourism generates 25 percent of economy and 33 percent of jobs.
Unemployment claims jumped nearly 200percent during the last week of September