Over 71 Percent of Travel Advisors at Risk of Closing Businesses

In response to survey data, which shows the financial devastation brought on by the coronavirus pandemic (COVID-19) throughout the travel agency sector, Zane Kerby, president & CEO of the American Society of Travel Advisors (ASTA) says, “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. With more than 90 percent of our members reporting revenue down 75 percent 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.

“It’s hard to imagine, but the situation would have been even worse without the relief programs provided by the CARES Act. Without additional relief from Congress and the federal government, these negative trends will continue and widespread agency closures will become the norm. An astonishing 71.3 percent 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.

“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. 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.”

Between August 4 and 5, 2020, ASTA surveyed its membership on the impact the coronavirus pandemic is having on their businesses and the steps governments to help restore them to health.

According to the nearly 1,200 respondents:

  • Of respondents with W-2 employees at the start of the crisis, 75 percent have laid off or furloughed at least one employee, including:
    • 43.1 percent who laid off or furloughed three-quarters or more
    • 16.4 percent have laid off or furloughed between 50 and 75 percent
  • 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 percent)
    • SBA Economic Injury Disaster Loans (34.9 percent)
    • Enhanced unemployment benefits (38.2 percent)
  • 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 percent)
    • Three months (24.3 percent)
    • Six months (31.2 percent)
    • 12 months (15.1 percent)
    • More than 12 months (13.6 percent)
  • 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 percent)
    • A lag time of between one and three months (8.8 percent)
    • A lag time of between three and six months (27.5 percent)
    • A lag time of between six and 12 months (43.8 percent)
    • A lag time of 12 months or more (18.8 percent)
  • 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 information, visit ASTA.org.

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