70 Percent of Travel Agencies Will Be Out of Business Without Federal Relief

American Society of Travel Advisors president and CEO Zane Kerby is sounding the alarm over the need for more federal relief for the travel industry as Congress and the White House struggle to come to an agreement over the next wave of coronavirus relief.

Kerby released a statement highlighting the dire circumstances for travel agencies:

“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.”

In a recent member survey conducted between August 4-5, ASTA found that the impact on agencies has been devastating.

—More than 9 in 10 (93.4 percent) reported business income down at least 75 percent as compared to last year, with more than three-quarters (77.8 percent) saying that income is down 90 percent or more.

—Of respondents with W-2 employees at the start of the crisis, 75 percent have laid off or furloughed at least one employee but most have laid off more. More than 43 percent said that they had laid off or furloughed three-quarters or more of their staff. More than 16 percent said that they had laid off or furloughed between 50 and 75 percent of staff, and nearly 9 percent have laid off of furloughed 25-50 percent of staff. Only 6.7 percent of travel agencies have laid off or furloughed less than 25 percent of their employees.

—The layoffs have taken place despite relief provided in the CARES Act such as the Paycheck Protection Program, SBA Economic Injury Disaster Loans and Enhanced unemployment benefits.

Ongoing uncertainty within the industry and with no guarantee of federal relief, travel agents are running out of time and money to keep their doors open.

The survey showed that nearly 16 percent will go out of business in six weeks or less. More than 24 percent are in danger of closing within the next three months. Just over 31 percent will be out of business in six months. Slightly more than 15 percent can hang on for one year, and only 13.6 percent will be able to last longer than 12 months.

Kerby points out that, beyond financial relief, additional steps can be taken to help travel agencies survive:

—Develop and widely distribute a viable COVID vaccine

—Lift State Department/CDC guidance against all international travel

—Lift European Union travel ban on American citizens

—Lift CDC “No Sail” order on cruising

—Mandate masks on all flights

—Lift Caribbean region country restrictions on U.S. travelers

—Lift U.S. state-by-state quarantines

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