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The Honolulu Advertiser
Posted on: Friday, September 14, 2001

America's bloodiest day
Travel industry's difficult year turning 'disastrous'

USA Today

As some jetliners took to the skies again after an unprecedented two-day shutdown, the travel industry began to gingerly measure the financial toll from the nation's worst-ever terrorist attack.

With jetliners grounded, losses rippled through the travel economy as a nation lurched to a standstill.

Hotels endured a raft of last-minute cancellations. Cruise ships stayed tied to the dock. Car rental companies at major airports ran out of vehicles as frustrated travelers drove them home one way.

Making matters worse, jittery travelers mostly shunned airline reservations lines. But officials expressed hope that business and pleasure travelers will return to the air when they see new security precautions in place.

"We've never had a tragedy of this magnitude to the extent that what's going to happen is very uncertain," says Cathy Keefe, spokeswoman for the Travel Industry Association. But "travel is one of America's fundamental freedoms. Americans are incredibly resilient. We know travel and tourism will be facing challenges, but we'll come through it."


The expected aftermath of the attack prompted a leading airline industry analyst yesterday to almost double his previous estimate of the 2001 loss.

Sam Buttrick of UBS Warburg now estimates the incremental impact of the terrorist attack at $2.1 billion, including next year. His estimate for industry losses for this year zooms to $4.4 billion, making it the worst year ever.

Airlines haven't given estimates yet. But it isn't just the financial impact of domestic flights. Losses to the world's airlines could reach $10 billion in the wake of the attack that grounded a third of the world's commercial airline fleet, according to the International Air Transport Association.

The U.S. market generates about $1 billion in revenue a day for all airlines, both international and domestic, IATA says. At $10 billion, losses for the year would triple the previous estimate.

Hotels and conventions

A year's worth of planning and $2 million were lost as Hoyt Publishing had to scratch a retail industry trade show at New York's Jacob Javits Center, which had been scheduled for Wednesday and yesterday. Hoyt expected 8,000 attendees.

"We had to pull the plug on the 11th hour," says Scott Wolters, director of exhibition and conferences at Hoyt.

The Gay Life Expo was expected at the Javits Center this weekend, bringing 20,000 visitors. It was postponed until later in the year. The California Dental Association canceled a three-day meeting this weekend in San Francisco that had been expected to draw 15,000 delegates.

The hotel industry is still tallying the losses, but the year is on track to be the worst in 33 years, according to PricewaterhouseCoopers.

Hotels benefited temporarily in some cities by housing travelers stranded by Tuesday's sudden airline shutdown. But at the same time, many were getting so many cancellations that they had to increase staff at their reservations centers.

"There's clearly going to be pretty significant short-term impact. We shouldn't kid ourselves about that," says Hilton spokesman Marc Grossman, noting a "significant drop-off in reservations."

Convention planners say the year went from bad to worse.

"What was looking like a difficult year with all the corporate cutbacks will now be a disastrous year," says Patrick Moscaritolo, president of the Greater Boston Visitors & Conventions Bureau.

At least four meetings were postponed and two were canceled in Boston. One was a medical convention expecting 8,500 delegates.

Cities lose $1,200 for every attendee who does not show up, says Michael Hughes, research director at "Tradeshow Week" magazine. He says many small and medium conventions will likely not reschedule.

Car rentals

Despite a rush of stranded airline passengers who rented cars to drive home, car rental companies say they are suffering, too.

Hertz says rentals were down 40 percent Tuesday and Wednesday, with thousands of cars in the wrong locations.

ANC Rental, which operates National and Alamo, says one-way rentals are up three to five times compared with the same time last year. One-way rentals in some cities, such as Charleston, S.C., and Las Vegas, are up 10 times. Many flights were diverted to Charleston, and many passengers living on the East Coast drove home instead of waiting for the air travel ban to be lifted. Many tourists in Las Vegas were from California and drove home, as well.

ANC spokeswoman Cheryl Budd says rental-car reservations in general are about the same as this time last year, because many travelers who have booked cars have not reached their destinations yet.

"It's almost as if time stopped," Budd says.

But the future does not look bright for the companies. Cars that are usually returned to the location they were rented at are now in cities throughout the United States. Budd says National will wait to see how many cars get returned by other travelers before bringing them back on trucks.


Cruise lines are facing a wave of cancellations.

"I'd say about 10 percent to 15 percent of those on our Hawai'i cruises this weekend have canceled," says Rod McLeod, president of American Classic Voyages, which operates ships in Hawai'i under the United States Lines banner and also operates Delta Queen steamboats. "The air system is now struggling to get on its feet, and there are still a lot of people who are still very concerned about flying."

Holland America canceled yesterday's departure of the 1,494-passenger Westerdam from Vancouver, scheduled to depart on a seven-day Alaska cruise.

That cruise cancellation alone could result in a loss of $2 million in revenue, estimates cruise analyst Jim Winchester of Lazard Freres.

Carnival postponed a Wednesday departure of the 2,124-passenger Carnival Spirit out of Vancouver. Passengers who were supposed to get off the ship that day have been living on the ship the past two days.

Bob Dickinson, president of Carnival, the world's largest cruise line, says that all 15 of the line's ships will sail this weekend, whether or not airlines are fully operating.

"We're sailing them even if (passengers) don't make it," he says. It would be unfair to the passengers who drive to cruises and are "looking forward to their vacation" to cancel them, he adds.

Theme parks

Most parks nationwide shut down Tuesday, losing a full day of revenue. Attendance has been light since they reopened Wednesday.

"It's noticeable, but not critical," says Victor Abbey, chairman and president of Busch Entertainment, the theme park subsidiary of Anheuser-Busch. He notes that "a bad day of weather has a greater impact than what we're seeing so far."

Abbey wouldn't put an exact dollar amount on the company's losses from the attack, but says that so far, they are "not significant."

Abbey expects "a short-term blip" in business over the next few days and weeks. But he's predicting a return to normalcy relatively soon. "We're (still) expecting a solid performance this year," noting that, year-to-date, the company's nine parks are showing record attendance and profits.

The park industry was lucky. Since the attacks came after the end of the peak summer season, which accounts for the bulk of park attendance and profit, this week's downturn will have less of an impact. Only one of Six Flags' 31 amusement and water parks in North America, Six Flags Magic Mountain near Los Angeles, was scheduled to be open this week. After Labor Day, many parks go to a weekends-only schedule or close outright.