Travel Industry Braces for Conflict

Industry professionals experience deja vu at prospect of another war with Iraq

By: Robert Carlsen

Even though Saddam Hussein’s Iraqi regime has said it would allow U.N. weapons inspectors back into the country, the travel industry continues to gird itself for conflict.

If armed conflict began today, travel agents and suppliers could face long months of little or no business, according to industry professionals TravelAge West contacted last week.

Many observers remember the 1991 Persian Gulf conflict and the fact that travel especially to Europe and the Middle East essentially dried up overnight. In this post-Sept. 11 environment, however, travel agents and suppliers have already redirected their businesses to reflect changes in international travel habits, moving products closer to home and closer to a perceived realm of safety.

What most travel professionals fear most about a new Iraq campaign is the possibility of a long, involved confrontation with severe reprisals against Americans by the Arab world.

“It’s a bit like price elasticity of demand war elasticity of demand, if you will in that we know it will result in the decline of travel, but the question remains ‘how much?’” said travel agency consultant Robert Joselyn of Joselyn Tepper and Associates, Scottsdale, Ariz.

He said that if the “radical elements within the Arab states engage in significant rhetoric and demonstrations, and I think this is almost a certainty, the negative impact on travel is likely to be very significant. There will be life threats against any American anywhere, and I believe we will see a bunker mentality.”

Also, another war within Iraq will be quite different than the first Persian Gulf conflict in 1991, because the times have changed.

“In 1991, Americans felt less vulnerable and exposed than they do in 2002,” said Joselyn. “Sept. 11 notwithstanding, the current administration feeds us a nearly daily dose of how careful we should be living our lives in our own country, much less abroad.”

Martha Nell Beatty of Travel Advisors of Marin in San Rafael, Calif., said one of her best clients, a 90-year-old lady, recently booked a cruise on Seabourn from Egypt to Italy for next spring.

“Just today she asked me, ‘What will happen if we go to war?’ I know that this year the Seabourn Spirit continued through the Suez Canal without guests. I could only guess that the Spirit, which will still be in Asia during the winter, might make this transit again. However, the client would probably have to embark in a different country.”

Nell Beatty said the lady reminded her of her clients who early on the morning of Sept. 11 left a message calmly asking, “What do we do now?” “She and her husband were due to leave for London and South Africa that day and were prepared to wait for another week if we could redo their trip. We did and they went,” Nell Beatty said.

“In other words, some people are prepared to travel in spite of disastrous happenings. But these are the more experienced travelers.” Nell Beatty said she and her 90-year-old client can’t predict what the U.S. government will do or how suppliers and clients may react. Waiting is the hardest part.

“So far, I am seeing a lot of interest in Europe for next year, even the Eastern Mediterranean,” she said. “But each time I talk to a client or book a trip, I think to myself: ‘Will this be canceled if we do go to war?’ One minute I feel optimistic about my bookings for next year and the next I feel I cannot count on them at all.

“I fear not just for us in the agency business, but for all the suppliers, about what might lie ahead.”

“I feel it will be disaster for everyone,” said Sheila Hyman of Tanforan Travel in San Bruno, Calif. “Certainly it’s a no-win situation and the country will no doubt be split over this probably worse than during Vietnam.”

Mike Estill, general manager of the co-op WESTA in Portland, feels his members have prepared for a coming war by shifting their sales to destinations closer to home.

“A byproduct of the events of last year was a dramatic shift to shorter, safer real or perceived and closer-to-home vacations. A resumption of hostilities in the Middle East will just continue this situation,” Estill said. “The unfortunate part of this scenario is that many of these vacations are substantially lower yield per trip, thereby decreasing agency revenue streams.”

“I would think we will be quiet for the first few days as everyone stays glued to CNN,” said Steve Cosgrove of Dynamic Travel & Cruises in Southlake, Texas. “Then it will depend on how bad it gets if Saddam uses chemical, biological or nuclear weapons, or if the U.N./U.S. go in and finish the job quickly and get a warm welcome from regular Iraqi citizens. If it ends quickly and cleanly, it should have minimal effect on Europe travel. It might even help things settle down in the Middle East, and we could see a return of that business.”

George Delanoy of Brea (Calif.) Travel said that although this conflict is a different situation from 1991, the mindset of the consumer isn’t all that different.

“Travel is like the stock market in reacting negatively to uncertainty,” he said. “I think some results will be similar [to 1991], but potential travel changes and cutbacks could be broader now because, unlike 1991, the traveling public is concerned about being away from home and is also concerned about their own safety in a much more profound sense than 11 years ago. This would be exacerbated with wartime reverberations.” Scott Ahlsmith of Magellan 360 Travel Technologies in Santa Ynez, Calif., said, “Any military action that reaches the press and is transported into our living rooms has a detrimental impact on tourism. Under the heading ‘Humor is the Best Tonic,’ I would go out on a limb and project that motorcoach tours to Baghdad would be negatively impacted.” Rick Garrett, president of Happy Vacations in Scotts Valley, Calif., remembers that just prior to Hussein invading Kuwait in 1991 it was the best sales year in the history of his company. What happened after the invasion, he said, “quickly turned into a complete reversal of fortune that equaled, or perhaps exceeded, the effects of Sept. 11. It wasn’t until after the U.S. had won its victory almost a year later that we saw business return to its pre-Iraq levels.”

Garrett said the average citizen’s fascination with smart bombs on CNN “had as much to do with that as any actual fears of terrorism, coupled with the uncertainty over the war’s effects on the economy.” He said it’s fortunate his company sells destinations (Hawaii, South Pacific and the Caribbean) that are considered safe havens in times of political instability. “So, I think we suffer less than companies who have exposure in Europe or Africa.”

One travel agency owner is quite optimistic about his future, given that his salespeople have already gone through the bad times following Sept. 11 and have redirected their sales efforts.

“This time around I am confident that we have a very good business plan in place that will allow us to face the threat of a downturn with positive results,” said Brad Anderson of Anderson Travel & Cruises in San Diego. Anderson based his optimism on the fact that his sales agents are “performance based and motivated to win,” are well trained on limited products and destinations, and have improved the agency’s closing ratio by more than 25% in the last two years, lowering the cost of new client acquisition.

“Last but not least,” he said, “we are not afraid to change. Good salespeople can never be replaced. I am not afraid to admit that I am wrong and to change directions.

“There will be great opportunities for travel professionals in the next 10 years we just can’t do business like we used to do. It’s over with or without a new war.”