September 29, 2020

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ASTA Says Travel Agencies Need More Federal Relief

3 min read

Travel agencies are in need of additional federal assistance, according to new research conducted by the American Society of Travel Advisors (ASTA) of its members. “An astonishing 71.3 percent of travel advisors will be out of business in six months or less without additional relief,” said ASTA president and CEO Zane Kerby in a press statement.

More than nine in 10 (93 percent) report business income as being down at least 75 percent as compared to last year, with more than three-quarters (78 percent) reporting being 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, including:

  • 43 percent who laid off or furloughed three-quarters or more 
  • 16 percent have laid off or furloughed between 50 and 75 percent
  • 9 percent have laid off or furloughed between 25 and 50 percent 
  • 7 percent have laid off or furloughed fewer than 25 percent

These layoffs come despite the fact that respondents reported availing themselves of the various relief programs in the CARES Act, including the Paycheck Protection Program (46 percent), Small Business Administration (SBA) Economic Injury Disaster Loans (35 percent) and enhanced unemployment benefits (38 percent).

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“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,” said Kerby.

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 fewer (16 percent); three months (24 percent); six months (31 percent); 12 months (15 percent); and more than 12 months (14 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, only 1 percent of respondents reported there will be no lag time. The plurality (44 percent) expect a lag time of between six and 12 months; an addition 28 percent expect a lag of three to six months, while 19 percent say there will be a lag of 12 months or more.

Beyond financial relief for struggling businesses, ASTA says governments in the U.S. 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-19 vaccine
  2. Lift State Department and Centers for Disease Control and Prevention (CDC) guidance against all international travel
  3. Lift European Union travel ban on American citizens
  4. Lift the 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

The survey was conducted August 4 and 5, 2020 among nearly 1,200 ASTA members.

Visit https://asta.org.

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