Sept. 11 aftermath taught travel companies a lesson in small business survival

Posted: Thursday, February 07, 2002

NEW YORK -- Imagine that your company's business virtually disappears in an instant. None of your customers is buying -- in fact, all they want to do is cancel orders, and there's no telling when they'll be back.

That scenario is not only a business owner's nightmare, it is what thousands of small companies in the travel industry faced last September after the terrorist attacks. The devastating drop in business and leisure travel after the attacks forced these companies to take quick and drastic steps to survive -- the kind of actions a business textbook would recommend for a firm that suddenly has little or no revenue coming in.

''On Sept. 11 the world changed for everybody,'' said Ken Ellis, president of Gold Class Travel in Arlington, Texas. ''We spun our wheels and lost money for three months, basically.''

Ellis began examining his business to see where he could cut back. He reduced Gold Class' hours of operation and reviewed its operating expenses. He was spared laying off workers because two people decided to leave.

Ellis also talked with his landlord, who told him, ''For September through December, pay what you can.''

Martha Borawski, president of Pioneer Valley Travel in Northampton, Mass., said that ''in 32 years of the travel business, this has been the most difficult time of my life.''

Like Ellis, Borawski cut back her firm's hours, and also took herself off the payroll for three months, but she was forced to lay off a full-time receptionist and two travel agents. She canceled her cleaning service, stopped advertising and made no charitable donations. Such steps have helped these companies keep going until business began picking up in recent weeks. In the past month, Borawski said, she's started paying herself again and was able to bring back laid-off staffers.

''I am sure now that I can survive,'' Borawski said. But not without some scars: One of the laid-off agents refused to come back because ''she is still very angry with me.''

While the plunge in business after Sept. 11 was by itself crushing for the travel industry, it actually was the latest in a series of setbacks for travel companies in recent years. Not only have they lost business to the Internet, but airlines have reduced commissions. Many travel agents who gave their services free to consumers have begun charging fees.

For many companies, the cutbacks they imposed post-Sept. 11 actually presented an opportunity to make some needed changes.

''We got into the technical side'' of the business, and moved to a cheaper high-speed Internet connection, said Larry Berke, president of Royal Travel in DeKalb, Ill., with three locations in western Illinois. ''It probably was something we should have done before 9/11.''

Ellis, noting that Gold Class Travel's landlord was willing to help rather than lose a tenant, suggested business owners talk to vendors and ''see if they'll work with you.'' He said he also was approached by Sabre Holdings, a provider of technology and services to the travel industry, which had developed a cheaper service for small travel companies.

The drop in business forced some travel firms to either shut down or merge with others, but that became an opportunity for Vacation Concepts By Pericas in Trumbull, Conn. Owner Elaine Janus said her company, which has three locations, took over the clientele of another business nearby and is using most of its employees as independent agents rather than staff.

''The key is trying to increase our volume and lower overhead,'' Janus said.

''To be a small business owner in the travel industry, it's very hard to keep your head above water,'' she said. ''You have to take an aggressive standpoint of not just sitting back and taking it ... You have to find new marketing ideas in order to get people in the door.''

Targeting a specific market can also be a help, company owners say. Vacation Concepts caters to the Hispanic market; Ellis' business is doing more work with groups.

Choosing a narrow market niche helped bring in revenue for Bobby Zur, who started a high-end travel business right after Sept. 11.

Zur said his company, Franklin Lakes, N.J.-based Travel Artistry, is not a traditional travel agency, but more of a consultancy. His customers give him an idea of what they want to do, and he will supply them with a number of detailed options, including little-known, off-the-beaten-track locations.

When no one wanted to get on a plane, Zur said he was able to come up a variety of destinations, all of them within driving distance.



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