If jitters caused by the recent terrorist attacks are not enough to keep corporate travelers off airplanes, the extended wait time to get on board at LAX will surely do the trick.
Many local businesses are expected to slash most non-essential travel in the coming days and weeks, which analysts say could put the airline and hotel industries into its worst slump since at least 1991, when the last threat of terrorism during the Gulf War kept travelers at home.
The ripple effects from the attacks are expected to last through the end of the year and stall the more bullish travel market that analysts once thought they'd see next summer.
"This will probably be worst than the Gulf War because we are already in a recession anyway," said Bruce Baltin, senior vice president of PKF Consulting, an L.A.-based hospitality consulting firm. "There is a fear of flying and fear of the unknown as to what the impacts of those (safety) procedures will be. It's going to be a very bad fourth quarter. But people have to travel to do business so ultimately they will get back on the planes."
When they do, they will have a much longer wait. Curbside baggage checks are now prohibited at Los Angeles International Airport, which also prohibits non-ticket holders from passing through security check points. Motorists who need to park their vehicles will be confined to two structures on the airport grounds.Long waits
With the safety measures in place, airport officials are encouraging domestic and international travelers to arrive at the airport 2 & #733; and 3 & #733; hours respectively before their flight takes off. That's an increase of 1 & #733; hours over the previously recommended waiting time.
September and October is the second-busiest time period for business travelers who come to L.A. They pump $1.4 billion into the local travel industry, which generates $13 billion annually.
With so much uncertainty, many local firms are looking at alternative ways of getting around, such as trains or cars when shorter destinations are involved. There also will be more communication handled through phones, e-mails, fax machines, video conferencing and even the U.S. mail.
"There was a huge temptation to jump on a commuter plane for a day-long meeting in places such as San Francisco and Oakland," said Neil Martau, vice president of Pasadena-based Inter-Con Security Systems Inc. which takes advantage of such commuting methods frequently. "Now I think they're going to consider alternative means to communicate."
Not every company is keeping employees out of the air.
An out-of-state national sales meeting this week for employees of Sunkist Growers Inc. will go ahead as planned.
"The people who travel are certainly concerned, but I haven't heard one person say, 'I'm not going to fly anymore'," said Laurence Stern, transportation director for the Sherman Oaks company, which spends more than $1 million per year on plane tickets alone. "You've got to make your living."
But the decline does not bode well for hotels, which rely on business travelers for nearly half of their occupancy rate in September and October. After suffering a 1.5 percent drop in business after the Gulf War, L.A. hotels could see a drop of 2 percent in the coming year, according to Baltin.
Downtown hotels, which cater primarily to the business customer, are expected to get hit the hardest.Downtown cancellations
Within two days of the attack, the 683-room Millennium Biltmore Hotel received more than 400 cancellations for this week.
Over the next month, occupancy rates, which normally run 70 percent on weekdays and 50 percent on weekends, are expected to drop to 50 percent on weekdays and as low as 30 percent on weekends, local hotel executives said.
"I'm obviously upset because it's a shame that outside influences have caused the hardship on the economic conditions of the hospitality industry," said Stephen Haller, the Biltmore's sales and marketing director. "I don't see doomsday yet. But if this triggers an overall recession, jobs could be affected."
A sizeable portion of the hotel business feeds off the Los Angeles Convention Center, which as of late last week had already lost a computer technology convention as a result of the attacks. Local officials were in negotiations with the trade group to determine how much if any of the $608,000 rental fee would be refunded.
They said it was too soon to tell whether other events scheduled for this fall would be canceled.
"Psychologically, everyone's going to react differently about this," said George Rakis, general manager of the convention center. "Some people are going to do business as usual and get back to normal as soon as possible. Others may curtail their travel in the short term. But in the long term, it won't have any effect. People will get back to the normal type of things they do. If things are important to their business, they'll continue to do their normal activities."
For reprint and licensing requests for this article, CLICK HERE.
Stories You May Also Be Interested In
- PARTIES---Holiday Cheer Seen Dampened As Business Slows, War Looms
- Japan's Tourists Are Staying Put
- Months to Lapse Before Economy Regains Stride
- ECONOMY---Layoffs Mounting as Recession Hits Town
- HOTELS---Airport Hotels Profit From Summer Airline Problems
- Comment---Waiting Is Hard
- Mitch Albom---New Airport Purgatory Doesn't Feel Safer
- Majority of L.A. Conferences Will Go Ahead as Scheduled