When much of the nation is cutting back on frivolous expenditures to afford gas and mortgage payments, Jay Johnson is looking into a $28,000, three-week cruise to Antarctica for one of his clients.
The president of Garden Grove-based Coastline Travel Advisors, which focuses on luxury excursions, hasn’t seen too much of a slowdown in business despite a sliding economy.
“People who have money will always have money so luxury travel is doing quite well,” Johnson said. “I wouldn’t say it is recession-proof, but we’ve dropped very little from last year and last year was the best we’ve ever had.”
While Coastline Travel’s financials may not have changed much during this economy, its day-to-day operations have.
Gone are the days of planning two-week European vacations on air-conditioned buses; people are now looking for more exciting vacations that are better values for their dollars. Johnson has seen a rise in demand for trips to Southeast Asia and India.
Tom Jackson, president of Santa Ana-based World Travel Bureau Inc., has seen the same uptick in trips to Africa, Antarctica and the Galapagos Islands as travelers try to avoid going to places that operate on the euro, which is now worth about $1.50 in dollars.
“Regardless of your economic well-being, there is a stretch point when you say there has to be more value for what I am going to be doing,” Jackson said.
Randy Durband, president of Newport Beach-based Travcoa, said in general people are being more value conscious, opting for unique travel experiences in places where the dollar is worth more.
“What today’s traveler has is a greater sensibility for really finding something truly unique,” Durband said, “not just seeing a place for the first time, but really wanting to get into a culture,whether it’s being physically active or getting face-to-face with local culture.”
“If you are ultra rich, you have the money to do anything, so you just need the experience,” Johnson said. “Exper-ience travel is what people are after. You can only go to the Caribbean so many times.”
Durband said interest in high-ticket items hasn’t dropped off at all.
This is particularly true when it comes to the one of the rarest travel experiences of all,space flight.
“Space travel is really cool,” said Johnson, who’s sold four such flights at $200,000 a pop and is close to making a fifth sale.
Late last month, Richard Branson, founder of Virgin Group Ltd., unveiled the WhiteKnightTwo carrier aircraft that will ferry the passenger-loaded space ships just out of the Earth’s atmosphere. The space ships themselves still are under development, but the certified space travel agents,just 45 people including Johnson and Jackson,expect the first flights to launch in 2010.
Jackson says he is targeting people who have an interest in space or who are pilots for this round of seats. There are some 300 people with reserved spots on future flights.
“We’ve heard stories of people who early on purchased a package and literally mortgaged their homes (and paid in full) to be one of the first 100 up,” Jackson said.
To generate interest for both space flights and more traditional tours, Coastline Travel is ramping up its advertising. Johnson said he expects the company to increase his advertising budget 20% to 30% this year for radio spots and direct mail. There has even been talk of public displays with men in space suits.
That ramp up in advertising might be a necessary tool as a recent survey by the Travel Industry Association showed that 14% of American leisure travelers chose to take a home-based vacation instead of traveling internationally in the past six months.
Many travelers, particularly those attracted to more middle-market, four-star trips, have been scared out of traveling by the upheaval in the airline industry, Durband said, cutting business to many travel agencies and tour operators.
“The entire industry is waiting to see what will happen with the airlines,” he said. “Domestic carriers are talking about capacity cuts after Labor Day, so more people will be competing for fewer flights that are more crowded.”
Travcoa’s business is not as affected by the airline issues because long-haul flights still are profitable for international carriers, and that is what Travcoa focuses on.
But another recent survey by the Travel Industry Association said that travelers avoided 41 million trips last year because of frustration with the airlines, costing the U.S. economy $26 billion in consumer spending and affecting small businesses, which includes 95% of travel and tourism businesses.
World Travel Bureau, which has a diverse range of clients, has been hit by this drop in the middle market. Jackson, who took over the business from his father, wouldn’t disclose specific numbers but said his company saw a “huge drop in revenue,” although none of it was from the luxury market.
“I don’t know of any agency in the country that has not been impacted by the economy,” Jackson said. “Nobody’s better than last year,” he said.
World Travel Bureau doesn’t want to cut any staff, but it is using the government work-share program to move some of its employees to part time with partial federal subsidization for lost wages.
“We’ve worked too long and hard to cut people,” Jackson said. “When the pendulum swings the other way we can bring everyone back on.”
Congress has been entertaining representatives from the travel industry during meetings about the airline crisis. The representatives have been lobbying for a reform of the airline system to encourage more air travel.
“The air travel crisis has hit a tipping point. More than 100,000 travelers each day are voting with their wallets by choosing to avoid trips,” said Roger Dow, president and chief executive of the Travel Industry Association. “This should be a wake-up call to America’s policy leaders that the time for meaningful air system reform is now.”
Jackson thinks that after the presidential election, air travel and travel in general will pick back up. But until then, World Travel Bureau is cutting costs and relying on revenue from last year to weather the storm.
“The luxury market has had a great run,” Coastline Travel’s Johnson said. “You would have had to be a pretty bad business person to not have saved money. If you were just hanging on during the last ride you were doing something wrong.”
“No major company is going to go out during this downturn,” he said.
But Durband sees a lot of smaller companies really struggling.
“We saw a few entities close their doors after 9/11 and one wonders if that will happen now,” he said.
At one point there were 35,000 to 36,000 travel agencies, Jackson said, and today there are closer to 15,000 nationwide. He said a lot of this attrition happened to agencies that were dependent on airline commissions.
Jackson expects the economic downturn to bottom out in six to nine months giving way to greater demand for travel agencies’ and tour operators’ services.
“We can get through this,” Johnson said. “If we can get through 9/11, we can get through this. It is a blip on the map.”
