Destination unknown - Travel industry braces for war impact

MIAMI

The prospect of a U.S. war with Iraq has the nation's already troubled tourism industry bracing for even harder times.

Walt Disney World has stopped hiring and cut some workers' hours. Carnival Corp., the world's largest cruise line, is lowering prices in hopes of luring more passengers. And airlines might have to cut their schedules. All cite concerns over the possible impact of war on their business.

Meanwhile, tourism-dependent destinations including Florida, Nevada, New York and Hawaii are considering new advertising campaigns if a war keeps visitors away.

"Even without factoring the war, we were looking to 2004, 2005 before we got back to 2000 levels," said Cathy Keefe, spokeswoman for the Washington-based Travel Industry Association of America. "War is inevitably going to push that recovery even further."

The consensus among industry leaders and observers is that the effects of war on leisure travel depends on how long the conflict lasts and whether there are any terrorist attacks on U.S. soil.

Most agree international travel bookings will suffer if war breaks out, particularly hurting global airlines as it did 12 years ago during the Gulf War. Airline passenger traffic declined 8 percent in the first quarter of 1991 and was down 2.2 percent for the year.

It bounced back in the first quarter of 1992, increasing 6.7 percent, according to the Air Transport Association, a trade organization that represents most of the major air carriers. Still, a recession and the effects of the war on air travel and jet fuel prices led to Midway and Pan Am airlines going under.

Today, airlines again face high fuel costs, a sluggish economy, weak bookings following the Sept. 11 attacks and added security costs. United Airlines and US Airways are restructuring in bankruptcy court, and analysts have speculated American Airlines might follow.

"We're trying to anticipate where the impact might be and calculate a response that will be commensurate," said Joe Hopkins, a spokesman for United, the nation's second-largest airline.

Todd Burke, spokesman for American, the nation's largest carrier, said the airline is prepared to make flight schedule decisions if necessary.

"We expect a dropoff in traffic, especially in international markets, such as Europe, but how deep these cuts might be will depend on the extent of military action," Burke said.

ATA spokesman Michael Wascom said airlines have seen gains in passenger traffic over the past year -- the group tallied a 3.4 percent increase in January from a year earlier -- but totals are still down from the same period in 2000 and 2001.

Cruises in better position

The cruise industry, meanwhile, appears better positioned than it was in 1991.

At the start of the Gulf War, cruise lines saw bookings drop, but reservations recovered as the conflict drew to a close after a few weeks. Back then, the cruise lines shifted itineraries closer to the United States -- and made similar moves following the terrorist attacks, aiming to reduce the need for customers to fly to their ports.

"Certainly in '91 we were a lot more reliant on air travel than we are today, as we have spread out our ships," said Tim Gallagher, spokesman for Carnival, which sails from 18 ports.

Carnival and No. 2 Royal Caribbean Cruises reported in recent weeks that uncertainty over war in Iraq and the economy have depressed bookings so far this year. Lower demand has forced the cruise companies to drop prices.

Norwegian Cruise Line has also lost bookings because of concerns over war, said Colin Veitch, president and chief executive.

"What it will mean is fantastic deals for consumers," he said.

Tourism-dependent spots have already found would-be vacationers are having second thoughts.

Last month, Walt Disney World said it might lay off workers if business worsens amid war fears and slow bookings. The company cut back the hours of some of its part-time employees at the theme park and froze hiring indefinitely at all its central Florida attractions and resorts.

War and fear of war

Many destinations are considering new marketing campaigns.

"The concern right now is that even without a war, there's already a fear of war, and that's causing some soft bookings," said Frank Haas, director of marketing for the Hawaii Tourism Authority.

Haas said Hawaii is particularly vulnerable because most people must fly to get to the state. Last year, international arrivals made up one-third of its visitors.

In Las Vegas, "very likely we will be focusing any marketing effort that we do on our short haul and drive-in markets," said Erika Brandvick, spokeswoman for the city's convention and visitor authority. "We can pretty much expect that international visitation will all but cease, initially."

Tom Flanigan, spokesman for Visit Florida, the state's tourism promotion agency, said it will conduct weekly surveys of hotel operators and other tourist-related businesses to assess any damage.

In 1991, Florida had 1 million fewer visitors than it in 1990.

"How many of those million stayed home because of hesitancy about the war ... and how many stayed home because of (the economy) is impossible to calculate," Flanigan said.

Florida had a record number of tourists in 2002, but their stays were shorter and they spent less money than in the past. And while hotel operators in north Florida have fared well due to a healthy drive-in market, the fly-in dependent South Florida and central Florida theme park hub are hurting.

An assessment by the Orlando-Orange County Convention & Visitors Bureau concluded that if a new Iraq war is relatively short and there are no acts of domestic terrorism, tourism will build slowly and reach prewar levels in about a year.

"You can look back at the Gulf War, but things are different now," Keefe said. "We have had an attack on our own soil. Security was never really an issue before."