As financial analysts last week discussed the sectors that could be most battered by the economic fallout from the Sept. 11th terrorist attacks on New York and Washington, D.C., the tourism industry was near the top of the list.
“We certainly already know the industries that are going to be most negatively affected, and those include airlines, hotels, cruise lines and the insurance industry,” said George Borts, an economics professor at Brown University.
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Rhode Island’s tourism industry – which generates more than $3 billion in annual revenue – already had been hampered by the sluggish economy and higher energy costs this year.
But as both business and leisure trips were cancelled throughout the U.S. in the days after the attacks – primarily because of the three-day shutdown of U.S. commercial flights – the state’s hotels and other travel-dependent sectors lost substantial business.
“It’s been devastating to our industry,” said Maryann Sasso, president of Pearson Travel, a Providence travel agency. She said travel agencies already were reeling from a steep reduction in commissions – implemented by the airlines earlier this month – which slashed her firm’s revenue by as much as 60 percent.
“Now, after this tragic event, most airlines are cutting back on their schedules,” she said, adding that her agency will be forced to temporarily lay off some of its 68 employees because of the revenue pressures. Many major airlines have announced cutbacks in flight schedules of 20 percent or more.
Nicholas A. Langella, general manager of the Rhode Island Convention Center, said the disruption in air travel has resulted in sharply lower attendance at recent events at the center. But the convention center as of last week had not suffered any cancellations as a result.
“We’ve had negative effects on our ancillary businesses, like parking and food services,” Langella said. “But we’ve been lucky and we’re open for business. I’d say the hotels have been much more affected.”
Indeed, many hotels saw widespread cancellations following the nationwide grounding of flights and subsequent cutbacks in flight schedules.
“Virtually everyone has had significant cancellations, primarily among group bookings,” said Robert Rosenberg, president of the Newport Convention and Visitors Bureau.
Already, Newport County’s hotel business is off as much as 5 percent vs. last year, primarily because of weak corporate business. And while the recent cancellations will further weigh on revenues, Rosenberg said the uncertainty created by the tragedy is the bigger concern.
“There is no question that the hospitality industry will be directly affected by this,” Rosenberg said. “But heaven only knows what will happen now. It would be foolish to try to make predictions because we have nothing to compare this to. A lot will depend on what our government does in terms of retaliation.”
Dale Venturini, president and CEO of the Rhode Island Hospitality and Tourism Association, agreed that it’s difficult to gauge what the effects of the national calamity will be on travel habits.
“This is unprecedented,” said Venturini. “There’s no history book or MBA program to study how to respond to something like this.”
She said the RIHTA – a group representing nearly 600 hotels, restaurants and other businesses – will convene a “tourism summit” within the next week to discuss strategies for the hospitality sector to cope with lingering effects from the disaster.
