Overseas Travel to U.S. Falls by as Much as 40%

The Commerce Department said Monday that travel to the United States from some foreign countries has plunged as much as 40% since the Persian Gulf War began, providing fresh evidence of the deepening malaise afflicting the travel industry.

The report was issued amid growing signs that Americans also are putting off trips abroad. The U.S. airline industry is suffering record losses; travel agencies are laying off employees and, in some cases, closing down.

At a news briefing in Washington, Commerce Undersecretary Rockwell A. Schnabel cited the results of a recent survey of U.S. officials attached to embassies abroad who monitor travel. Overall, about two-thirds of those interviewed said travel to the United States from Europe and Asia was down 40%. Travel from Canada and Mexico also declined, but by an estimated 20%.

The drop-off in foreign visitors could cost California’s tourism industry as much as $1.5 billion this year, particularly if tourists from Western Europe and Asia continue to stay home through the peak summer period, according to state officials.

California Deputy Commerce Director Jack Stewart said that the state may shift some of the $800,000 it spends now on overseas advertising to promoting California within the United States, especially in the Northeast, if it looks as if foreigners will go elsewhere this spring and summer.

“Our plans aren’t final yet, but, if the war drags on, we may want to look at changing our marketing plans,” he said. Stewart said that visitors from the East Coast might make up for any decline in visitors from Europe and Asia.

The Commerce Department’s gloomy forecast coincided with an announcement that 1990 was a record year for tourism. The department said that the number of foreign visitors last year rose by 9% to 39.8 million. Forty-three percent of the visitors were from Canada.

The government blamed the travel slump on the recession and on the Gulf War but said the industry was likely to recover when the war ended.

The industry cannot recover too quickly for travel agencies, mostly mom-and-pop businesses whose profits are thin even in good times. Travel agencies have had to lay off workers and reduce their hours to cope with a severe decline in ticket sales. There are reports that some agencies have closed.

“I think it is safe to say that, if you are a small agency, with revenue under $2 million, you are not going to stay in business,” said Vito Schaefer, owner of the Brentwood-based Travel Store, which has sales of $20 million a year.

Schaefer, a 16-year veteran of the industry, said that a small Brentwood agency and three Torrance firms have gone out of business in the last month.

“In 10 years, this is the worst it’s been,” said Ellen Shapiro, owner of Devonshire Travel in Chatsworth. Shapiro said she laid off three employees, reducing her staff to four, because sales have skidded 15% since December. She says her sales may plunge as much as 30% by the end of the month.

“The worst is when the phone doesn’t ring,” she said.

Susan Kaplan, director of the American Society of Travel Agents in Southern California, estimated that sales have declined 40% for most agents here. She said agents have been hurt by the recession and a fare war in California that produced low-priced tickets with low commissions. She said the Gulf War landed a devastating blow.

“The psychological impact on the industry has been tremendous. People are afraid to plan vacations,” Kaplan said.

Although business travel is down, largely because of the recession, leisure travel has been hardest hit. Some agents said that bookings for spring travel were down by more than half from last year.

But some travel agents say the slump offers opportunities to capture corporate accounts because large companies are looking for help in cutting their travel budgets.