Will Travel Advisors Be Last in Line for Bailouts?

As talks of bailouts for the travel industry swirl around — and divide opinion — there’s another sector of the travel industry that is fighting to make sure it doesn’t get forgotten: travel advisors.

The American Society of Travel Advisors is ramping up its lobbying and advocacy efforts, including asking its members to write to their elected officials and ask that travel advisors are considered in any financial relief package. A call to action tells members “your elected representatives need to hear from you during this time of crisis.”

Travel advisors are, of course, small businesses that play a crucial role in securing revenue for big businesses like airlines, airports, hotels, and cruise ships. ASTA estimates that more than 140,000 people work in the travel agency industry in the U.S., with 98 percent of advisors considered small businesses. In addition to the 108,000 jobs created by retail locations across the country, an estimated 40,000 travel advisors work as independent contractors.

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The society is lobbying for this industry to be included in any industry bailout, noting that “a scenario where the largest travel companies survive and quickly recover from this crisis while the thousands of overwhelmingly small businesses that distribute their products — your constituents — are allowed to fail is an unacceptable outcome.”

A survey conducted on March 6 — before the U.S. essentially prohibited all travel — estimated that 53 percent of ASTA members would be out of business in the next six months if the situation remained as is.

The specific policy requests to Congress include “$7.7 billion in immediate grants to ticket agents to compensate for reduced liquidity attributable to the virus; $6 billion in zero-interest loans for the same purposes; and fully funding the President’s request for an additional $50 billion in Small Business Administration loan funding.” Tax relief is also being asked for, in the form of “payroll tax suspension, deferrals, carryback of losses.”

Laurel Brunvoll, an independent travel advisor of Unforgettable Trips, received the message and is just one of the thousands of advisors trying to stay afloat. “During these unprecedented times, I’m working hard to stay in constant contact with cruise lines, airlines, tour companies, hotels and resorts as well as monitoring global changes in travel requirements. I’m committed to providing very best efforts in offering guidance to my clients.  Not just to protect their trip investment, but also supporting and fulfilling their hopes and dreams of family vacations, birthday celebrations, anniversary moments and honeymoon wishes.”

What About Cruises

One sector that travel advisors play a huge role in securing business for is the cruise industry. According to to the industry’s lobbying group Cruise Lines International Association, 75 percent of cruises are booked via an agent. That is perhaps why last week, the industry sent out a message to more than 40,000 travel agents asking them to similarly contacted their elected representatives

The message asked advisors to point out the industry is a “vital artery” to the U.S. economy — claiming it supports 421,000 American jobs — and that it had been doing everything it could to keep its ships safe. It also asked lawmakers to “avoid any excessive policies that could shut down the travel and tourism industry.”

This message was sent as recently as March 13, the same day the cruise industry essentially went on indefinite suspension at the request of President Trump. It’s not clear if CLIA’s lobbying effort has continued since the suspension; it did not reply to a direct question on that matter.

A spokesperson from CLIA did say: “At this point, we are focused on doing everything we can to support the over 40,000 North American travel agents who are a part of CLIA and who own and operate small and medium-sized businesses that have been significantly impacted by COVID-19. Those travel agents are vital to the cruise industry … we are committed to seeing them through these unprecedented times just as we are our member cruise lines. We are asking Congress to support this critical community and we are providing travel agents the resources they need to make sure their voices are heard as well.”

Even if it would help travel advisors recover a huge chunk of their business, the prospect of a cruise industry bailout is a complicated one. Critics have long pointed out that all major cruise lines use an obscure Internal Revenue Code exemption that means they don’t have to pay U.S. taxes on most of their income. The three largest companies, Carnival Corp. Royal Caribbean, and Norwegian Cruise Lines, are incorporated in Panama, Liberia, and Bermuda respectively, despite all having headquarters in Miami. Senators including Sheldon Whitehouse of Rhode Island have said there is no valid reason to bailout companies have gone out of their way to not operate in America.

That said, President Trump has now indicated a vague willingness to help the industry financially multiple times. However, there’s an argument that the cruise industry might not be able to accept such assistance. As Law360 explained, a tax exemption wouldn’t be particularly useful for cruise lines that pay very little tax on their income in the first place. Furthermore, lawmakers on both sides of the aisle that have historically tried to regulate the cruise industry may not be willing to provide financial assistance without conditions attached — conditions which could potentially threaten the industry’s strategy of acting not as American companies.

Either way, for travel advisors who operate on exponentially smaller margins than cruise lines and the like, the fallout will be brutal either way. One described the situation simply: “This is catastrophic.”