In downturn, travel industry looks for federal business

ATLANTA — The federal government may be the most consistent business this year for a travel industry facing huge financial pressures, but travelers shouldn’t expect that to mean incentives and discounts.

Representatives from hotel and rental car companies seemed eager to drum up federal business at last week’s National Travel Forum here. A number of exhibitors said that a slowing economy and record gas prices are combining to make this the industry’s worst year financially since the Sept. 11 attacks, when the industry’s revenues fell by more than $10 billion.

So the industry is pinning its hopes on federal travelers.

“The government never goes out of business,” said Denise Benyak, director of global sales for the Wyndham hotel group. “This year will be much like after 9/11, when [government] … basically kept us going.” There have already been a few bad signs for the travel industry. The Marriott hotel chain announced last week that its second-quarter revenues would fall short of expectations; several major airlines have reported slowing passenger traffic.

“When you look at estimated fuel costs, I think government is going to have to make up for the [revenue] shortfall,” said Newton Wong, director of military and government sales for the Waikiki Hilton in Honolulu.

But federal agencies, operating on fixed travel budgets, face limits, too, said Tim Burke, director of the office of travel and transportation services at the General Services Administration. With gas prices and airfares skyrocketing, and airlines adding myriad surcharges, those fixed budgets might not pay for as much travel.

“I’m not sure that it’ll make up the shortfall,” Benyak agreed. “Based on gas prices and the economy, we’re still going to suffer.”

Still, federal employees with public-service missions can’t cut back on travel as much as the private sector, and that means spending will continue.

“The majority of agencies will continue to travel," Burke said. “I think they're good about using our tools and stretching their dollars.”