In the wars

The lure of the worlds far flung regions has been hit by a run of tragic
events, but while it may have lost recent battles, the travel industry is
confident it will bounce back with a healthy glow. Isabel Choat reports

Anyone who works in travel and tourism knows how sensitive the economic
health of the industry is to factors beyond their control. Natural disasters,
airline strikes, civil unrest, terrorist attacks, and now severe acute
respiratory syndrom (SARS) – the list of global events that can send a strong
holiday booking pattern spiralling downwards goes on and on. But by far the
worst thing that can happen is international conflict.

While other factors can have a devastating effect on tourism to individual
countries – bookings to Bali, for example, plummeted after the nightclub bomb
in October last year, causing a $1.3bn drop in tourism income for Indonesia –
war knocks consumer confidence, affecting travel to virtually all destinations,
regardless of their proximity to the trouble spots. Even the September 11 terrorist
attacks, which forced several airlines into Chapter 11 bankruptcy and prompted
widespread job losses, turned out to be a short-term crisis. Many companies
admitted off the record that the job losses had been on the cards anyhow, and
by January 2002, bookings were picking up again as cheap airfares and packages
lured tourists back to their favourite holiday spots.

War, however, is a different story. The 1991 Gulf War led to the collapse of
120 travel and tourism businesses, including industry giant International
Leisure Group. Those companies that survived did so by making widespread
redundancies – in hindsight, a policy that turned out to be a knee-jerk
reaction which caused more problems than it solved.

"We were already sliding into recession in the run up to the Gulf War
and when it hit, companies panicked and started to cut staff," says Julia
Feuell, director of travel recruitment consultancy New Frontiers.

"We would put a job ad out and the phone would ring off the hook
because so many people had been made redundant. From a recruitment point of
view, it meant you would have a fantastic shortlist of candidates for any job.
The problem was, when bookings started to come back after the war, there was a
severe skills shortage; companies didn’t have the staff to cope."

In the run-up to the 2003 conflict, many people working in travel feared
that history would repeat itself – another Gulf War, another slew of job cuts
and failing businesses. Reports on ailing company MyTravel, one of the ‘big
four’ travel firms, appeared in the papers every week, if not daily. It is
slashing 2,000 jobs worldwide (700 will be lost from the 15,000-strong UK
workforce) as it struggles to keep its head above water.

But although there are pockets of redundancy the doom and gloom is not
universal. TV Travel shop may have made 70 home workers redundant at the end of
last month, and BA has brought forward its downsizing programme (it is making
13,000 redundancies, mostly in the UK) from March 2004 to September this year,
but most businesses are cautiously optimistic and insist that they are not
planning to cut staff.

"MyTravel obviously had its own internal issues for a long time; it was
already in the low point of its business cycle before the war started,"
says Angus Chisholm, director of travel recruitment consultancy, C&M
Recruitment. "But generally, the travel industry hasn’t been hit as badly
as last time. As a recruitment firm we are a good barometer of what’s going on.
Business is about 5 per cent down, but we’ve only had one slow week since
January."

His comments are borne out by what the HR directors of the major players are
saying. Holiday bookings may be down by up to 50 per cent to the worst-hit
destinations, but tour operators are doing all they can to avoid slashing jobs.

"We are not making collective redundancies; our whole approach has been
about reducing any discretionary expenditure. We are looking at the number of
jobs directly related to the sales we are making," says Dominic Mahony, HR
director of TUI UK, which owns Thomson Holidays. "For example, the current
trend is towards late bookings, so on our teletext channels we want to maintain
numbers, but in the retail division [high street shops] we need to cut our
6,000-strong staff by about 150, and we are doing that through natural
turnover.

"We have a general recruitment freeze in place, but we are taking an
intelligent approach to it – rather than stopping altogether, we are still
recruiting for essential roles. For instance, we have just taken on an IT
specialist," Mahony adds.

At TUI UK, job-specific training – such as training holiday reps before they
are posted abroad – will continue, but longer-term development plans have been
put on hold. Face-to-face meetings have been reduced in favour of electronic
and written communications, there is an overtime freeze and staff have been
invited to take unpaid leave of up to five days (those who take five
consecutive days get one day paid), but so far jobs are safe.

Its rival First Choice has taken similar steps, asking call centre staff to
bank hours in quiet periods, offering unpaid leave and halting non-essential
recruitment.

"Our business model, particularly since September 11, has been one of tight
cost control and a very prudent approach to capacity [airline seats and hotel
beds] management. Our main focus and message to staff is that it’s business as
usual," says Jacky Simmonds, head of HR for First Choice holidays
division.

Paul Kennedy, the new group HR director at E-bookers, is equally upbeat. His
main concern at the moment is ensuring effective communications to avoid staff
jumping to their own conclusions about the health of the business.

"One of my first tasks is to take on an internal communications
specialist for a six- month contract who can put a robust communications
programme in place and ensure consistency across our European and Indian
offices.

"The message we are relaying to staff is that the business is in pretty
good shape, despite the war and the SARS virus."

Kennedy says there are no plans to reduce headcount. In fact, there are no
plans to make cuts anywhere: recruitment, training and working hours have all
been unaffected.

Now in the final stages of a massive reorganisation programme which started
in September 2001, Thomas Cook claims it is in a much stronger position than
many of its rivals. More than 2,000 of its 14,000-strong workforce were made
redundant at the beginning of 2002 as part of a drive to take £140m worth of
costs out of the business. Pay and recruitment freezes, salary cuts and shorter
working hours were all imposed at the time; now only the recruitment freeze
remains.

"We know times are difficult but we want to be ready when bookings
start to recover. All the information we are getting says customers were
putting off their travel during the war, but they intend to travel later in the
year," says group HR director of Thomas Cook UK, Fiona Rodford, who joined
the company in 2001 to oversee the restructuring process.

Kennedy agrees one of the primary concerns is how to deal with the expected
influx of bookings now the Iraq war is over. In a survey carried out by
Association of British Travel Agents, only 6 per cent of the of 500 respondents
say they will not book a holiday at all this year, suggesting there will be a
sudden surge once consumer confidence returns.

All this positive talk may smack of companies putting on a brave face in the
hope that business won’t suffer as much as it did in 1991, but their view is
backed up by comments from the recruitment sector.

"Companies looking for staff think it’s a buyers market at the moment,
but it’s not. We’ve had two candidates turn down jobs this week because they
weren’t offered enough money," says Feuell.

In March, the World Travel & Tourism Council predicted that a prolonged
Gulf War would lead to more than three million job losses worldwide and wipe
more than $30m from the sector. As holiday bookings start to return, following
the dip caused by the war, it is becoming clear the industry has been spared
this fate, although with the Foreign Office still advising against travel to
Hong Kong and Beijing because of the SARS crisis, a sense of uncertainty and
caution remains. As TUI’s Mahony suggests, travel companies are not out of the
woods yet. "You rarely hear people make blanket statements about
redundancies. We hope not to, but you can never say never."

Case study – Carlson Wagonlit

Business travel agency Carlson
Wagonlit employs 1,400 staff at 60 offices across the UK. Sue Kavanagh, HR
director, North Europe, says trading was already down at the beginning of this
year, but the outbreak of war and the SARS virus has forced the business to
take stock and look at where savings could be made. The first step was a
recruitment ban, although she says if a key position became vacant they would
reconsider.

In April, staff were invited to take unpaid leave – a minimum
of a week, a maximum of two. It is a policy that Kavanagh says has worked well.

"Take-up has been positive, although obviously we reserve
the right to review each case individually."

In addition, staff were asked to take any lieu days in April.

One potentially controversial step was a ban on all stationery
purchasing. "We’ve probably got enough in the business to last six months;
head office is consolidating all stationery purchasing to avoid
duplication," says Kavanagh.

It is the small changes such as the block on new stationery
that can dent morale, says Kavanagh , which is why so much emphasis has been
put on effective communication. The HR department put together an action plan
covering all the changes, and issued it to managers. It also asked staff to
come up with their own cost-saving ideas.

Kavanagh says the current difficulties have brought the HR
function’s role into sharp focus.

"We have a very important role to play in making sure
whatever message we want to communicate comes out centrally and is not a
knee-jerk reaction. Staff would be stupid not to be concerned about the health
of the business, but we have been through September 11, and hopefully our staff
have confidence that whatever action we take is for the good of the business
and that we know what we are doing. Redundancy will be the last call."

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