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Personal Finance > Smart Spending > Travel
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War dents business travel
Restrictions much tighter on overseas trips; employees can just say 'no.'
March 27, 2003: 1:45 PM EST
By Chris Isidore, CNN/Money Senior Writer

NEW YORK (CNN/Money) - Businesses are cutting back on travel in response to the war in Iraq, and they're giving employees more freedom to just refuse to travel altogether.

Some leading corporate travel agents said there's been a sharp drop in bookings by their clients, which started after President Bush's March 17 speech giving an ultimatum to Iraq.

"Slightly over 50 percent have put in some restriction for international travel," said Dee Runyan, executive vice president with WorldTravel BTI, the Atlanta-based corporate travel manager that is the nation's No. 3 travel agent. "They're banning outright some countries or regions, such as the Middle East. If they're allowing travel at all, they want security officers or senior executives to approve such travel."

The sluggish U.S. economy already has cut business travel since early 2001, even before the Sept. 11 terrorist attacks and the more recent concerns about war. Since business travelers are more likely to pay higher unrestricted fares than leisure travelers, the change in business travel policy is another body blow to the nation's airlines, already reeling under heavy losses from the war.

The Air Transport Association, an industry group, said Wednesday that traffic tumbled 10 percent last week, led by a 25 percent drop in trans-Atlantic travel, a 13 percent drop in trips across the Pacific, and a 7 percent drop in domestic travel.

But even the most cautious companies are keeping some employees on the road, said Cathy Voss, vice president of business travel services for Carlson Wagonlit Travel, the No. 2 travel agent after American Express.

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"I don't know of any accounts that have stopped travel completely," she said.

A survey of members by the Business Travel Coalition, an industry group, found that 19 percent of corporations have banned international travel, at least for a while, while 53 percent have tightened the approval process for international trips. Another 37 percent would consider putting restrictions in place if the war situation "worsens."

According to the survey, about half have "adjusted" domestic travel policy, though few are banning domestic travel outright.

WorldTravel's Runyan said she's seen only a "smattering" of restrictions on domestic travel, mostly a requirement for more reviews of possible trips by top executives. She said that overall bookings by her firm have falling 17.5 percent since before the March 17 speech. Despite war worries and a softening economy, bookings had been running even with year-ago levels in January and February, she added.

Other executives with major corporate travel managers are reporting a less severe drop in bookings.

Alicia Klosowski, spokeswoman for Rosenbluth International, said the Philadelphia travel manager saw bookings sink 26 percent last Thursday, the first full day of fighting in Iraq, from a year earlier. But since then bookings have rebounded, and are down about 12 percent overall since the start of the war. Travel arrangements had been off about 8 percent in the weeks leading up the to the start of fighting.

"There's been a certain level of uncertainty for quite some time in our client base: 'When's it going to be begin, how long is it going to last?'" Klosowski said.

All the corporate travel managers, along with the Business Travel Coalition survey, say employees are being given greater latitude to turn down trips during this period. The survey found 73 percent are giving employees the right to say no to a trip.

"Well over half our clients are telling employees, 'If you are uncomfortable, you can say no to travel.' And they're putting that in writing," Runyan said.

What none of the travel managers can say is how long the restrictions on business travel may last. Some say businesses could resume more normal operations in the coming weeks and months, even if the fighting is continuing, if there is a greater sense of routine.

"We believe there is a pent-up demand for travel because there's been uncertainty for so long," Klosowski said. "We think for the most part we've bottomed out right now unless there's a terrorist attack."

Others say restrictions may continue even after the end of fighting if there are concerns about the threat of terrorist attacks during a U.S. occupation of Iraq.

"This time, even when we control Baghdad, that won't necessarily be a green light in the mind of the traveler," Business Travel Coalition Chairman Kevin Mitchell said. He said that improvements in communication technology since the first Gulf War in 1991, such as Web conferencing, will slow the rebound in business travel after the end of fighting.

WorldTravel's Runyan said the war isn't the only factor limiting business travel right now. Trips to Hong Kong and China are being halted by some firms due to concerns about the outbreak of a virus there that is believed to have killed about 50 people in recent weeks.  Top of page




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