What the $2 trillion stimulus package will mean for the beleaguered travel industry — and travelers
After days of wrangling, the Senate is voting on a $2 trillion stimulus package aimed at getting the economy back on its feet as it deals with the coronavirus shutdowns.
The economic damage is widespread across the economy, but the travel industry has taken some of the biggest hits.
Reservations have dried up. Airlines schedules have been cut. Cruise ships have been idled. Even when the crisis ends, there are worries about how quickly the industry can bounce back.
And it comes at a terrible time: before the coronavirus surfaced in the U.S., travel companies were on their way to having one of their best years ever, according to President Donald Trump.
Here’s how the stimulus package could help.
What does the stimulus package mean for airlines, cruise lines and hotels?
Based on the way the bill is written now, it appears travel providers are going to have to compete for loans from a $500 billion fund. Trump has repeatedly mentioned airlines as a group that needs to be bailed out. He has also mentioned the cruise and hotel industries. They would have jostle for a share ofthe pot, which would likely be structured so that it would eventually have to be paid back once the economy improves. What’s less clear is how the damage to other sectors of travel, from casinos to tour operators will be handled. It’s yet to be seen which businesses can secure loans and whether some are left behind.
The airline industry was reportedly hoping for $50 billion, and the president said they would be first in line for a bailout. Hotels wanted $150 billion directly and another $100 billion for their suppliers. The cruise industry hasn’t disclosed how much its members were seeking.
What made this bailout necessary?
A cascade of cancellations and travel restrictions.
Some 4.6 million workers in the U.S. travel industry stand to lose their jobs in coming weeks, according to research prepared for industry group U.S. Travel.
The organization says the layoff predictions underscore the need for government action.
Even before the State Department issued a Level 4 warning for travel abroad – basically telling everyone to stay in the U.S. – travelers were bowing out of their reservations. Hotels, for instance, saw their occupancy rates to fall to 20% in major cities during what had been a banner year, the American Hotel Lodging Association.
About 25,000 of the nation’s 56,000 hotels could close due to the pandemic, warned Chip Rogers, CEO of the American Hotel Lodging Association. Major chains say they are going to have to furlough employees.
How bad has it been for airlines?
So bad that they’ve had to make draconian cuts. American Airlines is cutting international flying by 75% and 30% domestically for April. It is parking 450 planes. CEO Robert Isom told employees, “We are in the fight of our lives, and we will win.” Delta Air Lines is parking 600 planes as it cuts its flight schedule by 70%. United Airlines is slashing its flights by more than 60%. Southwest said Tuesday that it is canceling about 1,500 of its nearly 4,000 daily flights through April 14.
And how bad for cruise lines?
They’re basically shut down for at least 30 days. The Centers for Diseases Control and Prevention recommended earlier this month that everyone stay off cruise ships, not just older travelers. The warning came after a series of cruise ships had infected passengers or crew, in some instances seeing the number of cases spread among those on board. Most prominent was the Diamond Princess, which saw more than 600 passengers and crew infected by the time all disembarked in Japan. Some cruise ships have had trouble finding ports that would allow those aboard to get off and fly home, whether or not they had anyone suspected of having the virus aboard.
What happens now?
It’s yet to be seen whether the bailout is enough to get travel businesses back to any semblance of where it stood before the crisis. The stimulus has a lot of money to lend – but if travelers are hesitant to hit the road again when the crisis ends, we’ll have to see if it was enough.
