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5 April 2013

US Budget Cuts Ripple Beyond Defence to Travel
Reuters Report

(Reuters) – The rustic, 316-room Cheyenne Mountain Resort hotel in Colorado Springs is usually booked solid this time of year, just days before a major national space conference rolls into town.

But business is off by about a third this season as NASA has withdrawn from the conference, one of many government agencies cutting spending to meet $85 billion in budget cuts that must be made by September 30 known as "sequestration”.

"We're still taking reservations," said the Cheyenne Mountain Resort's general manager, Todd Felsen, who has 100 vacant rooms. "Last year at this time, we were over booked."

As the US travel industry nears its summer upswing, airlines and hotels are joining other companies in warning about lost revenue due to federal budget cuts that started in March – and fear they'll lose much more.

Recent anecdotal evidence suggests government agencies are scaling back travel even more this year. The National Aeronautics and Space Administration announced last month that it would not attend the National Space Symposium, the annual space conference set for April 8-11 in Colorado Springs. NASA Administrator Charles Bolden, who typically addresses the conference, also will not be attending.

Travel cost-cutting will help save NASA an estimated $10 million in the current fiscal year, the agency said, noting it already trimmed conference and travel spending aggressively in the past. "With sequestration in place, we are further curtailing these types of non-mission critical activities," NASA spokesman Allard Beutel said in an email.

Those cuts ripple through the broader economy. The nonprofit foundation that hosts the space conference estimated government attendance this year was down by about 200 people. The meeting brings millions of dollars to the Colorado Springs economy, and allows the community to showcase its picturesque mountain views.

"This is our Super Bowl," said Felsen, of the Cheyenne Mountain Resort.

DC AREA HOTELS TAKE HIT

Hotels had been feeling the effects of reduced government spending even before sequestration took effect. Budget uncertainties led to cancellations of several air shows, including Virginia's Langley air show and the 2013 Wings Over Wayne Open House and Air Show at Seymour Johnson Air Force Base near Goldsboro, North Carolina, both of which had been scheduled for May.

Mark Carrier, president of B.F. Saul Company Hospitality Group, a Bethesda, Maryland-based operator of 20 hotels, said there has been a noticeable drop-off in business since January tied to sequestration. Sixteen of his company's hotels are in the Washington area.

"It's everything from the agencies saying 'we're not going to have meetings or do the training that we planned' to situations where the normal demand just isn't showing up," Carrier said. "It's really a significant thing here regionally."

As government business decreased, spending by defence contractors such as Boeing Co and Northrop Grumman Corp have also dropped off, Carrier said. At B.F. Saul hotels in the Washington region, 20 to 25 percent of business is directly dependent on the federal government, while another 20 to 25 percent is related to contractors, he added.

As a result, B.F. Saul expects a significant drop in hotel revenues this year from 2012, Carrier said. That follows flat revenue the past two years, he said.

"We just have no way to offset the demand change in government and the contractors," Carrier said.

(Reporting by Karen Jacobs; Additional reporting by Susan Heavey and Valerie Volcovici in Washington;
Editing by Alwyn Scott, Tiffany Wu and Leslie Gevirtz)

Source: Reuters


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