Travel agency assets are up in smoke after a possible Federal Reserve bailout.
Travel industry insiders say the U.S. is on the brink of losing its biggest market and could see an avalanche of bankruptcies as a result.
The Federal Reserve is poised to increase interest rates by as much as 25 basis points to close the current downturn and help push up inflation.
“It’s a very scary situation for all of us,” said Tom Bostock, head of travel-related advisory firm Bostocks Travel.
It’s also a very important market for travel agents to serve.
If you’re a travel agent, you can count on a steady stream of customers and a steady revenue stream.
If you’re not, the risk of a massive crash is too great to ignore, said Bostocker.
Bostocks, which is based in New York, says the current wave of bankruptcy will push up travel-service costs.
When that happens, travel-agency expenses will rise to an average of $13,000 a year, up from $10,000.
Bostacks is not predicting a full-blown recession.
However, he is warning that the industry could face a serious shortage of agents if the Fed fails to act.
That means a massive shortage of travel agents, he said.
We’ll be able to tell you, but we won’t know until the end of this week if the United States will be in a recession or not, he added.
Some travel-industry executives believe the Federal Reserve should raise interest rates to boost demand and boost economic growth.
But, they worry about the consequences for the travel-agent business and the economy as a whole.
Many travelers have already made the difficult decision to move abroad, and some travel agencies say they will need to cut back on their travel services to keep up with demand, Bostocked said.