Some companies pull back on business travel

The hotel industry never fully recovered from that recession, said Bjorn Hanson, a hotel consultant with PriceWaterhouseCoopers LLC. In part that is because of permanent changes in the way some companies manage their travel budgets.

"In the late '90s, (you'd) stay where you want, spend as much money as you want, didn't matter," technology consultant Perry Sellers said recently while waiting for a colleague's flight to arrive at Newark International airport so they could share a rental car. "But today, uh-uh. Just be very conservative at all times."

Because corporate America has permanently done away with some of the travel excesses of the 1990s, there may be less fat to cut this time around. For instance, growth in hotel room demand this year will be weaker than the average rate of 2.1 percent but will still grow by 1.2 percent, Hanson said.

Restaurant industry profits are falling, but it's hard to determine how much of that is due to business travel versus local families cutting back, said Standard & Poor's chief economist David Wyss. Wyss said the travel and leisure sectors, which employ roughly 1 in 25 Americans, are "by no means trivial" to the broader economy.

In the airline industry, a new recession could lead to further industry restructuring, including new partnerships, consolidation or even a return to bankruptcy for the weakest carriers, said John Heimlich, chief economist for the Air Transport Association.

The trade group expects the industry will post a profit this year — its third since 2000 — in part because of aggressive capacity cuts that have slashed the supply of seats. But optimism is tempered.

"If we have a continued slowdown, combined with fuel prices staying stubbornly high, that's where we get into a problem," Heimlich said.

In their most recent earnings announcements, the nation's biggest airlines provided a mixed picture on the forecast for business travel.

Southwest Airlines Co. Chief Financial Officer Laura Wright said the low-cost carrier, an increasingly popular option for business travelers, began "seeing domestic weakness about a year ago" and has cut its 2008 capacity growth target to 4 percent or 5 percent, about half its original plan. On the other hand, American Airlines, a unit of AMR Corp. and the largest domestic airline, said advanced bookings are up 0.8 percent for the first quarter compared with last year, a typical rate of increase for this time of year.

Companies in industries that have been hit hard by the mortgage crisis, such as construction, building supplies and finance, are starting to consider cutting back on travel, said Jack Riepe, a spokesman for the Association of Corporate Travel Managers.

"Your view of the impact of a potential recession depends on how close you are to it," Riepe said.

Airline executives said generalizing on business travel is tricky.

"You have some corporates who are looking to reduce their travel spend. You've got other companies who see what's going on as an opportunity," said Robin Hayes, executive vice president for the Americas at British Airways, which generates much of its profit ferrying business travelers across the Atlantic.

Sabre said it issued 5.3 percent more tickets for travel during the first half of February than it did last year. Business- and first-class ticket issues rose 4.1 percent.

"Businesses like to hang in there as long as possible," said John Armbrust, founder and chairman of Armbrust Aviation Group, a Florida airline consultant and trade publisher.

Also, many companies have to send support staffers to clients to meet contractual obligations — or just to keep customers happy.

"Our clients require accounting services and tax services even more during a recession," said Grant Thornton's Geib. "Sometimes a recession for us can be an opportunity."

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