November 05, 2008 - Nationwide job cuts soared to the highest level in nearly five years in October as employers announced plans to slash 112,884 workers from payrolls, according to outplacement firm Challenger, Gray & Christmas. Just under 6 percent of the cuts, 6,372 jobs, were in transportation and entertainment/leisure, which includes hospitality, according to the firm.
Thus far in 2008, U.S. employers have cut a total of 875,974 jobs. Of those, just over 10 percent (91,230) jobs were eliminated in the two travel-related industry sectors that the outplacement firm tracks. "The transportation sector has seen the biggest jump in layoffs, increasing 245 percent from a 10-month total of 19,377 in 2007 to 66,876 in 2008," the firm stated.
Across business travel sectors, thousands of positions have been eliminated in recent months.
The U.S. aviation industry announced the elimination of more than 36,000 jobs this year, according to the Air Transport Association. Most of those "went into effect in Q2," and all cuts were expected by Q4, which is when most airlines planned to reduce capacity, a spokesman said. The job cuts include airline crews, mechanics and other direct employees, but exclude airport employees or other service providers. More than 97 airports across the country lost all air service, the spokesman said, and the total excludes all of those airport workers.
American Express Company last week announced plans to eliminate 7,000 positions (10 percent of its global workforce) by year-end, institute a hiring freeze and suspend management salary increases as part of a broader cost-reduction program "expected to produce cost benefits of approximately $1.8 billion in 2009." The staff and compensation-related reductions are expected to save $700 million.
Scaled-back investments in technology, marketing and business development and "streamlining costs associated with some rewards programs" are expected to deliver $1 billion in cost benefits to the company. Reductions in consulting, professional services and travel and entertainment spending are "expected to realize benefits of approximately $125 million next year." An Amex spokeswoman told
The Beat, "There will be some employees impacted in Business Travel, but I am not sharing specific numbers by location or business unit."
Carlson Wagonlit Travel said it was "transitioning an undisclosed number of non-client-facing operational positions to CWT India." The positions are in the centralized ticketing and refund fulfillment department of CWT Traveler and Transactions Services. About one-third of the impacted employees, all based in the United States, are to be reassigned, while others were given the opportunity to apply for open positions within the company.
Meanwhile, BCD Travel last month said that during the next five years it plans to reduce its headcount of about 8,000 by 7 percent to 10 percent as part of a cost-reduction program that includes "process improvements and synergies" and reductions through normal attrition.
Struggling hotel markets like Las Vegas, Hawaii and Orlando have likewise eliminated thousands of jobs, according to published reports. In Las Vegas, according to one report, more than 15,000 hotel positions have been eliminated. In October unemployment reports, California state officials noted that the 2,100 leisure and hospitality jobs lost in October were nearly twice as many as usual. The sector includes hotel and restaurant workers. U.S. Labor Department unemployment reports indicate that the hospitality and restaurant sector cut more than 19,576 jobs in the three-months ended in September and 74,975 since January.
In its earnings conference call last month, Starwood Hotels & Resorts executives said they continued on a "three-pronged approach to cost cutting focused at the property level, corporate SG&A (selling, general and administrative expense) and procurement." Starwood said it was reducing headcount in its vacation ownership unit.
Marriott International last month said it, too, had implemented cost-cutting programs. "Cost savings range from modifying menus and restaurant hours to reviewing room amenities, to imposing mandatory time off and hiring freezes. We continue to focus on operating efficiencies, such as food procurement, and were able to lock in cheaper energy supplies during the sharp price downswing a few weeks ago," said CFO Arne Sorensen.
Wyndham Worldwide Corp. also noted job cuts as part of a restructuring, but didn't provide specific numbers.
In the car rental sector, Enterprise Rent-A-Car last week announced the first mass layoffs in its 51-year history, with plans to eliminate about 1,000 jobs by the end of November.
"We can't avoid the realities of the economy, and the actions we are taking are to ensure our long-term strength as an organization," said spokeswoman Christy Conrad. The privately held company has about 75,000 employees nationwide in three brands, Enterprise, National Car Rental and Alamo Rent A Car.
Dollar Thrifty Group said it cut its overall workforce by 6 percent, or about 400 jobs. The cuts included a 30 percent reduction in company officers, 15 percent cut in headquarters staff and 5 percent in field staff. In prepared remarks, the company said the reductions would "allow us to streamline our processes, resulting in a more efficient operating structure, and should generate $15 million in annual cost savings beginning in 2009."
Avis Budget Group last week said it cut 700 positions during the September quarter as part of a $50 million annual cost savings initiative.
Hertz Global Holdings on Thursday is expected to detail recent cutbacks as it continues a "companywide process, which began in early 2007, to restructure and right-size Hertz." The company has eliminated an unspecificed number of information technology employees as part of an outsourcing deal with IBM.
Meanwhile, MasterCard International said it planned to "significantly ratchet up" cost-containment efforts although its debit and charge card business remains robust. "We have established a hiring cap, essentially eliminating all open positions. We are also tightening up on contractor expenses, reducing travel expenses and spending with suppliers and consultants," CEO Bob Selander said during an earnings conference call last week.
Of the steep increase in job cuts, Challenger, Gray & Christmas CEO John Challenger noted, "It is also an ominous sign that job cuts reached a five-year high in October." Job cuts are typically higher at year-end, "but the fact that October was significantly higher than recent years suggests that companies not only have been hit hard by this downturn, but they do not see a rebound in the near future."
