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SARS, Iraq War, Poor Economy Hurt Travel Business

As Severe Acute Respiratory Syndrome, or SARS, continues to raise concerns and rebuilding begins in Iraq, American travelers and the industry that serves them are watching and waiting. Airline and hotel bookings overseas are down as much as 40 percent.

Call it a convergence of bad luck: war, disease, fear of terrorism and a global economic downturn have brought international travel to a virtual standstill. Most U.S. airlines have put a moratorium on flights to Asia and are flying with reduced schedules to the Middle East.

Other airlines have simply gone bankrupt. That is why American travel operators are crossing their fingers for a mini-boom this summer that is closer to home.

Cathy Pelaez, chief executive officer of Liberty Travel, which has more than 200 offices throughout the New York area, says the current economy and world events are making Americans skittish about their travel plans.

"The vacation business is on hold. I think a lot of travelers are in a wait-and-see mode. It is not like post-9/11," she said, referring to the travel industry's difficult period after the Sept. 11, 2001, terror attacks, "because post-9/11 we were facing both cancellations and people not traveling and making future plans. In this particular state we are in right now, we are not seeing the wave of cancellations that we saw post-9/11, but we are seeing that people are temporarily putting plans on hold."

Ms. Pelaez, like other leisure travel operators, is cautiously optimistic that people will start traveling again once summer approaches.

"The areas that are being hardest right now is overseas travel: European destinations, Asia. Those areas have had the biggest impact," she said. "It is somewhat inevitable that people who have decided not to go overseas are still going to want to take a vacation and that could impact domestic travel; Caribbean travel, travel to Mexico, Hawaii should be somewhat positively impacted."

Some travel companies, like Kerzner International Resorts, which owns the Atlantis, a 2,300-room mega-resort in the Bahamas, are starting to see glimmers of a rebound. The Bahamas is a 45-minute flight from Miami and just three hours from New York.

Kerzner executive vice president Howard Karawan says the Atlantis, where rooms go for as much as $900 a night, was 90 percent occupied in March, and calls for reservations have gone up by 50 percent in recent weeks.

"Clearly, immediately after the war, we saw a slowdown in bookings, but that has pretty much picked up to pre-war levels," said Mr. Karawan. "In addition to the fact that we are close to home in the Bahamas, the Bahamas is perceived to be very safe. There is U.S. immigration and customs in the Bahamas. The rest of the collection [of Kerzner hotels] is in the Indian Ocean, and we have had a bit more of a fall-off there because of needing to fly in and around the Middle East to get there."

More than any other travel market, it is Asia that has fallen off the tourism radar screen, primarily because Severe Acute Respiratory Syndrome continues to affect the region.

Louie Yi, president of Lotus, a Seattle-based travel company that arranges luxury tours in China, Cambodia and Vietnam, says the leisure travel part of his business has fallen to zero.

"In the past four to six weeks, 100 percent of leisure travel has been canceled. People want to wait and hear whether the situation in China is under control before re-booking and make a new decision," Mr. Yi said.

He believes it will take at least six months after the epidemic is under control before people will start returning to Asia.

Mr. Yi says his only clients still traveling to the region are adoptive parents, who have waited more than a year for permission to bring babies to the United States. He says even an epidemic has not stopped these parents from flying to China.