Chicago sings the travel blues

As businesses cut costs, the city braces for the bottom-line effects on airlines, restaurants, hotels and conventions.

Mark Thomas has been shaving his retail company's travel budget relentlessly, and he's considering pulling out an even sharper blade next year.

When he takes his buyers to trade shows, he puts them up in hotel rooms with kitchenettes so they can buy coffee and bagels at a convenience store rather than racking up $20 breakfast tabs. He no longer treats them to $70 steak-and-lobster dinners on the eve of shows, springing instead for California Pizza Kitchen. Taxi rides, often $20 a pop, are out, replaced by a rental van for the group.

"I'm really cheap," Thomas said, estimating he has trimmed his company's travel budget by 25 percent over the past three years, to try to offset the escalating costs of doing business.

Now, with the country reeling from a credit crisis and teetering on recession, he's weighing whether to eliminate some buying trips altogether, lumping him among many businesses poised to do the same thing. Travel to Chicago is expected to fall off steeply in the months ahead, creating financial pressures for airlines, hotels, restaurants and other companies that cater to the millions of tourists and conventioneers who visit the region each year.

The largest airlines serving the city, United, American and Southwest, are cutting flights to O'Hare and Midway airports on an unprecedented scale in anticipation of a looming recession.

Flights to O'Hare during the fourth quarter will be down 11 percent from 2007 levels and a whopping 23 percent from the same period in 2000, according to data compiled exclusively for the Tribune by OAGback Aviation Solutions.

But the falloff in airline traffic and tourism could be much steeper in 2009, analysts warn.

"People are just now doing their travel budgets [for 2009], and that's where the cuts will come," said Vaughn Cordle, chief analyst for AirlineForecasts, a Virginia-based market research firm. "It's going to get worse before it gets better."

Economists say belt-tightening lies ahead for most consumers as they adjust to shrinking stock portfolios or declines in the value of their homes. That could leave hotels and carriers competing with Wal-Mart for scarce consumer dollars.

"Everyone is predicting there will be no Christmas, and if that's so, then we will find out the real impact," said Thomas, whose Alley Stores, a collection of six shops in Wrigleyville, sell items ranging from motorcycle leather to cigars.

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