As promised in my year end letter during the holidays, I am writing to give everyone a mid-year State of the Company briefing.
As we are all aware, the economy and our industry are in the midst of a retrenchment the likes of which we have not seen for many years. With the recent spiraling price of oil, the aftershocks from the severe credit and subprime crisis that began last year, and the overall weak global economic environment, corporations are very focused on reducing costs. Business travel for many organizations is being affected.
So what does this mean to XXXXXXXX and the travel industry as a whole? Most importantly, it means that we need to be fiscally prudent and tighten our belt wherever possible. As the airlines try to figure out how to manage the dramatic increase in the cost of fuel, we find ourselves again at the epicenter of a confluence of economic forces which we must navigate very carefully. The pressures on travel management companies from the airlines and other suppliers will continue for some time, while simultaneously many of our clients in the financial services and legal arenas are seeing a significant decrease in their businesses.
We have been rigorously looking at our business over the past two months and are focusing on keeping our costs down wherever possible. While we continue to bring in a good influx of new business, we have seen some troubling signs from our existing clients with respect to their travel activity, which may also be affected by skyrocketing ticket prices. As we head into the slower summer months, some of the trends we have seen in May and June are troubling. Are we near the bottom or are we in for a long and bumpy road? It is unclear, but what do we know is that running the business as leanly as possible will insure that the company stays healthy and avoids the major headcount reductions that other firms are facing.
While I am aware of the many ways the economic conditions are creating hardships for so many of you and your families, it is clear to me and the senior management team that we cannot implement any companywide raises at this point without exposing our company to financial risk in the short term. We are a fiscally strong company and we will do everything in our power to manage the company through this as efficiently as possible. We will revisit compensation increases at year end, when hopefully we will have a clearer sign as to where things are heading.
As I have expressed to you before, XXXXXXXXX’s most important asset is its people, and I value each of your contributions to the company. As we have done in the past during challenging times, we are taking the necessary steps to ensure that the company stays sound. As always, I will keep you up to date as we move forward. As veterans of this industry we have been through this cycle many times, and as long as we act prudently, we will emerge as an even stronger company.
I wish you all a good summer.
I really need to get out of this hell-hole.