September 14, 2004
Output per hour in the travel agencies industry increased at an average rate of 1.6 percent per year from 1987 to 2002, reflecting an annual average rise in output of 2.0 percent and an average annual increase in hours of 0.4 percent.
However, there were different trends in the 1990-95 and 1995-2000 periods. From 1990 to 1995, productivity in the industry increased at a rate of 0.2 percent per year. The increase in output of 2.4 percent per year during this period was largely offset by the rate of growth in hours of 2.1 percent per year.
From 1995 to 2000, productivity increased more rapidly, rising at an average annual rate of 2.9 percent. The productivity growth was driven by output growth of 3.0 percent per year with only a 0.1 percent per year growth in hours.
The industry's composition shifted in the late 1990s, as the share of very small establishments declined and Internet-only firms gained market share. The operations of Internet-only firms require less labor partly because the firms do not need to staff local offices.
The terrorist attacks in 2001 precipitated a significant drop in air travel, adversely affecting travel agencies, as output fell by 13.1 percent and hours by 7.0 percent that year. In 2002, the decline in hours accelerated (-13.2 percent), as output fell again (-0.4 percent), leading to an increase in productivity of 14.7 percent.