WorldCity Business Magazine

Back to business

by Mary Dempsey

Some Miami businesses that came to a crashing halt nearly four years ago after the Sept. 11 terrorist attacks are now seeing the first sure signs of recovery.

The four executives gathered at World- City’s CEO Roundtable in late July representeda spectrum of industries from executiverecruitment and travel to corporatesecurity and information services. Yet allreported their companies did well in 2004.For most, that good showing followed dismalpost-9/11 years.

Even more encouraging, all four expected 2005 to be another one of strong growth.

“The travel industry is coming back. It is returning to 2000 levels although it took nearly five years to do it,” said Keith St. Clair, a roundtable participant and CEO of Coral Gables-based TraveLeaders, which has evolved into South Florida’s largest travel supplier. “Hotels are achieving better rates and their yields are getting better. My side of the industry is getting better, too. We’re being rewarded for volume.”

Travel industry veteran St. Clair built TraveLeaders through the acquisition of 20 other travel companies, then sold the assets in December 2004 to New Jersey-based American Leisure Holdings, which has two divisions: travel and vacation-home resort development. St. Clair is chairman of the advisory board for American Leisure’s travel division.

Covering both leisure and business travel, including corporate travel management and meetings planning, TraveLeaders offers private-label services for local companies that want to set up in-house online travel services bearing their names. The services are fulfilled by TraveLeaders. (Disclosure note: WorldCity has partnered with Trave-Leaders to create WorldCityvacations.com.)

In 2000, TraveLeaders was thriving, the result of travel revenues and passenger volumes that were breaking all-time records around the world. The day after the terrorist attacks, however, the industry began a dramatic plunge that stretched through 2003. St. Clair told the roundtable that improvements began to surface in 2004, with business increasing 10%, and he expects a 15% uptick for TraveLeaders in 2005.

His projections echoed forecasts made in early July by the World Travel Organization in Madrid. “Worldwide tourism results for 2005 show a continuation of the overall positive trend of 2004, with international tourism arrivals growing on average by 8 percent in the first four months,” according to the WTO’s “World Tourism Barometer” report. WTO figures show that 763 million people embarked on international travel in 2004, a hike of more than 10% from a year earlier.

**Beyond travel

The travel industry is one of the most sensitive to terrorism and other acts of violence as well as catastrophic weather and disease, as evidenced in recent years by the impact on travel of the tsunami in Indonesia and the outbreak of the SARS virus in Asia. But it is not the only one that saw an overnight decline in the wake of the attacks on New York’s World Trade Center and the Pentagon in Washington, D.C., four years ago.

Bonnie Crabtree, managing director in Florida for executive-recruitment companyKorn/Ferry International, said 2000 was also one the best years on record for her company. “Then the six months after 9/11 it was dead. After about 18 months things had started to come back a bit,” she said. But during that interval, her company laid off employees for the first time.

The executive search industry is not cyclical like other sectors. Still Crabtree, a participant at the CEO roundtable, said it took a long time for business to rebound, even for an office like hers that, in addition to Florida, oversees business in the company’s 11 Latin American offices.

“In the fall of 2004 we really started to see it come back. In our year ending April 30, 2005, we announced close to a 40 percent jump in earnings,” she noted.

Korn/Ferry’s fiscal 2005 fee revenues reached $452.2 million, an increase of 38% compared to a year earlier. In announcing the earnings figures in June, Korn/Ferry CEO Paul C. Reilly said global demand for executive- level jobs was up, despite volatile equity markets and high oil prices. The publicly traded company is the world’s largest executive placement company.

For Andre Britto, the terrorist attacks not only affected the new Miami office he was charged with opening for Finnish company Esmerk, but it gave him pause on a personal level. Britto, a Brazilian, moved to Miami just a week before 9/11. “I didn’t know what to do. I debated whether I should go back to Brazil,” he recalled.

Content provider Esmerk is owned by Helsinki-based SanomaWSOY Group, one of Europe’s large publishing and media conglomerates. Esmerk collects news from 100 countries around the globe then customizes it for online transmission to its subscribers. All the content is provided in English except that destined for Finland, where it is produced in Finnish, and some French articles for subscribers in France. It provides services similar to Lexis Nexis or, in Latin America, Chile’s BNamericas. The content is managed and translated at the company’s U.K. office.

**Taking a risk

Britto was given the responsibility of opening Esmerk’s first U.S. office, which was to handle Latin American clients principally in Argentina and Brazil as well as subscribers in the eastern part of the United States. After 9/11 he decided to push ahead with the launch of the new office, but the beginning proved tough.

“In 2002 we had no business. Everything was going down. It was a big challenge, trying to figure out what to do,” he said, adding that the office did not begin to turn around until 2003. “Then 2004 was a great year. And our company as a whole grew 10.1%,” he said. Esmerk’s U.S. operation is now talking about Chicago and San Francisco.

The fourth executive at the CEO roundtable also has seen growth in her sector in the past couple years, but she acknowledges that some of that springs directly from the terrorist attacks. Odalys Fajardo-Guerrero is managing director in Miami for Vance, a Virginia- based company that handles all levels of corporate security from bodyguards to due diligence in mergers and acquisitions. In addition to handling local clients, the Miami office oversees operations in Latin America.

Driving the growth

The terrorist attacks, foreign kidnappings and labor and political unrest in Latin America all create demand for Vance’s services. Last year’s hurricanes sparked requests for teams to protect companies in the Caribbean from looting. In addition, Vance handles background checks on candidates for highlevel corporate positions, does digital research in high-tech cases and takes on investigations linked to international litigation which, increasingly, is unfolding in Miami.

“At the end of the day, it comes down to protecting your people, protecting your assets,” said Fajardo-Guerrero.

The investigations and assets protection company handled digital security for the Olympics in Athens last year and is also contracted for security work at the Winter Olympics in Italy in 2006. Vance is owned by SPX Corp., a manufacturer and service provider across several industries.

Ongoing global violence and political upheaval are likely to keep Vance in business. “I’m confident things will continue to go well for us,” said Fajardo-Guerrero. But for the other companies represented at the roundtable, the hows and whys of recovery are more complicated.

TraveLeader’s St. Clair said Americans have become more accustomed to the idea of terrorism, their fear has faded somewhat “and now they don’t want to let the terrorists win.” The World Tourism Organization speculated that some of the travel growth posted in 2004 and 2005 stemmed from pent-up demand, as well as the stimulating effective of online travel services offering low-cost airline tickets. “People are regaining the lust for travel and feel that the moment is appropriate to make the trips,” according to the WTO.

**Global expansion

At Esmerk, Britto said corporations’ ongoing business expansions have helped his company. In particular, fast food and energy companies have been eager subscribers to the news service as they gear up for expansions and development projects. “Many of the fast-food companies are seeking news from China,” he said.

Korn/Ferry’s Crabtree said corporations have a renewed need for strong managers, effective talent management and retention strategies. She noted that Korn/Ferry’s Leadership Development Solutions unit, developed in Europe a decade ago but relatively new to the United States, is doing well. Among other things, the unit does in-house assessments of executives’ performance and executive coaching.

The roundtable participants, except for Fajardo-Guerrero, acknowledged that another terrorist act in the United States would likely devastate their companies again. “The year 2001 is not that far away. We remember those dark days,” said Crabtree. But the executives also acknowledged that their companies managed to pull through when they weren’t sure they could. They’re hanging onto that lesson.