US Economy - Sequestration effects: U.S. budget cuts ripple to travel, tech

The rustic, 316-room Cheyenne Mountain Resort hotel in Colorado Springs is usually booked solid this time of year, just days before a major national space conference rolls into town.

But business is off by about a third this season as NASA has withdrawn from the conference, one of many government agencies cutting spending to meet $85 billion in budget cuts that must be made by Sept. 30 known as "sequestration." "We're still taking reservations," said the Cheyenne Mountain Resort's general manager, Todd Felsen, who has 100 vacant rooms. "Last year at this time, we were over booked."

As the U.S. travel industry nears its summer upswing, airlines and hotels are joining other companies in warning about lost revenue due to federal budget cuts that started in March -- and fear they'll lose much more.

The travel industry offers a window into the domino effect of government cutbacks. Federal, state and local governments spent about $30 billion a year on travel in 2011, according to the U.S. Travel Association, and the effect of reduced travel on the movement of goods and people, business meetings, leisure industries and tax revenue is significant. The Federal Aviation Administration estimates that commercial aviation helps generate $1.3 trillion in annual economic activity in the United States.

U.S. budget officials could not say how much federal travel was being cut in the current fiscal year, but historical tallies provide a clue. In fiscal 2012, federal agencies cut travel spending by about $2 billion from fiscal 2010, a budget official told lawmakers in late February.

This week, Delta Air Lines and US Airways Group said reduced last-minute bookings by government workers cut their unit revenue in March, sparking a selloff in airline stocks.

Shares of F5 Networks Inc plunged 18 percent on Friday, after the network equipment maker partly blamed lower government sales for its profit warning - news that also pressured shares of rivals Juniper Networks Inc and Cisco Systems Inc..

Last month, Britain's Smiths Group Plc, an engineering concern whose products range from explosive detectors to surgical needles, warned of lower revenue due to U.S. government spending cuts.

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