Travel group hit by drop in value
Shares of Ambassadors Group Inc., the Spokane educational travel company that markets the People-to-People program, sank to 52-week lows Tuesday after reports that fewer students are interested in the company’s excursions.
The stock price closed at $22.22 on Tuesday, down $17.73. The 44 percent drop in value wiped out close to $400 million in paper wealth as 20 percent of the stock – or about 4.1 million shares – traded on the Nasdaq exchange.
Jeff Thomas, chief executive officer, blamed a weakened U.S. dollar and higher fuel prices that have pushed many student trips above the $6,000 mark.
Furthermore, parents are financially wary as they watch housing prices stall or decline.
“This is my 13th fall here and our early indicators for revenue growth for 2008 are not good,” Thomas said during a conference call to report earnings.
He said it’s only the second time that student enrollments have declined.
The company’s 2008 programs have enrolled 26,200 students, compared with 37,300 as of the same date last year.
The last decline was five years ago in the wake of 9/11.
The company has quit hiring and has eliminated jobs as executives clamp down on spending.
He said the company will increase marketing and sales efforts, however that won’t be enough to offset what is shaping up to be a leaner 2008.
Part of the problem was that a program designed to provide names of prospective students who would be interested in the travel excursions fell short. Ambassadors uses about 50 sources to find potential customers, usually students, athletes and professionals.
Ambassadors recently moved into a spacious new $18 million headquarters building on the West Plains outside Spokane. It is traded under the ticker symbol EPAX.
Insiders own 13 percent of the company.