Rick Steves cuts payroll 20%, to increase to 40% in 2021
$1 million a month in expenses, but no revenue
Last updated 5/22/2020 at 1:20pm
Edmonds resident Rick Steves, founder and owner of Rick Steves' Europe, has released the following statement concerning his company's finances.
It has been a difficult and exhausting couple of months as Rick Steves' Europe (RSE) works to survive the total shutdown of international travel. I've been flattered by the media interest in the way I'm handling my business during this time, and humbled to see how that story has spread.
But as the situation evolves, I want to make sure we're being completely transparent with our staff, guides, customers and fans about what we're doing to survive this crisis.
I have said publicly that I'm committed to keeping my office staff employed with their health care during this crisis, and that's still true – but we are facing very difficult math. Right now, even with activities here at work scaled way back, it takes about $15 million a year to pay the RSE bills and stay open as a business.
We have about 100 office staff on our payroll, well over a million dollars a month in expenses, and zero revenue.
While I could follow the lead of many companies and simply shut down, that is not who I am. I have always been prepared to personally fund RSE – my life's work – though times of trouble.
My goal is to emerge from this crisis with our organization intact and prepared to fill the buses once Americans can travel to Europe again. But as the global situation becomes increasingly dire, it's becoming clear that we may need to fund our company for two years or longer with no revenue.
This is not possible without cutting our payroll dramatically.
Starting July 1, 2020, our office staff will be working at about 80% (4 days a week). Then, starting January 1, 2021, they will be working at 60% (3 days a week) until European tourism returns. These reductions represent at least a 20% cut in hours and pay in 2020 and a 40% reduction in hours and pay in 2021.
With these moves we will be able to keep our staff together, employed as a team with health care, through this crisis.
What about our tour guides?
Our guides are paid only when they lead tours. While most of our tour guides are independent contractors, we had a small group that were classified as employees. Because we have no work for them for the foreseeable future, we were forced to make the difficult decision to lay them off.
We still view this group as part of our extended RSE family and we plan to get them back on the road with the rest of our tour guide team as soon as we can. The actions we must take for our company to survive this crisis are difficult and sad for everyone at RSE, especially our guides, who now have no paid work from us.
I understand it is a frightening time. And nobody knows for sure where this crisis will take us and how long it will last.
But I do believe it will pass.
And for us to ever offer tours again, it is critical that we keep our office staff intact until that day comes. Just as we did after 9/11 and after the 2008 financial crisis, we want to be able to restart tours when it's safe to do so. We've been able to rebound quickly from previous crises and ramp up our tours when the demand returned because we kept our Edmonds staff intact.
This crisis is much more serious, but if any American company selling European bus tours will survive COVID-19, we believe it will be RSE.
I'm committing my personal finances to keeping RSE open, but I must carefully allocate that money where it will have the most benefit.
I would love to help take care of the hardship beyond our staff (our guides, our publisher, and the many other friends and partners we have in our work). But the practical and smart way to survive this extended crisis is for me to focus on keeping RSE operating, to run it on a more basic level, and to prepare for the recovery.
We believe that we will emerge from this crisis stronger as a company and united as a team. And then, we will celebrate our victory together, when we will once again be taking our happy busloads of travelers through Europe as only we can.