September 11, 2006

The economy was slumping, shaking the confidence of businesses and consumers.

Then it got worse.

The Sept. 11, 2001, terrorist attacks gripped a nation and accelerated economic downturns, including a regional recession.

Some industries, such as travel, suffered as travelers grew wary of flying and businesses cut out trips to save money.

"When these things happen, you kind of hunker down," said Andy James, co-owner of James TravelPoints, a 49-year-old Boulder agency. "You do the things you have to do to stay alive."

Other industries, though, rapidly boomed as they served the needs of disconnected companies and national defense.

In the following years, the area's business community diversified, either to keep up with growing demands or to stay afloat.

Five years later, that business community is a stronger one for making it through that time, said Gary Horvath, a research assistant in the University of Colorado's business research division.

"The companies that survived seem like they have turned the corner and are doing well," he said.

Adjusting to change

The plan was for Applied Trust, an information technology consultancy, to get incorporated and open a new office on Sept. 11, 2001.

"It was going to be a normal day for us," said Trent Hein, who co-founded the Boulder-based company with Ned McClain.

But after learning of the attacks in the eastern United States, Hein began to question himself.

"I thought, 'What do I do? Do we proceed with our day as we planned? Should we be moving to that office? Should we even be starting a company?'" Hein said.

But Hein and McClain moved forward.

Applied Trust was able to push through the ensuing economic downturn. It hired experienced tech workers who recently were laid off. It purchased its current downtown office space during the real estate slump. And it found a niche providing services in the security sector to the regional marketplace.

Last week, Applied Trust celebrated its fifth anniversary.

The events of 9/11 "raised awareness," McClain said. "It is a visible example of something that is still a practical risk for all of us."

The amount of data lost after Sept. 11, 2001, showed problems that existed with information backup and recovery, said Mike Karp, who follows the data storage industry as a senior analyst with Boulder-based Enterprise Management Associates.

"That caused a major rethinking. People started to understand the tools they had, while good, were not all-encompassing with their abilities to protect," Karp said. "The important thing was not how you backed up, but how quickly you could recover."

Karp noted local companies such as Louisville's Storage Technology Corp. — which was acquired by Sun Microsystems in 2005 — and Longmont-based Copan Systems were able to adjust to the industry's changing dynamics.

The ability to quickly adjust helped local businesses Raindance Communications Inc. and Starsys Inc. to respond to change in their respective industries as well. Consequently, both became acquisition targets.

Raindance, a Web- and audio-conferencing company, saw a 30 percent spike in its business almost overnight, said Bryce Ambraziunas, vice president of operations at the company's Louisville site. West Corp.'s Intercall division bought Raindance earlier this year.

The business remained even after downed networks and phone lines were repaired and flights resumed in 2001 because travel and time became costlier expenses for many businesses, he said.

"We really held onto that traffic over time as people decided not to travel that much," he said.

Raindance already planned for accelerated growth and was able to handle the bump, he said.

In Starsys' case, the manufacturer of electromechanical systems for spacecraft was starting to work more on defense programs during 2001.

"As defense picked up right after (9/11), we picked up right with that," said Scott Tibbitts, Starsys' co-founder.

The bolstered defense work not only helped the company overcome dips in its space and commercial businesses, but it also helped boost those other sectors as well, Tibbitts said.

The business proved attractive to aerospace firm SpaceDev Corp., which bought Starsys in 2004. The combined company recently was one of six finalists for a $250 million NASA mission.

During the past five years, Tibbitts said he places the most importance on how his company has been able to help its nation.

"I realized we were working on things that made a difference for what the country was going through," he said. "It felt like we were doing something."

Moving forward

Five years ago, the Boulder region's economy already was in its descent, with woes in telecommunications and manufacturing sectors already underway. Broomfield-based Level 3 Communications Inc. pared jobs as it struggled to compete with a crowded field of players and a glut of fiber-optic networks. Manufacturers with local connections, such as Electro-Mechanical-Solutions, ventured into bankruptcy, shedding workers as well.

"We were headed into a recession anyway, and that was exacerbated by 9/11," said CU's Horvath. "I think much of what happened (in telecom and manufacturing) would have happened with or without 9/11."

Initially, air traffic numbers dropped, he said, but those have rebounded well as Denver International Airport is on track for a record year in 2006.

The Colorado tourism industry's hit was a little more long-lasting. It saw the effects of wary travelers but then suffered a double-whammy later in the following summer because of drought and wildfires, he said.

Boulder-based travel agency Cain Travel lost several accounts during that time, not only because of 9/11 and the dot-com bust, but also because of pandemic fears from SARS, said owner Linda Cain.

Business appears to have turned the corner now, she said.

"It increased slower at first, and now we feel the economy rebounding and we're very encouraged by the outlook," she said.

While the business traveler market saw a relatively quick rebound, it took about a full year for the leisure traveler market to pick up again, said James TravelPoints' Andy James. The leisure market continued to increase through the next couple of years, but not quickly enough for all in the industry as hotels, cruise lines and agencies went out of business, James said.

"Pretty much anyone who lasted through 2001 to 2003, and is still standing after 2003, survived it," he said. "And a lot of it comes down to how you managed your business, how your finances were and can you weather a downturn like that? And a lot of businesses couldn't."

James TravelPoints' business is pretty close to what it was prior to 2001, but the operation is a lot leaner. It's also using different approaches, such as Web marketing, he said.

It's been a four-year recovery process for the local tourism industry, said Mary Ann Mahoney, executive director of the Boulder Convention and Visitors Bureau.

After 9/11, hotel occupancy rates sunk, she said.

In September 2000, 84 percent of Boulder's hotel rooms were filled, according to the Colorado Hotel and Lodging Association's Rocky Mountain Lodging Report.

A year later, that number dropped to 53.2 percent.

"You anticipate a 4 (percent) to 5 percent growth rate in healthy times and when you see it drop dramatically like that, it's a long recovery," she said.

Stasia Patience, director of sales at the Boulder Marriott, said she has noticed the industry bounce back during the past two years.

"It seems like people are spending money again," she said. "That's the feeling that you get."

For September 2005, Boulder's occupancy rate was 65.6 percent. In September 2004, it was 70.5 percent.

Fewer travelers after the attacks meant fewer dollars funneling down to local businesses, resulting in sales tax declines for downtown Boulder in 2001 and into 2002, said Jane Jenkins, executive director of Downtown Boulder Inc.

"It was 9/11; it was the tech boom and bust; it was the lack of consumer confidence on the national level," Jenkins said. "I think we felt the impacts of all of that. I think 9/11 was a small piece of it."

However, she said, the landmark shopping district of Boulder was able to emerge from the downturn.

"I think that our traffic is up," she said. "I think people seem to be responding well to downtown Boulder."

As business appears to be improving, the community is not losing sight of the struggles it went through and the road ahead, Mahoney said.

"I don't know if you ever recover," she said. "I think you can only move forward."

Contact Camera Business Writer Alicia Wallace at (303) 473-1332 or This e-mail address is being protected from spam bots, you need JavaScript enabled to view it