Tourism is big business in the Pacific Northwest. But with people traveling less, the number of visitors from overseas declining and companies slashing business travel, everyone — from small innkeepers to major downtown hotels — is feeling the impact.

Lummi Island innkeeper Riley Starks saw the downturn coming last June, when after years of brisk bookings at his century-old Willows Inn, business plunged 15 percent.

“We were shocked, but took it in stride. Then July came, and we were down 15 percent again.”

Starks says he started to catch on to what might be going on when things improved in August. “That told us people were postponing their vacations until the bitter end.”

The former reef-net fisherman and his wife, Judy Olsen, aren’t taking any chances this year with the Whatcom County inn and restaurant they opened seven years ago next door to their 5.5-acre organic farm.

Save 75% on a Digital Subscription Today

With business down 25 percent last month, they cut back on hired help, closed their restaurant to the public most days, froze room rates at 2007 prices and rolled up their sleeves.

“We’re both putting in serious amounts of time here,” he said.

Gone is a full-time breakfast cook. Expansion plans were shelved.

Starks is counting on wedding bookings and local travelers to help weather what some say is the worst time for the travel industry since the Sept. 11, 2001, attacks.

Tourism is big business in the Pacific Northwest. Visitors to Washington spent nearly $17 billion last year, generating 150,000 jobs and $1 billion in local and state tax revenues, according to the latest report by Washington State Tourism.

With people traveling less, the number of visitors from overseas declining and companies slashing business travel, everyone — from small innkeepers to major downtown hotels — is feeling the impact.

“All sectors of the industry are looking for ways to generate business and keep themselves afloat,” said Dave Blandford of Seattle’s Convention and Visitors Bureau.

A few signs of the economic times:

Conventions: Seattle so far hasn’t lost convention business on the scale of Las Vegas or San Diego, but future prospects are murky.

So far, two companies have canceled meetings this year. T-Mobile called off a January national sales meeting that would have brought 2,500 to 3,000 to the city. Best Buy canceled a summer meeting expected to draw 2,000.

Spending: Although travel spending in the state rose 5.7 percent last year, most of the increase was due to higher gas prices and airfares. Adjusted for inflation, spending actually dipped 0.1 percent.

Online booking: Calling the economic environment “unpredictable and unprecedented,” Bellevue-based Expedia, the once-profitable and robust online-travel-booking site, posted a fourth-quarter loss of $2.76 billion. It froze salaries and slashed its payroll by $20 million.

International flights: SAS Airlines announced it will pull out of the Seattle market after 42 years when it drops its Seattle-Copenhagen flights later this year or early in 2010.

Hotel vacancies: When Hyatt Hotels and Resorts began planning two years ago for the Hyatt at Olive 8, the chain’s newest downtown Seattle hotel that opened Jan. 29, it was the best year ever for Seattle convention business and “2007 looked strong,” said Andy Bishop, director of sales and marketing.

But this past January, reports Smith Travel Research, downtown Seattle’s hotel occupancy rate slipped to 44 percent, down 20 percent from January 2008.

The Hyatt filled just 20 percent of its 346 rooms the first month it was open, “sort of what we expected,” said Bishop.

For the year, he said, “we’ll certainly be pleased with anything over 65 percent.”

Foreign travel: Hit hard by a drop-off in travel to Europe, even at a time when the dollar is worth 20 percent more against the euro than it was last spring, Edmonds-based travel writer and public-television host Rick Steves says his tour business and book sales are off 33 percent.

“If this was a publicly held [stockholder-owned] company, people would be freaking out.”

Steves, 53, owns Europe Through the Backdoor, the company he started after college. He’s cutting the number of overseas tours he’s offering to 250 from 400 last year, but says he has no plans to lay off any of his 70 employees.

“This market is tougher than post-9/11 because back then, we needed to convince people only that it was safe [to travel],” Steves said.

“Today, we need to convince people that they have enough money to spend on a trip … which is beyond good salesmanship,” he said. “People’s financial status is a reality. Some can travel and many can’t.”

For those who can, there’s a flip side to the industry’s woes: Lower prices on everything from package tours to cruises and rooms in luxury hotels.

Some examples:

Hotels: If your dream has been to spend a weekend in a luxury hotel, this is the year to do it.

The Hyatt at Olive 8, with flat-screen HDTVs, marble baths and underwater speakers in its heated pool, is offering a prepaid rate of $169 on weekend nights.

Hotels like this normally depend on convention and business travel for most of their business and companies are cutting way back.

Weyerhaeuser, for example, will trim its travel spending 65 percent this year, said spokeswoman Shannon Hughes.

“We get discounted rates when we negotiate hotel prices each year, but we’re also finding it’s a buyer’s market,” she said. “Employees have even had success adjusting hotel prices down by asking upon check-in.”

Travelers bidding on — a site where users name their own price for a certain class of hotel and find out its name only after their offer is accepted — reported bidding $70 for four-star hotels in downtown Seattle in February.

They landed rooms at the Edgewater, Hotel Monaco and Vintage Park, where room rates are normally double that this time of the year.

The new Seattle Four Seasons across from the Seattle Art Museum won’t show up on the discount sites, but it is offering weekend rates starting at $275, and a third night free through June for rooms booked at the $365 standard rate.

Airfares: Prices are plunging from last year’s highs. How far ahead should you buy?

Probably not too far, considering airlines seem to be making decisions about lowering fares much the way travelers are deciding on trips: last-minute.

Seattle-San Francisco round-trips are going for $129 most days in March, April and May as Alaska Airlines, Virgin America and United duke it out for a shrinking pool of passengers.

Round-trip fares between Seattle and many European destinations for spring fell last week into the $600 range compared with the $800-$850 the airlines quoted just a few weeks ago.

“This year will be the first in a long time when we will see a lot of summer fares (to Europe) under $1,000,” said Rick Seaney of FareCompare, a Web site that monitors airline-ticket prices.

“Airlines are reacting to demand,” he said. “They make their money by studying past trends and history, but there’s no history for oil going from $150 a barrel back to $50, followed by the worst recession in recent history. They’re basically flying blind.”

Tours and cruises: Tour companies are slashing prices, especially on cruises and European destinations.

Norwegian Cruise Line is offering seven-day cruises between Seattle and Alaska’s Glacier Bay starting at $790 per person for inside cabins, about $112 per day, including taxes, for May departures.

REI Adventures lowered prices on its European trips by $200 to $600 per person, said manager Cynthia Dunbar.

Dropped from its lineup this year when no one signed up was a nine-day trip to the Swiss Alps for $3,599. Added were weeklong hiking trips to Utah’s Capitol Reef National Park ($1,799), now wait-listed for several April departures.

Steves, who spent several weeks last year filming in Iran, sees more interest in tours to exotic destinations such as the Baltics, Turkey and Spain’s Basque Country than in “Best of Europe” type tours, a trend he traces to less-experienced travelers staying closer to home.

He’s philosophical about the future, noting that although his business is down one-third compared to last year, it’s 60 percent higher than it was 20 years ago.

“We had an unsustainable, falsely affluent economy for the last decade. … It couldn’t last.”

Carol Pucci: