As skittish consumers scrap plans for elaborate holiday trips, the phones at Collette Vacations have quieted. Advanced booking for travel this year is down 21 percent.

Yesterday, the Pawtucket-based company said it was laying off 40 employees, 9 percent of its global work force.

“It’s unfortunate. It kind of breaks our heart,” John Galvin, Collette’s chief financial officer, said. “In difficult economic times, people defer travel and vacations.”

Painful stock market losses and the threat of layoffs have battered consumer confidence, keeping shoppers away from car dealerships and retailers. In the third quarter of last year, the growth in consumer spending dropped for the first time in 17 years and household debt declined for the first time since at least 1952, The Wall Street Journal has reported.

The national household savings rate is expected to jump from less than zero to as high as 10 percent this year.

In most cases, it is a newfound frugality, not rising salaries, that is filling savings accounts. That is bad news for businesses that chase discretionary income, particularly the leisure travel industry, dependant on wanderlust and spare cash.

Southwest Airlines reported Tuesday that its traffic had increased by 1.6 percent last year, the slowest annual growth since 1988. Normally an unimpressive performer, the Dallas-based carrier outpaced American Airlines, which saw a nearly 5-percent drop in traffic, and United Airlines, which recorded a 6.5-percent drop.

So far, travelers are still finding their way to Providence. Last November, the city’s hotels averaged 62.3 percent occupancy, up from 55.6 percent in November 2007. But that increase may be attributed to several large conventions last fall, including a meeting of the Evangelical Theological Society that brought 1,700 visitors.

“Nationwide, you’re definitely seeing an impact,” Martha J. Sheridan, president of the Providence Warwick Convention & Visitors Bureau, said of the weakening economy. “Most major national hotel chains are projecting decreases.”

At Collette, the recent struggles follow two years of record growth. In 2007, Collette brought in $175 million in revenue and showed record net income, Galvin said. Last year, revenue rose to $180 million, another record. The privately held company does not disclose its net income.

But sales began to slow last September and it quickly “got progressively worse,” Galvin said yesterday. “We kept riding it out, hoping it was going to get better,” he said. “You do everything you can to avoid having to cut people. But all the statistics point in the same direction, to a slowdown in business.”

The travel agency has been operating since 1918, when its founder, Jack Collette, began organizing bus trips to Boston and later, April tours of Washington, D.C. By last year, the company had grown to 426 employees, and its vacation destinations included Tibet, Costa Rica and New Zealand.

But as sales for trips this year, available to travelers since last June, fell far below expectations, the company’s prospects dimmed.

Suddenly, Collette has found itself celebrating its 90th anniversary by laying off 36 of its 250 employees in Pawtucket, as well as staff in offices in Toronto and Great Britain.

“To put your head in the sand and pretend this isn’t happening,” Galvin said, “is not an option.”

bgedan@projo.com