Will a day of action be enough to save the travel industry?
Travel agents, tour operators, suppliers, local partners are joining with airlines and airports to get the spotlight on them and hopefully some industry-wide support too.
This follows from new research released by ABTA – the trade association for travel agents and tour operators in the UK – that reveals over half of independent travel agents fear they will be out of business within three months, putting thousands of jobs at risk.
57% of small and medium sized travel agents surveyed said they believed they wouldn’t have enough cash to survive if current trading conditions and government support continues or worsens.
This could mean that up to 195,000 of the 526,000 jobs (37%) the industry provides could be in jeopardy if there is no material change of circumstances.
Mark Tanzer, chief executive of ABTA said: “Travel businesses feel completely abandoned by the government, which has consistently failed to provide adequate support for an industry which has borne the brunt of the economic fallout from the pandemic.
“People have worked tirelessly through the pandemic trying to stay afloat, taking on extra jobs, having to make long-standing, valued staff redundant, worrying about mounting debts.
“While we can clearly see the financial toll with jobs and businesses lost, the emotional toll of this ongoing battle, which still has no discernible end in sight, cannot be underestimated.
“Unless the government’s strategic review of international travel on 28th June brings forth a sensible plan for travel to reopen for the summer and targeted support that recognises the catastrophic economic hit that the sector has taken, the industry will truly begin to buckle before the summer is over.
ABTA are demanding that the government provides a tailored package of financial support to see the industry through to a recovery phrase including:
- Extending existing staff furloughs under CJRS and SEISS
- Extending full business rates relief
- Create new sector-specific “recovery grants” to be accessed by travel agents, tour operators and travel management companies
They would like to see any measures brought in immediately to counter the rise in employer furlough contributions at the end of the month and business rates relief tapering beginning.
Since February 2020, revenues for travel agents and tour operators has been consistently down between 86-90% every month.
Travel businesses have also had no sector-specific support from the government to date and have had limited access to the more general grant support measures that were available.
Retail travel agents were only deemed eligible for the minimum restart grants and tour operators were excluded from the process entirely.
ABTA found that less than half of travel companies were able to use the furlough scheme as staff were needed for non-revenue raising activities, such as issuing refunds and managing holiday rebookings.
While travel businesses will benefit from the extension of protections recently announced including the ongoing suspension of the use of winding up petitions by creditors and evictions by commercial landlords, they will still have to begin to make a 10% contribution to wages of furloughed staff from July 1st along with paying a third of business rates due.
With international travel still largely restricted for the second summer season in a row, ABTA thinks that travel businesses will not have the money to cover their costs the longer the restrictions go on.
Health Secretary Matt Hancock reiterated that the Government believes they are on track for a general easing of restrictions in the UK on July 19th but warned that it is more difficult freeing up international travel.
One of the most important factors to running a successful business is certainty.
If you can predict or rely on a level of demand then you can plan and fund your own expenditure accordingly but the past 18 months have blown this calculation up for a lot of industries – especially the travel sector.
There is still no guidance on international travel availability or demand as we approach the peak holiday season meaning that if August arrives with no material change then many travel agents and tour operators will be looking at the second bleak midwinter in succession.
So while everyone is hoping that the unrestricted travel will return within the next couple of months and #traveldayofaction succeeds, the chances are that this might still not be enough to return many travel businesses to profitability, at least before the furlough scheme ends in September and other measures are also lifted.
If you feel your business is stuck on the runway and instead of going places, you’re working out how to pay the bills – get in touch with us.
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