Lack of Covid support schemes hits travel sector

As half-term and Christmas holiday plans remain uncertain in the face of an upsurge in coronavirus infections and moves to introduce regional lockdowns, research shows the travel sector is heavily reliant on furlough scheme, with new measures failing to provide support

A report from RSM and industry group ABTA found that 89% of travel businesses made use of the coronavirus job retention scheme (CJRS) and 84% expect to use it until the end of October.

RSM surveyed 255 senior decision makers (predominantly ABTA members) from across the UK’s travel and tourism sector on the state of their industry in the context of Covid-19.

While 90% of those polled had returned to active operations by mid-September, 60% do not expect to return to pre-lockdown booking volumes and values until 2022.

Ian Bell, head of travel and tourism at RSM, said: ‘In 2019, outbound travel’s contribution to the UK economy totalled £37.1bn supporting over 220,000 jobs.

‘For a large sector that was all-but shut down during lockdown, it’s no surprise the industry has been one of the most reliant on the Chancellor’s furlough scheme, particularly when ongoing challenges with quarantine and consumer confidence are taken into consideration.’ 

Bell said the travel sector was missed off the agenda in the government’s latest announcement of extra support for the leisure and hospitality sector.

‘Strong feedback shows that the new job support scheme (JSS) launching in November will not do the job.

‘The upfront cost of the JSS will be too much to bear for many cash-strapped travel businesses.

‘With the double-whammy of obligatory customer-refunds and significantly reduced bookings over the summer trading period, the extra money just isn’t there,’ Bell said.  

RSM’s research suggests the next 12 months are crucial for the travel industry to find ways to maintain and flex operations before they get back to near pre-pandemic trading levels.

Almost a third of business (31%) plan to restructure current operations and a quarter (26%) said they are looking to access further finance.

Getting the online experience right is also a priority, with 25% of businesses planning to invest in new technology.

Bell said: ‘Our report shows the travel sector views the pandemic as a short, sharp, shock, with booking levels anticipated to revert to pre-pandemic levels during 2022.

‘To meet these challenges, over half of businesses will look to either access finance or restructure operations in the next 12 months, whilst around 40% are considering a change to their operational footprint or are planning to relocate existing sites.

 ‘Maintaining cash-flow will be the biggest challenge. Without further government support or a step-change in airport testing which might offer a lifeline to the sector it desperately needs; the next few months will be really tough.’

Pat Sweet |Reporter, Accountancy Daily [2010-2021]

Pat Sweet was the former online reporter at Accountancy Daily and contributor to the monthly Accountancy magazine, pub...

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