A sharp decline in Atol holders and Abta members during the pandemic is forecast to continue despite a strong bounce‑back in bookings as most travel companies’ finances are “shot to pieces”.
Leading industry accountant Chris Photi, head of travel and leisure at White Hart Associates, warned the decline in tour operator and travel agent numbers won’t abate and the cost of living will “impact demand”.
Photi told the Travel Weekly Future of Travel Spring Forum: “There were 2,100 Atol holders before the pandemic. Now there are about 1,600. By March 2023, I predict another 100 will go and there will be 1,500.
“Some may just have stopped selling Atol products. Some trade licences have not been renewed due to a change in the VAT rules. But there is a trend.
“We see a similar trend with Abta members – 1,106 prior to the pandemic, reduced to 928 at the last renewal. That is going to reduce further between now and June.”
Photi noted: “Most travel companies’ balance sheets have been shot to pieces. There have been few failures simply because of government support mechanisms. The industry has criticised the government, [saying] it hasn’t done enough, and I agree. But these mechanisms kept businesses alive.”
However, he argued: “The elephant in the room is the cost of living. It’s going to impact demand. If inflation is 10%, lower-income groups are probably going to book fewer holidays [and] staff are going to be looking for higher salaries.”
Photi added: “As you bounce back, your merchant acquirer is going to see more cash coming through and the risk start to increase. We already see CAA pressure for trust accounts and Abta pressure for higher bonds. That is an issue. The bounce-back is not going to be without problems. You want to retain good staff, but you’ve got to look at your overheads.”