The travel industry can expect a spate of failures in the autumn, a PricewaterhouseCoopers director has warned.
Speaking at yesterday’s Travel Recession Toolkit seminar held in London after the ABTA annual general meeting, Ian Oakley Smith said the full effect of the recession on the travel trade is likely to be delayed as the industry takes cash in advance of delivering holidays to consumers.
However, once September arrives and advance payments dry up, it is likely companies will really feel the pinch, forcing some out of business.
Oakley Smith said: “Inevitably, there are going to be casualties this time and XL [Leisure Group] was an early casualty.
“XL was a very large failure and it took the pressure off the back end of last year.
“There’s a good chance that, come the autumn and winter, there will have been some (businesses) that realise they didn’t have a good summer.
“I think it is inevitable there will be a reasonably steady stream of failures come the autumn.
“The government’s efforts [to fight the recession through fiscal stimulus] makes it very difficult to predict how long the recession will last.”
While he was unable to predict how long this recession would affect the trade, he said the 1993 recession saw air travel fall by 20%, while non-air travel fell by 10%.
Oakley Smith was speaking following the ABTA AGM where members voted to disband the position of president as Justin Fleming stood down from the role.
Instead the association will appoint a chairman and potential candidates have until May 14 to be proposed and seconded by ABTA board members.
Rumours abound that Advantage chief executive John McEwan has the backing from several industry names to stand for the role. John de Vial, ABTA board member, was re-appointed at the board Meeting after the AGM, following the completion of his first two year term.
Advantage chief executive John McEwan admitted discussions had taken place but said he had not been formally nominated for the position of ABTA chairman.
He said: “There has been an informal discussion about it but nothing more at this stage. It’s a case of wait and see. If someone approaches me I will consider it. I think ABTA is the right vehicle to lead the industry and it needs a strong chairman.”
It was also announced at the AGM that the association had recorded a profit of £285,000 after tax from a turnover of £4.8 million for the year ending June 30 2008.