Trade association Abta says the sector is in for a difficult time and it has demanded more help from government and the financial sector to see it through the COVID-19 crisis.
Speaking to Travel Weekly editor-in-chief Lucy Huxley in an exclusive webcast yesterday, Abta chief executive Mark Tanzer said the industry was “looking at a very difficult 2020”.
However, he said before the crisis hit firms’ trading and demand was fundamentally fine but that the sector will need nursing through this unprecedented period.
Tanzer called on banks, insurance firms and credit card companies to support the sector, and while he was pleased with the UK government’s package of support announced, said more was needed.
“We don’t know how long COVID-19 is going to last. We have to have confidence there will be an end to it and companies will be able to trade their way out of it if we give them time.
“The underlying businesses are sound. What we need is for the destinations to open up again and consumer confidence to come back.
“Very few sectors can survive a prolonged period when you don’t have any sales. It doesn’t matter what your cashflow model is.
“It’s going to be a difficult few months and it’s going to take a while for destinations to come back and consumer confidence to come back and for companies to start trading again.
“We’re looking at a very difficult 2020. That said, companies and fundamental demand was fine before this happened.
“I don’t think people are going to be scared of travelling. The appetite is there. All the trends are positive and that gives me confidence that the sector will return.”
Tanzer said much of the focus from government has been on supporting small and medium sized businesses but he said that was not enough and the larger firms also need urgent assistance.
He said it is still be seen whether the financial support in the form of underwritten loans and paying up to 80% of furloughed workers’ wages would come through quickly enough.
And he said many travel firms do not want to put workers in furlough because they are still dealing with customers and need staff in place for when the recovery kicks in.
Outside of government support Tanzer said the companies that provide financial support to the industry need to realise they’ve got a role to play.
“Credit card companies, insurance companies, banks, if everybody acts in a spirit of self-preservation then they will exaggerate the pain of this and slow down the recover. We need to collectively solve the problem.”
Asked how the travel sector might be changed by COVID-19 Tanzer said: “The system of relationships between tour operators and agents and suppliers has worked very well and built a very large industry and it’s been able to withstand shocks in the past.
“We had the shock of the collapse of Thomas Cook last year, but fundamentally the system coped with that and new companies moved in.
“There will always be lessons to be learned from this. Companies will look very closely at where their cash is, who’s holding it, who’s protecting what. I’m sure this will intensify people’s scrutiny of that.
“Maybe the industry will look different in terms of the individual companies. There could be consolidation and M&A activity. I don’t think there’ll be a shortage of investors to put money behind it.
“You need to take that broad perspective. This is a national emergency, this is not one business or sector that’s got itself into trouble, and if we all act together we will be able to recreate the sector, the jobs and the opportunities and the experiences for those customers in the future.”