Coronavirus expected to drive consolidation in travel

Consolidation is expected in the travel sector as strong firms that emerge from the COVID-19 crisis go on an acquisition trail.

Alistair Rowland, Abta chairman and chief retail officer for specialist business at Midcounties Co-operative, said he expects a lot of changes in the industry due to the pandemic.

Speaking in a Travel Weekly webcast, he said the lack of a commercial market for insurance for Atol and Abta bonding could make re-packaging too risky for many firms.

Rowland said Midcounties will be supporting its Personal Travel Advisors (PTA) homeworkers, stores and consortium members with a “war chest” ready for when travel restarts.

And he said firms that have battled to survive the lockdown could also look to larger groups to spread the cost of having to deal with customer refunds as they run short of cash.

“Definitely, we will be supporting our PTAs, our consortium agents and our own shops when we know what demand will look like and we will do that without doubt in a bigger way than normal.

War chest

“We have a war chest to be able to do that and we want to support. Being one of the larger travel businesses, there’s got to be a lot of independent agents that needs a hand out of this.

“They will just about survive because they are fighters, but they will be running out of cash, so the market will look different when we come out of this, there’s no doubt.

“Not everybody will survive to tell the tale. Government support, while it’s welcome, it’s got gaps and therefore everybody will do the best thing that they can do.

“And I’m sure other PTA-type of parents and consortia will be doing everything they can to keep agents solvent by them out spreading cancellation fees and risks.

Rowland added: “I think the market for the stronger players will actually be quite acquisitive.

“I do think there’ll be a lot of changes. For lots of people who have lived off repackaging in Atol, the reinsurance market is really difficult and there’s going to have to a much tighter rule set on who can sell what. All of those things have got to recalibrate.

“Today, if you wanted to take insurance on the failure of other operators or agents, that product’s not there anymore so the market’s got to collect itself together and become commercial again.”

Atol renewals complex

Sorting firms’ finances out ahead of Atol renewals in September “is going to be really quite complex”, added Rowland.

“Insurance bonding has got to become much more commercial than it is today for people to be able to renew their Atols at the same level,” he said.

Asked whether fewer agent will look to dynamically package, Rowland said consumes are likely to be more reticent to book holidays and looking for reassurance.

And he said as the sector emerges from the crisis and it will be the firms that have treated customers in the right way who will be in the best position.

Ryanair ‘transparent’

“If you look at the airline industry, Ryanair has come out best. Who’d have thought that?

“That’s not just because Michael O’Leary woke up one day and decided he wanted to be nice to his consumers.

“He’s taken the brand stance of we will be very clean, we’ll offer you a refund if you want a refund or you can move the booking, but we will be very transparent.

“Jet2 now are a bit like that, although they are on their fifth version [of refund credit notes]. So, I’m comforted by the big operators for the time being.”

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