More than 2,500 businesses in the travel industry are currently experiencing significant distress, new research reveals.
The figure of 2,679 represents a 10% rise compared to the previous quarter and a four per cent year-on-year increase, data from insolvency firm Begbies Traynor reportedly shows.
City A.M. reported that the travel industry is braced for thousands of insolvencies as the sector comes under increasing pressure from terrorism fears and rising costs.
Julie Palmer, a partner at Begbies Traynor, said: “Terrorism is a growing concern, and it’s having an impact on the sector.” She added consumers are shifting away from traditional holiday areas like Turkey and Egypt.
Currently, there are just under 7,000 travel agents and tour operators in the UK, and 1,800, or 26%, have attracted the “warning rating” of Company Watch, a database that measures a company’s risk of insolvency.
Out of the 1,800 travel companies deemed at risk by Company Watch, about 450 are at “real risk” of going insolvent, said Nick Hood, business risk adviser for Opus Restructuring. Around 160 of these are tour operators.
“Clearly, the travel industry is under severe stress from all sorts of different adverse factors,” Hood said.
He added that the fortunes of travel companies depend very heavily on where they are based around the world and their scale, with smaller companies facing higher risks.