Abta chief executive Mark Tanzer responds to last week’s claim by insolvency firm Begbies Traynor that thousands of travel firms are close to failure
Reports in the trade and City press last Friday suggested thousands of travel companies are at risk of insolvency.
The stories resulted from an at best well timed, or at worst opportunistic, piece of public relations from business recovery firm Begbies Traynor following the failure of All Leisure Holidays Ltd.
The reports have very little basis in reality. However, they certainly run the risk of damaging customer and business confidence.
Suggesting there will be thousands of travel company insolvencies in 2017 is extremely far-fetched and highly misleading.
Begbies Traynor released a similar report this time last year, anticipating a high number of insolvencies in 2016.
Yet last year was one of the lowest on record for travel company failures, with just five Abta member failures.
In fact, in the last three years fewer than 20 Abta members have gone out of business. This reflects the requirements we put on members in order to join Abta and their effective strategies for managing adversity.
While it is fair to say the travel industry is facing challenges from various factors, the industry is no stranger in dealing with adversity.
The industry has had to deal with a whole range of challenges over the years – natural disasters, political unrest, terrorist attacks, epidemics – as well as economic issues. Following these experiences, the industry has developed a range of strategies to minimise their impact.
Even when consumer confidence was at one of the lowest points in modern history following the 2007 financial crisis, there were relatively low numbers of travel company failures.
Overseas holidays bookings for summer 2016 were up around 6% year on year, according to GfK. This followed a strong 2015, with the Office for National Statistics reporting a 9.4% growth in overseas holidays during 2015, the largest annual rise in almost 20 years, and spending on holidays exceeding pre-crisis levels for the first time since the recession.
Our own research suggests that people plan to spend more on holidays in 2017 than they did in 2016.
It is true that global terrorism has had a serious impact on sectors of the travel industry, but the industry has also been quick to adapt. For example, while there are continued travel restrictions in place for Tunisia and Sharm El-Sheikh this winter, tour operators laid on extra capacity in destinations such as Cape Verde, Dubai and Goa.
People still want to go on holiday; they are just choosing to travel to different destinations. Thanks to the industry’s forward planning and flexibility, customers are able to do so.
There are undoubtedly challenges ahead, which as an industry we must be prepared for. In particular, this will mean working together to secure the best possible deal for Brexit.
A weaker pound and currency fluctuations will make trading conditions harder, but I am confident that the expertise and experience of the industry will ensure it will meet these and other challenges.