Nearly half of independent agents still have Covid related debts and almost a third say high interest rates are affecting their businesses, according to a survey of The Advantage Travel Partnership members.
Travel agents in the industry consortium revealed debts and interest rates were among their key challenges for the year ahead.
In the poll, conducted ahead of the Budget on Wednesday, 44% of respondents were still servicing debt related to Covid 19 despite the industry’s fast recovery since the pandemic.
During the pandemic many agents incurred debts as they were unable to shut their businesses and furlough staff. Most were forced to use their own capital or take loans, such as government-backed CBILS loans, to sustain operations and serve customers who were cancelling or amending bookings rather than booking holidays.
The poll also revealed high interest rates were hitting 29% of Advantage’s members’ businesses. The base rate for interest rates in the UK is now 5.25%, but that has shot up from 0.25% in December 2021.
Advantage said the interest rate rise has come as members experience increased financial pressures on their businesses, with cash flow a major challenge because agents do not usually receive commission for booking a trip until the holiday takes place and their clients travel.
One proposal reportedly under discussion by the Treasury is increasing Air Passenger Duty in the Budget for those flying in business class, potentially raising hundreds of millions of pounds.
In the Advantage survey, agents cited other challenges in the year ahead as staff recruitment, wage rises, the impact of the cost of living crisis, higher prices, high corporation tax and consumer confidence.
Despite the challenges, agents have been investing in future proofing their businesses, according to the survey.
Almost a quarter of respondents said they were planning to invest in people while 12% were looking to invest in online booking tools and 7% were looking to spend money on new trading locations.
Advantage chief executive Julia Lo Bue-Said said the consortium was already working with its partners in the UK Outbound Travel Group, including The Specialist Travel Association (Aito) and The Association of Bonded Travel Organisers Trust (Abtot), to submit policy requests to the Treasury ahead of this week’s budget.
Among the key asks are for a reduction in business rates and financial support for business owners in the travel sector who are struggling to pay back loans taken out during the pandemic.
Lo Bue-Said added: “The UK outbound travel industry remains a key contributor to both local and national economy and research has shown on average consumers spend an additional £200 per person in the UK before travelling overseas and international travel annually contributes a further £80 billion to the UK economy.
“It is therefore of paramount importance that the UK Government recognises the contribution that the industry makes and is supported in its growth.
“It’s really encouraging to see that our members are looking to invest in their businesses this year but there is no doubt that they will need the support of the government as the industry navigates continued geopolitical challenges and economic uncertainty, to ensure that this growth can take place.”