UK Travel Sector Pushes for Tailored Financial Support Package As Furlough Costs Rise

With businesses across the UK facing a rise in furlough contributions from 1 August, and overseas travel still subject to significant restrictions, the Save Future Travel Coalition is urging the Chancellor and Businesses Secretary to provide financial support for the sector, recognising the unique circumstances travel faces. The Coalition warns that jobs, businesses and livelihoods remain at risk as long as help is not provided.

The group says the return to international travel has been too slow for businesses to be able to fully capitalise on the peak summer months. Many restrictions still remain and the lifting of the others has come too late in the summer season – with removal of quarantine for double vaccinated travellers returning from Amber list countries only introduced a fortnight ago and inbound restrictions only due to be lifted from 2 August.

The school summer holidays would normally be the busiest trading period for international travel, accounting for around two thirds of annual income for many travel agencies and tour operators – vital revenue that carries those businesses through the rest of the year. This, combined with rising furlough costs and business rates payments, means many companies, particularly the smaller to medium-sized businesses, are on the edge of a financial cliff.

The call to Government comes as travel companies, along with other businesses, face double the cost for furlough this month, compared with the payments they were making in June. The contributions businesses need to make to furlough will rise on 1 August (increasing to 40%); this is the second rise in a matter of months, with contributions increasing to 30% from the base rate of 20% on 1 July. Business rates relief was also reduced from the end of June in England.

The Save Future Travel Coalition – made up of 16 leading travel associations which represent outbound and inbound travel, as well as business and long-haul travel – is urging Chancellor Rishi Sunak and Business Secretary Kwasi Kwarteng to commit to ongoing financial support for the UK’s international travel industry by:

  • providing full furlough support and other income support schemes,
  • providing 100% business rates relief for the full financial year, as many of the Devolved Administrations are already committed to doing,
  • introducing a dedicated grant scheme to help these businesses get through the very difficult weeks and months ahead.

The latest estimates from ABTA suggest as many as 200,000 jobs in the sector have been lost or are a risk of redundancy.

The group says Government ministers have previously explained that the gradual removal of support across the wider economy is based on parallel giving back of freedoms, and lifting of restrictions, which will enable businesses to trade again successfully. But as the Prime Minister has publicly acknowledged, international travel will continue to be restricted for many months to come.

The Coalition says the sector is extremely frustrated that Government has not provided any tailored financial support to travel agents, travel management companies and tour operators – despite repeatedly claiming it has.

Travel businesses have been told that the tourism, hospitality and leisure sectors have been provided with £25bn, and that the aviation sector has already benefited from £7bn in Government funding. But the many thousands of businesses that the Coalition represent – travel agents, tour operators, and travel management companies – do not fall into either of these categories.

In addition, tour operators were not able to access the Restart Grant schemes, and eligible travel agents (as a default of being ‘retail’ businesses) were only able to access Strand 1 of the Restart Grant scheme, despite continuing to have their trade hampered by restrictions beyond the re-opening date for many leisure, hospitality and personal care businesses, who received the higher Strand 2.

The cut in VAT for tourism and hospitality also does not apply to travel agents or tour operators operating in international travel, and therefore has not provided any financial benefit for these companies. 

Mark Tanzer, Chief Executive of ABTA – The Travel Association said:

“International travel hasn’t returned to the extent that all businesses feel confident they’ll make it through the pandemic and the Government has done nothing in terms of providing tailored financial support for travel agents and tour operators.

“There are still a lot of very worried companies out there, particularly the smaller, independent agents and operators, who aren’t seeing anywhere near the level of bookings they need to cover their costs – let alone return any sort of profit. At the same time, general business support from Government is being reduced, adding even more financial pressure. Government needs to wake up to the crisis in the industry – without action, jobs will be lost, businesses will fold and the UK’s wider recovery will be at risk.”

Danny Callaghan, CEO of Latin American Travel Association said:

“Despite some good news for travel to the EU and USA, tourism to Latin America still looks to be some way off, so LATA members still have many months of difficulty ahead. Tourism to Latin America has increased in recent years, and the businesses that sell the region are successful, growing businesses that contribute to employment and economic growth in the UK. Like the whole tourism sector, they are just about hanging on, but the coming months, with the end of furlough, repayments on CBILS loans, and the effective end of business support, will be very challenging.

“It would be a tragedy to see business failures at this stage, when we are within reach of getting through this stage of the Covid crisis, and we urgently need Government to recognise the unique problems our industry faces and to provide a tailored support solution.”

Clive Wratten, Chief Executive of the Business Travel Association said:

“Business travel is not expected to return at scale until at least 2022. We urge the Government to produce tailored financial support for our industry to save jobs and retain talent so that safe and secure international travel can return.

“Without further support, we face a future where there are not the people in the sector to facilitate British businesses’ return to the international trading stage.”