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Chancellor must provide financial help to travel businesses

Chancellor urged to use Budget to extend furlough and provide tailored financial help to travel businesses

ABTA has urged the chancellor to use Wednesday’s Budget to provide tailored financial support to the travel industry to help businesses through the reopening of overseas travel as new analysis reveals how the pandemic shut down of overseas travel has cost the UK economy £13.7bn.

ABTA says that while the Restart Grants will be helpful for those travel businesses who have retail premises, such as retail travel agents, a large part of the travel industry will be excluded from this support, including tour operators and home-based workers. There are 12,000 designated homeworkers in ABTA membership. ABTA also says that it is important to remember that although retailers will be allowed to open from April 12, international travel cannot start until at least May 17.

The Prime Minister’s plan for a roadmap for international travel, and the ambition to get people travelling in time for summer, are positive first steps towards restarting travel. But difficult months still lie ahead for the industry, particularly as businesses have generated next to nothing during the last year and with no travel allowed over peak holiday periods like Easter and the ski season, tailored financial support will be critical.

New analysis released today on travel over the past 12 months to some of the UK’s most popular holiday destinations reveals the impact the shutdown of travel has had not just on the sector but the wider UK economy.

Restrictions at home and abroad meant that people could only travel to the whole of Spain and Portugal for just three weeks during the past 12 months, rising to six weeks for France and Malta, and leisure travel to the US has been off limits entirely. Some industries such as ocean cruise and school trips were also closed down altogether.

Unlike other sectors, the travel industry isn’t able to amend its business model to generate revenue. Retailers have been able to move sales online and offer click and collect, restaurants have provided takeaway and cook-at-home meal kits, but there is no alternative when it comes to holidays and business travel. Yet the government hasn’t provided any tailored financial support to the industry, while other struggling sectors like hospitality, have received specific help.

In total, ABTA estimates that a contribution of £13.7bn to the UK economy from sales of overseas holiday and business travel services has been lost since the start of the pandemic – equivalent to £1.6m every hour. The latest figures from the Office for National Statistics say the economic output for travel agents and tour operators is down by 86 per cent between February and December 2020.

ABTA says it is important the government uses the Budget to extend existing financial support measures such as furlough, VAT deferrals, and business rates relief, and provides tailored financial help, in the shape of grants, which are available to all travel businesses. This will help protect people’s jobs and livelihoods and help travel businesses through the recovery of the sector. Providing grants on the basis of whether they have retail premises will shut out a large proportion of the travel industry from much needed support.

It also says that the reopening of international travel is likely to be gradual, so it is important that the availability of the support tracks the opening-up of the market. Withdrawing financial help too soon could mean that whole swathes of the industry, which aren’t able to open until later this year or the start of 2022, lose the essential funding that necessary to keep their businesses going.

Many travel businesses including destination management companies, tour operators, travel management companies, and home-based travel agents, have been entirely excluded from existing grants support packages so it is vital that the financial support is extended to them.

Mark Tanzer, chief executive of ABTA, said: “While there is definitely a feeling of increased hope following the Prime Minister’s announcement of a roadmap for international travel, the reality remains that travel businesses haven’t been able to generate income over the last 12 months. This means that travel agents and tour operators, including many small to medium-sized businesses, are still facing a significant cash shortfall.

“The prime minister said himself that travel, tourism and aviation are among the sectors hardest hit by the pandemic, so it is important the government acts on this by providing the tailored financial support which is long overdue.

“The Restart Grants will help our retail travel agent members but many more travel companies will miss out on this financial help – which would be a lifeline for many businesses at this stage, so it is important all travel businesses have access to some sort of grant support.”