Extracts from TW Video pannel featuring Rebound Consultings Will Waggott
Travel firms are facing a critical few days as they battle to retain cash in their businesses and fight for survival, experts told a Travel Weekly COVID-19 webcast this week.
With many firms looking to effectively mothball their businesses they are waiting on a crucial decision over whether package travel regulations will be relaxed on offering refunds.
But the sector was warned discussions with government may not go in its favour with support for the airline sector considered more important than the travel industry.
Chris Photi, partner at White Hart Associates, warned of a double whammy for travel of airlines being allowed to issue refund credits while agents and operators must repay cash if customers demand it.
“A lot of the other EU member states tweaked the PTR [Package Travel Regulation] legislation over two and a half weeks ago. Unfortunately, our government has prevaricated.
“They have been receiving a lot of lobbying from Abta, the CAA and I believe the Department for Transport very much in line with thinking this is a desirable thing for the travel industry.
“But it appears that BEIS [Department for Business] has a dilemma in that they think it’s going to be detrimental to consumers when they need money in these difficult times
“But really, there are a lot of travel business with their lives hanging by a thread and it’s been exacerbated by the airline position.
“They have the support of 38 MPS and it does appear they have the support of the European Commission.
“The EC has warned BEIS that they would be breaking the law if they tweak the PTRs although that didn’t stop the other EU member states.”
Experienced travel sector executive Will Waggott, who has held senior roles at Airtours, Tui, Thomas Cook and Travelopia, said having to pay refunds will mean firms run out of cash very quickly.
He said: “If the government don’t allow travel companies to give credit notes you would have to stop people charging back on credit cards because the money then still comes out of the retailor or operator that’s providing the trip.
“All that’s going to do is accelerate the demise very, very quickly because that revenue in advance is very important cash flow for all of these businesses.
“The really big businesses like Tui, maybe Jet2, easyJet are likely to end up with some sort of government bailout, so long term it kind of does not matter to them whether they refund or not.
“But for all the small to medium sized businesses, that’s not going to happen to them and they will run out of cash incredibly quickly if they are going to have to start giving refunds.”
This week Waggott launch Rebound Consulting offering firms advice alongside former colleagues Steve Endacott and Seamus Conlon.
Former Saga tour operating division chief executive and Tui emerging markets managing director, Jeanette Linfoot, who also advises firms and works as a business mentor said:
“This the worst time of the year for this to happen because it’s the point where everyone’s due to pay their balances for their summer holidays.
“And as we all know travel businesses really only make money during a very limited part of the season and that has gone. You have to assume there is no summer.
“The timeframe is very difficult to predict but it’s a case of plan for the worst and hope for the best for all businesses and do everything you can to protect your cash.
“It’s all about survival in the short term so you come through the other side and, obviously, the industry will look very different. But the key is survival in this really difficult time.”
Photi said: “A lot in the travel industry, to put it bluntly, are fighting for their lives, and I’m trying to guide my clients as best I can through some very turbulent waters.
“Unfortunately, I think a lot of irreversible damage has already been done, and the next few days are going to be extremely telling.
“It is a critical period. I have not witnessed anything like this in my 40 years in the travel industry.”