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Submission from ABTA - The Travel Association of 08 December 2021

PE1889/C - Financial Support for self-employed people in the travel industry

Impact of the COVID-19 pandemic on the travel industry

After 18 months of severe restrictions on the ability of travel businesses to trade, summer 2021 failed to deliver a meaningful restart for the Scottish travel sector. While ABTA recognises the Government did take steps in October to relax restrictions on international travel, it is clear the latest measures, re-introduced in the last few weeks in response to the Omicron variant, will not only cause temporary disruption, but also have a lingering impact on consumer confidence that will weaken the recovery over much of the winter period.

A recent industry wide survey, conducted by ABTA on behalf of the Save Future Travel Coalition, which consists of 16 leading trade bodies and organisations representing international travel businesses, clearly demonstrates the precarious situation that many businesses in the industry find themselves in. Businesses reported that the value of new bookings taken across summer and early autumn (June-October 2021), which covers the normal peak trading months, represented, on average, only 31% of the value of new bookings taken over the same period in 2019. Across their most recent financial year, most businesses were trading at levels of only around a fifth of pre-pandemic turnover.

An estimated 49% of jobs have been lost across the outbound travel industry since March 2020. Overall, this equates to over 13,800 jobs lost in the wider Scottish travel industry, including supply chains.

The impact the COVID-19 pandemic on self-employed travel agents, including their ability to access financial support

It is important to note that self-employed travel agents operate a variety of business models, including owner-director models for businesses operating from either high-street or office premises, and homeworking agents that are part of parent companies but operate as entirely independent businesses within that framework.

Income support

While previous ABTA Member Surveys have demonstrated that 9/10 businesses in the travel sector have used furlough to some extent, many travel agents and tour operators have been unable to fully maximise their use of the scheme because their staff have been required to issue refunds and manage rebooking requests on behalf of clients. HMRC’s data show that take up of furlough by travel agencies and tour operators up to 30 April 2021 was only 49%, compared to 70% in hospitality, for example.

There is also a high percentage of owner-directors in the industry, who have found themselves unable to benefit from any of the income support systems, either because they have been unable to furlough themselves due to workload, or due to their structure as limited companies and their income primarily being derived through dividend payments.

ABTA has previously supported calls for the introduction of a support scheme specifically for company directors who have not been able to access either furlough or SEISS. The Northern Ireland Executive did choose to unilaterally introduce a Limited Company Director’s Support Scheme (LCDSS) to provide an initial one-off taxable grant of £3,500 to eligible company directors in January 2021.

Grant funding, rates relief and loan schemes

Grant funding schemes in Scotland have also largely failed to recognise the impact of unique restrictions placed on international travel which have been more severe and extended than restrictions on other business sectors. Many local authority administered schemes instead focused on the physical constraints of COVID-19 regulations, i.e. closure of premises usually open to the public, or reduction in capacity due to social distancing measures (aimed at retail, hospitality, leisure and personal care).

As such, schemes such as the temporary closure grant were only applicable to retail travel agents during periods when retail premises were required by law to close to the public; online travel agents (working from office premises), tour operators, and travel agent homeworkers were not eligible for this funding stream. Similarly, travel businesses without a rateable premises were not eligible for the one-off Travel Agent Fund launched by the Scottish Government in January 2021, or the Restart Grant scheme. In contrast, Northern Ireland’s own’s travel agent grant funding scheme – The Travel Agents (Coronavirus) Financial Assistance Scheme 20211 – included a one-off single payment of £3,500 for self-employed travel agents working from home in Northern Ireland.

Business insolvency

ABTA would caution against the use of just the number of insolvencies as a measure to assess the case for offering additional financial assistance to travel businesses impacted by the crisis. For example, ABTA is aware of many independent agents within our Membership that have had to re-mortgage or sell their homes in order to keep their businesses alive.

7 December 2021