With restrictions beginning to lift as part of the UK Government’s ‘roadmap out of lockdown’, ICAEW Insights speaks with finance professionals from three hard-hit sectors to get their reaction to the return-to-work roadmap, along with blueprints to kickstarting business.
The first sector covered in the series is travel and tourism, which eagerly awaits the 12 April government announcement on international travel. This will determine when and how to resume safe international travel no earlier than 17 May 2021.
Roadmap reaction
For the Financial Controller of an online travel retailer (who wishes to remain anonymous), it was “great to see that there was an end in sight”. They said their company saw an initial surge of booking following the announcement of the roadmap, but then daily bookings dropped to about 30%-40% of what they would expect in a normal year.
“I think reality set in for people when it became clear that either a vaccine passport or a negative PCR test will likely be needed for travel. And there is no guarantee people will be able to have both doses of vaccine by a certain date and also getting a test in the destination could be difficult”, they added.
“Airlines continue to refund well past the acceptable timeframe”
They said that support for the sector during the pandemic has been good in terms of cashflow schemes such as furlough and the various loan offerings (CBILS, CLBILS etc), but felt let down when it came to sector-specific support.
“It’s tough to see what is going to the airlines when they are treating us so unfairly at the moment,” they said. This references the government announcement that airports and ground handlers are eligible for up to £8m in support, while some airlines “continue to refund well past the acceptable timeframe”.
This backlog for processing refunds for holidays is putting a squeeze on some travel agencies waiting for this money. The interviewee explained how their travel agency has a customer charter where they have a 14-day commitment to holiday refunds, so they refund customers within 14 days and have to wait for airlines to pay them back.
“It’s not like you can cancel and get the refund straight away,” they said. “We might have to put in a chargeback which could take up to another six to nine months. Between funding the refunds in advance to getting the receipts from airlines and with bookings picking up this means we are also funding our low deposit scheme, this is actually having a huge impact on our cash at the moment.
“For our travel business, we are lucky enough to have access to good cash reserves and credit facilities, we can fund these airline refunds in advance and we will get through it. But I do worry that for smaller agencies this might be the final nail in the coffin and over the next few months, we will see a lot of failures in the sector.”
Plans for getting back to business
In the background, the travel agency has taken this pause in activity to develop their website and improve the process to make booking easier for customers.
“It has actually given us a good amount of time to prep for that peak,” they said. “Everything has become more flexible because that is what people need and want at the moment.”
From a customer perspective, this change means more flexibility in the booking pathway and with change dates. From a business perspective, a lot more staff working from home was a new concept, but the financial controller saw opportunities to be a lot more flexible, which they believed will be a key benefit for the firm and the sector in the future.
What has the pandemic taught you about this sector?
“It’s proven just how resilient the business and the demand for our services really is,” they said. “It’s one of the first things people seem to mention when they talk about the pandemic, saying what they’re going to do after and that they can’t wait to get away.
“We are waiting eagerly for 12 April, not long to go now before we find out more about international travel”, they concluded.
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As the world adapts to the challenges presented by COVID, chartered accountants will be at the forefront of reshaping the economic landscape. Read more of ICAEW’s COVID coverage on its dedicated coronavirus updates page.