“When COVID hit, there was a massive brain drain out of the travel industry because income streams were hit almost overnight,” stated Nicola Spoor, Chair of the advisory committee on ICAEW’s Travel, Tourism and Hospitality Community. “If you think about it, COVID has removed three years of trading income for the travel industry.”
The three years can be broken down into two broad categories of loss: the first due to travel bans between 2019-2020, and the second due to holidays that could possibly go ahead in 2021 and relate to bookings customers have already made rolled over from previous years.
Industry-wide brain-drain
According to the World Travel & Tourism Council, in 2019 the sector contributed 10.1% towards the UK’s GDP and supported 4.3 million jobs, representing 12% of total employment. However, the pandemic and subsequent COVID travel bans and lockdown have devastated the industry, resulting in an estimated 62 million job losses worldwide.
Reacting to the de facto closure of their industry, travel and tourism firms were forced to lower overheads as quickly as feasibly possible, resulting in a huge number of redundancies.
“Operators had no option because they couldn't sustain their overheads on a fraction of their normal income,” said Spoor. “But that means their industry has been brain-drained of essential positions like marketers, developers, product managers, marketing, travel, PR and managing directors.”
She continued: “They were forced into that decision, knowing that when things did bounce back, they were going to have a serious problem with staff shortages. A lot of the skill set within travel and tourism jobs are transferable to other industries. When the sector does recover, trying to recruit staff with appropriate skills is going to be a real challenge.”
Travel is a fun industry when you’re selling dreams
Spoor’s firm, White Hart Associates, are travel industry specialists, and over the past few years have seen operators in the industry working on making travel an attractive sector to work in, especially to universities.
“Travel is a magical industry - it's fun because you're selling people dreams. That's an attractive career option for a lot of people, especially younger people who may go into it but won't have the experience and the depth of knowledge with people being forced out and switching industries,” Spoor pointed out.
She continued: “I think there's going to be a period of time when skills have to be developed from the roots up. That way, the younger generations can be encouraged into the sector.”
One problem at a time
However, this challenge will have to wait as most operators are still in the midst of a battle to survive. Spoor commented that some operators are not convinced they're even going to be here. “My clients are just living to fight another day and it's a challenge on a weekly basis,” she said.
“When they’ve had to ask staff to take salary cuts, they know it will be difficult to support their families. It's been emotionally draining for them and they're still coming to terms with that. It's not really what they wanted to do, but they didn't have a choice.”
How are you advising your clients?
Spoor said she is telling her clients about the apprenticeship scheme and funding the government is providing for getting people back into jobs. That way, when business takes off again, there are funding options available to reduce the financial pressures.
“As chartered accountants, we helped our clients navigate the furlough scheme and with the HR part of it as well. When the pandemic hit, for the first three months we were almost running a ‘furlough hotline’, but we realised how pivotal it was to assist that industry”.
“The travel industry has been one of the worst-affected industries throughout the whole of the pandemic. And it's not high on the priority list because it's viewed as ‘just holidays’. But this has basically meant that the industry has been brutalised. I can't even describe how bad it’s been. The workforce is actually one of the worst problems, but it's one of the lowest priorities at the moment. In future, it's really going to be difficult to deal with.”
Follow this link for ICAEW’s exclusive five-part series - ‘Companies face up to post-pandemic bounce back risks’ - which gathers chartered accountant insight on problems faced by hospitality, retail, tourism and agriculture.