RSM calls for industry specific support for the travel and tourism sector

The ONS’ latest report tracking the effect of Coronavirus on the UK travel and tourism industry highlights the incredible impact the first two lockdowns had on the sector. 

Accommodation and travel agents dealt significant blow  

Turnover in travel and tourism businesses fell to its lowest level in 2020 in May, at just 26.0 per cent of February levels, compared with 73.6 per cent in all other industries. Accommodation and travel agency businesses saw the sharpest decline in turnover during the first national lockdown, falling to 9.3 per cent of February levels in May. At its peak, accommodation and travel agency businesses recovered to 61.1 per cent of February’s levels of turnover in August, but this was short lived with new restrictions dampening trade.  

Airport passenger numbers 

Monthly air passenger arrivals to the UK fell from 6,804,900 in February 2020 to 112,300 in April 2020, a fall of 98.3 per cent. International passenger traffic at UK airports fell to 1.9 per cent of its February 2020 levels in April, recovering to a peak of 36.7 per cent in August before falling again in response to increased restrictions.

Employment in the travel and tourism industry 

In the three months to June 2020, employment in accommodation for visitors fell by 21.5 per cent compared with the same three months of 2019. In travel and tourism industries overall, the number of people aged 16 to 24 years saw the largest fall in employment of any age group between Quarter 3 (July to Sept) 2019 and Quarter 3 2020.

Eat out to help out scheme boosts food and beverage serving industries 

Every travel and tourism sub-industry except for conferences and exhibitions experienced an uplift in turnover in response to the relaxing of restrictions over summer. Food and beverage serving industries peaked at 90 per cent of February levels in August due to the highly successful Eat Out to Help Out scheme.

Ian Bell, Head of Travel and Tourism at RSM responds to the latest statistics: 

‘This data gives nowhere to hide when it comes to the immense impact that the first two lockdowns had on the sector, and points to the dire straits travel businesses find themselves in amidst a third national lockdown.

‘Opening up out of lockdown will not be straightforward for many businesses in the sector and will require a significant increase in working capital to cover costs such as recruitment, yet, signs of targeted support remain scarce.

‘Income in the travel and tourism sector will take some time to catch up in 2021 as consumer confidence will be hampered by concerns over international variants of the virus and ambiguity around vaccine passports and quarantine. A clear steer now from Government on the use of vaccine passports would greatly assist consumer confidence and remedy reservations over booking trips later in the year.

‘Regulatory support would also be a positive way Government could act to bolster the travel industry’s position. A softening of the CAA’s ATOL financial covenants from 1 April this year would assist in getting the sector restarted, with Government underwriting the ATOL scheme for a period until trading conditions improve. This kind of targeted assistance could give the travel sector a lifeline it so desperately needs, mirroring the success of other industry specific initiatives like the Eat Out to Help Out scheme.’