New Forest Ribbon
New Forest

26/04/2021

Tough times for tourism industry

The travel and tourism industry has been hit as hard, if not harder, than any other sector by the coronavirus pandemic.

As we emerge, blinking, into the daylight of relaxed restrictions which allow parts of the industry to reopen, it’s perhaps time to take a step back and reflect on a tumultuous time.

National tourism organisation VisitBritain’s revised forecast for 2021 makes gloomy reading.

It expects 11.7 million visits – up 21% on 2020, but only 29% of the 2019 level.

Spending by inbound tourists is forecast at £6.6 billion, up 16% on 2020 but only 23% of the 2019 level.

The forecast assumes the start of a recovery from May, but with inbound tourism remaining at a fraction of its usual level, followed by a gradual recovery in the summer and autumn.

This is, of course, contingent on the progression of vaccine rollouts and in the level of Covid-19 cases – and given the fast-moving and ever-changing nature of this pandemic, we can never be sure about anything.

VisitBritain concludes by stating that by the end of 2021 it does not expect inbound tourism to be back to, or even close to, normal levels.

The latest figures from the Office of National Statistics (ONS) are also worth a look as they paint an important picture of a moment in time, although the world has moved on since the period covered.

Using data on business performance and the labour market, the ONS came up with harrowing but not at all unexpected findings from its analysis.

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%.

Greater London saw the largest fall in room occupancy from 2019 to 2020, with just 20% of rooms occupied in July 2020 compared with 90% in the same month in 2019.

Accommodation and travel agency businesses saw the sharpest decline in turnover during the first national lockdown, falling to 9.3% of their February levels in May 2020.

In the three months to June 2020, employment in accommodation for visitors fell by 21.5% 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.

Outbound tourism has been hit just as hard – airlines, cruise ships, tour operators and travel agents all virtually stopped or sunk without trace – with 90% of flights grounded, cruise liners moored up wherever there was space and operators and agents concerned more with refunds than bookings.

Several airlines have gone into administration, cruise ships are now viewed with some suspicion as virus breeders and operators and agents fear that recovery will be slow and may be too late for some.

Millions of jobs in the travel and tourism sector depend on the economy opening up again and there being enough traction to keep jobs feasible when the furlough scheme finally comes to a close in October.

So, amid all this doom and gloom, are there signs of hope?

We believe so. The aforementioned job retention scheme was designed to protect employees and employers. We must expect that process to largely succeed.

Also, remember that the above statistics were gathered while we were in lockdown so the results are not surprising.

We would hope that this sector bounces back in the summer once the vaccination programme and other measures stabilise the virus.

Lockdown is gradually being lifted. From last Monday (12 April) a host of restrictions were withdrawn, allowing non-essential retail, hairdressers, nail salons, outdoor hospitality venues to reopen.

This also included most outdoor attractions including zoos, theme parks, and drive-in performances (such as cinemas and concerts), smaller outdoor events such as fetes, literary fairs, and fairgrounds, as well as indoor leisure and sports facilities for individual exercise

Crucially, it also marked the re-emergence of the internal travel market with self-contained accommodation able to open for overnight stays in England for households or support bubbles.

We must also add into the mix the extension of the temporary reduced rate of VAT of 5% until 30 September 2021 and the lesser reduced rate of 12.5% from 1 October 2021 to 31 March 2022 for hospitality, hotel and holiday accommodation and admissions to certain attractions.

This will naturally give a boost to the industry where businesses have been severely affected by forced closures and social distancing measures.

Thus we must remain optimistic – and please don’t forget that at HWB we are always here to help. Our hugely knowledgeable specialist travel team has years of sector experience and can offer solutions to the hardest of problems.

As travel industry accounting specialists we are members of the ATOL Reporting Accountants’ Scheme and are approved under the ICAEW Licensed Practice Scheme, authorised by the Civil Aviation Authority (CAA).

The scheme ensures accountants reporting on behalf of ATOL members have the necessary specialist knowledge of the travel sector as well as the specific requirements of membership.

For more information on how we can help, please contact James Flood on 023 8046 1244.

Latest Tweets

The 5th and final SEISS grant is now available and can be claimed for the period of May to September 2021. https://bit.ly/2UpkqJf

UK retailers who rely on online sales with EU consumers will need to comply with new VAT rules effective from this month, in an effort to stop annual VAT fraud by non-EU ecommerce sellers https://bit.ly/3eGrxUq

Let’s Talk

Why not arrange a FREE consultation and find out what we can do for your business.