A no-show summer and the residual impact of the pandemic has dealt the independent tour operating sector a blow it simply wasn't prepared for.
Independent tour operators in the UK are “petrified” for the future, after a cancelled summer peak season and rising numbers of failures in the sector.
They’re also caught between conflicting government advice and strict consumer protection regulations that have left them out of pocket, offering a glimpse into the plight of a once-vital industry on the frontlines of global travel.
Short-break specialist Cities Direct, which was a member of Aito — The Specialist Travel Association, ceased trading on September 7, after 20 years in business. On the same day, TrekAmerica, part of Travelopia, also shut down.
This recent spate follows the collapse of Specialist Leisure Group back in May, where 2,500 jobs were reportedly lost. It included well-known brands Shearings and National Holidays.
Left Out in the Cold
Now Aito — The Specialist Travel Association, which comprises 120 operators and 100 agencies, has told Skift its members are “petrified.” It’s mostly down to the UK government’s furlough support scheme winding down at the end of October, as well as the seemingly ad-hoc quarantine rules that are denting consumer confidence.
“Our operators are thinking: when’s it going to be me?” a spokesperson for the association told Skift, in light of the collapses this past week.
She said they had effectively experienced “three winters in succession” taking into account last winter; this summer season, where no bookings were made; and the fact they spent all summer refunding huge sums in respect of bookings made long in advance for the summer season.
“Tour operators don’t make money in the winter,” the spokesperson added. “The peak summer season is vital to them, that’s when they can build up their assets, and enough flesh, to survive a winter when they’ve got staff payments, bills to pay, offices to cover, brochures to pay for and websites to update.”
The nature of bespoke tour operating is complex. The UK has a distinct geographical disadvantage compared to most other countries, as operators mostly rely on airlines being able to fly their customers overseas.
Itineraries are often more complex compared to those offered by larger players, such as Tui, which admittedly is also making its own cuts. The spokesperson said “unravelling” an itinerary was even more difficult that building it.
The sector at large argues the UK government should have opted to pay staff working in the travel industry to continue working, not sit at home, as the majority of companies kept them on to process customer refunds. Rather than simply defer the holiday to next year, the UK’s Package Travel Regulations require operators to offer a full refund within 14 days if there is a cancellation due to unavoidable and extraordinary circumstances. This includes coronavirus.
The association spokesperson claimed that overall, accommodation providers and airlines didn’t refund its members for advance payments, so customer refunds came out of their cash reserves. “The pandemic has proved the package travel regulations aren’t fit for purpose. They weren’t designed with a pandemic in mind,” she added. “But because we’ve got a pandemic, the government has to recognize that, and make changes.”
Meanwhile, UK tour operators report to no fewer than five government departments, including the Foreign & Commonwealth Office and Department for Transport. When the former advises against travel to a destination, the latter doesn’t stop planes flying there. “The poor tour operator is caught in the middle, it’s an unholy mess,” the spokesperson said.
All eyes will be on how bookings perform this winter, traditionally a time when summer holidays are planned and booked. After a year of lockdowns and travel restrictions, the pent-up demand could provide a boost for the embattled sector.
Competition will be intense, however, as the online giants will also have their eyes on the European market. Reports even emerged this week that Thomas Cook, which collapsed in September last year, will relaunch as an online agent under new owner Fosun Tourism Group. Shanghai-based Fosun bought Thomas Cook’s trademark following its collapse in September 2019, and there were reports at the end of last year it would debut the platform in the first half of next year.
While the thomascook.com site is now live, a spokesperson told Skift there was no official announcement, or information it could provide regarding when the brand would return in the UK.
The trade association says the once vibrant UK outbound travel industry delivers nearly $50 billion annually directly into the government’s finances, and bolsters the inbound tourism industry considerably by creating travel links with Europe and beyond.
Many of these home-grown businesses have appealed for help, including a request to extend furlough support for a further six months, and the association wrote to Rishi Sunak, the Chancellor of the Exchequer, on August 14. There’s been no response.
The resizing of the independent tour operating sector may continue for some time.
The Daily Newsletter
Our daily coverage of the global travel industry. Written by editors and analysts from across Skift’s brands.
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Photo credit: The UK's latest quarantine measures have dented the consumer's confidence to book holidays. MChe Lee / Unsplash