Tour operators set to make large scale redundancies without government action
88% of tour operators and destination management companies (DMCs), who are responsible for bringing in and looking after over 50% of all international visitors to the UK (and over 70% of visitors from the USA and China), are set to make large scale redundancies as a result of the COVID-19 crisis, unless the Government provides more financial support to the sector, according to survey results released today by tourism trade association UKinbound.
The trade body conducted a survey of its tour operator and DMC members, and found that without further Government support:
- 60% will be forced to make further redundancies in August when the Coronavirus Job Retention Scheme tapers off
- 88% expect to make between 25% and 100% of their staff redundant
- Over half (53%) expect their business to last no more than six months
- The number of businesses expected to turn over more than £500,000 from international visitors will fall to just 34% in 2020, compared to 71% in 2019
- The number of businesses expected to turn over more than £5m from international visitors in 2020 will fall to just 2% from 27% in 2019
The survey results highlight the broader impacts of COVID-19 on the UK’s tourism sector which contributed £145.9bn to GDP in 2019 (international visitors contributed £28.4 billion) and is responsible for 3.3 million jobs.
Joss Croft, Chief Executive of UKinbound commented: “The Chancellor’s latest economic recovery plans clearly recognise the value of hospitality and tourism to the UK economy which is very positive, however the measures that have been announced will unfortunately not help the many businesses that are involved in inbound tourism.
“Our survey results unsurprisingly reinforce that those tourism businesses that rely wholly on international visitors for their livelihoods are on their knees and that the risk of widespread redundancies and the collapse of previously successful businesses is a very real threat without further Government support.
“Before the pandemic, the UK was the 7th most visited country in the world but generally there is a low awareness in this country of how much international visitors contribute to our national and regional economies. Similarly, there is generally a low awareness among international travellers of what to do in the UK outside London, and it is the tour operators who generate a large proportion of visitation to the UK’s nations and regions. Sadly, we look set to see significant redundancies from tour operators and the tourism supply chain next month, which means that many communities and businesses throughout the UK who depend on significant revenue from international visitors will also suffer.
“Our inbound tourism industry is a vital part of the UK economy and we simply cannot recover or level up our economy without the value that international tourism brings to all regions of the UK.
“We face considerable and exceptional challenges as our sector looks to survive the impacts of COVID-19 and we are calling on the Government to do much more to protect the jobs and businesses who will be vital to our long term economic recovery and the Government’s ambitions for a truly global Britain.”
Conservative MP for Crawley Henry Smith said: “Our travel and tourism industry have been amongst the hardest hit sectors by the impacts of COVID-19 and will take longer to recover than other sectors as a result of the collapse of overseas visitors to the UK.
“We need to ensure that travel and tourism businesses are able to survive the long-term impacts of COVID-19 and when circumstances allow play their role in our wider economic recovery. We simply cannot allow such an important industry to collapse and damage the communities throughout the UK who are dependent on them.
“These businesses can and will recover but only with Government support that reflects their vital importance to a truly global Britain.”
Stephen Broughton, owner and Managing Director of Mountain Goat Tours said: “My business has been operating for over 40 years and normally turns over £2m revenue annually. We specialise in running small, personalised tours in the North of England and Wales for both domestic and international tourists and last year over 50% of our revenue came from overseas visitors.
“Whilst the lifting of quarantine measures is very welcome – the reality remains that we are already over halfway through the tourism season and many people will be reluctant to travel overseas for some time. We are hopeful that we will be able to increase our share of domestic visitors this year but social distancing requirements on transport are also making this side of the business unviable.
“An extension of the job retention scheme until the tourism season starts again next March would be fantastic and would make all the difference to the survival of our business. Our most valuable asset is our staff and we are in an area where tourism is the main source of employment. We need to do everything we can to maintain a livelihood for them.”