Resilient industry getting through recession, says Abta chief

Resilient industry getting through recession, says Abta chief

The travel industry is showing pleasing resilience in tough economic circumstances, according to the chairman of Abta and Advantage Travel Centres John McEwan.

Speaking to Travel Weekly ahead of his views being discussed at next Tuesday’s Barclays Travel Forum, McEwan sounded a positive note on how the trade was coping with recession.

“What we are seeing is a travel industry that’s pretty resilient. If you look at this year’s performance, mainstream holidays are down around 7% but that’s largely orchestrated by the big two taking capacity out.

“Outside of that, overall the market is about flat with last year and when you consider we’ve been through this quite difficult economic period it illustrates the fact that it’s a big market and it’s being quite resilient.

“I do not foresee that there is going to be much growth other than in some pockets, therefore it’s really incumbent on tour operators to have a good enough proposition to hold their own.

“There are lots of examples of good companies out there still growing their business against a difficult economic backdrop. People may not be making as much money as before but they are surviving.

“There is a certain toughness and resilience about, which suggests people are getting through it. We have seen relatively few failures in the last 12 months although we did take a hit back in 2009 when the weakest companies went first, but failures since then have not been abnormal.”

McEwan said he could not see any bounce back in the market for the next 18 months to two years and he called on the banks to start providing more support for companies.

“There is no question life has been pretty tough for not just travel but other sectors. In terms of support from the banking sector, the banks went through difficult times and their first priority was to make up their capital ratios and repair their own balance sheets.

“We are three years into this now and I would have thought there should be more willingness to provide support. It’s fine having austerity measures but that should be accompanied by growth as well and the prime vehicle for that are the banks.

“The banks have taken a rather holistic view of the sector where they should be taking a more individual view of their clients, because there are many good robust businesses out there whether they be tour operators or travel agents.

“Each business should be looked at on their merits in terms of how risky they are.”

McEwan said the implementation of Flight-Plus to provide customer protection and the move by many retailers to trust accounts should help to ensure the financial sector starts to see the travel sector as less risky in general. 

In recent years credit card acquirers have started asking travel firms for ever greater security as the cost of failures has been passed on to them due to the inadequacy of the previous consumer protection regime.

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