The travel industry should lobby government for an extension of financial support so firms can survive to when revenues start flowing again next year, experts told a Travel Weekly Webcast.

Giles Hawke, UK chief executive of tour operator Cosmos, said he did think it was worth the travel sector making a special case because of the way it collects money in advance of travel.

With prospects for this year pretty much written off, Hawke said the sector will take longer than most industries to recover because until balances are paid next year it will only be collecting deposits.

Delayed recovery

He said: “Travel and hospitality is probably going to be one of the last industries to restart properly. And even when we start getting bookings in, they’re going to be bookings for quite some time in the future.

“So, the business you’d expect in the summer months which sees you through the winter, that’s not going to happen.

“And even though we’ll be taking deposits and bookings for next spring and next summer you’re talking about deposits, you’re not talking about the money that helps a business to keep running.

“When pubs and bars and restaurants are open, hopefully in the autumn and back end of the year, they’re seeing full amounts of money coming in for the full service provided.

“They are able to generate the sort of bigger sums of money they will be used to now because the full payment happens at that time.

“In our sector we’re taking small payments, so we won’t see the real money come in until people are actually about to travel about a year from now and onwards from there.

“So there is an argument to say, if we want a travel industry, if we want a travel industry that actually has liquidity and is going to survive we need some government support.

“Whether that comes in the way of loans to see us through that period or grants, I think it is worth lobbying for further support from government to help the travel and tourism industry.”

Atol renewals danger

Alan Bowen, legal adviser to the Association of Atol Companies, said this September’s Atol renewals could be a danger time for many firms.

He said the CAA has already said it anticipates firms’ accounts to not be in a good state as no operators will have been able to make the profit in summer that fund them for the rest of the year.

Bowen welcomed yesterday’s announcement of the extension of the furlough Jobs Retention Scheme by the Chancellor, although he said it was an indication of how long the crisis will go on.

Furlough scheme backing

And he said the plan to allow part-time working with the government topping up wages to the current 80% level from August was positive, although it may come too late.

“That’s been one of the big problems, we’ve needed staff in offices or working from home to deal with refunds to deal with a cancellations and re-bookings and we haven’t been able to use them because we couldn’t afford to pay a full wage. So, we have had to say stay at home and do nothing.

“It’s a pity it’s going to be August, but there has been a lot of talk about the need to get people to do some work, perhaps not full time and for the government to adjust the furlough scheme, and it has indicated it will do that from August. But August seems a long time away.”