Soaring travel agent insolvencies just ‘the tip of the iceberg’
Insolvencies of UK travel agents and tour operators have leaped in the last year.
Audit and tax firm Mazars said insolvencies jumped 17 per cent from 59 to 69.
In July, sector insolvencies rose from one to nine. Experts have pointed to the end of furlough as something that could place additional pressure on the beleaguered sector.
Travel firms have struggled during the pandemic, with smaller firms using up cash reserves during periods of tough Covid restrictions.
Although countries have eased restrictions, travel is still well below pre-Covid levels. Many countries in Africa and Latin America are still not open to overseas travellers.
Rebecca Dacre, partner at Mazars said: “These figures suggest the crisis is far from over for the travel sector. Despite an increase in demand many travel agencies face a shortage of cash with which to operate and a shortage of options for credit.”
Trade body ABTA can hike the level of bond required when a travel company is suffering losses or poor performance. This puts further pressure on cash flow, Mazars said.
Dacre added: “The insolvencies we’ve seen so far are likely to be the tip of the iceberg. In many cases, furlough support has been the only thing keeping travel businesses going. Now these firms will have to pay their whole wage bill and may find creditors knocking at the door.”