An Estimated 1,800 Travel Companies Deemed “At Risk”: Some 160 tour operators are at risk of failing, according to a chilling report that came out late last week. While most of London focused on the impact of a massive tube strike, the business newspaper City A.M. had stitched together information from several sources graphically illustrating just how fragile the overall travel industry in the UK is. Highlights from the publication’s report include the following:
-The industry is braced for thousands of insolvencies as the sector comes under increasing pressure from terrorism fears and rising costs driven by a weak British pound.
-According to data from insolvency firm Begbies Traynor, 2,679 businesses in the travel industry are currently experiencing significant distress, a 10 per cent increase compared to the previous quarter and a four per cent increase vs. the same period in 2016.
-Currently, there are just under 7,000 travel agents and tour operators in the UK, and 1,800, or 26 per cent, have attracted the “warning rating” of Company Watch, a database that measures a company’s risk of insolvency.
-Out of the 1,800 travel companies deemed at risk by Company Watch, about 450 are at “real risk” of going insolvent, said Nick Hood, business risk adviser for Opus Restructuring. Around 160 of these are tour operators.
-“Clearly, the travel industry is under severe stress from all sorts of different adverse factors,” Hood said. He added that the fortunes of travel companies depend very heavily on where they’re based around the world and their scale, with smaller companies facing higher risks.
-As if to illustrate the immediacy of the threat of insolvency for so many travel businesses, All Leisure Holidays, a specialist cruise holiday operator, stop trading last Wednesday, leaving hundreds of travelers stranded worldwide and leading to the cancellation of more than 13,000 booked holidays.
-According to travel industry expert Simon Calder, a “perfect storm” led to All Leisure Group’s downfall. Some of the company’s main cruise destinations were to North Africa, including Tunisia and Libya, the Mediterranean and the Black Sea, including Crimea.
-A weak pound sterling added to the cruise company’s troubles. Malcolm Ginsberg, an industry veteran who works for BTNews, said rising fuel costs and transactions done in dollars are likely to have also hurt the company.