21% jump in UK travel sector insolvencies amid stop-start holiday season

Insolvencies of UK travel agents and tour operators increased 21% from 68 to 82 in the year ending 30 November 2021, revealed international audit, tax, and advisory firm Mazars.

Additionally, in the most recent month, travel sector insolvencies jumped from nine to 15 and global travel remained 72% down on pre-pandemic levels in 2021.

Mazars said the travel sector, which employs 500,000 people, was hoping for a return to normal as restrictions eased last summer, however these hopes were dampered by the emergence of the Omicron variant and lingering restrictions on UK tourists in countries such as Italy.

Travel companies that deal with travellers for business or education were especially hard-hit as school trips and business travel ground to a halt during the pandemic.

Mazars said that the end of the ban on winding up petitions on 1 October means that travel agencies who owe more than £10,000 to creditors may have faced demands to pay up or be wound up.

Many travel firms were reportedly hoping that the limited cash reserves they were left with as lockdown eased would last until the peak holiday booking season in January to March, but Omicron has meant a “subdued start” to the peak season.

Rebecca Dacre, partner at Mazars, said: “Many travel companies went into the off-season in a precarious position and have not come out the other side. The on-off nature of travel restrictions has left lingering damage in the sector with many consumers having lost confidence and put off bookings.

“Consequently, operators across the industry have been running out of options for cash flow and for credit. The adoption of UK holidays instead of foreign travel has had a further negative impact.”

She added: “The insolvencies we’ve seen so far could just be the beginning. Omicron restrictions will have blunted the recovery of the holiday sector and are likely to have further hit travel companies’ bottom lines.”