GlobalData: End of furlough presents balancing act for UK travel firms

Published on : Wednesday, September 22, 2021

GlobalData

With the UK’s furlough scheme set to end this month, leading data and analytics company GlobalData notes that travel companies will be forced to cut costs in order to survive the winter. Gus Gardner, Associate Travel and Tourism Analyst at GlobalData, warns that such measures may well include redundancies.

Gardner comments: “The end of furlough couldn’t really have come at a worse time of year for the travel industry. The tough winter season is upon us, and cost-cutting measures will be essential for survival. Unfortunately, this means redundancies are likely, as this is one of the easiest ways to save money.”

GlobalData forecasts UK domestic travel to rebound to 2019 levels during 2022, when it will reach 123.9 million trips. However, international outbound trips will take longer and will not return to pre-COVID levels until 2024, when they will hit 84.7 million trips.

Gardner continues: “Although domestic recovery is on track for a 2022 rebound, the industry must navigate the normally tough winter period first. Without sufficient demand, revenues will continue to be suppressed and companies will struggle. A fine balance must be struck between redundancies and future agility.”

Gardner also points out the dangers of dropping employee numbers to UK travel companies: “If companies begin making employees redundant, they are less able to respond to sudden upticks in demand. Striking a balance will cause headaches for many travel firms – especially those heavily reliant on international travel.”

“The quickly changing nature of travel restrictions may see a sudden spike in demand for certain destinations at short notice. If a firm is understaffed, it could miss out on much-needed revenue. Conversely, retaining too many staff could result in costs spiraling out of control.”

“Extending the furlough scheme for the travel industry could buy time for the sector until demand begins to strengthen. However, the prospect is slim.”

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