Assessing Covid risks ‘will be key’, warns Pattison

Travel businesses face a host of new risks from the Covid-19 pandemic and assessing those risks “will be key”, according to Alan Pattison, managing director of Travel Risk Professionals. Pattison told a Travlaw industry

webinar: “In addition to traditional risk exposures, you need to factor in lockdowns, border restrictions, local quarantines, social distancing, supply shortages, staff welfare and infrastructure impacts. Risk assessments will be key.” Companies would “need to pay

attention to local Covid regulations and provision of PPE [personal

Alan Pattison

Raising money will now be even harder for many firms – Barclays

protective equipment] for staff overseas”, he said, and advised: “Avoid a narrow geographical spread of destinations. Have a plan B if a country goes into lockdown.” Pattison noted: “Business inter-

ruption insurance typically only cov- ers interruption at office premises.” He also emphasised the need

for “robust supplier contracts”, saying: “We’ve seen so many travel companies forced to pay refunds when they have not received money back from suppliers.”

Businesses in a weak state going into the coronavirus pandemic will struggle to raise cash to survive, Barclays head of hospitality and leisure Mike Saul has warned. Saul forecast “more failures”

as the industry emerges from the crisis and “a lot of change to come” as retailers reduce their high street presence. Speaking on a Travlaw webinar,

Saul said: “The fundamental issue now is consumer confidence. A lot of people are waiting [or] looking at alternatives to overseas holidays.” He hailed the government

financial-support schemes, saying: “Each has been set up pretty

quickly.” But he insisted: “If a business could not afford [a loan] at the end of last year, it probably can’t afford a lot of leverage now.” Saul told the webinar: “In the

fourth quarter of last year, after the failure of Thomas Cook, a lot of companies were banking on better margins [this year].” Now, he said: “Making more

[financial] headroom available is not an option. “When businesses are working

with small margins and using customers’ money to run a business – which is the normal way of operating in travel – it leaves you very skinny when there is a problem.”

Photi warns of failure risk dates Ian Taylor

The trade faces crunch points this week and in September when there will be a heightened risk of failures, industry accountant Chris Photi has warned. Photi, White Hart Associates

head of travel and leisure, noted the recent failures of long-established businesses Funway Holidays and Fleetway Travel and said: “They are not likely to be the only failures. The July 31 refund credit note deadline could result in more.” Looking ahead to the September 30

renewal date for Atols and Abta bonds, he added: “Bonding is going to be a hugely difficult area. If you’re renewing bonds at existing or lower levels you should have no difficulty. But if you’re trying to reposition from a provider which has left the market you’re going to find it very difficult.” The July 31 RCN

deadline could result in more failures. And bonding is going to be a hugely difficult area

Speaking on a Travlaw industry

webinar, Photi said: “The problems have come in waves. In March and April, the big issue was cash retention [when] we saw a kneejerk reaction from merchant acquirers [and] from travel insurance providers. “In May, we saw travel businesses

in urgent need of cash seeking loans. That got off to a slow start – banks didn’t have their processes ready – but has kind of settled down.” Now, he suggested: “The CAA’s

resources are stretched and it is outsourcing legal work to City law

firms with mixed experience.” Photi praised Abta for its “immense

role” in winning acceptance of refund credit notes, with the government confirming Atol protection of the notes and the CAA issuing guidance on July 18. Photi said: “Abta really came to the fore as a trade association. It deserves an immense amount of credit.” But he said: “Unfortunately, the

government didn’t see it the same way and the consumer still has a choice of a cash refund.” Photi added: “Goodness knows

why the CAA took so long. The Air Travel Trust payment policy is quite clear that RCNs are protected.” He also noted a “disappointing

aspect” of the CAA guidance, pointing out: “If a customer who has a cancelled booking rebooks, there’s no additional Atol Protection Contribution to pay. But rebook with a RCN and the £2.50 APC has to be paid again.”

30 JULY 2020

Chris Photi


PICTURE: Matthew Joseph

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