Hundreds of travel agents close down amid coronavirus pandemic, others barely survive
Miriam Henry was on a five-and-a-half-month travel adventure when she fell sick in late March.
“About a week out from coming home I started to get a small cough which I thought was something I normally get in the winter.”
Confirmed as COVID-19, Miriam’s travel agent Linda Forster quickly got her back home on one of the last flights before the international travel ban took full force.
“I arrived home on March 24, in the evening and I was in the hospital the next day,” Ms Henry said.
She spent 10 weeks in hospital before she got cleared with a negative test.
Ms Henry says she picked the virus up in Surrey, south-east England, and could have died if she hadn’t come back home to get proper medical care. She is now COVID-free.
“It’s been extremely stressful,” Ms Henry said.
“I thank Linda very much for making me come home because I’m quite worried what would have happened to me had I still been in England.
“I would have probably got into a worse state and got much sicker. She [her travel agent] was my lifesaver.”
Ms Henry is one of millions of Australians who travel overseas each year with the help of a travel agent — in 2018-19 more than 8.1 million Australians did.
When international travel bans lift, there’s no question Ms Henry will use her travel agent to help her navigate a whole new world of travel.
But the question is, can her agent and other agents survive in the meantime?
Industry pleading for Government support
The industry is on edge. Hundreds of travel agents have closed their shopfronts since the onset of the COVID pandemic, and many have exited the industry.
Australian Federation of Travel Agents (AFTA) is the peak industry body for travel agents.
Its chairman Tom Manwaring, who is also CEO of Express Travel Group, has called on the Federal Government to provide the sector with a $250 million support package for 4000 travel agencies and the 40,000 Australians they employ.
“We contribute $28 billion plus each year to the economy,” he said in a recent submission.
“Without a tailored support package, businesses will start closing,” he said, estimating at least 25 per cent of the sector will close.
“That means job losses, a gap in the market that the internationals will fill.”
According to Australian Small Business and Family Enterprise Ombudsman Kate Carnell travel agents are wearing the costs of airline, cruise ship and hotel refunds.
She says they did a recent survey of hundreds of agents and 98 per cent say they have seen their revenue plunge by more than 75 per cent since COVID restrictions were introduced in March.
“More than half have told us their revenue has plummeted by over 100 per cent, meaning they have been paying more out in refunds, including previously made revenue, than they are selling in new business,” Ms Carnell said.
Small businesses in ‘hibernation’ barely hang on
Ms Forster knows that story only too well. She runs a mobile travel service, TravLin Travel, out of her home on the Mornington Peninsula.
She says business was thriving before the coronavirus pandemic, now the phones only ring when customers want help getting a refund or credit for cancelled trips.
Ms Forster relies largely on international travel bookings and has placed her business in hibernation while she looks for a second job.
But she says many others have been unable to survive. She recently made a video on the dire situation, noting the number of agents that have to close their businesses.
“They’ve already left — people who have been in the industry since school — they’ve been in the industry 10, 20 30, even 40 years,” she said.
“They’ve been in a position where they’ve had to leave broken and it’s heartbreaking.”
Ms Forster has been living off JobKeeper but wants the Government to extend it — and go back to its full original rate of $1500 fortnightly, instead of reducing it from March.
“We’ve been through crises before in the world — we’ve had Ansett, we’ve had SARS, we’ve had the GFC, we’ve had 9/11.
“We’ve never asked the Government for help but now we really need the help now.”
‘Nothing to sell. It’s been a really tough time’
It’s not just leisure travel that’s been affected. Penny Spencer runs a corporate travel agency in Sydney, Spencer Travel.
She’s had to close two shopfronts and run her business out of head office in Mascot.
“Pretty much overnight our business stopped,” she said.
“We had nothing to sell. We’re like a supermarket with nothing on the shelves. It’s been a really, really tough time.”
Ms Spencer has had to use her home as collateral to negotiate with the banks and spends her days negotiating with the banks and her suppliers.
“Everyday I look at my cash flow and try work out what I can and can’t pay,” she said.
“Everyday I wake up and think, ‘what is today going to bring?’ Whether it’s going to be another shutdown of a border. Mentally it does take a toll on you.
Ms Spencer says thanks to leniency from the banks and JobKeeper “we are just surviving”. Her hope is that there will some from of international travel soon.
“A couple of bubbles would be good, with New Zealand, the Pacific and possibly Singapore and Japan,” Ms Spencer said.
“That would be great, but it’s going to be slow,” she said, noting corporates are already saying they will cut down 50 per cent of travel they normally do.
“Obviously December and January are slow in corporates, so we will just have to wait and see whether corporates will travel over that period,” she said.
Ms Spencer also wants to see JobKeeper extended.
“It [JobKeeper] has been a lifesaver for everybody, especially in the travel industry,” she said.
“We need to look at what the travel industry can have after March because there is no way we will be able to put people onto full salaries after March.
“The borders will be shut to international travel and the majority of our business is international travel.”
Flight Centre boss: earnings won’t hit pre-COVID levels until 2025
ASX-listed companies like Flight Centre can still go to the market for extra cash. But it has also taken a huge hit, having to close more than 500 stores in Australia since the crisis.
It’s down from 950 stores in Australia to about 400 and has another 150 stores left overseas.
“We’ve had a significant downsizing and obviously there’s staff to go with that as well,” says Flight Centre chief executive Graham Turner.
“We started pre-COVID with about 21,000 people [employees internationally]. And were down to 6,500-7,000 at the moment.”
“We’ve kept our best locations and frontline people so that we can cope with a fair bit of businesspeople coming back.
But he thinks it won’t be until June 2025 where their earnings lift to pre-COVID levels.
“We will have a significant loss this financial year — and it will be the year after, 2021-22 — when we should make a small profit or break even that year.”
But he says with interstate travel still largely restricted and COVID infections in North America and Europe, “it is going to take a bit of time to get back to any level of serious normality”.
“International [travel] we believe will start returning in the next six months — it will be generally bilateral arrangements — places like Japan, South Korea, perhaps China, Japan and New Zealand of course.”
But Mr Turner says his view is that we need to learn to live with the virus until a vaccine is successful, “by controlling and supressing, not eliminating”.
“By June/July we will see much more travel coming back and will have much better protocols to protect people both before and after [getting on the plane], so the risk of travelling will be very low of either catching it on a plane or spreading it once people arrive here,” he said.
Navigating travel as COVID restrictions ease
Regardless of how soon international travel resumes, Mr Turner says there will be more agents exiting.
“A lot of small businesses in travel and tourism are really going to suffer over this next period, if they indeed survive,” Mr Turner said.
“The really low-cost ones will scrape by. And larger companies like us, who are publicly listed and can raise capital, get a reasonable cash runway …that we think will last us two to three years.
Mr Turner said Flight Centre had already raised more than $700 million, “plus, another couple of hundred million in back facilities” and is considering whether it needs to raise more.
He says those who survive will have to shift to being even more customer-centric. This call was being made months before the pandemic hit, with the collapse of British tour operator Thomas Cook.
“The industry is going to change — it’s inevitable,” Mr Turner said.
“But as things come back whether it’s busines travel or leisure travel most customers are going to want the certainty that they get good advice and the way they travel is safe, so the role of the travel agent will be even more important.”
Regardless of Government support measures, Ms Spencer says the industry is going to look very different on the other side of COVID.
“We’re going to have to be like lawyers and doctors,” Ms Spencer said.
“We are going to have to know what is required when someone travels to Italy, and then goes to Germany — do they need a COVID test to get into Germany?
“What borders are going to be open to what countries? So there’s going to be a lot of extra work that we have to do.
“But I think there definitely will be fewer travel agents.”