As people try to navigate their way through the existing traffic light system in order to plan a possible post-lockdown holiday abroad, there are signs that the travel sector could experience long-term scarring from damage sustained during the pandemic. A leading figure in the travel industry went as far as to suggest an entire generation of travel firms could disappear.

Testing times for travel

Fancy a bit of sunshine abroad? That’ll cost you. Since mid-May, the UK has officially adopted a traffic light system for international travel. Pick a country designated on the green list, and some COVID-19 testing is required on either side of your journey, but no isolation upon your return. The bulk of European holiday destinations, however, are now on the amber list, meaning COVID-19 testing, as well as up to 10 days of isolation when you return to the UK.

Travel to a red list country, and you face testing and a 10-day stay in a hotel before you can return home, all paid for out of your own pocket. For understandable reasons, travel may have finally become an option for many once more, but the logistical hurdles imposed to keep the transmission of the differing COVID-19 variants low make international travel less attractive. This perception of travel becoming a chore rather than a holiday hasn’t gone unnoticed by those in the know.

Last week at a Treasury Select Committee oral evidence session on the impact of coronavirus, Mark Tanzer, Chief Executive of ABTA – The Travel Association, claimed: “The Government need to recognise that travel is in a class of its own in terms of the pain it has suffered. If we do not have support through these critical weeks, I really fear that we will lose a generation of travel companies, if we do not act and get some financial support into them now.”

Feeling the pain

Travel companies which would have been expecting to be enjoying a lucrative summer of expectant holiday goers coming through their doors are currently on the brink of collapse. During his Treasury Committee testimony, Mark Tanzer claimed such businesses are in need of an extension of furlough arrangements, allowing the government to subsidize the wages of employees.

Not only this, but business rates relief and VAT deferrals are cited by Mr Tanzer as crucial in helping keep distressed travel firms afloat, as revenues remain tight, even after an easing of lockdown restrictions. Before the pandemic, Brits collectively splashed out £43.3 billion in 2019 on holidays, but it could be some time before such healthy figures are seen once more.

In the meantime, presuming that business conditions remain tight and government policies are not adjusted to accommodate for a high volume of distressed businesses in the travel sector, we may see a wave of collapses in the coming years, offering up unique acquisition opportunities. However, unless countries move as one in tackling the pandemic, the traffic light system will remain in place, and it may pay to be patient and cautious about how the situation evolves.

International travel is a multi-billion pound industry in the UK, but you will want to time your entry as perfectly as possible, to benefit from an eventual bounce-back in the sector, so your investment takes to the skies, rather than simply being grounded before it has a chance to spread its wings.