This blog was originally a comment piece in Travel Weekly on 10th March 2021
Our industry has been through the toughest 12 months in its history, and we are far from out of the woods, albeit that there is a brighter light now shining.
Every travel business has been impacted. Every travel employee affected. And every traveller has had their plans disrupted, cancelled or placed on hold.
Encouragingly, the rate of vaccinations in the UK means that all adults should have the option to receive their first jab by the end of July, and both jabs by end October. The 2021 lockdown and the impressive vaccination programme is boosting UK consumer confidence, as seen in this month’s YouGov index. Last week’s Budget added several positives including the furlough extension and a high level of tax relief for business investment. We know that there is pent up demand for travel, both leisure and business, with consumers keen to spend the money saved on holidays and experiences of a lifetime.
However, in many European countries, there is a tightening or extension of restrictions underway, and the rate of vaccination is well behind the UK. Many of the important destination markets will be understandably cautious about how and when borders are reopened. The European Commission is actively considering the introduction of a common vaccination certificate to help enable safe travel and the all important summer holiday season alongside essential business travel needs.
We need to maintain perspective and be both realistic and flexible in our planning.
Some commentators expect it to take 15 months before half the western world’s adult population is vaccinated. Sadly, much longer for many developing countries. The primary limiting factor is production capacity, with the world requiring over 10bn doses before factoring in annual recurring needs. This will constrain the return of travel, with geographical variation. It won’t be a smooth journey either, with inevitable bumps along the way.
What does this mean for travel companies? The team at the Firebird Partnership has had many conversations with travel companies, including specialist tour operators and TMCs, with a focus on the small-medium sized category. We see several types of response.
Survivors, hoping for the best
There are a number of companies that reorganised their business to reflect the dramatic drop in demand, and effectively entered a period of semi-hibernation, with fingers crossed for 2021. Very much a survival strategy. Some of these companies will successfully bounce back, some will not, especially where customer engagement has been limited. Hope is not a great strategy after all.
Planners, preparing to be best
Other travel companies reorganised their business to best manage the demand shock whilst forming a clear view for the recovery. This involved rethinking their business goals and strategy, and for some, ongoing investment in relevant technology and customer communication to ensure a fast and flexible response to the green shoots. Their focus is to be in a good place to quickly respond as the outlook improves, and outperform their competitors.
Time to move on – the sellers
Another group of companies have reflected on where they want to be and how to get there. For some owners, the realisation that it will take several years of hard graft to rebuild to get back to where they were in 2019 meant that they preferred to sell their business, often with a deal structure linked to future results. An entirely reasonable response.
Opportunity knocks – the buyers
For other travel companies, they see the crisis as an opportunity to accelerate the delivery of their business ambitions. A bit like the rapid pace of digitalisation, the pandemic has meant that things can and are happening much faster, with the opportunity to grow more quickly and to acquire long-admired competitors or complementary businesses.
In its first 9 months, the Firebird Partnership has supported a number of travel businesses and their owners, helping them to complete 3 management buy-outs, one sale, one investment raise and a commercial due diligence review. The team is in advanced discussions around 2 MBOs, 3 sales, 7 investment raises plus several long-term non-exec/advisory roles.
We are seeing a growing appetite from Private Equity firms for travel investments, a positive indicator for our sector. We are also seeing more and more travel companies preparing for a different tomorrow, in order to best manage the bumpy road ahead.
Everyone in travel has had much to learn, and quickly since March 2020. We believe it’s vital that you have trusted advisors working in partnership alongside you who know what it’s like to run a travel business. Someone who can help you chart the best way forward for your company and for your team, whatever your desired direction of travel into the future.