Business rescue specialist Begbies Traynor found 4,908 travel and tourism businesses were “significantly distressed” in the second half of 2021, a 26% increase on the same period last year.
Among these were 1,580 classed as travel agencies or other reservations services, and 805 tour operators.
Begbies Traynor’s Red Flag Alert also found 27,557 jobs with SMEs in travel and tourism were at risk in the second quarter of this year, compared to 15,747 a year ago.
However, the latest figure has fallen from the peak of 29,692 at the start of this year, indicating that either some companies have recovered – or already disappeared from the market.
The firm’s research, compiled from Companies House data, highlighted the fact that a moratorium on winding up orders – imposed earlier in the Covid crisis – came to an end on 30 June.
Begbies Traynor partner Julie Palmer, said: “In the last quarter, there has been an easing of travel and tourism companies in significant distress.
"Many will have been able to pay off some creditors as consumers rushed to take advantage of the good weather for a staycation, being double jabbed, or flights to other countries opening up.
“However, the moratorium on winding up orders has been delaying what could be a flurry of court activity and creditors calling in the payments they have been without for a long time.
“With that now over, it feels like we are at the edge of a storm. A 90% year-on-year increase in County Court judgments this quarter (across all industries) shows that momentum is gathering pace and creditors are starting to call in their debts. It is because of this the decrease in distress could be temporary.”
Opportunities
Palmer said there were various way companies could help themselves, including administration, Company Voluntary Arrangements and fast-track CVAs – a rapid method for turning around businesses that were viable before the pandemic.
“Many creditors would prefer to wait longer to get all that they are owed than take a hit on debts,” she said.
Palmer added there was a bright side to the current situation, with cheap finance available.
“Some companies that are nimble and talented will see the opportunity to swallow up the competition and grow their own teams to cement a position in the market,” she said.
