CORONAVIRUS INDUSTRY UPDATE 12.03.2020

LOTUS Industry Update: 12.03.2020

NEWS

WHO

The World Health Organisation has declared the outbreak as a Pandemic. But while WHO chief Dr Tedros Adhanom Ghebreyesus said he was “deeply concerned” by “alarming levels of inaction” over the virus, he also said the WHO would not be changing its advice about what action countries should take.

However, countries are upgrading their own action and all travellers are recommended to check the UK FCO Advice for details on this fast-moving situation. Amongst recent developments are:

USA

President Trump has suspended travel from Europe’s 26 Schengen countries to the USA for 30 days. These restrictions do not apply to the UK or US citizens. Despite the initial statement, Trump has since tweeted that trade and cargo will not be affected.

India

India has imposed coronavirus-related travel restrictions on most incoming foreign traffic.

The Maldives

The UK Foreign Office has advised against all but essential travel to some Maldives resorts: Kuredu, Vilemendhu, Batalaa and Kuramathi Island Resorts.

Jamaica

Jamaica has sent notification that it is planning to implement stringent regulations with regards to those who have travelled to France, Germany and Spain within the previous 14 days.

Spain

The UK FCO has no advisories in place for Spain, currently, but health authorities in Spain have implemented measures to stem the spread and has temporarily closed all educational institutions in Madrid, Vitoria and Labastida where there have been cluster outbreaks. In addition, in these cities, authorities have banned collective activities in closed spaces with a capacity of more than a thousand people and encouraged people to work remotely and flexibly and to avoid all unnecessary travel and meetings.

The UK Government is convening another emergency COBRA meeting about COVID-19 today, and further measures are expected to delay the spread.

THE BUDGET

Yesterday, Chancellor Rishi Sunak announced a £30 billion package of measures to counter the Covid-19 epidemic, including £2 billion in funds to support small businesses.

The measures to help small businesses included:

1. A loan scheme to be introduced to cover the cost of salaries and bills offering loans of up to £1.2m to support small and medium sized businesses. The government will offer a generous guarantee on those loans, covering up to 80% of losses, with no fees, so that banks can lend with confidence. This will unlock up to £1bn of working capital loans to support small businesses, with more as needed.

2. £3,000 cash grant per business for any firm that is currently eligible for the small business rates relief.

3. For businesses with fewer than 250 employees Government will fund SSP for two weeks - £2billion – this is a robust move to encourage self-isolation, which is good news for SMEs.

Action from Banks

In addition to help from the Government, the Bank of England has announced an emergency cut in interest rates to shore up the economy. Policymakers reduced rates from 0.75% to 0.25%, taking borrowing costs back down to the lowest level in history. The Bank said it would also free up billions of pounds of extra lending power to help banks support firms.

UK banks including Royal Bank of Scotland, Lloyds and TSB are to offer repayment holidays on mortgages and loans, as part of relief measures for customers affected by the coronavirus outbreak. Natwest has said it will pledge £5bn of funding to support small and medium-sized businesses across the UK amid disruption caused by the coronavirus outbreak. The funding will be used to provide loan repayment holidays of up to six months, as well as temporary emergency loans with no fees. The moves are part of efforts by UK banks to stem a potential tide of defaults if customers become ill, have to self-isolate or lose pay from employers and clients as the virus continues to spread.

Business Travel reaction

Abby Penston, CEO of Focus Travel Partnership, the leading business travel consortium for the independent sector said: “There’s no doubt that our sector is hurting. The Chancellor Rishi Sunak has announced a big emergency package in the first budget of this Government. I am glad to see that the Government is taking Covid-19 seriously, and I welcome the measures. Whether they go far enough is another matter. “For the business travel sector most corporate clients have imposed some form of change to their travel policy for most destinations in the world – with only 46% of domestic trips remaining unaffected. “Two-thirds of our TMC partners are telling us that the current crisis is having a significant impact, 19% are moderately impacted and only 14% have experienced a slight impact.”

ABTA reaction

Mark Tanzer, CEO of ABTA said: “The business interruption loan scheme, the emergency cut to interest rates and support for small businesses with sickness payments for staff will provide some welcome relief and a degree of protection in the weeks to come.”

APD

Despite speculation and calls from the travel industry, Air Passenger Duty (APD) was not axed in Rishi Sunak’s first Budget. In fact, for long haul, the rates have increased. Which? has reported that APD on long-haul flights will rise in line with inflation (RPI) – for most flights by a few pounds from 1 April 2020. Airlines can pass this increase onto customers, subject to booking conditions. The government has promised that a consultation to reform APD will take place this spring.

Economy class tickets on long haul will see APD rise £2 to £80; £4 to £176 for non-economy classes and the higher rate - charged on planes carrying fewer than 19 passengers will be charged at £528 for long haul.

CONSUMER SENTIMENT

Contentsquare: Purchases on Travel Planning Websites down by 20% Travolution has reported that travel websites are taking a significant hit from Covid-19 and accompanying travel advisories. Digital experience analytics firm Contentsquare has analysed activity on 1,400 websites including many of the UK’s largest. The study of anonymised customer behaviour covered 1.8 billion user sessions and 50 million transactions.

In the two weeks to last Friday, purchases on travel planning websites have decreased by 20% and time spent on travel sites is down 14%. Holiday comparison website icelolly.com reported last week that searches had recovered to be 10% down from 20% the week before as the UK saw its coronavirus death.

In terms of when users are still looking to go on holiday, icelolly.com said searches for holidays after this September were still relatively strong and May and April departures were stronger than June to August.

Richard Singer, icelolly.com chief executive said: “It has never been more important to buy travel insurance, which guarantees that, in the unlikely event something happens while you’re away, medical costs are covered.

“And with package holidays covered by Atol, meaning that your holiday is protected, and you’ll get your money back should the FCO restrict travel to your chosen destination, my advice is: don’t delay and book today.”

Google: Travel searches fell dramatically from 22 February, but still significant demand

Ruairidh Roberts, senior industry head at Google, presented data at a Travel Weekly breakfast, reporting on the peak booking period for 2020. The post-Christmas period behaved normally with spikes in late December and late January, coinciding with industry campaigns and promotional offers. Google’s graphs saw a dramatic fall-off in searches on travel from February 22. This coincided with the virus taking hold in Italy and there were sharp declines for queries for Holidays, Cruise, Hotel and Air (in that order), although they saw an uplift in air queries from that time, which were probably people checking to see whether their flights were cancelled.“

It is a similar analysis for the major UK destinations with Italy seeing the sharpest decline, whilst the USA held up for the longest. In March, there is 0% growth in travel queries year-on-year. “There’s not massive panic, but there was a reaction,” said Roberts. “Even though there is a drop off in queries there’s still a significant demand out there.” Roberts urged firms to change their search strategy to differentiate between profitable demand and searches related to fact-finding.

ASIA

Intelligence from LOTUS partners, suggest that the crisis seems to have bottomed out in Asia. Quarantined populations are beginning to slowly emerge and confidence is returning. Condé Nast Traveller told us that its Chinese clients, who stopped marketing in January and February, are now going back into the title. The Japan Times reports that according to daily tracking surveys in 12 countries by Morning Consult, Chinese consumers have the highest consumer reading – more than double than that of Japan, where consumer confidence has fallen 8.7% since 1 January.

CONSUMER CONFIDENCE ELSEWHERE

Consumer confidence fell in the US, Japan, Germany, the UK, and France over the past three months, according to a Morning Consult survey released on Tuesday, as the number of confirmed cases escalated. After previously rising following reduced Brexit uncertainty, consumer confidence fell more than 3% during that period in the UK. In Germany, consumer confidence has fallen 1.5%.